Stacy Stern and Tim Stanley co-founded FindLaw, Inc. (http://www.findlaw.com) in 1995. FindLaw.com is currently the highest-trafficked law and government site on the Internet. FindLaw.com provides access to a comprehensive and fast-growing online library of legal resources for use by legal professionals, students, consumers, and small businesses. FindLaw's mission is to make legal information on the Internet easy to find. Users will find a broad array of tools, including Web search utilities, cases, statutes, legal news, and community-oriented tools such as a secure document management utility, mailing lists, and message boards.

Stacy Stern, Vice President, has been instrumental in developing FindLaw into the leading site for information on law and government. She graduated Phi Beta Kappa from Stanford University with an A.B. in Communication. She received her J.D. from Harvard Law School, where she served as an editor for the Harvard Environmental Law Review. She is a member of the State Bar of California and has written on Internet legal research and trends for such publications as The Internet Lawyer and LegalResearch.com.

Tim Stanley, Chief Technology Officer, has been a driving force in building FindLaw into the leading Web portal focused on law and government. Before founding FindLaw, he developed Web sites and databases for the legal and medical industries. He sits on the editorial board of the Encyclopedia of Law and Economics, and on the advisory board of the Stanford Technology Law Review at Stanford Law School. He is a co-founder of the Coalition of Online Journals and a member of the State Bar of California, American Civil Liberties Union, Computer Professionals for Social Responsibility, and Electronic Frontier Foundation. He holds a B.S. and M.S. from Stanford University and a J.D. from the University of Michigan Law School.

On February 14, 2001, Stacy and Tim invited BizLawJournal.com's Brian Anderson to FindLaw's Silicon Valley headquarters to discuss their background, FindLaw's history, what it takes to start an Internet business, West Group's recent acquisition of FindLaw, and how FindLaw can help students interested in business law.

Q: Can you tell me a little about West Group's recent acquisition of FindLaw?

Stacy Stern ("SS"): With the acquisition, FindLaw is just going to improve. The things people know and love about FindLaw are going to stay the same, but we're going to be able to improve because we have all these new resources behind us now. We've been adding new things to the site since we launched in January of 1996, but we're going to be able to take a quantum leap in terms of growing really fast and adding new services, because we have all these resources behind us. One example that I can give, that's going to happen pretty soon, is that FindLaw has a lawyer directory with about half-a-million listings. But, West has a much larger legal directory with over a million listings and we're going to integrate that into FindLaw. And, some of the content that we'll be adding is Black's Law Dictionary, which is the preeminent law dictionary. We have integration teams right now - people from West and people from FindLaw - working together to see how we're going to enhance and improve going forward. It's a really exciting, busy time for FindLaw.

Q: Have there been any cultural differences between West and FindLaw?

SS: West is based in the Mid-west and is a very large company. Thompson, West's parent corporation, has thirty-thousand employees and FindLaw had only fifty-five. So, there are cultural differences. But, they haven't created any problems. West is interested in keeping FindLaw as an independent subsidiary, because they feel FindLaw is a successful formula and they want to benefit from that. So, they're not trying to change things at FindLaw. It's a great question - there are cultural differences, but they haven't caused any problems.

Q: Could you both tell me a little about your personal, academic, and professional background and how you ended-up starting FindLaw?

Tim Stanley ("TS"): I was a math and computer science major at Stanford. I worked for a few years, went and got my masters degree, went to law school at the University of Michigan - where I'm from. I was actually more interested at politics at the time. The guy I wanted to work for - Jim Blanchard - lost the election to a conservative Republican. At which point in time, I went back to my Ph.D. program. [laugh] But, I never finished my Ph.D. program, at least at this time, because I started working on FindLaw. As for legal experience, I worked a little for the public defender's office and for the National Lawyer's Guild. But, that's pretty much it. I haven't really practiced law. I never did the summer internship at a big firm, or anything. I did database programming instead. I worked at public television for a bit - did some database stuff there. Things like that - not too much legal work.

Q: When you were in law school did you think you were going to practice law?

TS: No. Initially, I thought I'd do something in politics. So, maybe something with law but not as a practitioner. When Blanchard lost, I immediately started looking for something to do. I took business school courses on entrepreneurial management and venture capital finance. I kept a book, where I wrote down business ideas. Every night, I would write something in my book. As long as you're writing down your ideas, just look for the opportunity, and sort of see where it hits.

SS: Tim, I'll also add, was getting his Ph.D. in the Engineering-Economic Systems program at Stanford. He was actually going toward becoming a law professor. Then, FindLaw became such an important part of his life, that he just never finished his Ph.D. - he has about a month left on his Ph.D. Tim's thesis has been published in Santa Clara Law Review and it's won awards.

TS: I won money for it. [laugh]

Q: What was the topic of your thesis?

TS: It was on joint and several liability. [the title of Tim Stanley's thesis is An Analysis of the Rules of Contribution and No Contribution for Joint and Several Liability in Conspiracy Cases] Whether you have contribution or no contribution, contribution with claim reductions, there are a few different schemes. Posner, Landes, and Easterbrook had written a paper on it ten-years before I started working on it. [See Richard A. Posner, Frank H. Easterbrook, and William M. Landes, Contribution among Antitrust Defendants: A Legal and Economic Analysis, 23 Journal of Law and Economics 331 (1980)] But, they didn't have the information. There were a bunch of assumptions that they made that they didn't make explicit and they got to a certain answer that they wanted to get. I figured I would just write something on it because it's applied game theory. And, my law review article ended-up one-hundred-twenty pages long. I also worked with Mitch Polinksy and Steve Shavell on behalf of AT&T researching the AT&T-RBOC litigation. Then the Telecommunications Act was passed, and that ended our research. But, we still got paid a lot. [laugh]

SS: One of the other interesting things about Tim's writing is that he started this law and economics site out of his interest in the subject. He started posting papers on the Web, and people were responding to those. And, that's actually a precursor to FindLaw and it's now a part of the FindLaw site.
[See http://lawecon.lp.findlaw.com ]

TS: I made a bet with a friend in one of my Ph.D. seminars that I could do anything with algebra and calculus. He said, well you can't increase the penalties for crime and have crime go up. And, I proved it in a paper and it's on the Web now. [Tim's law and economics papers can be accessed at http://lawecon.lp.findlaw.com/02workpap/index.html] For example, assume that you normally speed only half the time. Then, the punishment for speeding goes up, so you buy a radar detector, and now you speed all the time. You just have to find the right cut-off points when that happens. But, I just did it on a bet. Ph.D. students are kind of dorkish. [laugh] A lot of my personal research and writings are in law and economics and economic theory. I'm on the Board of Editors for the Encyclopedia of Law and Economics.

Q: What about your background?

SS: My background is not quite as interesting as Tim's. I majored in communications at Stanford and then went straight to law school at Harvard. And, I took a lot of the business-corporate-oriented law courses, because I was interested in business and I wasn't sure exactly what I wanted to do. I did do the summer associate thing when I was a law student. And, I thought that it was a really helpful experience for me to understand how working in a law firm works. So, even if you decide to go into business, I think working in a law firm for the summer is actually a helpful experience - learning how do the research and things like that. They have a recommended track for corporate law at Harvard. They tell you to take: corporate, accounting, secured transactions, and tax courses. So, I took all of the courses that they recommended. Then, I graduated and I thought: there's something else I wanted to do besides practice law. I was looking around, and the Web was just starting to become popular and I thought it was really interesting. Tim and I both felt that the Internet was going to revolutionize the way people practice law. Tim had created his law and economics site. I had created a cyberspace law site that dealt with legal issues around the Internet. Then, Tim was giving a talk for the Northern California Association of Law Librarians; we prepared some materials for that talk and we put them on the Web, and that actually became FindLaw. This is also around the time Tim got involved with the University Law Review Project. [See http://www.lawreview.org]

Q: Could you explain the University Law Review Project?

TS: Sure. I did a lot of work helping law reviews publish on the Web back in early 1995. The University of Richmond Technology Law Review was the first one up. We designed a bunch of scripts, tools, and templates for law reviews to publish online. Then, we set-up a "spider" and indexed the law reviews that were online. Right now, we still send-out abstracts of law review articles to a pretty big subscriber-base on almost a monthly basis. So, if you put this article online and you write an abstract for it, we'll send it out to everyone who is interested in business law and probably cyberspace law. It's a great way to publicize your journal and get it out to a broader audience. We send out 4.5 million e-mails per month. And, at least 500,000 of those e-mails are the law review abstracts.

Q: And, how did you two meet?

SS: We're married. We meet in 1985, so we've know each other for sixteen years.

Q: How is it being married and business partners?

SS: Its great - we'd never see each other if we didn't work together. Tim has a futon here, and he probably sleeps here four nights a week. Even after we've been acquired, he's still working just as hard.

Q: What did you think you would do when you were in law school?

SS: I didn't know. There was a great cartoon in the NEW YORKER magazine, and it had these kids in front of a locker and it said: what do you to be when you grow up? One of the kids said: what I want to be when I grow up hasn't been invented yet. And, I feel like that is how I am. I had no idea that the Web would become so huge.

Q: Did you anticipate the level of success FindLaw has enjoyed?

SS: When we started FindLaw, it was more of a hobby, but it quickly became a business. We decided that we wanted to offer online CLE [Continuing Legal Education] courses. We offered the first interactive online CLE courses. We launched those in the summer of 1996. And, we launched FindLaw in January of 1996. We sold our first advertisements in the summer of 1996 as well. So, we started generating revenues that summer and we bootstrapped until 1999 - we bootstrapped FindLaw off the revenues we were generating. Then, we hooked-up with some lawyers at Venture Law Group. Jim Brock had taken Yahoo public while at VLG, we hooked-up with him, and he encouraged us to go-out and raise money so that we could grow even faster. We raised an angel round in January of 1999 - $1 million. Then, in September of 1999, we did a VC round of $10 million.

Q: How was the process of raising capital? Was it difficult?

SS: It was very easy at the time. In 1999, it was totally the boom and people were throwing money at us. I actually had an investor scream at me because he wanted to invest more money - I won't say who that was. [laugh] But, people were throwing money at all kinds of ideas and it was extremely easy to raise money at that time.

TS: For the VC round, we went from our first meeting on a Friday, we had a term sheet by the following Monday, and we basically had a hand-shake deal the next Friday. And, we had sent the VC's our materials on Tuesday or Wednesday, so that they would be there for the Friday meeting. So, it took about a week to raise the money.

Q: Was FindLaw first to market, or were there competing legal sites when FindLaw launched?

SS: We were the most highly-trafficked legal site and we have been since I can remember. Within six-months after FindLaw launched, we had won best legal research site out there. Our traffic and revenues were doubling every quarter - it was all happening really fast. So, we were the top site in our space, which made it easy to raise money. The climate is obviously a lot different now. And, there are advantages and disadvantages to both climates. When investors are throwing money at people, competitors are cropping-up all the time to enter the space. And, when it became a lot harder to raise money, there were a lot less competitors trying to enter the space.

Q: Starting a business is always a risk, how did you decide to just go-for-it and start FindLaw?

TS: Mark Andresson [the founder of Netscape] lived in our apartment building. He lived in our apartment until Netscape went public - then he moved out. [laugh] We saw what happened with Yahoo and everything that was going on at Stanford and around this area. We would see these people that you read about in the paper, and we figured we should try that, I mean what the heck.

SS: After you get out of law school, most people are relatively young, and it's a time to take a chance and seize the day. The year we started, I just thought: I'm so glade I'm not in law school right now, because if I was, I don't think I would finish. Like Tim didn't finish his Ph.D., because we were just so wrapped-up with FindLaw. Tim would be up all night anyway, but I would wake-up in the middle of the night and check the stats and see how many people had come to the site - it was so exciting.

TS: And, part of it is that we were connected at the right place, at the right time. There was a high energy level and we didn't have a lifestyle that required a lot of money. I was working as a Ph.D. student, and you know Ph.D. students don't need much. We know people that went to work with Wilson or Fenwick, they were buying new suits and new cars, and they had this debt from law school, and they got caught in this endless debt cycle until they become partner about three or four years out. Then, they pay off their debt, and now their kids need to go to college. You can get locked into that type of lifestyle. So, certainly, it was helpful that our costs were very low. Also, the cost of entry on the Internet was close to zero. We started with a $25 a month server, went to $200 a month, went to $3,000 a month, and now we have a full cage with thirty or forty servers running different parts of the site. Our monthly expenses are much higher, but we grew it out of the revenue stream.

SS: Yeah, we didn't start advertising until the Fall of 1996 and that's because we were bringing-in revenue and were very cost efficient.

Q: How has FindLaw's business model changed or evolved since its inception?

SS: When we first started it was like a hobby, but we were trying to make legal information, and services, and community easy to find and use. And, that's still our goal. We're creating a marketplace on the Internet for law and legal information. And, that's still something we're pursuing. Because we're both lawyers, the first content was more lawyer-oriented, and then we launched some more consumer and business centers later. But, I think we've just become more expansive and continued to add new services. I think that our vision is very similar to what it was when we started.

Q: Was that vision as clear in the beginning?

SS: No. It was really just like: let's see what we can do and let's make legal information easy to find. That's how we started. It has evolved and we have been much more clear about our goals. When you're raising money, you need to have some clarity and explain your vision. But, although it's evolved, there is still the goal of serving the customer, facilitating legal research, and the use of services.

Q: Were there any difficult times? Any times when you were worried?

SS: Oh, of course. Any business has ups and downs. I think that the environment for running a dot-com became a lot more difficult after the market crashed. One of the things I would do differently, if we were doing it over again, I would have grown a little more slowly. When you raise money, there is a real incentive to spend it and move as quickly as you can, and we were growing faster than our resources. There was a lot of incentive to spend money on this, spend money on that, and all the dot-coms were spending. I think we were fortunate that we didn't spend as much as some other dot-coms. Once you start spending money, it's really hard to rein it in. And, we did rein it in because the climate changed. We did that really quickly. I think after the market crashed, it was much harder for a lot of dot-coms.

TS: We had too many people and not enough managers. At the time, we were having discussions with the VC group and they were pushing us to grow as fast as possible. They wanted us to spend money on marketing - things that in the past we were extremely cost conscious about. And, that was probably not the right thing to do at the time. But, we've learned a lot.

Q: Do you think you would have started FindLaw in the current environment, as opposed to the 1990's Internet boom?

TS: The only issue right now is the ability to get linked-up - can you do that as easy? It's not so much the market as far as price and things go, it's that the entry costs to building a community and traffic are higher, because people are less likely to link-up other sites. So, you need some catch to build a community. What's that catch right now? If you were to start fresh, that would be your biggest issue.

SS: Yeah. Barrier to entry was nothing, and now the barrier to entry is much higher. FindLaw is linked-up more than any other legal site out there, partly because we've been around so long. But, you couldn't pay to get linked-up like we're linked-up in this environment. When we were starting out, we would just write e-mails to Webmasters, and everybody knew each other, and they were happy to link-up FindLaw. But, now people get a zillion e-mails a day, people ignore their e-mails. It also propagates, when you're linked-up, people look at other guides to create their own guide. So, because FindLaw is out there, it just gets linked-up in the new guides that come out. And, it provides FindLaw with a tremendous advantage, because we're not dependent on any one site for traffic. A lot of these sites that came out in 1999, they weren't linked-up and they were doing these giant, very expensive distribution deals to get traffic. We have traffic coming from all over the Web to us, so it gives FindLaw a tremendous advantage in terms of promotional dollars. It's just a different time. But, we might start a different company today if we hadn't started FindLaw.

TS: You just have to think of other ways you can build that community. Napster did it real quickly. Give away other people's copyrighted material - that works. [laugh]

Q: Does FindLaw use an outside law firm?

SS: Yes. West has general counsel and their own outside firms. But, Morrison & Foerster represented us in the acquisition and they've been representing us for a while. We highly recommend getting outside legal counsel. Even for a company run by lawyers. We did our initial incorporation and Tim did our filing for the LawCrawler trademark. I think it's helpful to have a human resources consultant when you're setting-up and hiring employees. They do this stuff everyday, if you're a lawyer, you have to go do research. You can do a lot of it yourself. But, if you're doing a financing, you definitely need a law firm representing you because the financiers generally fund people on a repeat basis. So, they know the ins-and-outs of what they can and cannot do. As a person raising money for the first time, you don't know. So, I definitely recommend having a law firm to help you do financings and other major transactions.

Q: This summer, my fellow law clerks at the SEC and I had fun using FindLaw's Greedy Associates Boards on FindLaw's infirmation.com. [http://www.infirmation.com] Do you think Greedy Associates may have influenced law firms to increase associate salaries during the past few years?

TS: Definitely. It had a huge impact as far as people being able to compare salary information. Being at Fenwick and knowing what they're getting at Wilson is valuable. Wilson recently wasn't getting bonuses. There was some commotion about Brobeck giving some bonus and Wilson and Cooley hadn't given the bonus - we got a lot of traffic from that.

SS: The boards bring information out in the open and people can compare salaries. When Gunderson came out with their big salary increase, everybody knew it very quickly, and other firms matched it very quickly. And, I think if the information wasn't flowing as freely, that wouldn't have happened across the board so quickly.

Q: What's next for FindLaw in terms of new services?

TS: I think there will be a lot more in the way of content on the site that will be freely available. And, there will be just a lot more, a lot faster.

SS: One example: we do career placement services as part of our job section. Right now it's just for lawyers, but we're adding services for paralegals and temporary placement as well.

Q: Do you see any new ways the Internet and technologies are being integrated into the legal profession?

TS: I think the main thing is that it can help attorneys find clients. Unlike the medical profession, where the doctor-patient relationship is your insurance policy, there is none of that for attorneys and their clients. So, I think you're going to see a lot more information coming out about individual attorneys - like you would see in a yellow pages ad. And, a lot more of a marketplace for services. I think that's where there will be the biggest push. It will be interesting to see how Bar Associations deals with online advertising going forward. That's where I think there will be a revolution within the legal profession.

SS: The Internet has already changed the way clients find lawyers, the way lawyers market themselves and research. It's affecting associate salaries and how quickly they adjust. It's affecting the way lawyers communicate with clients, and with each other. There are online workspaces where people can collaborate. The Internet is touching so many different aspects of the lawyer's life, because law is so information intensive.

Q: Perhaps you could discuss some of FindLaw's resources that would be especially valuable to law students and law students interested in business or business law?

SS: In our newsletters, we send-out summaries of decisions for all the Circuit Courts, the U.S. Supreme Court, and also the California Supreme Court and New York Court of Appeals. People can subscribe by jurisdiction, but you can also subscribe by specific area of law. You will get weekly summaries of the decisions that have come-down in that area. That's really popular and its viral - people get the newsletter, they like it, and they send it to their friends. Tech Deals is another popular service that I think BizLawJournal.com's readers would be interested in. We go out and get hundreds of contracts from Internet and technology companies and they're categorized into different areas. For example, joint ventures or executive compensation. So, if you want to see what some other company is doing in the field and sample language for your own agreement, you can find it there. It's kind of voyeuristic as well - it's really interesting to see the terms of these big business agreements. Also, if you're starting a company and you're doing a business development deal with some company in the space, and you want to see the terms of similar deals, you can come to the Tech Deals section and view sample agreements. And, it's categorized by type of deal and it's also categorized by company. We also have a business section with forms and check lists for people starting a new company. We recently re-designed the site, so that it uses different channels. So, if you're a business lawyer, you'll have even easier access to the services that interest you. We have outline sections - with outlines for different areas of law. You can customize your FindLaw interface by creating My FindLaw - that way you can get the Greedy Boards that interest you. You can specify what case law and jurisdictions interest you. And, we plan to continue adding valuable services to FindLaw going forward.

*This interview has been modified for clarity and brevity.