Series Embark

#23 Providing new value to corporate legal affairs through the use of AI technology, pioneering legal tech


  • LegalOn Technologies, Inc.
#23 Providing new value to corporate legal affairs through the use of AI technology, pioneering legal tech

LegalOn Technologies, an artificial intelligence (AI)-based contract-related service provider, is a startup founded in April 2017 by lawyers from Kyoto University's Faculty of Law and Law School. By applying AI technology to the corporate legal field, the company aims to build a world where people can enjoy higher quality legal services. The number of user companies of "LegalForce," an AI contract review platform developed through joint research with Kyoto University's Academic Center for Computing and Media Studies/Graduate School of Informatics, has exceeded 3,000. We interviewed Nozomu Tsunoda, Representative Director and CEO of the company, which is growing as a pioneer in the legal tech field, about the background of the start-up, the company's strengths, and its prospects.
(Interviewer: Katsuyoshi Masuda)

Providing better legal services and starting a business as a means to achieve this.

Please tell us about your career and how you started your own business.


After graduating from Kyoto University Faculty of Law in 2010, he attended the university's law school, passed the bar exam in 2012, and registered as a lawyer. He then worked at Mori Hamada & Matsumoto in general corporate legal affairs before starting his own business in April 2017.

I thought about starting a business just before I retired from the law firm, but during my tenure at the law firm, I was thinking about what "good legal services (for companies)" should be. I was discussing with my colleague Masataka Ogasawara (co-founder, current Director and Audit & Supervisory Board Member) on a daily basis whether we could create a better legal service than what had been done by our predecessors. At the time, AI (Artificial Intelligence) technology based on neural networks was attracting a great deal of attention, with the computer Go program AlphaGo (Alpha Go, Google DeepMind) winning against the best professional Go players. I thought that the application of this technology had the potential to improve legal services, and I started LegalForce Inc. (now LegalOn Technologies Inc.) to realize it.

What kind of "good legal services" were discussed? Also, why did you decide to develop it in-house rather than in alliance with a company specializing in AI development?


Our idea of better legal services is more abstract, but it includes services that focus on providing higher quality legal advice faster, drafting contracts, or working more closely with the client company to deliver business wins.

In order to catch up with the times, we knew that we would have to establish a company with the objective of focusing firmly on technology development in order to do well. We also believed that we would not be able to maintain our competitiveness without in-house development in order to obtain feedback from our customers and reflect it in our development at a high speed. Neither Ogasawara nor I had any knowledge of technology, so our first task was to scout for engineers with expertise in AI.

(Nozomu Tsunoda, Representative Director, Executive Officer and CEO)
Nozomu Tsunoda Representative Director, CEO

What were some of the challenges you faced in establishing the company?


Everything was a challenge, so it was a series of hardships from start to finish. There is no right answer when it comes to deciding on a product concept, and there are many options when it comes to legal tech, so we had no idea where to focus our efforts. Even if we narrowed it down, we had no idea whether it would be successful or not, or whether it would sell. We had no idea how to realize the concept, and since we had no engineers, we had no idea how to make it happen. We had to clear all these issues one by one, including whether we would be able to attract human resources in such a situation. Even if we wanted to hire engineers in the first place, we did not have a product yet, nor did we have the money to pay for it - people would not easily come to such a risky company.

For the first year after its establishment, the company paid staff compensation and other expenses with earnings from Zelo, a law firm that Ogasawara and I had established at the same time and that we operated together, and with personal borrowed funds. As the company's operating funds dwindled, I was drawing up a roadmap for product development, starting operations, and fundraising, so I felt a lot of pressure to accomplish what I had to do and the plans in front of me, which kept me busy.

Under these circumstances, a beta version of our first product, "LegalForce," was completed in April 2018, but we had to reject it because we felt that our customers would not use it even if we released it. Therefore, we greatly compressed the concept and completed a new beta version about three months later that focused on the current base functionality of "LegalForce" - automatic review and search of contracts - and were able to start offering it to customers as an open beta version.

After the completion of the open beta version, did you see a smooth path to customer acquisition?


Our business itself was getting a lot of attention in the media, but there was a period of time when we could not get any contracts at all, even though we went out to sales with our open beta version. No matter how many companies we visited, they were slow to respond and would not buy at all.... So, while thinking about how we could get people to buy our products, we kept repeating trial and error, changing the way we explained things, changing the way we made proposals, etc. Then one day, all of a sudden, we started to sell. Sales by simply explaining in detail or appealing to the features of the product will not sell. It was the moment when I realized that new and innovative products will never sell unless we can conduct sales activities that change the way customers think. From that point on, I began to think about how to conduct sales.

Collaboration with Kyoto University, where we were able to enjoy cutting-edge knowledge

In March 2018, you received an investment from Kyoto University Innovation Capital (Kyoto-iCAP), was the company's support helpful?


The name value of Kyoto-iCAP's fund is high, and we believe that the seed round would not have been possible without their participation. Another major benefit of our earlier connection with Kyoto-iCAP was that we were introduced to Professor Shinsuke Mori of Kyoto University's Academic Center for Computing and Media Studies, with whom we were able to initiate joint research.

In particular, the name value of Dr. Mori, who is highly knowledgeable and accomplished in natural language processing technology, is also very high, and has had a significant impact on our recruitment of AI developers. Some AI engineers have joined our company because they were able to talk about our business with people who said, "I know Dr. Mori" or "I have talked with Dr. Mori at a conference in Europe," at language processing conferences and other events. Our joint research continues to this day, and it has been a great benefit for us to be able to have discussions based on cutting-edge knowledge in the areas of natural language processing technology and machine learning. We have learned how to solve certain problems using state-of-the-art language processing techniques, and this has been very helpful in our development work for practical applications in the legal field.

Please provide an overview of your products and services and their strengths.


The first release, "LegalForce," uses AI technology to automatically review contracts that are uploaded for review. The system highlights points of note and suggests revisions. The proposed amendments are prepared by dedicated attorneys in our development department, and the main feature of this service is that it is reliable. In addition, by having and collaborating with attorneys dedicated to our development department, we are able to create services with high quality content that is in line with legal practice. In addition, our collaboration with ZeLo, a law firm with expertise in corporate legal affairs, enables us to provide high-quality content, including a collection of contract templates.

LegalForce Cabine, whose official version was released in January 2021, supports the management of contracts after they have been executed, reducing the time and effort required to search for contracts and creating a management ledger. The solution manages contracts by importing PDF files of contracts and automatically tagging them with the names of the parties to the contract, the expiration date, and other information to create a database. It supports contract management operations by displaying alerts in advance of expired contracts. Recently, it also supports the revised Electronic Bookkeeping Act, and we believe it is contributing to the evolution of back-office operations more than ever before.

This year, we launched "LF Checker," a simple AI contract review service limited to some of the functions of "LegalForce" at a lower cost for small businesses. Furthermore, in October, we released "Legal Learning," an online video learning support service for legal professionals. This online service allows users to learn an overview of what a contract is, etc., in the preliminary stages of creating and checking contracts.

Representative Director, Executive Officer and CEO Tsunoda explains the "LegalForce" operation screen. The system supports automated review by utilizing AI technology in contract review.
Representative Director, Executive Officer and CEO Tsunoda explains the "LegalForce" operation screen. The system supports automated review by utilizing AI technology in contract review.

Sales methods need to evolve in line with the evolution of products

You have more than 3,000 users of "LegalForce" and more than 800 users of "LegalForce Cabine" in the two years since you started offering the official version.


There are several timing factors when a product sells. In the case of "LegalForce," the initial sales were strong due to media coverage. Six months later, the user interface (UI) was significantly updated to make it easier to see and use, which accelerated the number of users; a year later, further improvements were made, and overall accuracy was greatly enhanced, making it easier for the sales department to sell the product. I believe that the fact that our engineers have accompanied our customers during business meetings, listening to their opinions and reflecting their needs in the development of the product, has been highly evaluated.

We also believe that in order to achieve gradual growth, it is important to evolve our sales methods in line with improvements in product performance and other factors. To begin with, we have always believed that no matter how high the quality of a product, it cannot be sold without sales, and we have emphasized sales operations from the initial stages. I pointed out earlier the importance of changing our sales approach, and we are committed to continuing to evolve our presentation methods and proposals as the performance of our products improves.

What are your future business prospects?


Our medium- to long-term vision is to "create a society where people can move forward with peace of mind through the power of law and technology." This is our medium- to long-term vision: to "create a society that can move forward with peace of mind through the power of law and technology," and how we will realize this vision. In order to realize a society that can move forward with peace of mind, it is necessary to apply our strengths in law and technology, and we hope to achieve this not only in Japan but also on a global scale. First, we aim to be able to provide solid value to the U.S. and English-speaking countries. On the other hand, in Japan, although the number of client users is growing, I believe that we have yet to deliver value, so we will continue to strive to provide value to our clients. At the same time, we would like to improve the quality of our products, which play a part in that value.

Five and a half years have passed since our establishment, and we have grown to a company with 500 employees, but from the beginning we never thought that company growth = expansion of scale. We have set short-term goals and a roadmap for how we will create products and deliver value to society, and we have been striving to achieve these goals. We have an image of how much value we would like to provide to the world in 3 or 5 years, not the size of the company. I think it is important to set a roadmap for achieving this goal, manage the indicators, and work to ensure that we can achieve our goals.

Finally, what advice would you give to those who are considering starting a business?


If you think you are ready to start a business when you are ready, you will probably find it difficult to move forward anytime soon. No matter how carefully you plan and prepare, you will encounter many changes along the way. Things often don't go as planned, and society is constantly changing, so assumptions change as well. I believe that we are required to move forward while correcting and responding as we run. If you have such a desire to realize this kind of society and to provide the world with the services to realize it, I recommend that you take on this challenge as soon as possible.

(Interviewed in September 2023. Affiliations, positions, etc. are as of the time of the interview)

From the Investment Officer

We introduced Dr. Mori and Dr. Suenaga of Kyoto University in the early days of the company when it still had three members, and since then we have had a long (?) relationship with them as Kyoto-iCAP's support and investment partner since 2018. We have been in a long (?) relationship with the company since 2018. We too have been able to learn the secrets of Saas companies' success and sales growth, and we have grown together. A company with a strong team, high expertise and good technology can win in the world. We are looking forward to LegalOn Technologies' future global expansion.

Nobuhiro Yagi
Nobuhiro Yagi

Nobuhiro Yagi

LegalOn Technologies, Inc. website

LegalOn Technologies, Inc. website


Please feel free to contact us if you have any questions or concerns.

Inquiry Form