1 00:00:02,104 --> 00:00:04,021 Guy, how are you this afternoon? 2 00:00:04,854 --> 00:00:06,234 Hey Ted, how are you? 3 00:00:06,234 --> 00:00:07,491 It's great to be here. 4 00:00:07,491 --> 00:00:11,433 Yeah, I appreciate you taking a few minutes to chat with us. 5 00:00:11,433 --> 00:00:24,113 um You and I had a similar thought process around a couple of posts that were floating around LinkedIn and we had a chat and I was like, man, we got to have a chat on the 6 00:00:24,113 --> 00:00:26,925 podcast because there's too much good stuff here. 7 00:00:26,925 --> 00:00:34,600 um But before we jump into the agenda, why don't you tell us a little bit about who you are, what you do and where you do it? 8 00:00:35,150 --> 00:00:36,991 Sure, I'm happy to do that. 9 00:00:37,131 --> 00:00:39,633 So I am Guy Alvarez. 10 00:00:39,633 --> 00:00:44,670 I am a former practicing attorney or a recovering lawyer, as they say. 11 00:00:44,670 --> 00:00:49,418 I practiced international trade law for the first five years of my career. 12 00:00:49,418 --> 00:00:55,762 But for the last 20, 25 years, I've been involved in legal technology and digital marketing. 13 00:00:55,762 --> 00:01:03,648 ah Most recently, I started and founded a company called Good to Be Social in 2012. 14 00:01:03,650 --> 00:01:08,830 that was acquired by a private equity based company in August of 2023. 15 00:01:08,830 --> 00:01:20,679 I stayed on for an extra year and then for the last six months or so, I've been focusing on helping law firms uh leverage AI for growth. 16 00:01:20,679 --> 00:01:24,258 And that is where we run into the culture issue. 17 00:01:24,258 --> 00:01:25,278 Yeah. 18 00:01:25,579 --> 00:01:25,849 Yeah. 19 00:01:25,849 --> 00:01:27,189 We're going to talk a lot about that. 20 00:01:27,189 --> 00:01:29,740 And this is a topic that I write a lot about. 21 00:01:29,740 --> 00:01:43,526 And it's an area of passion for me because, you know, we are being very intentional at InfoDash about the type of culture that we create and defining core values and really 22 00:01:43,526 --> 00:01:44,426 living by them. 23 00:01:44,426 --> 00:01:50,509 um We do, you know, in our hiring process, we screen candidates based on them. 24 00:01:50,509 --> 00:01:54,040 When we do our performance reviews, we evaluate 25 00:01:54,040 --> 00:01:56,952 performance based on these core values. 26 00:01:56,952 --> 00:02:04,938 And when we exit somebody from the organization, it's uh usually a core values conversation. 27 00:02:05,839 --> 00:02:09,422 it's something that I think really matters. 28 00:02:09,422 --> 00:02:20,170 um it's not that big law necessarily has a bad culture, but it's not one that is well aligned for 29 00:02:20,394 --> 00:02:25,077 adopting new technologies and change and innovation. 30 00:02:25,674 --> 00:02:30,741 And we're starting to see a little bit of shift there and that's really good. 31 00:02:30,741 --> 00:02:41,301 you know, I hate to take the negative perspective as much as I do, but you know, we are at InfoDash, we are solely dependent on law firms. 32 00:02:41,301 --> 00:02:44,110 100 % of our business is our law firms. 33 00:02:44,110 --> 00:02:46,611 We don't have one non-law firm client. 34 00:02:46,732 --> 00:02:50,074 And I really want to see the industry do well. 35 00:02:50,094 --> 00:03:03,548 Um, you know, I have a, I have a dog in the fight and, um so, but yeah, tell me just kind of in broad brushstrokes, like how you see the big picture with innovation and law firms, 36 00:03:03,548 --> 00:03:06,210 and then we'll jump into some specifics. 37 00:03:06,668 --> 00:03:14,301 Yeah, so I think the problem with innovation in law firms is the culture. 38 00:03:14,301 --> 00:03:27,317 And when I talk about culture, if you talk about the foundation of modern law firms, especially big law, ah there's three things that I think run against the current of having 39 00:03:27,317 --> 00:03:29,728 an innovation-led culture. 40 00:03:29,728 --> 00:03:32,650 Number one is the hierarchical model. 41 00:03:32,650 --> 00:03:33,792 uh 42 00:03:33,792 --> 00:03:40,267 very uh heavy at the bottom, a lot of associates, uh fewer partners, equity partners. 43 00:03:40,408 --> 00:03:49,095 And in order to get ahead, you've got to put in your billable hours and eventually, hopefully, you get invited to become an equity partner. 44 00:03:49,095 --> 00:03:50,796 So that's number one. 45 00:03:50,836 --> 00:03:53,258 Number two is the business model, right? 46 00:03:53,258 --> 00:04:02,670 The billable hour uh is a big impediment to innovation because if all you're doing is worrying about 47 00:04:02,670 --> 00:04:14,453 how many hours you're billing, there's not much room to do other things that are important when it comes to innovation and having a culture of collaboration and experimentation. 48 00:04:14,533 --> 00:04:28,137 And then the third is something that is ingrained in all lawyers, the risk averseness, being very, very cautious about doing things, being super conservative, which of course, 49 00:04:28,137 --> 00:04:32,818 uh legal industry is a regulated industry and it's important to be careful. 50 00:04:32,908 --> 00:04:47,048 But to what extent do you uh leverage uh being careful and conservative, and how much does that play against the ability to be innovative and experimenting? 51 00:04:47,048 --> 00:04:57,078 So I think those three things, which is traditionally the foundation of most law firms, are things that are running against the current when it comes to culture and innovation. 52 00:04:57,078 --> 00:04:58,018 Yeah. 53 00:04:58,059 --> 00:05:06,928 So, you know, to your billable hour point, one common rebuttal to, or guess rebuttal is not the right word. 54 00:05:06,928 --> 00:05:16,498 uh One common solution, I guess, to how the price, the new pricing model will work in this world of AI is outcome based pricing. 55 00:05:16,639 --> 00:05:20,422 And uh my first business, I've been an entrepreneur for 30. 56 00:05:20,590 --> 00:05:24,332 three years now and my first business was a collection agency. 57 00:05:24,332 --> 00:05:28,394 So we were an outcome based, oh we had outcome based pricing. 58 00:05:28,394 --> 00:05:35,877 We worked on a contingency and you know, if the, if the delinquency of the debt was less than six months, we got a third. 59 00:05:35,877 --> 00:05:40,439 If it was more than six months, we got half and uh it was truly outcome based. 60 00:05:40,439 --> 00:05:44,641 And there are, there are real examples in legal where they have similar models. 61 00:05:44,641 --> 00:05:46,182 um 62 00:05:46,922 --> 00:05:51,846 I have a, uh this is a little bit of a hot button, this outcome based pricing for me. 63 00:05:51,846 --> 00:05:56,490 uh I attended an inside practice event, financial innovation. 64 00:05:57,011 --> 00:05:59,413 That was the main theme. 65 00:05:59,453 --> 00:06:01,025 And I heard really good dialogue. 66 00:06:01,025 --> 00:06:08,972 So they had some GCs, they had a guy from, from Ford there and a couple of other inside folks and all the pricing people. 67 00:06:08,972 --> 00:06:14,286 And they were really mixing it up in a good way, like debating topics and 68 00:06:14,304 --> 00:06:19,767 So I have a little bit of experience to share with non-legal outcome-based pricing. 69 00:06:19,767 --> 00:06:20,267 So in St. 70 00:06:20,267 --> 00:06:27,480 Louis here, all the plumbing companies have apparently gotten together and decided they no longer work on time and materials. 71 00:06:27,480 --> 00:06:32,683 They do fixed fee outcome-based jobs. 72 00:06:32,683 --> 00:06:39,926 So, um you know, at first I was like, okay, this seems like just a way to create. 73 00:06:39,976 --> 00:06:41,807 lack of transparency into. 74 00:06:41,807 --> 00:06:48,472 So I figured out I had a big job done here and they replaced the section of sewer pipe to fix a leak. 75 00:06:48,732 --> 00:06:54,216 And my interpretation of what the outcome was, it was the leak was going to stop. 76 00:06:54,216 --> 00:06:54,927 Well, guess what? 77 00:06:54,927 --> 00:06:56,718 They replaced the wrong section. 78 00:06:56,718 --> 00:07:02,642 It was further upstream where my kitchen sink tied in and they had to knock out some drywall. 79 00:07:02,642 --> 00:07:08,746 So they didn't sell me an outcome of, they said, no, the outcome was we replaced the section of pipe. 80 00:07:09,120 --> 00:07:12,291 And I'm like, yeah, that's not, that's not how I read it at all. 81 00:07:12,291 --> 00:07:22,510 So we went back and forth and I had another job by the same company where they replaced a hose bib and the guy was here 45 minutes and the job was $450. 82 00:07:22,716 --> 00:07:24,106 There's almost no materials. 83 00:07:24,106 --> 00:07:27,557 You can go get a hose bib from Home Depot for 12 bucks. 84 00:07:27,598 --> 00:07:29,519 They were charging me 450 an hour. 85 00:07:29,519 --> 00:07:31,049 So it really bothered me. 86 00:07:31,049 --> 00:07:33,020 It really pissed me off to be candid. 87 00:07:33,020 --> 00:07:37,262 And so now I'm trying, I'm, I'm no longer going to do business with them. 88 00:07:37,262 --> 00:07:38,222 had another 89 00:07:38,222 --> 00:07:40,163 Plumbing company out, same thing. 90 00:07:40,324 --> 00:07:47,800 So um there have been no efficiencies in that world that really have driven this trend. 91 00:07:47,800 --> 00:07:51,243 It's just a way to reduce transparency. 92 00:07:51,243 --> 00:07:54,675 Then they can charge you whatever they want per hour. 93 00:07:54,675 --> 00:08:03,432 I'm wondering how are we going to avoid that scenario in legal when we move to outcome-based pricing? 94 00:08:04,576 --> 00:08:07,218 It's not, there's not an easy answer. 95 00:08:07,218 --> 00:08:17,487 And I actually, I was speaking a couple of weeks ago with a friend of mine who's a partner at Cooley and we're having exactly this conversation, you know, and he said, goes, it's 96 00:08:17,487 --> 00:08:28,006 really hard for me to figure out, you know, what to charge based on an outcome, because every outcome could be different or the amount of work that goes into it. 97 00:08:28,006 --> 00:08:33,014 You we might think it's going to be this, this, and this, but then when we get into it, 98 00:08:33,014 --> 00:08:36,016 It's this, this, and this, and then some more. 99 00:08:36,236 --> 00:08:38,908 And so he was like, it's very hard for me. 100 00:08:38,908 --> 00:08:40,980 And I go, look, I get it. 101 00:08:40,980 --> 00:08:44,002 You I own the digital marketing agency. 102 00:08:44,182 --> 00:08:50,047 And when we gave bids to redesign websites, it was the same kind of issue, right? 103 00:08:50,047 --> 00:08:54,220 You went in there, you gave them a proposal based upon what you thought they wanted. 104 00:08:54,220 --> 00:09:00,564 And then when you start to dig in, you start to see it's much more complex or there are things that you didn't anticipate. 105 00:09:00,622 --> 00:09:05,982 And then now you're either losing money or you had to go back and say, hey, I didn't anticipate this. 106 00:09:05,982 --> 00:09:07,282 I need to charge you more. 107 00:09:07,282 --> 00:09:10,802 So there's not an easy solution to it. 108 00:09:10,902 --> 00:09:21,822 But one of the things we did at the agency is we started to basically invest in a pre-audit of the website. 109 00:09:21,822 --> 00:09:24,742 So we basically would say, hey, let us go in the back end. 110 00:09:24,742 --> 00:09:26,982 Let us see what's going on today. 111 00:09:27,362 --> 00:09:28,722 Let us do some work. 112 00:09:28,722 --> 00:09:30,132 We'll charge you. 113 00:09:30,132 --> 00:09:33,444 X amount upfront to do this audit. 114 00:09:33,444 --> 00:09:42,969 And then ah if you decide, once we find and we give you a quote, if you decide to move forward with that, we'll take whatever we charge it for the audit off the books, and then 115 00:09:42,969 --> 00:09:44,990 you just pay for that. 116 00:09:45,150 --> 00:09:49,473 And that got us closer ah to what the actual work was entailed. 117 00:09:49,473 --> 00:09:59,446 Now, it's not as easy to do in a legal sense, but I think there's opportunities to do those kinds of work where you're doing a little bit of investigation or discovery. 118 00:09:59,446 --> 00:10:05,152 charge for it and then have a better sense of what the overall project is going to cost. 119 00:10:05,152 --> 00:10:08,813 Yeah, we do the same thing here at InfoDash on the services side. 120 00:10:08,813 --> 00:10:11,724 So we give the customers an estimate upfront. 121 00:10:11,724 --> 00:10:18,046 It's based on like three hours or less of pre-sales conversation and has a very high margin of error. 122 00:10:18,046 --> 00:10:19,106 I say very high. 123 00:10:19,106 --> 00:10:25,148 Maybe that's an exaggeration, but we've had it swing 50 % in both directions. 124 00:10:25,148 --> 00:10:27,249 then, but it's the best we can do. 125 00:10:27,249 --> 00:10:29,410 If we're working for free, that's what you're going to get. 126 00:10:29,410 --> 00:10:30,430 And then... 127 00:10:30,702 --> 00:10:35,087 If you want to pay us for like an envisioning engagement where we come in and do what you talk about. 128 00:10:35,087 --> 00:10:39,051 But so then we have very early on in the project, we have an engineering phase. 129 00:10:39,051 --> 00:10:46,328 So directly after kickoff, we do engineering and then we drill down and validate all the assumptions that we made in our estimate. 130 00:10:46,328 --> 00:10:48,861 And then then we have a really solid number. 131 00:10:48,861 --> 00:10:50,061 But if custom. 132 00:10:50,095 --> 00:10:51,076 we did that as well. 133 00:10:51,076 --> 00:10:56,550 We started to do that as well where we would say, you know, this is what we think it's gonna cost. 134 00:10:56,550 --> 00:11:03,212 It's gonna be a range, but once we go in there, we'll give you a much closer cost of what it's gonna 135 00:11:03,212 --> 00:11:04,023 Yeah. 136 00:11:04,023 --> 00:11:05,865 So outcome based pricing. 137 00:11:05,865 --> 00:11:08,747 Here's another curve ball. 138 00:11:08,747 --> 00:11:09,989 Let's kick around a little bit. 139 00:11:09,989 --> 00:11:11,890 So value based pricing. 140 00:11:11,890 --> 00:11:17,476 So another thing I've heard as a potential solution is value based pricing. 141 00:11:17,476 --> 00:11:21,740 And that sounds great on paper, but let's use the plumbing metaphor for a minute. 142 00:11:21,740 --> 00:11:28,486 So what value did the plumber who fixed my sewer pipe delivered to me really? 143 00:11:28,696 --> 00:11:30,647 tens of thousands of dollars, right? 144 00:11:30,647 --> 00:11:36,608 Because I actually know what it costs when my basement floods, because it did about nine months ago. 145 00:11:36,608 --> 00:11:39,609 um It cost me about 45 grand. 146 00:11:39,829 --> 00:11:50,453 And um now if they were to say, well, we'll charge you 20 % of that, I would fall back to, it's a supply and demand question. 147 00:11:50,453 --> 00:11:55,514 I'm going to get some more bids on this because it's not just the value that you... 148 00:11:55,522 --> 00:12:06,868 You can't just take an arbitrary piece of the value that you're creating because you still have supply and demand dynamics that, that roll into the equation on the buy side. 149 00:12:06,868 --> 00:12:14,132 So, you know, I, again, there's no easy answers here, but you know, outcome based pricing, value based pricing, not saying it's not possible. 150 00:12:14,132 --> 00:12:25,388 Both actually already happened in legal today, but, um, you know, as a, but just taking that paradigm and it's more complicated than that, I guess, is 151 00:12:25,388 --> 00:12:26,287 the way I see it. 152 00:12:26,287 --> 00:12:27,583 I don't know, how about you? 153 00:12:28,374 --> 00:12:28,975 Yeah. 154 00:12:28,975 --> 00:12:34,316 mean, look, neither of these choices or pricing models are easy. 155 00:12:34,316 --> 00:12:44,439 But uh I think the billable hour model is broken and it's going to need to be replaced by something else. 156 00:12:44,439 --> 00:12:50,021 So you might as well put in the work and find out what's going to work best for you. 157 00:12:50,301 --> 00:12:54,042 I think a lot of the things that lawyers do today 158 00:12:54,122 --> 00:13:06,867 are going to end up being outsourced to non-legal entities, uh things that don't require a high degree of knowledge or high degree of technical expertise. 159 00:13:06,867 --> 00:13:14,441 And so then if you're only left with those types of things, then it really becomes, you know, what value do you provide? 160 00:13:14,441 --> 00:13:22,804 And the knowledge that you have as a lawyer that has a lot of experience in a particular thing, that may be, you know, 161 00:13:22,954 --> 00:13:34,504 more expensive than you're charging by the hour now, but you're also not paying for all the other stuff that a machine could do or outsourcing it to India or something like that. 162 00:13:34,504 --> 00:13:36,646 um 163 00:13:36,659 --> 00:13:36,949 Yeah. 164 00:13:36,949 --> 00:13:39,109 And the firm has to take some risk. 165 00:13:39,109 --> 00:13:42,251 you know, if you're gonna just, just like the plumbing company has to take some risks. 166 00:13:42,251 --> 00:13:47,283 Hey man, if you replace the wrong section of pipe, you come back and you do the rest for free. 167 00:13:47,283 --> 00:13:50,634 And that's not what, that's not the service that, that I got. 168 00:13:50,634 --> 00:13:56,178 And I'm, pretty hot on that now uh at the moment, but it... 169 00:13:56,178 --> 00:13:57,598 hear you. 170 00:13:58,175 --> 00:14:04,861 really made me think a lot about the value and the outcome-based pricing, but I got us a little off track. 171 00:14:04,861 --> 00:14:19,633 um You mentioned risk aversion when we first started, and that is a very uh rampant, I guess, posture in legal. 172 00:14:20,598 --> 00:14:24,979 Innovation really requires risk taking because it's a process of trial and error. 173 00:14:24,979 --> 00:14:27,430 If you're not failing, then you're not innovating. 174 00:14:27,430 --> 00:14:28,320 It's that simple. 175 00:14:28,320 --> 00:14:31,179 mean, it's trial and error. 176 00:14:31,179 --> 00:14:32,361 You're trying new things. 177 00:14:32,361 --> 00:14:34,232 You're breaking new ground. 178 00:14:34,232 --> 00:14:37,863 And in order to do that, you're going to make mistakes. 179 00:14:37,863 --> 00:14:46,885 um yeah, I mean, how do you see this tension between risk aversion and the need to innovate? 180 00:14:46,885 --> 00:14:49,376 How do you see this playing out in big law? 181 00:14:50,030 --> 00:14:58,655 So again, the easy thing is to say, ah it's too risky, we're not going to try it. 182 00:14:58,655 --> 00:15:00,696 We don't know what we don't know. 183 00:15:00,856 --> 00:15:12,483 And what you have to think about is, fine, if you're going to have that mindset, ah you can have that mindset, but you're going to be left behind because other firms are looking 184 00:15:12,483 --> 00:15:18,506 to innovate and are being ah able to take some risks. 185 00:15:18,598 --> 00:15:24,723 And the way to handle risk is really to start small and to start with small experiments, right? 186 00:15:24,723 --> 00:15:31,509 ah Pick the things that we're talking about AI, for example, pick things that are not necessarily client facing, right? 187 00:15:31,509 --> 00:15:40,857 Maybe more internal processes, you your marketing, your business development activity, your client intelligence, things that help you become more aware of what your clients 188 00:15:40,857 --> 00:15:42,678 wants and needs are. 189 00:15:43,099 --> 00:15:46,478 And once you get a little bit of traction going with that and 190 00:15:46,478 --> 00:15:51,078 then you can start to go out with some of the client-facing type of things. 191 00:15:51,538 --> 00:15:59,038 But to just say, it's too risky, we're not going to try it, to me, the opportunity cost is humongous. 192 00:15:59,378 --> 00:16:04,364 And not being able to do that is going to end up costing you a lot. 193 00:16:04,364 --> 00:16:14,138 Yeah, I think the model that you mentioned, listen, there are a very finite number of ways to tackle unknowns in the project world. 194 00:16:14,278 --> 00:16:21,601 And, you know, kind of what we do, I think is going to be the answer for stuff that doesn't fit neatly in a box. 195 00:16:21,601 --> 00:16:24,738 And that is, you know, maybe a... 196 00:16:24,782 --> 00:16:30,305 pre-sales conversation, you know, and maybe this is a pre-engagement conversation for a lawyer. 197 00:16:30,305 --> 00:16:34,947 They come in, they ask a set of questions, they get a general sense of what's needed here. 198 00:16:34,968 --> 00:16:46,214 And then they build an estimate and with a certain set of assumptions, and then they dig in deeper and actually do what we call like an engineering phase, or maybe they actually 199 00:16:46,214 --> 00:16:48,615 start the execution of the matter. 200 00:16:48,615 --> 00:16:54,698 But in order to not get hurt, have to fix cost, fixed price requires fixed scope. 201 00:16:54,742 --> 00:16:58,645 And fixed scope requires management and project management. 202 00:16:58,645 --> 00:17:03,949 Law firms are notoriously not good at this on the practice side. 203 00:17:03,949 --> 00:17:09,693 We have some clients that are as good at project management as we are, and that's all we do are projects. 204 00:17:09,693 --> 00:17:15,417 So it seems like that's, it's going to have to play out for the stuff that doesn't fit neatly in a box. 205 00:17:15,417 --> 00:17:22,542 You come in, you get a general sense and you present it to the client with some sort of a 206 00:17:22,542 --> 00:17:23,662 you know, caveats. 207 00:17:23,662 --> 00:17:30,742 And then when you actually get into the matter, you'll do a deeper dive and you know, what part of this is billable or not? 208 00:17:30,742 --> 00:17:33,922 Those are things the lawyer, the law firms got to work out. 209 00:17:33,922 --> 00:17:45,666 But you build up essentially a project and how are they going to, the big question in my mind is like, we have project managers who sit there and listen and, take notes and 210 00:17:45,666 --> 00:17:48,749 When something goes out of scope, it gets flagged immediately. 211 00:17:48,749 --> 00:17:54,755 We have a conversation and then it's either a change order or we deprioritize it. 212 00:17:54,755 --> 00:17:55,405 I don't know, man. 213 00:17:55,405 --> 00:17:58,848 I have a hard time seeing that happen on the practice of law side. 214 00:17:59,426 --> 00:18:01,107 I think it's going to happen, Ted. 215 00:18:01,107 --> 00:18:07,712 think there is going to be, you know, there's a lot of talk about AI is going to replace your job or take your job. 216 00:18:07,712 --> 00:18:09,493 I think AI is going to create a lot of jobs. 217 00:18:09,493 --> 00:18:17,969 And I think the legal project manager job is definitely a position that law firms are going to have to invest in. 218 00:18:17,969 --> 00:18:26,855 Cause I agree a hundred percent, you know, especially when you're dealing with a multifaceted client where you're dealing with, maybe you're doing their &A work, you're 219 00:18:26,855 --> 00:18:28,408 doing their tax work, you're doing. 220 00:18:28,408 --> 00:18:29,979 their IP work. 221 00:18:29,999 --> 00:18:41,075 And so you need someone, right, that not necessarily a lawyer, but someone that can manage all those different projects, find the efficiencies within that, making sure everyone in 222 00:18:41,075 --> 00:18:45,728 the team is aware of everything that's going on in order to get the best outcomes. 223 00:18:45,728 --> 00:18:47,379 And, you know, we got to get back to outcomes. 224 00:18:47,379 --> 00:18:55,980 It's all about outcomes for the client and the smart firms are going to invest in these types of roles so that they can have better outcomes. 225 00:18:55,980 --> 00:18:56,670 Yeah. 226 00:18:56,670 --> 00:18:57,071 Yeah. 227 00:18:57,071 --> 00:19:00,050 And you know, there, mean, LPM has been a thing for a long time. 228 00:19:00,050 --> 00:19:07,786 You know, we've seen, I would say 10 years ago, it was really hot and everybody was talking about it and I hear less about it now. 229 00:19:07,786 --> 00:19:10,318 Well, I heard less about it pre AI. 230 00:19:10,318 --> 00:19:15,030 I'm starting to hear a little bit more about it now through conversations like this, but I agree with you. 231 00:19:15,030 --> 00:19:26,006 It's, um, you know, even if we get away from the billable hour, the, the lawyer, the hours lawyers work are absolutely still going to be tracked. 232 00:19:26,194 --> 00:19:28,536 in detail because it's your cost basis. 233 00:19:28,536 --> 00:19:31,977 You can't measure profitability if you're not tracking your time. 234 00:19:31,977 --> 00:19:35,239 So even if the billable hour goes away, you're still tracking time. 235 00:19:35,239 --> 00:19:42,784 Maybe you don't have to worry about OCG compliance and you'll have internal, you'll have ICG, you required. 236 00:19:42,784 --> 00:19:44,905 You're going to have guidelines to manage to. 237 00:19:44,905 --> 00:19:47,846 um But yeah, I agree. 238 00:19:47,846 --> 00:19:54,750 um think the LPM role is going to really play a key part in how things play out here. 239 00:19:55,084 --> 00:19:56,875 Yeah, absolutely. 240 00:19:57,215 --> 00:20:13,292 And going back to the risk question, again, if you can start small with small projects and test those out and then go from there instead of starting like one huge thing, we're going 241 00:20:13,292 --> 00:20:17,263 to turn everything into AI or that's too risky. 242 00:20:17,263 --> 00:20:23,852 So there are ways to reduce risk, but at the same time, allow for innovation and experimentation. 243 00:20:23,852 --> 00:20:24,682 Yeah. 244 00:20:24,682 --> 00:20:33,806 You and I talked about kind of the success paradox and how profitable Big Law has been and how sticky that's made the status quo. 245 00:20:33,806 --> 00:20:42,810 um I would say just as recently as six months ago, I would have said that is really going to hold us back. 246 00:20:42,810 --> 00:20:46,301 But I'm starting to see a little bit of a shift just recently. 247 00:20:46,301 --> 00:20:52,546 Like, you know, I'm seeing firms make some big moves and really seem to be doubling. 248 00:20:52,546 --> 00:20:54,213 doubling down and investing. 249 00:20:54,213 --> 00:20:54,563 don't know. 250 00:20:54,563 --> 00:20:57,334 Are you seeing a similar trend? 251 00:20:58,242 --> 00:21:06,746 Yeah, mean, there's a lot, especially the big firms, they're making a lot of noise about big AI initiatives or big innovation initiatives. 252 00:21:06,746 --> 00:21:14,630 uh One of them ah just bought an AI company and had the founder become their AI lead. 253 00:21:14,630 --> 00:21:22,414 ah There's some big firms working with McKinsey or some of the large big four. 254 00:21:22,414 --> 00:21:23,494 uh 255 00:21:24,524 --> 00:21:29,075 And I think that's great, but I don't necessarily think that's the right move for everyone. 256 00:21:29,075 --> 00:21:36,337 Because at the end of the day, like no one knows the work you do better than the people that do the work themselves. 257 00:21:36,337 --> 00:21:46,580 So if you're going to outsource everything to a consultant to come up with a strategy and you're not really involving the people that are doing the day to day work, I don't know 258 00:21:46,580 --> 00:21:49,681 that it's going to be the most effective use of your dollars. 259 00:21:49,681 --> 00:21:53,062 ah I think there's a, it's going to be a combination. 260 00:21:53,062 --> 00:21:54,360 ah 261 00:21:54,360 --> 00:22:08,944 But especially for mid-size firms, uh which don't have the financial resources to hire the McKinsey's and the AEYs, figuring out how to do it with your own team, maybe someone that 262 00:22:08,944 --> 00:22:10,865 can come and help your team get it. 263 00:22:10,865 --> 00:22:20,927 But at the end of the day, it's got to be driven by your team, the people that know your work, know where the problems are, know where you can uh accelerate things and how you can 264 00:22:20,927 --> 00:22:23,884 create workflows that make more sense. 265 00:22:23,884 --> 00:22:24,794 Yeah. 266 00:22:24,955 --> 00:22:32,284 And we also talked a little bit about what it means to be a challenger firm in this new era. 267 00:22:32,284 --> 00:22:37,970 know, like what, what advantages and we've heard of like, you know, Garfield across the pond. 268 00:22:37,970 --> 00:22:41,454 That's, think it's like automated kind of small claims matters. 269 00:22:41,454 --> 00:22:45,428 And now there's Crosby here in the U S that's I think still 270 00:22:45,428 --> 00:22:50,664 in semi stealth mode but we're hearing stuff about them. 271 00:22:50,664 --> 00:23:00,253 What advantages do you think this new era or disadvantages this new AI era presents for challenger firms? 272 00:23:00,480 --> 00:23:01,540 It's interesting, right? 273 00:23:01,540 --> 00:23:10,983 Because it used to be the smaller firms couldn't compete with the big firms, especially when it comes to like bet the company type of litigation, right? 274 00:23:10,983 --> 00:23:12,494 Because they just didn't have the resources. 275 00:23:12,494 --> 00:23:15,835 They didn't have 100 associates they could throw at. 276 00:23:15,835 --> 00:23:19,716 But now with technology, with AI, that's the big equalizer. 277 00:23:19,716 --> 00:23:21,127 You don't need 100 associates. 278 00:23:21,127 --> 00:23:25,550 You just need someone that really knows how to use the technology to 279 00:23:25,550 --> 00:23:28,990 know, consume the vast amounts of data and synthesizes. 280 00:23:28,990 --> 00:23:31,290 And that's something that AI can do really well. 281 00:23:31,290 --> 00:23:36,710 Obviously you have a half human in the middle, but still, you know, it gets you a lot further. 282 00:23:36,850 --> 00:23:49,410 On the reverse side, one of the things I'm seeing, and you and I spoke about it is I'm starting to see a lot of mid to senior partners that have very deep expertises in 283 00:23:49,410 --> 00:23:55,072 particular areas of law saying, I'm done with my big firm. 284 00:23:55,072 --> 00:23:58,613 I'm going to leave and I'm going to take my expertise and monetize it. 285 00:23:58,613 --> 00:24:01,044 And they're doing it in two ways that I'm seeing. 286 00:24:01,044 --> 00:24:12,497 Either they are starting their own AI forward or AI first firms where they're using AI to supplement and not hire a lot of people, or they're basically going to legal tech 287 00:24:12,497 --> 00:24:14,668 companies and say, Hey, I have this knowledge. 288 00:24:14,668 --> 00:24:18,749 How can you take this knowledge and productize it and sell it? 289 00:24:18,909 --> 00:24:21,800 And so that's really interesting what's happening. 290 00:24:22,094 --> 00:24:31,932 The other thing on looking at it from the client side, one of the trends I'm starting to see, and this has just literally happened over the last month, I've had several 291 00:24:31,932 --> 00:24:46,823 conversations with people that are running, not huge Fortune 1000 companies, but mid-sized businesses that are turning to AI first to do their research so that they can then have a 292 00:24:46,823 --> 00:24:48,898 conversation with their lawyer. 293 00:24:48,898 --> 00:24:50,809 to say, hey, I did the research. 294 00:24:50,809 --> 00:24:52,720 This is what I'm thinking. 295 00:24:52,761 --> 00:24:53,641 What do you think? 296 00:24:53,641 --> 00:24:56,801 So they're not completely outsourcing the legal work to AI. 297 00:24:56,801 --> 00:24:59,546 That's clearly not the right thing to do. 298 00:24:59,546 --> 00:25:03,349 But they're using it to leverage their costs significantly. 299 00:25:03,349 --> 00:25:07,031 And some firms are saying, I don't care what your AI said. 300 00:25:07,031 --> 00:25:08,252 I'm going to do it my way. 301 00:25:08,252 --> 00:25:13,716 But other firms are saying, OK, let's work with what you got and let's refine it and give you. 302 00:25:13,716 --> 00:25:16,648 And that can save a lot of money, a lot of 303 00:25:16,814 --> 00:25:25,194 we do it like, you know, I mean, we're small, like 45 employees, but you know, we're amending our operating agreement. 304 00:25:25,194 --> 00:25:26,654 Now we're an LLC. 305 00:25:26,654 --> 00:25:31,454 This tax is a C corp, which is a little bit of an unusual structure, but that that's what it is. 306 00:25:31,454 --> 00:25:32,774 So we have an operating agreement. 307 00:25:32,774 --> 00:25:38,074 It's 45 pages long, very lots of, you know, T's and C's. 308 00:25:38,074 --> 00:25:45,594 And as part of this amendment process, I have been, um, doing a deep research. 309 00:25:45,710 --> 00:25:57,070 um, on Gemini and, uh, chat GPT 03 and asking for flag, flag all of the issues, um, you know, anything irregular in this operating agreement. 310 00:25:57,070 --> 00:26:03,650 Then I would put it, you know, me as the majority stakeholder, what are risks that I have as the majority stakeholder and a manager? 311 00:26:03,970 --> 00:26:07,370 Um, and then I had it role play. 312 00:26:07,450 --> 00:26:13,524 So, um, we have one provision in particular that we're, trying to figure out now and it 313 00:26:13,524 --> 00:26:19,559 I had it list out all the scenarios that could, where this provision could get in our way. 314 00:26:19,914 --> 00:26:25,434 And, and then I had it role play out and I said, um, okay. 315 00:26:25,434 --> 00:26:33,831 You know, one of them was like, we have a unanimous consent on any, um, amendments that need to be made to the, to the OA. 316 00:26:33,831 --> 00:26:43,028 And it highlighted one thing, well, Hey, if you've got minority partners who, maybe leave the business and you need, you want to. 317 00:26:43,028 --> 00:26:46,180 start attacking the UK market and you want to spin up a separate entity. 318 00:26:46,180 --> 00:26:46,860 Can't do it. 319 00:26:46,860 --> 00:26:52,561 um Then, you know, if we have another COVID lockdown, it listed all of these different things. 320 00:26:52,561 --> 00:26:56,446 And I was like, man, I never would have thought of so many of those things. 321 00:26:56,526 --> 00:27:03,530 And when I went to our legal counsel with that, they were impressed with all of the scenarios. 322 00:27:03,530 --> 00:27:05,601 You know, they didn't have to sit there and think of them. 323 00:27:05,601 --> 00:27:07,492 They were kind of laid out for him in advance. 324 00:27:07,492 --> 00:27:08,923 So I'm seeing it, man. 325 00:27:08,923 --> 00:27:09,552 It's real. 326 00:27:09,552 --> 00:27:13,108 Yep, yep, absolutely, absolutely. 327 00:27:13,875 --> 00:27:16,756 What about um client demand? 328 00:27:16,756 --> 00:27:28,039 know, and we talked about how AI might reduce demand through, you know, firms or companies using it internally the way I did. 329 00:27:28,039 --> 00:27:33,121 Ultimately, it's going to reduce the hours that I end up paying for. 330 00:27:33,121 --> 00:27:37,610 um But there's also a ton of unmet 331 00:27:37,610 --> 00:27:38,921 needs in the legal world. 332 00:27:38,921 --> 00:27:41,093 And I don't just mean in the A to J space. 333 00:27:41,093 --> 00:27:42,675 I mean in like the corporate space. 334 00:27:42,675 --> 00:27:50,492 Like, man, you know, there are so many things I would want um my law firm to look at where it's just out of reach. 335 00:27:50,492 --> 00:27:54,886 So, you know, are these things going to offset each other? 336 00:27:55,490 --> 00:27:56,851 Yeah, I think so. 337 00:27:56,851 --> 00:28:07,479 Look, think, you know, especially for small companies like yours or entrepreneur like me, who's, know, I mean, to be able to afford some of these fees, it's just, it's very hard to 338 00:28:07,479 --> 00:28:08,300 do, right? 339 00:28:08,300 --> 00:28:18,408 ah But once, you know, once, even once you get up and running, like you said, there's a lot of things that lawyers can't do right now because they're busy billing hours. 340 00:28:18,408 --> 00:28:21,846 What if we took that off the plate? 341 00:28:21,846 --> 00:28:33,989 and instead have them focus on not just what they're really, really knowledgeable about, but also on getting to learning more about your company and your needs and the trends in 342 00:28:33,989 --> 00:28:42,222 your industry so that they can become more intelligent and can give you the kind of advice that they can't do right now. 343 00:28:42,222 --> 00:28:48,774 It's a little bit similar to the concierge medicine model, if you recall that, right? 344 00:28:48,774 --> 00:28:50,456 Where doctors just... 345 00:28:50,456 --> 00:28:51,667 They were overwhelmed. 346 00:28:51,667 --> 00:28:54,148 They were seeing 200 patients every week. 347 00:28:54,148 --> 00:28:56,408 They could only spend half an hour with them. 348 00:28:56,408 --> 00:29:00,820 They couldn't dive deep to see, you know, they were just treating the symptoms. 349 00:29:00,820 --> 00:29:04,512 They were not looking at what's causing all of this, right? 350 00:29:04,512 --> 00:29:07,813 I see the legal industry going in that direction. 351 00:29:07,813 --> 00:29:19,926 I see a concierge model for lawyers where you're going to be paying, but you're going to be paying for a lawyer that really understands you, understands your business. 352 00:29:19,926 --> 00:29:21,517 and sees where you're going. 353 00:29:21,517 --> 00:29:31,191 And it's going to proactively give you advice, not just reactively when something goes wrong, but proactively to help you achieve your goals. 354 00:29:31,191 --> 00:29:40,214 And that is another great way that lawyers can use AI is to free them up to do that kind of client intelligence that today they don't have the time to do. 355 00:29:40,436 --> 00:29:44,158 And that is, I really like that metaphor, the concierge medicine. 356 00:29:44,158 --> 00:29:52,983 So I've been a, I've been a subscriber or consumer of, um, you know, I probably pay around five grand a year to company. 357 00:29:52,983 --> 00:29:53,723 think they're a chain. 358 00:29:53,723 --> 00:29:55,494 Maybe it's called Palm health. 359 00:29:55,834 --> 00:30:01,506 And, um, they've got an outstanding doctor there who I have access to. 360 00:30:01,506 --> 00:30:02,738 I text her. 361 00:30:02,934 --> 00:30:11,320 And you know, can send her a text message and she talks to me about like, she spends time with me and helps me figure things out. 362 00:30:11,320 --> 00:30:13,342 There are all sorts of other services. 363 00:30:13,342 --> 00:30:14,943 Like they have cryo and assault room. 364 00:30:14,943 --> 00:30:15,874 I don't use any of that. 365 00:30:15,874 --> 00:30:24,340 I, I pay that money just to have access to her and, it is, and I am happy to write the check every year. 366 00:30:24,902 --> 00:30:26,784 I have the same. 367 00:30:26,784 --> 00:30:30,998 I belong to a service called CCPHP, Castle Connolly Private Health Partnerships. 368 00:30:30,998 --> 00:30:31,458 Same thing. 369 00:30:31,458 --> 00:30:36,432 have a fantastic doctor, knows me, knows exactly everything about me. 370 00:30:36,432 --> 00:30:41,957 ah I can call him day or night or text, like you said. 371 00:30:41,957 --> 00:30:47,722 you know, I feel and look, when you're dealing with your life, your health, what's more important, right? 372 00:30:47,722 --> 00:30:52,063 And so I think you're going to see a very similar model for law firms. 373 00:30:52,063 --> 00:31:01,487 That's a, it is such a good metaphor because if you think about how law firms have engaged with clients historically, it's been extremely reactive, right? 374 00:31:01,487 --> 00:31:05,029 When do you, when you call your lawyer, when you have a problem, right? 375 00:31:05,029 --> 00:31:12,612 It's like there's, there's very little proactive activity going on in legal today. 376 00:31:12,612 --> 00:31:16,854 Um, and moving more in that direction, I think would benefit. 377 00:31:16,950 --> 00:31:17,911 the client. 378 00:31:17,911 --> 00:31:21,943 And you know what's interesting is I use AI with my doctor, my concierge doctor. 379 00:31:21,943 --> 00:31:24,654 Like I've been getting blood tests and some other stuff. 380 00:31:24,654 --> 00:31:29,077 And the first thing I do when I get the blood test, I load it into Claude or Chad's GPT. 381 00:31:29,077 --> 00:31:34,359 Um, and it gives me good, and then her and I talk about it. 382 00:31:35,541 --> 00:31:36,561 You know? 383 00:31:37,642 --> 00:31:38,122 Yeah. 384 00:31:38,122 --> 00:31:42,955 Um, what do you think about the internal firm compensation model? 385 00:31:42,955 --> 00:31:45,606 So that's another area that I think is really 386 00:31:45,870 --> 00:31:49,079 creating a lot of friction for innovation. 387 00:31:49,079 --> 00:31:53,169 What are your thoughts on where it is today and where it needs to go? 388 00:31:53,794 --> 00:31:57,855 Well, look, again, it goes back to the billable hour model, right? 389 00:31:57,855 --> 00:32:06,202 Because if all you're getting compensated is how many hours you're billing every month, where's the room for experimentation? 390 00:32:06,202 --> 00:32:08,363 Where's the room for innovation? 391 00:32:08,363 --> 00:32:11,124 Where's the room for collaboration, right? 392 00:32:11,185 --> 00:32:17,429 You hear about cross-selling as every firm wants to get better at cross-selling. 393 00:32:17,429 --> 00:32:20,174 And I've talked to a lot of lawyers and a lot of... 394 00:32:20,174 --> 00:32:24,294 CMOs and you know what the number one issue with cross-selling is? 395 00:32:24,354 --> 00:32:26,854 Lawyers don't trust their colleagues. 396 00:32:26,854 --> 00:32:34,974 They don't trust that if they're a good lawyer, they don't trust that they're going to take care of their client and they don't know enough about their practice to really get a 397 00:32:34,974 --> 00:32:38,554 sense of when is the right time to introduce a different lawyer. 398 00:32:38,554 --> 00:32:40,574 That's the biggest challenge. 399 00:32:41,294 --> 00:32:47,850 So if we can use technology to help us at least learn 400 00:32:47,850 --> 00:32:53,872 what our colleagues are doing, what their practices entails, when might be the right time to introduce them. 401 00:32:53,872 --> 00:33:04,915 ah Again, learning more about your client and also learning more about what your firm can offer can potentially enhance significantly what you're doing for the client. 402 00:33:04,915 --> 00:33:07,736 And that should be compensated, right? 403 00:33:07,736 --> 00:33:13,964 Those types of things have to be compensated so that there's more and more of that. 404 00:33:13,964 --> 00:33:15,634 Yeah, completely agree. 405 00:33:15,634 --> 00:33:25,067 mean, the client benefits when you're stepping out of your lane and you say, hey, hold on, time out. 406 00:33:25,067 --> 00:33:30,809 Let's bring in an expert about labor and employment or intellectual property or I'm a generalist. 407 00:33:30,809 --> 00:33:35,060 And the client benefits from that, the firm benefits from it. 408 00:33:35,060 --> 00:33:42,192 um The attorney should also, and I know some firms do have a rewards mechanism for that. 409 00:33:42,192 --> 00:33:43,362 don't know how. 410 00:33:43,744 --> 00:33:47,744 It still seems like things are really closely tied to the buildable hour. 411 00:33:47,744 --> 00:33:50,363 um, and then, 412 00:33:50,363 --> 00:34:09,071 I mean, look, one example I recently wrote about this, I learned of a firm, basically uh give credits to those lawyers that spend time creating internal alerts that can explain to 413 00:34:09,071 --> 00:34:15,234 the rest of the firm developments within their practice that might have impact for other clients. 414 00:34:16,246 --> 00:34:22,371 and they're promulgating this internally as a way to teach their lawyers, hey, these things are happening. 415 00:34:22,371 --> 00:34:26,150 If you have this type of client, this might be an issue you want to bring up. 416 00:34:26,944 --> 00:34:28,074 Interesting. 417 00:34:28,375 --> 00:34:35,858 Yeah, um I've heard of innovation credits or learning credits. 418 00:34:35,858 --> 00:34:44,863 I still think when the powers that be are sitting there, I'm wondering, even if they tell you that they're equal, are they? 419 00:34:44,863 --> 00:34:46,403 know what I mean? 420 00:34:47,634 --> 00:34:50,185 I guess that's a firm by firm question. 421 00:34:50,185 --> 00:34:51,788 um 422 00:34:51,788 --> 00:34:54,319 Well, you talked about McKinsey. 423 00:34:54,319 --> 00:34:59,543 um what's interesting is there's a lot of McKinsey people making their way into law firms now. 424 00:34:59,543 --> 00:35:05,987 um You've got uh Paul Weiss just brought Christine. 425 00:35:05,987 --> 00:35:07,668 I can't pronounce her last name. 426 00:35:07,668 --> 00:35:11,810 Dasich or uh Liz Grennan at Simpson Thatcher. 427 00:35:11,810 --> 00:35:14,852 Michael Korn, I forget which firm he ended up going to. 428 00:35:14,852 --> 00:35:18,354 Alona Logvinova, she's now at Cleary. 429 00:35:18,560 --> 00:35:24,676 lot of former McKinsey people and you never saw that like five years ago, that never happened. 430 00:35:24,676 --> 00:35:25,117 Right. 431 00:35:25,117 --> 00:35:27,008 Um, so that's a good sign. 432 00:35:27,008 --> 00:35:32,804 That means firms are investing and I would assume these people are really smart that they're bringing in. 433 00:35:32,804 --> 00:35:35,687 They're not going to stick around if they're not properly empowered. 434 00:35:35,687 --> 00:35:41,993 So I would have to assume, I would have to assume they're going to really let them do their job. 435 00:35:41,994 --> 00:35:42,934 I hope. 436 00:35:43,434 --> 00:35:43,704 Yeah. 437 00:35:43,704 --> 00:35:44,215 Yeah. 438 00:35:44,215 --> 00:35:49,156 And I think, you know, I think most of them will have a positive impact. 439 00:35:49,616 --> 00:36:02,220 The thing I fear is ah if you try to look a lot of times when you bring in a McKinsey consultant, they're going to apply the McKinsey framework of the way things are, 440 00:36:02,220 --> 00:36:03,780 especially around innovation. 441 00:36:03,780 --> 00:36:09,493 And the problem is that law firms are not like other businesses, right? 442 00:36:09,493 --> 00:36:15,777 Law firms are really a confederation of small little businesses that share one letterhead. 443 00:36:15,777 --> 00:36:17,057 That's really what they are. 444 00:36:17,057 --> 00:36:27,223 So trying to impose a methodology on a confederation is not going to necessarily be well received, right? 445 00:36:27,223 --> 00:36:35,568 Try to tell the partner who's billing X amount of dollars a month that now you got to do it this way because the consultant is saying you have to do it that way. 446 00:36:35,568 --> 00:36:38,169 You're going to have outward rebellion, right? 447 00:36:38,806 --> 00:36:47,234 Yes, it's good that they're looking outside the industry, but they have to recognize that law firms are not traditional businesses. 448 00:36:47,234 --> 00:36:49,075 They operate differently. 449 00:36:49,075 --> 00:36:57,036 And so whatever innovation, change management, implementation you're going to do has to recognize those differences. 450 00:36:57,036 --> 00:36:58,636 Yeah, 100%. 451 00:36:58,636 --> 00:37:00,007 And you know what? 452 00:37:00,347 --> 00:37:02,228 There needs to be recognition on the firm side. 453 00:37:02,228 --> 00:37:05,449 There also needs to be recognition on the practice side. 454 00:37:05,930 --> 00:37:14,113 The bespoke, you know, artisan nature of legal service delivery is changing and they're going to have to change with it. 455 00:37:14,113 --> 00:37:18,655 And that's going to be a really hard shift, especially for folks that are later in their career. 456 00:37:18,655 --> 00:37:23,337 But um whether they like it or not, this change is coming and it's going to require. 457 00:37:23,337 --> 00:37:27,038 um It's going to be interesting to see how 458 00:37:27,178 --> 00:37:32,353 how the practice evolves in this new era. 459 00:37:32,867 --> 00:37:33,468 Agreed. 460 00:37:33,468 --> 00:37:41,373 And I think as with everything illegal, some firms will get out there and be innovative and others will just be following. 461 00:37:41,373 --> 00:37:43,522 And that's just the reality. 462 00:37:43,522 --> 00:37:45,764 Yeah. 463 00:37:46,346 --> 00:37:51,792 When you and I talked, you had mentioned micro changes over the big McKinsey model. 464 00:37:51,792 --> 00:37:53,684 Tell me what you meant by that. 465 00:37:54,978 --> 00:37:57,950 Yeah, so little changes can make all the big difference. 466 00:37:57,950 --> 00:38:13,568 So for example, ah know, ah every big firm has huge budgets that they allocate to, ah you know, season tickets to the Yankees or the Mets or tickets to specific concerts or, you 467 00:38:13,568 --> 00:38:24,436 know, so what if we change one thing about that and said, you know, those people that bring another partner to from a different practice group, they get priority. 468 00:38:24,436 --> 00:38:26,687 over those tickets, right? 469 00:38:26,728 --> 00:38:34,053 You're ingraining those cross-sell opportunities around, instead of forcing them down their throat, you're saying, hey, you want these tickets? 470 00:38:34,053 --> 00:38:36,855 Bring a couple of people from other practices. 471 00:38:36,855 --> 00:38:38,316 Now you can sit down with a client. 472 00:38:38,316 --> 00:38:44,000 ah So little changes like that ah can make a huge difference. 473 00:38:44,000 --> 00:38:53,007 ah And that's what I'm talking about, is respecting the culture at a firm and making changes that almost don't even feel like 474 00:38:53,007 --> 00:39:01,174 You're trying to force a cultural change, but it's more in a way that is going to encourage your lawyers to do those types of things. 475 00:39:01,174 --> 00:39:04,196 Yeah, using the carrot instead of the stick. 476 00:39:05,137 --> 00:39:06,078 Yeah. 477 00:39:06,078 --> 00:39:09,280 Well, what about data hygiene? 478 00:39:09,280 --> 00:39:16,306 So I have had a front row seat to the law firm data world for a very long time. 479 00:39:16,306 --> 00:39:20,869 And I've seen firsthand how, in what poor shape it is usually in. 480 00:39:20,869 --> 00:39:24,032 um there's been an underinvestment. 481 00:39:24,032 --> 00:39:27,174 And part of this is, um 482 00:39:27,618 --> 00:39:32,449 The vast overwhelming majority of law firm data is unstructured, right? 483 00:39:32,449 --> 00:39:33,659 It's documents, right? 484 00:39:33,659 --> 00:39:34,300 It's emails. 485 00:39:34,300 --> 00:39:36,100 It's everything that lives in the DMS. 486 00:39:36,100 --> 00:39:41,162 Like, I don't know what the ratio is, probably 10 to 1, unstructured to structured. 487 00:39:42,102 --> 00:39:55,246 But they have lots of structured data now, too, especially as um systems have evolved and become more, there's been more rigor applied, especially like in the LPM world. 488 00:39:55,246 --> 00:39:56,268 um 489 00:39:56,268 --> 00:40:02,262 you know, and outcomes and matter classification and all those things that happen in the, in the, in the PMS. 490 00:40:02,262 --> 00:40:13,228 But, you know, I don't know, given where, and know law firms and vendors are out there working hard to bridge the gap, but given where our law firms are today, I mean, how would 491 00:40:13,228 --> 00:40:16,994 you rate big laws readiness to adopt AI? 492 00:40:17,984 --> 00:40:29,160 I feel like uh most big law firms are in better shape than if you look at mid-size firms. 493 00:40:29,160 --> 00:40:39,385 Mid-size firms for the most part are a disaster when it comes to data governance and data ah cleanliness. 494 00:40:39,385 --> 00:40:41,867 uh They just don't have the data. 495 00:40:41,867 --> 00:40:47,690 They don't collect the data or if they do, collecting it in spreadsheets or outlook boxes. 496 00:40:47,790 --> 00:40:50,292 places where it's very inaccessible, right? 497 00:40:50,292 --> 00:41:01,310 I feel like big law is starting to make an investment in not just making sure that data is accessible, ah because that's the other thing too, is you can have data in a lot of 498 00:41:01,310 --> 00:41:07,505 different silos and that makes it difficult, but also that the data is clean and updatable. 499 00:41:07,505 --> 00:41:14,766 ah And so I've seen firms starting to invest in those types of data enrichment. 500 00:41:14,766 --> 00:41:18,008 uh resources that makes your data up to date complete. 501 00:41:18,008 --> 00:41:21,770 uh But it goes back to processes, right? 502 00:41:21,770 --> 00:41:26,242 You can adapt as much technology as you want and implement it. 503 00:41:26,242 --> 00:41:39,090 But if you don't have those processes that take into account how a matter comes in, how it's dealt with and assigns taxonomy and data structure across it, it's going to be very 504 00:41:39,090 --> 00:41:43,622 difficult to have data that is meaningful from an AI perspective. 505 00:41:43,778 --> 00:41:44,638 Yeah. 506 00:41:45,040 --> 00:41:46,941 Yeah, that makes a lot of sense. 507 00:41:47,542 --> 00:41:53,469 and know we're almost out of time, but I, it was one other topic I wanted to kick around with you a little bit. 508 00:41:53,469 --> 00:42:02,619 Um, when you and I spoke last time, we, talked about, know, the billable hour is a, is a revenue measure, right? 509 00:42:02,619 --> 00:42:05,762 And, that's really the yardstick. 510 00:42:06,174 --> 00:42:09,076 It's ultimately, it's a revenue measure. 511 00:42:09,157 --> 00:42:17,944 And I mean, the reality is profitability is what drives shareholder value. 512 00:42:17,944 --> 00:42:31,584 you know, how should law firms be thinking about transitioning from revenue KPIs to profitability KPIs as we move forward here? 513 00:42:32,450 --> 00:42:34,432 I mean, that's a great question, right? 514 00:42:34,432 --> 00:42:47,403 And I actually, just, uh last week I wrote an article on LinkedIn that, you know, culture is actually the number one ah competitive advantage. 515 00:42:47,403 --> 00:42:49,845 It's the only lasting competitive advantage. 516 00:42:49,845 --> 00:43:00,514 And the reason for that is culture enables you to build those motes that make it very difficult for your competitors. 517 00:43:00,684 --> 00:43:02,195 to gain any ground. 518 00:43:02,195 --> 00:43:15,002 If you are known as a lawyer that knows their clients, knows their business, is there as a trusted advisor, as opposed to uh just there for the transactional type of uh element, 519 00:43:15,002 --> 00:43:17,213 then it's gonna be hard for them to switch, right? 520 00:43:17,213 --> 00:43:24,007 They're not gonna switch just because the firm across the street is 5 % cheaper or can do things faster. 521 00:43:24,007 --> 00:43:30,668 um So when we look at profitability, we gotta look at not just uh 522 00:43:30,668 --> 00:43:39,242 your billable hours, but more importantly, are you spending time on the things that can actually make a huge difference? 523 00:43:39,242 --> 00:43:41,283 Client retention is one of those things. 524 00:43:41,283 --> 00:43:46,774 ah Not having clients switch, expanding your business, right? 525 00:43:46,774 --> 00:43:49,066 That's the whole thing about cross-selling, right? 526 00:43:49,066 --> 00:43:57,358 Not focused on how many hours you're billing, but how many dollars or what share of wallet do you have with a particular client, right? 527 00:43:57,358 --> 00:44:01,082 ah Maybe you're doing work for Citibank, but you're only doing their tax work. 528 00:44:01,082 --> 00:44:04,887 Maybe you want to be doing their real estate work or their energy work. 529 00:44:04,887 --> 00:44:06,108 How do you get to that? 530 00:44:06,108 --> 00:44:17,862 So being able to innovate and figure out how you can get more of that share of the pie, that's going to lead to profitability and not to your traditional billable hours. 531 00:44:17,964 --> 00:44:19,955 Yeah, that makes a lot of sense. 532 00:44:19,955 --> 00:44:23,836 um Well, listen, I really appreciate you taking time. 533 00:44:23,836 --> 00:44:27,977 I know we had some scheduling hiccups along the way, which was totally my fault. 534 00:44:27,977 --> 00:44:31,178 um But I'm glad we got it done. 535 00:44:31,259 --> 00:44:34,108 Before we go, how do people find out more? 536 00:44:34,108 --> 00:44:35,760 You've written some really good articles. 537 00:44:35,760 --> 00:44:36,640 I've enjoyed. 538 00:44:36,640 --> 00:44:38,161 I've read most of them. 539 00:44:38,161 --> 00:44:42,132 How do folks find out more about you and your what you write about? 540 00:44:42,284 --> 00:44:46,982 Yeah, just go to LinkedIn, Guy Alvarez, or go to my website, guyalvariz.com. 541 00:44:46,982 --> 00:44:48,583 They can find it there. 542 00:44:49,226 --> 00:44:50,306 But yeah, thank you, Ted. 543 00:44:50,306 --> 00:44:52,102 It's been a pleasure talking to you. 544 00:44:52,102 --> 00:44:53,573 I really enjoyed it. 545 00:44:53,573 --> 00:44:57,150 And I look forward uh to continuing the conversation. 546 00:44:57,150 --> 00:44:57,673 Awesome. 547 00:44:57,673 --> 00:44:58,395 Good stuff. 548 00:44:58,395 --> 00:45:00,561 All right, we'll have a great rest of the week. 549 00:45:00,910 --> 00:45:02,227 All right, thanks. 00:00:04,021 Guy, how are you this afternoon? 2 00:00:04,854 --> 00:00:06,234 Hey Ted, how are you? 3 00:00:06,234 --> 00:00:07,491 It's great to be here. 4 00:00:07,491 --> 00:00:11,433 Yeah, I appreciate you taking a few minutes to chat with us. 5 00:00:11,433 --> 00:00:24,113 um You and I had a similar thought process around a couple of posts that were floating around LinkedIn and we had a chat and I was like, man, we got to have a chat on the 6 00:00:24,113 --> 00:00:26,925 podcast because there's too much good stuff here. 7 00:00:26,925 --> 00:00:34,600 um But before we jump into the agenda, why don't you tell us a little bit about who you are, what you do and where you do it? 8 00:00:35,150 --> 00:00:36,991 Sure, I'm happy to do that. 9 00:00:37,131 --> 00:00:39,633 So I am Guy Alvarez. 10 00:00:39,633 --> 00:00:44,670 I am a former practicing attorney or a recovering lawyer, as they say. 11 00:00:44,670 --> 00:00:49,418 I practiced international trade law for the first five years of my career. 12 00:00:49,418 --> 00:00:55,762 But for the last 20, 25 years, I've been involved in legal technology and digital marketing. 13 00:00:55,762 --> 00:01:03,648 ah Most recently, I started and founded a company called Good to Be Social in 2012. 14 00:01:03,650 --> 00:01:08,830 that was acquired by a private equity based company in August of 2023. 15 00:01:08,830 --> 00:01:20,679 I stayed on for an extra year and then for the last six months or so, I've been focusing on helping law firms uh leverage AI for growth. 16 00:01:20,679 --> 00:01:24,258 And that is where we run into the culture issue. 17 00:01:24,258 --> 00:01:25,278 Yeah. 18 00:01:25,579 --> 00:01:25,849 Yeah. 19 00:01:25,849 --> 00:01:27,189 We're going to talk a lot about that. 20 00:01:27,189 --> 00:01:29,740 And this is a topic that I write a lot about. 21 00:01:29,740 --> 00:01:43,526 And it's an area of passion for me because, you know, we are being very intentional at InfoDash about the type of culture that we create and defining core values and really 22 00:01:43,526 --> 00:01:44,426 living by them. 23 00:01:44,426 --> 00:01:50,509 um We do, you know, in our hiring process, we screen candidates based on them. 24 00:01:50,509 --> 00:01:54,040 When we do our performance reviews, we evaluate 25 00:01:54,040 --> 00:01:56,952 performance based on these core values. 26 00:01:56,952 --> 00:02:04,938 And when we exit somebody from the organization, it's uh usually a core values conversation. 27 00:02:05,839 --> 00:02:09,422 it's something that I think really matters. 28 00:02:09,422 --> 00:02:20,170 um it's not that big law necessarily has a bad culture, but it's not one that is well aligned for 29 00:02:20,394 --> 00:02:25,077 adopting new technologies and change and innovation. 30 00:02:25,674 --> 00:02:30,741 And we're starting to see a little bit of shift there and that's really good. 31 00:02:30,741 --> 00:02:41,301 you know, I hate to take the negative perspective as much as I do, but you know, we are at InfoDash, we are solely dependent on law firms. 32 00:02:41,301 --> 00:02:44,110 100 % of our business is our law firms. 33 00:02:44,110 --> 00:02:46,611 We don't have one non-law firm client. 34 00:02:46,732 --> 00:02:50,074 And I really want to see the industry do well. 35 00:02:50,094 --> 00:03:03,548 Um, you know, I have a, I have a dog in the fight and, um so, but yeah, tell me just kind of in broad brushstrokes, like how you see the big picture with innovation and law firms, 36 00:03:03,548 --> 00:03:06,210 and then we'll jump into some specifics. 37 00:03:06,668 --> 00:03:14,301 Yeah, so I think the problem with innovation in law firms is the culture. 38 00:03:14,301 --> 00:03:27,317 And when I talk about culture, if you talk about the foundation of modern law firms, especially big law, ah there's three things that I think run against the current of having 39 00:03:27,317 --> 00:03:29,728 an innovation-led culture. 40 00:03:29,728 --> 00:03:32,650 Number one is the hierarchical model. 41 00:03:32,650 --> 00:03:33,792 uh 42 00:03:33,792 --> 00:03:40,267 very uh heavy at the bottom, a lot of associates, uh fewer partners, equity partners. 43 00:03:40,408 --> 00:03:49,095 And in order to get ahead, you've got to put in your billable hours and eventually, hopefully, you get invited to become an equity partner. 44 00:03:49,095 --> 00:03:50,796 So that's number one. 45 00:03:50,836 --> 00:03:53,258 Number two is the business model, right? 46 00:03:53,258 --> 00:04:02,670 The billable hour uh is a big impediment to innovation because if all you're doing is worrying about 47 00:04:02,670 --> 00:04:14,453 how many hours you're billing, there's not much room to do other things that are important when it comes to innovation and having a culture of collaboration and experimentation. 48 00:04:14,533 --> 00:04:28,137 And then the third is something that is ingrained in all lawyers, the risk averseness, being very, very cautious about doing things, being super conservative, which of course, 49 00:04:28,137 --> 00:04:32,818 uh legal industry is a regulated industry and it's important to be careful. 50 00:04:32,908 --> 00:04:47,048 But to what extent do you uh leverage uh being careful and conservative, and how much does that play against the ability to be innovative and experimenting? 51 00:04:47,048 --> 00:04:57,078 So I think those three things, which is traditionally the foundation of most law firms, are things that are running against the current when it comes to culture and innovation. 52 00:04:57,078 --> 00:04:58,018 Yeah. 53 00:04:58,059 --> 00:05:06,928 So, you know, to your billable hour point, one common rebuttal to, or guess rebuttal is not the right word. 54 00:05:06,928 --> 00:05:16,498 uh One common solution, I guess, to how the price, the new pricing model will work in this world of AI is outcome based pricing. 55 00:05:16,639 --> 00:05:20,422 And uh my first business, I've been an entrepreneur for 30. 56 00:05:20,590 --> 00:05:24,332 three years now and my first business was a collection agency. 57 00:05:24,332 --> 00:05:28,394 So we were an outcome based, oh we had outcome based pricing. 58 00:05:28,394 --> 00:05:35,877 We worked on a contingency and you know, if the, if the delinquency of the debt was less than six months, we got a third. 59 00:05:35,877 --> 00:05:40,439 If it was more than six months, we got half and uh it was truly outcome based. 60 00:05:40,439 --> 00:05:44,641 And there are, there are real examples in legal where they have similar models. 61 00:05:44,641 --> 00:05:46,182 um 62 00:05:46,922 --> 00:05:51,846 I have a, uh this is a little bit of a hot button, this outcome based pricing for me. 63 00:05:51,846 --> 00:05:56,490 uh I attended an inside practice event, financial innovation. 64 00:05:57,011 --> 00:05:59,413 That was the main theme. 65 00:05:59,453 --> 00:06:01,025 And I heard really good dialogue. 66 00:06:01,025 --> 00:06:08,972 So they had some GCs, they had a guy from, from Ford there and a couple of other inside folks and all the pricing people. 67 00:06:08,972 --> 00:06:14,286 And they were really mixing it up in a good way, like debating topics and 68 00:06:14,304 --> 00:06:19,767 So I have a little bit of experience to share with non-legal outcome-based pricing. 69 00:06:19,767 --> 00:06:20,267 So in St. 70 00:06:20,267 --> 00:06:27,480 Louis here, all the plumbing companies have apparently gotten together and decided they no longer work on time and materials. 71 00:06:27,480 --> 00:06:32,683 They do fixed fee outcome-based jobs. 72 00:06:32,683 --> 00:06:39,926 So, um you know, at first I was like, okay, this seems like just a way to create. 73 00:06:39,976 --> 00:06:41,807 lack of transparency into. 74 00:06:41,807 --> 00:06:48,472 So I figured out I had a big job done here and they replaced the section of sewer pipe to fix a leak. 75 00:06:48,732 --> 00:06:54,216 And my interpretation of what the outcome was, it was the leak was going to stop. 76 00:06:54,216 --> 00:06:54,927 Well, guess what? 77 00:06:54,927 --> 00:06:56,718 They replaced the wrong section. 78 00:06:56,718 --> 00:07:02,642 It was further upstream where my kitchen sink tied in and they had to knock out some drywall. 79 00:07:02,642 --> 00:07:08,746 So they didn't sell me an outcome of, they said, no, the outcome was we replaced the section of pipe. 80 00:07:09,120 --> 00:07:12,291 And I'm like, yeah, that's not, that's not how I read it at all. 81 00:07:12,291 --> 00:07:22,510 So we went back and forth and I had another job by the same company where they replaced a hose bib and the guy was here 45 minutes and the job was $450. 82 00:07:22,716 --> 00:07:24,106 There's almost no materials. 83 00:07:24,106 --> 00:07:27,557 You can go get a hose bib from Home Depot for 12 bucks. 84 00:07:27,598 --> 00:07:29,519 They were charging me 450 an hour. 85 00:07:29,519 --> 00:07:31,049 So it really bothered me. 86 00:07:31,049 --> 00:07:33,020 It really pissed me off to be candid. 87 00:07:33,020 --> 00:07:37,262 And so now I'm trying, I'm, I'm no longer going to do business with them. 88 00:07:37,262 --> 00:07:38,222 had another 89 00:07:38,222 --> 00:07:40,163 Plumbing company out, same thing. 90 00:07:40,324 --> 00:07:47,800 So um there have been no efficiencies in that world that really have driven this trend. 91 00:07:47,800 --> 00:07:51,243 It's just a way to reduce transparency. 92 00:07:51,243 --> 00:07:54,675 Then they can charge you whatever they want per hour. 93 00:07:54,675 --> 00:08:03,432 I'm wondering how are we going to avoid that scenario in legal when we move to outcome-based pricing? 94 00:08:04,576 --> 00:08:07,218 It's not, there's not an easy answer. 95 00:08:07,218 --> 00:08:17,487 And I actually, I was speaking a couple of weeks ago with a friend of mine who's a partner at Cooley and we're having exactly this conversation, you know, and he said, goes, it's 96 00:08:17,487 --> 00:08:28,006 really hard for me to figure out, you know, what to charge based on an outcome, because every outcome could be different or the amount of work that goes into it. 97 00:08:28,006 --> 00:08:33,014 You we might think it's going to be this, this, and this, but then when we get into it, 98 00:08:33,014 --> 00:08:36,016 It's this, this, and this, and then some more. 99 00:08:36,236 --> 00:08:38,908 And so he was like, it's very hard for me. 100 00:08:38,908 --> 00:08:40,980 And I go, look, I get it. 101 00:08:40,980 --> 00:08:44,002 You I own the digital marketing agency. 102 00:08:44,182 --> 00:08:50,047 And when we gave bids to redesign websites, it was the same kind of issue, right? 103 00:08:50,047 --> 00:08:54,220 You went in there, you gave them a proposal based upon what you thought they wanted. 104 00:08:54,220 --> 00:09:00,564 And then when you start to dig in, you start to see it's much more complex or there are things that you didn't anticipate. 105 00:09:00,622 --> 00:09:05,982 And then now you're either losing money or you had to go back and say, hey, I didn't anticipate this. 106 00:09:05,982 --> 00:09:07,282 I need to charge you more. 107 00:09:07,282 --> 00:09:10,802 So there's not an easy solution to it. 108 00:09:10,902 --> 00:09:21,822 But one of the things we did at the agency is we started to basically invest in a pre-audit of the website. 109 00:09:21,822 --> 00:09:24,742 So we basically would say, hey, let us go in the back end. 110 00:09:24,742 --> 00:09:26,982 Let us see what's going on today. 111 00:09:27,362 --> 00:09:28,722 Let us do some work. 112 00:09:28,722 --> 00:09:30,132 We'll charge you. 113 00:09:30,132 --> 00:09:33,444 X amount upfront to do this audit. 114 00:09:33,444 --> 00:09:42,969 And then ah if you decide, once we find and we give you a quote, if you decide to move forward with that, we'll take whatever we charge it for the audit off the books, and then 115 00:09:42,969 --> 00:09:44,990 you just pay for that. 116 00:09:45,150 --> 00:09:49,473 And that got us closer ah to what the actual work was entailed. 117 00:09:49,473 --> 00:09:59,446 Now, it's not as easy to do in a legal sense, but I think there's opportunities to do those kinds of work where you're doing a little bit of investigation or discovery. 118 00:09:59,446 --> 00:10:05,152 charge for it and then have a better sense of what the overall project is going to cost. 119 00:10:05,152 --> 00:10:08,813 Yeah, we do the same thing here at InfoDash on the services side. 120 00:10:08,813 --> 00:10:11,724 So we give the customers an estimate upfront. 121 00:10:11,724 --> 00:10:18,046 It's based on like three hours or less of pre-sales conversation and has a very high margin of error. 122 00:10:18,046 --> 00:10:19,106 I say very high. 123 00:10:19,106 --> 00:10:25,148 Maybe that's an exaggeration, but we've had it swing 50 % in both directions. 124 00:10:25,148 --> 00:10:27,249 then, but it's the best we can do. 125 00:10:27,249 --> 00:10:29,410 If we're working for free, that's what you're going to get. 126 00:10:29,410 --> 00:10:30,430 And then... 127 00:10:30,702 --> 00:10:35,087 If you want to pay us for like an envisioning engagement where we come in and do what you talk about. 128 00:10:35,087 --> 00:10:39,051 But so then we have very early on in the project, we have an engineering phase. 129 00:10:39,051 --> 00:10:46,328 So directly after kickoff, we do engineering and then we drill down and validate all the assumptions that we made in our estimate. 130 00:10:46,328 --> 00:10:48,861 And then then we have a really solid number. 131 00:10:48,861 --> 00:10:50,061 But if custom. 132 00:10:50,095 --> 00:10:51,076 we did that as well. 133 00:10:51,076 --> 00:10:56,550 We started to do that as well where we would say, you know, this is what we think it's gonna cost. 134 00:10:56,550 --> 00:11:03,212 It's gonna be a range, but once we go in there, we'll give you a much closer cost of what it's gonna 135 00:11:03,212 --> 00:11:04,023 Yeah. 136 00:11:04,023 --> 00:11:05,865 So outcome based pricing. 137 00:11:05,865 --> 00:11:08,747 Here's another curve ball. 138 00:11:08,747 --> 00:11:09,989 Let's kick around a little bit. 139 00:11:09,989 --> 00:11:11,890 So value based pricing. 140 00:11:11,890 --> 00:11:17,476 So another thing I've heard as a potential solution is value based pricing. 141 00:11:17,476 --> 00:11:21,740 And that sounds great on paper, but let's use the plumbing metaphor for a minute. 142 00:11:21,740 --> 00:11:28,486 So what value did the plumber who fixed my sewer pipe delivered to me really? 143 00:11:28,696 --> 00:11:30,647 tens of thousands of dollars, right? 144 00:11:30,647 --> 00:11:36,608 Because I actually know what it costs when my basement floods, because it did about nine months ago. 145 00:11:36,608 --> 00:11:39,609 um It cost me about 45 grand. 146 00:11:39,829 --> 00:11:50,453 And um now if they were to say, well, we'll charge you 20 % of that, I would fall back to, it's a supply and demand question. 147 00:11:50,453 --> 00:11:55,514 I'm going to get some more bids on this because it's not just the value that you... 148 00:11:55,522 --> 00:12:06,868 You can't just take an arbitrary piece of the value that you're creating because you still have supply and demand dynamics that, that roll into the equation on the buy side. 149 00:12:06,868 --> 00:12:14,132 So, you know, I, again, there's no easy answers here, but you know, outcome based pricing, value based pricing, not saying it's not possible. 150 00:12:14,132 --> 00:12:25,388 Both actually already happened in legal today, but, um, you know, as a, but just taking that paradigm and it's more complicated than that, I guess, is 151 00:12:25,388 --> 00:12:26,287 the way I see it. 152 00:12:26,287 --> 00:12:27,583 I don't know, how about you? 153 00:12:28,374 --> 00:12:28,975 Yeah. 154 00:12:28,975 --> 00:12:34,316 mean, look, neither of these choices or pricing models are easy. 155 00:12:34,316 --> 00:12:44,439 But uh I think the billable hour model is broken and it's going to need to be replaced by something else. 156 00:12:44,439 --> 00:12:50,021 So you might as well put in the work and find out what's going to work best for you. 157 00:12:50,301 --> 00:12:54,042 I think a lot of the things that lawyers do today 158 00:12:54,122 --> 00:13:06,867 are going to end up being outsourced to non-legal entities, uh things that don't require a high degree of knowledge or high degree of technical expertise. 159 00:13:06,867 --> 00:13:14,441 And so then if you're only left with those types of things, then it really becomes, you know, what value do you provide? 160 00:13:14,441 --> 00:13:22,804 And the knowledge that you have as a lawyer that has a lot of experience in a particular thing, that may be, you know, 161 00:13:22,954 --> 00:13:34,504 more expensive than you're charging by the hour now, but you're also not paying for all the other stuff that a machine could do or outsourcing it to India or something like that. 162 00:13:34,504 --> 00:13:36,646 um 163 00:13:36,659 --> 00:13:36,949 Yeah. 164 00:13:36,949 --> 00:13:39,109 And the firm has to take some risk. 165 00:13:39,109 --> 00:13:42,251 you know, if you're gonna just, just like the plumbing company has to take some risks. 166 00:13:42,251 --> 00:13:47,283 Hey man, if you replace the wrong section of pipe, you come back and you do the rest for free. 167 00:13:47,283 --> 00:13:50,634 And that's not what, that's not the service that, that I got. 168 00:13:50,634 --> 00:13:56,178 And I'm, pretty hot on that now uh at the moment, but it... 169 00:13:56,178 --> 00:13:57,598 hear you. 170 00:13:58,175 --> 00:14:04,861 really made me think a lot about the value and the outcome-based pricing, but I got us a little off track. 171 00:14:04,861 --> 00:14:19,633 um You mentioned risk aversion when we first started, and that is a very uh rampant, I guess, posture in legal. 172 00:14:20,598 --> 00:14:24,979 Innovation really requires risk taking because it's a process of trial and error. 173 00:14:24,979 --> 00:14:27,430 If you're not failing, then you're not innovating. 174 00:14:27,430 --> 00:14:28,320 It's that simple. 175 00:14:28,320 --> 00:14:31,179 mean, it's trial and error. 176 00:14:31,179 --> 00:14:32,361 You're trying new things. 177 00:14:32,361 --> 00:14:34,232 You're breaking new ground. 178 00:14:34,232 --> 00:14:37,863 And in order to do that, you're going to make mistakes. 179 00:14:37,863 --> 00:14:46,885 um yeah, I mean, how do you see this tension between risk aversion and the need to innovate? 180 00:14:46,885 --> 00:14:49,376 How do you see this playing out in big law? 181 00:14:50,030 --> 00:14:58,655 So again, the easy thing is to say, ah it's too risky, we're not going to try it. 182 00:14:58,655 --> 00:15:00,696 We don't know what we don't know. 183 00:15:00,856 --> 00:15:12,483 And what you have to think about is, fine, if you're going to have that mindset, ah you can have that mindset, but you're going to be left behind because other firms are looking 184 00:15:12,483 --> 00:15:18,506 to innovate and are being ah able to take some risks. 185 00:15:18,598 --> 00:15:24,723 And the way to handle risk is really to start small and to start with small experiments, right? 186 00:15:24,723 --> 00:15:31,509 ah Pick the things that we're talking about AI, for example, pick things that are not necessarily client facing, right? 187 00:15:31,509 --> 00:15:40,857 Maybe more internal processes, you your marketing, your business development activity, your client intelligence, things that help you become more aware of what your clients 188 00:15:40,857 --> 00:15:42,678 wants and needs are. 189 00:15:43,099 --> 00:15:46,478 And once you get a little bit of traction going with that and 190 00:15:46,478 --> 00:15:51,078 then you can start to go out with some of the client-facing type of things. 191 00:15:51,538 --> 00:15:59,038 But to just say, it's too risky, we're not going to try it, to me, the opportunity cost is humongous. 192 00:15:59,378 --> 00:16:04,364 And not being able to do that is going to end up costing you a lot. 193 00:16:04,364 --> 00:16:14,138 Yeah, I think the model that you mentioned, listen, there are a very finite number of ways to tackle unknowns in the project world. 194 00:16:14,278 --> 00:16:21,601 And, you know, kind of what we do, I think is going to be the answer for stuff that doesn't fit neatly in a box. 195 00:16:21,601 --> 00:16:24,738 And that is, you know, maybe a... 196 00:16:24,782 --> 00:16:30,305 pre-sales conversation, you know, and maybe this is a pre-engagement conversation for a lawyer. 197 00:16:30,305 --> 00:16:34,947 They come in, they ask a set of questions, they get a general sense of what's needed here. 198 00:16:34,968 --> 00:16:46,214 And then they build an estimate and with a certain set of assumptions, and then they dig in deeper and actually do what we call like an engineering phase, or maybe they actually 199 00:16:46,214 --> 00:16:48,615 start the execution of the matter. 200 00:16:48,615 --> 00:16:54,698 But in order to not get hurt, have to fix cost, fixed price requires fixed scope. 201 00:16:54,742 --> 00:16:58,645 And fixed scope requires management and project management. 202 00:16:58,645 --> 00:17:03,949 Law firms are notoriously not good at this on the practice side. 203 00:17:03,949 --> 00:17:09,693 We have some clients that are as good at project management as we are, and that's all we do are projects. 204 00:17:09,693 --> 00:17:15,417 So it seems like that's, it's going to have to play out for the stuff that doesn't fit neatly in a box. 205 00:17:15,417 --> 00:17:22,542 You come in, you get a general sense and you present it to the client with some sort of a 206 00:17:22,542 --> 00:17:23,662 you know, caveats. 207 00:17:23,662 --> 00:17:30,742 And then when you actually get into the matter, you'll do a deeper dive and you know, what part of this is billable or not? 208 00:17:30,742 --> 00:17:33,922 Those are things the lawyer, the law firms got to work out. 209 00:17:33,922 --> 00:17:45,666 But you build up essentially a project and how are they going to, the big question in my mind is like, we have project managers who sit there and listen and, take notes and 210 00:17:45,666 --> 00:17:48,749 When something goes out of scope, it gets flagged immediately. 211 00:17:48,749 --> 00:17:54,755 We have a conversation and then it's either a change order or we deprioritize it. 212 00:17:54,755 --> 00:17:55,405 I don't know, man. 213 00:17:55,405 --> 00:17:58,848 I have a hard time seeing that happen on the practice of law side. 214 00:17:59,426 --> 00:18:01,107 I think it's going to happen, Ted. 215 00:18:01,107 --> 00:18:07,712 think there is going to be, you know, there's a lot of talk about AI is going to replace your job or take your job. 216 00:18:07,712 --> 00:18:09,493 I think AI is going to create a lot of jobs. 217 00:18:09,493 --> 00:18:17,969 And I think the legal project manager job is definitely a position that law firms are going to have to invest in. 218 00:18:17,969 --> 00:18:26,855 Cause I agree a hundred percent, you know, especially when you're dealing with a multifaceted client where you're dealing with, maybe you're doing their &A work, you're 219 00:18:26,855 --> 00:18:28,408 doing their tax work, you're doing. 220 00:18:28,408 --> 00:18:29,979 their IP work. 221 00:18:29,999 --> 00:18:41,075 And so you need someone, right, that not necessarily a lawyer, but someone that can manage all those different projects, find the efficiencies within that, making sure everyone in 222 00:18:41,075 --> 00:18:45,728 the team is aware of everything that's going on in order to get the best outcomes. 223 00:18:45,728 --> 00:18:47,379 And, you know, we got to get back to outcomes. 224 00:18:47,379 --> 00:18:55,980 It's all about outcomes for the client and the smart firms are going to invest in these types of roles so that they can have better outcomes. 225 00:18:55,980 --> 00:18:56,670 Yeah. 226 00:18:56,670 --> 00:18:57,071 Yeah. 227 00:18:57,071 --> 00:19:00,050 And you know, there, mean, LPM has been a thing for a long time. 228 00:19:00,050 --> 00:19:07,786 You know, we've seen, I would say 10 years ago, it was really hot and everybody was talking about it and I hear less about it now. 229 00:19:07,786 --> 00:19:10,318 Well, I heard less about it pre AI. 230 00:19:10,318 --> 00:19:15,030 I'm starting to hear a little bit more about it now through conversations like this, but I agree with you. 231 00:19:15,030 --> 00:19:26,006 It's, um, you know, even if we get away from the billable hour, the, the lawyer, the hours lawyers work are absolutely still going to be tracked. 232 00:19:26,194 --> 00:19:28,536 in detail because it's your cost basis. 233 00:19:28,536 --> 00:19:31,977 You can't measure profitability if you're not tracking your time. 234 00:19:31,977 --> 00:19:35,239 So even if the billable hour goes away, you're still tracking time. 235 00:19:35,239 --> 00:19:42,784 Maybe you don't have to worry about OCG compliance and you'll have internal, you'll have ICG, you required. 236 00:19:42,784 --> 00:19:44,905 You're going to have guidelines to manage to. 237 00:19:44,905 --> 00:19:47,846 um But yeah, I agree. 238 00:19:47,846 --> 00:19:54,750 um think the LPM role is going to really play a key part in how things play out here. 239 00:19:55,084 --> 00:19:56,875 Yeah, absolutely. 240 00:19:57,215 --> 00:20:13,292 And going back to the risk question, again, if you can start small with small projects and test those out and then go from there instead of starting like one huge thing, we're going 241 00:20:13,292 --> 00:20:17,263 to turn everything into AI or that's too risky. 242 00:20:17,263 --> 00:20:23,852 So there are ways to reduce risk, but at the same time, allow for innovation and experimentation. 243 00:20:23,852 --> 00:20:24,682 Yeah. 244 00:20:24,682 --> 00:20:33,806 You and I talked about kind of the success paradox and how profitable Big Law has been and how sticky that's made the status quo. 245 00:20:33,806 --> 00:20:42,810 um I would say just as recently as six months ago, I would have said that is really going to hold us back. 246 00:20:42,810 --> 00:20:46,301 But I'm starting to see a little bit of a shift just recently. 247 00:20:46,301 --> 00:20:52,546 Like, you know, I'm seeing firms make some big moves and really seem to be doubling. 248 00:20:52,546 --> 00:20:54,213 doubling down and investing. 249 00:20:54,213 --> 00:20:54,563 don't know. 250 00:20:54,563 --> 00:20:57,334 Are you seeing a similar trend? 251 00:20:58,242 --> 00:21:06,746 Yeah, mean, there's a lot, especially the big firms, they're making a lot of noise about big AI initiatives or big innovation initiatives. 252 00:21:06,746 --> 00:21:14,630 uh One of them ah just bought an AI company and had the founder become their AI lead. 253 00:21:14,630 --> 00:21:22,414 ah There's some big firms working with McKinsey or some of the large big four. 254 00:21:22,414 --> 00:21:23,494 uh 255 00:21:24,524 --> 00:21:29,075 And I think that's great, but I don't necessarily think that's the right move for everyone. 256 00:21:29,075 --> 00:21:36,337 Because at the end of the day, like no one knows the work you do better than the people that do the work themselves. 257 00:21:36,337 --> 00:21:46,580 So if you're going to outsource everything to a consultant to come up with a strategy and you're not really involving the people that are doing the day to day work, I don't know 258 00:21:46,580 --> 00:21:49,681 that it's going to be the most effective use of your dollars. 259 00:21:49,681 --> 00:21:53,062 ah I think there's a, it's going to be a combination. 260 00:21:53,062 --> 00:21:54,360 ah 261 00:21:54,360 --> 00:22:08,944 But especially for mid-size firms, uh which don't have the financial resources to hire the McKinsey's and the AEYs, figuring out how to do it with your own team, maybe someone that 262 00:22:08,944 --> 00:22:10,865 can come and help your team get it. 263 00:22:10,865 --> 00:22:20,927 But at the end of the day, it's got to be driven by your team, the people that know your work, know where the problems are, know where you can uh accelerate things and how you can 264 00:22:20,927 --> 00:22:23,884 create workflows that make more sense. 265 00:22:23,884 --> 00:22:24,794 Yeah. 266 00:22:24,955 --> 00:22:32,284 And we also talked a little bit about what it means to be a challenger firm in this new era. 267 00:22:32,284 --> 00:22:37,970 know, like what, what advantages and we've heard of like, you know, Garfield across the pond. 268 00:22:37,970 --> 00:22:41,454 That's, think it's like automated kind of small claims matters. 269 00:22:41,454 --> 00:22:45,428 And now there's Crosby here in the U S that's I think still 270 00:22:45,428 --> 00:22:50,664 in semi stealth mode but we're hearing stuff about them. 271 00:22:50,664 --> 00:23:00,253 What advantages do you think this new era or disadvantages this new AI era presents for challenger firms? 272 00:23:00,480 --> 00:23:01,540 It's interesting, right? 273 00:23:01,540 --> 00:23:10,983 Because it used to be the smaller firms couldn't compete with the big firms, especially when it comes to like bet the company type of litigation, right? 274 00:23:10,983 --> 00:23:12,494 Because they just didn't have the resources. 275 00:23:12,494 --> 00:23:15,835 They didn't have 100 associates they could throw at. 276 00:23:15,835 --> 00:23:19,716 But now with technology, with AI, that's the big equalizer. 277 00:23:19,716 --> 00:23:21,127 You don't need 100 associates. 278 00:23:21,127 --> 00:23:25,550 You just need someone that really knows how to use the technology to 279 00:23:25,550 --> 00:23:28,990 know, consume the vast amounts of data and synthesizes. 280 00:23:28,990 --> 00:23:31,290 And that's something that AI can do really well. 281 00:23:31,290 --> 00:23:36,710 Obviously you have a half human in the middle, but still, you know, it gets you a lot further. 282 00:23:36,850 --> 00:23:49,410 On the reverse side, one of the things I'm seeing, and you and I spoke about it is I'm starting to see a lot of mid to senior partners that have very deep expertises in 283 00:23:49,410 --> 00:23:55,072 particular areas of law saying, I'm done with my big firm. 284 00:23:55,072 --> 00:23:58,613 I'm going to leave and I'm going to take my expertise and monetize it. 285 00:23:58,613 --> 00:24:01,044 And they're doing it in two ways that I'm seeing. 286 00:24:01,044 --> 00:24:12,497 Either they are starting their own AI forward or AI first firms where they're using AI to supplement and not hire a lot of people, or they're basically going to legal tech 287 00:24:12,497 --> 00:24:14,668 companies and say, Hey, I have this knowledge. 288 00:24:14,668 --> 00:24:18,749 How can you take this knowledge and productize it and sell it? 289 00:24:18,909 --> 00:24:21,800 And so that's really interesting what's happening. 290 00:24:22,094 --> 00:24:31,932 The other thing on looking at it from the client side, one of the trends I'm starting to see, and this has just literally happened over the last month, I've had several 291 00:24:31,932 --> 00:24:46,823 conversations with people that are running, not huge Fortune 1000 companies, but mid-sized businesses that are turning to AI first to do their research so that they can then have a 292 00:24:46,823 --> 00:24:48,898 conversation with their lawyer. 293 00:24:48,898 --> 00:24:50,809 to say, hey, I did the research. 294 00:24:50,809 --> 00:24:52,720 This is what I'm thinking. 295 00:24:52,761 --> 00:24:53,641 What do you think? 296 00:24:53,641 --> 00:24:56,801 So they're not completely outsourcing the legal work to AI. 297 00:24:56,801 --> 00:24:59,546 That's clearly not the right thing to do. 298 00:24:59,546 --> 00:25:03,349 But they're using it to leverage their costs significantly. 299 00:25:03,349 --> 00:25:07,031 And some firms are saying, I don't care what your AI said. 300 00:25:07,031 --> 00:25:08,252 I'm going to do it my way. 301 00:25:08,252 --> 00:25:13,716 But other firms are saying, OK, let's work with what you got and let's refine it and give you. 302 00:25:13,716 --> 00:25:16,648 And that can save a lot of money, a lot of 303 00:25:16,814 --> 00:25:25,194 we do it like, you know, I mean, we're small, like 45 employees, but you know, we're amending our operating agreement. 304 00:25:25,194 --> 00:25:26,654 Now we're an LLC. 305 00:25:26,654 --> 00:25:31,454 This tax is a C corp, which is a little bit of an unusual structure, but that that's what it is. 306 00:25:31,454 --> 00:25:32,774 So we have an operating agreement. 307 00:25:32,774 --> 00:25:38,074 It's 45 pages long, very lots of, you know, T's and C's. 308 00:25:38,074 --> 00:25:45,594 And as part of this amendment process, I have been, um, doing a deep research. 309 00:25:45,710 --> 00:25:57,070 um, on Gemini and, uh, chat GPT 03 and asking for flag, flag all of the issues, um, you know, anything irregular in this operating agreement. 310 00:25:57,070 --> 00:26:03,650 Then I would put it, you know, me as the majority stakeholder, what are risks that I have as the majority stakeholder and a manager? 311 00:26:03,970 --> 00:26:07,370 Um, and then I had it role play. 312 00:26:07,450 --> 00:26:13,524 So, um, we have one provision in particular that we're, trying to figure out now and it 313 00:26:13,524 --> 00:26:19,559 I had it list out all the scenarios that could, where this provision could get in our way. 314 00:26:19,914 --> 00:26:25,434 And, and then I had it role play out and I said, um, okay. 315 00:26:25,434 --> 00:26:33,831 You know, one of them was like, we have a unanimous consent on any, um, amendments that need to be made to the, to the OA. 316 00:26:33,831 --> 00:26:43,028 And it highlighted one thing, well, Hey, if you've got minority partners who, maybe leave the business and you need, you want to. 317 00:26:43,028 --> 00:26:46,180 start attacking the UK market and you want to spin up a separate entity. 318 00:26:46,180 --> 00:26:46,860 Can't do it. 319 00:26:46,860 --> 00:26:52,561 um Then, you know, if we have another COVID lockdown, it listed all of these different things. 320 00:26:52,561 --> 00:26:56,446 And I was like, man, I never would have thought of so many of those things. 321 00:26:56,526 --> 00:27:03,530 And when I went to our legal counsel with that, they were impressed with all of the scenarios. 322 00:27:03,530 --> 00:27:05,601 You know, they didn't have to sit there and think of them. 323 00:27:05,601 --> 00:27:07,492 They were kind of laid out for him in advance. 324 00:27:07,492 --> 00:27:08,923 So I'm seeing it, man. 325 00:27:08,923 --> 00:27:09,552 It's real. 326 00:27:09,552 --> 00:27:13,108 Yep, yep, absolutely, absolutely. 327 00:27:13,875 --> 00:27:16,756 What about um client demand? 328 00:27:16,756 --> 00:27:28,039 know, and we talked about how AI might reduce demand through, you know, firms or companies using it internally the way I did. 329 00:27:28,039 --> 00:27:33,121 Ultimately, it's going to reduce the hours that I end up paying for. 330 00:27:33,121 --> 00:27:37,610 um But there's also a ton of unmet 331 00:27:37,610 --> 00:27:38,921 needs in the legal world. 332 00:27:38,921 --> 00:27:41,093 And I don't just mean in the A to J space. 333 00:27:41,093 --> 00:27:42,675 I mean in like the corporate space. 334 00:27:42,675 --> 00:27:50,492 Like, man, you know, there are so many things I would want um my law firm to look at where it's just out of reach. 335 00:27:50,492 --> 00:27:54,886 So, you know, are these things going to offset each other? 336 00:27:55,490 --> 00:27:56,851 Yeah, I think so. 337 00:27:56,851 --> 00:28:07,479 Look, think, you know, especially for small companies like yours or entrepreneur like me, who's, know, I mean, to be able to afford some of these fees, it's just, it's very hard to 338 00:28:07,479 --> 00:28:08,300 do, right? 339 00:28:08,300 --> 00:28:18,408 ah But once, you know, once, even once you get up and running, like you said, there's a lot of things that lawyers can't do right now because they're busy billing hours. 340 00:28:18,408 --> 00:28:21,846 What if we took that off the plate? 341 00:28:21,846 --> 00:28:33,989 and instead have them focus on not just what they're really, really knowledgeable about, but also on getting to learning more about your company and your needs and the trends in 342 00:28:33,989 --> 00:28:42,222 your industry so that they can become more intelligent and can give you the kind of advice that they can't do right now. 343 00:28:42,222 --> 00:28:48,774 It's a little bit similar to the concierge medicine model, if you recall that, right? 344 00:28:48,774 --> 00:28:50,456 Where doctors just... 345 00:28:50,456 --> 00:28:51,667 They were overwhelmed. 346 00:28:51,667 --> 00:28:54,148 They were seeing 200 patients every week. 347 00:28:54,148 --> 00:28:56,408 They could only spend half an hour with them. 348 00:28:56,408 --> 00:29:00,820 They couldn't dive deep to see, you know, they were just treating the symptoms. 349 00:29:00,820 --> 00:29:04,512 They were not looking at what's causing all of this, right? 350 00:29:04,512 --> 00:29:07,813 I see the legal industry going in that direction. 351 00:29:07,813 --> 00:29:19,926 I see a concierge model for lawyers where you're going to be paying, but you're going to be paying for a lawyer that really understands you, understands your business. 352 00:29:19,926 --> 00:29:21,517 and sees where you're going. 353 00:29:21,517 --> 00:29:31,191 And it's going to proactively give you advice, not just reactively when something goes wrong, but proactively to help you achieve your goals. 354 00:29:31,191 --> 00:29:40,214 And that is another great way that lawyers can use AI is to free them up to do that kind of client intelligence that today they don't have the time to do. 355 00:29:40,436 --> 00:29:44,158 And that is, I really like that metaphor, the concierge medicine. 356 00:29:44,158 --> 00:29:52,983 So I've been a, I've been a subscriber or consumer of, um, you know, I probably pay around five grand a year to company. 357 00:29:52,983 --> 00:29:53,723 think they're a chain. 358 00:29:53,723 --> 00:29:55,494 Maybe it's called Palm health. 359 00:29:55,834 --> 00:30:01,506 And, um, they've got an outstanding doctor there who I have access to. 360 00:30:01,506 --> 00:30:02,738 I text her. 361 00:30:02,934 --> 00:30:11,320 And you know, can send her a text message and she talks to me about like, she spends time with me and helps me figure things out. 362 00:30:11,320 --> 00:30:13,342 There are all sorts of other services. 363 00:30:13,342 --> 00:30:14,943 Like they have cryo and assault room. 364 00:30:14,943 --> 00:30:15,874 I don't use any of that. 365 00:30:15,874 --> 00:30:24,340 I, I pay that money just to have access to her and, it is, and I am happy to write the check every year. 366 00:30:24,902 --> 00:30:26,784 I have the same. 367 00:30:26,784 --> 00:30:30,998 I belong to a service called CCPHP, Castle Connolly Private Health Partnerships. 368 00:30:30,998 --> 00:30:31,458 Same thing. 369 00:30:31,458 --> 00:30:36,432 have a fantastic doctor, knows me, knows exactly everything about me. 370 00:30:36,432 --> 00:30:41,957 ah I can call him day or night or text, like you said. 371 00:30:41,957 --> 00:30:47,722 you know, I feel and look, when you're dealing with your life, your health, what's more important, right? 372 00:30:47,722 --> 00:30:52,063 And so I think you're going to see a very similar model for law firms. 373 00:30:52,063 --> 00:31:01,487 That's a, it is such a good metaphor because if you think about how law firms have engaged with clients historically, it's been extremely reactive, right? 374 00:31:01,487 --> 00:31:05,029 When do you, when you call your lawyer, when you have a problem, right? 375 00:31:05,029 --> 00:31:12,612 It's like there's, there's very little proactive activity going on in legal today. 376 00:31:12,612 --> 00:31:16,854 Um, and moving more in that direction, I think would benefit. 377 00:31:16,950 --> 00:31:17,911 the client. 378 00:31:17,911 --> 00:31:21,943 And you know what's interesting is I use AI with my doctor, my concierge doctor. 379 00:31:21,943 --> 00:31:24,654 Like I've been getting blood tests and some other stuff. 380 00:31:24,654 --> 00:31:29,077 And the first thing I do when I get the blood test, I load it into Claude or Chad's GPT. 381 00:31:29,077 --> 00:31:34,359 Um, and it gives me good, and then her and I talk about it. 382 00:31:35,541 --> 00:31:36,561 You know? 383 00:31:37,642 --> 00:31:38,122 Yeah. 384 00:31:38,122 --> 00:31:42,955 Um, what do you think about the internal firm compensation model? 385 00:31:42,955 --> 00:31:45,606 So that's another area that I think is really 386 00:31:45,870 --> 00:31:49,079 creating a lot of friction for innovation. 387 00:31:49,079 --> 00:31:53,169 What are your thoughts on where it is today and where it needs to go? 388 00:31:53,794 --> 00:31:57,855 Well, look, again, it goes back to the billable hour model, right? 389 00:31:57,855 --> 00:32:06,202 Because if all you're getting compensated is how many hours you're billing every month, where's the room for experimentation? 390 00:32:06,202 --> 00:32:08,363 Where's the room for innovation? 391 00:32:08,363 --> 00:32:11,124 Where's the room for collaboration, right? 392 00:32:11,185 --> 00:32:17,429 You hear about cross-selling as every firm wants to get better at cross-selling. 393 00:32:17,429 --> 00:32:20,174 And I've talked to a lot of lawyers and a lot of... 394 00:32:20,174 --> 00:32:24,294 CMOs and you know what the number one issue with cross-selling is? 395 00:32:24,354 --> 00:32:26,854 Lawyers don't trust their colleagues. 396 00:32:26,854 --> 00:32:34,974 They don't trust that if they're a good lawyer, they don't trust that they're going to take care of their client and they don't know enough about their practice to really get a 397 00:32:34,974 --> 00:32:38,554 sense of when is the right time to introduce a different lawyer. 398 00:32:38,554 --> 00:32:40,574 That's the biggest challenge. 399 00:32:41,294 --> 00:32:47,850 So if we can use technology to help us at least learn 400 00:32:47,850 --> 00:32:53,872 what our colleagues are doing, what their practices entails, when might be the right time to introduce them. 401 00:32:53,872 --> 00:33:04,915 ah Again, learning more about your client and also learning more about what your firm can offer can potentially enhance significantly what you're doing for the client. 402 00:33:04,915 --> 00:33:07,736 And that should be compensated, right? 403 00:33:07,736 --> 00:33:13,964 Those types of things have to be compensated so that there's more and more of that. 404 00:33:13,964 --> 00:33:15,634 Yeah, completely agree. 405 00:33:15,634 --> 00:33:25,067 mean, the client benefits when you're stepping out of your lane and you say, hey, hold on, time out. 406 00:33:25,067 --> 00:33:30,809 Let's bring in an expert about labor and employment or intellectual property or I'm a generalist. 407 00:33:30,809 --> 00:33:35,060 And the client benefits from that, the firm benefits from it. 408 00:33:35,060 --> 00:33:42,192 um The attorney should also, and I know some firms do have a rewards mechanism for that. 409 00:33:42,192 --> 00:33:43,362 don't know how. 410 00:33:43,744 --> 00:33:47,744 It still seems like things are really closely tied to the buildable hour. 411 00:33:47,744 --> 00:33:50,363 um, and then, 412 00:33:50,363 --> 00:34:09,071 I mean, look, one example I recently wrote about this, I learned of a firm, basically uh give credits to those lawyers that spend time creating internal alerts that can explain to 413 00:34:09,071 --> 00:34:15,234 the rest of the firm developments within their practice that might have impact for other clients. 414 00:34:16,246 --> 00:34:22,371 and they're promulgating this internally as a way to teach their lawyers, hey, these things are happening. 415 00:34:22,371 --> 00:34:26,150 If you have this type of client, this might be an issue you want to bring up. 416 00:34:26,944 --> 00:34:28,074 Interesting. 417 00:34:28,375 --> 00:34:35,858 Yeah, um I've heard of innovation credits or learning credits. 418 00:34:35,858 --> 00:34:44,863 I still think when the powers that be are sitting there, I'm wondering, even if they tell you that they're equal, are they? 419 00:34:44,863 --> 00:34:46,403 know what I mean? 420 00:34:47,634 --> 00:34:50,185 I guess that's a firm by firm question. 421 00:34:50,185 --> 00:34:51,788 um 422 00:34:51,788 --> 00:34:54,319 Well, you talked about McKinsey. 423 00:34:54,319 --> 00:34:59,543 um what's interesting is there's a lot of McKinsey people making their way into law firms now. 424 00:34:59,543 --> 00:35:05,987 um You've got uh Paul Weiss just brought Christine. 425 00:35:05,987 --> 00:35:07,668 I can't pronounce her last name. 426 00:35:07,668 --> 00:35:11,810 Dasich or uh Liz Grennan at Simpson Thatcher. 427 00:35:11,810 --> 00:35:14,852 Michael Korn, I forget which firm he ended up going to. 428 00:35:14,852 --> 00:35:18,354 Alona Logvinova, she's now at Cleary. 429 00:35:18,560 --> 00:35:24,676 lot of former McKinsey people and you never saw that like five years ago, that never happened. 430 00:35:24,676 --> 00:35:25,117 Right. 431 00:35:25,117 --> 00:35:27,008 Um, so that's a good sign. 432 00:35:27,008 --> 00:35:32,804 That means firms are investing and I would assume these people are really smart that they're bringing in. 433 00:35:32,804 --> 00:35:35,687 They're not going to stick around if they're not properly empowered. 434 00:35:35,687 --> 00:35:41,993 So I would have to assume, I would have to assume they're going to really let them do their job. 435 00:35:41,994 --> 00:35:42,934 I hope. 436 00:35:43,434 --> 00:35:43,704 Yeah. 437 00:35:43,704 --> 00:35:44,215 Yeah. 438 00:35:44,215 --> 00:35:49,156 And I think, you know, I think most of them will have a positive impact. 439 00:35:49,616 --> 00:36:02,220 The thing I fear is ah if you try to look a lot of times when you bring in a McKinsey consultant, they're going to apply the McKinsey framework of the way things are, 440 00:36:02,220 --> 00:36:03,780 especially around innovation. 441 00:36:03,780 --> 00:36:09,493 And the problem is that law firms are not like other businesses, right? 442 00:36:09,493 --> 00:36:15,777 Law firms are really a confederation of small little businesses that share one letterhead. 443 00:36:15,777 --> 00:36:17,057 That's really what they are. 444 00:36:17,057 --> 00:36:27,223 So trying to impose a methodology on a confederation is not going to necessarily be well received, right? 445 00:36:27,223 --> 00:36:35,568 Try to tell the partner who's billing X amount of dollars a month that now you got to do it this way because the consultant is saying you have to do it that way. 446 00:36:35,568 --> 00:36:38,169 You're going to have outward rebellion, right? 447 00:36:38,806 --> 00:36:47,234 Yes, it's good that they're looking outside the industry, but they have to recognize that law firms are not traditional businesses. 448 00:36:47,234 --> 00:36:49,075 They operate differently. 449 00:36:49,075 --> 00:36:57,036 And so whatever innovation, change management, implementation you're going to do has to recognize those differences. 450 00:36:57,036 --> 00:36:58,636 Yeah, 100%. 451 00:36:58,636 --> 00:37:00,007 And you know what? 452 00:37:00,347 --> 00:37:02,228 There needs to be recognition on the firm side. 453 00:37:02,228 --> 00:37:05,449 There also needs to be recognition on the practice side. 454 00:37:05,930 --> 00:37:14,113 The bespoke, you know, artisan nature of legal service delivery is changing and they're going to have to change with it. 455 00:37:14,113 --> 00:37:18,655 And that's going to be a really hard shift, especially for folks that are later in their career. 456 00:37:18,655 --> 00:37:23,337 But um whether they like it or not, this change is coming and it's going to require. 457 00:37:23,337 --> 00:37:27,038 um It's going to be interesting to see how 458 00:37:27,178 --> 00:37:32,353 how the practice evolves in this new era. 459 00:37:32,867 --> 00:37:33,468 Agreed. 460 00:37:33,468 --> 00:37:41,373 And I think as with everything illegal, some firms will get out there and be innovative and others will just be following. 461 00:37:41,373 --> 00:37:43,522 And that's just the reality. 462 00:37:43,522 --> 00:37:45,764 Yeah. 463 00:37:46,346 --> 00:37:51,792 When you and I talked, you had mentioned micro changes over the big McKinsey model. 464 00:37:51,792 --> 00:37:53,684 Tell me what you meant by that. 465 00:37:54,978 --> 00:37:57,950 Yeah, so little changes can make all the big difference. 466 00:37:57,950 --> 00:38:13,568 So for example, ah know, ah every big firm has huge budgets that they allocate to, ah you know, season tickets to the Yankees or the Mets or tickets to specific concerts or, you 467 00:38:13,568 --> 00:38:24,436 know, so what if we change one thing about that and said, you know, those people that bring another partner to from a different practice group, they get priority. 468 00:38:24,436 --> 00:38:26,687 over those tickets, right? 469 00:38:26,728 --> 00:38:34,053 You're ingraining those cross-sell opportunities around, instead of forcing them down their throat, you're saying, hey, you want these tickets? 470 00:38:34,053 --> 00:38:36,855 Bring a couple of people from other practices. 471 00:38:36,855 --> 00:38:38,316 Now you can sit down with a client. 472 00:38:38,316 --> 00:38:44,000 ah So little changes like that ah can make a huge difference. 473 00:38:44,000 --> 00:38:53,007 ah And that's what I'm talking about, is respecting the culture at a firm and making changes that almost don't even feel like 474 00:38:53,007 --> 00:39:01,174 You're trying to force a cultural change, but it's more in a way that is going to encourage your lawyers to do those types of things. 475 00:39:01,174 --> 00:39:04,196 Yeah, using the carrot instead of the stick. 476 00:39:05,137 --> 00:39:06,078 Yeah. 477 00:39:06,078 --> 00:39:09,280 Well, what about data hygiene? 478 00:39:09,280 --> 00:39:16,306 So I have had a front row seat to the law firm data world for a very long time. 479 00:39:16,306 --> 00:39:20,869 And I've seen firsthand how, in what poor shape it is usually in. 480 00:39:20,869 --> 00:39:24,032 um there's been an underinvestment. 481 00:39:24,032 --> 00:39:27,174 And part of this is, um 482 00:39:27,618 --> 00:39:32,449 The vast overwhelming majority of law firm data is unstructured, right? 483 00:39:32,449 --> 00:39:33,659 It's documents, right? 484 00:39:33,659 --> 00:39:34,300 It's emails. 485 00:39:34,300 --> 00:39:36,100 It's everything that lives in the DMS. 486 00:39:36,100 --> 00:39:41,162 Like, I don't know what the ratio is, probably 10 to 1, unstructured to structured. 487 00:39:42,102 --> 00:39:55,246 But they have lots of structured data now, too, especially as um systems have evolved and become more, there's been more rigor applied, especially like in the LPM world. 488 00:39:55,246 --> 00:39:56,268 um 489 00:39:56,268 --> 00:40:02,262 you know, and outcomes and matter classification and all those things that happen in the, in the, in the PMS. 490 00:40:02,262 --> 00:40:13,228 But, you know, I don't know, given where, and know law firms and vendors are out there working hard to bridge the gap, but given where our law firms are today, I mean, how would 491 00:40:13,228 --> 00:40:16,994 you rate big laws readiness to adopt AI? 492 00:40:17,984 --> 00:40:29,160 I feel like uh most big law firms are in better shape than if you look at mid-size firms. 493 00:40:29,160 --> 00:40:39,385 Mid-size firms for the most part are a disaster when it comes to data governance and data ah cleanliness. 494 00:40:39,385 --> 00:40:41,867 uh They just don't have the data. 495 00:40:41,867 --> 00:40:47,690 They don't collect the data or if they do, collecting it in spreadsheets or outlook boxes. 496 00:40:47,790 --> 00:40:50,292 places where it's very inaccessible, right? 497 00:40:50,292 --> 00:41:01,310 I feel like big law is starting to make an investment in not just making sure that data is accessible, ah because that's the other thing too, is you can have data in a lot of 498 00:41:01,310 --> 00:41:07,505 different silos and that makes it difficult, but also that the data is clean and updatable. 499 00:41:07,505 --> 00:41:14,766 ah And so I've seen firms starting to invest in those types of data enrichment. 500 00:41:14,766 --> 00:41:18,008 uh resources that makes your data up to date complete. 501 00:41:18,008 --> 00:41:21,770 uh But it goes back to processes, right? 502 00:41:21,770 --> 00:41:26,242 You can adapt as much technology as you want and implement it. 503 00:41:26,242 --> 00:41:39,090 But if you don't have those processes that take into account how a matter comes in, how it's dealt with and assigns taxonomy and data structure across it, it's going to be very 504 00:41:39,090 --> 00:41:43,622 difficult to have data that is meaningful from an AI perspective. 505 00:41:43,778 --> 00:41:44,638 Yeah. 506 00:41:45,040 --> 00:41:46,941 Yeah, that makes a lot of sense. 507 00:41:47,542 --> 00:41:53,469 and know we're almost out of time, but I, it was one other topic I wanted to kick around with you a little bit. 508 00:41:53,469 --> 00:42:02,619 Um, when you and I spoke last time, we, talked about, know, the billable hour is a, is a revenue measure, right? 509 00:42:02,619 --> 00:42:05,762 And, that's really the yardstick. 510 00:42:06,174 --> 00:42:09,076 It's ultimately, it's a revenue measure. 511 00:42:09,157 --> 00:42:17,944 And I mean, the reality is profitability is what drives shareholder value. 512 00:42:17,944 --> 00:42:31,584 you know, how should law firms be thinking about transitioning from revenue KPIs to profitability KPIs as we move forward here? 513 00:42:32,450 --> 00:42:34,432 I mean, that's a great question, right? 514 00:42:34,432 --> 00:42:47,403 And I actually, just, uh last week I wrote an article on LinkedIn that, you know, culture is actually the number one ah competitive advantage. 515 00:42:47,403 --> 00:42:49,845 It's the only lasting competitive advantage. 516 00:42:49,845 --> 00:43:00,514 And the reason for that is culture enables you to build those motes that make it very difficult for your competitors. 517 00:43:00,684 --> 00:43:02,195 to gain any ground. 518 00:43:02,195 --> 00:43:15,002 If you are known as a lawyer that knows their clients, knows their business, is there as a trusted advisor, as opposed to uh just there for the transactional type of uh element, 519 00:43:15,002 --> 00:43:17,213 then it's gonna be hard for them to switch, right? 520 00:43:17,213 --> 00:43:24,007 They're not gonna switch just because the firm across the street is 5 % cheaper or can do things faster. 521 00:43:24,007 --> 00:43:30,668 um So when we look at profitability, we gotta look at not just uh 522 00:43:30,668 --> 00:43:39,242 your billable hours, but more importantly, are you spending time on the things that can actually make a huge difference? 523 00:43:39,242 --> 00:43:41,283 Client retention is one of those things. 524 00:43:41,283 --> 00:43:46,774 ah Not having clients switch, expanding your business, right? 525 00:43:46,774 --> 00:43:49,066 That's the whole thing about cross-selling, right? 526 00:43:49,066 --> 00:43:57,358 Not focused on how many hours you're billing, but how many dollars or what share of wallet do you have with a particular client, right? 527 00:43:57,358 --> 00:44:01,082 ah Maybe you're doing work for Citibank, but you're only doing their tax work. 528 00:44:01,082 --> 00:44:04,887 Maybe you want to be doing their real estate work or their energy work. 529 00:44:04,887 --> 00:44:06,108 How do you get to that? 530 00:44:06,108 --> 00:44:17,862 So being able to innovate and figure out how you can get more of that share of the pie, that's going to lead to profitability and not to your traditional billable hours. 531 00:44:17,964 --> 00:44:19,955 Yeah, that makes a lot of sense. 532 00:44:19,955 --> 00:44:23,836 um Well, listen, I really appreciate you taking time. 533 00:44:23,836 --> 00:44:27,977 I know we had some scheduling hiccups along the way, which was totally my fault. 534 00:44:27,977 --> 00:44:31,178 um But I'm glad we got it done. 535 00:44:31,259 --> 00:44:34,108 Before we go, how do people find out more? 536 00:44:34,108 --> 00:44:35,760 You've written some really good articles. 537 00:44:35,760 --> 00:44:36,640 I've enjoyed. 538 00:44:36,640 --> 00:44:38,161 I've read most of them. 539 00:44:38,161 --> 00:44:42,132 How do folks find out more about you and your what you write about? 540 00:44:42,284 --> 00:44:46,982 Yeah, just go to LinkedIn, Guy Alvarez, or go to my website, guyalvariz.com. 541 00:44:46,982 --> 00:44:48,583 They can find it there. 542 00:44:49,226 --> 00:44:50,306 But yeah, thank you, Ted. 543 00:44:50,306 --> 00:44:52,102 It's been a pleasure talking to you. 544 00:44:52,102 --> 00:44:53,573 I really enjoyed it. 545 00:44:53,573 --> 00:44:57,150 And I look forward uh to continuing the conversation. 546 00:44:57,150 --> 00:44:57,673 Awesome. 547 00:44:57,673 --> 00:44:58,395 Good stuff. 548 00:44:58,395 --> 00:45:00,561 All right, we'll have a great rest of the week. 549 00:45:00,910 --> 00:45:02,227 All right, thanks. -->