1 00:00:00,151 --> 00:00:02,474 Ben Algrove, how are you this afternoon? 2 00:00:02,653 --> 00:00:04,040 Very well, thank you, Ted. 3 00:00:04,040 --> 00:00:04,976 Thank you. 4 00:00:05,088 --> 00:00:06,711 I really appreciate you coming on. 5 00:00:06,711 --> 00:00:10,498 You're coming to us from London, correct? 6 00:00:10,782 --> 00:00:11,393 That's right. 7 00:00:11,393 --> 00:00:16,089 So based in London, I'm Australian originally, but I've been here for the last 20 plus years. 8 00:00:16,089 --> 00:00:19,273 So I think I'm a Londoner for all 10s of purposes. 9 00:00:19,273 --> 00:00:23,032 Okay, yeah, my team is actually over there for Legal Geek this week. 10 00:00:23,032 --> 00:00:24,773 Indeed, indeed. 11 00:00:26,135 --> 00:00:26,895 I'm not making it. 12 00:00:26,895 --> 00:00:30,785 Members of my team are making it this time around, but it's good event. 13 00:00:30,785 --> 00:00:33,125 Yeah, yeah, it's our first time there. 14 00:00:33,125 --> 00:00:35,565 We're somewhat new in the UK. 15 00:00:35,745 --> 00:00:40,245 We're growing in that direction, but yeah, we're excited about it. 16 00:00:40,245 --> 00:00:44,105 Well, before we jump into our agenda, let's get you introduced. 17 00:00:44,105 --> 00:00:47,736 So you're the chief innovation officer at Baker McKenzie. 18 00:00:47,736 --> 00:00:53,496 God, I don't know what your, I think you guys are on the AmLaw list, correct? 19 00:00:54,076 --> 00:00:55,256 You're American based. 20 00:00:55,256 --> 00:00:59,474 I know you're at the top of the list based on your size and scale, but 21 00:00:59,474 --> 00:01:03,674 Why don't you tell us a little bit about who you are, what you do, and where you do it? 22 00:01:03,674 --> 00:01:04,494 Yeah, thanks, Ted. 23 00:01:04,494 --> 00:01:06,334 So I'm a practicing lawyer. 24 00:01:06,334 --> 00:01:08,934 So I'm a technology lawyer by trade. 25 00:01:08,934 --> 00:01:17,674 And before I came to private practice, I was an academic, an AI academic, which is what I was doing before I came into private practice law. 26 00:01:17,674 --> 00:01:19,114 So I still do the client work. 27 00:01:19,114 --> 00:01:26,394 I still advise a variety of technology companies on various forms of regulation, including AI regulation. 28 00:01:26,394 --> 00:01:28,012 my management role 29 00:01:28,012 --> 00:01:31,185 at the firm is, as you say, is the chief innovation officer. 30 00:01:31,185 --> 00:01:34,206 So I'm the firm's first chief innovation officer. 31 00:01:34,207 --> 00:01:44,377 And in that role, I advise our management and our partners on not only our strategy when it comes to innovation, and these days, most of that is AI, let's be honest, about the 32 00:01:44,377 --> 00:01:45,603 conversation. 33 00:01:45,603 --> 00:01:53,334 But equally, I'm the one who engages with the, know, leads the engagement with our clients, with the market around where the legal profession's going, you where our strategy 34 00:01:53,334 --> 00:01:55,836 is to respond to that, what I think clients 35 00:01:55,836 --> 00:01:57,228 need and are asking for. 36 00:01:57,228 --> 00:02:01,420 And that's in the context of a firm which as you say is a large international law firm. 37 00:02:01,420 --> 00:02:03,271 It was the first international law firm. 38 00:02:03,271 --> 00:02:06,673 It's not the biggest anymore but we are relatively sizable. 39 00:02:06,673 --> 00:02:14,247 And we're quite proud of the fact that although we were founded in Chicago, so I do think we have American, well we do have American roots, our second office was Caracas in 40 00:02:14,247 --> 00:02:14,888 Venezuela. 41 00:02:14,888 --> 00:02:17,620 So we are sort of the definition of an international business. 42 00:02:17,620 --> 00:02:18,914 So yeah, that's my. 43 00:02:18,914 --> 00:02:19,608 Interesting. 44 00:02:19,608 --> 00:02:23,598 And how long has the innovation function existed at Baker McKenzie? 45 00:02:23,598 --> 00:02:36,558 So we sort set up our first sort of name strategy in 2016, 2017, like lots of firms did about that period of time, that sort of first phase of legal tech impacting the market. 46 00:02:36,898 --> 00:02:43,818 My role specifically has been around for just over, well it's actually nearly four years now, I supposed say just over three, but time flies. 47 00:02:43,818 --> 00:02:50,758 I've been involved since 2016 to 2017, but the Chief Innovation Officer role was brought in about four years ago now. 48 00:02:51,142 --> 00:03:00,489 Yeah, I've been around long enough to remember when legal innovation used to be an oxymoron like a jumbo shrimp or a military intelligence. 49 00:03:00,489 --> 00:03:03,713 Times are changing, which is a great time. 50 00:03:03,713 --> 00:03:08,656 So we're a legal tech company and it's an exciting time from a vendor perspective. 51 00:03:08,656 --> 00:03:17,184 It's a little, it's a little scary too, because you know, the future of law is a little bit uncertain. 52 00:03:17,184 --> 00:03:17,705 I think 53 00:03:17,705 --> 00:03:19,085 There's a bright future. 54 00:03:19,085 --> 00:03:23,905 It's just, we don't know exactly how things are going to, how the dust is going to settle. 55 00:03:24,165 --> 00:03:30,985 And, um, you know, we're 100 % dependent on law firms as our client base. 56 00:03:30,985 --> 00:03:40,225 So, you know, I started this podcast shortly after chat GPT was released and, um, it really had nothing to do with AI. 57 00:03:40,225 --> 00:03:44,865 The reason I started the podcast is because I was honestly confused. 58 00:03:45,124 --> 00:03:47,666 on the innovation function within legal. 59 00:03:47,666 --> 00:03:53,511 had seen many knowledge management roles kind of get rebranded with the innovation title. 60 00:03:53,511 --> 00:04:00,357 And when I talked to certain people, the remits or the responsibilities of those roles hadn't changed that much. 61 00:04:00,357 --> 00:04:09,803 So I started off with a couple of folks in your seat at other firms and just, hey, tell me, let's talk about, you know, 62 00:04:09,879 --> 00:04:13,306 the divergence or convergence of legal innovation and KM. 63 00:04:13,306 --> 00:04:15,821 How does Baker-Mackenzie think about that distinction? 64 00:04:15,821 --> 00:04:17,111 I think it's an evolution. 65 00:04:17,111 --> 00:04:22,014 So I'm not going to say that we have necessarily reached end point or that we've got it all figured out. 66 00:04:22,014 --> 00:04:27,626 We've taken a slightly different approach to many of the firms in the market, as you rightly note. 67 00:04:27,626 --> 00:04:37,670 In lots of businesses, the role has traditionally sat in technology or in knowledge or some sort of adjacent function within the business services side of the business. 68 00:04:37,811 --> 00:04:43,187 When we set this up, we put a practicing lawyer and a partner into that 69 00:04:43,187 --> 00:04:43,927 lead role. 70 00:04:43,927 --> 00:04:52,891 Now obviously I'm supported by a sort of a team of business professionals across the business, but we felt it was really important to have a partner in the role for two 71 00:04:52,891 --> 00:04:53,211 reasons. 72 00:04:53,211 --> 00:05:02,745 So one was somebody who was close to clients and close to what was happening in the market and had that direct sort of entry point. 73 00:05:02,745 --> 00:05:09,828 And then also internally as a change agent, if that's the role and it's the role that our management wanted was somebody to challenge 74 00:05:09,859 --> 00:05:16,413 established business models, established thinking, that is an easier thing to do in a partnership if you are a partner. 75 00:05:16,413 --> 00:05:23,635 that, you know, we hate the term non-lawyers, but the reality is that that is the dynamic, I think, in most partnerships. 76 00:05:23,635 --> 00:05:28,046 And so for that reason, we set it up in the way that we have with me sitting in that role. 77 00:05:28,046 --> 00:05:30,207 I don't think I will forever be in the role. 78 00:05:30,207 --> 00:05:31,567 I certainly don't want to be in the role forever. 79 00:05:31,567 --> 00:05:36,345 And I don't think necessarily the person who succeeds me needs to be a partner. 80 00:05:36,345 --> 00:05:39,060 once we get the ball rolling or where we need it to be. 81 00:05:39,060 --> 00:05:43,146 But certainly for this initial period, it's been useful to have a structure that 82 00:05:43,224 --> 00:05:43,644 Yeah. 83 00:05:43,644 --> 00:05:48,984 And I wrote an article on LinkedIn and mentioned you and others. 84 00:05:48,984 --> 00:05:50,564 I'm an advocate. 85 00:05:50,564 --> 00:05:52,244 think you're exactly right. 86 00:05:52,244 --> 00:05:56,424 think there are definitely advantages and just a little background. 87 00:05:56,424 --> 00:06:09,578 So I've been in legal tech for almost 20 years and have done business with more than half the AmLaw and had a good cross-sectional view of the innovation. 88 00:06:09,578 --> 00:06:17,394 innovation function and the inner workings and the dynamics and the buying patterns and how firms implement technology. 89 00:06:17,394 --> 00:06:20,516 so I've had an interesting perspective. 90 00:06:20,516 --> 00:06:34,227 And I think that the current state of legal, there are advantages to having a lawyer, not necessarily have to be a partner, but in that role, because it does give some street cred. 91 00:06:34,259 --> 00:06:38,002 And, um, you're asking people to change what they do. 92 00:06:38,002 --> 00:06:52,064 And that's not easy, especially in a, in an industry like legal that has been so it's a very traditional, know, tradition runs strong in, in legal and, it's a very past precedent 93 00:06:52,064 --> 00:06:53,606 focused discipline. 94 00:06:53,606 --> 00:06:55,827 It's also very artisanal. 95 00:06:55,827 --> 00:07:00,384 There's not a lot of standardized processes that run across all. 96 00:07:00,384 --> 00:07:07,451 practice areas on the practice side, certainly on the business of law side, there's lots of practices or processes. 97 00:07:07,451 --> 00:07:12,706 but yeah, it was a fun debate to have with some people who I, who I really respect. 98 00:07:12,706 --> 00:07:14,317 And, um, we debated that. 99 00:07:14,317 --> 00:07:22,719 And I think that in the future, we could end up in a place where, it's not as advantageous if 100 00:07:41,520 --> 00:07:43,713 Look, I think it does depend on... 101 00:07:43,713 --> 00:07:51,147 you know, which bit of the market you're playing in, because coming back to one of your earlier comments around, you know, this is a sort of transitional moment for the 102 00:07:51,147 --> 00:07:53,008 profession, which I agree with. 103 00:07:53,008 --> 00:08:03,451 But ultimately, you know, the opportunity that exists for law firms and vendors to law firms and alternatives to law firms, you know, is determined by what the buyer wants, 104 00:08:03,451 --> 00:08:04,672 right, what the client wants. 105 00:08:04,672 --> 00:08:06,336 And the reality is 106 00:08:06,336 --> 00:08:14,616 Despite the fact that in 2016, 2017, the same articles were being run saying AI is going to kill the law, it didn't happen. 107 00:08:14,616 --> 00:08:16,116 We're still seeing industry that's growing. 108 00:08:16,116 --> 00:08:20,156 Now, I am a believer that this time is different, and there's a variety of reasons I think it is different. 109 00:08:20,156 --> 00:08:28,767 I'm not trying to deny that there is going to be a foundational impact on the economics of the legal industry and the delivery model. 110 00:08:28,767 --> 00:08:32,377 The reality is the conservative model has... 111 00:08:32,377 --> 00:08:34,978 done very well, thank you for the legal industry for time. 112 00:08:34,978 --> 00:08:42,916 And pure economics say that, know, supply and demand, there is a lot of demand, and the supply has, you know, delivered what was being asked. 113 00:08:42,916 --> 00:08:48,208 clients don't like the billable hour, it's getting more expensive, the world's a much more volatile place. 114 00:08:48,208 --> 00:08:51,019 So actually, the demand for legal services is going up. 115 00:08:51,019 --> 00:08:56,031 And what we have now are an increasing number of viable alternatives to the traditional delivery model. 116 00:08:56,031 --> 00:08:58,472 And that, I think, is what is going to shape up. 117 00:08:58,745 --> 00:09:00,956 you what happens over the next few years. 118 00:09:00,956 --> 00:09:10,059 But ultimately I do, I'm a positive person around the fate of the industry and certainly where we want to play, which is the premium end of the market, I think there will still be 119 00:09:10,059 --> 00:09:14,983 demand for that premium end service, which will still be white glove. 120 00:09:14,983 --> 00:09:21,156 I don't use the word artisanal, but white glove because that's what our clients want because they resist the standardization as well. 121 00:09:21,156 --> 00:09:21,345 Right. 122 00:09:21,345 --> 00:09:24,747 And that's, that's the simple reality for the things that they need. 123 00:09:25,048 --> 00:09:34,900 But there are layers of services which firms like us may or may not do, to be frank, going into the future, which are more susceptible to standardization where the buyer is willing 124 00:09:34,900 --> 00:09:43,154 to accept the standardization or where the technology allows a certain amount of customization on the top like consumer products, but the core is standardized, but that 125 00:09:43,154 --> 00:09:44,834 becomes the right delivery model. 126 00:09:44,834 --> 00:09:51,861 And so I think when it comes to the roles that deliver that, that's going to be, you're going to need, I mean, we have plenty of people in our business with 127 00:09:51,861 --> 00:10:00,116 Lean Six Sigma and those sorts of process qualifications and plenty of technical experts within our business, whether they're the right ones to lead the function, I think depends 128 00:10:00,116 --> 00:10:01,767 on what the target is you're trying to hit. 129 00:10:01,767 --> 00:10:05,099 And I think you'll need a mixture of skill sets going forward. 130 00:10:05,262 --> 00:10:05,652 Yeah. 131 00:10:05,652 --> 00:10:19,569 And I think that I agree with everything that you said and law firms financial performance have been consistently improving really since the recovery started from the Great 132 00:10:19,569 --> 00:10:20,309 Recession. 133 00:10:20,309 --> 00:10:24,111 AmLaw profitability sets new records every year. 134 00:10:24,111 --> 00:10:29,434 So the status quo is very sticky and we're reaching 135 00:10:30,106 --> 00:10:37,952 a point of interesting tension where the stickiness of the status quo from the law firm's perspective. 136 00:10:37,952 --> 00:10:42,034 You mentioned that law firm clients don't like the billable hour. 137 00:10:42,074 --> 00:10:44,815 It's a love-hate relationship. 138 00:10:44,815 --> 00:10:52,401 They hate it, but also there's a lot of pearl-clutching going on with respect to the billable hour. 139 00:10:52,401 --> 00:10:55,091 I hear it from pricing professionals where 140 00:10:55,091 --> 00:11:01,356 You know, the conversation will start to head down the AFA path and the, they want shadow billing to see their hours. 141 00:11:01,356 --> 00:11:13,357 And it's like, you know, um, as a professional service provider myself, the challenges with that are there has to be wins and losses as part of any sort of fixed price 142 00:11:13,357 --> 00:11:18,984 engagement and fixed price really requires fixed scope, but you can't, you can't get into it. 143 00:11:18,984 --> 00:11:20,815 Like it does not exceed. 144 00:11:20,815 --> 00:11:23,586 type of engagement as a service provider. 145 00:11:23,586 --> 00:11:34,551 That's a losing proposition for a service provider because what you've done is essentially say, okay, you're capping hours, but you're not allowing, if I generate some efficiencies 146 00:11:34,551 --> 00:11:40,194 to recoup the losses that I had on the other X number of matters. 147 00:11:40,194 --> 00:11:47,264 And it seems like clients are still holding firms back from really charging down the 148 00:11:47,264 --> 00:11:48,353 AFA path. 149 00:11:48,353 --> 00:11:49,929 Is that your perspective? 150 00:11:49,976 --> 00:11:58,155 So I think, and there are some notable exceptions to this in the market, but I think that that proposition is true, but it's not because I think they're wedded to the billable hour 151 00:11:58,155 --> 00:12:01,358 from any sense of sort of affection for it. 152 00:12:01,358 --> 00:12:04,280 There is some type of work where that is the appropriate model for charging, right? 153 00:12:04,280 --> 00:12:06,072 There's a certain amount of sort of consulting heavy. 154 00:12:06,072 --> 00:12:15,670 If you want a specific person, because they have a specific expertise, then actually charging for their time is not a bad mechanic for valuing that contribution. 155 00:12:15,670 --> 00:12:17,171 If you want an outcome, 156 00:12:17,572 --> 00:12:21,355 then it's a really bad mechanic for valuing the work that's done. 157 00:12:21,355 --> 00:12:32,525 But what the market has failed to deliver, despite thousands of conferences and thousands of speeches and articles, is an alternative means for valuing legal input. 158 00:12:32,525 --> 00:12:41,621 So if you take something like a big private equity transaction, people are perfectly comfortable with the banks taking a percentage of the deal as a mechanic for the value 159 00:12:41,621 --> 00:12:42,723 they bring to the table. 160 00:12:42,723 --> 00:12:50,095 very reluctant to do that for law firms or other professional service advisors in the piece, even if it's a percentage of a percentage of the value the banks bring, because 161 00:12:50,095 --> 00:12:51,363 obviously they bring the money. 162 00:12:51,363 --> 00:12:54,271 So I'm not saying it necessarily be the same percentage. 163 00:12:54,311 --> 00:12:55,253 Question why? 164 00:12:55,253 --> 00:13:03,230 We've tried models where we have proposed tying our charging to the share price of a client, right? 165 00:13:03,230 --> 00:13:06,303 So being part of the collective success of the client. 166 00:13:06,303 --> 00:13:07,984 Again, reluctance to do that. 167 00:13:07,984 --> 00:13:08,264 Why? 168 00:13:08,264 --> 00:13:12,446 Because it's an indirect relationship between import and output. 169 00:13:12,446 --> 00:13:15,848 When it comes to end time is what people have used. 170 00:13:15,848 --> 00:13:22,592 But if you look back 50 years ago, the billable hour was not the dominant model for law firms in the market. 171 00:13:22,592 --> 00:13:24,713 It was a retainer model, largely. 172 00:13:24,713 --> 00:13:26,414 You had your law firm. 173 00:13:26,434 --> 00:13:29,926 What changed was actually the market started to become more fluid. 174 00:13:29,926 --> 00:13:31,757 There was more competition in the market. 175 00:13:31,757 --> 00:13:33,468 Companies didn't have just one law firm. 176 00:13:33,468 --> 00:13:34,188 They had panels. 177 00:13:34,188 --> 00:13:36,479 And so they needed to be able to compare them. 178 00:13:36,550 --> 00:13:39,924 And ultimately, that's where this metric came from. 179 00:13:39,924 --> 00:13:50,152 And you're right, if we want to come up with a different economics for the industry, we've got to get away from our sort of reliance on that as a measure. 180 00:13:50,152 --> 00:13:55,117 And I think there's, you know, often people talk about the business model of law firms being the billable hour. 181 00:13:55,117 --> 00:14:02,306 The monitoring of what people do within the business, by the way they spend their time, that's still going to be around for quite a while within a law firm. 182 00:14:02,306 --> 00:14:04,376 It's the same in most businesses which are service-based. 183 00:14:04,376 --> 00:14:08,179 You need to know what people are doing because to a certain extent you are monetizing their efforts. 184 00:14:08,359 --> 00:14:13,582 Whereas the pricing mechanic to the market is a different thing, related but different. 185 00:14:13,582 --> 00:14:22,648 And I think the pricing mechanic has to change long before it will change internally as to how many hours we're expecting associates to work billables in a law firm. 186 00:14:22,648 --> 00:14:28,502 And clients could have got rid of the billable hour 20 years ago when this conversation really first started. 187 00:14:28,771 --> 00:14:36,351 by putting out RFPs that said we want a price, but which didn't include what they still usually include, and we also want your rates, right? 188 00:14:36,351 --> 00:14:37,751 It's that second bit. 189 00:14:37,791 --> 00:14:47,731 Ultimately, they do control the market in a free market, and that is the thing that I love leaning into client tooling, to say, okay, yep, we can go compare the price. 190 00:14:47,731 --> 00:14:57,751 We can ask five firms what they were charged to do this thing, and then pick based on whatever our assessment is of value, but we don't need the hourly rate to compare those 191 00:14:57,751 --> 00:14:58,731 five firms. 192 00:14:58,892 --> 00:14:59,212 Yeah. 193 00:14:59,212 --> 00:15:07,530 And you know, what's interesting and what makes this such a difficult problem, you know, I've heard, you know, well, we'll just do value-based billing or outcome-based billing. 194 00:15:07,530 --> 00:15:15,078 It's really not that simple because law firms, what law firms deliver goes well beyond just the work product. 195 00:15:15,078 --> 00:15:19,802 And even really the advice advisory services that they provide. 196 00:15:19,962 --> 00:15:21,075 There are 197 00:15:21,075 --> 00:15:36,055 Um, a lot of things kind of bundled up, there's reputation, there's trust and decoupling these things and figuring out how to monetize them independently is very challenging. 198 00:15:36,195 --> 00:15:49,775 And, you know, I saw somebody post the other day and I had a comment on it, um, where they talked about these are, we have to figure out what the client values. 199 00:15:49,843 --> 00:15:50,283 Right. 200 00:15:50,283 --> 00:15:54,143 What in the delivery of legal work does the client truly value? 201 00:15:54,143 --> 00:16:01,003 And that answer will vary across practice areas and probably across clients. 202 00:16:01,123 --> 00:16:14,963 And so how, how do we unbundle these things and say, we're going to charge you, you know, um, a fixed price for the document, but we're going to charge you hourly and, you know, w 203 00:16:14,963 --> 00:16:17,937 w for maybe the advisory work and 204 00:16:17,937 --> 00:16:22,442 we think we should land here based on all of these intangible factors. 205 00:16:22,442 --> 00:16:25,716 It seems like a really difficult problem to unravel. 206 00:16:25,716 --> 00:16:32,608 Yeah, look, it's a nuance problem, but actually I don't think it's difficult. 207 00:16:32,608 --> 00:16:39,239 So the first piece that I think is essential is to recognize the point you made, which is it's more than just the delivery of the service. 208 00:16:39,239 --> 00:16:44,592 And actually, AI is a really good example of a change that's forcing that conversation. 209 00:16:44,592 --> 00:16:51,714 Because in addition to brand and reputation and trust, one of the things that clients want is our insurance policies, right? 210 00:16:51,714 --> 00:16:53,944 And I don't think we should be shy about saying. 211 00:16:54,421 --> 00:17:03,536 And so we are now going into the market, and I should say this in consultation with our general counsel and our insurers, saying to clients, you we can do this faster and 212 00:17:03,536 --> 00:17:12,462 cheaper, but we offer it to you at price X without the insurance policy that you accept what you're getting under the tin and the level of quality assurance that goes with it, 213 00:17:12,462 --> 00:17:15,033 but you get a cost benefit and a speed benefit. 214 00:17:15,234 --> 00:17:19,228 Or we can use that same technology, but then wrap a human layer around it. 215 00:17:19,228 --> 00:17:24,699 which means it is more expensive and it's price X plus, but the insurance policy comes with that, right? 216 00:17:24,699 --> 00:17:32,034 Because we stand behind our quality control and our workflows to deliver that point and therefore our insurers will stand behind us when we do that. 217 00:17:32,034 --> 00:17:33,324 We're still in a transitional phase. 218 00:17:33,324 --> 00:17:37,565 Clients are really uncomfortable with that conversation because they'll say, you're a top tier law firm. 219 00:17:37,565 --> 00:17:39,726 should be able to, know, everything that comes from you should be right. 220 00:17:39,726 --> 00:17:44,797 And you go, but you need to understand the delivery model is different under those two outcomes. 221 00:17:44,957 --> 00:17:47,570 And the value to you is different under those two outcomes. 222 00:17:47,570 --> 00:17:53,432 And so there is a difference not only in price, but also in the product that's being offered. 223 00:17:53,432 --> 00:18:01,497 And I think that that's a conversation we're to have to repeatedly have across the market for people to get comfortable with that if they want to get the full benefit of the speed 224 00:18:01,497 --> 00:18:04,038 and the cost savings as well. 225 00:18:04,098 --> 00:18:14,393 The second point I think that the market really needs to get their head around is the sort of win-loss narrative on a matter basis. 226 00:18:14,393 --> 00:18:15,574 is not helpful for anyone. 227 00:18:15,574 --> 00:18:19,253 Ultimately, law firms are not charities. 228 00:18:19,253 --> 00:18:22,605 They have professional obligations and have duties of fidelity to their clients. 229 00:18:22,605 --> 00:18:27,817 So they're not a completely unregulated or a completely mercenary service provider. 230 00:18:27,817 --> 00:18:29,237 There is a difference. 231 00:18:29,277 --> 00:18:33,298 But ultimately, we are profit-making or profit-seeking entities. 232 00:18:33,298 --> 00:18:37,459 Our clients are profit-seeking entities mostly, other than our pro bono clients. 233 00:18:37,519 --> 00:18:41,420 And we shouldn't be shy about saying, we need a return on capital. 234 00:18:41,706 --> 00:18:44,297 that reflects the investment that's being made. 235 00:18:44,318 --> 00:18:48,940 And of course, we're going to seek to maximize that within reason. 236 00:18:48,940 --> 00:18:52,302 We could do a margin-based pricing arrangement, right? 237 00:18:52,302 --> 00:18:58,206 Again, if you want to be creative around it, you could say there's a certain margin frame in it as to what a reasonable margin is. 238 00:18:58,206 --> 00:19:06,507 But unless you're willing to go down that route, it's not your job as the customer to determine what the margin is on the fact that I a Rolls Royce or I build a Ford in respect 239 00:19:06,507 --> 00:19:07,367 of what the... 240 00:19:07,515 --> 00:19:12,875 parts that go into that product are, that's an issue for me as the vendor there. 241 00:19:12,955 --> 00:19:16,655 And so I think thinking about it at a matter level, do I win on this engagement or not? 242 00:19:16,655 --> 00:19:25,755 The question is really, is the price that's being offered in the market for the quality I'm competitive with other vendors in the market? 243 00:19:25,755 --> 00:19:29,115 If the answer is, too expensive, the market will sort that out. 244 00:19:29,115 --> 00:19:33,095 And if the market is too cheap, right, then you should snap that up straight away, right? 245 00:19:33,095 --> 00:19:35,758 Because that's a really good price, they've mispriced it in the market. 246 00:19:35,758 --> 00:19:48,199 But talking about the law firm winning, I think it displays a trust relationship which is, I think, broken, but actually more fundamentally is the wrong conversation because it's 247 00:19:48,199 --> 00:19:48,990 not about winning. 248 00:19:48,990 --> 00:19:54,296 It's about there are different pricing models and different risks attached to those models and different scoping attached to those models. 249 00:19:54,296 --> 00:19:58,580 And if you only want to pay for the input that goes into the product, then actually we are back to the hourly rate. 250 00:19:58,580 --> 00:20:01,822 The input is there and there's a markup on the input and you pay for that. 251 00:20:02,172 --> 00:20:05,774 If you want the output, that is something where it's not a win-loss scenario. 252 00:20:05,774 --> 00:20:07,608 We've got to change that language as well. 253 00:20:08,014 --> 00:20:16,863 Yeah, I just had a visual when you were describing that about, you know, essentially waving cut like, I don't know how it works in the UK, but here in the US when you go and 254 00:20:16,863 --> 00:20:24,812 rent a car, rent a vehicle, you know, and the optional, you know, cub cover and all the places they make you initial, they make good margin on that. 255 00:20:24,812 --> 00:20:28,900 And yeah, that's that just brought interesting visual to mind. 256 00:20:28,900 --> 00:20:31,100 if you look at, yes, I mean, it's that visual. 257 00:20:31,100 --> 00:20:34,100 And I think that's fundamentally what we're talking about here. 258 00:20:34,100 --> 00:20:46,020 Because if you look at, you know, some of the workflows that we've built out already for some new ways of service delivery, as a rule, we don't tend to make the output directly 259 00:20:46,020 --> 00:20:47,140 accessible to the client, right? 260 00:20:47,140 --> 00:20:52,140 We're not in the business of productizing our knowledge in an app or a tool. 261 00:20:52,140 --> 00:20:58,120 That's not, you know, we've gone down that route and explored it and decided it's not really the piece of the place in the market that we want to play. 262 00:20:58,415 --> 00:20:59,275 But we could, right? 263 00:20:59,275 --> 00:21:05,715 What we do is we build things for our lawyers to use who then deliver the advice more efficiently, quicker, more informed. 264 00:21:05,875 --> 00:21:11,055 And our clients are often involved in designing those systems that we use, but we don't tend to make them available to the client. 265 00:21:11,055 --> 00:21:11,975 But you could, right? 266 00:21:11,975 --> 00:21:16,457 You could have a world where you said to the client, we'll give you access to the same tool that lawyers are using. 267 00:21:16,457 --> 00:21:19,637 You can use it to get an answer quicker, but it doesn't come with our insurance policy. 268 00:21:19,637 --> 00:21:22,317 doesn't come with, it's not legal advice, right? 269 00:21:22,317 --> 00:21:26,193 There's privilege questions and all those sorts of things as well because the lawyers not been involved in it. 270 00:21:26,203 --> 00:21:36,312 But within 24 hours, there'll be an SLA that will sign off on it as legal advice that's contextual to you and has had the quality assurance that comes with the insurance. 271 00:21:36,312 --> 00:21:39,184 That's a huge opportunity for the market to change the way it operates. 272 00:21:39,184 --> 00:21:51,234 And if you think about it at the other end of the market, access to justice for consumer type issues and criminal type issues, huge opportunities to fundamentally democratize 273 00:21:51,234 --> 00:21:52,625 access to the law. 274 00:21:52,853 --> 00:22:00,792 in a way we haven't been able to do before, where none of us, well, there are obviously some complex issues, but most of us would say that is a positive and we should do that 275 00:22:00,792 --> 00:22:03,766 because the system does not serve that segment of the population. 276 00:22:03,766 --> 00:22:10,252 But those same principles could apply at the corporate end as well, ultimately, about getting access to things at a different price point. 277 00:22:10,456 --> 00:22:17,279 You know, I've heard the cost plus proposition before, where you're essentially pricing on margin. 278 00:22:17,320 --> 00:22:26,825 I think one of the challenges with that though is your costs are based on internal firm compensation decisions that your client might not agree with, right? 279 00:22:26,825 --> 00:22:35,031 Like your cost to deliver, if you have a partner whose cost is a million dollars a year and you're offering me 280 00:22:35,403 --> 00:22:37,763 you know, cost plus 20%. 281 00:22:37,763 --> 00:22:44,883 So then I'm essentially paying, you know, that'd be roughly $600 an hour, US, right? 282 00:22:44,883 --> 00:22:47,043 Cost is roughly 5,000 hours. 283 00:22:47,043 --> 00:22:48,203 I'm sorry. 284 00:22:49,098 --> 00:22:50,469 Yeah, right. 285 00:22:50,469 --> 00:23:00,169 So the challenge though is that the structure of the internal firm compensation is going to have a huge impact on what those, what that margin looks like, because this is a people 286 00:23:00,169 --> 00:23:01,209 business. 287 00:23:01,297 --> 00:23:05,316 So how might that work? 288 00:23:05,316 --> 00:23:16,757 Because it'd be really difficult to compare apples to apples as a buyer and say, OK, well, I'm going to pay cost plus 20 % to Baker McKenzie and law firm Y. 289 00:23:16,757 --> 00:23:20,188 But your cost may look very different than law firm Y. 290 00:23:20,188 --> 00:23:24,480 Yeah, I actually don't think it's that different to what clients are already doing on the hourly rate. 291 00:23:24,480 --> 00:23:31,084 So if you look at different pricing strategies firms have on the hourly rate, you can have really high rates and offer big discounts. 292 00:23:31,084 --> 00:23:36,928 You can have lower rates but offer lower discounts if you're competing at the same quality level and bit of the market. 293 00:23:36,928 --> 00:23:45,189 They end up with the same outcome, different structural decisions around how you price, but also different structural decisions about then how you resource. 294 00:23:45,189 --> 00:23:51,023 that you have some firms which have high leverage models, some firms which have low leverage models, obviously the technology is going to impact the high leverage firms, 295 00:23:51,023 --> 00:23:54,106 think more than the low leverage firms over time. 296 00:23:54,226 --> 00:23:57,159 But ultimately, you're right, there's a certain amount of engineering. 297 00:23:57,159 --> 00:24:06,195 the other point to think about is actually those talent decisions are talent decisions that the firms need to do to compete to have the best talent in the market, whether it's 298 00:24:06,195 --> 00:24:08,136 getting the best people out of law school. 299 00:24:08,157 --> 00:24:13,900 Now the best technical expertise, try to recruit a computer scientist in the legal space at the moment without spending a lot of money. 300 00:24:13,900 --> 00:24:16,304 It's a very hard talent gap to fill. 301 00:24:16,304 --> 00:24:17,515 And even on the partner side, right? 302 00:24:17,515 --> 00:24:25,339 Yeah, part of what you're paying for is the ability to generate business and effectively a sales function that your rainmakers play. 303 00:24:25,339 --> 00:24:32,364 But part of it's also you need the best litigator, you need the best advisory privacy lawyer or the best employment lawyer if that's the area you're targeting. 304 00:24:32,446 --> 00:24:35,246 And so that's the cost of the product is a reasonable cost. 305 00:24:35,246 --> 00:24:38,397 That's what it's costing to get that talent to you. 306 00:24:38,397 --> 00:24:49,737 And, you know, I think one of the things that, again, we don't talk enough about in the industry is the symbiosis between the in-house market and the private practice market when 307 00:24:49,737 --> 00:24:54,977 it comes to how you train lawyers and provide a pipeline of talent to both sides of the market. 308 00:24:54,977 --> 00:24:59,741 Because at the moment, the majority of that talent pipeline, the base of the pyramid, 309 00:24:59,741 --> 00:25:01,352 starts in private practice. 310 00:25:01,352 --> 00:25:03,752 And that has a cost to it as well. 311 00:25:03,752 --> 00:25:12,692 think one of the things that we, slightly off topic, one of the things that we're thinking about a lot here at my firm is with some of the technological change, you might be able to 312 00:25:12,692 --> 00:25:17,652 reduce the cost, it drive efficiency in the short to medium term. 313 00:25:18,092 --> 00:25:23,772 But some of the skills you need lawyers to have are not skills that are easily done outside of an apprenticeship model. 314 00:25:23,772 --> 00:25:24,972 They're hard to learn in a classroom. 315 00:25:24,972 --> 00:25:28,679 They are the experience of negotiation, being in the room, being in court. 316 00:25:28,943 --> 00:25:39,816 So you may end up in a world where actually you carry deliberately some inefficiency in the business still in order to make sure you have a pipeline of talent to sit at the top 317 00:25:39,816 --> 00:25:41,668 and do the really strategic stuff. 318 00:25:41,668 --> 00:25:45,204 That again is a cost that the client would say, well, that's your choice, not ours. 319 00:25:45,204 --> 00:25:46,570 And you go, that's true. 320 00:25:46,570 --> 00:25:52,533 But actually the implications of us not making that choice hit both of us potentially at different points of time in different ways. 321 00:25:52,713 --> 00:25:53,444 And so. 322 00:25:53,444 --> 00:25:55,066 We need to think about what the implications are. 323 00:25:55,066 --> 00:25:58,990 Most firms already won't pay for first or second year associates, for example, because they regard that as training. 324 00:25:58,990 --> 00:26:07,218 But if you start cutting out that layer completely in five or six years time, it's going to be much, more expensive to recruit a six or seven year qualified lawyer into an 325 00:26:07,218 --> 00:26:08,908 in-house team as well. 326 00:26:08,983 --> 00:26:13,155 Yeah, lawyers, senior lawyers will be like COBOL programmers, right? 327 00:26:13,155 --> 00:26:16,367 uh which, yeah. 328 00:26:16,367 --> 00:26:17,588 And what's, what's interesting. 329 00:26:17,588 --> 00:26:20,380 So I came from, I spent 10 years at bank of America. 330 00:26:20,380 --> 00:26:31,857 It's incredible how much, how much, private industry and government still relies on these skillsets, you know, insurance, financial services, government, you know, and there's a 331 00:26:31,857 --> 00:26:32,968 huge gap. 332 00:26:32,968 --> 00:26:35,309 People are being pulled out of retirement and making 333 00:26:35,309 --> 00:26:38,932 millions of dollars a year just because they understand that. 334 00:26:38,932 --> 00:26:46,640 And that same dynamic could happen here in legal if we totally nuke the leverage model. 335 00:26:46,640 --> 00:26:58,692 I've heard mixed, I've had some partners who've told me about their journey, their partnership journey, and said that in the beginning, they were thrown in a room with a box 336 00:26:58,692 --> 00:27:00,393 of documents and that 337 00:27:00,685 --> 00:27:02,487 that wasn't effective training. 338 00:27:02,487 --> 00:27:04,077 It could have been much more effective. 339 00:27:04,077 --> 00:27:10,479 the partner, the overseer in that equation would only come in when they had to. 340 00:27:10,479 --> 00:27:19,317 Whereas this technology could open up new training mechanisms and really reimagine the whole associate development process. 341 00:27:19,317 --> 00:27:22,998 Do you see opportunities there as well as potential challenges? 342 00:27:23,239 --> 00:27:24,179 huge, huge opportunity. 343 00:27:24,179 --> 00:27:33,630 And I agree, there's a certain amount of sort of camaraderie and being in the trenches that comes from being in that data room with thousands of documents and, you know, no 344 00:27:33,630 --> 00:27:34,970 daylight for days on end. 345 00:27:34,970 --> 00:27:38,841 But I don't for a second say that that was good quality training. 346 00:27:38,841 --> 00:27:49,811 But I do think, you know, being required to look for things of relevance and value in a mountain of information is good training. 347 00:27:49,811 --> 00:27:52,945 in how to think what's relevant, how to ignore the irrelevant. 348 00:27:52,945 --> 00:27:57,539 Similarly, it's very rare that a young lawyer gets to draft a contract from scratch these days, right? 349 00:27:57,539 --> 00:27:58,870 And that is a challenge, right? 350 00:27:58,870 --> 00:28:05,816 Because actually, if you have to draft it from scratch and think about the issues that are between the clients and think about the things you need to cover, that makes you a better 351 00:28:05,816 --> 00:28:10,379 lawyer when you're looking at the thousand page contract for a billion dollar service. 352 00:28:10,400 --> 00:28:15,804 And so we've got to find ways to give that sort of experience. 353 00:28:15,856 --> 00:28:21,256 to lawyers if we want them to be the strategic partner at the end of the day. 354 00:28:21,516 --> 00:28:28,556 I do think there's some opportunities to effectively get some of this technology to quiz our lawyers, to question why did you do that? 355 00:28:28,556 --> 00:28:30,896 Have you thought about X, Y, Z? 356 00:28:30,896 --> 00:28:32,136 Those things I think are there. 357 00:28:32,136 --> 00:28:33,556 It's not my expertise at all. 358 00:28:33,556 --> 00:28:39,676 That's one of the areas I go to our learning people and development people and say that's firmly in your wheelhouse rather than mine. 359 00:28:40,156 --> 00:28:41,496 But there's definite opportunities there. 360 00:28:41,496 --> 00:28:44,416 If I think there's one thing that we haven't cracked yet. 361 00:28:44,472 --> 00:28:44,922 That's it. 362 00:28:44,922 --> 00:28:51,136 If you think about how a service is going to be delivered, what a client is going to want, what does the end state look like for pricing? 363 00:28:51,436 --> 00:28:53,958 I think those are pretty simple, if I'm perfectly honest. 364 00:28:53,958 --> 00:28:59,261 think there's a huge demand for premium and other legal services. 365 00:28:59,261 --> 00:29:00,983 It'll be filled in a variety of ways. 366 00:29:00,983 --> 00:29:03,784 There's a pretty much big consensus to what it looks like. 367 00:29:03,784 --> 00:29:06,216 The training piece is the piece I don't think anyone's figured out yet. 368 00:29:06,216 --> 00:29:07,987 And I think law schools are struggling with it as well. 369 00:29:07,987 --> 00:29:09,395 So it's not just firms. 370 00:29:09,395 --> 00:29:10,036 Yeah, they are. 371 00:29:10,036 --> 00:29:14,690 I've had lots of academics on the podcast and it is a constant struggle. 372 00:29:14,690 --> 00:29:26,876 You know, one thing you and I talked about last time that I thought was really interesting was the orchestration layer risk and avoiding having your law firm powered by tech 373 00:29:26,876 --> 00:29:28,647 companies, right? 374 00:29:28,647 --> 00:29:32,321 And I think that I'll give my take and then I'd love to hear yours on this. 375 00:29:32,321 --> 00:29:33,860 So I think the 376 00:29:33,860 --> 00:29:36,943 whole powered, but I think that's a very short term risk. 377 00:29:36,943 --> 00:29:47,673 And the reason I think that is, because, you know, the, the big players in the space today are very much, the model is, bring your data to AI, right? 378 00:29:47,673 --> 00:29:53,679 You know, the Harveys and the Goras of the world, you know, they, they, they are, mostly ad hoc. 379 00:29:53,679 --> 00:29:56,973 They're not doing wholesale AI operations for the most part, right? 380 00:29:56,973 --> 00:30:00,115 I see the future as being very much, 381 00:30:00,160 --> 00:30:11,120 how law firms are going to differentiate themselves is by leveraging all of the documents and wisdom that created positive outcomes for their clients. 382 00:30:11,120 --> 00:30:17,811 And that is going to be baked into whatever tech enabled legal service delivery machine gets built. 383 00:30:17,811 --> 00:30:21,471 I think, but in the short term, it could be a risk, right? 384 00:30:21,471 --> 00:30:27,483 If why am I paying X law firm $1,000 an hour who's using 385 00:30:27,483 --> 00:30:30,903 you know, this tool when there's a firm over here at $800 an hour. 386 00:30:30,903 --> 00:30:41,523 I think that is a short-term risk, but long-term, I think firms are going to have to do some R and D and if they want to differentiate, but I don't know, what is your take on 387 00:30:41,523 --> 00:30:42,227 that? 388 00:30:42,404 --> 00:30:45,996 Yeah, I don't, I'll come to the orchestration layer point because I think it's an important one. 389 00:30:45,996 --> 00:30:53,942 But before I get there, the thing that's going to differentiate law firms at the premium end of the market is not the technology, right? 390 00:30:53,942 --> 00:31:00,376 Ultimately, every law firm is going to be using a mixture of the same tools, just like we do now, to be perfectly honest. 391 00:31:00,376 --> 00:31:02,359 And I don't think AI changes that. 392 00:31:02,359 --> 00:31:05,702 What's going to differentiate firms is do you have the right human talent? 393 00:31:05,702 --> 00:31:10,902 And that's, you know, across the spectrum of skills you need, but obviously you're still going to need the best lawyers. 394 00:31:10,902 --> 00:31:21,851 both from an expertise perspective, but also a client handling perspective, a relationship trust builder, sales, those sorts of things are gonna determine who wins. 395 00:31:22,122 --> 00:31:26,335 So you're still gonna be going to law schools trying to recruit the best lawyers ultimately and train them up. 396 00:31:26,335 --> 00:31:36,004 And then the second piece is the piece you mentioned, which is what data do you have within your business that is not available to everyone else via those models? 397 00:31:36,004 --> 00:31:36,984 And that... 398 00:31:37,121 --> 00:31:39,561 Unique play, and I've got some people who challenge me on that. 399 00:31:39,561 --> 00:31:42,641 think that everything's going to be commoditized on the data side of things. 400 00:31:42,641 --> 00:31:44,081 What is it that's really, really unique? 401 00:31:44,081 --> 00:31:47,152 You say, no, ultimately, could say here are the rules. 402 00:31:47,152 --> 00:31:48,232 The what is the law business? 403 00:31:48,232 --> 00:31:49,312 That stuff's gone away. 404 00:31:49,312 --> 00:31:55,032 But the what do do piece does vary depending on the lawyer you're on, your boots on the ground. 405 00:31:55,032 --> 00:32:01,112 If it's a country that is not as predictable as others, the world's becoming a more volatile place. 406 00:32:01,112 --> 00:32:05,000 Those sorts of judgment calls increasingly valuable if you get them right. 407 00:32:05,000 --> 00:32:08,280 around what you do to get around geopolitical risk. 408 00:32:08,480 --> 00:32:11,560 And so those are the two things which are going to differentiate. 409 00:32:11,580 --> 00:32:13,580 And so those are the two things you have to invest in. 410 00:32:13,580 --> 00:32:15,780 Now, what are the barriers to that? 411 00:32:16,040 --> 00:32:24,060 So one is client reticence to allow people to use client data in the design of those systems, right? 412 00:32:24,060 --> 00:32:25,160 And that's the reality. 413 00:32:25,160 --> 00:32:28,600 We still get that from sophisticated technology clients, right? 414 00:32:28,600 --> 00:32:31,760 You require consent for every use of my data in any AI tool. 415 00:32:31,760 --> 00:32:34,940 go, then we can't build intelligence. 416 00:32:34,940 --> 00:32:36,400 that goes across the business. 417 00:32:36,400 --> 00:32:45,694 can do verticals for you, but ultimately you come to Ben as a technology lawyer because he's done work for you for years and knows what it is, but also because he works for 418 00:32:45,694 --> 00:32:50,685 others in the industry and has a sense of what market is and has a sense of what risk tolerances are from peers. 419 00:32:50,785 --> 00:32:52,945 And that can only come if we can work horizontally. 420 00:32:52,945 --> 00:32:55,587 And so that will come across the business, that will come. 421 00:32:55,587 --> 00:33:00,789 But then the second piece is that orchestration layer you're mentioning, because what has happened 422 00:33:01,013 --> 00:33:12,781 over the last 50 years is law firms have been the layer in the value chain where legal expertise, information, project management, technology have been brought together to 423 00:33:12,781 --> 00:33:14,423 deliver a legal service. 424 00:33:14,423 --> 00:33:19,245 over the last 20 years, in-house teams have started to grow their capability to fulfill that role. 425 00:33:19,245 --> 00:33:27,540 So one of the alternative buying patterns was we'll build out a team to do this internally so that we become the orchestration layer and we just take the expertise out of a law firm 426 00:33:27,540 --> 00:33:28,820 for certain bits. 427 00:33:29,015 --> 00:33:35,869 ALSP's, you know, 10, 15 years ago started to come into the market and say, well, there's bits of this that we can take out and we can become the orchestration layer for that. 428 00:33:35,869 --> 00:33:41,624 And now you knew sort of tech law vendors because of AI are playing for that space as well. 429 00:33:41,624 --> 00:33:45,650 So when I'm, when I say, you know, what's going to change is the orchestration layer. 430 00:33:45,650 --> 00:33:52,962 still think there'll be a role for some law firms in that layer, but the winners will be the ones who can maintain a place in that orchestration layer because they bring something 431 00:33:52,962 --> 00:33:56,254 unique to the table when it comes to that data or the talent piece. 432 00:33:56,370 --> 00:34:00,972 If they don't bring anything unique, then they will become suppliers into one of those other orchestration layers. 433 00:34:00,972 --> 00:34:05,054 And the second you do that, then your margin goes, right? 434 00:34:05,054 --> 00:34:07,676 Because ultimately your margin gets squeezed for their margin. 435 00:34:07,676 --> 00:34:17,302 And so that's certainly from our strategy perspective is to say, we want to make sure we continue to deliver enough value that clients will see a role for us, you know, in the 436 00:34:17,302 --> 00:34:23,274 orchestration layer and not have us powering somebody else in that, in that layer. 437 00:34:23,274 --> 00:34:28,090 And that's on the assumption that most tech vendors don't want to become licensed law firms, legal service providers. 438 00:34:28,090 --> 00:34:29,493 But that could change as well. 439 00:34:29,493 --> 00:34:32,704 Yeah, I was going to say I would challenge that assumption. 440 00:34:32,704 --> 00:34:35,836 We're already seeing it here in the US and actually in. 441 00:34:35,836 --> 00:34:38,577 You know there's a few examples. 442 00:34:38,577 --> 00:34:44,139 Crosby is a notable one here in the US and they have a really narrow focus. 443 00:34:44,139 --> 00:34:46,580 It's what I know about him. 444 00:34:46,580 --> 00:34:54,665 I Sequoia, who's one of their the VCs in their cap table have uh had the founders on a podcast and they talked about doing. 445 00:34:54,665 --> 00:34:58,325 uh I believe they do like MSA review for. 446 00:34:58,325 --> 00:35:03,486 some of the big SaaS players in the space like Clay and Stripe. 447 00:35:03,486 --> 00:35:07,117 think that, and I'd be curious to your take on this. 448 00:35:07,477 --> 00:35:18,570 I think it's a really interesting time to be a challenger firm right now and building from the ground up with all, without all of the legacy baggage that a traditional law firm 449 00:35:18,570 --> 00:35:19,440 structure has. 450 00:35:19,440 --> 00:35:26,366 And by legacy baggage, mean, you know, the internal firm, you know, lawyers are ruthlessly measured on billable hours, really hard to... 451 00:35:26,366 --> 00:35:29,169 really hard to change that culturally and otherwise. 452 00:35:29,169 --> 00:35:39,208 The partnership structure itself, the consensus driven decision making, the cash basis accounting that optimizes for profit taking at the end of the year instead of long-term 453 00:35:39,208 --> 00:35:49,140 investment, retirement horizons, the lack of a traditional C-corp governance model where you've got shareholders and you've got layers of risk management. 454 00:35:49,140 --> 00:35:52,562 that you see in traditional enterprise structures. 455 00:35:52,562 --> 00:35:54,224 None of that exists in law firms. 456 00:35:54,224 --> 00:35:58,267 And I think it's going to need to exist in the next iteration. 457 00:35:58,267 --> 00:36:00,949 So I guess two questions. 458 00:36:00,949 --> 00:36:05,282 One is, you agree with that in five, 10 years? 459 00:36:05,282 --> 00:36:12,657 Whatever the number of years is, are we going to need to look fundamentally different than we do today as an industry? 460 00:36:12,657 --> 00:36:16,580 And then what is the viability of a challenger firm 461 00:36:16,580 --> 00:36:25,260 kind of coming up the ranks starting with a narrow niche and you know, maybe a 10 person Amlaw 50 firm one day. 462 00:36:25,260 --> 00:36:28,453 I don't know what, are your thoughts on those two questions? 463 00:36:28,453 --> 00:36:34,055 Yes, I mean, every sort of challenge that you identify is true, right? 464 00:36:34,055 --> 00:36:36,425 And there are trade-offs made throughout. 465 00:36:36,425 --> 00:36:41,898 So there's a reason that most legal systems still require law firms to be partnerships, right? 466 00:36:41,898 --> 00:36:43,540 Alternative business structures are coming. 467 00:36:43,540 --> 00:36:51,403 But actually, wasn't, you know, the requirement to be partnership structure was because of the fiduciary relationship with clients and the profession. 468 00:36:51,403 --> 00:36:52,834 So there is a trade-off. 469 00:36:52,834 --> 00:36:56,209 Once you move away from the partnership structure and the 470 00:36:56,209 --> 00:37:00,790 that impacts the fiduciary relationship and policymakers may decide to change the rules. 471 00:37:00,790 --> 00:37:09,693 But one of the things I'm quite vocal about, I gave evidence to the UK Parliament about this is, you know, let us compete on an even footing, right? 472 00:37:09,693 --> 00:37:17,635 If somebody can deliver something technology enabled, but without having to have all the fiduciary duties that come to consider the client's best interests, then if you want us to 473 00:37:17,635 --> 00:37:20,066 compete with that, take that off the law firms as well, right? 474 00:37:20,066 --> 00:37:23,363 Or alternatively put it on the other side so that everyone's... 475 00:37:23,363 --> 00:37:25,545 you know, achieving the right policy outcome here. 476 00:37:25,545 --> 00:37:28,149 So I think, you know, that shift is going to take a while. 477 00:37:28,149 --> 00:37:36,146 The regulations will take time to come catch up, which is why it has to be very narrow at the moment, because it has to be in areas where policymakers have decided it's okay and 478 00:37:36,146 --> 00:37:38,568 jurisdictions where they decided it's okay. 479 00:37:38,628 --> 00:37:45,035 And so for business like ours, which is already in 45 plus countries and jurisdictions, it's going to be messy, is the honest answer. 480 00:37:45,035 --> 00:37:48,217 We can't just flick a switch tomorrow and change the structure because 481 00:37:48,476 --> 00:37:59,376 It comes down to things like in some markets, we have to have a founder's name in the firm name that is registered with the bar there, so we can't be Baker and McKenzie there. 482 00:37:59,376 --> 00:38:00,426 And people go, it's a different firm. 483 00:38:00,426 --> 00:38:08,353 No, it's like it's a structural change, but the rules require us to have a different structure in that market in order to practice legally. 484 00:38:08,353 --> 00:38:12,228 So the change won't happen uniformly. 485 00:38:12,228 --> 00:38:14,370 But of course, the bigger firms have 486 00:38:14,756 --> 00:38:18,856 more resources and so therefore you would have thought we'll move faster. 487 00:38:19,336 --> 00:38:23,736 again, as the cost of entry goes down with technology, it could well be the case there'll be a challenger firm. 488 00:38:23,736 --> 00:38:33,596 I haven't heard about the sort of 10 person AMLO sort of 50 firm, but the first single principle, you know, billion dollar revenue firm is something people talk about quite a 489 00:38:33,596 --> 00:38:33,676 lot. 490 00:38:33,676 --> 00:38:34,436 Is it possible? 491 00:38:34,436 --> 00:38:35,376 Yeah. 492 00:38:35,556 --> 00:38:39,856 But then the piece is, you know, the big four have 493 00:38:40,164 --> 00:38:45,944 all at various points in time made forays into legal and invested heavily at various points in time. 494 00:38:45,944 --> 00:38:54,175 And one of the challenges they have, even with their resources and their more corporate structure, is delivering what clients want and retaining the talent they need to deliver 495 00:38:54,175 --> 00:38:57,755 what clients want to play at that sort of big end of the table. 496 00:38:58,195 --> 00:39:01,515 And that's part of the challenge as well, right? 497 00:39:01,515 --> 00:39:05,291 It's one thing to say, okay, more corporate structure, but can you keep... 498 00:39:05,363 --> 00:39:17,243 the humans in the mix, and as I said before, humans are to be part of the sort of solution to the top quality product without some of the status, without some of the autonomy that 499 00:39:17,243 --> 00:39:20,594 they've been used to in a private practice partnership model. 500 00:39:20,594 --> 00:39:23,554 And in some organizations, they'll crack the magic formula there. 501 00:39:23,554 --> 00:39:26,054 I think most won't, to be honest. 502 00:39:26,354 --> 00:39:28,285 History's history, it tastes a little bit harder. 503 00:39:28,285 --> 00:39:31,323 And so, you know, I think for more processed 504 00:39:31,323 --> 00:39:34,579 driven or process amenable, I should say service lines. 505 00:39:34,579 --> 00:39:36,562 But yeah, that's where I see the market going. 506 00:39:36,562 --> 00:39:43,573 For the more artisan bit of the market, I think you'll still see a partnership model surviving for quite a while. 507 00:39:43,978 --> 00:39:48,602 Well, and the big four partnerships as well, and they have their own baggage. 508 00:39:48,602 --> 00:40:02,635 I think what makes them different and potentially a real threat in the space is they have innovation in their DNA and law firms generally don't. 509 00:40:02,635 --> 00:40:06,609 That is starting to change, but we got a long way to go. 510 00:40:06,609 --> 00:40:10,899 um 511 00:40:10,899 --> 00:40:18,365 you don't most industries which are innovative don't tend to have people who have titles of chief innovation officer as a rule, right? 512 00:40:18,365 --> 00:40:19,586 It's a fair signal. 513 00:40:19,586 --> 00:40:23,849 It's a fair signal that you're starting from somewhere further back on the field. 514 00:40:23,849 --> 00:40:29,362 But, you know, equally, I do think the shift has started. 515 00:40:29,362 --> 00:40:31,358 I think it started some time ago. 516 00:40:31,358 --> 00:40:33,085 I think the narrative of 517 00:40:33,085 --> 00:40:36,105 law firms having their head in the sand actually a false one. 518 00:40:36,105 --> 00:40:43,076 think actually most good leaders amongst law firms in industry get it. 519 00:40:43,076 --> 00:40:47,336 But coming back to a point we raised earlier, you need client demand to change their buying patterns. 520 00:40:47,336 --> 00:40:53,276 It's a bit like sort of inclusion and equity programs and those sorts of things as well. 521 00:40:53,276 --> 00:40:59,516 It's like if you want to achieve an outcome, as before our current age of politics, you need to change how you buy. 522 00:40:59,536 --> 00:41:00,432 Ultimately, 523 00:41:00,432 --> 00:41:07,272 If you want a more diverse supplier and you still buy from the white males, then you're going to get the white males. 524 00:41:07,512 --> 00:41:08,952 And the same is true around innovation. 525 00:41:08,952 --> 00:41:15,532 If you want innovation, you've got to reward, or at least take a risk on those businesses who are saying, let's do it a different way. 526 00:41:15,532 --> 00:41:17,572 And I think that's to happen and will happen more and more. 527 00:41:17,572 --> 00:41:19,954 But that ultimately is what will drive the change. 528 00:41:19,954 --> 00:41:20,354 Yeah. 529 00:41:20,354 --> 00:41:22,385 And I agree with you, by the way. 530 00:41:22,385 --> 00:41:24,226 I do think that it is changing. 531 00:41:24,226 --> 00:41:31,159 I don't think that most of what I would consider successful firms out there have their head in the sand. 532 00:41:31,159 --> 00:41:42,746 I do think that they're moving slower than maybe I would if I had, you know, and I understand that there's a lot to, again, there's a lot of baggage that has to be managed 533 00:41:42,746 --> 00:41:43,688 on this journey. 534 00:41:43,688 --> 00:41:44,722 And it is, 535 00:41:44,722 --> 00:41:59,262 I find it interesting that, and I look for early signals because what we do is very aligned to firms who think in an innovative way. 536 00:41:59,262 --> 00:42:03,142 We're putting our chips on the table that we're an internet extranet platform. 537 00:42:03,322 --> 00:42:13,957 Intranet, yeah, there's some innovation there, but extranet is a scenario where we believe that the clients are going to demand a different journey. 538 00:42:13,957 --> 00:42:19,478 in how customer journey and how they engage with law firms as we undergo this transformation. 539 00:42:19,478 --> 00:42:21,689 So that's where we're putting our chips on the table. 540 00:42:21,689 --> 00:42:30,484 And one signal that I've seen pretty reliably predict the commitment to innovation is the hiring. 541 00:42:30,484 --> 00:42:33,034 Just look at the people they're bringing in. 542 00:42:33,034 --> 00:42:39,047 You I mean, you're seeing a lot of big four folks, McKinsey folks now move into legal. 543 00:42:39,047 --> 00:42:40,199 You're seeing 544 00:42:40,199 --> 00:42:53,252 I think the org chart and the commitments that firms are making to these hires, because think about it, you're like Liz Grennan at Simpson Thatcher, she's got a big name in the 545 00:42:53,252 --> 00:42:55,795 space and very well respected. 546 00:42:55,795 --> 00:43:04,903 Why would she make the move from McKinsey into a law firm if she wasn't real comfortable that she was going to be given the tools to succeed there? 547 00:43:04,903 --> 00:43:06,804 So I have no knowledge of. 548 00:43:07,014 --> 00:43:07,934 what's going on there. 549 00:43:07,934 --> 00:43:11,326 I, again, I just look at early signals on the hiring. 550 00:43:11,326 --> 00:43:23,891 Um, is that a, is that a good predictor or are there other things that, you know, maybe clients or people should look at to, I guess, try and predict winners and losers of this 551 00:43:23,891 --> 00:43:25,181 transformation. 552 00:43:25,476 --> 00:43:28,678 I mean, think, yeah, the talent that's being hired, I think is important. 553 00:43:28,678 --> 00:43:34,821 And, you know, we've done that for a few years, been looking at sort of who's hiring what type of talent. 554 00:43:34,821 --> 00:43:35,761 Doesn't always work out. 555 00:43:35,761 --> 00:43:37,972 There is a bit of a revolving door of some of those sorts of roles. 556 00:43:37,972 --> 00:43:38,872 And that's the reality, right? 557 00:43:38,872 --> 00:43:44,140 And some of the reasons are the barriers that we've been talking about here, that they run into a challenge. 558 00:43:44,140 --> 00:43:51,833 yeah, we've recruited some super talented people into our business who haven't been able to navigate some of those barriers and through no largely fault of their own, to be frank. 559 00:43:51,833 --> 00:43:59,901 have decided this isn't the right place for them, even though I think we are one of the more progressive when it comes to that structural piece, just given how complex a business 560 00:43:59,901 --> 00:44:00,812 we are anyway. 561 00:44:00,812 --> 00:44:08,408 No, mean the other thing I would be looking at are the core metrics, right? 562 00:44:08,408 --> 00:44:12,663 Ultimately, are the numbers going in the right direction? 563 00:44:12,663 --> 00:44:16,991 And there will be a bit of a period where the investment cycle will require a bit of adapting on 564 00:44:16,991 --> 00:44:20,983 on profits for partner for a few years. 565 00:44:20,983 --> 00:44:32,199 But if you start to see a pull away from firms who get scale, continue to increase scale, but also maintain margin, I think that's a fairly good indication they're doing something 566 00:44:32,199 --> 00:44:32,579 different. 567 00:44:32,579 --> 00:44:42,399 Because there's so much competition, there'll be so much competition, that if you can't do that, if you can't reorganize yourself, then you won't 568 00:44:42,399 --> 00:44:50,681 I think there's definitely still going to be a market for premium legal services and legal services generally, but there will be winners and losers. 569 00:44:50,681 --> 00:44:55,340 And I think the AMLO 50 will look very different in 10 years time to what it looks like. 570 00:44:55,340 --> 00:44:56,350 I completely agree. 571 00:44:56,350 --> 00:44:57,141 Yeah. 572 00:44:57,141 --> 00:44:58,791 And the financial metrics, I agree with you. 573 00:44:58,791 --> 00:45:00,002 They're a bit lagging. 574 00:45:00,002 --> 00:45:03,073 think it's hard to find leading indicators. 575 00:45:03,073 --> 00:45:12,310 Again, the only, because you certainly can't, there was, there's a professor at Northwestern who created a law firm innovation index. 576 00:45:12,310 --> 00:45:21,659 And the approach was to go crawl the law firms websites and find things that seem to be leading towards innovation, you know, 577 00:45:21,659 --> 00:45:23,380 AFAs. 578 00:45:23,380 --> 00:45:30,897 Anyway, can't really there's a huge disconnect between what what's being said that from a marketing perspective and what's actually being done. 579 00:45:31,308 --> 00:45:38,481 Yeah, and you look at that like the products that everyone's announcing, know, the partnerships here, deals there, licenses taken. 580 00:45:38,741 --> 00:45:40,659 The next question is what are you doing with it? 581 00:45:40,659 --> 00:45:41,160 Right. 582 00:45:41,160 --> 00:45:45,481 And, you know, I do think there's a lot of innovation by press release that happens in the market. 583 00:45:45,481 --> 00:45:49,102 I'm not going to for a second claim that we haven't been guilty of some of that. 584 00:45:49,102 --> 00:45:52,003 You you're competing with the market that you're facing. 585 00:45:52,003 --> 00:45:54,044 Clients want to hear stories. 586 00:45:54,044 --> 00:45:56,088 But the actual changing of 587 00:45:56,088 --> 00:46:03,017 process and the data and the behaviour needed to actually affect real change is hard work as we all know. 588 00:46:03,017 --> 00:46:07,521 And I think the reality sometimes is different from the press release. 589 00:46:07,521 --> 00:46:12,038 Yeah, and that has been especially true pre-gen AI. 590 00:46:12,038 --> 00:46:14,220 I think it is catching up. 591 00:46:14,220 --> 00:46:14,638 um 592 00:46:14,638 --> 00:46:18,650 think Gen.ai is a general purpose technology and that's the big difference, right? 593 00:46:18,650 --> 00:46:29,175 So everything up till now has largely been application specific and that has an impact, but it doesn't cut across the entire functioning of the organization and also your 594 00:46:29,175 --> 00:46:30,586 client's organization as well, right? 595 00:46:30,586 --> 00:46:31,627 That's the difference here. 596 00:46:31,627 --> 00:46:37,659 Yeah, it's not a perfect analogy, but effectively it's look at the productivity jump in legal when email came in. 597 00:46:37,659 --> 00:46:41,341 You'd have to wait for a letter for seven days to execute things. 598 00:46:41,609 --> 00:46:46,607 we're looking at that sort of productivity jump and that unavoidably impacts the economics. 599 00:46:46,607 --> 00:46:51,399 or digital legal research, you know, um another huge innovation. 600 00:46:51,399 --> 00:46:53,048 Well, this has been a great conversation. 601 00:46:53,048 --> 00:46:57,341 I really appreciate you carving out a little bit of time to have a chat. 602 00:46:57,341 --> 00:47:00,483 know my listeners will certainly enjoy it. 603 00:47:00,483 --> 00:47:07,866 How do people find out more about maybe, you know, writing or speaking that you do in the firm? 604 00:47:08,137 --> 00:47:10,777 So follow me on LinkedIn, it's probably the best way. 605 00:47:10,777 --> 00:47:14,441 I tend to be fairly assiduous at publicizing myself on there. 606 00:47:14,441 --> 00:47:18,665 And that'll connect you to most of the right people that I'm connected to on this side of the pond. 607 00:47:18,665 --> 00:47:20,346 But thank you for having me, really enjoyed it. 608 00:47:20,346 --> 00:47:20,918 Awesome. 609 00:47:20,918 --> 00:47:22,642 Okay, we'll chat again soon. 610 00:47:22,642 --> 00:47:23,173 Thanks, Ben. 611 00:47:23,173 --> 00:47:25,829 All right, take care. 612 00:47:25,873 --> 00:47:26,496 Bye bye. 00:00:02,474 Ben Algrove, how are you this afternoon? 2 00:00:02,653 --> 00:00:04,040 Very well, thank you, Ted. 3 00:00:04,040 --> 00:00:04,976 Thank you. 4 00:00:05,088 --> 00:00:06,711 I really appreciate you coming on. 5 00:00:06,711 --> 00:00:10,498 You're coming to us from London, correct? 6 00:00:10,782 --> 00:00:11,393 That's right. 7 00:00:11,393 --> 00:00:16,089 So based in London, I'm Australian originally, but I've been here for the last 20 plus years. 8 00:00:16,089 --> 00:00:19,273 So I think I'm a Londoner for all 10s of purposes. 9 00:00:19,273 --> 00:00:23,032 Okay, yeah, my team is actually over there for Legal Geek this week. 10 00:00:23,032 --> 00:00:24,773 Indeed, indeed. 11 00:00:26,135 --> 00:00:26,895 I'm not making it. 12 00:00:26,895 --> 00:00:30,785 Members of my team are making it this time around, but it's good event. 13 00:00:30,785 --> 00:00:33,125 Yeah, yeah, it's our first time there. 14 00:00:33,125 --> 00:00:35,565 We're somewhat new in the UK. 15 00:00:35,745 --> 00:00:40,245 We're growing in that direction, but yeah, we're excited about it. 16 00:00:40,245 --> 00:00:44,105 Well, before we jump into our agenda, let's get you introduced. 17 00:00:44,105 --> 00:00:47,736 So you're the chief innovation officer at Baker McKenzie. 18 00:00:47,736 --> 00:00:53,496 God, I don't know what your, I think you guys are on the AmLaw list, correct? 19 00:00:54,076 --> 00:00:55,256 You're American based. 20 00:00:55,256 --> 00:00:59,474 I know you're at the top of the list based on your size and scale, but 21 00:00:59,474 --> 00:01:03,674 Why don't you tell us a little bit about who you are, what you do, and where you do it? 22 00:01:03,674 --> 00:01:04,494 Yeah, thanks, Ted. 23 00:01:04,494 --> 00:01:06,334 So I'm a practicing lawyer. 24 00:01:06,334 --> 00:01:08,934 So I'm a technology lawyer by trade. 25 00:01:08,934 --> 00:01:17,674 And before I came to private practice, I was an academic, an AI academic, which is what I was doing before I came into private practice law. 26 00:01:17,674 --> 00:01:19,114 So I still do the client work. 27 00:01:19,114 --> 00:01:26,394 I still advise a variety of technology companies on various forms of regulation, including AI regulation. 28 00:01:26,394 --> 00:01:28,012 my management role 29 00:01:28,012 --> 00:01:31,185 at the firm is, as you say, is the chief innovation officer. 30 00:01:31,185 --> 00:01:34,206 So I'm the firm's first chief innovation officer. 31 00:01:34,207 --> 00:01:44,377 And in that role, I advise our management and our partners on not only our strategy when it comes to innovation, and these days, most of that is AI, let's be honest, about the 32 00:01:44,377 --> 00:01:45,603 conversation. 33 00:01:45,603 --> 00:01:53,334 But equally, I'm the one who engages with the, know, leads the engagement with our clients, with the market around where the legal profession's going, you where our strategy 34 00:01:53,334 --> 00:01:55,836 is to respond to that, what I think clients 35 00:01:55,836 --> 00:01:57,228 need and are asking for. 36 00:01:57,228 --> 00:02:01,420 And that's in the context of a firm which as you say is a large international law firm. 37 00:02:01,420 --> 00:02:03,271 It was the first international law firm. 38 00:02:03,271 --> 00:02:06,673 It's not the biggest anymore but we are relatively sizable. 39 00:02:06,673 --> 00:02:14,247 And we're quite proud of the fact that although we were founded in Chicago, so I do think we have American, well we do have American roots, our second office was Caracas in 40 00:02:14,247 --> 00:02:14,888 Venezuela. 41 00:02:14,888 --> 00:02:17,620 So we are sort of the definition of an international business. 42 00:02:17,620 --> 00:02:18,914 So yeah, that's my. 43 00:02:18,914 --> 00:02:19,608 Interesting. 44 00:02:19,608 --> 00:02:23,598 And how long has the innovation function existed at Baker McKenzie? 45 00:02:23,598 --> 00:02:36,558 So we sort set up our first sort of name strategy in 2016, 2017, like lots of firms did about that period of time, that sort of first phase of legal tech impacting the market. 46 00:02:36,898 --> 00:02:43,818 My role specifically has been around for just over, well it's actually nearly four years now, I supposed say just over three, but time flies. 47 00:02:43,818 --> 00:02:50,758 I've been involved since 2016 to 2017, but the Chief Innovation Officer role was brought in about four years ago now. 48 00:02:51,142 --> 00:03:00,489 Yeah, I've been around long enough to remember when legal innovation used to be an oxymoron like a jumbo shrimp or a military intelligence. 49 00:03:00,489 --> 00:03:03,713 Times are changing, which is a great time. 50 00:03:03,713 --> 00:03:08,656 So we're a legal tech company and it's an exciting time from a vendor perspective. 51 00:03:08,656 --> 00:03:17,184 It's a little, it's a little scary too, because you know, the future of law is a little bit uncertain. 52 00:03:17,184 --> 00:03:17,705 I think 53 00:03:17,705 --> 00:03:19,085 There's a bright future. 54 00:03:19,085 --> 00:03:23,905 It's just, we don't know exactly how things are going to, how the dust is going to settle. 55 00:03:24,165 --> 00:03:30,985 And, um, you know, we're 100 % dependent on law firms as our client base. 56 00:03:30,985 --> 00:03:40,225 So, you know, I started this podcast shortly after chat GPT was released and, um, it really had nothing to do with AI. 57 00:03:40,225 --> 00:03:44,865 The reason I started the podcast is because I was honestly confused. 58 00:03:45,124 --> 00:03:47,666 on the innovation function within legal. 59 00:03:47,666 --> 00:03:53,511 had seen many knowledge management roles kind of get rebranded with the innovation title. 60 00:03:53,511 --> 00:04:00,357 And when I talked to certain people, the remits or the responsibilities of those roles hadn't changed that much. 61 00:04:00,357 --> 00:04:09,803 So I started off with a couple of folks in your seat at other firms and just, hey, tell me, let's talk about, you know, 62 00:04:09,879 --> 00:04:13,306 the divergence or convergence of legal innovation and KM. 63 00:04:13,306 --> 00:04:15,821 How does Baker-Mackenzie think about that distinction? 64 00:04:15,821 --> 00:04:17,111 I think it's an evolution. 65 00:04:17,111 --> 00:04:22,014 So I'm not going to say that we have necessarily reached end point or that we've got it all figured out. 66 00:04:22,014 --> 00:04:27,626 We've taken a slightly different approach to many of the firms in the market, as you rightly note. 67 00:04:27,626 --> 00:04:37,670 In lots of businesses, the role has traditionally sat in technology or in knowledge or some sort of adjacent function within the business services side of the business. 68 00:04:37,811 --> 00:04:43,187 When we set this up, we put a practicing lawyer and a partner into that 69 00:04:43,187 --> 00:04:43,927 lead role. 70 00:04:43,927 --> 00:04:52,891 Now obviously I'm supported by a sort of a team of business professionals across the business, but we felt it was really important to have a partner in the role for two 71 00:04:52,891 --> 00:04:53,211 reasons. 72 00:04:53,211 --> 00:05:02,745 So one was somebody who was close to clients and close to what was happening in the market and had that direct sort of entry point. 73 00:05:02,745 --> 00:05:09,828 And then also internally as a change agent, if that's the role and it's the role that our management wanted was somebody to challenge 74 00:05:09,859 --> 00:05:16,413 established business models, established thinking, that is an easier thing to do in a partnership if you are a partner. 75 00:05:16,413 --> 00:05:23,635 that, you know, we hate the term non-lawyers, but the reality is that that is the dynamic, I think, in most partnerships. 76 00:05:23,635 --> 00:05:28,046 And so for that reason, we set it up in the way that we have with me sitting in that role. 77 00:05:28,046 --> 00:05:30,207 I don't think I will forever be in the role. 78 00:05:30,207 --> 00:05:31,567 I certainly don't want to be in the role forever. 79 00:05:31,567 --> 00:05:36,345 And I don't think necessarily the person who succeeds me needs to be a partner. 80 00:05:36,345 --> 00:05:39,060 once we get the ball rolling or where we need it to be. 81 00:05:39,060 --> 00:05:43,146 But certainly for this initial period, it's been useful to have a structure that 82 00:05:43,224 --> 00:05:43,644 Yeah. 83 00:05:43,644 --> 00:05:48,984 And I wrote an article on LinkedIn and mentioned you and others. 84 00:05:48,984 --> 00:05:50,564 I'm an advocate. 85 00:05:50,564 --> 00:05:52,244 think you're exactly right. 86 00:05:52,244 --> 00:05:56,424 think there are definitely advantages and just a little background. 87 00:05:56,424 --> 00:06:09,578 So I've been in legal tech for almost 20 years and have done business with more than half the AmLaw and had a good cross-sectional view of the innovation. 88 00:06:09,578 --> 00:06:17,394 innovation function and the inner workings and the dynamics and the buying patterns and how firms implement technology. 89 00:06:17,394 --> 00:06:20,516 so I've had an interesting perspective. 90 00:06:20,516 --> 00:06:34,227 And I think that the current state of legal, there are advantages to having a lawyer, not necessarily have to be a partner, but in that role, because it does give some street cred. 91 00:06:34,259 --> 00:06:38,002 And, um, you're asking people to change what they do. 92 00:06:38,002 --> 00:06:52,064 And that's not easy, especially in a, in an industry like legal that has been so it's a very traditional, know, tradition runs strong in, in legal and, it's a very past precedent 93 00:06:52,064 --> 00:06:53,606 focused discipline. 94 00:06:53,606 --> 00:06:55,827 It's also very artisanal. 95 00:06:55,827 --> 00:07:00,384 There's not a lot of standardized processes that run across all. 96 00:07:00,384 --> 00:07:07,451 practice areas on the practice side, certainly on the business of law side, there's lots of practices or processes. 97 00:07:07,451 --> 00:07:12,706 but yeah, it was a fun debate to have with some people who I, who I really respect. 98 00:07:12,706 --> 00:07:14,317 And, um, we debated that. 99 00:07:14,317 --> 00:07:22,719 And I think that in the future, we could end up in a place where, it's not as advantageous if 100 00:07:41,520 --> 00:07:43,713 Look, I think it does depend on... 101 00:07:43,713 --> 00:07:51,147 you know, which bit of the market you're playing in, because coming back to one of your earlier comments around, you know, this is a sort of transitional moment for the 102 00:07:51,147 --> 00:07:53,008 profession, which I agree with. 103 00:07:53,008 --> 00:08:03,451 But ultimately, you know, the opportunity that exists for law firms and vendors to law firms and alternatives to law firms, you know, is determined by what the buyer wants, 104 00:08:03,451 --> 00:08:04,672 right, what the client wants. 105 00:08:04,672 --> 00:08:06,336 And the reality is 106 00:08:06,336 --> 00:08:14,616 Despite the fact that in 2016, 2017, the same articles were being run saying AI is going to kill the law, it didn't happen. 107 00:08:14,616 --> 00:08:16,116 We're still seeing industry that's growing. 108 00:08:16,116 --> 00:08:20,156 Now, I am a believer that this time is different, and there's a variety of reasons I think it is different. 109 00:08:20,156 --> 00:08:28,767 I'm not trying to deny that there is going to be a foundational impact on the economics of the legal industry and the delivery model. 110 00:08:28,767 --> 00:08:32,377 The reality is the conservative model has... 111 00:08:32,377 --> 00:08:34,978 done very well, thank you for the legal industry for time. 112 00:08:34,978 --> 00:08:42,916 And pure economics say that, know, supply and demand, there is a lot of demand, and the supply has, you know, delivered what was being asked. 113 00:08:42,916 --> 00:08:48,208 clients don't like the billable hour, it's getting more expensive, the world's a much more volatile place. 114 00:08:48,208 --> 00:08:51,019 So actually, the demand for legal services is going up. 115 00:08:51,019 --> 00:08:56,031 And what we have now are an increasing number of viable alternatives to the traditional delivery model. 116 00:08:56,031 --> 00:08:58,472 And that, I think, is what is going to shape up. 117 00:08:58,745 --> 00:09:00,956 you what happens over the next few years. 118 00:09:00,956 --> 00:09:10,059 But ultimately I do, I'm a positive person around the fate of the industry and certainly where we want to play, which is the premium end of the market, I think there will still be 119 00:09:10,059 --> 00:09:14,983 demand for that premium end service, which will still be white glove. 120 00:09:14,983 --> 00:09:21,156 I don't use the word artisanal, but white glove because that's what our clients want because they resist the standardization as well. 121 00:09:21,156 --> 00:09:21,345 Right. 122 00:09:21,345 --> 00:09:24,747 And that's, that's the simple reality for the things that they need. 123 00:09:25,048 --> 00:09:34,900 But there are layers of services which firms like us may or may not do, to be frank, going into the future, which are more susceptible to standardization where the buyer is willing 124 00:09:34,900 --> 00:09:43,154 to accept the standardization or where the technology allows a certain amount of customization on the top like consumer products, but the core is standardized, but that 125 00:09:43,154 --> 00:09:44,834 becomes the right delivery model. 126 00:09:44,834 --> 00:09:51,861 And so I think when it comes to the roles that deliver that, that's going to be, you're going to need, I mean, we have plenty of people in our business with 127 00:09:51,861 --> 00:10:00,116 Lean Six Sigma and those sorts of process qualifications and plenty of technical experts within our business, whether they're the right ones to lead the function, I think depends 128 00:10:00,116 --> 00:10:01,767 on what the target is you're trying to hit. 129 00:10:01,767 --> 00:10:05,099 And I think you'll need a mixture of skill sets going forward. 130 00:10:05,262 --> 00:10:05,652 Yeah. 131 00:10:05,652 --> 00:10:19,569 And I think that I agree with everything that you said and law firms financial performance have been consistently improving really since the recovery started from the Great 132 00:10:19,569 --> 00:10:20,309 Recession. 133 00:10:20,309 --> 00:10:24,111 AmLaw profitability sets new records every year. 134 00:10:24,111 --> 00:10:29,434 So the status quo is very sticky and we're reaching 135 00:10:30,106 --> 00:10:37,952 a point of interesting tension where the stickiness of the status quo from the law firm's perspective. 136 00:10:37,952 --> 00:10:42,034 You mentioned that law firm clients don't like the billable hour. 137 00:10:42,074 --> 00:10:44,815 It's a love-hate relationship. 138 00:10:44,815 --> 00:10:52,401 They hate it, but also there's a lot of pearl-clutching going on with respect to the billable hour. 139 00:10:52,401 --> 00:10:55,091 I hear it from pricing professionals where 140 00:10:55,091 --> 00:11:01,356 You know, the conversation will start to head down the AFA path and the, they want shadow billing to see their hours. 141 00:11:01,356 --> 00:11:13,357 And it's like, you know, um, as a professional service provider myself, the challenges with that are there has to be wins and losses as part of any sort of fixed price 142 00:11:13,357 --> 00:11:18,984 engagement and fixed price really requires fixed scope, but you can't, you can't get into it. 143 00:11:18,984 --> 00:11:20,815 Like it does not exceed. 144 00:11:20,815 --> 00:11:23,586 type of engagement as a service provider. 145 00:11:23,586 --> 00:11:34,551 That's a losing proposition for a service provider because what you've done is essentially say, okay, you're capping hours, but you're not allowing, if I generate some efficiencies 146 00:11:34,551 --> 00:11:40,194 to recoup the losses that I had on the other X number of matters. 147 00:11:40,194 --> 00:11:47,264 And it seems like clients are still holding firms back from really charging down the 148 00:11:47,264 --> 00:11:48,353 AFA path. 149 00:11:48,353 --> 00:11:49,929 Is that your perspective? 150 00:11:49,976 --> 00:11:58,155 So I think, and there are some notable exceptions to this in the market, but I think that that proposition is true, but it's not because I think they're wedded to the billable hour 151 00:11:58,155 --> 00:12:01,358 from any sense of sort of affection for it. 152 00:12:01,358 --> 00:12:04,280 There is some type of work where that is the appropriate model for charging, right? 153 00:12:04,280 --> 00:12:06,072 There's a certain amount of sort of consulting heavy. 154 00:12:06,072 --> 00:12:15,670 If you want a specific person, because they have a specific expertise, then actually charging for their time is not a bad mechanic for valuing that contribution. 155 00:12:15,670 --> 00:12:17,171 If you want an outcome, 156 00:12:17,572 --> 00:12:21,355 then it's a really bad mechanic for valuing the work that's done. 157 00:12:21,355 --> 00:12:32,525 But what the market has failed to deliver, despite thousands of conferences and thousands of speeches and articles, is an alternative means for valuing legal input. 158 00:12:32,525 --> 00:12:41,621 So if you take something like a big private equity transaction, people are perfectly comfortable with the banks taking a percentage of the deal as a mechanic for the value 159 00:12:41,621 --> 00:12:42,723 they bring to the table. 160 00:12:42,723 --> 00:12:50,095 very reluctant to do that for law firms or other professional service advisors in the piece, even if it's a percentage of a percentage of the value the banks bring, because 161 00:12:50,095 --> 00:12:51,363 obviously they bring the money. 162 00:12:51,363 --> 00:12:54,271 So I'm not saying it necessarily be the same percentage. 163 00:12:54,311 --> 00:12:55,253 Question why? 164 00:12:55,253 --> 00:13:03,230 We've tried models where we have proposed tying our charging to the share price of a client, right? 165 00:13:03,230 --> 00:13:06,303 So being part of the collective success of the client. 166 00:13:06,303 --> 00:13:07,984 Again, reluctance to do that. 167 00:13:07,984 --> 00:13:08,264 Why? 168 00:13:08,264 --> 00:13:12,446 Because it's an indirect relationship between import and output. 169 00:13:12,446 --> 00:13:15,848 When it comes to end time is what people have used. 170 00:13:15,848 --> 00:13:22,592 But if you look back 50 years ago, the billable hour was not the dominant model for law firms in the market. 171 00:13:22,592 --> 00:13:24,713 It was a retainer model, largely. 172 00:13:24,713 --> 00:13:26,414 You had your law firm. 173 00:13:26,434 --> 00:13:29,926 What changed was actually the market started to become more fluid. 174 00:13:29,926 --> 00:13:31,757 There was more competition in the market. 175 00:13:31,757 --> 00:13:33,468 Companies didn't have just one law firm. 176 00:13:33,468 --> 00:13:34,188 They had panels. 177 00:13:34,188 --> 00:13:36,479 And so they needed to be able to compare them. 178 00:13:36,550 --> 00:13:39,924 And ultimately, that's where this metric came from. 179 00:13:39,924 --> 00:13:50,152 And you're right, if we want to come up with a different economics for the industry, we've got to get away from our sort of reliance on that as a measure. 180 00:13:50,152 --> 00:13:55,117 And I think there's, you know, often people talk about the business model of law firms being the billable hour. 181 00:13:55,117 --> 00:14:02,306 The monitoring of what people do within the business, by the way they spend their time, that's still going to be around for quite a while within a law firm. 182 00:14:02,306 --> 00:14:04,376 It's the same in most businesses which are service-based. 183 00:14:04,376 --> 00:14:08,179 You need to know what people are doing because to a certain extent you are monetizing their efforts. 184 00:14:08,359 --> 00:14:13,582 Whereas the pricing mechanic to the market is a different thing, related but different. 185 00:14:13,582 --> 00:14:22,648 And I think the pricing mechanic has to change long before it will change internally as to how many hours we're expecting associates to work billables in a law firm. 186 00:14:22,648 --> 00:14:28,502 And clients could have got rid of the billable hour 20 years ago when this conversation really first started. 187 00:14:28,771 --> 00:14:36,351 by putting out RFPs that said we want a price, but which didn't include what they still usually include, and we also want your rates, right? 188 00:14:36,351 --> 00:14:37,751 It's that second bit. 189 00:14:37,791 --> 00:14:47,731 Ultimately, they do control the market in a free market, and that is the thing that I love leaning into client tooling, to say, okay, yep, we can go compare the price. 190 00:14:47,731 --> 00:14:57,751 We can ask five firms what they were charged to do this thing, and then pick based on whatever our assessment is of value, but we don't need the hourly rate to compare those 191 00:14:57,751 --> 00:14:58,731 five firms. 192 00:14:58,892 --> 00:14:59,212 Yeah. 193 00:14:59,212 --> 00:15:07,530 And you know, what's interesting and what makes this such a difficult problem, you know, I've heard, you know, well, we'll just do value-based billing or outcome-based billing. 194 00:15:07,530 --> 00:15:15,078 It's really not that simple because law firms, what law firms deliver goes well beyond just the work product. 195 00:15:15,078 --> 00:15:19,802 And even really the advice advisory services that they provide. 196 00:15:19,962 --> 00:15:21,075 There are 197 00:15:21,075 --> 00:15:36,055 Um, a lot of things kind of bundled up, there's reputation, there's trust and decoupling these things and figuring out how to monetize them independently is very challenging. 198 00:15:36,195 --> 00:15:49,775 And, you know, I saw somebody post the other day and I had a comment on it, um, where they talked about these are, we have to figure out what the client values. 199 00:15:49,843 --> 00:15:50,283 Right. 200 00:15:50,283 --> 00:15:54,143 What in the delivery of legal work does the client truly value? 201 00:15:54,143 --> 00:16:01,003 And that answer will vary across practice areas and probably across clients. 202 00:16:01,123 --> 00:16:14,963 And so how, how do we unbundle these things and say, we're going to charge you, you know, um, a fixed price for the document, but we're going to charge you hourly and, you know, w 203 00:16:14,963 --> 00:16:17,937 w for maybe the advisory work and 204 00:16:17,937 --> 00:16:22,442 we think we should land here based on all of these intangible factors. 205 00:16:22,442 --> 00:16:25,716 It seems like a really difficult problem to unravel. 206 00:16:25,716 --> 00:16:32,608 Yeah, look, it's a nuance problem, but actually I don't think it's difficult. 207 00:16:32,608 --> 00:16:39,239 So the first piece that I think is essential is to recognize the point you made, which is it's more than just the delivery of the service. 208 00:16:39,239 --> 00:16:44,592 And actually, AI is a really good example of a change that's forcing that conversation. 209 00:16:44,592 --> 00:16:51,714 Because in addition to brand and reputation and trust, one of the things that clients want is our insurance policies, right? 210 00:16:51,714 --> 00:16:53,944 And I don't think we should be shy about saying. 211 00:16:54,421 --> 00:17:03,536 And so we are now going into the market, and I should say this in consultation with our general counsel and our insurers, saying to clients, you we can do this faster and 212 00:17:03,536 --> 00:17:12,462 cheaper, but we offer it to you at price X without the insurance policy that you accept what you're getting under the tin and the level of quality assurance that goes with it, 213 00:17:12,462 --> 00:17:15,033 but you get a cost benefit and a speed benefit. 214 00:17:15,234 --> 00:17:19,228 Or we can use that same technology, but then wrap a human layer around it. 215 00:17:19,228 --> 00:17:24,699 which means it is more expensive and it's price X plus, but the insurance policy comes with that, right? 216 00:17:24,699 --> 00:17:32,034 Because we stand behind our quality control and our workflows to deliver that point and therefore our insurers will stand behind us when we do that. 217 00:17:32,034 --> 00:17:33,324 We're still in a transitional phase. 218 00:17:33,324 --> 00:17:37,565 Clients are really uncomfortable with that conversation because they'll say, you're a top tier law firm. 219 00:17:37,565 --> 00:17:39,726 should be able to, know, everything that comes from you should be right. 220 00:17:39,726 --> 00:17:44,797 And you go, but you need to understand the delivery model is different under those two outcomes. 221 00:17:44,957 --> 00:17:47,570 And the value to you is different under those two outcomes. 222 00:17:47,570 --> 00:17:53,432 And so there is a difference not only in price, but also in the product that's being offered. 223 00:17:53,432 --> 00:18:01,497 And I think that that's a conversation we're to have to repeatedly have across the market for people to get comfortable with that if they want to get the full benefit of the speed 224 00:18:01,497 --> 00:18:04,038 and the cost savings as well. 225 00:18:04,098 --> 00:18:14,393 The second point I think that the market really needs to get their head around is the sort of win-loss narrative on a matter basis. 226 00:18:14,393 --> 00:18:15,574 is not helpful for anyone. 227 00:18:15,574 --> 00:18:19,253 Ultimately, law firms are not charities. 228 00:18:19,253 --> 00:18:22,605 They have professional obligations and have duties of fidelity to their clients. 229 00:18:22,605 --> 00:18:27,817 So they're not a completely unregulated or a completely mercenary service provider. 230 00:18:27,817 --> 00:18:29,237 There is a difference. 231 00:18:29,277 --> 00:18:33,298 But ultimately, we are profit-making or profit-seeking entities. 232 00:18:33,298 --> 00:18:37,459 Our clients are profit-seeking entities mostly, other than our pro bono clients. 233 00:18:37,519 --> 00:18:41,420 And we shouldn't be shy about saying, we need a return on capital. 234 00:18:41,706 --> 00:18:44,297 that reflects the investment that's being made. 235 00:18:44,318 --> 00:18:48,940 And of course, we're going to seek to maximize that within reason. 236 00:18:48,940 --> 00:18:52,302 We could do a margin-based pricing arrangement, right? 237 00:18:52,302 --> 00:18:58,206 Again, if you want to be creative around it, you could say there's a certain margin frame in it as to what a reasonable margin is. 238 00:18:58,206 --> 00:19:06,507 But unless you're willing to go down that route, it's not your job as the customer to determine what the margin is on the fact that I a Rolls Royce or I build a Ford in respect 239 00:19:06,507 --> 00:19:07,367 of what the... 240 00:19:07,515 --> 00:19:12,875 parts that go into that product are, that's an issue for me as the vendor there. 241 00:19:12,955 --> 00:19:16,655 And so I think thinking about it at a matter level, do I win on this engagement or not? 242 00:19:16,655 --> 00:19:25,755 The question is really, is the price that's being offered in the market for the quality I'm competitive with other vendors in the market? 243 00:19:25,755 --> 00:19:29,115 If the answer is, too expensive, the market will sort that out. 244 00:19:29,115 --> 00:19:33,095 And if the market is too cheap, right, then you should snap that up straight away, right? 245 00:19:33,095 --> 00:19:35,758 Because that's a really good price, they've mispriced it in the market. 246 00:19:35,758 --> 00:19:48,199 But talking about the law firm winning, I think it displays a trust relationship which is, I think, broken, but actually more fundamentally is the wrong conversation because it's 247 00:19:48,199 --> 00:19:48,990 not about winning. 248 00:19:48,990 --> 00:19:54,296 It's about there are different pricing models and different risks attached to those models and different scoping attached to those models. 249 00:19:54,296 --> 00:19:58,580 And if you only want to pay for the input that goes into the product, then actually we are back to the hourly rate. 250 00:19:58,580 --> 00:20:01,822 The input is there and there's a markup on the input and you pay for that. 251 00:20:02,172 --> 00:20:05,774 If you want the output, that is something where it's not a win-loss scenario. 252 00:20:05,774 --> 00:20:07,608 We've got to change that language as well. 253 00:20:08,014 --> 00:20:16,863 Yeah, I just had a visual when you were describing that about, you know, essentially waving cut like, I don't know how it works in the UK, but here in the US when you go and 254 00:20:16,863 --> 00:20:24,812 rent a car, rent a vehicle, you know, and the optional, you know, cub cover and all the places they make you initial, they make good margin on that. 255 00:20:24,812 --> 00:20:28,900 And yeah, that's that just brought interesting visual to mind. 256 00:20:28,900 --> 00:20:31,100 if you look at, yes, I mean, it's that visual. 257 00:20:31,100 --> 00:20:34,100 And I think that's fundamentally what we're talking about here. 258 00:20:34,100 --> 00:20:46,020 Because if you look at, you know, some of the workflows that we've built out already for some new ways of service delivery, as a rule, we don't tend to make the output directly 259 00:20:46,020 --> 00:20:47,140 accessible to the client, right? 260 00:20:47,140 --> 00:20:52,140 We're not in the business of productizing our knowledge in an app or a tool. 261 00:20:52,140 --> 00:20:58,120 That's not, you know, we've gone down that route and explored it and decided it's not really the piece of the place in the market that we want to play. 262 00:20:58,415 --> 00:20:59,275 But we could, right? 263 00:20:59,275 --> 00:21:05,715 What we do is we build things for our lawyers to use who then deliver the advice more efficiently, quicker, more informed. 264 00:21:05,875 --> 00:21:11,055 And our clients are often involved in designing those systems that we use, but we don't tend to make them available to the client. 265 00:21:11,055 --> 00:21:11,975 But you could, right? 266 00:21:11,975 --> 00:21:16,457 You could have a world where you said to the client, we'll give you access to the same tool that lawyers are using. 267 00:21:16,457 --> 00:21:19,637 You can use it to get an answer quicker, but it doesn't come with our insurance policy. 268 00:21:19,637 --> 00:21:22,317 doesn't come with, it's not legal advice, right? 269 00:21:22,317 --> 00:21:26,193 There's privilege questions and all those sorts of things as well because the lawyers not been involved in it. 270 00:21:26,203 --> 00:21:36,312 But within 24 hours, there'll be an SLA that will sign off on it as legal advice that's contextual to you and has had the quality assurance that comes with the insurance. 271 00:21:36,312 --> 00:21:39,184 That's a huge opportunity for the market to change the way it operates. 272 00:21:39,184 --> 00:21:51,234 And if you think about it at the other end of the market, access to justice for consumer type issues and criminal type issues, huge opportunities to fundamentally democratize 273 00:21:51,234 --> 00:21:52,625 access to the law. 274 00:21:52,853 --> 00:22:00,792 in a way we haven't been able to do before, where none of us, well, there are obviously some complex issues, but most of us would say that is a positive and we should do that 275 00:22:00,792 --> 00:22:03,766 because the system does not serve that segment of the population. 276 00:22:03,766 --> 00:22:10,252 But those same principles could apply at the corporate end as well, ultimately, about getting access to things at a different price point. 277 00:22:10,456 --> 00:22:17,279 You know, I've heard the cost plus proposition before, where you're essentially pricing on margin. 278 00:22:17,320 --> 00:22:26,825 I think one of the challenges with that though is your costs are based on internal firm compensation decisions that your client might not agree with, right? 279 00:22:26,825 --> 00:22:35,031 Like your cost to deliver, if you have a partner whose cost is a million dollars a year and you're offering me 280 00:22:35,403 --> 00:22:37,763 you know, cost plus 20%. 281 00:22:37,763 --> 00:22:44,883 So then I'm essentially paying, you know, that'd be roughly $600 an hour, US, right? 282 00:22:44,883 --> 00:22:47,043 Cost is roughly 5,000 hours. 283 00:22:47,043 --> 00:22:48,203 I'm sorry. 284 00:22:49,098 --> 00:22:50,469 Yeah, right. 285 00:22:50,469 --> 00:23:00,169 So the challenge though is that the structure of the internal firm compensation is going to have a huge impact on what those, what that margin looks like, because this is a people 286 00:23:00,169 --> 00:23:01,209 business. 287 00:23:01,297 --> 00:23:05,316 So how might that work? 288 00:23:05,316 --> 00:23:16,757 Because it'd be really difficult to compare apples to apples as a buyer and say, OK, well, I'm going to pay cost plus 20 % to Baker McKenzie and law firm Y. 289 00:23:16,757 --> 00:23:20,188 But your cost may look very different than law firm Y. 290 00:23:20,188 --> 00:23:24,480 Yeah, I actually don't think it's that different to what clients are already doing on the hourly rate. 291 00:23:24,480 --> 00:23:31,084 So if you look at different pricing strategies firms have on the hourly rate, you can have really high rates and offer big discounts. 292 00:23:31,084 --> 00:23:36,928 You can have lower rates but offer lower discounts if you're competing at the same quality level and bit of the market. 293 00:23:36,928 --> 00:23:45,189 They end up with the same outcome, different structural decisions around how you price, but also different structural decisions about then how you resource. 294 00:23:45,189 --> 00:23:51,023 that you have some firms which have high leverage models, some firms which have low leverage models, obviously the technology is going to impact the high leverage firms, 295 00:23:51,023 --> 00:23:54,106 think more than the low leverage firms over time. 296 00:23:54,226 --> 00:23:57,159 But ultimately, you're right, there's a certain amount of engineering. 297 00:23:57,159 --> 00:24:06,195 the other point to think about is actually those talent decisions are talent decisions that the firms need to do to compete to have the best talent in the market, whether it's 298 00:24:06,195 --> 00:24:08,136 getting the best people out of law school. 299 00:24:08,157 --> 00:24:13,900 Now the best technical expertise, try to recruit a computer scientist in the legal space at the moment without spending a lot of money. 300 00:24:13,900 --> 00:24:16,304 It's a very hard talent gap to fill. 301 00:24:16,304 --> 00:24:17,515 And even on the partner side, right? 302 00:24:17,515 --> 00:24:25,339 Yeah, part of what you're paying for is the ability to generate business and effectively a sales function that your rainmakers play. 303 00:24:25,339 --> 00:24:32,364 But part of it's also you need the best litigator, you need the best advisory privacy lawyer or the best employment lawyer if that's the area you're targeting. 304 00:24:32,446 --> 00:24:35,246 And so that's the cost of the product is a reasonable cost. 305 00:24:35,246 --> 00:24:38,397 That's what it's costing to get that talent to you. 306 00:24:38,397 --> 00:24:49,737 And, you know, I think one of the things that, again, we don't talk enough about in the industry is the symbiosis between the in-house market and the private practice market when 307 00:24:49,737 --> 00:24:54,977 it comes to how you train lawyers and provide a pipeline of talent to both sides of the market. 308 00:24:54,977 --> 00:24:59,741 Because at the moment, the majority of that talent pipeline, the base of the pyramid, 309 00:24:59,741 --> 00:25:01,352 starts in private practice. 310 00:25:01,352 --> 00:25:03,752 And that has a cost to it as well. 311 00:25:03,752 --> 00:25:12,692 think one of the things that we, slightly off topic, one of the things that we're thinking about a lot here at my firm is with some of the technological change, you might be able to 312 00:25:12,692 --> 00:25:17,652 reduce the cost, it drive efficiency in the short to medium term. 313 00:25:18,092 --> 00:25:23,772 But some of the skills you need lawyers to have are not skills that are easily done outside of an apprenticeship model. 314 00:25:23,772 --> 00:25:24,972 They're hard to learn in a classroom. 315 00:25:24,972 --> 00:25:28,679 They are the experience of negotiation, being in the room, being in court. 316 00:25:28,943 --> 00:25:39,816 So you may end up in a world where actually you carry deliberately some inefficiency in the business still in order to make sure you have a pipeline of talent to sit at the top 317 00:25:39,816 --> 00:25:41,668 and do the really strategic stuff. 318 00:25:41,668 --> 00:25:45,204 That again is a cost that the client would say, well, that's your choice, not ours. 319 00:25:45,204 --> 00:25:46,570 And you go, that's true. 320 00:25:46,570 --> 00:25:52,533 But actually the implications of us not making that choice hit both of us potentially at different points of time in different ways. 321 00:25:52,713 --> 00:25:53,444 And so. 322 00:25:53,444 --> 00:25:55,066 We need to think about what the implications are. 323 00:25:55,066 --> 00:25:58,990 Most firms already won't pay for first or second year associates, for example, because they regard that as training. 324 00:25:58,990 --> 00:26:07,218 But if you start cutting out that layer completely in five or six years time, it's going to be much, more expensive to recruit a six or seven year qualified lawyer into an 325 00:26:07,218 --> 00:26:08,908 in-house team as well. 326 00:26:08,983 --> 00:26:13,155 Yeah, lawyers, senior lawyers will be like COBOL programmers, right? 327 00:26:13,155 --> 00:26:16,367 uh which, yeah. 328 00:26:16,367 --> 00:26:17,588 And what's, what's interesting. 329 00:26:17,588 --> 00:26:20,380 So I came from, I spent 10 years at bank of America. 330 00:26:20,380 --> 00:26:31,857 It's incredible how much, how much, private industry and government still relies on these skillsets, you know, insurance, financial services, government, you know, and there's a 331 00:26:31,857 --> 00:26:32,968 huge gap. 332 00:26:32,968 --> 00:26:35,309 People are being pulled out of retirement and making 333 00:26:35,309 --> 00:26:38,932 millions of dollars a year just because they understand that. 334 00:26:38,932 --> 00:26:46,640 And that same dynamic could happen here in legal if we totally nuke the leverage model. 335 00:26:46,640 --> 00:26:58,692 I've heard mixed, I've had some partners who've told me about their journey, their partnership journey, and said that in the beginning, they were thrown in a room with a box 336 00:26:58,692 --> 00:27:00,393 of documents and that 337 00:27:00,685 --> 00:27:02,487 that wasn't effective training. 338 00:27:02,487 --> 00:27:04,077 It could have been much more effective. 339 00:27:04,077 --> 00:27:10,479 the partner, the overseer in that equation would only come in when they had to. 340 00:27:10,479 --> 00:27:19,317 Whereas this technology could open up new training mechanisms and really reimagine the whole associate development process. 341 00:27:19,317 --> 00:27:22,998 Do you see opportunities there as well as potential challenges? 342 00:27:23,239 --> 00:27:24,179 huge, huge opportunity. 343 00:27:24,179 --> 00:27:33,630 And I agree, there's a certain amount of sort of camaraderie and being in the trenches that comes from being in that data room with thousands of documents and, you know, no 344 00:27:33,630 --> 00:27:34,970 daylight for days on end. 345 00:27:34,970 --> 00:27:38,841 But I don't for a second say that that was good quality training. 346 00:27:38,841 --> 00:27:49,811 But I do think, you know, being required to look for things of relevance and value in a mountain of information is good training. 347 00:27:49,811 --> 00:27:52,945 in how to think what's relevant, how to ignore the irrelevant. 348 00:27:52,945 --> 00:27:57,539 Similarly, it's very rare that a young lawyer gets to draft a contract from scratch these days, right? 349 00:27:57,539 --> 00:27:58,870 And that is a challenge, right? 350 00:27:58,870 --> 00:28:05,816 Because actually, if you have to draft it from scratch and think about the issues that are between the clients and think about the things you need to cover, that makes you a better 351 00:28:05,816 --> 00:28:10,379 lawyer when you're looking at the thousand page contract for a billion dollar service. 352 00:28:10,400 --> 00:28:15,804 And so we've got to find ways to give that sort of experience. 353 00:28:15,856 --> 00:28:21,256 to lawyers if we want them to be the strategic partner at the end of the day. 354 00:28:21,516 --> 00:28:28,556 I do think there's some opportunities to effectively get some of this technology to quiz our lawyers, to question why did you do that? 355 00:28:28,556 --> 00:28:30,896 Have you thought about X, Y, Z? 356 00:28:30,896 --> 00:28:32,136 Those things I think are there. 357 00:28:32,136 --> 00:28:33,556 It's not my expertise at all. 358 00:28:33,556 --> 00:28:39,676 That's one of the areas I go to our learning people and development people and say that's firmly in your wheelhouse rather than mine. 359 00:28:40,156 --> 00:28:41,496 But there's definite opportunities there. 360 00:28:41,496 --> 00:28:44,416 If I think there's one thing that we haven't cracked yet. 361 00:28:44,472 --> 00:28:44,922 That's it. 362 00:28:44,922 --> 00:28:51,136 If you think about how a service is going to be delivered, what a client is going to want, what does the end state look like for pricing? 363 00:28:51,436 --> 00:28:53,958 I think those are pretty simple, if I'm perfectly honest. 364 00:28:53,958 --> 00:28:59,261 think there's a huge demand for premium and other legal services. 365 00:28:59,261 --> 00:29:00,983 It'll be filled in a variety of ways. 366 00:29:00,983 --> 00:29:03,784 There's a pretty much big consensus to what it looks like. 367 00:29:03,784 --> 00:29:06,216 The training piece is the piece I don't think anyone's figured out yet. 368 00:29:06,216 --> 00:29:07,987 And I think law schools are struggling with it as well. 369 00:29:07,987 --> 00:29:09,395 So it's not just firms. 370 00:29:09,395 --> 00:29:10,036 Yeah, they are. 371 00:29:10,036 --> 00:29:14,690 I've had lots of academics on the podcast and it is a constant struggle. 372 00:29:14,690 --> 00:29:26,876 You know, one thing you and I talked about last time that I thought was really interesting was the orchestration layer risk and avoiding having your law firm powered by tech 373 00:29:26,876 --> 00:29:28,647 companies, right? 374 00:29:28,647 --> 00:29:32,321 And I think that I'll give my take and then I'd love to hear yours on this. 375 00:29:32,321 --> 00:29:33,860 So I think the 376 00:29:33,860 --> 00:29:36,943 whole powered, but I think that's a very short term risk. 377 00:29:36,943 --> 00:29:47,673 And the reason I think that is, because, you know, the, the big players in the space today are very much, the model is, bring your data to AI, right? 378 00:29:47,673 --> 00:29:53,679 You know, the Harveys and the Goras of the world, you know, they, they, they are, mostly ad hoc. 379 00:29:53,679 --> 00:29:56,973 They're not doing wholesale AI operations for the most part, right? 380 00:29:56,973 --> 00:30:00,115 I see the future as being very much, 381 00:30:00,160 --> 00:30:11,120 how law firms are going to differentiate themselves is by leveraging all of the documents and wisdom that created positive outcomes for their clients. 382 00:30:11,120 --> 00:30:17,811 And that is going to be baked into whatever tech enabled legal service delivery machine gets built. 383 00:30:17,811 --> 00:30:21,471 I think, but in the short term, it could be a risk, right? 384 00:30:21,471 --> 00:30:27,483 If why am I paying X law firm $1,000 an hour who's using 385 00:30:27,483 --> 00:30:30,903 you know, this tool when there's a firm over here at $800 an hour. 386 00:30:30,903 --> 00:30:41,523 I think that is a short-term risk, but long-term, I think firms are going to have to do some R and D and if they want to differentiate, but I don't know, what is your take on 387 00:30:41,523 --> 00:30:42,227 that? 388 00:30:42,404 --> 00:30:45,996 Yeah, I don't, I'll come to the orchestration layer point because I think it's an important one. 389 00:30:45,996 --> 00:30:53,942 But before I get there, the thing that's going to differentiate law firms at the premium end of the market is not the technology, right? 390 00:30:53,942 --> 00:31:00,376 Ultimately, every law firm is going to be using a mixture of the same tools, just like we do now, to be perfectly honest. 391 00:31:00,376 --> 00:31:02,359 And I don't think AI changes that. 392 00:31:02,359 --> 00:31:05,702 What's going to differentiate firms is do you have the right human talent? 393 00:31:05,702 --> 00:31:10,902 And that's, you know, across the spectrum of skills you need, but obviously you're still going to need the best lawyers. 394 00:31:10,902 --> 00:31:21,851 both from an expertise perspective, but also a client handling perspective, a relationship trust builder, sales, those sorts of things are gonna determine who wins. 395 00:31:22,122 --> 00:31:26,335 So you're still gonna be going to law schools trying to recruit the best lawyers ultimately and train them up. 396 00:31:26,335 --> 00:31:36,004 And then the second piece is the piece you mentioned, which is what data do you have within your business that is not available to everyone else via those models? 397 00:31:36,004 --> 00:31:36,984 And that... 398 00:31:37,121 --> 00:31:39,561 Unique play, and I've got some people who challenge me on that. 399 00:31:39,561 --> 00:31:42,641 think that everything's going to be commoditized on the data side of things. 400 00:31:42,641 --> 00:31:44,081 What is it that's really, really unique? 401 00:31:44,081 --> 00:31:47,152 You say, no, ultimately, could say here are the rules. 402 00:31:47,152 --> 00:31:48,232 The what is the law business? 403 00:31:48,232 --> 00:31:49,312 That stuff's gone away. 404 00:31:49,312 --> 00:31:55,032 But the what do do piece does vary depending on the lawyer you're on, your boots on the ground. 405 00:31:55,032 --> 00:32:01,112 If it's a country that is not as predictable as others, the world's becoming a more volatile place. 406 00:32:01,112 --> 00:32:05,000 Those sorts of judgment calls increasingly valuable if you get them right. 407 00:32:05,000 --> 00:32:08,280 around what you do to get around geopolitical risk. 408 00:32:08,480 --> 00:32:11,560 And so those are the two things which are going to differentiate. 409 00:32:11,580 --> 00:32:13,580 And so those are the two things you have to invest in. 410 00:32:13,580 --> 00:32:15,780 Now, what are the barriers to that? 411 00:32:16,040 --> 00:32:24,060 So one is client reticence to allow people to use client data in the design of those systems, right? 412 00:32:24,060 --> 00:32:25,160 And that's the reality. 413 00:32:25,160 --> 00:32:28,600 We still get that from sophisticated technology clients, right? 414 00:32:28,600 --> 00:32:31,760 You require consent for every use of my data in any AI tool. 415 00:32:31,760 --> 00:32:34,940 go, then we can't build intelligence. 416 00:32:34,940 --> 00:32:36,400 that goes across the business. 417 00:32:36,400 --> 00:32:45,694 can do verticals for you, but ultimately you come to Ben as a technology lawyer because he's done work for you for years and knows what it is, but also because he works for 418 00:32:45,694 --> 00:32:50,685 others in the industry and has a sense of what market is and has a sense of what risk tolerances are from peers. 419 00:32:50,785 --> 00:32:52,945 And that can only come if we can work horizontally. 420 00:32:52,945 --> 00:32:55,587 And so that will come across the business, that will come. 421 00:32:55,587 --> 00:33:00,789 But then the second piece is that orchestration layer you're mentioning, because what has happened 422 00:33:01,013 --> 00:33:12,781 over the last 50 years is law firms have been the layer in the value chain where legal expertise, information, project management, technology have been brought together to 423 00:33:12,781 --> 00:33:14,423 deliver a legal service. 424 00:33:14,423 --> 00:33:19,245 over the last 20 years, in-house teams have started to grow their capability to fulfill that role. 425 00:33:19,245 --> 00:33:27,540 So one of the alternative buying patterns was we'll build out a team to do this internally so that we become the orchestration layer and we just take the expertise out of a law firm 426 00:33:27,540 --> 00:33:28,820 for certain bits. 427 00:33:29,015 --> 00:33:35,869 ALSP's, you know, 10, 15 years ago started to come into the market and say, well, there's bits of this that we can take out and we can become the orchestration layer for that. 428 00:33:35,869 --> 00:33:41,624 And now you knew sort of tech law vendors because of AI are playing for that space as well. 429 00:33:41,624 --> 00:33:45,650 So when I'm, when I say, you know, what's going to change is the orchestration layer. 430 00:33:45,650 --> 00:33:52,962 still think there'll be a role for some law firms in that layer, but the winners will be the ones who can maintain a place in that orchestration layer because they bring something 431 00:33:52,962 --> 00:33:56,254 unique to the table when it comes to that data or the talent piece. 432 00:33:56,370 --> 00:34:00,972 If they don't bring anything unique, then they will become suppliers into one of those other orchestration layers. 433 00:34:00,972 --> 00:34:05,054 And the second you do that, then your margin goes, right? 434 00:34:05,054 --> 00:34:07,676 Because ultimately your margin gets squeezed for their margin. 435 00:34:07,676 --> 00:34:17,302 And so that's certainly from our strategy perspective is to say, we want to make sure we continue to deliver enough value that clients will see a role for us, you know, in the 436 00:34:17,302 --> 00:34:23,274 orchestration layer and not have us powering somebody else in that, in that layer. 437 00:34:23,274 --> 00:34:28,090 And that's on the assumption that most tech vendors don't want to become licensed law firms, legal service providers. 438 00:34:28,090 --> 00:34:29,493 But that could change as well. 439 00:34:29,493 --> 00:34:32,704 Yeah, I was going to say I would challenge that assumption. 440 00:34:32,704 --> 00:34:35,836 We're already seeing it here in the US and actually in. 441 00:34:35,836 --> 00:34:38,577 You know there's a few examples. 442 00:34:38,577 --> 00:34:44,139 Crosby is a notable one here in the US and they have a really narrow focus. 443 00:34:44,139 --> 00:34:46,580 It's what I know about him. 444 00:34:46,580 --> 00:34:54,665 I Sequoia, who's one of their the VCs in their cap table have uh had the founders on a podcast and they talked about doing. 445 00:34:54,665 --> 00:34:58,325 uh I believe they do like MSA review for. 446 00:34:58,325 --> 00:35:03,486 some of the big SaaS players in the space like Clay and Stripe. 447 00:35:03,486 --> 00:35:07,117 think that, and I'd be curious to your take on this. 448 00:35:07,477 --> 00:35:18,570 I think it's a really interesting time to be a challenger firm right now and building from the ground up with all, without all of the legacy baggage that a traditional law firm 449 00:35:18,570 --> 00:35:19,440 structure has. 450 00:35:19,440 --> 00:35:26,366 And by legacy baggage, mean, you know, the internal firm, you know, lawyers are ruthlessly measured on billable hours, really hard to... 451 00:35:26,366 --> 00:35:29,169 really hard to change that culturally and otherwise. 452 00:35:29,169 --> 00:35:39,208 The partnership structure itself, the consensus driven decision making, the cash basis accounting that optimizes for profit taking at the end of the year instead of long-term 453 00:35:39,208 --> 00:35:49,140 investment, retirement horizons, the lack of a traditional C-corp governance model where you've got shareholders and you've got layers of risk management. 454 00:35:49,140 --> 00:35:52,562 that you see in traditional enterprise structures. 455 00:35:52,562 --> 00:35:54,224 None of that exists in law firms. 456 00:35:54,224 --> 00:35:58,267 And I think it's going to need to exist in the next iteration. 457 00:35:58,267 --> 00:36:00,949 So I guess two questions. 458 00:36:00,949 --> 00:36:05,282 One is, you agree with that in five, 10 years? 459 00:36:05,282 --> 00:36:12,657 Whatever the number of years is, are we going to need to look fundamentally different than we do today as an industry? 460 00:36:12,657 --> 00:36:16,580 And then what is the viability of a challenger firm 461 00:36:16,580 --> 00:36:25,260 kind of coming up the ranks starting with a narrow niche and you know, maybe a 10 person Amlaw 50 firm one day. 462 00:36:25,260 --> 00:36:28,453 I don't know what, are your thoughts on those two questions? 463 00:36:28,453 --> 00:36:34,055 Yes, I mean, every sort of challenge that you identify is true, right? 464 00:36:34,055 --> 00:36:36,425 And there are trade-offs made throughout. 465 00:36:36,425 --> 00:36:41,898 So there's a reason that most legal systems still require law firms to be partnerships, right? 466 00:36:41,898 --> 00:36:43,540 Alternative business structures are coming. 467 00:36:43,540 --> 00:36:51,403 But actually, wasn't, you know, the requirement to be partnership structure was because of the fiduciary relationship with clients and the profession. 468 00:36:51,403 --> 00:36:52,834 So there is a trade-off. 469 00:36:52,834 --> 00:36:56,209 Once you move away from the partnership structure and the 470 00:36:56,209 --> 00:37:00,790 that impacts the fiduciary relationship and policymakers may decide to change the rules. 471 00:37:00,790 --> 00:37:09,693 But one of the things I'm quite vocal about, I gave evidence to the UK Parliament about this is, you know, let us compete on an even footing, right? 472 00:37:09,693 --> 00:37:17,635 If somebody can deliver something technology enabled, but without having to have all the fiduciary duties that come to consider the client's best interests, then if you want us to 473 00:37:17,635 --> 00:37:20,066 compete with that, take that off the law firms as well, right? 474 00:37:20,066 --> 00:37:23,363 Or alternatively put it on the other side so that everyone's... 475 00:37:23,363 --> 00:37:25,545 you know, achieving the right policy outcome here. 476 00:37:25,545 --> 00:37:28,149 So I think, you know, that shift is going to take a while. 477 00:37:28,149 --> 00:37:36,146 The regulations will take time to come catch up, which is why it has to be very narrow at the moment, because it has to be in areas where policymakers have decided it's okay and 478 00:37:36,146 --> 00:37:38,568 jurisdictions where they decided it's okay. 479 00:37:38,628 --> 00:37:45,035 And so for business like ours, which is already in 45 plus countries and jurisdictions, it's going to be messy, is the honest answer. 480 00:37:45,035 --> 00:37:48,217 We can't just flick a switch tomorrow and change the structure because 481 00:37:48,476 --> 00:37:59,376 It comes down to things like in some markets, we have to have a founder's name in the firm name that is registered with the bar there, so we can't be Baker and McKenzie there. 482 00:37:59,376 --> 00:38:00,426 And people go, it's a different firm. 483 00:38:00,426 --> 00:38:08,353 No, it's like it's a structural change, but the rules require us to have a different structure in that market in order to practice legally. 484 00:38:08,353 --> 00:38:12,228 So the change won't happen uniformly. 485 00:38:12,228 --> 00:38:14,370 But of course, the bigger firms have 486 00:38:14,756 --> 00:38:18,856 more resources and so therefore you would have thought we'll move faster. 487 00:38:19,336 --> 00:38:23,736 again, as the cost of entry goes down with technology, it could well be the case there'll be a challenger firm. 488 00:38:23,736 --> 00:38:33,596 I haven't heard about the sort of 10 person AMLO sort of 50 firm, but the first single principle, you know, billion dollar revenue firm is something people talk about quite a 489 00:38:33,596 --> 00:38:33,676 lot. 490 00:38:33,676 --> 00:38:34,436 Is it possible? 491 00:38:34,436 --> 00:38:35,376 Yeah. 492 00:38:35,556 --> 00:38:39,856 But then the piece is, you know, the big four have 493 00:38:40,164 --> 00:38:45,944 all at various points in time made forays into legal and invested heavily at various points in time. 494 00:38:45,944 --> 00:38:54,175 And one of the challenges they have, even with their resources and their more corporate structure, is delivering what clients want and retaining the talent they need to deliver 495 00:38:54,175 --> 00:38:57,755 what clients want to play at that sort of big end of the table. 496 00:38:58,195 --> 00:39:01,515 And that's part of the challenge as well, right? 497 00:39:01,515 --> 00:39:05,291 It's one thing to say, okay, more corporate structure, but can you keep... 498 00:39:05,363 --> 00:39:17,243 the humans in the mix, and as I said before, humans are to be part of the sort of solution to the top quality product without some of the status, without some of the autonomy that 499 00:39:17,243 --> 00:39:20,594 they've been used to in a private practice partnership model. 500 00:39:20,594 --> 00:39:23,554 And in some organizations, they'll crack the magic formula there. 501 00:39:23,554 --> 00:39:26,054 I think most won't, to be honest. 502 00:39:26,354 --> 00:39:28,285 History's history, it tastes a little bit harder. 503 00:39:28,285 --> 00:39:31,323 And so, you know, I think for more processed 504 00:39:31,323 --> 00:39:34,579 driven or process amenable, I should say service lines. 505 00:39:34,579 --> 00:39:36,562 But yeah, that's where I see the market going. 506 00:39:36,562 --> 00:39:43,573 For the more artisan bit of the market, I think you'll still see a partnership model surviving for quite a while. 507 00:39:43,978 --> 00:39:48,602 Well, and the big four partnerships as well, and they have their own baggage. 508 00:39:48,602 --> 00:40:02,635 I think what makes them different and potentially a real threat in the space is they have innovation in their DNA and law firms generally don't. 509 00:40:02,635 --> 00:40:06,609 That is starting to change, but we got a long way to go. 510 00:40:06,609 --> 00:40:10,899 um 511 00:40:10,899 --> 00:40:18,365 you don't most industries which are innovative don't tend to have people who have titles of chief innovation officer as a rule, right? 512 00:40:18,365 --> 00:40:19,586 It's a fair signal. 513 00:40:19,586 --> 00:40:23,849 It's a fair signal that you're starting from somewhere further back on the field. 514 00:40:23,849 --> 00:40:29,362 But, you know, equally, I do think the shift has started. 515 00:40:29,362 --> 00:40:31,358 I think it started some time ago. 516 00:40:31,358 --> 00:40:33,085 I think the narrative of 517 00:40:33,085 --> 00:40:36,105 law firms having their head in the sand actually a false one. 518 00:40:36,105 --> 00:40:43,076 think actually most good leaders amongst law firms in industry get it. 519 00:40:43,076 --> 00:40:47,336 But coming back to a point we raised earlier, you need client demand to change their buying patterns. 520 00:40:47,336 --> 00:40:53,276 It's a bit like sort of inclusion and equity programs and those sorts of things as well. 521 00:40:53,276 --> 00:40:59,516 It's like if you want to achieve an outcome, as before our current age of politics, you need to change how you buy. 522 00:40:59,536 --> 00:41:00,432 Ultimately, 523 00:41:00,432 --> 00:41:07,272 If you want a more diverse supplier and you still buy from the white males, then you're going to get the white males. 524 00:41:07,512 --> 00:41:08,952 And the same is true around innovation. 525 00:41:08,952 --> 00:41:15,532 If you want innovation, you've got to reward, or at least take a risk on those businesses who are saying, let's do it a different way. 526 00:41:15,532 --> 00:41:17,572 And I think that's to happen and will happen more and more. 527 00:41:17,572 --> 00:41:19,954 But that ultimately is what will drive the change. 528 00:41:19,954 --> 00:41:20,354 Yeah. 529 00:41:20,354 --> 00:41:22,385 And I agree with you, by the way. 530 00:41:22,385 --> 00:41:24,226 I do think that it is changing. 531 00:41:24,226 --> 00:41:31,159 I don't think that most of what I would consider successful firms out there have their head in the sand. 532 00:41:31,159 --> 00:41:42,746 I do think that they're moving slower than maybe I would if I had, you know, and I understand that there's a lot to, again, there's a lot of baggage that has to be managed 533 00:41:42,746 --> 00:41:43,688 on this journey. 534 00:41:43,688 --> 00:41:44,722 And it is, 535 00:41:44,722 --> 00:41:59,262 I find it interesting that, and I look for early signals because what we do is very aligned to firms who think in an innovative way. 536 00:41:59,262 --> 00:42:03,142 We're putting our chips on the table that we're an internet extranet platform. 537 00:42:03,322 --> 00:42:13,957 Intranet, yeah, there's some innovation there, but extranet is a scenario where we believe that the clients are going to demand a different journey. 538 00:42:13,957 --> 00:42:19,478 in how customer journey and how they engage with law firms as we undergo this transformation. 539 00:42:19,478 --> 00:42:21,689 So that's where we're putting our chips on the table. 540 00:42:21,689 --> 00:42:30,484 And one signal that I've seen pretty reliably predict the commitment to innovation is the hiring. 541 00:42:30,484 --> 00:42:33,034 Just look at the people they're bringing in. 542 00:42:33,034 --> 00:42:39,047 You I mean, you're seeing a lot of big four folks, McKinsey folks now move into legal. 543 00:42:39,047 --> 00:42:40,199 You're seeing 544 00:42:40,199 --> 00:42:53,252 I think the org chart and the commitments that firms are making to these hires, because think about it, you're like Liz Grennan at Simpson Thatcher, she's got a big name in the 545 00:42:53,252 --> 00:42:55,795 space and very well respected. 546 00:42:55,795 --> 00:43:04,903 Why would she make the move from McKinsey into a law firm if she wasn't real comfortable that she was going to be given the tools to succeed there? 547 00:43:04,903 --> 00:43:06,804 So I have no knowledge of. 548 00:43:07,014 --> 00:43:07,934 what's going on there. 549 00:43:07,934 --> 00:43:11,326 I, again, I just look at early signals on the hiring. 550 00:43:11,326 --> 00:43:23,891 Um, is that a, is that a good predictor or are there other things that, you know, maybe clients or people should look at to, I guess, try and predict winners and losers of this 551 00:43:23,891 --> 00:43:25,181 transformation. 552 00:43:25,476 --> 00:43:28,678 I mean, think, yeah, the talent that's being hired, I think is important. 553 00:43:28,678 --> 00:43:34,821 And, you know, we've done that for a few years, been looking at sort of who's hiring what type of talent. 554 00:43:34,821 --> 00:43:35,761 Doesn't always work out. 555 00:43:35,761 --> 00:43:37,972 There is a bit of a revolving door of some of those sorts of roles. 556 00:43:37,972 --> 00:43:38,872 And that's the reality, right? 557 00:43:38,872 --> 00:43:44,140 And some of the reasons are the barriers that we've been talking about here, that they run into a challenge. 558 00:43:44,140 --> 00:43:51,833 yeah, we've recruited some super talented people into our business who haven't been able to navigate some of those barriers and through no largely fault of their own, to be frank. 559 00:43:51,833 --> 00:43:59,901 have decided this isn't the right place for them, even though I think we are one of the more progressive when it comes to that structural piece, just given how complex a business 560 00:43:59,901 --> 00:44:00,812 we are anyway. 561 00:44:00,812 --> 00:44:08,408 No, mean the other thing I would be looking at are the core metrics, right? 562 00:44:08,408 --> 00:44:12,663 Ultimately, are the numbers going in the right direction? 563 00:44:12,663 --> 00:44:16,991 And there will be a bit of a period where the investment cycle will require a bit of adapting on 564 00:44:16,991 --> 00:44:20,983 on profits for partner for a few years. 565 00:44:20,983 --> 00:44:32,199 But if you start to see a pull away from firms who get scale, continue to increase scale, but also maintain margin, I think that's a fairly good indication they're doing something 566 00:44:32,199 --> 00:44:32,579 different. 567 00:44:32,579 --> 00:44:42,399 Because there's so much competition, there'll be so much competition, that if you can't do that, if you can't reorganize yourself, then you won't 568 00:44:42,399 --> 00:44:50,681 I think there's definitely still going to be a market for premium legal services and legal services generally, but there will be winners and losers. 569 00:44:50,681 --> 00:44:55,340 And I think the AMLO 50 will look very different in 10 years time to what it looks like. 570 00:44:55,340 --> 00:44:56,350 I completely agree. 571 00:44:56,350 --> 00:44:57,141 Yeah. 572 00:44:57,141 --> 00:44:58,791 And the financial metrics, I agree with you. 573 00:44:58,791 --> 00:45:00,002 They're a bit lagging. 574 00:45:00,002 --> 00:45:03,073 think it's hard to find leading indicators. 575 00:45:03,073 --> 00:45:12,310 Again, the only, because you certainly can't, there was, there's a professor at Northwestern who created a law firm innovation index. 576 00:45:12,310 --> 00:45:21,659 And the approach was to go crawl the law firms websites and find things that seem to be leading towards innovation, you know, 577 00:45:21,659 --> 00:45:23,380 AFAs. 578 00:45:23,380 --> 00:45:30,897 Anyway, can't really there's a huge disconnect between what what's being said that from a marketing perspective and what's actually being done. 579 00:45:31,308 --> 00:45:38,481 Yeah, and you look at that like the products that everyone's announcing, know, the partnerships here, deals there, licenses taken. 580 00:45:38,741 --> 00:45:40,659 The next question is what are you doing with it? 581 00:45:40,659 --> 00:45:41,160 Right. 582 00:45:41,160 --> 00:45:45,481 And, you know, I do think there's a lot of innovation by press release that happens in the market. 583 00:45:45,481 --> 00:45:49,102 I'm not going to for a second claim that we haven't been guilty of some of that. 584 00:45:49,102 --> 00:45:52,003 You you're competing with the market that you're facing. 585 00:45:52,003 --> 00:45:54,044 Clients want to hear stories. 586 00:45:54,044 --> 00:45:56,088 But the actual changing of 587 00:45:56,088 --> 00:46:03,017 process and the data and the behaviour needed to actually affect real change is hard work as we all know. 588 00:46:03,017 --> 00:46:07,521 And I think the reality sometimes is different from the press release. 589 00:46:07,521 --> 00:46:12,038 Yeah, and that has been especially true pre-gen AI. 590 00:46:12,038 --> 00:46:14,220 I think it is catching up. 591 00:46:14,220 --> 00:46:14,638 um 592 00:46:14,638 --> 00:46:18,650 think Gen.ai is a general purpose technology and that's the big difference, right? 593 00:46:18,650 --> 00:46:29,175 So everything up till now has largely been application specific and that has an impact, but it doesn't cut across the entire functioning of the organization and also your 594 00:46:29,175 --> 00:46:30,586 client's organization as well, right? 595 00:46:30,586 --> 00:46:31,627 That's the difference here. 596 00:46:31,627 --> 00:46:37,659 Yeah, it's not a perfect analogy, but effectively it's look at the productivity jump in legal when email came in. 597 00:46:37,659 --> 00:46:41,341 You'd have to wait for a letter for seven days to execute things. 598 00:46:41,609 --> 00:46:46,607 we're looking at that sort of productivity jump and that unavoidably impacts the economics. 599 00:46:46,607 --> 00:46:51,399 or digital legal research, you know, um another huge innovation. 600 00:46:51,399 --> 00:46:53,048 Well, this has been a great conversation. 601 00:46:53,048 --> 00:46:57,341 I really appreciate you carving out a little bit of time to have a chat. 602 00:46:57,341 --> 00:47:00,483 know my listeners will certainly enjoy it. 603 00:47:00,483 --> 00:47:07,866 How do people find out more about maybe, you know, writing or speaking that you do in the firm? 604 00:47:08,137 --> 00:47:10,777 So follow me on LinkedIn, it's probably the best way. 605 00:47:10,777 --> 00:47:14,441 I tend to be fairly assiduous at publicizing myself on there. 606 00:47:14,441 --> 00:47:18,665 And that'll connect you to most of the right people that I'm connected to on this side of the pond. 607 00:47:18,665 --> 00:47:20,346 But thank you for having me, really enjoyed it. 608 00:47:20,346 --> 00:47:20,918 Awesome. 609 00:47:20,918 --> 00:47:22,642 Okay, we'll chat again soon. 610 00:47:22,642 --> 00:47:23,173 Thanks, Ben. 611 00:47:23,173 --> 00:47:25,829 All right, take care. 612 00:47:25,873 --> 00:47:26,496 Bye bye. -->