Legal Tech Innovation, Managing AI Risk, and Building Breadth with Josh Lokko

Today, I'm meeting with Josh Loco. He's a capital markets lawyer turned founder, building Satara and AI first verification engine for securities diligence. He was at Sherman and Sterling in capital markets, then equity derivatives at Scotia bank before founding Satara in 2024. He's a JD MBA from the university of Toronto, member of the New York bar, and also teaches AI coding workshops for lawyers. Thank you so much for making the time to come to the show today, Josh. No problem. Thank you very much for having me. Absolutely. And to start our conversation, I know I just said a quick introduction about you, but I'd love for you to tell us a little bit about your journey, you know, from being at U of T, from being, you know, a New York capital markets lawyer, and then founding your own company. Yeah, for sure. Um, well, I was one of those people who always wanted to be a lawyer and didn't really have a good reason for it, but I thought it was going to be really cool. Came to my political science undergrad, came to West Arts, came to U of T. And when I got here, I started learning more about what law looks like and ended up getting a one-on-one position at Tories. And when I was doing that job, I just finished my first year of my MBA. It's like the mixed program does one year law school, one year MBA. So I just been around a whole bunch of business people. And when I was an undergrad, I was very involved in entrepreneurship through some friends and that kind of stuff. And when I saw the way that some of the things we did in the firm ran, I thought maybe we could probably do these a little bit more efficiently, but also saw that it wasn't probably going to change anytime soon, unless somebody, you know, made a concerted effort to actually build the tools that were needed for that. And I decided pretty early on, actually, that I thought legal tech would be a really cool place to build my career because I saw that there was all of these things that were done in a bit of a slower way compared to other industries, but that a lot of lawyers didn't actually have the skills or interest in to actually leave the practice and solve those problems. And that's why they persist for so long. So from there, I decided that I was going to try to learn how to prototype tools for myself. I learned VBA and Microsoft Office, which sounds less cool than it is and slightly nerdy, but I'm very, very good at Excel. Built a whole bunch of tools for myself, prototyped things out. And then when I went to Sherman and Sterling after graduation, continued doing that when I was in my first year there. And the idea was that I wanted to figure out what kind of problem was worth solving that could actually be addressed with technology that would fit into the workflows of lawyers that would actually be useful, not just a cool toy, because it's really easy to end up building something that's cool and not that useful. And then once I had enough, enough time building things out, then decided I would jump into the entrepreneurship side full time. And that's incredible. And, you know, it's so interesting to hear about, you know, how, how you made those decisions. And honestly, pretty early on, I understand that Satara focuses on helping capital market lawyers with AI. What are some of the biggest challenges that maybe you noticed in practice and you're trying to solve? And even maybe why do they matter for the future of legal practice? Yeah, well, in capital markets, it's all about protecting investors by ensuring that companies disclose accurate information in your prospectuses, annual reports, all that kind of thing. And if you ever read a prospectus or an annual report, you'll know they're very long and very dense and full of facts. And like everywhere else in law, difference implies meaning. So lawyers spend a ton of time just trying to make sure everything is consistent, accurate, looking up precedents, copy pasting. I think my friend, one of my friends a year below me and I both compared our keyboards after first year law and realized that the control, that the C key was worn down from all the copy pasting we did. So there's a lot of activities that aren't really thinking deeply about law. And I think pretty much every corporate practice group has things like this. And so what we're really fundamentally trying to do, and I think a lot of tech companies are trying to do is solve the problem of making sure that lawyers don't have to do so much non-legal work really before getting to the point of exercising their professional judgment. We think about it as kind of like hiring a sculptor with highly experienced, they have refined tastes and expensive rate. And then you tell them they should go down to the quarry and mine all the stone themselves before they get started with the sculpture. It just doesn't really make sense. And so I think that Statera and other tools like ours are going to help raise the quality bar really substantially. It's going to be faster for sure. But the biggest thing is that it allows lawyers like these kinds of tools allow lawyers to be way more thought through and thorough with what they're doing, because you can actually dive down all the rabbit holes when you have the tech to do it. And lawyers, of course, love doing nothing more than doing that. So I think that once we have these tools adopted more broadly, we're going to have fewer of those little oversights that are impossible to avoid in the current system and just a higher quality bar for our law generally. That's amazing. I feel like a lot of the discourse out there on have, I guess, two polar opposites. Right. But especially in the context of the podcast here, I usually speak to early career professionals, lawyers who are just getting out in the market and those who are pursuing law school, right, trying to decide what their next steps are and all of that. And honestly, I think what you just said was really, really interesting. It helped to also see legal tech not as a doomsday tool for young lawyers or, you know, anything in that sense, but really something that can really enhance and help with that practice. I'm curious if I may ask you, you know, do you have a few thoughts on this sense, on the early career professionals, next generation of lawyers, what they should be looking into when it comes to, you know, preparing for a career and for practice? And I know that you've been a self-starter in many ways and an entrepreneur, but would, you know, learn more about AI and how to build tools themselves, be a good path to go about it? What are some of your thoughts overall? Yeah, well, I think first thing people need to do is to think about where they want to go with their career long term, because it can get really easy to get a little bit short-sighted thinking about just the next step, like, oh, where am I going to article? Am I going to do well in articling? What's the next, just like immediate next year and not really think about what you want longer term. And I think that's the most important thing to do first, of course. And once you do that, if you decide that you want to be a person who's on the business side, who's on the tech side and building products, who's on the law side, who's in private practice, who's in-house, and you kind of think about what kind of career and job and life you want to have, then you can decide where you want to allocate your time, because I think everybody now needs to be not a generalist per se, but have a general understanding of a pretty broad range of topics and then can choose the things they're going to become expert in if they want to be successful. Most lawyers are not going to become professional developers. I'm not a professional developer and I don't plan to become one, but I am very familiar with how technical products are built because, of course, I'm a founder and it's very helpful to have that. And I knew that was going to be something I wanted to do. So I spent the rest of the time to learn. However, if somebody wants to be a partner in a law firm, for example, they probably don't want to spend the amount of time that I spent working on cloud code or codex. They probably want to spend more of that time practicing law. But like me, I don't spend a ton of time reading about capital markets law anymore because it's not something that I'm going to be doing in great detail in the same way that I would if I was going to be a capital markets partner. And so you can kind of think about how you want to allocate your time to be based on the skills you want to have. But I need to know capital markets law. A capital markets partner needs to know how tools like mine work so that nobody can pull the wool over their eyes. And getting a basic understanding of all of these kind of like high level buckets is really important. And when you're an early stage professional, you have a lot of latitude to do that because you can look at things with fresh eyes and you can spend your time experimenting with stuff, doing things that maybe you're not going to bring to your senior year, but you can at least see, OK, does this work? How can I try this in my personal life or with something that's not client facing so I can just get a basic understanding? And that kind of experimentation will allow you to build the skill of learning new things that allows you to stay up to speed as things change quickly over time. Amazing. I see, you know, more often than not, that many lawyers are curious with AI, but get a little concerned with, you know, the whole possibility of putting in information they might not want to have there. Or also, you know, especially in the litigation side, there's all the concerns on research and cases and maybe coming up with a case that is not real and all of those things. So it makes the profession a little bit hesitant to embrace it. Or maybe, you know, just a few members of the profession, because I feel like at the same time, I keep seeing, at least in my bubble, so many lawyers building and experimenting with AI all the time. Do you think there's a few misconceptions that lawyers have about AI that maybe through this podcast we could address? Definitely. And I think that misconception sometimes isn't even the right way to put it, because a lot of the things that the people who are hesitant to use AI think about AI are true, like AI does hallucinate, things like that, for example. And if you do research with AI and you don't check that research, then there might be a hallucinated case depending on the tools you use and things like that. Those things are true. But I think the problem is that when people haven't had enough experience with AI, these things seem like unbounded errors. They don't know when and how and where those kinds of things can occur. And because of that, you know, and you're a lawyer, uncapped liability is the scariest thing of all time. And I think that's how people see AI when they don't have a good understanding. It seems like there's all kinds of risks. They don't know where they are and they're just not going to deal with it because it's too much to try to figure out. But once you get a sense of how it works and you experiment with a little more, then you understand that it is not an uncapped liability. There's pretty predictable failure moments. There's things that go wrong that you know can go wrong. There's ways to defend against those. And of course, nothing will ever, nothing will ever replace just doing your diligence and making sure you check that all the cases you use do actually exist and that you actually read those cases or someone on your team actually read those cases. It's kind of the same. It's not that different than using a bunch of junior associates, except that a junior associate is pretty unlikely to ever put in a case that literally doesn't exist because they'd get fired instantly. But a junior associate is quite likely to read a case and misinterpret it. That kind of thing happens all the time. And senior lawyers have found many ways to deal with that and to help avoid that risk. And I think as people get more familiar with AI, not that they're going to replace junior associates, because I actually don't think that's really going to happen. But what I think they're going to do is learn to understand how to work with AI and similar to the way they used to work with a junior, where they have, they expect some errors and they know how to look for those errors such that they're able to get useful outputs that are better than doing the thing themselves and faster and cheaper. And that will probably be how it goes. So letting people have more experience or having people experiment more with AI allows them to figure out the risk. And I think that's going to dispel a lot of these misconceptions or limited perceptions as we go forward. Amazing. Thinking about all that you've built and the time you spent with people in the technology field, in the technology field yourself, also the experimentation you've done with different AI tools. I'm curious if there's a few lessons that you've learned from the technology world that you believe every lawyer should consider or should, you know, adopt or know about. Are there a few things that come to mind? One of the things I found really interesting is the prevalence of developer tools in the technical world. And what that effectively means is a product or tool, a lot of these are open source and free, whose sole purpose is to improve the day-to-day life of a developer. An example of this, an example of this is GitHub, which is a huge now company, but it's based on a technology called Git. And what Git is, is a version control system. And every lawyer, of course, knows the horrors of version control in a transactional or litigation practice. Software engineers have the same problem, but like times 10. Because if you have five different engineers working on one code base and they're working on it at the same time and they have to merge that code together, being able to make all of those different systems work together is very, very hard if you don't have some kind of automatic way of doing that. So a number of years ago, somebody came up with this system Git that allows you to do version control very effectively across software. And it's become broadly adopted. It's open source and free. Everyone needs it. In law, we don't really have this. And it's a different situation, of course. But in law, we don't have this same muscle about looking at something we're doing, thinking it's frustrating and then thinking of a solution rather than just grinding through it. And I think that as that develops and as we have access to more tech and tools that will allow us to do that, I think lawyers will change the way that they work pretty substantially because it's just not practical to just brute force everything. I think other industries like, you know, engineers will build a bridge. No engineer builds a bridge by just trying to stay on top of everything and make sure their juniors are being very diligent about reading all their emails. But for us, legal transactions are complicated, but they're not so complicated. You can't do it without an extra tool or without having to put everything on paper and plan everything out very specifically. There's not that many people, not that much paper relative to some things. And so I think as AI increases complexity, we're going to have to adopt more of those product management skills and build that up. And I think that's going to be really transformational for the way we practice. Incredible. What you just mentioned here, I'd love to hear a little bit more about your thoughts, you know, looking ahead, are there a few other things that excite you about, you know, the possible future of the legal profession or even specifically of legal technology? Are there a few of the changes that you think will have, you know, a big impact on the profession over the next decade? Yeah, well, I think one, everyone should read The Legal Singularity by Professors Abdi Abid and Ben Allory from U of T. It's a really interesting book that talks about the future of law and their, you know, some of the brightest minds on this topic, which is really interesting to read. But one of the things they talk about is basically that as law becomes more automated, I guess, is a good way to put it, then we won't have to spend so much time either planning around or arguing about what should happen, because ultimately law, being a lawyer, is about making predictions about what is going to happen for a client to say, hey, if you do this deal, you should be fine or you will not be fine. Right. And so what I think will happen is that over time, lawyers will be able to focus more on strategic applications of law versus mechanical ones, because a lot of the regulatory, not regulatory, but a lot of the compliance and less fun parts of the law that are just very rote and you have to do this thing because you have to report this at this time. Those things will become background noise to much more interesting and involved legal practice that provides a lot more value both for clients and for lawyers themselves. So I'm pretty excited to see how that transforms the practice. I also think lawyers will finally be able to work a little bit less, despite the fact that many of them might not want to. I think that it will be less necessary to just spend all of your time at the office or on your laptop or whatever it may be, because you'll be able to get all that information and all that kind of brute forcing that's done now will be able to be done by technology. And it'll just be you and your actual thinking smart brain. And you can only use your the smart part of your brain for so many hours a day. So I think that we'll see a little bit of a reduction in the high hours culture because people will be doing more difficult work. And that's so interesting. I love hearing that many of our listeners here are, as I mentioned, you know, early career professionals starting out in the profession. And I think you really had a quite interesting experience with your upbringing in the legal field and also the different experiences and environments that you were able to be exposed to quite early on, but also being very intentional about what you did. And based on that journey of yours, would there be any kind of advice that you'd give to early stage of career lawyers who want to build a career in the profession, even though it's changing so quickly? And you did mention something very interesting that, you know, keeping that that ongoing mind is something that might be helpful from the beginning. Do you have any piece of advice or anything else that we could share to wrap up today's episode? I think for early stage professionals in law, junior lawyers, the important thing is to try to build breadth so that you know what you like and you don't like and what you're good at and you're not good at. It can be kind of easy to, like I said earlier, get the blinders and just go forward at what you have in front of you. But then what can happen is that you get in a little bit too deep into that and then realize it's actually not what you like. And because you didn't have a chance to explore other things outside of it, you didn't know that. And you want to be able to disqualify things as your career as early as you can, because if you get to be, you know, maybe a fifth or sixth year litigation associate in a big law firm and you realize you don't want to be a partner in a big law firm, your career options get kind of limited. And those are things that you can know in advance by researching, by talking to people, of course, by understanding more about the practice and what you want to do and who you are and the life you want and all those kinds of things, which are big questions, but still necessary ones to answer. And so I think the best and most practical way to answer those is by getting as much breadth as you can, trying new things, learning about different experiences, taking different classes. If you're still in law school, don't just do all corporate if you want to do corporate or vice versa. If you want to be a family lawyer, do some corporate classes and see what they're like. It's going to serve you in the long run, because once you start in whatever area you're going to be in, you only have so much time to spend on breadth. So you want to take every opportunity you can to get that. And that's going to help you out, because once you get to the senior levels of your career, then knowing as much as you can about just a little bit about a lot of things will let you go really far because you can work with experts in those fields. And by coordinating with them, you're going to be able to make the maximum impact. That's amazing. Josh, thank you so much for making the time to come on the show to share your thoughts and insights. It's been a great conversation. I really appreciate you making the time. No problem at all. Thank you very much for having me. Absolutely. And thank you all for tuning in to today's episode and we'll see you on the next one.