78% of storage used … If you run out, you can't create, edit and upload files. Share 2 TB of storage with your family members for ₱599/mo. INF_LIS Podcast Full Transcript Episode 130.txt 1 100% INF_LIS Podcast Full Video Episode 130 === [00:00:00] Anastasia, thanks for joining me today. Thanks for having me back. Yes, I know. I haven't had, uh, that many people, uh, multiple times, so thank you for doing this with me twice. Yeah, absolutely. I felt like I went rogue last time, so, um, we'll see what happens this time. Yeah, you're probably gonna go rogue again- and that's okay because it's always a good conversation. Yeah. True. Um, so okay, those regular listeners may have heard your intro last time, but for those that, uh, that h- don't know your background, why don't you just tell us a little bit about yourself? Yeah. I feel like I've been sort of dancing around the c- the legal ecosystem to try to impact change, um, and get us to practice in a way that is enjoyable, right? So I practiced in Big Law myself. I was international tax lawyer, um, at a global firm, and then I went into legal tech at Project A Law Company and was there in a variety of roles. Um, and then went into a firm on the [00:01:00] practice management business development side. Went back into innovation on the, uh, at an A- ALSP leading talent and recruiting, so seeing the in-house lens of things. And, and then s- spent some time in legal education, so seeing what we see from the practitioner side and trying to create a feedback loop. So I built a, a large leadership and innovation program at my alma mater at Yale, and I was also the chief innovation officer at the University of Utah S.J. Quinney Law School. Um, and then I went back into legal tech, so I was a legal futurist, um, most recently at Filevine, and I've spent the last year developing a consultancy around sort of how do we adjust to what these changes mean for the profession with AI. I think we dove in, which is great. I love that we took on the challenge of new technology, and I think we're realizing that it's much harder, uh, and different than previous technology that we've seen in the past. And so it takes a bit of thinking and a bit of restructuring. [00:02:00] Yeah. And you know what's interesting is like we, we, we know it's different, but we, we're not quite sure how different, and I think there is, you know, on the Gartner Hype Cycle, you know, I'm not sure exactly where we are. I don't think we're at the peak of inflated expectations. I feel like we're coming down the slope a little bit. We're not quite in the trough of disillusionment, um, and then it's the plateau of productivity. They're really creative names they have. I, I'm not sure I believe those anymore, right? Like, so I used to buy- Yeah ... into all of these frameworks and systems, and I think in many ways AI has changed that. I think it's a different game, and I think we keep trying to find, um, heuristics and parallels that we've used in the past. I just don't think they apply in the same way, and I think that's part of the challenge right now is we're all looking for tools that we've used before, um, and none of them are really perfect rubrics for trying to navigate this [00:03:00] particular cycle. And that's really frustrating, especially, you know, if you're, if you're used to using heuristics and systems like that. You know, and you and I are friends, and we trade texts every once in a while about industry stuff, and you and I are a little bit-- well, have slightly different views on this, and it, it might be fun to jump into that in the spirit of going rogue. Yeah. Right? This is not even on our agenda- Let's do it ... but this is, this is really good stuff. Um, so I think you're a little more Um, I guess pessimistic about how this may ultimately impact the tech that is broadly the economy and more narrowly the, the legal industry. I tend to be more optimistic, and this has been a more recent phenomenon for me. And the reason I'm more op-optimistic is I'm seeing early signals that the tech isn't there. Um, it, it's showing promise towards being there, but, you know, when [00:04:00] this tech first got introduced, I'm a former engineer, so I used to work at Microsoft and spent my early days as a programmer, and so I'm pretty-- I'm, I'm very rusty. If I had to go build a modern web app now, I'd fall flat on my face. But, um, I understand tech and large language models, I understand how they work, I understand their mechanics, and there has always been an inherent ceiling in my mind as to how far they could go for m- a number of reasons. Um, but at the top of that list of reasons is because language can only go so far in describing reality, right? And that's why, you know, really smart pioneers in the AI industry like Yann LeCun and others have now kind of pivoted towards world models that learn visually, right? Which is a completely added dimension to the language dimension. And I think we're starting to bump our head a little [00:05:00] bit on some of the inherent limitations, including the limitations around language. You know, legal Is a great example of the, of the limitations of language. Like any lawyer or any consumer of legal services has seen how difficult it is to, um, construct language around the concepts that you need to encapsulate in legal work product, whether it's a commercial lease or a stock purchase agreement or-- It's, it's verbose, it's, um, how legalese came to be another language. And, um, I do think that we're starting to see these early signals. One example is Meta. Like, um, Zuckerberg just came out and apologized to employees and investors and basically said, "Agentic isn't anywhere near where we thought it would be in terms of replacing headcount." And, [00:06:00] um, so I, I, I tend to be a little bit more on the pessimistic or optimistic end of the spectrum for that reason. And I also think that there is so much added complexity that this technology is going to thrust upon our world, like self-driving cars and robotics, and all of this is going to create tremend- a tremendous amount of, uh, regulatory complexity. And the-- now that at a minimum, the, the tech can, um, speed up some of our legal processes, it's going to reduce cost eventually. It hasn't done it yet, but there are AI native firms delivering flat fee work out there, and that is going to lower the cost in the cost-benefit ratio that business owners like me evaluate when they decide, do I roll the dice on this or do I send it to a lawyer? And that lowering of the bar is going to let more work flow and ultimately, um, [00:07:00] harvest some of the benefits of Jevons paradox. So that's my pitch on why I think it's not going to be a, you know, nuclear bomb on the economy and our industry. What is your take on that? I think it's slightly different. I'll put the legal piece to the side. So I agree with you, actually. I, I don't think the tech is there, and I think that we've, we've seen that over and over. I think that was the first phase of my cynicism. I was a huge fan when this all came out, uh, and I thought it was gonna solve, uh, all of our problems, uh, automate work that we don't like doing, uh, cure cancer, all the things. Um, and then you saw it being Not great, right? Like, the tech would make mistakes, um, and there would be excuses for this constantly, but it wasn't living up to the promises. Um, my concern with the bigger picture economy is that, um, people are making a lot of stupid decisions. Management is making a lot of stupid decisions. And so yeah, the tech's not there. Why did we jump to, [00:08:00] to redo reductions in force before we even knew that the AI would work, right? And I think this is where, like, we were trading some, some back and forth on this, but, like, what, what drives me nuts is we'll say, like, "Okay, well, this company got rid of 8,000 people, but they're gonna hire them back next year." Are they the same people? What is the damage to those people? What is the damage to their careers, right? Like, are they able to get a job quickly after that fact, right? So, I just think that it, it's been accelerating a lot of, um, shortsighted decision-making by leadership, uh, in how they handle talent. And frankly, like, employees remember that stuff. If you're gonna lay them off because you think that AI is going to change how you do things, they're gonna hold onto that because it's a huge disruption in their lives, and you see it across the board, right? Like, Meta rolled out this new AI, um, AI feature that everyone disabled because frankly these companies need to stop making opt-in the default. Um, but, like, what a [00:09:00] stupid idea. Like, somebody inside probably said, "Hey, this is a dumb idea," and they still said, "No, we're gonna do it." Just like we had those weird, like, metaverse, uh, situations where you had the, the glasses and you could be a Sim. You know, like, these are not, like, helpful things to society, and there are enough smart people who say, "Let's not do this." But at the same time, there are consequences when products like that get rolled out and when things don't work and people lose their jobs, and we've seen this across the board, especially in public companies who are anticipating, um, a, a reduction in human labor with the advent of AI and not seeing that, but they're making decisions based on that with regard to their human capital. They're also forcing people to use a tool that may not actually fit in to the workflow of what they're doing, right? They're not really thinking about adoption in a thoughtful way. Um, but in legal, yes, I agree with you. I think, I think the, the game changer for us in legal is it does allow clients to be able to have leverage, and so I've [00:10:00] said this before, I, I think that in, in the economic system that we have, it allows, um, law firm lawyers to hold their clients hostage to the secrets of how law works, right? Like, we get this monopoly on how to navigate the legal system, and because our clients don't know how to navigate it, we sort of get to be the gatekeepers. Now AI is breaking that down Right? And you're seeing really savvy legal departments, large legal departments, right, like Ford, um, coming in and doing really innovative and exciting things. And so when I sit in conversations with in-house lawyers and they're saying, "I'm trying to get rid of 90% of my outside counsel work," yeah, now they can, 'cause they're no longer held hostage by this. They now have technology that will allow them to take this in-house, build their own tools, create their own, um, knowledge libraries, and not be codependent on their outside counsel who have for years have been ignoring the [00:11:00] feedback that, that clients have been giving them about being dissatisfied in the service that they're getting, including the constantly increasing fees every year. Yeah, and I do think that is, uh, the power dynamic shift, and I don't think it's gonna be a binary zero to one shift. I think it's going to be an incremental shift in Mm, uh, purchasing power, leverage between buyer and seller. I do think that is going to rebalance itself to a certain extent, but I also think that there is enough latent demand, even within the corporate community, which by and large is, you know, they're the largest buyers of legal services, is really the Fortune 500. Um, so I, I, I agree with you. There is going to be a shift, but the, the tech-- You know, much of the work in the legal world, there's no formal definitions around operate the company work versus bet the company work, [00:12:00] but I think most people agree that somewhere around eighty percent of legal work is operate the company, twenty percent is bet the company, right? So operate the company are things like, you know, wrongful termination suits or contract review, right? Fairly low stakes in the bigger picture matters, and so much of that stuff, you know, I'll use us as an example. So we-- the, it, we have done, you know, we have a third of the AML 200 as clients. So we have negotiated our, it's, we call it an SLSSA, software licensing and software agreement. We have negotiated that, you know, sixty-six times, and unless there's a real curveball, we manage the change. If we're just redlining a couple of words here and there and there's not a foundational change to the meaning, um, and even if there is, we, we sometime... But now that you've got companies like Crosby and General Legal, um, you know, doing this work for five hundred [00:13:00] dollars a co- Like, I don't care how simple the change is, I'm gonna send the work, and that, that is net new revenue that law firms never saw. So, um, I do think, again, that's where the cost-benefit ratio changes and ultimately lowers the bar and more work flows. So how do you think about that as offsetting some of the dynamic that you described? I, I think it's gonna depend on relationships, right? Again, I, I do feel like we've been in this codependent triangle between junior attorneys, partners, and outside clients, um, where everybody has a reason to buy into the system that hasn't worked or that is still causing harm. Um, and I think as soon as one of those people finds a way out, I think the triangle breaks, right? Uh, and so yeah, sure, there might be additional work if you have a good [00:14:00] relationship, right? But if you have found a way to pull more and more of this in-house from someone with- who hasn't really cared about your concerns for a long time and you've just had to use them, I don't think it's gonna, I don't think it's gonna happen, right? And yeah, they might find new relationships in new firms that are able to charge less and, um, hopefully focus more on the actual relationship with the client, 'cause I think that's the fundamental piece we just don't talk enough about. Um, and there could be, in the aggregate, more work. Um, but I just think, I think the entire cycle breaks down once you allow one of those parties to get something that they want that they haven't been able to get in the old system, right? Like, I also think this might start happening with associates. Like, associates end up choosing firms based on prestige and, and compensation, and I think more associates are gonna see paths that are hybrid, uh, with AI, and they're gonna find alternative firms or they're gonna start their own thing, [00:15:00] um, or they're gonna go do something completely different, right, that is able to pay, pay off their loan burdens. And you're not gonna have as many people doing the work. We're already seeing this as, as senior associates and partners complain about how the I- AI is able to replace so much junior work. What happens to your firm when your, your talent pipeline dries up? Like, are you not thinking systemically, right? Like, for them, it's, "Okay, well, how do we train them up to be fast enough to be mid-levels?" It doesn't happen that way. It's mastery, it's time and friction, and you have to actually invest in them. But something bad happens to your business model when your talent pipeline dries up Yeah. I mean, it definitely changes the shape of the triangle, um, or the pyramid rather- Uh-huh for sure. But you, you bring up a really good point, and that gets us back to our agenda, which is the people aspect of this component. So another reason why I'm an optimist in terms of what the net impact [00:16:00] is going to be to our economy in the, in the legal industry, um, at large, is because human change is so incredibly difficult and takes so much time. The tech could be there today. It could have been there a year ago, and it's not. But if it were, there is so much human change necessary that creates friction towards rebalancing scales and transforming industry, and mu-much of that work is cultural, right? Like I always talk about The things that have to change inside a law firm that are really hard and that largely isn't being done yet. Um, you know, the cash basis partnership model that doesn't have retained earnings to deploy towards capital projects. Um, the internal firm compensation model that a- lawyer identity is completely built around, right? Lawyers have two KPIs. It's billables and originations, and that, those are the only things that [00:17:00] matter, and one of those is changing, right? Namely billables. It's the client engagement model. It is, um, I mean, just everyth- these things are so deeply rooted inside a, a, a law firm that, you know, that is going to create friction towards us getting to our future state that will slow things down. And yes, you bring up a great point about in- in-house enabling themselves with this tech, but I have in-house people on the show. In fact, I just had someone from Google, an in-house lawyer, um, she's in their M&A group, uh, Grace Chediak, and she was a fantastic guest, and she talked about she's at Google, and they're not even doing-- She has this idea for agentic redlining, but they're not ready, right? That's Google. Um, so I, I think that the tech is not going to be the driver in the speed of this transformation. It's going to [00:18:00] be people, and people are slow learners relative to tech, right? I mean, it's like- Yeah ... cu- yeah, cultural change is the hardest change, and I think that's gonna give us more runway to adjust because I don't care how fast the tech goes, the people change has to happen and work has to get redesigned based on first principles thinking, and that's really hard stuff to do. So I think it gives us more runway. What, what are your thoughts on that? Uh, I, I, that's actually exactly because of the people piece, I-- that's exactly why I'm cynical. Um- Right ... so one of my degrees is in psychology, and I have spent 25 years working inside legal, um, organizations and institutions, and part of what keeps me here is just the absolute dysfunctional decision-making that happens, the constant choices against interest, um, that, that happen in every organization where you'd think the logic would take you in one direction, but it takes you in another. And I think part of that challenge is [00:19:00] legal is very bad at culture currently, right? Like, we used to have an ethos around how we helped, uh, as advisors and provided judgments for clients, and we were rooted in, um, in ethics and principles. That's far less so the case as the industry has begun to dominate the profession, right? Like, less vocation, more business. Um, and I, I've just watched so many bad decisions being made that don't even actually make sense from a business perspective, right? Like, you could just give a law firm managing partner an HBR article, and they still are gonna go against all the data that every other company has seen work. Um, and so culture change within legal has been a personal obsession of mine as I've gone into a lot of different organizations, sometimes as a vendor, sometimes as an employee. Um, and I think we're deeply insecure and deeply selfish as a profession now, which, uh, wasn't how we got built, right? Um, [00:20:00] and it's hard to watch because to your point, yes, like origination and billables. It doesn't matter if my associates are physically expiring Right? Like, people are actually being harmed in a lot of these organizations. Um, and we have mental health days, and we've got little workshops about breathing, and we've got pizza parties, but, like, if the entirety of the thing is set up for disregard for the beings in it, it's going to demolish people, right? And it's just gonna go through people, and the response is, "Well, that's just business. It's the pace of business, right? Like, we need to be responsive to our clients' demands." Um, and so I just think that they're gonna continue making bad calls on, on culture, right? Like, you see it in law schools. Like, the incentives are centered around tenured faculty. And so we can talk about all kinds of really cool programs. We can have committees who, who wanna be involved in this, but if people are not on the same page and they're not implementing this in every single [00:21:00] class, and the institution is talking with one voice, which is culture, right? If people are not on the same cultural page, it's not gonna happen. And so because we set up these institutions and organizations to center the money-making people, the scholarship-making people, it forgets everybody else in the system, right? Like, it allows you to betray the other people in the system, and to the, to the detriment of the organization, right? And we still continue to make bad choices. Like, I would regularly sit down with practice group leaders and managing partners and sort of explain the math on training and the importance of investment, and they still just would shrug at me, right? Because they're taking home slightly more every quarter, every year, and they don't feel the pain of the frustration of their associates or having to replace people and having their mid-levels or their seniors retrain people, right? Like, it's just not hitting them because they are very [00:22:00] self-centered. Like, I keep analyzing, like, what is the, what is the bottleneck in our system? And I think what I keep going back to is, like, partners, right? Partners will continue sort of centering themselves in this. And sure, yeah, the structure is set up for that, but they're also human beings with responsibility, and they're choosing not to take responsibility for the people who they are responsible for, the institutions that they lead, right? And the profession that they're stewards of. And so I just... I think a lot of the, um, the regular principles we use when we look at organizational dynamics don't seem to stick at law firms. Like, we seem to... I- if we can screw it up, we're gonna screw it up, um, because we think we know better Yeah. You know, this is, um, what you're describing, I think, is there is a natural tension between short-term and long-term thinking, right? A lot of the ideas that you're describing are long-term concepts, right? And [00:23:00] legal doesn't have a monopoly on that tension. So I spent 10 years at Bank of America, and I was primarily in risk management roles, but I had a front row seat to every aspect of the business. I was in corporate audit for years, so I used to parachute into different lines of business and evaluate their risk management processes. I mean, we would look holistically at the business, not just like, what are your security controls around your IT? We would look at people. I mean, this is way before COVID. We would look at pandemic risk. There's all sorts of business continuity- Yeah ... um, scenarios that we would test against. And, um, in the investment banks, the, the exact same dynamic exists, right? So to go from associate to VP in an investment bank, first of all, in a major investment bank, you gotta go to a ranked MBA program, not, you know, one down the street. They're not created equal. You have to work yourself into the ground. It's [00:24:00] actually, there's a lot of parallels between what the career path of investment bankers and lawyers, and many that actually finally get there to VP and then asen-- um, um, uh Managing director managing director, um, you know, are, they have this mindset of, "Hey, I had to go through it, now you're gonna have to go through it." A-again, a similar kind of scenario. This is just the way the world works. And I think those, th-those, that tension, it, it's really a, a, a capitalistic concept that, you know, capitalism has, um, conflicting objectives sometimes, and the long term and the short term economic interests of organizations are oftentimes at odds. And a lot of shareholders, it's, that's why a lot of companies stay private, right? Because the shareholders demand bottom line performance, even if it's at the cost of [00:25:00] l-long term performance. Um, so I see that as a huge trend, again, not just in legal, and, um, I don't really know the answer. Do you have one? Yeah. I mean, I mean, so I was a, I was an investment banker shortly after I was a lawyer. Um, and I think, uh, those of us who are high achievers sort of run toward the windmill, um, thinking that we'll be the exception. Um, and I, I mean, I think my answer is, is frankly more humanities education, um, in, in college and in law school to help people become full selves, right? To take care of others and still be productive, um, but not be productive to the detriment of your community, um, and to the detriment of your colleagues, and to understand how to hold boundaries around those things. Um, I don't know how well you can succeed, right? 'Cause I think, I think finance, law, I think these are highly sociopathic, uh, institutions.[00:26:00] I think tech is the same way, right? You put a bunch of hard-charging people together. You oftentimes have sociopathic leaders who have a lot of codependent people around them. Um, I, I think you need people who have that mindset to ignore their body's signals when they're overworked and they're burnt out and they haven't seen daylight and they haven't interacted socially with people outside of who they have to work with on different things. Um, I think we have to rethink the nature of work, uh, especially, like, when you look at all of our in- economic indicators, only a few people are doing well Um, and that just doesn't work for a society long term. Um, you need to find a way to make sure that everybody has an opportunity to do well, um, and that there are safety nets in place if something goes wrong, especially with people who are vulnerable or not able to participate in the economy in the same way. Um, and we've sort of been... I, I think we used to give lot-- lip service to that, and we used to have some institutions around that. I think we've [00:27:00] become a little more careless about it. Um, and so it, it, I, I think it, it has to naturally break down for us to rethink what the structure looks like. How do we wanna work with each other? How do we wanna be in community with each other? What should our society look like? What do I owe you? What do you owe me in the social contract? I think we're gonna have to have a renegotiation about that because I think where we are right now has created a lot of tension and has created a lot of, um, misfortune for a large number of people, right? If half the country can't afford healthcare and we're here talking about these multi-billion dollar valuations for AI companies that still haven't proven themselves, uh, to actually be able to deliver ROI, like something's off. Something's off, and I, again, I'm not a policy wonk, so I can't give you the exact answers there. But I do think we're actually going into, into a re- renegotiation of some sort socially, um, and economically, and we'll see who ends up getting leverage, right? I think AI is an incredible [00:28:00] tool for leverage for people who wouldn't have had access to these systems in the past to build new things, um, be far more entrepreneurial, find arbitrage opportunities to be able to help people and make a living. Um, so we'll see where that gets us, right? Like, is that gonna be enough of a wave to counter the sort of hegemonic power that large corporations tend to hold within our economic system? You know, and, um, I'll tell you what's not the answer in my mind, and that's the Europe model. Because Europe really tried to address many of the concerns that you're describing, and they have failed miserably. Uh, Y- Europe is in a complete mess right now. Um, so GDP from post-COVID, they are up 5%, barely i- in lockstep with inflation. The US is up 15%, three X what Europe is. Their, their infrastructure is in tatters. I was just over there, um, a few weeks ago, and they had a heat wave of like 90, low 90s, which is funny to us here. Um, their [00:29:00] infrastructure completely breaks down. Their rails get hot. They have to do like a th- knock off two-thirds of the capacity of the trains. Um, people are on vacation all the time. Like, you know, the pendulum swung too far in the opposite direction. Um, I, I... There's not anybody who could convince me that the Europe model is, is the way. It's, it's not. Um, but I look at our model, and doesn't seem to be the way either. Maybe there's some, you know, in between, um, I don't- But that's what I mean with, that's what I mean with renegotiation. You know, I think- Yeah ... I think we, we know that people have, have a lot of negative sentiment toward AI, and simultaneously we have regulators who refuse to regulate AI, right? We have federal government coming in and trying to stop states from regulating their, their own AI, um, uh, systems and policies, right? So I, I, I think that's gonna be a tension that's going to hit, um, as, as we think about how we do this safely, because I think there are clearly a lot of interests who wanna be able to [00:30:00] have no guardrails as this develops, even though it has real consequences. I live in a state that recently had a lot of national controversy about a data center that was gonna get put toward a lake that is at risk already. Um, you know, a lot of communities are pushing back against data centers, and it, it, there, there is a cost to this. And like I said, there's going to be a renegotiation here about for whom does society work, right? For whom does the economy work? And for many people, the, the European model isn't the answer. Um, for many people, the US model isn't, isn't the answer, right? Like, simultaneously you have China making huge advancements and making large investments in, um, in renewables, uh, ahead of everybody else, and slowly, you know, passing people by. Um, and, and that, that is the benefit of comparative analysis, is being able to look at different countries, different cultures. 'Cause again, like, what happens in another country is not necessarily gonna work here 'cause we have a different culture, [00:31:00] um, and people may not get, get on board. But it, I think we owe it to ourselves to look at other models and see the trade-offs of what's, what's working and not working there versus saying, "Hey, there's a piece of this I really don't like. I don't want any of it." Uh, we, we clearly have a monopoly on this. We don't wanna have a discussion with our population about the, the negative consequences of this. Um, I, I think we have to go back to more consensus, right? Like, there, there is an opportunity to hear more voices about this, because I think the alternative is getting to such a friction point that you have a much less, um diplomatic negotiation of what happens next. I'll put it politely that way, right? I think that there's gonna be such friction, such tension, such acute anger about how things have progressed that I think people are gonna make really hasty decisions. Um, and I don't wanna be in that dynamic. Like, I would like to be in a much more diplomatic, let's figure out how this works [00:32:00] situation. And as lawyers, like, our job is to navigate this process for society, right? Like I, I say often, we are the stewards of society. We know how the laws work. We know how the systems work. We're trying to uphold the structures that allow us to do really hard decision-making sometimes. Um, and we need to be part of this dialogue, and so I am constantly surprised by the lawyers who don't wanna learn enough to be able to have an opinion or to help guide this dialogue because they're the ones who are equipped with a specific kind of education to move through thorny policy issues Yeah. Well, um, as we're looking at models to adopt, um, the Europe model didn't work in Europe, so it sure as hell isn't gonna work here. Um, and I think all of these models have trade-offs, and I can't name one place who has it figured out, right? It's, it's, it's a series of trade-offs. So, you know, the Europe model is, um, very regulatory heavy, and many [00:33:00] startups move to the US to- Yeah to do business because of the amount of friction. Um, you know, you talked about states enacting AI legislation. That's another tension that has to be managed. There's no simple answer to that, right? Um, having 50 different states with 50 different sets of rules puts us at a competitive disadvantage against adversaries in the space like China that are full steam ahead with no regard for anything. So how do we- But plus also, like it's technology, right? It's technology in the ether. Like, how do you expect to regulate technology that doesn't know state boundaries, right? Right. Like, that's why like I think it's bizarre for when we're looking at tech regulation and have it, like having it be tech spec- I mean, state specific. It becomes very difficult to enforce, um, especially as people wanna create workarounds on a regular basis with VPNs or something else, right? Mm-hmm. Yeah, exactly. So I think it's a series of trade-offs that we have to [00:34:00] evaluate, and there is no perfect answer. Nobody has it figured out. I mean, you hear politicians point to examples all the time. Yeah. Um, Bernie Sanders talks a lot about, uh, I think it's, is it Denmark? It's one of those Scandinavian countries and, you know, this is democratic socialism and the, the leaders in that say, "Hey, don't use us as an example. That's not what we are." Right? So I think the, the political interests really skew the dynamic in terms of, you know, and politics is a mess everywhere. People-- You know, every time I fly to Europe, I usually get lectured on, especially, um, in the UK about what a, you know, what a joke our political situation is. Well, wh- when I was over there, the sixth prime minister in seven years, um, had resigned, and they were up for a new one. So guess what? I didn't get any lectures this time, but I normally do. No, but again- So the- Like but, but everything, everything is being questioned, right? I think this is- Yeah ... part of a larger [00:35:00] thing dynamic that's happening right now where, you know, our representative systems are not reflective of what they say they are, right? Our economic systems are not reflective of what they say they are. And so there is all of this energy fomenting, and I think there's a deep desire for an alternative solution to what we've seen before, or at least what we have experienced as a society living now. Um, it, and we, we want better, right? Everybody wants to do better, um, especially because the certain- the current circumstances do seem limiting for a lot of people as far as what is available within the economy, what is available within society, um, our, our disconnection from each other, right? Like, the way that technology has played a role in our ability to build community, right? Like, the fact that people aren't reading. Like, that is so crazy to me that we are, what? 16% of people, um, reading a book. Uh, that- I br- I saw that. Yeah. Yeah. You know, and, and so, like, I, I, I think we're seeing all of these pieces that [00:36:00] were fundamental to a representative democracy, um, fall away. Uh, and we're seeing a lot of discontent, and we're seeing political leadership that isn't necessarily invested in solving those problems. Um, we have a lot of influence, right? Like, you look at the, you look at the AI and technology lobbies in Washington, it's a lot of money, right? It's a lot of money going toward, um, removing guardrails for innovation. Uh, which sure has, sounds really good, um, but we need to balance those with the potential harms, and we have to be really thoughtful about what we're putting into the system because frankly, we can't take some of that stuff back, right? Like, you look at what the, what the cost is with these data centers, you can't run the tape back Once you do this much harm, it's really pretty difficult to go back to the state beforehand. And I think the same with, with the economy, right? Like, if you are gonna keep laying people off because it increases shareholder value because you're not seeing real ROI with this technology, you're gonna create a lot of bad will in, in the workplace [00:37:00] systems, and people are finally gonna have enough, and they're gonna go start their own thing, or they're gonna work for people who actually respect them, and it's gonna be harder to find corporate employees for large organizations. Like, the sentiment is gonna, again, foment, um, and we get into another renegotiation. Um, so I'm, I'm really curious to see what happens with legal because I've seen several of these iterations, right? Like, I lived through the financial crisis. Um, I was a casualty of, of those decisions that were being made at that time. Um, I saw what was happening in 2020, '21, right, where we thought that there might be a downturn, but lawyers were actually busier than ever, and there was a huge talent, uh, market fight, um, and some concessions being made by partners toward associates. And then you're seeing it again now, right? So associates sort of don't have leverage right now with AI doing a lot of this work, but they simultaneously wanna be able to go and do other things that are, are good opportunities in technology, right? So a- all of this is being, [00:38:00] um, reconsidered as far as how the system needs to look, and I'm curious whether legal will participate in this or do what I think they've done before, which is try to weather the storm, right? Let this pass. Let whatever is happening in the economy, it's, it's, it's beyond us, and we'll just respond to our clients and keep making the same decisions. But I don't think it's a smart decision to hire zero Ls who haven't even started law school yet, where you have zero sense of, of their competence in law firms. Like, I thought a year of experience, uh, in law school wasn't enough to make a decision around a summer associate, but now you're making decisions purely based on their undergraduate experience and the school they got into? Yeah. Yeah, I know. That makes sense. And, um, you know, uh, I wanted to-- We're almost out of time, and I wanted to make sure we talked about something that you and I have kicked around quite a bit, which is like these legal AI companies, their valuations, and what the implications of those valuations [00:39:00] mean. And, and, uh, it's not getting enough discussion. It gets touched on every once in a while, but, you know, I, I think that there is no way at, you know, an eleven billion dollar valuation for a company like Harvey to make their investors whole without fundamentally, not just, you know, uh, on a small scale, fundamentally offsetting law firm revenue, right? And that could come a number of ways. They could stand up a, a legal service entity of their own. They could enable in-house to keep the work internally rather than to external counsel. Um, there's a number of ways, and you see them, you know, hiring much of the, the really critical talent in the, in the ecosystem, like the legal engineers of the world. And I'm looking at law firms and I'm going, "You're letting," uh, uh, and I know several of these people, really smart folks go to Harvey, and they're gonna sell you that time back [00:40:00] at three x the cost, and you're gonna put all of your processes and critical data into this system that ultimately might be a competitive force against your business And I'm looking at law firms like they've got three heads. Like, you should be that-- To, to do that, to let your cr- critical talent go, to not make the investments internally to keep this within your four walls seems like absolute insanity to me, and it's still happening. What's your read on it? Uh, I think it goes back to what I said earlier, which is like, I stayed in this, uh, in this space for this long 'cause it's just so wild to see such smart people make such dumb decisions, right? Like, it just, there is no... Like, the critical analytical thinking that's being used to help clients solve problems just doesn't get used in the operation of the firm, right? So to me, it's wild that they sign three-year contracts without really understanding what they're doing. It's wild they d- didn't ask questions about where the data goes, right? Or put parameters around... [00:41:00] Like, you negotiate contracts for a living, right? You protect your clients for a living, um, and you're still making these choices because you're trying to compete with peer firms around who has which toys. Um, and then you're in this situation where st- like, informed, important information is locked up, like you've chosen not to build, you've chosen not to invest. Um, and, uh, the, the legal tech firms, because they have so much money, are able to buy out all the talent within, within the system. And I don't... Like, I mean, I, I'm, I'm happy that these companies are doing well. I think it is temporary. I don't think that their business model actually shakes out to what they're telling us it's going to be. I agree with you. I think they have to become something else. Um, I also think there's too much money in, in entrepreneurship right now. I think the VCs have too much money, and I think they're putting it toward everything. There's a fantastic piece in Harper's Bazaar from a few months ago about boys in Toyland that talks about just how much VC money is going toward companies that don't even have a proof of [00:42:00] concept, right? Where they're just rewarding, uh, uh, agency and, and energy. Um, and so I think legal has become part of that, that casualty. I am just surprised that lawyers haven't woken up to this given that they have been part of these technology contracts in the past. And I guess maybe before they just deferred to their IT heads, um, to be able to make these decisions and the technology wasn't as, um, n- potentially dangerous, right? Or, or potentially had the consequences that, that AI has now to their business models. Uh, but I, I see a lot of, um, I see a lot of, uh consequences coming soon. Yeah. I'll just put it that way, right? Like, we're gonna, we're gonna see a lot of the errors of these mistakes come to the fore, and we're gonna see who was paying attention and who was not paying attention. And I think many firms are trying to make up ground by now paying, paying more, um, experts around [00:43:00] this and focusing more on change management and implementation. But I- but all the things that you named are at the core root of this, right? Like, you didn't ask some of these fundamental questions, and you didn't take the logic to its end, right? Like, my friend Owen McGran talks about this all the time on LinkedIn, is like, how did you not see this, right? Like, your job is to logic this out to the end, and you didn't, and now you're sort of surprised that the, the people you locked yourself in with are servicing your clients. And so there's this natural competitive piece, and now you're three years behind, four years behind on building Yeah. Uh, t-tot-totally agree, and, um, I hear you on the valuations and the amount of money flowing into the space. Uh, it was Mira Murati, she was like the former CTO at OpenAI. She started a company and had nothing and got like a $12 billion valuation. Yeah. You know, that is a, a real y- you have to do some mental gymnastics to wrap your head around. But that's why I say [00:44:00] the economy's broken, right? Like I, like- Yeah ... this is why when we go back and forth, I was like, I look at these big economic indicators, like these are not businesses with a product yet. Mm-hmm. And the valuations are so high, and the money keeps pouring in even as they're in the red, right? Even as customer feedback isn't there. Everyone's like, "Sure, it'll get there, right? As long as it has AI, it'll get there." And so when we have the adults in the room, which I'm hoping are the leaders of the VC companies and the people pouring money in, including law firms, right? Including law firm partners who are putting money in. I am just always shocked how smart individuals are not using business fundamentals to make decisions around investment, um, because that's what we're seeing, right? We're, we're seeing a lot of that activity, and I do think it, it causes a little whiplash among employees, among the public in general, um, and it shifts, shifts the rules of the road. You know, when I see, and I'm seeing more of this lately, when I see law firms, and I have nothing against [00:45:00] Legora or Harvey, like I actually know both the CEOs. I think they're great guys. I think they're good businesses. They got good people. Uh, nothing against them. But when I see, you know, when they released their portal product, what Legora did, and Harvey released Shared Spaces, the first thing in my mind, and again, I have a risk management background, so I tend to look through that lens. Like, wait a second, we're in the first-- we're in the top of the first inning in this ball game, and you're gonna make your practice of law solution that you don't know is gonna be a great fit or even if it's gonna exist in three or four years, you're making that client facing? Like- Yeah, why not? Let's see what happens you're put-- Yeah, man, you're, you're putting a ring on that vendor's finger- Uh-huh ... and l-like where is the operational risk awareness inside- Yeah ... the law firms to go, "Wait a second." Like, all right, if we gotta be... I gotta be able to hot swap these things, right? As one gets better than another, or I decide to dir- go direct anthropic like Freshfields is doing- Mm and I wanna build this tech out myself. Wait a second, I've just made my-- I just [00:46:00] created a dependency that I have to go reset expectations with a customer. It's very hard to do. They don't like it, and they are knowingly putting themselves in this position, and it's a head scratcher to me. Like, do I have a dog in this fight? I do, because I sell an extranet product that's not tied to any AI other than Microsoft's, which I think is the right path. But um, yeah, I'm just like, why, why are you guys putting rings on vendors' fingers, whether it's signing a three-year deal- Mm-hmm ... or making your solution client facing? That is creating operational risk for your business, and they c- it, it keeps happening. Yeah, this is where I go back to, to the yoga of it all, right? So I've been doing yoga for 22 years, and I've been teaching for 10 years. Uh, and what I see in these high demand environments that I've been deeply embedded in is just poor decision-making. When people are too busy to take a pause, take a beat, really think about what's happening just because they have such high demands from their clients, their colleagues, uh, their associates, right? There's just too [00:47:00] much pressure on them. You start making bad decisions. Like, it's in all the organizational psychology, it's in all the individual psychology, um, research, and that's where we are. We've reached that l- that, that, um, that, that ultimate point where human minds can't function well at that level, and we're seeing law firm leadership do this. And because it's just accelerated like a frog in a, in a boiling pot, right? Like they're, they're in a really tough space. So as much as I give law firm partners a hard time for not making the right decision, I really feel for them because they have too many pressures and they have no release valves that are healthy. Um, and they are struggling to make good, sound, informed decisions because their brains are in hypervigilance, triage, urgency mode. And so they're going to make a lot of mistakes, and that's what we're seeing across the board. Um, and we'll see how costly those mistakes are. Um, [00:48:00] but this is what happens when you put really smart people in these kinds of situations. Like, nature will take its course because your brain just can't function under that much pressure. Yeah. No, it's true, and, and, and I give, I give folks a hard time as well, and I understand there's so much FOMO, and law firms are so far behind, you know, really on the cultural aspects. Like, you know, another thing I talk a, a lot about is how the practice is at the center of the universe for a, for a law firm. And historically, that's been probably the right perspective, right? That's the rev- that's the revenue engine of the business. But guess what? All of those business of law professionals that were once, um, secondary on the totem pole, well, guess what? They now have parity because if you're gonna have a tech-enabled legal practice, your tech professionals, your product managers, your legal engineers, all those people are just as important as your lawyers. Mm-hmm. And that is a huge mind chef- mind shift for [00:49:00] law firms to make. Mm-hmm. And I don't know How they're gonna do it in the amount of time we have, I think it's gonna be a struggle. It's transformation. Like, this is all-- Like, we talk about transformation work as change management work, and it feels like product adoption. But I, I do think it's like changing hearts and minds, and that's really hard work. Um, uh, sitting with people, helping them see themselves in their situations, what they're enabling, what they're standing in the way of, how they interact with their colleagues. Like, that-- I have been doing that work myself for a very long time. I've been helping other people do that work for a long time. And, uh, I, I mean, my takeaway is that there just isn't a shortcut. Like, you want the shortcut? The shortcut is you have to face yourself, and you have to figure out how, how you operate in the world and where it's out of integrity and in integrity with your principles, how you wanna be working with other people, where you have to give up control, um, and how you move forward together because you simply can't do it on your own, right? Sure, you can like, oh, hang a shingle, use AI, have a solo firm, and many are doing that, [00:50:00] and I love seeing the proliferation of that, um, especially given the, the, the ability of AI to support it. Um, but most of us work inside, inside systems and inside organizations, and you must do self work for culture to succeed. Otherwise, people are gonna start breaking even more than they were breaking before. I think the previous system had a lot of casualties, and I think the current transition that we're in is gonna have more casualties if people don't do the self-development transformational work. Like, the leveling up that is required to operate in this system is, like, advanced level. Um, and many people aren't even in the beginning or intermediary stages of it. Yeah. I, I wrote an article, uh, recently. It's called How AI Will Kill Law Firms, and a better title for it would have been How AI Kills Lag- Laggard Law Firms. But I think it got more attention with the title that I gave it. But, you know, I talked about the K-shaped [00:51:00] trajectory- Yeah and the firms that are on that downward leg of the K, I do think, um, are gonna be in some real trouble. Um, and I think they're gonna-- Just the portability of lawyers and how the professional rules in the US have made that portability so accessible that it's gonna create some real challenges. So we shall see in the future. We shall see. Yeah, we'll see what direction it goes. Um, I think, again, there's a, there's a lot of opportunity if you get it right, and I oftentimes remind people that just because you're not making more money that you made last year, perhaps staying where you are is actually the win, um, because others are gonna try to run really fast and, you know, break as a result of it. So I think sometimes the, the better option right now is how do we keep the boat steady? How do we get our people leveled up? How do we reinforce our culture so that we can survive this transition? Versus let's try to run as quickly as our perceived peers and then break an ankle in the process. [00:52:00] Couldn't have said it better myself, so we'll end on that. Um, well, thank you so much. This is always such a good conversation. We did hit a few items on the agenda this time- Good ... which is good. But, um, man, one of these times I'm gonna have to have you on, and we'll just completely riff because- Yeah ... it's always such good dialogue. Yeah. Agree. Um, well, well how do, uh, how do folks connect with you or find out about your, your writing or that sort of stuff? Yeah. I'm, I'm on LinkedIn. I live on LinkedIn until, until the day where I get sick of it and just go off into the woods. Uh, so for now, uh, find me on LinkedIn, reach out. Always happy to talk about, about these ideas. I think we need more forums to, to really generally just have the discussion about what we want the future to look like, because no one has the playbook. Yep. Good advice. All right. Well, thanks so much, and we'll, uh, we'll chat again soon. Sweet. Thanks. All right. Take care. Thanks for listening to Legal Innovation Spotlight. If you found value in this chat, hit the subscribe button to be notified when we release new episodes. We'd also [00:53:00] really appreciate it if you could take a moment to rate us and leave us a review wherever you're listening right now. Your feedback helps us provide you with top-notch content.