1 00:00:01,857 --> 00:00:03,699 David, how are you this afternoon? 2 00:00:04,910 --> 00:00:05,595 Good afternoon, Ted. 3 00:00:05,595 --> 00:00:06,029 I'm good. 4 00:00:06,029 --> 00:00:06,462 Thank you. 5 00:00:06,462 --> 00:00:07,541 Thank you for having me. 6 00:00:07,541 --> 00:00:11,082 Yeah, I'm excited about this conversation. 7 00:00:11,082 --> 00:00:13,043 You and I had a quick chat. 8 00:00:13,043 --> 00:00:19,822 I had reached out to you about being a advisory board member for TLTF and we had a great conversation. 9 00:00:19,822 --> 00:00:22,485 I was like, man, I got to get this guy on the podcast. 10 00:00:22,485 --> 00:00:24,706 So looking forward to it. 11 00:00:24,706 --> 00:00:36,789 um In addition to your work on the board at TLTF, you're also a partner at Fennimore and chair of the Fennimore labs and 12 00:00:36,791 --> 00:00:43,189 Fill in the blanks, like, well, tell our audience a little bit about kind of who you are, what you do, and where you do it. 13 00:00:44,152 --> 00:00:45,113 Yeah, very good. 14 00:00:45,113 --> 00:00:46,745 yeah, my name is David McCarvel. 15 00:00:46,745 --> 00:00:55,654 I'm chair of Fenimore Labs, which is our firm's R &D division, looking at AI programs and also looking at alternative platforms, like does an alternative business structure make 16 00:00:55,654 --> 00:00:56,595 sense? 17 00:00:56,916 --> 00:00:58,768 We're looking at new pricing structures. 18 00:00:58,768 --> 00:01:03,062 So we have an AI and AFA policy document we produce for our partners to look at. 19 00:01:03,352 --> 00:01:05,533 we're also looking at how we can streamline operations. 20 00:01:05,533 --> 00:01:11,816 So the of the work you're doing at info dash, how we can work with tech vendors to better serve our clients is really our main mission. 21 00:01:11,816 --> 00:01:15,708 And the committee's made up of attorneys who are practicing with myself. 22 00:01:15,708 --> 00:01:23,792 I'm in our business and finance practice group, but we have attorneys from all over our offices and our different practice groups, you know, participating and trying to help us 23 00:01:23,792 --> 00:01:26,653 figure out how we can use this technology to better serve our clients. 24 00:01:26,653 --> 00:01:28,244 In addition to that, we've 25 00:01:28,428 --> 00:01:32,742 We created a number of ad hoc working groups that are looking at AI and alternative fee arrangements. 26 00:01:32,742 --> 00:01:38,547 And we meet pretty regularly with those groups, trying to help them understand, you know, what are the tools that we can use? 27 00:01:38,547 --> 00:01:44,151 What are some use cases and what are some good clients that we could potentially work with to use this technology? 28 00:01:44,151 --> 00:01:46,874 So that's, that's a big part of what we do with labs. 29 00:01:46,874 --> 00:01:50,647 I'm also chair of our DNI committee on service and outreach. 30 00:01:50,647 --> 00:01:56,974 And I'm part of our federal forward program, which is a program where we have attorneys who have their own book of business. 31 00:01:56,974 --> 00:02:00,814 come to work in places where we don't have traditional brick and mortar offices. 32 00:02:00,814 --> 00:02:03,554 So I'm located in Massachusetts near Boston. 33 00:02:03,674 --> 00:02:08,454 We have about 30 attorneys, I believe now in the Fennimore Forward Program who are all over the country. 34 00:02:08,474 --> 00:02:14,914 Most of our lawyers, we have about 350 lawyers and most of our Fennimore lawyers and offices are in the Mountain West. 35 00:02:14,914 --> 00:02:17,294 So that's our home base, if you will. 36 00:02:17,294 --> 00:02:20,314 We're headquartered in Phoenix where we started in 1885. 37 00:02:20,654 --> 00:02:23,474 So the has been around for a long time and I'm real happy to be here. 38 00:02:23,474 --> 00:02:24,358 So thank you. 39 00:02:24,358 --> 00:02:37,267 Awesome good stuff and you said R &D and law firm in the same sentence, which uh I thought was interesting That's not you don't hear about law firms doing much R &D at least in the 40 00:02:37,267 --> 00:02:38,878 in the tech space. 41 00:02:38,878 --> 00:02:40,339 So how? 42 00:02:40,378 --> 00:02:42,720 How did Fennimore? 43 00:02:42,941 --> 00:02:47,804 Gravitate in that direction because again, you just don't you don't hear about it a lot 44 00:02:49,164 --> 00:02:51,115 Yeah, I think it was pretty organic. 45 00:02:51,115 --> 00:02:58,883 mean, we are fortunate that we have a manager committee that's really looking forward, looking to the future and, you know, led by our CEO, James Goodenow, who I believe is the 46 00:02:58,883 --> 00:03:01,645 youngest CEO of an Amlog 200 firm. 47 00:03:01,645 --> 00:03:04,988 And, um, I have sort of an interest in curiosity and technology. 48 00:03:04,988 --> 00:03:09,952 I've been teaching a class at ASU law school as an adjunct professor on blockchain and cryptocurrency. 49 00:03:09,952 --> 00:03:11,354 This is my eighth year of doing that. 50 00:03:11,354 --> 00:03:15,127 So it just was sort of a natural point of gravitation. 51 00:03:15,127 --> 00:03:16,578 just moved towards. 52 00:03:16,710 --> 00:03:17,490 technology. 53 00:03:17,490 --> 00:03:26,054 And then of course, when chat GPT dropped three years ago, we had started to fend more labs with the idea, Hey, we really need to be leaning in and figuring out how we can use 54 00:03:26,054 --> 00:03:26,684 technology. 55 00:03:26,684 --> 00:03:30,156 And of course the AI boom started right around then. 56 00:03:30,156 --> 00:03:36,759 So initially in the first year, we, we spent a lot of time just trying to understand, you know, what is this technology? 57 00:03:36,759 --> 00:03:37,939 Who's who in the zoo? 58 00:03:37,939 --> 00:03:41,701 made a catalog of over a hundred legal AI tech providers. 59 00:03:41,701 --> 00:03:44,462 We did a bunch of demos with people. 60 00:03:44,658 --> 00:03:52,207 And then the second year, we really started to center on a few very good vendors that we continued to vet and work closely with. 61 00:03:52,207 --> 00:03:58,350 And now some of those vendors are on board with us and, um, happy to say that they're working out very well. 62 00:03:58,350 --> 00:04:03,750 Uh, but again, these vendors that are on board with us now, for the most part, we've been talking to them for about two years. 63 00:04:03,750 --> 00:04:09,510 And so it's, it's been a bit of a slog and a slow burn, but, um, it's been exciting also. 64 00:04:09,510 --> 00:04:20,150 And it's, it's, I give a lot of credit to, you know, the manager committee, but also to the other attorneys like myself who are willing to dedicate some time, uh, to helping us 65 00:04:20,150 --> 00:04:23,832 figure this out, because you really do have to have both, I think of grassroots. 66 00:04:23,832 --> 00:04:28,196 Group of attorneys who are willing to put time in on it and you have to have the management commitment as well. 67 00:04:28,196 --> 00:04:30,561 So we're fortunate to have both of those things. 68 00:04:31,327 --> 00:04:38,940 And that's a good segue into the topic around billable hours and alternative fee arrangements. 69 00:04:39,061 --> 00:04:53,177 And the reason it's a good segue is because it's so difficult when so much emphasis is placed on oh billable hour targets to get attorneys to divert their focus and their 70 00:04:53,177 --> 00:04:53,727 attention. 71 00:04:53,727 --> 00:04:56,228 There's a really high opportunity cost. 72 00:04:56,649 --> 00:04:57,741 There's a 73 00:04:57,741 --> 00:05:09,701 Couple of, there's a couple of interesting threads out there on, I'm not going to say the name of the firm, but a firm recently published a 2,400 hour, maybe it was a 2,000 hour 74 00:05:09,701 --> 00:05:17,981 billable 400 hour kind of what we're talking about here, R and D development kind of hours. 75 00:05:17,981 --> 00:05:25,509 And you know, if you do the math on that, it's pretty outrageous how the level of 76 00:05:25,857 --> 00:05:30,437 the extent to which that will skew work-life balance. 77 00:05:30,437 --> 00:05:32,602 And there's so much burnout in the industry. 78 00:05:32,602 --> 00:05:48,695 It's like, man, how do you guys think about balance and trying to make it a sustainable path where people just don't hate their lives as they make their way up the ranks? 79 00:05:48,695 --> 00:05:51,477 Like, I don't know, any secret sauce there? 80 00:05:52,654 --> 00:05:52,994 Yeah. 81 00:05:52,994 --> 00:05:55,254 I mean, I think there's definitely a culture at Fennimore. 82 00:05:55,254 --> 00:05:58,174 Like I said, we've been around for a long time since 1885. 83 00:05:58,174 --> 00:06:02,954 And, uh, you know, before I came to Fennimore, had the pleasure of working with some of the attorneys on different matters. 84 00:06:02,954 --> 00:06:10,994 And it's always had the culture of we work hard and we have good attorneys, but we're not going to kill people with billable hour requirements. 85 00:06:11,294 --> 00:06:13,794 Um, in some ways it's kind of a choose your own adventure. 86 00:06:13,794 --> 00:06:16,134 Like if you want to bill 2,400 hours, we'll help you. 87 00:06:16,134 --> 00:06:17,594 And you know, we're happy to do that. 88 00:06:17,594 --> 00:06:19,914 And it is a little bit about the money. 89 00:06:19,934 --> 00:06:21,038 Um, but 90 00:06:21,038 --> 00:06:26,198 We enjoy a little more of a sort of Western Arizona approach to this kind of thing. 91 00:06:26,198 --> 00:06:30,538 We're not, you know, a New York law firm and in the AMLA 20 or whatever. 92 00:06:30,538 --> 00:06:32,258 So, uh, there was a different culture. 93 00:06:32,258 --> 00:06:35,798 I think I would credit that, that, you know, work life balance does matter. 94 00:06:35,798 --> 00:06:40,358 We understand that lawyers can get burned out and that burned out lawyer is no good for anybody. 95 00:06:40,358 --> 00:06:46,998 So, um, we try to, you know, basically straddle that line between working hard, but also having some balance. 96 00:06:46,998 --> 00:06:49,118 So I think that's an important part of culture. 97 00:06:49,118 --> 00:06:51,052 They just can't really transplant. 98 00:06:51,052 --> 00:06:51,592 somewhere. 99 00:06:51,592 --> 00:07:01,636 uh But you know, related to the alternative fee arrangements and how we look at the collections issue is it really is mostly about collections at the end of the day anyway, 100 00:07:01,636 --> 00:07:01,760 right? 101 00:07:01,760 --> 00:07:06,564 Because you can build 2000 hours if you only collect half of those, then it's really not that great. 102 00:07:06,564 --> 00:07:18,063 So what we are enthusiastic about is using AI to reduce write-offs, especially for associates on matters and getting a better first draft and making sure that we're being 103 00:07:18,063 --> 00:07:19,670 efficient with our time. 104 00:07:19,670 --> 00:07:21,691 And that our clients are getting some value. 105 00:07:21,691 --> 00:07:27,253 Um, it's been a struggle and I'll get into it a little bit in terms of why that is. 106 00:07:27,273 --> 00:07:33,856 I anticipated that, all we need to do is find the right vendor and then it'll be easy to unlock an alternative fee arrangement. 107 00:07:33,856 --> 00:07:38,819 But it's actually more difficult than that because yeah, you have to find the right vendor and the right use case. 108 00:07:38,819 --> 00:07:46,502 You also have to find the right partner or director in our firm as we call them, who can then take that and champion it with the right client. 109 00:07:46,508 --> 00:07:53,744 And then you have to figure out how to account for all of this in our internal compensation system and crack that nut. 110 00:07:53,744 --> 00:08:01,169 So there are a number of challenges to get to a point where you're really ready and able to use alternative fee arrangements at scale. 111 00:08:01,169 --> 00:08:03,641 We have been working very hard on it for a few years. 112 00:08:03,641 --> 00:08:04,752 It's hard work. 113 00:08:04,752 --> 00:08:11,817 So I don't think anybody should look at this and think we're going to be able to figure this out in six months because that's just not going to happen. 114 00:08:12,618 --> 00:08:14,579 It might take another six months from now. 115 00:08:14,579 --> 00:08:25,427 might take another six years, but at this point, the efficiencies that we see are really not materializing because we're spending a lot of time verifying that we're actually 116 00:08:25,427 --> 00:08:26,828 getting the right product to the client. 117 00:08:26,828 --> 00:08:27,128 Right. 118 00:08:27,128 --> 00:08:30,090 So, uh, I think the efficiencies are going to be there. 119 00:08:30,090 --> 00:08:33,232 looking at 20 to 80 % efficiency on some workflows. 120 00:08:33,232 --> 00:08:36,985 Um, but for the most part is just making our work product better. 121 00:08:36,985 --> 00:08:41,898 And we're doing a better job of quality control using these AI tools that we have right now. 122 00:08:42,028 --> 00:08:49,519 And how are you creating incentives for attorneys to embrace the tech tools and these alternative pricing models? 123 00:08:50,614 --> 00:08:51,424 Well, it's interesting. 124 00:08:51,424 --> 00:09:02,259 think the incentives over the last month have been me showing my colleagues, uh, how these tools that we have on board right now are working and giving them some of the work product 125 00:09:02,259 --> 00:09:11,203 and they are, you know, reacting in a way that's telling me that they want these products and they're going to go through the training now to get after it because they can see what 126 00:09:11,203 --> 00:09:11,683 they're doing. 127 00:09:11,683 --> 00:09:19,246 So that's one incentive is just showing them, here's what this tool can do on your particular area of practice. 128 00:09:19,492 --> 00:09:26,125 and if I'm able to use it and show them results without being an expert in their domain, um, that's convincing to them. 129 00:09:26,125 --> 00:09:28,226 So I'm seeing that happen in real time. 130 00:09:28,226 --> 00:09:36,309 The other aspect of it is working again with our management committee and our financial folks to make sure that we understand how we can deal with an alternative fee arrangement. 131 00:09:36,309 --> 00:09:46,433 And that's why we developed a policy document that tries to identify the various categories of AFAs between hybrid agreements, know, pure retainers as a whole universe of 132 00:09:46,433 --> 00:09:48,202 AFAs that are out there. 133 00:09:48,202 --> 00:09:54,588 And trying to find the right one for the director and also for their client is a big part of it. 134 00:09:54,588 --> 00:09:56,870 And, that relationship is so important, right? 135 00:09:56,870 --> 00:10:05,468 So you don't want to put somebody in position where they're trying an AI tool and an alternative fear arrangement with a client, and then they end up getting burned, right? 136 00:10:05,468 --> 00:10:06,809 That's just not appropriate. 137 00:10:06,809 --> 00:10:10,372 So it has to be dealt with very carefully and, 138 00:10:10,636 --> 00:10:17,993 You know, have to do a fair amount of work to put in place the infrastructure on the compensation side and also to educate and bring your partners along. 139 00:10:17,993 --> 00:10:20,625 Hey, this is, this is really kind of where this is going. 140 00:10:20,625 --> 00:10:24,268 So the earlier we engage on it, the better off we are all going to be. 141 00:10:24,524 --> 00:10:29,866 So, and then how do you mitigate risks more broadly? 142 00:10:30,347 --> 00:10:38,580 if a client, if you head down the AFA path with an important client relationship, um I mean, there's all sorts of risks. 143 00:10:38,580 --> 00:10:40,391 It's not just financial risks to the firm. 144 00:10:40,391 --> 00:10:46,014 It's potentially quality of deliverables to the client. 145 00:10:46,014 --> 00:10:51,896 um How do you guys think about and manage risks? 146 00:10:52,052 --> 00:10:57,321 more broadly when you're deploying AFAs with these important client relationships. 147 00:10:59,054 --> 00:11:05,970 Yeah, I mean, that's something that requires a conversation between, uh, you know, the attorney who has a relationship and the client that, we have these tools. 148 00:11:05,970 --> 00:11:08,603 We think these tools can solve these problems for you. 149 00:11:08,603 --> 00:11:11,716 Um, let's do a proof of concept. 150 00:11:11,716 --> 00:11:11,976 Right? 151 00:11:11,976 --> 00:11:19,573 So I think this is probably the easiest way to mitigate the risk is just being honest with your client, having a real discussion that, Hey, we're going to try this. 152 00:11:19,573 --> 00:11:21,254 We think this can work. 153 00:11:21,955 --> 00:11:25,558 what is interesting about it is what, and what we're seeing is that 154 00:11:25,826 --> 00:11:34,550 There are things that we can do for clients that would be very helpful to them that they previously would not have come to us for because we were too expensive by the hour. 155 00:11:34,550 --> 00:11:43,595 ah But they may be upstream or downstream from our normal legal services, but they're very relevant and related to our normal legal services. 156 00:11:43,595 --> 00:11:49,878 uh things that perhaps a client would have been doing internally, but maybe not doing so well. 157 00:11:50,038 --> 00:11:53,530 Um, we now can offer them some services using these AI tools. 158 00:11:53,530 --> 00:12:03,455 So a big part of it is really just having an open conversation with the client about, you know, their business, their workflows and how our workflow is their attorney interacts 159 00:12:03,455 --> 00:12:11,960 with that workflow and seeing if there are some additional value add, you know, uh, services that we can provide using these tools to them, uh, around that. 160 00:12:11,960 --> 00:12:19,630 So mitigating the risk is really just trying to understand what your client's needs are and, and having a little bit of more of an objective view. 161 00:12:19,630 --> 00:12:24,632 Um, rather than just a narrow view of these illegal services we provide you, and this is all we're going to look at. 162 00:12:24,632 --> 00:12:35,807 Let's try to look at a more holistic view of the workflow before we get the product and afterwards, you know, how do we actually mitigate risk for your business using the tools 163 00:12:35,807 --> 00:12:37,738 that we have in our legal services? 164 00:12:38,060 --> 00:12:39,721 So I looked up some stats. 165 00:12:39,721 --> 00:12:41,842 It's been a while, so I might get this wrong. 166 00:12:41,842 --> 00:12:50,566 So nobody, nobody hold me to these numbers, but I looked up some stats a few months ago about law firm leadership demographics. 167 00:12:50,747 --> 00:13:01,202 And if I remember correctly, it was a very high percentage of the executive committee demographics skewed. 168 00:13:01,308 --> 00:13:14,692 older like 55 plus which is no surprise right i mean it's usually you're more senior senior leaders in the organization which is interesting because the most mckenzie did a 169 00:13:14,692 --> 00:13:28,426 study um based on age cohorts on the um the age um brackets that were most comfortable with gen ai 170 00:13:28,620 --> 00:13:32,200 And the most comfortable are millennials, right? 171 00:13:32,200 --> 00:13:40,080 So it's hard to believe, but millennials are, mean, that generation started, I don't know, early eighties, I think it was maybe 82. 172 00:13:40,520 --> 00:13:44,480 Um, so that's almost, they're 43 now, which is crazy. 173 00:13:44,480 --> 00:13:52,240 Like they're in their mid forties, but that slice of, um, that are that cohort is most comfortable with Gen AI. 174 00:13:52,240 --> 00:13:58,251 And when you're talking about pushing out a very disruptive technology, 175 00:13:58,251 --> 00:14:01,332 You really have to set tone at the top, right? 176 00:14:01,332 --> 00:14:08,713 And those at the top are going to be, they are least comfortable with, with gen AI as a group, right? 177 00:14:08,713 --> 00:14:11,154 So there's plenty of exceptions to that. 178 00:14:11,154 --> 00:14:16,625 And maybe, maybe your leadership team is different, but as a group. 179 00:14:16,965 --> 00:14:20,386 So how, how do you guys, how do we do that? 180 00:14:20,386 --> 00:14:21,647 How do we do both things? 181 00:14:21,647 --> 00:14:21,947 Right? 182 00:14:21,947 --> 00:14:27,948 Like it's important for leaders to understand the transformative nature. 183 00:14:28,084 --> 00:14:32,967 of the technology and be comfortable with it to really push it down to the masses. 184 00:14:33,027 --> 00:14:39,710 But those law firm leadership skews much older than um more broadly. 185 00:14:39,831 --> 00:14:46,274 Overall, if you look across industries, it's seniority based, right? 186 00:14:46,274 --> 00:14:51,758 So leaders have been with the organization longer, they tend to be older, but it skews higher in legal. 187 00:14:51,758 --> 00:14:56,512 So how do you guys think about setting the tone at the top? 188 00:14:56,512 --> 00:14:59,870 when sometimes the people at the top are the least comfortable with the tech. 189 00:15:01,366 --> 00:15:06,471 Yeah, I mean, I think that is definitely a management committee issue, right? 190 00:15:06,471 --> 00:15:10,029 And I think our manager committee has addressed it by being very 191 00:15:10,176 --> 00:15:21,551 Intentional with regard to the directors meetings that we have every month, uh, making sure to educate the directors about AI and where it's going and what it's doing. 192 00:15:21,551 --> 00:15:29,920 We've had some really interesting directors meetings along those lines and then having breakout sessions where people can talk about it, but also during the annual retreat, uh, 193 00:15:29,920 --> 00:15:33,757 you know, we just had our annual retreat at the end of may, uh, in San Diego. 194 00:15:33,757 --> 00:15:37,679 And it was mostly about AI and the speakers we invited. 195 00:15:37,679 --> 00:15:39,680 We had Richard Susskind come the year before. 196 00:15:39,680 --> 00:15:40,152 uh 197 00:15:40,152 --> 00:15:44,634 in our retreat in Nevada, which was great listening to him talk about his book, Tomorrow's Lawyers. 198 00:15:44,634 --> 00:15:52,097 And it's that kind of intentional messaging from the management committee that they think has really broken through with that older demographic. 199 00:15:52,097 --> 00:15:52,707 And you're right. 200 00:15:52,707 --> 00:16:00,380 mean, look, from their perspective, they are for the most part making a very good living doing things the way that they've been doing them for a long time. 201 00:16:00,420 --> 00:16:05,352 And their horizon is a little shorter than the rest of us in terms of where they are for retirement. 202 00:16:05,352 --> 00:16:06,122 So 203 00:16:06,154 --> 00:16:11,157 It's not as big of an incentive for them to move into exploring something new. 204 00:16:11,157 --> 00:16:20,092 But yeah, I mean, we had a very good business of finance practice meeting today and a number of the folks who were, you know, asking questions of the AI vendor that was 205 00:16:20,092 --> 00:16:27,946 demonstrating, you know, the product were interested and they were older, you know, and they were interested in, and they can see the value in it when. 206 00:16:28,794 --> 00:16:31,126 And really, I think that's where the proof is in the pudding, right? 207 00:16:31,126 --> 00:16:42,225 When you can show a lawyer, hey, this is going to get you to a 90 % draft much faster, and it's going to improve your work product, whatever age they're at, if they can see it with 208 00:16:42,225 --> 00:16:44,057 their own eyes, it's going to be convincing. 209 00:16:44,057 --> 00:16:46,038 And that's what we're finally starting to see now. 210 00:16:46,038 --> 00:16:47,970 It's really starting to break through. 211 00:16:47,970 --> 00:16:50,052 the proof is in the pudding, I guess. 212 00:16:50,052 --> 00:16:57,198 you know, these lawyers who've been around for a long time, they'll know when they see an AI product that's actually working versus one that's just... 213 00:16:57,198 --> 00:16:58,038 uh 214 00:16:58,038 --> 00:17:06,260 You know, flashbang and noise, nothing really happening, but the ones that we're demonstrating right now are really getting some traction with these folks and they're 215 00:17:06,260 --> 00:17:09,245 interested and they're willing to take the training that we require to use them. 216 00:17:09,245 --> 00:17:11,477 So that tells you a lot right there. 217 00:17:11,477 --> 00:17:19,041 Yeah, you mentioned like 20 to 80 % efficiency gains on specific legal tasks, which is incredible. 218 00:17:19,041 --> 00:17:20,572 can you give some examples? 219 00:17:20,572 --> 00:17:23,403 Like what sort of tasks? 220 00:17:23,403 --> 00:17:26,825 Are there any common themes across those tasks? 221 00:17:28,204 --> 00:17:28,414 Yeah. 222 00:17:28,414 --> 00:17:33,577 I mean, I think if you look at litigation, you know, lot of the different components of litigation, you can break them down. 223 00:17:33,577 --> 00:17:44,442 Like if we look at, different AI tools that can take and chronology, create a chronology of events and facts and fact patterns, there's a lot of work that goes into that. 224 00:17:44,442 --> 00:17:48,594 And there's still going to need to be a lot of work in terms of oversight on how you put those things together. 225 00:17:48,594 --> 00:17:55,274 Um, but it can be done a lot more efficiently using a very good and vetted AI program. 226 00:17:55,274 --> 00:17:58,130 Uh, the same thing is true with contracts and transactional 227 00:17:58,130 --> 00:18:07,634 work that I do and with our &A group, especially, um, on due diligence, you know, there's a lot of things that AI can really do very quickly to help surface issues that are very 228 00:18:07,634 --> 00:18:08,194 important. 229 00:18:08,194 --> 00:18:11,385 Like, Hey, where are the liquidated damages clauses here in these contracts? 230 00:18:11,385 --> 00:18:18,888 Um, and also helping you generate language that is going to work for a very specific situation. 231 00:18:18,888 --> 00:18:24,890 I mean, the reality is for most lawyers, you know, in our amlock 200, ranks here. 232 00:18:25,356 --> 00:18:28,366 the work that we do is very custom. 233 00:18:28,366 --> 00:18:36,630 I mean, I know that's probably not as custom as we like to think it is, but all of us think of our own language as being very, very important. 234 00:18:36,630 --> 00:18:47,544 so what's important for us is to understand where we can get those efficiencies and how we can use AI to put our own spin on it and customize it for the work that we do for our 235 00:18:47,544 --> 00:18:49,094 clients using our. 236 00:18:49,122 --> 00:18:53,976 best templates and our best phrases and clauses that we've created over the years. 237 00:18:53,976 --> 00:19:01,442 And that's, you know, one of the exciting things we're starting to see now is that we can start to create those kinds of customizations for lawyers. 238 00:19:01,442 --> 00:19:10,319 And that's, uh, that's very exciting because that that's really, think one of things that's kept a lot of people from being engaged because you know, they have their own 239 00:19:10,319 --> 00:19:13,261 specific languages and processes they like to use. 240 00:19:13,261 --> 00:19:14,542 Uh, and so 241 00:19:14,666 --> 00:19:21,293 Giving them tools now that can help them implement that is really exciting part of the growth that we're seeing. 242 00:19:21,675 --> 00:19:34,471 And then last time you and I talked, you had mentioned that you guys um were thinking about like playbooks for standardized work or you know, like stock purchase agreements and 243 00:19:34,471 --> 00:19:35,051 NDAs. 244 00:19:35,051 --> 00:19:49,260 don't, I mean, I never sent NDAs to lawyers anyway, but I run them through my GPT or one of the models now and I have our standard MNDA and ask for what's different. 245 00:19:49,260 --> 00:19:49,950 And it works. 246 00:19:49,950 --> 00:19:50,741 It works great. 247 00:19:50,741 --> 00:19:54,933 It's low risk, but you know, stock purchase agreement, lease reviews. 248 00:19:54,933 --> 00:19:58,454 Um, my wife and I own five gyms here in St. 249 00:19:58,454 --> 00:20:06,698 Louis and we moved once we've had to sign six commercial leases and you know, we avoided lawyers until the last minute. 250 00:20:06,698 --> 00:20:09,680 Like, so it be me and my broker hashing out. 251 00:20:09,680 --> 00:20:13,101 Cause we, you know, um, I mean, I think I'm 252 00:20:13,257 --> 00:20:15,800 certified by the jailhouse bar, right? 253 00:20:15,800 --> 00:20:17,421 I could be jailhouse lawyer. 254 00:20:17,421 --> 00:20:19,844 um I've read enough legal documents. 255 00:20:19,844 --> 00:20:27,012 So we would get it to maybe inside the 20 yard line and then bring a lawyer in to kind of finalize it. 256 00:20:27,012 --> 00:20:29,995 But it seems like there's tremendous opportunity. 257 00:20:29,995 --> 00:20:35,721 Like what are your thoughts on like creating playbooks around some of that standardized work? 258 00:20:36,790 --> 00:20:37,790 Yeah, absolutely. 259 00:20:37,790 --> 00:20:43,132 think playbooks are going to be great, especially for quality control. 260 00:20:43,172 --> 00:20:52,015 And I think, you know, this is probably not something that's talked about very much, but I think playbooks are going to be very helpful for young attorneys and associates because 261 00:20:52,015 --> 00:20:55,996 the playbooks we're creating are from experienced attorneys templates. 262 00:20:55,996 --> 00:20:57,887 And they're the ones who are creating the playbooks, right? 263 00:20:57,887 --> 00:21:01,798 We don't have associates creating playbooks, but when the playbook is run, 264 00:21:02,176 --> 00:21:06,966 The program can show the attorney like, here's why we're changing this provision, right? 265 00:21:06,966 --> 00:21:09,901 It gives the rationale and the language and 266 00:21:10,126 --> 00:21:19,366 I don't know about other attorneys who, who are out there, but for me, as an associate coming up, I had some good mentors for sure on how to do things, how to not do things. 267 00:21:19,366 --> 00:21:27,106 You know, you pay attention and you learn those things, but having somebody sit down and walk through a contract with you like that, you know, clause by clause and show you, this 268 00:21:27,106 --> 00:21:28,066 is why we're redlining. 269 00:21:28,066 --> 00:21:29,146 It didn't really happen. 270 00:21:29,146 --> 00:21:34,466 And now I think it's possible for a young associate to get that kind of training and education. 271 00:21:34,486 --> 00:21:38,318 You know, if they're paying attention and wish they are, I mean, all the associates we bring on are great. 272 00:21:38,318 --> 00:21:42,303 great attorneys, they're going to be great attorneys, they need some experience, right? 273 00:21:42,303 --> 00:21:53,336 And so having the tools in the playbook to help educate and train attorneys in real time when they're creating that first draft for the director to look at, I think it's a 274 00:21:53,336 --> 00:21:56,860 valuable resource and I think it's something that's going to help them in their career. 275 00:21:56,860 --> 00:21:58,312 uh 276 00:21:58,312 --> 00:22:02,263 And so, yeah, I mean, think that playbooks are going to be very important. 277 00:22:02,263 --> 00:22:09,606 And again, playbooks that are customized based on the specific needs of the attorney who has that client relationship. 278 00:22:09,606 --> 00:22:17,969 And I'm sure, you know, attorneys out there will recognize that you can have 10 attorneys all in the same practice group working on the same type of document, but they're going to 279 00:22:17,969 --> 00:22:20,319 want to draft it a little bit differently, right? 280 00:22:20,319 --> 00:22:22,280 Because everybody has their own language. 281 00:22:22,280 --> 00:22:27,452 And to some extent, attorneys are more like artists than they are, you know, engineers, right? 282 00:22:27,452 --> 00:22:28,252 So. 283 00:22:29,052 --> 00:22:34,605 They might all get to the same place at end of the day, but they're going to want to get there perhaps using some different language. 284 00:22:34,605 --> 00:22:42,005 And so we have to be able to give them the tools that allow them to customize it the way that they want and the way their client expects it as well. 285 00:22:42,005 --> 00:22:42,215 Yeah. 286 00:22:42,215 --> 00:22:43,466 What are your thoughts on that? 287 00:22:43,466 --> 00:22:49,469 So, you know, today legal is very bespoke, right? 288 00:22:49,469 --> 00:22:52,410 It's Etsy, not Amazon. 289 00:22:52,651 --> 00:23:06,818 And, you know, the reality is as we build these tech enabled legal service delivery machines, how much opportunity and really how much appetite is there in the marketplace 290 00:23:06,818 --> 00:23:12,101 for more of that bespoke, Hey, I really like this language. 291 00:23:13,500 --> 00:23:16,500 versus the standard out of the playbook. 292 00:23:16,501 --> 00:23:21,061 Like that's something that I've always struggled with because I've worked with a lot of lawyers. 293 00:23:21,061 --> 00:23:27,901 I've been an entrepreneur for 32 years and had lots of lawyers with differing philosophies about things. 294 00:23:27,901 --> 00:23:33,741 And I've gotten advice to do it one way and then taking that document, change law firms and hand it to another one. 295 00:23:33,741 --> 00:23:35,721 They're like, yeah, absolutely not. 296 00:23:36,461 --> 00:23:36,681 Yeah. 297 00:23:36,681 --> 00:23:41,343 How much opportunity for standardization is there? 298 00:23:41,343 --> 00:23:43,498 in legal do you think? 299 00:23:45,152 --> 00:23:45,542 Yeah. 300 00:23:45,542 --> 00:23:47,933 mean, I guess the lawyer, the answer is it depends, right? 301 00:23:47,933 --> 00:23:50,205 And I think it depends on the market segment you're talking about. 302 00:23:50,205 --> 00:23:56,789 So for the most part, the MLOT 200 is serving a very narrow section of the general population, right? 303 00:23:56,830 --> 00:24:02,733 And for most of the clients that we have, they trust us individually and as a firm to take care of them. 304 00:24:03,014 --> 00:24:10,248 And they're willing to spend their resource, their money to have us spend our time getting it right. 305 00:24:10,282 --> 00:24:15,354 And so I think to some extent that market's always going to be there for customized, bespoke legal work. 306 00:24:15,354 --> 00:24:26,109 But as we know, there is a humongous market of small and medium sized businesses out there that typically won't come to a Fentimore or another Amlock 200 firm for legal services. 307 00:24:26,210 --> 00:24:35,636 And for those clients, there probably is going to be a market open up for them of more standardized. 308 00:24:35,636 --> 00:24:45,998 agreements and uh legal services at scale that's different than what legal zoom offers right now and is different than what fenimore offers our current clients but there's i 309 00:24:45,998 --> 00:24:56,660 think a huge latent legal market in between those two you know brackets and i think this technology is going to unlock it and you know we're certainly paying attention to that as 310 00:24:56,660 --> 00:24:57,420 well 311 00:24:57,739 --> 00:25:08,978 Yeah, I've been kind of running an experiment over the last, since close to the beginning of the year where I have been running almost everything. 312 00:25:09,109 --> 00:25:11,641 I can't even think of any exceptions to this right now. 313 00:25:11,641 --> 00:25:19,528 Every piece of legal work product that crosses my desk, I run through AI now. 314 00:25:19,528 --> 00:25:22,551 And um for a variety of different reasons. 315 00:25:22,551 --> 00:25:24,793 Some of it is pure testing, like... 316 00:25:25,057 --> 00:25:33,906 Um, I've mentioned it on the podcast before we hired a, uh, employee away from another, uh, from a competitor and they had some non-compete language and we wanted to make sure 317 00:25:33,906 --> 00:25:38,250 that we steered clear of, um, encroaching on that. 318 00:25:38,250 --> 00:25:41,713 So we engaged a labor and employment attorney. 319 00:25:41,713 --> 00:25:44,476 asked him a big, long set of questions. 320 00:25:44,476 --> 00:25:50,021 I wrote down the answers and then I went to AI and I asked all the same questions and you know what? 321 00:25:50,040 --> 00:25:54,253 the answers were almost identical um with very few exceptions. 322 00:25:54,253 --> 00:26:02,419 um We have a 409A program here that's like a shadow equity incentive program. 323 00:26:02,419 --> 00:26:03,980 I ran that through AI. 324 00:26:03,980 --> 00:26:07,603 It did a fantastic job risk ranking all my risks. 325 00:26:07,603 --> 00:26:09,313 were redoing our operating agreement. 326 00:26:09,313 --> 00:26:14,768 We just converted or we took a C-corp election that had to be reflected in the operating agreement. 327 00:26:14,768 --> 00:26:17,259 I had it go through and highlight risks. 328 00:26:17,451 --> 00:26:19,843 I mean, absolutely fantastic. 329 00:26:19,843 --> 00:26:25,487 And it did better in most cases than any lawyer has ever done explaining to me. 330 00:26:25,487 --> 00:26:38,195 Well, first of all, risk ranking, inventorying the risks, risk ranking them based on impact, and then also kind of like a likelihood of occurrence, and then helping role play 331 00:26:38,195 --> 00:26:46,731 where specific provisions might manifest themselves and what the economic impact of that would be. 332 00:26:46,797 --> 00:26:50,117 So it's not that a lawyer was, isn't capable of doing that. 333 00:26:50,117 --> 00:27:00,357 They are, but to put it in that nice, neat, orderly, it would, you'd end up paying $30,000 just for all the admin work necessary to do that. 334 00:27:00,357 --> 00:27:06,037 And I got it done in, you know, 30 seconds, um, using grok four. 335 00:27:06,277 --> 00:27:16,161 So, um, I have been absolutely shocked at how good AI is at doing so many legal tasks now for 336 00:27:16,161 --> 00:27:21,329 For high risk stuff, my attorneys always do the final. 337 00:27:21,329 --> 00:27:25,836 The docs always get finalized by my legal team. 338 00:27:25,836 --> 00:27:29,611 But man, it has been an eye opener just seeing how good AI is at this stuff. 339 00:27:29,611 --> 00:27:32,395 Do you have the same perspective? 340 00:27:33,292 --> 00:27:33,562 Yeah. 341 00:27:33,562 --> 00:27:35,553 I mean, and it's getting better all the time. 342 00:27:35,553 --> 00:27:43,711 I that's the thing that's really surprising to me, especially with the vendors we're working with, where they're continuing to add new features and, um, it's yeah, it's, it's 343 00:27:43,711 --> 00:27:44,321 phenomenal. 344 00:27:44,321 --> 00:27:49,236 And I think there are threats to the traditional legal business model in a number of ways. 345 00:27:49,236 --> 00:27:50,877 One is just the technology itself. 346 00:27:50,877 --> 00:27:55,671 Like you're pointing out more and more people can just go and use the technology and they might be satisfied with that. 347 00:27:55,671 --> 00:28:01,886 Now, obviously there's some danger to that and you're smart to go back to your attorneys and have them review the final, but, um, 348 00:28:02,294 --> 00:28:03,835 The technology is definitely a threat. 349 00:28:03,835 --> 00:28:09,239 And then of course, our current competitors who are learning how to use AI as well, that that's a real threat. 350 00:28:09,239 --> 00:28:19,506 Um, and then you have, you know, for example, I think it was the summer Y Combinator made a call for founders to come in and start a full stack AI law firm. 351 00:28:19,566 --> 00:28:26,766 So, you know, we have new entrants coming into the market that aren't our traditional competitors that are going to be using this technology in different ways. 352 00:28:26,766 --> 00:28:35,706 Um, you have the alternative business structure licenses and other things that can potentially combine legal services and technology in ways that hasn't been done before. 353 00:28:35,706 --> 00:28:40,226 Uh, so the traditional legal model is definitely under a lot of pressure. 354 00:28:40,226 --> 00:28:42,446 There are a lot of threats from different areas. 355 00:28:42,446 --> 00:28:45,346 So it's very important for us to be aware of that. 356 00:28:45,346 --> 00:28:48,294 I'm hopeful because I just think that. 357 00:28:48,558 --> 00:28:53,321 you know, there are going to be increasing demands from our existing clients for legal services. 358 00:28:53,321 --> 00:29:03,008 I see opportunities for us to provide additional services to our clients that are, you know, related to the traditional services we provide them. 359 00:29:03,008 --> 00:29:11,673 And I think we can get after additional client bases that, know, before now may not have come to us either down market or up market. 360 00:29:12,174 --> 00:29:19,714 because we can use these tools effectively and because we're putting in the time in a disciplined way to understand how to use this technology. 361 00:29:19,914 --> 00:29:28,734 So I'm bullish, but at the same time, you know, hearing you talk about your use of AI, I know there are a lot of clients that are doing the same thing and they're sending us, you 362 00:29:28,734 --> 00:29:31,806 know, a product that they've already run through their AI tools and 363 00:29:31,806 --> 00:29:40,624 And so it is just part of the fabric now, I think, of providing legal services that you need to understand that this is a movement that's happening where the technology is going 364 00:29:40,624 --> 00:29:44,928 to be a threat to your business if you're not embracing it already. 365 00:29:45,236 --> 00:29:59,374 And you guys are headquartered in a state that's pioneering kind of the modified model rule 5.4 with allowing non-legal ownership in the form of alternative business structures. 366 00:29:59,574 --> 00:30:03,376 And there are entrants making their way into that market. 367 00:30:03,376 --> 00:30:12,513 uh There is about um a 4,000 employee 368 00:30:12,941 --> 00:30:23,981 tax and advisory firm called Aprio that I don't know if they have, I think they have a joint venture with a small 50 attorney law firm called Radix Law and they created Aprio 369 00:30:23,981 --> 00:30:24,961 Law. 370 00:30:25,321 --> 00:30:37,081 That was newsworthy, the real, mean, KPMG also was granted rights to stand up in ABS. 371 00:30:37,341 --> 00:30:50,233 which I think is extremely interesting given their size and scale, 36,000 employees, 40 plus billion dollars in, no, I'm sorry, 36, they have like 275,000 employees, um 40 372 00:30:50,233 --> 00:30:56,426 billion in revenue and that's probably a dated number, they're probably higher now. 373 00:30:56,486 --> 00:31:06,229 A global presence, DNA that has really adopted the innovation ethos 374 00:31:06,821 --> 00:31:15,643 And 4,000 lawyers, if you stood those lawyers out on their own, they'd probably be an Amlaw 10 law firm. 375 00:31:16,104 --> 00:31:28,887 And I look at that and I'm like, man, these guys are going to be competing with some of these law firms that have really under invested in technology, are resistant to change, 376 00:31:28,887 --> 00:31:35,249 are risk avoidant, have consensus driven decision making. 377 00:31:35,266 --> 00:31:50,650 governance models and XCOM members with short retirement horizons that are in lateral mobility, firm to firm, all of this adds up to what's gonna happen? 378 00:31:51,550 --> 00:32:01,429 How do you see this thing playing out as more, and that's still, I and I just wanna be clear, I'm not saying law firms are. 379 00:32:01,429 --> 00:32:02,260 are going away. 380 00:32:02,260 --> 00:32:03,221 don't think that at all. 381 00:32:03,221 --> 00:32:10,079 The bet the farm stuff is still going to law firms for the foreseeable future, maybe forever. 382 00:32:10,079 --> 00:32:18,588 But there's a lot of blocking and tackling work out there too, that I could see KPMG making a really strong uh pitch for. 383 00:32:18,588 --> 00:32:19,770 So I don't know. 384 00:32:19,770 --> 00:32:23,113 How do you see the whole ABS thing? 385 00:32:24,014 --> 00:32:24,314 Yeah. 386 00:32:24,314 --> 00:32:25,434 I mean, look, it's exciting. 387 00:32:25,434 --> 00:32:33,854 And, know, I'm happy to say that our firm was one of, I think the few, if not the only larger firm in Phoenix that didn't sign a petition to try to stop the Arizona state 388 00:32:33,854 --> 00:32:36,594 Supreme Court from putting the ABS in place. 389 00:32:36,594 --> 00:32:45,214 And we actually had one of the judiciary come in and talk to us about, you know, why it was set up and the whole reason for it to be set up in the first place was really an 390 00:32:45,214 --> 00:32:46,434 access to justice issue. 391 00:32:46,434 --> 00:32:49,334 You know, it wasn't necessarily for KPMG to make more money. 392 00:32:49,334 --> 00:32:54,028 was to give, you know, regular citizens more access to legal services with the idea that 393 00:32:54,028 --> 00:33:00,311 technology would enable legal services to be delivered at a lower price point, which I think is correct. 394 00:33:00,391 --> 00:33:10,476 And I do think that's probably going to be the net effect and that impact of ABS entities is that they are going to be able to use technology and different business model 395 00:33:10,476 --> 00:33:21,762 structures rather than the partnership structure and billable hours to generate revenue in a way that is going to make the legal services much less expensive to receive. 396 00:33:22,068 --> 00:33:32,275 And I'm also bullish that the demand for legal services is going to continue to increase because I do think that there are a lot of people out there who have unmet legal needs. 397 00:33:32,275 --> 00:33:36,654 I think even our existing clients uh for the most part have 398 00:33:36,654 --> 00:33:43,454 things that they would probably prefer that we do for them, but that we've just been too expensive to do them for them in the past. 399 00:33:43,454 --> 00:33:52,214 And now, you know, with this technology and with us having a real honest conversation with them, I think we can expand a little bit our footprint and maybe change some of the 400 00:33:52,214 --> 00:33:54,074 pricing into alternative fee arrangements. 401 00:33:54,074 --> 00:33:56,354 do think AFAs will take off. 402 00:33:56,354 --> 00:33:57,854 I just don't know when. 403 00:33:57,854 --> 00:34:03,394 I think, um, there's a tremendous amount of hype and pressure around putting them forward for good reason. 404 00:34:03,454 --> 00:34:04,194 Um, 405 00:34:04,194 --> 00:34:14,721 But the, you know, the broad scale implementation of AFAs and departure from billable hours, I don't know that ever fully happened because, you know, in some instances, the 406 00:34:14,721 --> 00:34:16,814 client's getting a great deal if they can pay. 407 00:34:16,814 --> 00:34:22,854 By the hour for advice that will literally save them millions of dollars, which happens pretty regularly. 408 00:34:22,854 --> 00:34:23,874 Then they're going to do that. 409 00:34:23,874 --> 00:34:24,634 Right. 410 00:34:24,634 --> 00:34:27,734 But there are workflows and specific legal services. 411 00:34:27,734 --> 00:34:31,054 I think that, that, you know, are good fits for AFAs. 412 00:34:31,054 --> 00:34:40,014 And so it might be, you know, six months from now, it could be six years, who knows, but, uh, we as lawyers have to be thinking this way because there are a lot of problems for us 413 00:34:40,014 --> 00:34:43,404 to solve just to get into position to provide. 414 00:34:43,404 --> 00:34:47,181 clients with legal services that are not based on a billable hour. 415 00:34:47,181 --> 00:34:54,474 So fair amount of work that we have to do to change our mindset and our internal compensation structures to get ready for that. 416 00:34:54,476 --> 00:35:06,915 Yeah, I think it's actually pretty short-sighted for law firms and lawyers to oppose this ABS um model rolling out. 417 00:35:06,915 --> 00:35:12,319 I actually believe that lawyers are going to be the ones advocating for it soon. 418 00:35:12,319 --> 00:35:18,603 And the reason is because there are a number of benefits that it creates. 419 00:35:18,603 --> 00:35:23,064 First, it creates a whole new access to capital. 420 00:35:23,064 --> 00:35:26,455 that didn't exist before, which really wasn't necessary. 421 00:35:26,455 --> 00:35:32,038 Scaling a professional services team, you need some money for working capital, right? 422 00:35:32,038 --> 00:35:40,081 There's a pretty big delay from an hour that you work on January 1st that doesn't get invoiced until February 15th. 423 00:35:40,081 --> 00:35:43,762 It doesn't get collected until March 15th, if you're lucky. 424 00:35:44,203 --> 00:35:45,924 And you may only collect half that. 425 00:35:45,924 --> 00:35:48,615 there's capital needs there, right? 426 00:35:48,615 --> 00:35:51,846 But um in terms of doing R &D, 427 00:35:52,045 --> 00:36:04,040 which I think law firms are gonna have to do because uh I don't think that buying off the shelf tools is going to create enough differentiation ah because again, competitors can do 428 00:36:04,040 --> 00:36:04,160 it. 429 00:36:04,160 --> 00:36:07,702 So how are firms gonna differentiate themselves? 430 00:36:07,702 --> 00:36:17,306 They've historically done that with their brand, with the wins, the high profile wins, with the big name attorneys that they've got that have had the high profile cases. 431 00:36:17,440 --> 00:36:21,241 And that's still going to be a factor, but technology is also going to be a factor. 432 00:36:21,241 --> 00:36:23,512 And that has not been a factor before. 433 00:36:23,552 --> 00:36:28,013 And how are they going to deploy on that without capital? 434 00:36:28,013 --> 00:36:29,763 Well, this opens up a whole new avenue. 435 00:36:29,763 --> 00:36:32,434 I don't know what, what. 436 00:36:32,434 --> 00:36:40,696 And so, and I think over time that lawyers are going to realize that, that they have to, they're going to have to, the rules of the game have changed. 437 00:36:40,696 --> 00:36:46,754 And if they want to compete, they're going to have to make investments and how do they fund those investments? 438 00:36:46,754 --> 00:36:48,598 Well, ABS is a good model. 439 00:36:48,598 --> 00:36:57,888 Do you think that mindset, that anti-ABS mindset is too well entrenched to move, or could you see it moving? 440 00:36:58,894 --> 00:36:59,274 Yeah. 441 00:36:59,274 --> 00:37:03,154 I mean, you see some state legislatures introducing legislation, try to block. 442 00:37:03,154 --> 00:37:09,454 think California has some legislation right now that they're potentially going to block out of state ABS is from practicing there if that moves forward. 443 00:37:09,454 --> 00:37:15,954 But I agree with you a hundred percent on your premise, which is, you know, the differentiation is going to be where the strategic advantage comes in, right? 444 00:37:15,954 --> 00:37:21,234 You want an asymmetric advantage and you're not going to get that if you're just buying the same license that everybody else has. 445 00:37:21,548 --> 00:37:24,941 If everybody has Harvey, there's not a whole lot of differentiation there, right? 446 00:37:24,941 --> 00:37:38,662 But if you're doing both, if you're buying licenses for things that you can use and your clients want, um, and you're building on top of your own data set and, your own unique 447 00:37:38,662 --> 00:37:39,512 advantages, right? 448 00:37:39,512 --> 00:37:46,574 think every firm has some unique advantages in terms of practice areas, geographic locations, their market fit. 449 00:37:46,574 --> 00:37:57,674 The clients are going after, you know, there's some unique characteristics to probably every firm that's in the amlot 200, but how they utilize this technology and where they 450 00:37:57,674 --> 00:38:03,894 choose to build and where they choose to buy is going to make a big difference on how effective they are downrange. 451 00:38:03,894 --> 00:38:06,354 And I think, you know, you're right. 452 00:38:06,354 --> 00:38:14,574 Getting outside capital is going to be extremely helpful, especially as you start to see these IT expenditures go up and up and up, right? 453 00:38:14,574 --> 00:38:15,438 Because. 454 00:38:15,438 --> 00:38:23,138 When the partner starts spending 10 % of the revenue on IT, it's going to make it a very uncomfortable conversation come bonus time. 455 00:38:23,138 --> 00:38:23,698 Right. 456 00:38:23,698 --> 00:38:34,758 But if you can do it with outside capital and you can mitigate your risk and you can potentially, you know, get some multiple of your revenue in terms of valuation, the idea 457 00:38:34,758 --> 00:38:39,318 of owning equity and ABS is very different than the idea of owning equity in a partnership. 458 00:38:39,318 --> 00:38:39,978 Right. 459 00:38:39,978 --> 00:38:40,462 So 460 00:38:40,462 --> 00:38:45,987 um So there are very interesting economics and business models to look at. 461 00:38:46,789 --> 00:38:55,577 And it's not clear, you know, what the timeframe for all this change is going to be, but I think it is clear that there's going to be some massive change in terms of the way that 462 00:38:55,598 --> 00:38:59,221 law firms as businesses are run in the next five to 10 years. 463 00:38:59,266 --> 00:38:59,496 Yeah. 464 00:38:59,496 --> 00:39:09,790 And the governance model too, my listeners have probably heard me talk ad nauseam at this point about just the lack of governance in law firms. 465 00:39:09,790 --> 00:39:15,713 you know, I came from, spent 10 years in financial services, very highly regulated industry. 466 00:39:15,713 --> 00:39:19,915 And I was primarily in uh risk management roles. 467 00:39:19,915 --> 00:39:25,267 So that's kind of second line of defense, you know, in, in financial services that we say we have four lines of defense. 468 00:39:25,267 --> 00:39:28,290 First line of defense is the business unit, right? 469 00:39:28,290 --> 00:39:35,875 the commercial bank, the consumer bank, could be wealth management. 470 00:39:35,875 --> 00:39:39,108 They have controls to mitigate risk in that line of business. 471 00:39:39,108 --> 00:39:43,951 Then you have a risk management partner that's aligned specifically to with each line of business. 472 00:39:43,951 --> 00:39:45,622 That's your second line of defense. 473 00:39:45,622 --> 00:39:48,864 Then you have third line of defense, which is corporate audit. 474 00:39:49,465 --> 00:39:57,077 And then you have your fourth line of defense, which is the Wall Street Journal, which is where you end up if the first three fail and 475 00:39:57,077 --> 00:40:00,449 Law firms have one line of defense, right? 476 00:40:00,449 --> 00:40:13,956 I've yet to see a law firm with an internal audit and risk management partners and an audit committee and a uh board of directors that holds everybody accountable. 477 00:40:13,956 --> 00:40:15,817 It's just a different model. 478 00:40:15,817 --> 00:40:27,052 So I think for firms to scale beyond single digit billions, think a different business model or corporate structure 479 00:40:27,052 --> 00:40:29,622 governance model is going to be needed. 480 00:40:29,622 --> 00:40:31,338 I don't know if have any thoughts on that. 481 00:40:32,556 --> 00:40:33,116 Yeah, I do. 482 00:40:33,116 --> 00:40:39,168 And I think you can see, you know, there have been a lot of examples of law firms spinning out subsidiary ALSPs, right? 483 00:40:39,168 --> 00:40:44,062 I'll turn to legal service provider units that have done specific things, maybe point solutions in particular areas. 484 00:40:44,062 --> 00:40:47,735 And I do think that makes a lot of sense going forward as well. 485 00:40:47,735 --> 00:40:56,029 I think you're right that, you know, the traditional law firm is not really well structured at the moment to take advantage of all the opportunities that are out there. 486 00:40:56,029 --> 00:41:01,080 But I think with the right focus and discipline around. 487 00:41:01,080 --> 00:41:02,861 you how do we explore these business models? 488 00:41:02,861 --> 00:41:11,096 What are some opportunities we can, you know, seize out here and how can we look at this more from a private equity or venture capital perspective? 489 00:41:11,096 --> 00:41:18,060 uh It really comes down to just being a little more objective about, you know, what the clients want, right? 490 00:41:18,060 --> 00:41:19,821 And they need specific legal services. 491 00:41:19,821 --> 00:41:23,773 Do they really care how long it took you to deliver those services? 492 00:41:23,773 --> 00:41:25,204 Probably not, right? 493 00:41:25,204 --> 00:41:28,504 uh There's a certain value you're delivering. 494 00:41:28,504 --> 00:41:32,007 how you do that is really the question we're trying to answer here. 495 00:41:32,007 --> 00:41:36,100 Like, should we continue to do it the same way we've been doing it for the last 50 years? 496 00:41:36,100 --> 00:41:37,831 Probably not, right? 497 00:41:37,831 --> 00:41:44,286 In most cases, we should probably look at, there some tools that might make us a little more efficient or just make the product better, right? 498 00:41:44,286 --> 00:41:47,868 ah And so that's really where we're coming down. 499 00:41:47,868 --> 00:41:49,949 But I think you're right. 500 00:41:50,330 --> 00:41:55,914 the business model of a law firm just has not included a lot of governance uh per se. 501 00:41:56,394 --> 00:41:59,497 Except I will say that lawyers are generally very, very conservative. 502 00:41:59,497 --> 00:42:02,259 And so, you know, they don't take a lot of risk. 503 00:42:02,259 --> 00:42:09,595 So for the most part, that's been good to allow us to survive and not go extinct as a business model. 504 00:42:09,595 --> 00:42:13,037 You know, we've been able to preserve our own businesses for the most part. 505 00:42:13,037 --> 00:42:21,214 And I think uh it is, you know, it's a good attribute, but it's also probably something that's keeping a lot of law firms from innovating the way they probably should be at the 506 00:42:21,214 --> 00:42:22,024 moment. 507 00:42:22,208 --> 00:42:26,399 Yeah, lawyers are risk avoidant. 508 00:42:26,399 --> 00:42:34,642 And that's good when you're lacking layers of protection between you and the Wall Street Journal. 509 00:42:34,642 --> 00:42:47,485 But um I think in order to scale, to have Fortune 500 level scale, I'm not sure that the current law firm partnership model is the right path. 510 00:42:49,818 --> 00:42:51,064 What about 511 00:42:51,064 --> 00:42:55,576 You know, we're almost out of time, but I did want to balance one thing off of you. 512 00:42:55,576 --> 00:43:07,921 And that is like, how do firms think about, how should they think about balancing the protection of the firm's reputation, which as we just talked about, that's like number one 513 00:43:07,921 --> 00:43:11,763 on the differentiation list is the brand, right? 514 00:43:11,763 --> 00:43:17,565 Versus the need to make bold moves in technology adoption, because it does come with risk. 515 00:43:17,565 --> 00:43:20,246 So I don't know, how do you think about it? 516 00:43:20,574 --> 00:43:25,777 What do you think are best practices around that thought process? 517 00:43:27,310 --> 00:43:27,550 Yeah. 518 00:43:27,550 --> 00:43:35,730 I mean, I think to protect your clients, first of all, you have to develop a good due diligence capability so that you can filter out the noise from the signal in terms of what 519 00:43:35,730 --> 00:43:37,270 the vendors are offering you, right? 520 00:43:37,270 --> 00:43:40,690 Make sure your client's data is safe. 521 00:43:40,690 --> 00:43:43,310 That's fundamentally a requirement, ethical requirements. 522 00:43:43,310 --> 00:43:53,610 So making sure you have those pieces, you know, built in place first so you can screen out bad actors and you can really just work with the best of the best in terms of legal tech 523 00:43:53,610 --> 00:43:54,572 providers. 524 00:43:54,572 --> 00:43:58,586 And then trying to find legal tech providers that will actually work with you and listen to you. 525 00:43:58,586 --> 00:44:01,890 Um, what you don't want to do is just get a sales person. 526 00:44:01,890 --> 00:44:07,236 You want somebody who's actually going to take your feedback and maybe go back to the engineering team and say, Hey, they need X, Y, and Z. 527 00:44:07,236 --> 00:44:07,897 Can we do this? 528 00:44:07,897 --> 00:44:09,488 And then, yes, they can. 529 00:44:09,488 --> 00:44:15,515 and so, like I said, the relationships we have right now, we've been talking to these vendors for two years and they've been great to work with. 530 00:44:15,515 --> 00:44:16,605 And I think, 531 00:44:16,908 --> 00:44:17,778 That's what you need. 532 00:44:17,778 --> 00:44:23,201 You need a vendor that is going to listen to you and then it's going to be reactive to your needs and your clients needs. 533 00:44:23,201 --> 00:44:27,193 So due diligence, reactive, good vendor that you can work with somebody you can trust. 534 00:44:27,193 --> 00:44:32,966 And then, you know, find some use cases where you can actually get some return on investment, or at least you see. 535 00:44:33,006 --> 00:44:39,606 the light at the end of the tunnel where you can get some return on this investment because without that, you're going to have a difficult time selling it to your partners 536 00:44:39,606 --> 00:44:47,326 that, we need to go back and get some more money to pay for this legal tech, especially if it's not going to make any money anytime soon. 537 00:44:48,094 --> 00:44:54,237 Having a clear discipline process on how you're going to get to a return on investment is super important. 538 00:44:54,237 --> 00:45:00,360 So I think that's probably the final piece, just making sure you have the right use case and the right clients and the right practice area. 539 00:45:00,360 --> 00:45:08,724 You're going to actually try to do some proof of concept and take some measurements in terms of how much time you actually spent versus how much time you would have spent 540 00:45:08,724 --> 00:45:10,144 without the tools. 541 00:45:10,324 --> 00:45:13,686 And look, in that process, you're going to end up spending more time, right? 542 00:45:13,686 --> 00:45:17,978 Because you need to do it the traditional way and you need to test it in the new way. 543 00:45:17,978 --> 00:45:20,270 So it is actually going to be more time committed. 544 00:45:20,270 --> 00:45:30,889 But if you're clear on the goal that, at the end of the day, if we can get this right, we can actually deliver this service to our client and it's less expensive. 545 00:45:30,889 --> 00:45:31,490 It's faster. 546 00:45:31,490 --> 00:45:32,781 It's better product. 547 00:45:32,781 --> 00:45:34,923 Then it's worthwhile going through that process. 548 00:45:34,923 --> 00:45:38,317 So I guess those would be the three steps I would prescribe. 549 00:45:38,317 --> 00:45:46,515 Yeah, and what tech initiative doesn't require more investment in time than the status quo? 550 00:45:46,515 --> 00:45:48,917 I'd argue all of them do, right? 551 00:45:48,917 --> 00:46:00,547 If you get a new CRM with new capabilities, you're going to have to invest time in finding a migration path to customize the new system. 552 00:46:00,768 --> 00:46:03,660 It's a time investment. 553 00:46:03,754 --> 00:46:07,557 no matter what sort of tech change you're implementing. 554 00:46:07,557 --> 00:46:20,046 And man, your point is really solid about finding the vendors who listen because, you know, that's where, you know, we compete with the big boys, like on the, on the legal 555 00:46:20,046 --> 00:46:30,714 internet side, they're not much competition anymore, but it was Handshake that was bought by Adorant, very big company, not, not really a strategic, um, 556 00:46:32,504 --> 00:46:34,914 platform in their broader portfolio. 557 00:46:34,914 --> 00:46:43,560 Uh, and then on the extra net side, compete with IQ that's owned by Thompson Reuters, which, know, they are another really big organization. 558 00:46:43,560 --> 00:46:47,552 And, um, we are differentiating ourselves. 559 00:46:47,552 --> 00:46:58,878 The, the market has really expressed strong interest for alternatives and we're raising our hand and saying, Hey, we're here and we have a client advisory panel and we'd love you 560 00:46:58,878 --> 00:47:02,560 to participate and help us guide the roadmap. 561 00:47:02,612 --> 00:47:05,124 And man, that has been such a successful partnership. 562 00:47:05,124 --> 00:47:14,611 We've, we have had, especially on the extranet side, which is newer, our internet platform is very well established, like quarter of the AMLAL use us. 563 00:47:14,611 --> 00:47:16,032 We're only three and a half years old. 564 00:47:16,032 --> 00:47:23,737 So we've had tremendous traction in that space, but on the extranet side, it took another two and a half years of R and D to get that right. 565 00:47:23,737 --> 00:47:25,318 Because it's so much more high risk. 566 00:47:25,318 --> 00:47:30,314 It's client facing, like you have to make sure that governance and 567 00:47:30,314 --> 00:47:38,660 security controls, provisioning, all these things are really tightly managed and um our customers feel the difference. 568 00:47:38,660 --> 00:47:47,926 uh I would echo your sentiments about find a vendor who wants to listen to what you have to say because it makes a huge difference. 569 00:47:49,100 --> 00:47:49,370 Yeah. 570 00:47:49,370 --> 00:47:52,563 I mean, ultimately they're like a legal partner in some ways, right? 571 00:47:52,563 --> 00:48:00,238 I know we're not supposed to say that on ethical rules, but the reality is that if you're relying on them for legal services or for, for services that are going to be a part and 572 00:48:00,238 --> 00:48:05,542 parcel of your legal services, you need to be very comfortable that they are actually paying attention to what you need. 573 00:48:05,542 --> 00:48:12,337 And there's, there's a good working relationship there, just like you'd want to have with any professional services provider that you're working with, right? 574 00:48:12,337 --> 00:48:14,619 You want to make sure that there was a good relationship there. 575 00:48:14,619 --> 00:48:16,864 You're communicating well, you know, just 576 00:48:16,864 --> 00:48:19,575 important pieces of any good relationship. 577 00:48:19,575 --> 00:48:21,646 yeah, I think that's, that's been hugely important. 578 00:48:21,646 --> 00:48:30,171 I think it helps, uh, you be much more successful or mitigate your risks, at least if you have a good partner who you can communicate with and who's listening to you as you're 579 00:48:30,171 --> 00:48:31,051 communicating with them. 580 00:48:31,051 --> 00:48:32,834 So yeah, super important. 581 00:48:32,834 --> 00:48:33,555 Totally. 582 00:48:33,555 --> 00:48:35,175 Well, this has been a great conversation. 583 00:48:35,175 --> 00:48:38,718 really appreciate you spending a few minutes with us today. 584 00:48:38,718 --> 00:48:44,141 How do people find out more about Fenimore Labs or you or do have LinkedIn profile? 585 00:48:44,141 --> 00:48:46,342 What's the best way for people to get in touch? 586 00:48:47,008 --> 00:48:49,901 Yeah, certainly linkedinphenimorelaw.com is our website. 587 00:48:49,901 --> 00:48:53,454 You can go on there and find out more about Fenimore Labs and what we're doing with AI project. 588 00:48:53,454 --> 00:48:56,007 Blue wave is our AI project. 589 00:48:56,007 --> 00:49:00,461 Um, lot of good information on the website and, yeah, I'm happy to talk to anybody. 590 00:49:00,461 --> 00:49:04,545 If you have any questions or if you want to just discuss legal tech, I'm interested. 591 00:49:04,545 --> 00:49:08,619 So feel free to drop me a line on LinkedIn or by email through the website. 592 00:49:08,619 --> 00:49:11,688 Appreciate the time and thank you to have this opportunity. 593 00:49:11,688 --> 00:49:12,260 Awesome. 594 00:49:12,260 --> 00:49:12,750 All right. 595 00:49:12,750 --> 00:49:19,273 And then we'll see you uh not too long in uh Austin for TLTF, correct? 596 00:49:19,768 --> 00:49:20,290 That's right. 597 00:49:20,290 --> 00:49:20,732 That's right. 598 00:49:20,732 --> 00:49:21,071 Yeah. 599 00:49:21,071 --> 00:49:22,520 See you at the TLTF summit. 600 00:49:22,520 --> 00:49:23,189 Should be good. 601 00:49:23,189 --> 00:49:24,050 All right, good stuff. 602 00:49:24,050 --> 00:49:25,191 Thanks David. 603 00:49:26,776 --> 00:49:27,817 Take care. 00:00:03,699 David, how are you this afternoon? 2 00:00:04,910 --> 00:00:05,595 Good afternoon, Ted. 3 00:00:05,595 --> 00:00:06,029 I'm good. 4 00:00:06,029 --> 00:00:06,462 Thank you. 5 00:00:06,462 --> 00:00:07,541 Thank you for having me. 6 00:00:07,541 --> 00:00:11,082 Yeah, I'm excited about this conversation. 7 00:00:11,082 --> 00:00:13,043 You and I had a quick chat. 8 00:00:13,043 --> 00:00:19,822 I had reached out to you about being a advisory board member for TLTF and we had a great conversation. 9 00:00:19,822 --> 00:00:22,485 I was like, man, I got to get this guy on the podcast. 10 00:00:22,485 --> 00:00:24,706 So looking forward to it. 11 00:00:24,706 --> 00:00:36,789 um In addition to your work on the board at TLTF, you're also a partner at Fennimore and chair of the Fennimore labs and 12 00:00:36,791 --> 00:00:43,189 Fill in the blanks, like, well, tell our audience a little bit about kind of who you are, what you do, and where you do it. 13 00:00:44,152 --> 00:00:45,113 Yeah, very good. 14 00:00:45,113 --> 00:00:46,745 yeah, my name is David McCarvel. 15 00:00:46,745 --> 00:00:55,654 I'm chair of Fenimore Labs, which is our firm's R &D division, looking at AI programs and also looking at alternative platforms, like does an alternative business structure make 16 00:00:55,654 --> 00:00:56,595 sense? 17 00:00:56,916 --> 00:00:58,768 We're looking at new pricing structures. 18 00:00:58,768 --> 00:01:03,062 So we have an AI and AFA policy document we produce for our partners to look at. 19 00:01:03,352 --> 00:01:05,533 we're also looking at how we can streamline operations. 20 00:01:05,533 --> 00:01:11,816 So the of the work you're doing at info dash, how we can work with tech vendors to better serve our clients is really our main mission. 21 00:01:11,816 --> 00:01:15,708 And the committee's made up of attorneys who are practicing with myself. 22 00:01:15,708 --> 00:01:23,792 I'm in our business and finance practice group, but we have attorneys from all over our offices and our different practice groups, you know, participating and trying to help us 23 00:01:23,792 --> 00:01:26,653 figure out how we can use this technology to better serve our clients. 24 00:01:26,653 --> 00:01:28,244 In addition to that, we've 25 00:01:28,428 --> 00:01:32,742 We created a number of ad hoc working groups that are looking at AI and alternative fee arrangements. 26 00:01:32,742 --> 00:01:38,547 And we meet pretty regularly with those groups, trying to help them understand, you know, what are the tools that we can use? 27 00:01:38,547 --> 00:01:44,151 What are some use cases and what are some good clients that we could potentially work with to use this technology? 28 00:01:44,151 --> 00:01:46,874 So that's, that's a big part of what we do with labs. 29 00:01:46,874 --> 00:01:50,647 I'm also chair of our DNI committee on service and outreach. 30 00:01:50,647 --> 00:01:56,974 And I'm part of our federal forward program, which is a program where we have attorneys who have their own book of business. 31 00:01:56,974 --> 00:02:00,814 come to work in places where we don't have traditional brick and mortar offices. 32 00:02:00,814 --> 00:02:03,554 So I'm located in Massachusetts near Boston. 33 00:02:03,674 --> 00:02:08,454 We have about 30 attorneys, I believe now in the Fennimore Forward Program who are all over the country. 34 00:02:08,474 --> 00:02:14,914 Most of our lawyers, we have about 350 lawyers and most of our Fennimore lawyers and offices are in the Mountain West. 35 00:02:14,914 --> 00:02:17,294 So that's our home base, if you will. 36 00:02:17,294 --> 00:02:20,314 We're headquartered in Phoenix where we started in 1885. 37 00:02:20,654 --> 00:02:23,474 So the has been around for a long time and I'm real happy to be here. 38 00:02:23,474 --> 00:02:24,358 So thank you. 39 00:02:24,358 --> 00:02:37,267 Awesome good stuff and you said R &D and law firm in the same sentence, which uh I thought was interesting That's not you don't hear about law firms doing much R &D at least in the 40 00:02:37,267 --> 00:02:38,878 in the tech space. 41 00:02:38,878 --> 00:02:40,339 So how? 42 00:02:40,378 --> 00:02:42,720 How did Fennimore? 43 00:02:42,941 --> 00:02:47,804 Gravitate in that direction because again, you just don't you don't hear about it a lot 44 00:02:49,164 --> 00:02:51,115 Yeah, I think it was pretty organic. 45 00:02:51,115 --> 00:02:58,883 mean, we are fortunate that we have a manager committee that's really looking forward, looking to the future and, you know, led by our CEO, James Goodenow, who I believe is the 46 00:02:58,883 --> 00:03:01,645 youngest CEO of an Amlog 200 firm. 47 00:03:01,645 --> 00:03:04,988 And, um, I have sort of an interest in curiosity and technology. 48 00:03:04,988 --> 00:03:09,952 I've been teaching a class at ASU law school as an adjunct professor on blockchain and cryptocurrency. 49 00:03:09,952 --> 00:03:11,354 This is my eighth year of doing that. 50 00:03:11,354 --> 00:03:15,127 So it just was sort of a natural point of gravitation. 51 00:03:15,127 --> 00:03:16,578 just moved towards. 52 00:03:16,710 --> 00:03:17,490 technology. 53 00:03:17,490 --> 00:03:26,054 And then of course, when chat GPT dropped three years ago, we had started to fend more labs with the idea, Hey, we really need to be leaning in and figuring out how we can use 54 00:03:26,054 --> 00:03:26,684 technology. 55 00:03:26,684 --> 00:03:30,156 And of course the AI boom started right around then. 56 00:03:30,156 --> 00:03:36,759 So initially in the first year, we, we spent a lot of time just trying to understand, you know, what is this technology? 57 00:03:36,759 --> 00:03:37,939 Who's who in the zoo? 58 00:03:37,939 --> 00:03:41,701 made a catalog of over a hundred legal AI tech providers. 59 00:03:41,701 --> 00:03:44,462 We did a bunch of demos with people. 60 00:03:44,658 --> 00:03:52,207 And then the second year, we really started to center on a few very good vendors that we continued to vet and work closely with. 61 00:03:52,207 --> 00:03:58,350 And now some of those vendors are on board with us and, um, happy to say that they're working out very well. 62 00:03:58,350 --> 00:04:03,750 Uh, but again, these vendors that are on board with us now, for the most part, we've been talking to them for about two years. 63 00:04:03,750 --> 00:04:09,510 And so it's, it's been a bit of a slog and a slow burn, but, um, it's been exciting also. 64 00:04:09,510 --> 00:04:20,150 And it's, it's, I give a lot of credit to, you know, the manager committee, but also to the other attorneys like myself who are willing to dedicate some time, uh, to helping us 65 00:04:20,150 --> 00:04:23,832 figure this out, because you really do have to have both, I think of grassroots. 66 00:04:23,832 --> 00:04:28,196 Group of attorneys who are willing to put time in on it and you have to have the management commitment as well. 67 00:04:28,196 --> 00:04:30,561 So we're fortunate to have both of those things. 68 00:04:31,327 --> 00:04:38,940 And that's a good segue into the topic around billable hours and alternative fee arrangements. 69 00:04:39,061 --> 00:04:53,177 And the reason it's a good segue is because it's so difficult when so much emphasis is placed on oh billable hour targets to get attorneys to divert their focus and their 70 00:04:53,177 --> 00:04:53,727 attention. 71 00:04:53,727 --> 00:04:56,228 There's a really high opportunity cost. 72 00:04:56,649 --> 00:04:57,741 There's a 73 00:04:57,741 --> 00:05:09,701 Couple of, there's a couple of interesting threads out there on, I'm not going to say the name of the firm, but a firm recently published a 2,400 hour, maybe it was a 2,000 hour 74 00:05:09,701 --> 00:05:17,981 billable 400 hour kind of what we're talking about here, R and D development kind of hours. 75 00:05:17,981 --> 00:05:25,509 And you know, if you do the math on that, it's pretty outrageous how the level of 76 00:05:25,857 --> 00:05:30,437 the extent to which that will skew work-life balance. 77 00:05:30,437 --> 00:05:32,602 And there's so much burnout in the industry. 78 00:05:32,602 --> 00:05:48,695 It's like, man, how do you guys think about balance and trying to make it a sustainable path where people just don't hate their lives as they make their way up the ranks? 79 00:05:48,695 --> 00:05:51,477 Like, I don't know, any secret sauce there? 80 00:05:52,654 --> 00:05:52,994 Yeah. 81 00:05:52,994 --> 00:05:55,254 I mean, I think there's definitely a culture at Fennimore. 82 00:05:55,254 --> 00:05:58,174 Like I said, we've been around for a long time since 1885. 83 00:05:58,174 --> 00:06:02,954 And, uh, you know, before I came to Fennimore, had the pleasure of working with some of the attorneys on different matters. 84 00:06:02,954 --> 00:06:10,994 And it's always had the culture of we work hard and we have good attorneys, but we're not going to kill people with billable hour requirements. 85 00:06:11,294 --> 00:06:13,794 Um, in some ways it's kind of a choose your own adventure. 86 00:06:13,794 --> 00:06:16,134 Like if you want to bill 2,400 hours, we'll help you. 87 00:06:16,134 --> 00:06:17,594 And you know, we're happy to do that. 88 00:06:17,594 --> 00:06:19,914 And it is a little bit about the money. 89 00:06:19,934 --> 00:06:21,038 Um, but 90 00:06:21,038 --> 00:06:26,198 We enjoy a little more of a sort of Western Arizona approach to this kind of thing. 91 00:06:26,198 --> 00:06:30,538 We're not, you know, a New York law firm and in the AMLA 20 or whatever. 92 00:06:30,538 --> 00:06:32,258 So, uh, there was a different culture. 93 00:06:32,258 --> 00:06:35,798 I think I would credit that, that, you know, work life balance does matter. 94 00:06:35,798 --> 00:06:40,358 We understand that lawyers can get burned out and that burned out lawyer is no good for anybody. 95 00:06:40,358 --> 00:06:46,998 So, um, we try to, you know, basically straddle that line between working hard, but also having some balance. 96 00:06:46,998 --> 00:06:49,118 So I think that's an important part of culture. 97 00:06:49,118 --> 00:06:51,052 They just can't really transplant. 98 00:06:51,052 --> 00:06:51,592 somewhere. 99 00:06:51,592 --> 00:07:01,636 uh But you know, related to the alternative fee arrangements and how we look at the collections issue is it really is mostly about collections at the end of the day anyway, 100 00:07:01,636 --> 00:07:01,760 right? 101 00:07:01,760 --> 00:07:06,564 Because you can build 2000 hours if you only collect half of those, then it's really not that great. 102 00:07:06,564 --> 00:07:18,063 So what we are enthusiastic about is using AI to reduce write-offs, especially for associates on matters and getting a better first draft and making sure that we're being 103 00:07:18,063 --> 00:07:19,670 efficient with our time. 104 00:07:19,670 --> 00:07:21,691 And that our clients are getting some value. 105 00:07:21,691 --> 00:07:27,253 Um, it's been a struggle and I'll get into it a little bit in terms of why that is. 106 00:07:27,273 --> 00:07:33,856 I anticipated that, all we need to do is find the right vendor and then it'll be easy to unlock an alternative fee arrangement. 107 00:07:33,856 --> 00:07:38,819 But it's actually more difficult than that because yeah, you have to find the right vendor and the right use case. 108 00:07:38,819 --> 00:07:46,502 You also have to find the right partner or director in our firm as we call them, who can then take that and champion it with the right client. 109 00:07:46,508 --> 00:07:53,744 And then you have to figure out how to account for all of this in our internal compensation system and crack that nut. 110 00:07:53,744 --> 00:08:01,169 So there are a number of challenges to get to a point where you're really ready and able to use alternative fee arrangements at scale. 111 00:08:01,169 --> 00:08:03,641 We have been working very hard on it for a few years. 112 00:08:03,641 --> 00:08:04,752 It's hard work. 113 00:08:04,752 --> 00:08:11,817 So I don't think anybody should look at this and think we're going to be able to figure this out in six months because that's just not going to happen. 114 00:08:12,618 --> 00:08:14,579 It might take another six months from now. 115 00:08:14,579 --> 00:08:25,427 might take another six years, but at this point, the efficiencies that we see are really not materializing because we're spending a lot of time verifying that we're actually 116 00:08:25,427 --> 00:08:26,828 getting the right product to the client. 117 00:08:26,828 --> 00:08:27,128 Right. 118 00:08:27,128 --> 00:08:30,090 So, uh, I think the efficiencies are going to be there. 119 00:08:30,090 --> 00:08:33,232 looking at 20 to 80 % efficiency on some workflows. 120 00:08:33,232 --> 00:08:36,985 Um, but for the most part is just making our work product better. 121 00:08:36,985 --> 00:08:41,898 And we're doing a better job of quality control using these AI tools that we have right now. 122 00:08:42,028 --> 00:08:49,519 And how are you creating incentives for attorneys to embrace the tech tools and these alternative pricing models? 123 00:08:50,614 --> 00:08:51,424 Well, it's interesting. 124 00:08:51,424 --> 00:09:02,259 think the incentives over the last month have been me showing my colleagues, uh, how these tools that we have on board right now are working and giving them some of the work product 125 00:09:02,259 --> 00:09:11,203 and they are, you know, reacting in a way that's telling me that they want these products and they're going to go through the training now to get after it because they can see what 126 00:09:11,203 --> 00:09:11,683 they're doing. 127 00:09:11,683 --> 00:09:19,246 So that's one incentive is just showing them, here's what this tool can do on your particular area of practice. 128 00:09:19,492 --> 00:09:26,125 and if I'm able to use it and show them results without being an expert in their domain, um, that's convincing to them. 129 00:09:26,125 --> 00:09:28,226 So I'm seeing that happen in real time. 130 00:09:28,226 --> 00:09:36,309 The other aspect of it is working again with our management committee and our financial folks to make sure that we understand how we can deal with an alternative fee arrangement. 131 00:09:36,309 --> 00:09:46,433 And that's why we developed a policy document that tries to identify the various categories of AFAs between hybrid agreements, know, pure retainers as a whole universe of 132 00:09:46,433 --> 00:09:48,202 AFAs that are out there. 133 00:09:48,202 --> 00:09:54,588 And trying to find the right one for the director and also for their client is a big part of it. 134 00:09:54,588 --> 00:09:56,870 And, that relationship is so important, right? 135 00:09:56,870 --> 00:10:05,468 So you don't want to put somebody in position where they're trying an AI tool and an alternative fear arrangement with a client, and then they end up getting burned, right? 136 00:10:05,468 --> 00:10:06,809 That's just not appropriate. 137 00:10:06,809 --> 00:10:10,372 So it has to be dealt with very carefully and, 138 00:10:10,636 --> 00:10:17,993 You know, have to do a fair amount of work to put in place the infrastructure on the compensation side and also to educate and bring your partners along. 139 00:10:17,993 --> 00:10:20,625 Hey, this is, this is really kind of where this is going. 140 00:10:20,625 --> 00:10:24,268 So the earlier we engage on it, the better off we are all going to be. 141 00:10:24,524 --> 00:10:29,866 So, and then how do you mitigate risks more broadly? 142 00:10:30,347 --> 00:10:38,580 if a client, if you head down the AFA path with an important client relationship, um I mean, there's all sorts of risks. 143 00:10:38,580 --> 00:10:40,391 It's not just financial risks to the firm. 144 00:10:40,391 --> 00:10:46,014 It's potentially quality of deliverables to the client. 145 00:10:46,014 --> 00:10:51,896 um How do you guys think about and manage risks? 146 00:10:52,052 --> 00:10:57,321 more broadly when you're deploying AFAs with these important client relationships. 147 00:10:59,054 --> 00:11:05,970 Yeah, I mean, that's something that requires a conversation between, uh, you know, the attorney who has a relationship and the client that, we have these tools. 148 00:11:05,970 --> 00:11:08,603 We think these tools can solve these problems for you. 149 00:11:08,603 --> 00:11:11,716 Um, let's do a proof of concept. 150 00:11:11,716 --> 00:11:11,976 Right? 151 00:11:11,976 --> 00:11:19,573 So I think this is probably the easiest way to mitigate the risk is just being honest with your client, having a real discussion that, Hey, we're going to try this. 152 00:11:19,573 --> 00:11:21,254 We think this can work. 153 00:11:21,955 --> 00:11:25,558 what is interesting about it is what, and what we're seeing is that 154 00:11:25,826 --> 00:11:34,550 There are things that we can do for clients that would be very helpful to them that they previously would not have come to us for because we were too expensive by the hour. 155 00:11:34,550 --> 00:11:43,595 ah But they may be upstream or downstream from our normal legal services, but they're very relevant and related to our normal legal services. 156 00:11:43,595 --> 00:11:49,878 uh things that perhaps a client would have been doing internally, but maybe not doing so well. 157 00:11:50,038 --> 00:11:53,530 Um, we now can offer them some services using these AI tools. 158 00:11:53,530 --> 00:12:03,455 So a big part of it is really just having an open conversation with the client about, you know, their business, their workflows and how our workflow is their attorney interacts 159 00:12:03,455 --> 00:12:11,960 with that workflow and seeing if there are some additional value add, you know, uh, services that we can provide using these tools to them, uh, around that. 160 00:12:11,960 --> 00:12:19,630 So mitigating the risk is really just trying to understand what your client's needs are and, and having a little bit of more of an objective view. 161 00:12:19,630 --> 00:12:24,632 Um, rather than just a narrow view of these illegal services we provide you, and this is all we're going to look at. 162 00:12:24,632 --> 00:12:35,807 Let's try to look at a more holistic view of the workflow before we get the product and afterwards, you know, how do we actually mitigate risk for your business using the tools 163 00:12:35,807 --> 00:12:37,738 that we have in our legal services? 164 00:12:38,060 --> 00:12:39,721 So I looked up some stats. 165 00:12:39,721 --> 00:12:41,842 It's been a while, so I might get this wrong. 166 00:12:41,842 --> 00:12:50,566 So nobody, nobody hold me to these numbers, but I looked up some stats a few months ago about law firm leadership demographics. 167 00:12:50,747 --> 00:13:01,202 And if I remember correctly, it was a very high percentage of the executive committee demographics skewed. 168 00:13:01,308 --> 00:13:14,692 older like 55 plus which is no surprise right i mean it's usually you're more senior senior leaders in the organization which is interesting because the most mckenzie did a 169 00:13:14,692 --> 00:13:28,426 study um based on age cohorts on the um the age um brackets that were most comfortable with gen ai 170 00:13:28,620 --> 00:13:32,200 And the most comfortable are millennials, right? 171 00:13:32,200 --> 00:13:40,080 So it's hard to believe, but millennials are, mean, that generation started, I don't know, early eighties, I think it was maybe 82. 172 00:13:40,520 --> 00:13:44,480 Um, so that's almost, they're 43 now, which is crazy. 173 00:13:44,480 --> 00:13:52,240 Like they're in their mid forties, but that slice of, um, that are that cohort is most comfortable with Gen AI. 174 00:13:52,240 --> 00:13:58,251 And when you're talking about pushing out a very disruptive technology, 175 00:13:58,251 --> 00:14:01,332 You really have to set tone at the top, right? 176 00:14:01,332 --> 00:14:08,713 And those at the top are going to be, they are least comfortable with, with gen AI as a group, right? 177 00:14:08,713 --> 00:14:11,154 So there's plenty of exceptions to that. 178 00:14:11,154 --> 00:14:16,625 And maybe, maybe your leadership team is different, but as a group. 179 00:14:16,965 --> 00:14:20,386 So how, how do you guys, how do we do that? 180 00:14:20,386 --> 00:14:21,647 How do we do both things? 181 00:14:21,647 --> 00:14:21,947 Right? 182 00:14:21,947 --> 00:14:27,948 Like it's important for leaders to understand the transformative nature. 183 00:14:28,084 --> 00:14:32,967 of the technology and be comfortable with it to really push it down to the masses. 184 00:14:33,027 --> 00:14:39,710 But those law firm leadership skews much older than um more broadly. 185 00:14:39,831 --> 00:14:46,274 Overall, if you look across industries, it's seniority based, right? 186 00:14:46,274 --> 00:14:51,758 So leaders have been with the organization longer, they tend to be older, but it skews higher in legal. 187 00:14:51,758 --> 00:14:56,512 So how do you guys think about setting the tone at the top? 188 00:14:56,512 --> 00:14:59,870 when sometimes the people at the top are the least comfortable with the tech. 189 00:15:01,366 --> 00:15:06,471 Yeah, I mean, I think that is definitely a management committee issue, right? 190 00:15:06,471 --> 00:15:10,029 And I think our manager committee has addressed it by being very 191 00:15:10,176 --> 00:15:21,551 Intentional with regard to the directors meetings that we have every month, uh, making sure to educate the directors about AI and where it's going and what it's doing. 192 00:15:21,551 --> 00:15:29,920 We've had some really interesting directors meetings along those lines and then having breakout sessions where people can talk about it, but also during the annual retreat, uh, 193 00:15:29,920 --> 00:15:33,757 you know, we just had our annual retreat at the end of may, uh, in San Diego. 194 00:15:33,757 --> 00:15:37,679 And it was mostly about AI and the speakers we invited. 195 00:15:37,679 --> 00:15:39,680 We had Richard Susskind come the year before. 196 00:15:39,680 --> 00:15:40,152 uh 197 00:15:40,152 --> 00:15:44,634 in our retreat in Nevada, which was great listening to him talk about his book, Tomorrow's Lawyers. 198 00:15:44,634 --> 00:15:52,097 And it's that kind of intentional messaging from the management committee that they think has really broken through with that older demographic. 199 00:15:52,097 --> 00:15:52,707 And you're right. 200 00:15:52,707 --> 00:16:00,380 mean, look, from their perspective, they are for the most part making a very good living doing things the way that they've been doing them for a long time. 201 00:16:00,420 --> 00:16:05,352 And their horizon is a little shorter than the rest of us in terms of where they are for retirement. 202 00:16:05,352 --> 00:16:06,122 So 203 00:16:06,154 --> 00:16:11,157 It's not as big of an incentive for them to move into exploring something new. 204 00:16:11,157 --> 00:16:20,092 But yeah, I mean, we had a very good business of finance practice meeting today and a number of the folks who were, you know, asking questions of the AI vendor that was 205 00:16:20,092 --> 00:16:27,946 demonstrating, you know, the product were interested and they were older, you know, and they were interested in, and they can see the value in it when. 206 00:16:28,794 --> 00:16:31,126 And really, I think that's where the proof is in the pudding, right? 207 00:16:31,126 --> 00:16:42,225 When you can show a lawyer, hey, this is going to get you to a 90 % draft much faster, and it's going to improve your work product, whatever age they're at, if they can see it with 208 00:16:42,225 --> 00:16:44,057 their own eyes, it's going to be convincing. 209 00:16:44,057 --> 00:16:46,038 And that's what we're finally starting to see now. 210 00:16:46,038 --> 00:16:47,970 It's really starting to break through. 211 00:16:47,970 --> 00:16:50,052 the proof is in the pudding, I guess. 212 00:16:50,052 --> 00:16:57,198 you know, these lawyers who've been around for a long time, they'll know when they see an AI product that's actually working versus one that's just... 213 00:16:57,198 --> 00:16:58,038 uh 214 00:16:58,038 --> 00:17:06,260 You know, flashbang and noise, nothing really happening, but the ones that we're demonstrating right now are really getting some traction with these folks and they're 215 00:17:06,260 --> 00:17:09,245 interested and they're willing to take the training that we require to use them. 216 00:17:09,245 --> 00:17:11,477 So that tells you a lot right there. 217 00:17:11,477 --> 00:17:19,041 Yeah, you mentioned like 20 to 80 % efficiency gains on specific legal tasks, which is incredible. 218 00:17:19,041 --> 00:17:20,572 can you give some examples? 219 00:17:20,572 --> 00:17:23,403 Like what sort of tasks? 220 00:17:23,403 --> 00:17:26,825 Are there any common themes across those tasks? 221 00:17:28,204 --> 00:17:28,414 Yeah. 222 00:17:28,414 --> 00:17:33,577 I mean, I think if you look at litigation, you know, lot of the different components of litigation, you can break them down. 223 00:17:33,577 --> 00:17:44,442 Like if we look at, different AI tools that can take and chronology, create a chronology of events and facts and fact patterns, there's a lot of work that goes into that. 224 00:17:44,442 --> 00:17:48,594 And there's still going to need to be a lot of work in terms of oversight on how you put those things together. 225 00:17:48,594 --> 00:17:55,274 Um, but it can be done a lot more efficiently using a very good and vetted AI program. 226 00:17:55,274 --> 00:17:58,130 Uh, the same thing is true with contracts and transactional 227 00:17:58,130 --> 00:18:07,634 work that I do and with our &A group, especially, um, on due diligence, you know, there's a lot of things that AI can really do very quickly to help surface issues that are very 228 00:18:07,634 --> 00:18:08,194 important. 229 00:18:08,194 --> 00:18:11,385 Like, Hey, where are the liquidated damages clauses here in these contracts? 230 00:18:11,385 --> 00:18:18,888 Um, and also helping you generate language that is going to work for a very specific situation. 231 00:18:18,888 --> 00:18:24,890 I mean, the reality is for most lawyers, you know, in our amlock 200, ranks here. 232 00:18:25,356 --> 00:18:28,366 the work that we do is very custom. 233 00:18:28,366 --> 00:18:36,630 I mean, I know that's probably not as custom as we like to think it is, but all of us think of our own language as being very, very important. 234 00:18:36,630 --> 00:18:47,544 so what's important for us is to understand where we can get those efficiencies and how we can use AI to put our own spin on it and customize it for the work that we do for our 235 00:18:47,544 --> 00:18:49,094 clients using our. 236 00:18:49,122 --> 00:18:53,976 best templates and our best phrases and clauses that we've created over the years. 237 00:18:53,976 --> 00:19:01,442 And that's, you know, one of the exciting things we're starting to see now is that we can start to create those kinds of customizations for lawyers. 238 00:19:01,442 --> 00:19:10,319 And that's, uh, that's very exciting because that that's really, think one of things that's kept a lot of people from being engaged because you know, they have their own 239 00:19:10,319 --> 00:19:13,261 specific languages and processes they like to use. 240 00:19:13,261 --> 00:19:14,542 Uh, and so 241 00:19:14,666 --> 00:19:21,293 Giving them tools now that can help them implement that is really exciting part of the growth that we're seeing. 242 00:19:21,675 --> 00:19:34,471 And then last time you and I talked, you had mentioned that you guys um were thinking about like playbooks for standardized work or you know, like stock purchase agreements and 243 00:19:34,471 --> 00:19:35,051 NDAs. 244 00:19:35,051 --> 00:19:49,260 don't, I mean, I never sent NDAs to lawyers anyway, but I run them through my GPT or one of the models now and I have our standard MNDA and ask for what's different. 245 00:19:49,260 --> 00:19:49,950 And it works. 246 00:19:49,950 --> 00:19:50,741 It works great. 247 00:19:50,741 --> 00:19:54,933 It's low risk, but you know, stock purchase agreement, lease reviews. 248 00:19:54,933 --> 00:19:58,454 Um, my wife and I own five gyms here in St. 249 00:19:58,454 --> 00:20:06,698 Louis and we moved once we've had to sign six commercial leases and you know, we avoided lawyers until the last minute. 250 00:20:06,698 --> 00:20:09,680 Like, so it be me and my broker hashing out. 251 00:20:09,680 --> 00:20:13,101 Cause we, you know, um, I mean, I think I'm 252 00:20:13,257 --> 00:20:15,800 certified by the jailhouse bar, right? 253 00:20:15,800 --> 00:20:17,421 I could be jailhouse lawyer. 254 00:20:17,421 --> 00:20:19,844 um I've read enough legal documents. 255 00:20:19,844 --> 00:20:27,012 So we would get it to maybe inside the 20 yard line and then bring a lawyer in to kind of finalize it. 256 00:20:27,012 --> 00:20:29,995 But it seems like there's tremendous opportunity. 257 00:20:29,995 --> 00:20:35,721 Like what are your thoughts on like creating playbooks around some of that standardized work? 258 00:20:36,790 --> 00:20:37,790 Yeah, absolutely. 259 00:20:37,790 --> 00:20:43,132 think playbooks are going to be great, especially for quality control. 260 00:20:43,172 --> 00:20:52,015 And I think, you know, this is probably not something that's talked about very much, but I think playbooks are going to be very helpful for young attorneys and associates because 261 00:20:52,015 --> 00:20:55,996 the playbooks we're creating are from experienced attorneys templates. 262 00:20:55,996 --> 00:20:57,887 And they're the ones who are creating the playbooks, right? 263 00:20:57,887 --> 00:21:01,798 We don't have associates creating playbooks, but when the playbook is run, 264 00:21:02,176 --> 00:21:06,966 The program can show the attorney like, here's why we're changing this provision, right? 265 00:21:06,966 --> 00:21:09,901 It gives the rationale and the language and 266 00:21:10,126 --> 00:21:19,366 I don't know about other attorneys who, who are out there, but for me, as an associate coming up, I had some good mentors for sure on how to do things, how to not do things. 267 00:21:19,366 --> 00:21:27,106 You know, you pay attention and you learn those things, but having somebody sit down and walk through a contract with you like that, you know, clause by clause and show you, this 268 00:21:27,106 --> 00:21:28,066 is why we're redlining. 269 00:21:28,066 --> 00:21:29,146 It didn't really happen. 270 00:21:29,146 --> 00:21:34,466 And now I think it's possible for a young associate to get that kind of training and education. 271 00:21:34,486 --> 00:21:38,318 You know, if they're paying attention and wish they are, I mean, all the associates we bring on are great. 272 00:21:38,318 --> 00:21:42,303 great attorneys, they're going to be great attorneys, they need some experience, right? 273 00:21:42,303 --> 00:21:53,336 And so having the tools in the playbook to help educate and train attorneys in real time when they're creating that first draft for the director to look at, I think it's a 274 00:21:53,336 --> 00:21:56,860 valuable resource and I think it's something that's going to help them in their career. 275 00:21:56,860 --> 00:21:58,312 uh 276 00:21:58,312 --> 00:22:02,263 And so, yeah, I mean, think that playbooks are going to be very important. 277 00:22:02,263 --> 00:22:09,606 And again, playbooks that are customized based on the specific needs of the attorney who has that client relationship. 278 00:22:09,606 --> 00:22:17,969 And I'm sure, you know, attorneys out there will recognize that you can have 10 attorneys all in the same practice group working on the same type of document, but they're going to 279 00:22:17,969 --> 00:22:20,319 want to draft it a little bit differently, right? 280 00:22:20,319 --> 00:22:22,280 Because everybody has their own language. 281 00:22:22,280 --> 00:22:27,452 And to some extent, attorneys are more like artists than they are, you know, engineers, right? 282 00:22:27,452 --> 00:22:28,252 So. 283 00:22:29,052 --> 00:22:34,605 They might all get to the same place at end of the day, but they're going to want to get there perhaps using some different language. 284 00:22:34,605 --> 00:22:42,005 And so we have to be able to give them the tools that allow them to customize it the way that they want and the way their client expects it as well. 285 00:22:42,005 --> 00:22:42,215 Yeah. 286 00:22:42,215 --> 00:22:43,466 What are your thoughts on that? 287 00:22:43,466 --> 00:22:49,469 So, you know, today legal is very bespoke, right? 288 00:22:49,469 --> 00:22:52,410 It's Etsy, not Amazon. 289 00:22:52,651 --> 00:23:06,818 And, you know, the reality is as we build these tech enabled legal service delivery machines, how much opportunity and really how much appetite is there in the marketplace 290 00:23:06,818 --> 00:23:12,101 for more of that bespoke, Hey, I really like this language. 291 00:23:13,500 --> 00:23:16,500 versus the standard out of the playbook. 292 00:23:16,501 --> 00:23:21,061 Like that's something that I've always struggled with because I've worked with a lot of lawyers. 293 00:23:21,061 --> 00:23:27,901 I've been an entrepreneur for 32 years and had lots of lawyers with differing philosophies about things. 294 00:23:27,901 --> 00:23:33,741 And I've gotten advice to do it one way and then taking that document, change law firms and hand it to another one. 295 00:23:33,741 --> 00:23:35,721 They're like, yeah, absolutely not. 296 00:23:36,461 --> 00:23:36,681 Yeah. 297 00:23:36,681 --> 00:23:41,343 How much opportunity for standardization is there? 298 00:23:41,343 --> 00:23:43,498 in legal do you think? 299 00:23:45,152 --> 00:23:45,542 Yeah. 300 00:23:45,542 --> 00:23:47,933 mean, I guess the lawyer, the answer is it depends, right? 301 00:23:47,933 --> 00:23:50,205 And I think it depends on the market segment you're talking about. 302 00:23:50,205 --> 00:23:56,789 So for the most part, the MLOT 200 is serving a very narrow section of the general population, right? 303 00:23:56,830 --> 00:24:02,733 And for most of the clients that we have, they trust us individually and as a firm to take care of them. 304 00:24:03,014 --> 00:24:10,248 And they're willing to spend their resource, their money to have us spend our time getting it right. 305 00:24:10,282 --> 00:24:15,354 And so I think to some extent that market's always going to be there for customized, bespoke legal work. 306 00:24:15,354 --> 00:24:26,109 But as we know, there is a humongous market of small and medium sized businesses out there that typically won't come to a Fentimore or another Amlock 200 firm for legal services. 307 00:24:26,210 --> 00:24:35,636 And for those clients, there probably is going to be a market open up for them of more standardized. 308 00:24:35,636 --> 00:24:45,998 agreements and uh legal services at scale that's different than what legal zoom offers right now and is different than what fenimore offers our current clients but there's i 309 00:24:45,998 --> 00:24:56,660 think a huge latent legal market in between those two you know brackets and i think this technology is going to unlock it and you know we're certainly paying attention to that as 310 00:24:56,660 --> 00:24:57,420 well 311 00:24:57,739 --> 00:25:08,978 Yeah, I've been kind of running an experiment over the last, since close to the beginning of the year where I have been running almost everything. 312 00:25:09,109 --> 00:25:11,641 I can't even think of any exceptions to this right now. 313 00:25:11,641 --> 00:25:19,528 Every piece of legal work product that crosses my desk, I run through AI now. 314 00:25:19,528 --> 00:25:22,551 And um for a variety of different reasons. 315 00:25:22,551 --> 00:25:24,793 Some of it is pure testing, like... 316 00:25:25,057 --> 00:25:33,906 Um, I've mentioned it on the podcast before we hired a, uh, employee away from another, uh, from a competitor and they had some non-compete language and we wanted to make sure 317 00:25:33,906 --> 00:25:38,250 that we steered clear of, um, encroaching on that. 318 00:25:38,250 --> 00:25:41,713 So we engaged a labor and employment attorney. 319 00:25:41,713 --> 00:25:44,476 asked him a big, long set of questions. 320 00:25:44,476 --> 00:25:50,021 I wrote down the answers and then I went to AI and I asked all the same questions and you know what? 321 00:25:50,040 --> 00:25:54,253 the answers were almost identical um with very few exceptions. 322 00:25:54,253 --> 00:26:02,419 um We have a 409A program here that's like a shadow equity incentive program. 323 00:26:02,419 --> 00:26:03,980 I ran that through AI. 324 00:26:03,980 --> 00:26:07,603 It did a fantastic job risk ranking all my risks. 325 00:26:07,603 --> 00:26:09,313 were redoing our operating agreement. 326 00:26:09,313 --> 00:26:14,768 We just converted or we took a C-corp election that had to be reflected in the operating agreement. 327 00:26:14,768 --> 00:26:17,259 I had it go through and highlight risks. 328 00:26:17,451 --> 00:26:19,843 I mean, absolutely fantastic. 329 00:26:19,843 --> 00:26:25,487 And it did better in most cases than any lawyer has ever done explaining to me. 330 00:26:25,487 --> 00:26:38,195 Well, first of all, risk ranking, inventorying the risks, risk ranking them based on impact, and then also kind of like a likelihood of occurrence, and then helping role play 331 00:26:38,195 --> 00:26:46,731 where specific provisions might manifest themselves and what the economic impact of that would be. 332 00:26:46,797 --> 00:26:50,117 So it's not that a lawyer was, isn't capable of doing that. 333 00:26:50,117 --> 00:27:00,357 They are, but to put it in that nice, neat, orderly, it would, you'd end up paying $30,000 just for all the admin work necessary to do that. 334 00:27:00,357 --> 00:27:06,037 And I got it done in, you know, 30 seconds, um, using grok four. 335 00:27:06,277 --> 00:27:16,161 So, um, I have been absolutely shocked at how good AI is at doing so many legal tasks now for 336 00:27:16,161 --> 00:27:21,329 For high risk stuff, my attorneys always do the final. 337 00:27:21,329 --> 00:27:25,836 The docs always get finalized by my legal team. 338 00:27:25,836 --> 00:27:29,611 But man, it has been an eye opener just seeing how good AI is at this stuff. 339 00:27:29,611 --> 00:27:32,395 Do you have the same perspective? 340 00:27:33,292 --> 00:27:33,562 Yeah. 341 00:27:33,562 --> 00:27:35,553 I mean, and it's getting better all the time. 342 00:27:35,553 --> 00:27:43,711 I that's the thing that's really surprising to me, especially with the vendors we're working with, where they're continuing to add new features and, um, it's yeah, it's, it's 343 00:27:43,711 --> 00:27:44,321 phenomenal. 344 00:27:44,321 --> 00:27:49,236 And I think there are threats to the traditional legal business model in a number of ways. 345 00:27:49,236 --> 00:27:50,877 One is just the technology itself. 346 00:27:50,877 --> 00:27:55,671 Like you're pointing out more and more people can just go and use the technology and they might be satisfied with that. 347 00:27:55,671 --> 00:28:01,886 Now, obviously there's some danger to that and you're smart to go back to your attorneys and have them review the final, but, um, 348 00:28:02,294 --> 00:28:03,835 The technology is definitely a threat. 349 00:28:03,835 --> 00:28:09,239 And then of course, our current competitors who are learning how to use AI as well, that that's a real threat. 350 00:28:09,239 --> 00:28:19,506 Um, and then you have, you know, for example, I think it was the summer Y Combinator made a call for founders to come in and start a full stack AI law firm. 351 00:28:19,566 --> 00:28:26,766 So, you know, we have new entrants coming into the market that aren't our traditional competitors that are going to be using this technology in different ways. 352 00:28:26,766 --> 00:28:35,706 Um, you have the alternative business structure licenses and other things that can potentially combine legal services and technology in ways that hasn't been done before. 353 00:28:35,706 --> 00:28:40,226 Uh, so the traditional legal model is definitely under a lot of pressure. 354 00:28:40,226 --> 00:28:42,446 There are a lot of threats from different areas. 355 00:28:42,446 --> 00:28:45,346 So it's very important for us to be aware of that. 356 00:28:45,346 --> 00:28:48,294 I'm hopeful because I just think that. 357 00:28:48,558 --> 00:28:53,321 you know, there are going to be increasing demands from our existing clients for legal services. 358 00:28:53,321 --> 00:29:03,008 I see opportunities for us to provide additional services to our clients that are, you know, related to the traditional services we provide them. 359 00:29:03,008 --> 00:29:11,673 And I think we can get after additional client bases that, know, before now may not have come to us either down market or up market. 360 00:29:12,174 --> 00:29:19,714 because we can use these tools effectively and because we're putting in the time in a disciplined way to understand how to use this technology. 361 00:29:19,914 --> 00:29:28,734 So I'm bullish, but at the same time, you know, hearing you talk about your use of AI, I know there are a lot of clients that are doing the same thing and they're sending us, you 362 00:29:28,734 --> 00:29:31,806 know, a product that they've already run through their AI tools and 363 00:29:31,806 --> 00:29:40,624 And so it is just part of the fabric now, I think, of providing legal services that you need to understand that this is a movement that's happening where the technology is going 364 00:29:40,624 --> 00:29:44,928 to be a threat to your business if you're not embracing it already. 365 00:29:45,236 --> 00:29:59,374 And you guys are headquartered in a state that's pioneering kind of the modified model rule 5.4 with allowing non-legal ownership in the form of alternative business structures. 366 00:29:59,574 --> 00:30:03,376 And there are entrants making their way into that market. 367 00:30:03,376 --> 00:30:12,513 uh There is about um a 4,000 employee 368 00:30:12,941 --> 00:30:23,981 tax and advisory firm called Aprio that I don't know if they have, I think they have a joint venture with a small 50 attorney law firm called Radix Law and they created Aprio 369 00:30:23,981 --> 00:30:24,961 Law. 370 00:30:25,321 --> 00:30:37,081 That was newsworthy, the real, mean, KPMG also was granted rights to stand up in ABS. 371 00:30:37,341 --> 00:30:50,233 which I think is extremely interesting given their size and scale, 36,000 employees, 40 plus billion dollars in, no, I'm sorry, 36, they have like 275,000 employees, um 40 372 00:30:50,233 --> 00:30:56,426 billion in revenue and that's probably a dated number, they're probably higher now. 373 00:30:56,486 --> 00:31:06,229 A global presence, DNA that has really adopted the innovation ethos 374 00:31:06,821 --> 00:31:15,643 And 4,000 lawyers, if you stood those lawyers out on their own, they'd probably be an Amlaw 10 law firm. 375 00:31:16,104 --> 00:31:28,887 And I look at that and I'm like, man, these guys are going to be competing with some of these law firms that have really under invested in technology, are resistant to change, 376 00:31:28,887 --> 00:31:35,249 are risk avoidant, have consensus driven decision making. 377 00:31:35,266 --> 00:31:50,650 governance models and XCOM members with short retirement horizons that are in lateral mobility, firm to firm, all of this adds up to what's gonna happen? 378 00:31:51,550 --> 00:32:01,429 How do you see this thing playing out as more, and that's still, I and I just wanna be clear, I'm not saying law firms are. 379 00:32:01,429 --> 00:32:02,260 are going away. 380 00:32:02,260 --> 00:32:03,221 don't think that at all. 381 00:32:03,221 --> 00:32:10,079 The bet the farm stuff is still going to law firms for the foreseeable future, maybe forever. 382 00:32:10,079 --> 00:32:18,588 But there's a lot of blocking and tackling work out there too, that I could see KPMG making a really strong uh pitch for. 383 00:32:18,588 --> 00:32:19,770 So I don't know. 384 00:32:19,770 --> 00:32:23,113 How do you see the whole ABS thing? 385 00:32:24,014 --> 00:32:24,314 Yeah. 386 00:32:24,314 --> 00:32:25,434 I mean, look, it's exciting. 387 00:32:25,434 --> 00:32:33,854 And, know, I'm happy to say that our firm was one of, I think the few, if not the only larger firm in Phoenix that didn't sign a petition to try to stop the Arizona state 388 00:32:33,854 --> 00:32:36,594 Supreme Court from putting the ABS in place. 389 00:32:36,594 --> 00:32:45,214 And we actually had one of the judiciary come in and talk to us about, you know, why it was set up and the whole reason for it to be set up in the first place was really an 390 00:32:45,214 --> 00:32:46,434 access to justice issue. 391 00:32:46,434 --> 00:32:49,334 You know, it wasn't necessarily for KPMG to make more money. 392 00:32:49,334 --> 00:32:54,028 was to give, you know, regular citizens more access to legal services with the idea that 393 00:32:54,028 --> 00:33:00,311 technology would enable legal services to be delivered at a lower price point, which I think is correct. 394 00:33:00,391 --> 00:33:10,476 And I do think that's probably going to be the net effect and that impact of ABS entities is that they are going to be able to use technology and different business model 395 00:33:10,476 --> 00:33:21,762 structures rather than the partnership structure and billable hours to generate revenue in a way that is going to make the legal services much less expensive to receive. 396 00:33:22,068 --> 00:33:32,275 And I'm also bullish that the demand for legal services is going to continue to increase because I do think that there are a lot of people out there who have unmet legal needs. 397 00:33:32,275 --> 00:33:36,654 I think even our existing clients uh for the most part have 398 00:33:36,654 --> 00:33:43,454 things that they would probably prefer that we do for them, but that we've just been too expensive to do them for them in the past. 399 00:33:43,454 --> 00:33:52,214 And now, you know, with this technology and with us having a real honest conversation with them, I think we can expand a little bit our footprint and maybe change some of the 400 00:33:52,214 --> 00:33:54,074 pricing into alternative fee arrangements. 401 00:33:54,074 --> 00:33:56,354 do think AFAs will take off. 402 00:33:56,354 --> 00:33:57,854 I just don't know when. 403 00:33:57,854 --> 00:34:03,394 I think, um, there's a tremendous amount of hype and pressure around putting them forward for good reason. 404 00:34:03,454 --> 00:34:04,194 Um, 405 00:34:04,194 --> 00:34:14,721 But the, you know, the broad scale implementation of AFAs and departure from billable hours, I don't know that ever fully happened because, you know, in some instances, the 406 00:34:14,721 --> 00:34:16,814 client's getting a great deal if they can pay. 407 00:34:16,814 --> 00:34:22,854 By the hour for advice that will literally save them millions of dollars, which happens pretty regularly. 408 00:34:22,854 --> 00:34:23,874 Then they're going to do that. 409 00:34:23,874 --> 00:34:24,634 Right. 410 00:34:24,634 --> 00:34:27,734 But there are workflows and specific legal services. 411 00:34:27,734 --> 00:34:31,054 I think that, that, you know, are good fits for AFAs. 412 00:34:31,054 --> 00:34:40,014 And so it might be, you know, six months from now, it could be six years, who knows, but, uh, we as lawyers have to be thinking this way because there are a lot of problems for us 413 00:34:40,014 --> 00:34:43,404 to solve just to get into position to provide. 414 00:34:43,404 --> 00:34:47,181 clients with legal services that are not based on a billable hour. 415 00:34:47,181 --> 00:34:54,474 So fair amount of work that we have to do to change our mindset and our internal compensation structures to get ready for that. 416 00:34:54,476 --> 00:35:06,915 Yeah, I think it's actually pretty short-sighted for law firms and lawyers to oppose this ABS um model rolling out. 417 00:35:06,915 --> 00:35:12,319 I actually believe that lawyers are going to be the ones advocating for it soon. 418 00:35:12,319 --> 00:35:18,603 And the reason is because there are a number of benefits that it creates. 419 00:35:18,603 --> 00:35:23,064 First, it creates a whole new access to capital. 420 00:35:23,064 --> 00:35:26,455 that didn't exist before, which really wasn't necessary. 421 00:35:26,455 --> 00:35:32,038 Scaling a professional services team, you need some money for working capital, right? 422 00:35:32,038 --> 00:35:40,081 There's a pretty big delay from an hour that you work on January 1st that doesn't get invoiced until February 15th. 423 00:35:40,081 --> 00:35:43,762 It doesn't get collected until March 15th, if you're lucky. 424 00:35:44,203 --> 00:35:45,924 And you may only collect half that. 425 00:35:45,924 --> 00:35:48,615 there's capital needs there, right? 426 00:35:48,615 --> 00:35:51,846 But um in terms of doing R &D, 427 00:35:52,045 --> 00:36:04,040 which I think law firms are gonna have to do because uh I don't think that buying off the shelf tools is going to create enough differentiation ah because again, competitors can do 428 00:36:04,040 --> 00:36:04,160 it. 429 00:36:04,160 --> 00:36:07,702 So how are firms gonna differentiate themselves? 430 00:36:07,702 --> 00:36:17,306 They've historically done that with their brand, with the wins, the high profile wins, with the big name attorneys that they've got that have had the high profile cases. 431 00:36:17,440 --> 00:36:21,241 And that's still going to be a factor, but technology is also going to be a factor. 432 00:36:21,241 --> 00:36:23,512 And that has not been a factor before. 433 00:36:23,552 --> 00:36:28,013 And how are they going to deploy on that without capital? 434 00:36:28,013 --> 00:36:29,763 Well, this opens up a whole new avenue. 435 00:36:29,763 --> 00:36:32,434 I don't know what, what. 436 00:36:32,434 --> 00:36:40,696 And so, and I think over time that lawyers are going to realize that, that they have to, they're going to have to, the rules of the game have changed. 437 00:36:40,696 --> 00:36:46,754 And if they want to compete, they're going to have to make investments and how do they fund those investments? 438 00:36:46,754 --> 00:36:48,598 Well, ABS is a good model. 439 00:36:48,598 --> 00:36:57,888 Do you think that mindset, that anti-ABS mindset is too well entrenched to move, or could you see it moving? 440 00:36:58,894 --> 00:36:59,274 Yeah. 441 00:36:59,274 --> 00:37:03,154 I mean, you see some state legislatures introducing legislation, try to block. 442 00:37:03,154 --> 00:37:09,454 think California has some legislation right now that they're potentially going to block out of state ABS is from practicing there if that moves forward. 443 00:37:09,454 --> 00:37:15,954 But I agree with you a hundred percent on your premise, which is, you know, the differentiation is going to be where the strategic advantage comes in, right? 444 00:37:15,954 --> 00:37:21,234 You want an asymmetric advantage and you're not going to get that if you're just buying the same license that everybody else has. 445 00:37:21,548 --> 00:37:24,941 If everybody has Harvey, there's not a whole lot of differentiation there, right? 446 00:37:24,941 --> 00:37:38,662 But if you're doing both, if you're buying licenses for things that you can use and your clients want, um, and you're building on top of your own data set and, your own unique 447 00:37:38,662 --> 00:37:39,512 advantages, right? 448 00:37:39,512 --> 00:37:46,574 think every firm has some unique advantages in terms of practice areas, geographic locations, their market fit. 449 00:37:46,574 --> 00:37:57,674 The clients are going after, you know, there's some unique characteristics to probably every firm that's in the amlot 200, but how they utilize this technology and where they 450 00:37:57,674 --> 00:38:03,894 choose to build and where they choose to buy is going to make a big difference on how effective they are downrange. 451 00:38:03,894 --> 00:38:06,354 And I think, you know, you're right. 452 00:38:06,354 --> 00:38:14,574 Getting outside capital is going to be extremely helpful, especially as you start to see these IT expenditures go up and up and up, right? 453 00:38:14,574 --> 00:38:15,438 Because. 454 00:38:15,438 --> 00:38:23,138 When the partner starts spending 10 % of the revenue on IT, it's going to make it a very uncomfortable conversation come bonus time. 455 00:38:23,138 --> 00:38:23,698 Right. 456 00:38:23,698 --> 00:38:34,758 But if you can do it with outside capital and you can mitigate your risk and you can potentially, you know, get some multiple of your revenue in terms of valuation, the idea 457 00:38:34,758 --> 00:38:39,318 of owning equity and ABS is very different than the idea of owning equity in a partnership. 458 00:38:39,318 --> 00:38:39,978 Right. 459 00:38:39,978 --> 00:38:40,462 So 460 00:38:40,462 --> 00:38:45,987 um So there are very interesting economics and business models to look at. 461 00:38:46,789 --> 00:38:55,577 And it's not clear, you know, what the timeframe for all this change is going to be, but I think it is clear that there's going to be some massive change in terms of the way that 462 00:38:55,598 --> 00:38:59,221 law firms as businesses are run in the next five to 10 years. 463 00:38:59,266 --> 00:38:59,496 Yeah. 464 00:38:59,496 --> 00:39:09,790 And the governance model too, my listeners have probably heard me talk ad nauseam at this point about just the lack of governance in law firms. 465 00:39:09,790 --> 00:39:15,713 you know, I came from, spent 10 years in financial services, very highly regulated industry. 466 00:39:15,713 --> 00:39:19,915 And I was primarily in uh risk management roles. 467 00:39:19,915 --> 00:39:25,267 So that's kind of second line of defense, you know, in, in financial services that we say we have four lines of defense. 468 00:39:25,267 --> 00:39:28,290 First line of defense is the business unit, right? 469 00:39:28,290 --> 00:39:35,875 the commercial bank, the consumer bank, could be wealth management. 470 00:39:35,875 --> 00:39:39,108 They have controls to mitigate risk in that line of business. 471 00:39:39,108 --> 00:39:43,951 Then you have a risk management partner that's aligned specifically to with each line of business. 472 00:39:43,951 --> 00:39:45,622 That's your second line of defense. 473 00:39:45,622 --> 00:39:48,864 Then you have third line of defense, which is corporate audit. 474 00:39:49,465 --> 00:39:57,077 And then you have your fourth line of defense, which is the Wall Street Journal, which is where you end up if the first three fail and 475 00:39:57,077 --> 00:40:00,449 Law firms have one line of defense, right? 476 00:40:00,449 --> 00:40:13,956 I've yet to see a law firm with an internal audit and risk management partners and an audit committee and a uh board of directors that holds everybody accountable. 477 00:40:13,956 --> 00:40:15,817 It's just a different model. 478 00:40:15,817 --> 00:40:27,052 So I think for firms to scale beyond single digit billions, think a different business model or corporate structure 479 00:40:27,052 --> 00:40:29,622 governance model is going to be needed. 480 00:40:29,622 --> 00:40:31,338 I don't know if have any thoughts on that. 481 00:40:32,556 --> 00:40:33,116 Yeah, I do. 482 00:40:33,116 --> 00:40:39,168 And I think you can see, you know, there have been a lot of examples of law firms spinning out subsidiary ALSPs, right? 483 00:40:39,168 --> 00:40:44,062 I'll turn to legal service provider units that have done specific things, maybe point solutions in particular areas. 484 00:40:44,062 --> 00:40:47,735 And I do think that makes a lot of sense going forward as well. 485 00:40:47,735 --> 00:40:56,029 I think you're right that, you know, the traditional law firm is not really well structured at the moment to take advantage of all the opportunities that are out there. 486 00:40:56,029 --> 00:41:01,080 But I think with the right focus and discipline around. 487 00:41:01,080 --> 00:41:02,861 you how do we explore these business models? 488 00:41:02,861 --> 00:41:11,096 What are some opportunities we can, you know, seize out here and how can we look at this more from a private equity or venture capital perspective? 489 00:41:11,096 --> 00:41:18,060 uh It really comes down to just being a little more objective about, you know, what the clients want, right? 490 00:41:18,060 --> 00:41:19,821 And they need specific legal services. 491 00:41:19,821 --> 00:41:23,773 Do they really care how long it took you to deliver those services? 492 00:41:23,773 --> 00:41:25,204 Probably not, right? 493 00:41:25,204 --> 00:41:28,504 uh There's a certain value you're delivering. 494 00:41:28,504 --> 00:41:32,007 how you do that is really the question we're trying to answer here. 495 00:41:32,007 --> 00:41:36,100 Like, should we continue to do it the same way we've been doing it for the last 50 years? 496 00:41:36,100 --> 00:41:37,831 Probably not, right? 497 00:41:37,831 --> 00:41:44,286 In most cases, we should probably look at, there some tools that might make us a little more efficient or just make the product better, right? 498 00:41:44,286 --> 00:41:47,868 ah And so that's really where we're coming down. 499 00:41:47,868 --> 00:41:49,949 But I think you're right. 500 00:41:50,330 --> 00:41:55,914 the business model of a law firm just has not included a lot of governance uh per se. 501 00:41:56,394 --> 00:41:59,497 Except I will say that lawyers are generally very, very conservative. 502 00:41:59,497 --> 00:42:02,259 And so, you know, they don't take a lot of risk. 503 00:42:02,259 --> 00:42:09,595 So for the most part, that's been good to allow us to survive and not go extinct as a business model. 504 00:42:09,595 --> 00:42:13,037 You know, we've been able to preserve our own businesses for the most part. 505 00:42:13,037 --> 00:42:21,214 And I think uh it is, you know, it's a good attribute, but it's also probably something that's keeping a lot of law firms from innovating the way they probably should be at the 506 00:42:21,214 --> 00:42:22,024 moment. 507 00:42:22,208 --> 00:42:26,399 Yeah, lawyers are risk avoidant. 508 00:42:26,399 --> 00:42:34,642 And that's good when you're lacking layers of protection between you and the Wall Street Journal. 509 00:42:34,642 --> 00:42:47,485 But um I think in order to scale, to have Fortune 500 level scale, I'm not sure that the current law firm partnership model is the right path. 510 00:42:49,818 --> 00:42:51,064 What about 511 00:42:51,064 --> 00:42:55,576 You know, we're almost out of time, but I did want to balance one thing off of you. 512 00:42:55,576 --> 00:43:07,921 And that is like, how do firms think about, how should they think about balancing the protection of the firm's reputation, which as we just talked about, that's like number one 513 00:43:07,921 --> 00:43:11,763 on the differentiation list is the brand, right? 514 00:43:11,763 --> 00:43:17,565 Versus the need to make bold moves in technology adoption, because it does come with risk. 515 00:43:17,565 --> 00:43:20,246 So I don't know, how do you think about it? 516 00:43:20,574 --> 00:43:25,777 What do you think are best practices around that thought process? 517 00:43:27,310 --> 00:43:27,550 Yeah. 518 00:43:27,550 --> 00:43:35,730 I mean, I think to protect your clients, first of all, you have to develop a good due diligence capability so that you can filter out the noise from the signal in terms of what 519 00:43:35,730 --> 00:43:37,270 the vendors are offering you, right? 520 00:43:37,270 --> 00:43:40,690 Make sure your client's data is safe. 521 00:43:40,690 --> 00:43:43,310 That's fundamentally a requirement, ethical requirements. 522 00:43:43,310 --> 00:43:53,610 So making sure you have those pieces, you know, built in place first so you can screen out bad actors and you can really just work with the best of the best in terms of legal tech 523 00:43:53,610 --> 00:43:54,572 providers. 524 00:43:54,572 --> 00:43:58,586 And then trying to find legal tech providers that will actually work with you and listen to you. 525 00:43:58,586 --> 00:44:01,890 Um, what you don't want to do is just get a sales person. 526 00:44:01,890 --> 00:44:07,236 You want somebody who's actually going to take your feedback and maybe go back to the engineering team and say, Hey, they need X, Y, and Z. 527 00:44:07,236 --> 00:44:07,897 Can we do this? 528 00:44:07,897 --> 00:44:09,488 And then, yes, they can. 529 00:44:09,488 --> 00:44:15,515 and so, like I said, the relationships we have right now, we've been talking to these vendors for two years and they've been great to work with. 530 00:44:15,515 --> 00:44:16,605 And I think, 531 00:44:16,908 --> 00:44:17,778 That's what you need. 532 00:44:17,778 --> 00:44:23,201 You need a vendor that is going to listen to you and then it's going to be reactive to your needs and your clients needs. 533 00:44:23,201 --> 00:44:27,193 So due diligence, reactive, good vendor that you can work with somebody you can trust. 534 00:44:27,193 --> 00:44:32,966 And then, you know, find some use cases where you can actually get some return on investment, or at least you see. 535 00:44:33,006 --> 00:44:39,606 the light at the end of the tunnel where you can get some return on this investment because without that, you're going to have a difficult time selling it to your partners 536 00:44:39,606 --> 00:44:47,326 that, we need to go back and get some more money to pay for this legal tech, especially if it's not going to make any money anytime soon. 537 00:44:48,094 --> 00:44:54,237 Having a clear discipline process on how you're going to get to a return on investment is super important. 538 00:44:54,237 --> 00:45:00,360 So I think that's probably the final piece, just making sure you have the right use case and the right clients and the right practice area. 539 00:45:00,360 --> 00:45:08,724 You're going to actually try to do some proof of concept and take some measurements in terms of how much time you actually spent versus how much time you would have spent 540 00:45:08,724 --> 00:45:10,144 without the tools. 541 00:45:10,324 --> 00:45:13,686 And look, in that process, you're going to end up spending more time, right? 542 00:45:13,686 --> 00:45:17,978 Because you need to do it the traditional way and you need to test it in the new way. 543 00:45:17,978 --> 00:45:20,270 So it is actually going to be more time committed. 544 00:45:20,270 --> 00:45:30,889 But if you're clear on the goal that, at the end of the day, if we can get this right, we can actually deliver this service to our client and it's less expensive. 545 00:45:30,889 --> 00:45:31,490 It's faster. 546 00:45:31,490 --> 00:45:32,781 It's better product. 547 00:45:32,781 --> 00:45:34,923 Then it's worthwhile going through that process. 548 00:45:34,923 --> 00:45:38,317 So I guess those would be the three steps I would prescribe. 549 00:45:38,317 --> 00:45:46,515 Yeah, and what tech initiative doesn't require more investment in time than the status quo? 550 00:45:46,515 --> 00:45:48,917 I'd argue all of them do, right? 551 00:45:48,917 --> 00:46:00,547 If you get a new CRM with new capabilities, you're going to have to invest time in finding a migration path to customize the new system. 552 00:46:00,768 --> 00:46:03,660 It's a time investment. 553 00:46:03,754 --> 00:46:07,557 no matter what sort of tech change you're implementing. 554 00:46:07,557 --> 00:46:20,046 And man, your point is really solid about finding the vendors who listen because, you know, that's where, you know, we compete with the big boys, like on the, on the legal 555 00:46:20,046 --> 00:46:30,714 internet side, they're not much competition anymore, but it was Handshake that was bought by Adorant, very big company, not, not really a strategic, um, 556 00:46:32,504 --> 00:46:34,914 platform in their broader portfolio. 557 00:46:34,914 --> 00:46:43,560 Uh, and then on the extra net side, compete with IQ that's owned by Thompson Reuters, which, know, they are another really big organization. 558 00:46:43,560 --> 00:46:47,552 And, um, we are differentiating ourselves. 559 00:46:47,552 --> 00:46:58,878 The, the market has really expressed strong interest for alternatives and we're raising our hand and saying, Hey, we're here and we have a client advisory panel and we'd love you 560 00:46:58,878 --> 00:47:02,560 to participate and help us guide the roadmap. 561 00:47:02,612 --> 00:47:05,124 And man, that has been such a successful partnership. 562 00:47:05,124 --> 00:47:14,611 We've, we have had, especially on the extranet side, which is newer, our internet platform is very well established, like quarter of the AMLAL use us. 563 00:47:14,611 --> 00:47:16,032 We're only three and a half years old. 564 00:47:16,032 --> 00:47:23,737 So we've had tremendous traction in that space, but on the extranet side, it took another two and a half years of R and D to get that right. 565 00:47:23,737 --> 00:47:25,318 Because it's so much more high risk. 566 00:47:25,318 --> 00:47:30,314 It's client facing, like you have to make sure that governance and 567 00:47:30,314 --> 00:47:38,660 security controls, provisioning, all these things are really tightly managed and um our customers feel the difference. 568 00:47:38,660 --> 00:47:47,926 uh I would echo your sentiments about find a vendor who wants to listen to what you have to say because it makes a huge difference. 569 00:47:49,100 --> 00:47:49,370 Yeah. 570 00:47:49,370 --> 00:47:52,563 I mean, ultimately they're like a legal partner in some ways, right? 571 00:47:52,563 --> 00:48:00,238 I know we're not supposed to say that on ethical rules, but the reality is that if you're relying on them for legal services or for, for services that are going to be a part and 572 00:48:00,238 --> 00:48:05,542 parcel of your legal services, you need to be very comfortable that they are actually paying attention to what you need. 573 00:48:05,542 --> 00:48:12,337 And there's, there's a good working relationship there, just like you'd want to have with any professional services provider that you're working with, right? 574 00:48:12,337 --> 00:48:14,619 You want to make sure that there was a good relationship there. 575 00:48:14,619 --> 00:48:16,864 You're communicating well, you know, just 576 00:48:16,864 --> 00:48:19,575 important pieces of any good relationship. 577 00:48:19,575 --> 00:48:21,646 yeah, I think that's, that's been hugely important. 578 00:48:21,646 --> 00:48:30,171 I think it helps, uh, you be much more successful or mitigate your risks, at least if you have a good partner who you can communicate with and who's listening to you as you're 579 00:48:30,171 --> 00:48:31,051 communicating with them. 580 00:48:31,051 --> 00:48:32,834 So yeah, super important. 581 00:48:32,834 --> 00:48:33,555 Totally. 582 00:48:33,555 --> 00:48:35,175 Well, this has been a great conversation. 583 00:48:35,175 --> 00:48:38,718 really appreciate you spending a few minutes with us today. 584 00:48:38,718 --> 00:48:44,141 How do people find out more about Fenimore Labs or you or do have LinkedIn profile? 585 00:48:44,141 --> 00:48:46,342 What's the best way for people to get in touch? 586 00:48:47,008 --> 00:48:49,901 Yeah, certainly linkedinphenimorelaw.com is our website. 587 00:48:49,901 --> 00:48:53,454 You can go on there and find out more about Fenimore Labs and what we're doing with AI project. 588 00:48:53,454 --> 00:48:56,007 Blue wave is our AI project. 589 00:48:56,007 --> 00:49:00,461 Um, lot of good information on the website and, yeah, I'm happy to talk to anybody. 590 00:49:00,461 --> 00:49:04,545 If you have any questions or if you want to just discuss legal tech, I'm interested. 591 00:49:04,545 --> 00:49:08,619 So feel free to drop me a line on LinkedIn or by email through the website. 592 00:49:08,619 --> 00:49:11,688 Appreciate the time and thank you to have this opportunity. 593 00:49:11,688 --> 00:49:12,260 Awesome. 594 00:49:12,260 --> 00:49:12,750 All right. 595 00:49:12,750 --> 00:49:19,273 And then we'll see you uh not too long in uh Austin for TLTF, correct? 596 00:49:19,768 --> 00:49:20,290 That's right. 597 00:49:20,290 --> 00:49:20,732 That's right. 598 00:49:20,732 --> 00:49:21,071 Yeah. 599 00:49:21,071 --> 00:49:22,520 See you at the TLTF summit. 600 00:49:22,520 --> 00:49:23,189 Should be good. 601 00:49:23,189 --> 00:49:24,050 All right, good stuff. 602 00:49:24,050 --> 00:49:25,191 Thanks David. 603 00:49:26,776 --> 00:49:27,817 Take care. -->