Jason L. Brown

[00:00:00] Jason Brown, thanks for joining me today. Well, appre-appreciate you having me, Ted. I'm looking forward to this conversation. Yeah, I am as well. We got to meet at the, I think it was at the Financial Times Innovative Lawyer Summit in London a few months ago, right? Yes, yes, absolutely. Uh, it was good, good time, uh, great food I think we had, but, uh, really just great to hear all the innovative work that the other, uh, other le-le-leaders in legal were, were doing.

Yeah. Yeah, I thought it was-- It was my first time at the event, and I was impressed. I thought it was really good content and good format. Awesome. Well, before we jump in, maybe you could just do a quick introduction, tell us a little bit about what you're doing today and your background, and then we'll jump into the agenda.

Sure. Absolutely, happy to do that. Um, as you said, my name is Jason Brown. I am currently the president and CEO of the Association of Corporate Counsel. And so for those who don't know, ACC is the largest, uh, professional association specifically directed toward in-house counsel, um, [00:01:00] throughout the world. We have roughly forty-eight thousand members.

Um, we have over sixty chapters throughout the, the, the world in over a hundred countries. Uh, before this role, I've been actively a member of the ACC for over twenty years. Um, I sat on the global board of directors and also was a chapter president at my time in Chicago. But, uh, that means that I was in-house counsel before.

And so my, my immediate prior roles was leading the, uh, legal department. I was the, uh, chief legal officer at GE Appliances, a Haier company, uh, based in Louisville, Kentucky. Uh, then prior to that, I was the GC of Dyson Americas, which is the, the global company, as you all know, vacuum cleaners, hair dryers and whatnot, and I led the, uh, the Americas legal team, um, for that.

Uh, but I've had a long career, uh, most of it is in-house at brands that you all know, uh, um, Pepsi, uh, MillerCoors, and then before that, I was in private practice. I was a litigator of doing that work. So I've been, been in the legal game for about twenty-eight years now, and, and currently now I'm on, on this side leading a professional association of lawyers.

Awesome. [00:02:00] So yeah, there's lots to talk about in terms of the, the emerging dynamics in the relationship between kind of the buy and sell side o-of legal services. There's been, there's been a lot of technological change that has been thrown at the industry, and law firms have made very public investments in infrastructure, in roles related to AI.

But what hasn't seemed to change a whole lot just yet is kind of the pricing structures around how these legal services are getting delivered. And I know that You know, through my role at X, I'm hearing more and more kind of tension building in the relationship between the GCs and the, the, their panels on, you know, when there's gonna be some cost savings associated with these investments.

You know, you're seeing Kirkland's five hundred million dollar announcement. Uh, Latham [00:03:00] just announced they're buying, you know, a bunch of Nvidia servers, and you're seeing chief AI roles pop up. You're seeing press releases around Harvey and Lagora being purchased. But the bills seem to be a little bit stuck.

The firms are still trying to kinda figure out how to deliver, uh, cost efficiencies with this new tech and with these new investments. But it feels like the kind of the power dynamic between buyer and seller are also shifting. Like, what's, what's your take on that? Yeah, Chad, I think you, you hit the nail on the head, right?

Is it's the, the pow-power dynamic, right? And trying to figure out what's gonna happen with this new technology. So just as the law firms are making these w- large sweeping investments that we've heard about into the technology to see what they can do to deliver results for clients, in-house legal departments are also moving fast.

And hos- honestly, I believe that they're adopting faster this technology in, in how they work within their own internal constructs. Uh, the, the members that we have, we've surveyed and, and spoke to, and, and we have seen a jump from, I think it was [00:04:00] twenty twenty-four and twenty twenty-four, just two, just two years ago with implementation, to now over eighty-five percent that have said that they have actively embedded and are actively using AI within, um, their legal department.

So when you look at an association our size and, you know, thousands of members which represent, you know, thousands of corporations as well, you see that that shift is, is happening. And they're doing it to make that investment for efficiency, produce productivity, all of that. Then when you shift that and you start to think about that investment, and you're w- wanting your law firms to do the same thing I mean, we all make investments for a reason, right?

To see the fruits of those things come to light, and they're not. By and large, the overwhelming majority of our members are say, telling us that they're not seeing the evidence of, of efficiencies in terms of value, cost value coming from their law firms, which I think is going to reach a powder keg moment where decisions are gonna be made, where more work is gonna be shifted in-house, inside, [00:05:00] and less and less and less is going to be sent out to the law firms if they just don't see the value.

Yeah. You know, it's-- I think there's a lot of dynamics going on. I think that legitimately there is a lot for law firms to figure out. You know, they-- their, their world rotates around the axis, which is the billable hour, right? Yeah. I mean, everything is tied to it. It's not just pricing. Yeah. It's partner track, it's internal firm compensation, it's lawyer identity, it's, it's pricing.

There's so many thing-- It's productivity, like KPIs. Everything is managed billable hour, and it's been, it's been good times for firms for, you know, fifteen years really. And- Yeah ... you know, it's, it, it is-- I do think that there is a legitimate appetite to transform, but it's really hard, and there's a lot of cultural inertia inside these firms that has to be redirected.

And, you know, but you're [00:06:00] right. Like, the, the CLOs and GCs of the world aren't gonna sit around and wait for law firms to figure it out. They're gonna tool up internally, and I, I feel like we need to be pushing this along a little bit. Yeah. No, no, agree. And listen, I, I think there, there's no shortage of, of lawyers who are in-house that understand how hard change is, right?

We get it. Change is not easy. And so what we're looking at is everybody adapting to this new technology, this new way of working, all of the things that comes with it, all the expertise that has to be built to understand how to effectively work with it. But at the same time, we all have the same type of financial pressures, right?

Where people are asking, okay, well, where is the benefit that's coming out of this investment? Where are the things that we're supposed to see? Um, and as productivity gets better, right, as efficiencies and, and that type of metrics seem to improve, well then where do we see that on the bottom line? Where do we see that in black and white, right?

Where we see a, a, a dip in the amount of cost, um, that we're, we're paying for our outside counsel, right? We wanna see value, [00:07:00] but we also wanna see volume of that work, um, being able to be achieved at a much higher and a more efficient rate, uh, than we're, we're seeing right now, and, and absolutely we, we are not seeing it.

So yeah, I think it is, to what you said, something that we've gotta wrap our arms around. Yeah. You know, I, I had a LinkedIn post about a month ago, and I mapped out what I see as kind of the nine parts of a AI transformation within law firms. I think a lot of this probably applies in-house as well, but the nine things were making the strategy visible so that you can get kind of buy-in internally, fix the data layer, own skills and knowledge.

Number four was prove efficiency to clients, and I'm gonna come back to that one 'cause I got some interesting feedback about that one. Okay. Okay. Number five was rebuild apprenticeship, because that's another, you know, thing that's gonna change dramatically. Yep. Uh, six was govern for the real world. Seven, measure ROI, also related to our conversation.

Eight, rethink pricing, related. Uh, and nine, redesign the work, [00:08:00] which is a precursor to a lot of these other things. So I asked for feedback on this. I was like, "Th- this is my take on- Mm-hmm ... the, the things that need to happen inside a law firm to, as part of this transformation." Well, I got, I got feedback mostly privately that number four, prove efficiency to clients, should maybe be reframed, and it should be prove value.

And the thinking was that, and I'd love to get your take on this, that right now we're in this transitional state between kinda current state and future state, and a lot of what we're getting right now is better quality and less cost savings, uh, which is really hard to measure, right? Yeah. Like how, how do you measure quality?

But I was surprised that there was pushback. That was the only one that got pushback. I got comments on the, on the other one, but, you know, it, it does seem like firms are a bit stuck on, like, [00:09:00] first of all, how to, how to establish a baseline. Yeah. Right? And, and then demonstrate the, the line chart from that baseline measurement start to go down.

Like, how, how do you go about doing that? But I mean, what is the, what is the consensus or what is the thought on from the inside perspective around Efficiency versus value. Are they-- Are, are, are your members feeling like they're getting a higher level of value or are, are they, they feel like it... nothing is really visible at this point?

Yeah, I think it's a mix, right? I, and I think, um, and we can go into this later. I think it really depends on how engaged and how much of that partnership the in-house has with the, with the law firm or the, or basically their partner, right? I mean, I think the more engagement, the more connectivity that there is, they do start seeing a little bit more value because the conversation that needs to be happening, they're happening right as live term, so they can understand what are the metrics, how are we measuring value.

One of the most difficult things you'll hear from a lot of, uh, in, [00:10:00] in-house attorneys, especially, uh, GCs, is, you know, the drive that we have been doing since the beginning of time is trying to prove value in our organization because we are always gonna be a cost center. So trying to demonstrate that there's value in what the legal department is bringing when they're adding for-- asking for more resources, where they're needing to provide more support and, and the, the company being pulled in 50 different directions, that value becomes really important.

While that doesn't stop and just say, "Okay, well, we don't measure the same thing when it comes to our law firms," it is the same. So we are measuring that value, and it's not easy to do. And so when you look at that, the easiest way for a corporation to measure that value is just sheer numbers, right? How much am I paying my outside law firm versus the amount of the, the, what they're delivering to me?

And, and what's the impact of what they're delivering to me in the bottom line for the company? If I feel like I'm getting essentially the same amount of, of value, the same amount of, of output that's coming in, but I'm paying more because every [00:11:00] year we pay more, right? I mean, law firms aren't cutting rates.

So because I'm paying more, now I'm starting to see less and less value. It is depreciating, and I am investing in AI myself within my own department to increase that productivity, which I see growing. Now I start to question how much of the work that I wanna push out to my law firms versus, like I said, being more strategic about the work to alternative service providers, keeping certain things in-house because I've got to show some value for this investment, and that is critically important, and I'm not getting it.

By and large, most of the law-- the, the, uh, companies that, that, that we are talking to are saying they are not seeing it. It may be on the horizon, but they're definitely not seeing it right now. Yeah. And y-you know what's interesting as well, there's another dynamic, I think, in law firms that's kind of getting in the way is there is a very strong resistance in many firms, possibly even most, around providing transparency into w-what's, what's happening [00:12:00] inside the firm.

Like, so just quick little aside, so, uh, my company, InfoDash, we're a legal intranet and extranet provider, and the extranet solution is a way in which law firms can create transparency around, you know, not just the documents, but, like, financial, uh, metrics around attorney profiles that are billing time to the matters, you know, year-to-date legal spend, spend by matter type, all this sort of stuff.

And, uh, I had an interesting conversation the other day with, um He's not the managing partner, but he's, uh, head of-- he, he's on their executive committee at an Am Law fifty firm, and I was telling him about some of these capabilities. They were already customers of the prod- like, they already own it. Like, so I'm not selling him anything.

I was trying to sell him on kind of sharing more broadly, and he was like, "Ted," he goes, "W-we used to have on our invoice at the bottom year-to-date spend, and some partner came into my office and said, 'I want you to take that off the invoice.'" He goes, [00:13:00] "That's the kind of scarcity mindset that I'm dealing with."

And you know, of course, his comment, he's a, he's a, um, big thinker and forward-looking. He was like, "Dude, they know what the year-to-date number is, right? They, they, they got spreadsheets on their side." But that, man, that is a real hurdle. The transparency piece is a real hurdle for some of these firms. Yeah, I think it's unfortunate, and, and I think it's, to your point, believe your client knows that number.

They probably know it to the penny because there's somebody outside of their department, meaning somebody in the finance department, that is reminding them of that number whether they want to or not, to say, "Hey, do you know how much you're spending on these vendors?" Uh, again, as I said, going back to that thing, being a cost center and, and having to make sure that you're proving value all the time because of that, that being critically, uh, critically important.

And I, and like I said earlier on, I do know that it is very difficult, especially with a, uh, an organization as large and diverse of a law firm where people have different practices, different, you know, mindsets, and, and way in which they, they approach their relationships with their clients, and they f- [00:14:00] they fear that large number being on the bottom of an invoice, uh, being something that may be r-raising alarm bells, uh, to general counsels or legal ops professionals or whomever's reviewing those bills, um, to think that that's gonna make them say, "Wait a minute, we need to reevaluate that."

But, but honestly- They're doing it without you, and wouldn't you rather be at the table and have that question addressed in front of you so you can discuss that, as opposed to it being a back office-- And not even a back office, but, but, but an office conversation that's happening at the law f- at the legal department's level where they're trying to evaluate whether or not they wanna continue based on this numbers.

Because believe it or not, they are having those meetings either with you or without you, and I guarantee you, you would rather be in those rooms so you can work collectively in partnership than just in allow- allowing the, the, the corporation to, to, to really decide on your efficiency and your value without you there.

Yeah. No, that makes perfect sense, and I think there's a real opportunity for firms that do take the leap around [00:15:00] transparency to differentiate themselves in, in, in the marketplace and potentially steal work from their peers if, you know, they don't wait until the client puts a gun to their head to say, "This is what I wanna see."

They lead with that. I think that would, I think that would land well with CLOs and GCs if a firm came to the table and goes, "Hey, I'm gonna put my cards on the table, and I wanna, I wanna show matter spend by type year over year, and I, I wanna show that number going down." Do, do you think that would land well with o- with on the inside legal si- uh, team?

Yeah, and I think it, it-- knowing your, your client well enough to understand how they would take that conversation, right? 'Cause it's not necessarily meaning, "Hey, I wanna just, at the end of the day, pay you less." Right? I, I think the, the focus shouldn't be that, you know, a, a legal department wants to, instead of spending a million five with their particular law firm, this particular law firm, they only wanna spend a million.

The way we're approaching things right now, especially as it relates to the [00:16:00] technology that's coming in, is let's say I still paid you a million five, but I want more productivity out of that million five. So I'm looking at that number differently. I'm not just looking at it sheerly because I want it to de-decrease.

I'm looking at it to say, what work did I receive from you for this one point five million dollars on this particular matter? Is that value added? And if I'm looking at it and I see a bunch of administrative items and I see a bunch of repetitive work- Right ... and I say, "Can this be cut?" It's not necessarily the million five.

It's actually the work that leads up to it that is not high value. Paying a mid-level associate whatever rate you wanna give based on the firm, right, to do work that isn't strategic. It's not work that is literally work that can be done through AI that provides a level of productivity that gets, that ultimately can get to the senior partners, to the, to the, the, the law firms, I'm sorry, the, uh, lawyers that we hire directly to say, "Hey, I've got this information.

Now let me give [00:17:00] you this piece of advice that's worthy of my 25, 35 years of, of expertise and give that to you." That's the value that, that, uh, legal departments are looking for as opposed to just trying to cut corners and shave a dollar here or there. Yeah. It's about throughput really. Yes. Yeah. It really is, yeah T-talk a little bit about if, if you can share some perspective on how is the pressure building on inside legal leaders from CFOs and corporate boards and, and CEOs to derive efficiencies?

Because honestly, in the past, uh, you know, what it's felt like is there's been a lot of legal work that have-- has flown-- that has flowed to law firms that could have been delivered through more efficient channels like ALSPs, right? But just as a matter of convenience, it kind of fl-flowed to their existing panel.

But it feels like the pressure is mounting on [00:18:00] inside legal leaders. Is that accurate? That's absolutely accurate. We have, we have heard with, with very little discreptio- discrepancy or dissension, legal leaders say, "Listen, the pressure is there. The investment is coming from the C-suite. It's coming from the CEO."

It's not coming from within the legal department to say, "We need to do more with AI. Let's, let's involve it." There are CEOs who are coming in to, like, speak from my own former experience, where a CEO comes there and is asking and pressuring us as a team to look at AI as a tool and as a resource to improve our efficiency.

And then after giving us the, the resources, you know, earmarking budget for us to go ahead and do it, then they sit back and say, "Okay, well, now what is the, what is the, the, the, the, the fruits? What's the fruits from, from what we have actually planted with this investment in this technology?" And it's very difficult to take this, and, and what we're hearing from our, our, our members, take this initiative that's being brought in by the C-suite [00:19:00] to develop this, and then all of a sudden come back with the exact same line items from outside counsel spend that you had before because then the question is, "And then what did you do with the investment that we gave you?"

Right? And, and when you're comparing that as a cost center to other organizations that are actually developing technology or, or different processes that show immediate efficiency that hit the bottom line of the company, you don't wanna be the drag as a legal department a-at all. So, so it is, it is not just a, well, the CLO is feeling this.

The CLO is getting pressure from the CFO, getting pressure from the CEO saying, "We talked about this in twenty twenty-four. When am I gonna see the legal department get on board with everybody else or see that, that, that reverse hockey stick, so to speak, where effi-efficiencies and value really start to come to bear?"

Yeah. My listeners have heard me talk about the recent Deloitte study. It got released in June where it was close to two-thirds of legal leaders that were surveyed as part of that said that the law firms are not engaging with [00:20:00] them in any material way about H- how AI is gonna impact the economics of the relationship.

And I have a theory on why that is. I believe that is because the law firms are really trying to figure it out internally, and they're used to coming to conversations with clients with answers and have things buttoned up. And the reality, I, I believe, is that I think there needs to be some, what we call in the software world, like some design partnering.

Yeah. So, you know, in the software space, like when we were starting, uh, this company, we partnered with an AM Law 50 firm, and we said, "Look, we're gonna retain the IP on this. We're gonna give you a discount based on, um, your commitment and time with helping us build the product." And it was a win-win. And in return for giving us time The client got a solution that really met their needs.

But that, that model, that mental model, that's [00:21:00] very unfamiliar to law firms, and they're really trying to button things up and figure them out internally. But I don't know. My instinct tells me that it would be better for them to engage with clients and figure it out together. I, I could not, uh, agree with you more.

I think that is absolutely where the, uh, the, the gap is and the miss is, right? There's this strange but uncomfortable insecurity that, that exists there that, hey, by sharing this information or by working together, one of two things may happen. Number one, I share this information with you, and we build this model that you basically go and take to one of your other firms, and, and now I basically did, did all this work for someone else.

And, and they are gaining the, the benefit or the fruits of, of, of my labor by, by working with you. They've taken it to somebody else and maybe on a higher scale have done that and it maybe could use against me. The other thing is, maybe I bring it to you, and we have this conversation, and what it does is immediately give you the roadmap to decrease the investment and the, uh, the financial [00:22:00] expectation that we've had year over year with your company, because now you found ways to reduce and, and cut cost and that kind of thing.

And I think, you know, I, I've said this before, actually, when we were together in, uh, in, in London at the Financial Times event, I, I said this specifically on, on the panel, is we-- when you partner with the, with the, with the law firm and you've got that engagement, oftentimes you will see a growth because we see the ability to be more productive and do more with less than we had before.

And so now it's actually increased. It's not, I, I mentioned that one point five line before. Maybe it's one point eight because now with that one point eight, I'm actually getting two and a half million dollars worth of work that I would have been before, and the business and the company that I work for is now seeing the return on that investment on a much higher scale.

And but the being fearful of what that could be causes us not to even realize that by and large, because we don't engage in those conversations. And I'll be very clear, I'm not gonna just put this on law firms and say that law firms are the only [00:23:00] ones that are, are, are intimidated by this. I do think that in-house counsel are as well, because having this conversation does feel somewhat uncomfortable if you don't have the type of relationship that you-- the type of partnership that you need, um, with your external law firm.

And so you feel like, I don't wanna give up too much. I don't wanna be too, too open and transparent because I, I may be leading myself down the path where they realize, hey, I could be charging these guys more, or hey, we can do this. But it, it really, in, in the legal field, it's strange to say this, but it really is about trust and, and, and we usually Have to have an extreme relationship based on trust, right?

That's got to be the biggest thing. And it, and it works. And when it works, it works extremely well. But in this new, new age area where we're dealing with your true operating model of a law firm that goes back, you said 15 years. I've been practicing 28 years. I think it goes back to, to even before I started, where that, that model of, of billable hour is so entrenched in what we do.

Both [00:24:00] sides are nervous about the true change of it, but both of us know we've got to change. And so that's where this whole dynamic is, is really interesting to me, especially in this seat that I get to sit in now, because I can hopefully act as more of a broker in between those relationships because, you know, at the end of the day, I just want things to work out for all, right?

To have my, my members feel that they're getting the type of services that they need and the type of support that they need, and the law firms that are there are able to do it in a way that is not just both efficient but effective for everybody involved. Yeah. The Y- you're absolutely right about the, the operating model.

The billable hour's really been entrenched since the se- since the '70s. I was- Yeah ... really the, the-- But the record profits- Oh, yeah ... po- post like financial crisis- Yeah. Oh, yeah ... it's been a, it's been a solid fifteen years straight up from profitability for these firms. But yeah, I like what you said there about kind of there's a gap on both sides of the table at the moment, and you know what it feels like to me?[00:25:00]

It feels to me like there's, there's a hesitation to be vulnerable, right? Because this-- Like, to have a design partnership, I-- we-- I've done it several times. It really requires you to come to the table and be vulnerable and say, "Look, I don't have all this figured out. Here's what I do know. Here's what I don't know.

Let's figure out what I don't know together, and let's create something that we both benefit from." But sometimes that's a hard conversation, especially when there's been tension in the relationship or, you know, I think lawyers in general are like to be buttoned up and- Mm-hmm ... you know, uh, have the answers, and being vulnerable is sometimes hard in-house or law firm side.

Yeah, absolutely. I mean, y- you're, you're paid to, you know, when that phone rings and you answer it, you're, you're paid to be able to answer that, that, that call, right? To, to know the answer, to provide the advice, the guidance that makes the other person feel confident and glad that they called you. That you're, you're the person.

And [00:26:00] so when you're stepping into a new area, and, and let's also be very honest, I mean, we're, we're in a technology phase, uh, almost that ex-- technology acceleration I would call it, where even those of us who grew up with, you know, technology moving at a rapid pace are now finding this even more rapid than we're used to in our day-to-day.

And having to lead in this space now, as this is changing, also creates a bit of a, a, a, of a different and challenging dynamic for, for us in this industry. There's no playbook. There's, there's nothing we can look at that modeled before and said, "Well, hey, in the, in the revo-- in the, um, you know, industrial age, this is what they did, and when computers came in, this is what they did."

I mean, it- it's, it's lightning fast compared to that and, and still different and changing almost every day to how we can How we need to adopt it and then how we, we, we, we deal with it. So but yeah, I, I-- it does go back to honestly just figuring out a way to get out of our own way and, and be open, honest, transparent, vulnerable to [00:27:00] what we don't know so that we can all yield and build kind of a, what is it they say?

Build a better mousetrap is, is a word. Yeah, exactly. So I've heard the, I've heard the phrase, "I hire lawyers, not law firms" before, which I think is interesting and, and absolutely true. I know as a buyer of legal services, I've always felt that way. You know, my loyalty, I jokingly talk about Sarah, who cuts my hair.

I don't have much hair up there, but- ... you know, when Sarah went into her garage during COVID, uh, I, I went to her garage in, during COVID, right? I'm not loyal to the salon that she, where she- Yeah ... cuts hair. I'm loyal to her. Do you think that is changing now with a couple of things? Like with when tech starts to capture some of the knowledge and wisdom through learning loops and systems that currently is resides solely in a lawyer's head and starts to like systematize some of that.

Like there's [00:28:00] always gonna be things that's tacit that are hard, really hard to capture, but it-- are we, are we still marching towards I hire lawyers, not law firms, or is that dynamic maybe changing a little bit? Well, I will tell you as one that I, I love that phrase 'cause I use it all the time. I used it in my, in my, uh, prior role as well.

And I would say this, uh, Ted, I think it's, it's evolving because I hire lawyers, not law firms is kind of the, the beginning stages of it, right? Because I-- what, what we had talked about earlier and, and the whole notion of trust and making sure that you find someone that you trust, that you can engage with so that you feel that comfort to bring certain things to them.

At a certain point, depending upon the law firm that you're using for some of your work, the work, depending on the work, can be pretty routine. You're not doing anything that you're going to be totally surprised or what you determine as a legal department, it's not really worth our time. We're, we're okay with [00:29:00] how this is gonna work out because we can manage it at that level.

When you have that type of routine type of work, the lawyer specifically is not as high of a concern versus the law firm. Do you know how to do this? Do you have a process in, around that does this in a way that is so highly efficient and effective, I really don't need to worry about anything, so I'm gonna conti- keep hiring you for these types of matters?

But you'll still have-- you'll still need to have that trusted advisor, that, that person that you can go to on that matter or matters that you have no clue. You sit around in, in, in your, your legal department and asking everybody at the table, "What do you think?" And they're like, "Well, we need to call so and so," right?

Uh, you mentioned Sarah cutting your hair. We need to call Sarah. We need to go to the garage and figure this out because, you know, we trust that she is gonna be able to come through with, with some level of, of, of recommendation or resolution to us 'cause we don't know. That's never going away. I think you'll always need to have that.

But I do think as we evolve from a technology [00:30:00] standpoint, system building, and we're doing this what AI, AI agents are doing now is even crazier within, uh, legal departments, what I'm seeing with contracts and, and, and the like Yeah, there's gonna be a little bit less of that, but that high level, you are still going to want to have that, that relationship, absolutely.

But I think going back to the point I made earlier, I think that's the opportunity for a lot of law firms, right? Because, you know, there is that, I wanna be able to just call you and just run down certain things without being fearful of, oh my gosh, if I pick up this phone, it's gonna immediately cost me, you know, this amount of money, and then it, it trickles down to this.

You build up that relationship and that engagement that, that is, is most beneficial, uh, to your department and also beneficial to the law firm. You'll, you'll make those calls even more because guess what? You're gonna get more value out of those calls as opposed to being timid about calling and not calling 'cause you're afraid of what the bill's gonna look like.

Yeah. You know, I saw a, and I'm sure you saw it, [00:31:00] too, article, I think it was in Bloomberg. I might be wrong about that. With, I think it's Stephen Crowley from Ford- Mm-hmm. Yeah ... who talked about how law firms are not keeping up. Is that-- Are they, uh-- And, and Ford has some great people. You know, they, they, they seem like they're a leader in this space.

Is everybody-- Are, are, are, are most of the inside legal teams outpacing The law firms or is, is Ford more of a outlier? Well, I, I would say that-- I wouldn't say that Ford is an outlier, but I, I would say that the larger corporations that we have found, so I would just say call it revenue, annual revenue about ten billion plus, are definitely outpacing that.

And I, I think when you look at that, I would say, as I said before, I would correlate that to their businesses themselves, how they have implemented and moved quickly on AI. And, and legal departments are just trying to keep pace with the whole of the organization, right? It's, it's a, [00:32:00] it's a push rather than a pull, if, if we can be honest with, with most of these organizations and, and what's happening, which is why you could see a company like Ford, 'cause I've got to imagine the AI efficiencies that are working throughout that entire organization for the development of the technology that works in there and how they build and looking at, you know, autonomous vehicles and everything like that, that they are entrenched.

And the legal department's just trying to keep pace. And so when you then turn and look at your law firms where it is a pull, not a push, right? There, there's a... The outside is asking them to do this as opposed to a push from inside that's like, "Man, we gotta keep up." I, I think that's why you see a little bit of a lag.

But, but in fairness to, to law firms, you know, not every company is as big as Ford, and not every company is, is, is as large and has the type of dynamic that they have. So plenty of our members are, are, are still in that still, you know, discovery phase and trying to figure out how to make this of value.

Most of them have invested. We've got over eighty-five percent telling us that they're investing in AI [00:33:00] and implementing AI, but not to the-- not all of them are to the degree of, of, of, of en-enhancement and, and realization of, of the true benefits as our lar-larger corporations. Yeah. You know, I, I've had a lot of conversations with, we'll call them, you know, the utopian crowd and the dystopian crowd as to where we're headed e-specifically in the legal industry.

And What it seems to come down to, based on my perspective, is there is a certain amount of work that's going to get automated away. A couple of dynamics are gonna come into play, and again, I'd love to get your take on this as well, that will influence whether or not the external legal market grows or shrinks, and that is how much a latent demand will get pulled up the ranks.

In other words, legal work that just wasn't financially viable because of cost but can now be delivered [00:34:00] more cheaply and th-therefore making it viable, that will lower the bar and more work will flow. That's one way we can create more demand. Also, the additional complexity, you know, new regulatory requirements that are going to need to be dealt with, all sorts of new liability scenarios like self-driving cars, robotics, privacy, all these sorts of things could also create a tremendous new demand.

So like, you know, I, I see this as a, a rebalancing of the scales, right? You're gonna-- we're gonna take some things off, put some things on. I don't know. How do you, how do you see these scales balancing out? Do you think that we're gonna continue to have the Am Law 200? Do you see it collapsing down and consolidating?

I don't know. You have any vision on that? You know, it's, it's a good question. It is one I've been pondering myself, to be quite honest with you, Ted. It's just I, I, I believe that there is going to be a bit of a, a, a consolidation. I, I [00:35:00] do believe that the-- You know, and some of it is trying to meet the demand of tools, systems, how we operate, how we work, so many different corporations asking for so many different things.

It's-- it just, it may feel that this level of efficiency is easier by consolidation co-- uh, consolidating and collaborating for a lot of this baseline legal work that's being done. I think that there's always gonna be room for the really top large echelon specialty firms that do work that others just honestly they're just not going to do.

Like you said, it, it may be too out of reach, but you need that expertise, you need that specialty. I think those are always gonna be special. I think those are always gonna be there, you know, for corporations who need those services to go out there and get. But I just-- I don't see the same two hundred, uh, law firms that exist now being the same two hundred law firms in the next five to seven [00:36:00] years.

I just, I just see that diminishing. I don't know how, by how much, but I, I, I just see that being the, uh, the, the push. And, and it's gonna be really driven by, uh, again, the purchase of legal services and, and how people, you know, move based on how they spend their, their, their pocketbooks and, and where they feel that they've got the, the best answer for the question is: How do I make my legal department more efficient?

How do I bring more value to my corporation? And, and these handful of firms are answering that question, um, but these ones are not, or they're too difficult to deal with. And then all of a sudden you'll find that, that shift dynamic happening pretty significantly Yeah. And h-how are your members thinking about, like, where to draw the line, like, in terms of, all right, we're gonna keep this in-house, or we're gonna ask our law firms to operate more efficiently, or we're gonna look at alternative channels like AI native or ALSPs.

Are, are you seeing l-like, your, your member companies increasing head count [00:37:00] or tech budget to, like, maybe take on more internally, or do you see them really focus on-- focusing on figuring out how to deliver it more efficiently externally? So I-- fabulous question, and I would say a mixed bag of all of that, right?

I mean, right now we are in a, an incredible discovery phase, and I feel like there is-- there's some certain common themes in a lot of the conversations that we have and a lot of the surveys and the survey results that we're receiving, um, from our members. Uh, but, but one thing that is consistent in that is everyone is trying it out, right?

And, and it's a lot of-- The one thing that's consistent is people are looking to try to bring and do more in-house on a more efficient manner. But where there's not consistency is, okay, does that mean that you're hiring more legal office professionals, lawyers, paralegals to help you do that? You have a lot of them saying, "No, we're not getting any more headcount.

People are just thrilled that we're able to do more work with less," and they're just, you know, continuing to pile that on. Um, you have [00:38:00] f-some that are actually, I think, very, very innovative and are coming up with different new roles, right? Where, uh, I mean, I've heard it coined, I'm not gonna say it's mine, but somebody talked about legal engineers, people who are taking their knowledge and their background skill as lawyers and, and, and looking at what this technology is and helping with prompts, helping with building agents, helping with delivering the type of work necessary to, to show that efficiency within the legal department.

So you see these roles either being repurposed or, or just created, um, so that people are having the opportunity to, uh, or the departments are having the opportunity to really drive this home. But they're also really trying, I believe, to, to work with outside counsel, trying to have these conversations and, and these collaborations to say, "Hey, can you tell me what you're using and how you're using AI?"

The overwhelming majority don't know, have no clue. I think our results, I think, are very similar to that Deloitte study where I think ours was sixty-one percent have no clue, uh, what, uh, uh, their outside counsel is using [00:39:00] AI for. Um, it's not transparent in their matters, and they don't see the value coming out of it, right?

But that means that others are. Others are having those conversations. They are seeking to have that engagement and trying to develop from there to see where they can have that, that benefit. So I, I think 'twenty-six and probably into early 'twenty-seven we will find a lot of the testing and we shall see phase.

Uh, but I believe that means in late 'twenty-seven, early 'twenty-eight, it'll be interesting to get back on here with you and see where our, our, our results are from our survey about people saying, "No, we were, we were done. We did that year, tried to figure it out. They couldn't do it, so we moved it in-house or we found somebody else who could."

So I, I think we're gonna see a lot of that in about a year to probably, yeah, I'd say probably a year, 15 months from now we'll start to see a lot of that movement. So my friends in the pricing community have told me that, that clients aren't ready for value-based pricing, that, you know, there's still a bit of a latching onto or pearl clutching around like requiring shadow billing [00:40:00] and, you know, there's, there's been a hesitation on the buy side- Yeah

to, to, to really commit to, um, value-based, fixed-based alternative fee arrangement, however you wanna frame it, and that law firm clients haven't always been ready. Is that your experience or, or ha-ha-, or is that different? No, that, that is true, and I, I think it, it, it, it again, you know, to, to give you the lawyer answer, it depends.

It depends on the organization that you're talking about. But by and large That is absolutely true. I mean, if you're gonna come in and say, "Okay, well, this particular M&A is gonna cost your, your company," you know, whatever percentage you call it. Let's say I'm gonna say, "Okay, the deal is a, a $50 million deal.

You know, pay us 10% of that." Is that fair? Is that gonna work out for you? I mean, you know, we're so accustomed to and used to the model that already exists that, that we've, we've based a, a algorithm even in-house about how we talk about it to our CFOs to justify the cost, [00:41:00] right? It's like, "Oh, okay, well we're expecting this and it's gonna be this level of work.

It's probably gonna be around here," and we've just accepted that. So now to have to be the one negotiating what we think that number is, even though it's probably in the long term best interest for our clients, uh, the companies themselves, we're still reluctant to do it because we're fearful of, "Man, am I really getting the short end of the stick here?"

Right? And is this-- If I went to another firm, would they actually quote me and, and bring me something that's gonna be, you know, 25% lower and I'm gonna get the same level of work and value? I don't know, but I really wanna go with these guys 'cause they've done two other deals for us. It isn't, it's not e- that easy.

So you have that reluctance because it is, it's new territory, it's new space, and a lot of us don't wanna be the first. And, and because when you're the first, obviously you deal with the, the praise when it works out and then, you know, the, the opposite of praise when it doesn't. Yeah. The arrows in the back at that point.

Absolutely. Yeah. So yeah, so I do think that there are dynamics on the buy side that are [00:42:00] also, like, preventing us from getting there. Um, you know, there's another one that, and, and I alluded to it in when we got kicked off, is so about, you know, nobody owns these terms and there are different estimates, but I would say general consensus is about 80% of legal work that gets sent to outside counsel is operate the company, 20% is bet the company.

And within that 80%, there is a significant percentage of the pie chart that could be delivered through alternative channels like ALSPs and today AI native firms. The reality is that ALSP market share has hovered in the mid to upper single digits for a really long time. And, you know, when I ask the question why to ALSPs or to inside counsel, it-- the comment I get back is, "Well, sometimes it's just easier to send it to my law firms."

And that makes me think, all right, well, is that, [00:43:00] is that paradigm going away because of now there's such a focus on efficiencies, or are we still gonna see convenience or relationships driving some of these decisions that may ultimately hold us back from getting to a better place? Uh, my, my gut, and this is my gut, my kind of crystal ball, is I think that that dynamic is shifting.

When I talk to a lot of companies, and as we survey a lot of companies, you see some dynamic shifts happen from legal departments in the last, I'd say Five or s- five, five years or so, right, in, in such a demonstrable way. There are corporations that have never had legal operations professionals, people whose job it is to invest in understanding the efficiency of the legal department and how to make it better, operating with that mindset of, uh, of, of efficiency and transparency, effectiveness, all the things that we talked about.

So many of them are on the bandwagon now of bringing these people in or repurposing roles already existing within their team to have somebody solely focused on that. [00:44:00] And when you have somebody who is solely focused on that, they're gonna start to look at ALSPs a, a lot differently and start to really think about the math and say, "Well, wait a minute, this doesn't make any sense.

We should be doing more of that." So I, I do think the shift is coming because we're looking at how the technology is forcing us to think of things differently in one way, right? And then now you also see the shift of legal departments kind of reconfiguring staff, reconfiguring what the makeup of the work is to try to bring in and hone in that type of perspective on the way that they're actually managing and building the, the cost structure within their department.

So I will say that that's part of the reason why I think the, the contraction, so to speak, of the larger f- firms or whatever is gonna start to happen because I do think people are gonna start to, to really invest, as they already have been, right, as we see this increasing in math of finding the people that are gonna be looking at this and answering that question a different way.

I don't see you see it right now in a demonstrable way as, as the data has shown us, but I definitely think it, it is [00:45:00] definitely coming. Yeah. That makes a lot of sense. Well, we're, uh, we're almost out of time. It's been a fantastic conversation. I knew that it would be. I really enjoyed your talk at the, the FT event and had a great conversation with you after.

So, uh, before we wrap up, how do people find out more about you and the ACC and any upcoming events that or research that you guys may be putting out there? Yeah, absolutely. Well, well, we're easy to find, uh, acc.com. Um, that is acc.com. You can find us there and, and, and look at that. Uh, my name is, uh, Jason Brown, as I said.

You can find me on LinkedIn. Um, I know Jason Brown is a very common name, so but if you go Jason Brown, ACC or Jason L. Brown, which is my middle initial, um, you should be able to find me, me directly and, and reach out. Um, we have our annual meeting coming up October fourth through the seventh. I don't know when this is gonna be posted, but, uh, hopefully, um, you've got folks then that are, uh, that are interested in coming to the Boston area for a great time.

We, we are having our annual meeting there. And, uh, there you'll find that if you [00:46:00] go to our website, plenty of list of all of our events that we have across the, uh, across the world. As I said, we're a global organization. Um, we list everything that, that we're doing and would love to, uh, to, to see you there.

Awesome. We'll put some links in the show notes. I really appreciate your time today, Jason. Thank you so much, Ted, for the invite, and I really enjoyed this conversation. All right. Take care. We'll see you soon. Take care. Thanks for listening to Legal Innovation Spotlight. If you found value in this chat, hit the subscribe button to be notified when we release new episodes.

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