1 00:00:01,263 --> 00:00:01,494 Mr. 2 00:00:01,494 --> 00:00:03,402 Furlong, how are you this afternoon? 3 00:00:03,402 --> 00:00:07,183 I am very well Ted, thank you very much for having me on your show today. 4 00:00:07,183 --> 00:00:08,624 Yeah, I'm super excited. 5 00:00:08,624 --> 00:00:19,243 I've been following your work for many a year and you and I got to speak together at the Inside Practice event earlier this year. 6 00:00:19,243 --> 00:00:31,923 I gave the uh opening presentation and you followed up with a keynote and it almost seemed like we had collaborated because it was you kind of carried the theme and I was glad that 7 00:00:31,923 --> 00:00:36,727 you didn't completely disagree with everything I just said because people would listen to you before they did me. 8 00:00:36,788 --> 00:00:40,620 Well, uh I don't know about that, but no, I think you're absolutely right. 9 00:00:40,620 --> 00:00:50,896 think we're very much tuned in, I think, on the same wavelength, but that's a good part is that we're able to kind of offer complimentary viewpoints on all the stuff that's going on 10 00:00:50,896 --> 00:00:51,599 out there. 11 00:00:51,599 --> 00:00:52,800 which there's plenty of. 12 00:00:52,800 --> 00:00:57,842 um There's no shortage of things to talk about in the legal sector these days. 13 00:00:57,842 --> 00:01:00,673 um Well, let's get you introduced. 14 00:01:00,673 --> 00:01:02,714 I think most people probably know who you are. 15 00:01:02,714 --> 00:01:04,815 You've been around for quite a while. 16 00:01:04,815 --> 00:01:09,867 Why don't you tell us a little bit about who you are, what you do, and where you do it? 17 00:01:09,998 --> 00:01:10,838 Cool. 18 00:01:10,838 --> 00:01:17,858 So I am a, I guess, a legal market or legal sector analyst, consultant, forecaster. 19 00:01:18,218 --> 00:01:23,178 Sometimes I say sideline reporter if I'm feeling particularly acerbic. 20 00:01:23,178 --> 00:01:31,818 What I mostly do is I write and I speak with law firms, legal organizations, anybody really in the legal sector. 21 00:01:31,818 --> 00:01:39,796 And what I try to do is to describe what I'm seeing in terms of the extraordinary changes taking place in the legal world. 22 00:01:39,796 --> 00:01:49,293 anticipate what's coming our way in that regard and then to make my recommendations look this is what I really think we ought to be doing about this what you in particular in your 23 00:01:49,293 --> 00:01:58,480 whatever circumstance happens to be should be doing about this and just trying to give people a bit of it like a framework and and and some guidance in terms of where we can we 24 00:01:58,480 --> 00:02:06,666 can all go next on this and I do all this from Ottawa Canada which uh is a very nice place to live 25 00:02:06,767 --> 00:02:11,235 and so long as it's not any time between October and March. 26 00:02:12,699 --> 00:02:14,180 Just half the year. 27 00:02:15,340 --> 00:02:29,014 Well, so going back to that Inside Practice event, so my opening presentation was regarding the innovation efforts in legal over the last 10 years and putting a little bit 28 00:02:29,014 --> 00:02:31,085 of structure around it. 29 00:02:31,085 --> 00:02:38,619 And my listeners have heard many times about the little analysis that I did with looking at 30 00:02:38,619 --> 00:02:45,499 the number of innovation resources that existed in 2014 and then again 10 years later in 2024. 31 00:02:45,779 --> 00:02:54,839 And it was there were 16 people in the Ilta roster, which doesn't have 100 % coverage, but it's a good, fairly good data source. 32 00:02:54,979 --> 00:03:00,239 And then there were over 300 in 2024. 33 00:03:00,719 --> 00:03:03,079 There's approaching 400 now. 34 00:03:03,079 --> 00:03:08,195 So massive 200%, I'm sorry, 2000 % plus growth. 35 00:03:08,195 --> 00:03:22,389 And then I cited some additional numbers like the law department operation survey where almost two thirds of law firm clients said that they disagree or strongly disagree that 36 00:03:22,389 --> 00:03:28,551 their law firm partners are innovative and really points to a pretty big disconnect. 37 00:03:28,551 --> 00:03:37,763 And I outlined a few reasons I think uh that gap exists, one of which is there's been a lot of innovation theater. 38 00:03:37,901 --> 00:03:38,471 illegal. 39 00:03:38,471 --> 00:03:47,894 um You know, it's been I had Michele uh DeStefano on a couple episodes ago and she wrote a great paper. 40 00:03:47,914 --> 00:04:00,688 God, that paper is probably five, six years old by now, where she went and interviewed like, I don't know, 40 CINOs and, you know, asked them about their remit and the name of 41 00:04:00,688 --> 00:04:03,238 the paper was Rolls, Holes and Goals. 42 00:04:03,238 --> 00:04:06,139 You know, the chief innovation Officer role. 43 00:04:06,283 --> 00:04:08,183 in law firms. 44 00:04:08,264 --> 00:04:14,865 it was the number one remit was um around a marketing. 45 00:04:14,865 --> 00:04:22,007 was, um They had cited, you know, the need for the firms to appear innovative within the marketplace. 46 00:04:22,007 --> 00:04:27,219 And, you know, and I had seen it, obviously, we sell into the KM and Innovation space. 47 00:04:27,219 --> 00:04:33,770 And, you know, we had a bird's eye view into those functions. 48 00:04:33,811 --> 00:04:35,491 And then you followed up. 49 00:04:35,587 --> 00:04:53,042 with a really interesting metaphor about the immovable object that has been Big Law and the billable hour and the uh impending impact of this new transformation that's underway. 50 00:04:53,042 --> 00:04:58,987 Maybe you could just say a few words about the message that you were delivering that day and so we can get a sense of that. 51 00:04:59,062 --> 00:05:07,444 Yeah, and I guess one of the things I was hoping to communicate to people is a part of it was to bring forward a little bit more sense of urgency. 52 00:05:07,444 --> 00:05:20,808 um I think that for a lot of people in the legal sector, a lot of lawyers and understandably, the take they have or the way they kind of approach AI at the moment is 53 00:05:21,128 --> 00:05:22,439 mostly curiosity. 54 00:05:22,439 --> 00:05:23,669 It's like, huh, what's this? 55 00:05:23,669 --> 00:05:24,779 I wonder what this can do. 56 00:05:24,779 --> 00:05:26,030 wow, it's full of problems. 57 00:05:26,030 --> 00:05:28,070 And look at all these hallucinations. 58 00:05:29,433 --> 00:05:35,394 And maybe not taking it with quite the seriousness that I thought it required. 59 00:05:36,654 --> 00:05:45,054 And owning up to the fact that, as you say, we've got this, I think I used like a brick wall on a cannon to symbolize the two. 60 00:05:45,054 --> 00:05:47,234 And I said, look, I know that brick wall very well. 61 00:05:47,234 --> 00:05:50,894 I've been banging my head off it for the last 20, 25 years. 62 00:05:50,894 --> 00:05:54,394 The recalcitrance of the legal profession and of law firms. 63 00:05:54,394 --> 00:06:02,918 is just extraordinary and where so many other industries and professions have buckled under the pressure of outside forces, law has held firm. 64 00:06:02,938 --> 00:06:12,972 Now, the easiest thing in the world to say is this time is different and we've been wrong about these things before, but I look at what AI in particular is bringing. 65 00:06:12,972 --> 00:06:15,183 There's other forces at work here. 66 00:06:15,183 --> 00:06:18,365 There's other evolutions, developments taking place. 67 00:06:18,365 --> 00:06:22,030 You mentioned the law department operations survey. 68 00:06:22,030 --> 00:06:29,213 10 years ago, was no such thing as law department operations that legal ops was like this brand new concept. 69 00:06:29,213 --> 00:06:34,415 we're seeing any number of other factors coming in into play. 70 00:06:34,556 --> 00:06:40,788 so part of my message was, I didn't want to call it like a wake up call necessarily, because people don't, know, no one likes getting woken up. 71 00:06:40,788 --> 00:06:42,419 That's why we have this news button. 72 00:06:42,419 --> 00:06:49,334 But it really was just to bring a sense of urgency to say, we are running out of time. 73 00:06:49,334 --> 00:07:00,050 in order for us to make the adjustments to, yes, our business models as lawyers, but also how we perceive ourselves, how we present ourselves to the market, where we think our 74 00:07:00,050 --> 00:07:02,542 value is located. 75 00:07:02,542 --> 00:07:09,825 All of the ways in which we have traditionally defined that, I think have maybe five years to run, maybe if we're lucky. 76 00:07:09,906 --> 00:07:12,887 And so that really was kind of what I was hoping to communicate. 77 00:07:12,887 --> 00:07:18,142 Hopefully uh some of it came across, but it's a message that I feel even more strongly about today than I did. 78 00:07:18,403 --> 00:07:20,835 Yeah, and you know, I have a similar sentiment. 79 00:07:20,835 --> 00:07:29,352 So I've been in the space since 2008, so 17 years, and I've had the opportunity to work with 110 Amla firms. 80 00:07:29,352 --> 00:07:39,620 That's when I stopped counting the number because it gets hard to count, you know, like um they merge and you know, okay, we had Drinker Biddle and Fagry Baker Daniels. 81 00:07:39,620 --> 00:07:41,742 Now they're Drinker Biddle or they're Fagry Drinker. 82 00:07:41,742 --> 00:07:44,604 Does that count as three or is that one? 83 00:07:45,245 --> 00:07:46,676 You lose track. 84 00:07:46,676 --> 00:07:47,927 So I just... 85 00:07:47,927 --> 00:07:50,808 I'm going to stay with 110, but more than half. 86 00:07:50,808 --> 00:07:58,170 And um in that time, I've gotten to know people and understand the industry uh pretty well. 87 00:07:58,170 --> 00:08:02,431 And I see a tremendous amount of complacency in the marketplace. 88 00:08:02,431 --> 00:08:05,532 It's almost a tale of two extremes. 89 00:08:05,532 --> 00:08:16,335 I see firms that are really making moves and really investing and, you know, um the clearies of the world and, you know, the coolies and you see them making big moves with 90 00:08:16,335 --> 00:08:17,005 the 91 00:08:17,005 --> 00:08:22,648 Springbok acquisition and um hiring of really talented personnel. 92 00:08:22,648 --> 00:08:27,301 you see now um Liz Grennan going to Simpson Thatcher. 93 00:08:27,301 --> 00:08:32,474 And it's like, I'm seeing some big, like you didn't see things like this five years ago. 94 00:08:32,474 --> 00:08:38,507 So I'm really encouraged by that, but I'm also seeing a big, it's almost like a bell shaped curve. 95 00:08:38,507 --> 00:08:44,431 You know, you've, you've got the firms on one tail that are really dialing it in. 96 00:08:44,431 --> 00:08:45,441 You've got 97 00:08:45,891 --> 00:08:58,335 the ostriches on the other end that are sticking their head in the sand and then you have the middle which I think is where most of a big law sits and It's it's a smattering of 98 00:08:58,335 --> 00:09:11,598 well, we've got some POCs in flight We're you defining a gen AI strategy and policy and you know, we're doing some co-counsel Harvey um Experimentation maybe looking at co-pilot, 99 00:09:11,598 --> 00:09:14,991 but what I'm not seeing is 100 00:09:15,695 --> 00:09:23,609 really clear strategic um paths among the masses that seem to be being followed. 101 00:09:23,609 --> 00:09:30,379 So I'm curious from your perspective, where are you seeing kind of the same distribution or a little different? 102 00:09:30,594 --> 00:09:31,654 Yeah, very much so. 103 00:09:31,654 --> 00:09:42,188 And I think one significant difference, and it's not minor at all, from five or 10 years ago, back when innovation was still such a novelty that an organization I was working 104 00:09:42,188 --> 00:09:46,709 with, the College of Law Practice and Management, had an award specifically about innovation, right? 105 00:09:46,709 --> 00:09:50,740 To say, yay, a law firm or a legal entity did something innovative. 106 00:09:50,740 --> 00:09:55,122 And now I don't think we need to make as much uh of a deal about that. 107 00:09:55,122 --> 00:09:56,042 So I think... 108 00:09:56,078 --> 00:10:00,920 The firms that maybe were like bleeding edge back then are now the leading edge. 109 00:10:00,940 --> 00:10:12,525 But you're right, we still have this kind of Rogers diffusion, curvy thing where it's still taking a lot of time for that mass of firms in that bell shape in the middle uh to 110 00:10:12,525 --> 00:10:15,466 really cotton on to all this. 111 00:10:15,466 --> 00:10:23,759 And in a lot of respects, it's understandable and not just for the classic Richard Susskind, you know, explanation of it's difficult to tell a room full of millionaires 112 00:10:23,759 --> 00:10:25,470 their business model is wrong. 113 00:10:25,486 --> 00:10:31,530 um But also because there's no particular and there's two aspects of this. 114 00:10:31,530 --> 00:10:38,310 Number one, there's no particular market incentive for them right now to be going out and doing all kinds of different things. 115 00:10:38,310 --> 00:10:43,497 I mean, we talk about and I will want to talk a little bit later on about pricing strategies. 116 00:10:43,497 --> 00:10:52,482 But when you talk to, as I'm sure you have people in mid-size and large firms about this and as often as not, you'll hear them say something like, 117 00:10:52,482 --> 00:10:55,743 you know, we floated this by our clients and the clients don't want it. 118 00:10:55,743 --> 00:11:02,386 They they they they would prefer the billable hour not because they love it, but because it's the devil they know. 119 00:11:02,386 --> 00:11:11,190 um And also because I've heard this on a number of occasions, people with firms saying the clients don't want it because they think if we're pushing it on them, it means it's bad 120 00:11:11,190 --> 00:11:13,070 for them and good for the firm. 121 00:11:13,191 --> 00:11:18,433 So and I said, Okay, I think you know, you don't have a pricing problem, you have a trust problem, but okay. 122 00:11:18,433 --> 00:11:21,390 um And and the other piece of it 123 00:11:21,390 --> 00:11:35,014 ah in terms of the inability of lot of firms to kind of move forward, I think is the, it's not just the external, it's the internal issues that are far more gripping. 124 00:11:35,014 --> 00:11:45,457 uh I find law firms are incredibly alive to internal pressures and internal signals and so forth, and very little from the market itself. 125 00:11:45,457 --> 00:11:51,342 This is consistent with my experience that lawyers are very inward looking, not very outward looking. 126 00:11:51,342 --> 00:12:01,802 Um, but you know, like I've been, I've been yapping often on about AI for a couple of years now, but easily three quarters of my engagements with law firms of all kinds over 127 00:12:01,802 --> 00:12:04,522 the last couple of years have not been about AI. 128 00:12:04,602 --> 00:12:12,082 It's been around associates and attrition and productivity and work from home and all this kind of stuff. 129 00:12:12,082 --> 00:12:18,934 And, and, and common theme of w we don't think we have, we don't have enough engagement. 130 00:12:18,934 --> 00:12:22,596 by our younger lawyers with this and it's a problem and so forth. 131 00:12:22,596 --> 00:12:26,017 So, and that's not to say those aren't important issues. 132 00:12:26,017 --> 00:12:31,740 What I try to say to the firm is this is symptomatic of something bigger, which you need to take it address. 133 00:12:31,740 --> 00:12:44,245 But I think for all those reasons, I think it's just so difficult for firms to really respond to anything other than truly macro level forces like a pandemic, right? 134 00:12:44,245 --> 00:12:47,286 Or like, as we'll probably see the next five years. 135 00:12:47,558 --> 00:12:49,820 collapse of the bill of the lower regime that kind of thing. 136 00:12:49,820 --> 00:13:03,289 um So yeah, I'm hoping that there is some awareness being built and as you've suggested, at least some preliminary framework work being done internally, but we'll see I guess. 137 00:13:03,289 --> 00:13:05,010 Yeah, it's going to be interesting. 138 00:13:05,010 --> 00:13:10,583 And you know, you had written about a future lawyer starter kit, which I think is interesting. 139 00:13:10,583 --> 00:13:16,206 And um maybe you can talk a little bit about that and the human competencies. 140 00:13:16,206 --> 00:13:20,749 You know, I had a recent experience with a bank. 141 00:13:20,749 --> 00:13:26,092 We're an early stage tech company and we needed a credit facility. 142 00:13:26,092 --> 00:13:30,274 And we're a little different than most companies our size. 143 00:13:30,274 --> 00:13:32,773 Most companies have taken a bunch of VC money. 144 00:13:32,773 --> 00:13:42,910 They're lighting cash on fire, um but they've got venture funds in their cap table and banks like to loan with when there's a backstop. 145 00:13:42,910 --> 00:13:47,754 So they know the VCs will step in if there's a situation. 146 00:13:47,754 --> 00:13:49,835 We don't really fall into that. 147 00:13:49,835 --> 00:13:51,256 We're mostly bootstrap. 148 00:13:51,256 --> 00:13:57,841 TLTF gave us a little bit of money, but we're trying to go as long as we can in a capital efficient way. 149 00:13:57,841 --> 00:14:01,603 Well, as I was out shopping around for banks, I had... 150 00:14:01,627 --> 00:14:10,307 one bank in particular that asked me for all of this stuff, which is usually annoying, but the stuff that they asked for was really cool. 151 00:14:10,307 --> 00:14:13,067 They asked for our pitch deck. 152 00:14:13,067 --> 00:14:15,967 They asked for our business plan. 153 00:14:15,967 --> 00:14:20,347 They asked for a video of me delivering, explaining the pitch deck. 154 00:14:20,347 --> 00:14:23,927 They really got, wanted to know us and our business. 155 00:14:23,927 --> 00:14:29,059 And I thought about all of the, I've been an entrepreneur for 32 years and 156 00:14:29,059 --> 00:14:32,120 I've never had a law firm ask me for that. 157 00:14:32,120 --> 00:14:44,265 And when you think about the relationship and the importance of knowing your customer's business as someone who loans you money versus someone who helps you mitigate legal risks, 158 00:14:44,766 --> 00:14:49,017 you know, that that's a much bigger need in the latter scenario. 159 00:14:49,017 --> 00:14:57,881 So, you know, it really I think the industry has been largely reactive, largely kept clients at arm's length. 160 00:14:58,235 --> 00:15:07,121 Um, and there hasn't been like that proactive engagement and even willingness to turn off the billing clock and get to know me a little bit as a client. 161 00:15:07,121 --> 00:15:17,319 And I really think that all the, all of the human competencies that you listed out help align with that. 162 00:15:17,319 --> 00:15:19,380 And there's been a little bit of a deficit of that. 163 00:15:19,380 --> 00:15:20,618 feel like historically. 164 00:15:20,618 --> 00:15:21,398 yeah. 165 00:15:21,408 --> 00:15:22,210 I think massively. 166 00:15:22,210 --> 00:15:22,489 Yeah. 167 00:15:22,489 --> 00:15:33,019 And, and yeah, I mean, that was when I was writing about that topic, I was really trying to identify, given that we are very likely on the cusp of a technology that is going to be 168 00:15:33,019 --> 00:15:45,741 able to replicate a lot of what you might call our cognitive or our uh documentary or transactional tasks and, and, and skills and, and aspects and so forth. 169 00:15:45,741 --> 00:15:47,566 Um, that 170 00:15:47,566 --> 00:15:53,006 those are going to become less important to us because now we have, if you will, competition for that. 171 00:15:53,126 --> 00:16:00,826 And the possibility that your any given lawyer is going to be competitive for that kind of work, if you will, is dwindling daily. 172 00:16:00,826 --> 00:16:07,666 And so I said, what's going to matter is your human skill, your human attributes and capacities. 173 00:16:07,846 --> 00:16:16,986 And yes, and that includes things like, you know, how well do you communicate and what's, you know, do you have anything more than a sociopathic level of empathy, for instance? 174 00:16:16,986 --> 00:16:24,048 and so forth, but even kind of goes beyond and deeper than that. 175 00:16:24,048 --> 00:16:30,070 And something you mentioned about how like the bank is out there saying, we're interested, we want to get to know your business. 176 00:16:30,070 --> 00:16:35,872 And you will occasionally find this amongst law firms and more often among individual lawyers. 177 00:16:35,872 --> 00:16:41,773 It's very rare to see it expressed as a corporate or entity wide approach. 178 00:16:41,813 --> 00:16:44,594 But for me, I'm always about drilling down. 179 00:16:44,594 --> 00:16:45,545 Digging into it, right? 180 00:16:45,545 --> 00:16:51,980 So let's say for instance, I have uh a Service provider that wants to get to know my business really well. 181 00:16:51,980 --> 00:16:55,323 Okay Why do they want why do they want to get to know my business, right? 182 00:16:55,323 --> 00:17:05,361 And of course, you know one potential answer to that which I think is probably an accurate answer in a number of cases is because they want to get Work and money from us and they 183 00:17:05,361 --> 00:17:13,994 figured out the best way to do that is to show interest in the business itself So it's you know, the classic, you know authenticity if you can fake that you got it made 184 00:17:13,994 --> 00:17:14,974 Okay. 185 00:17:15,135 --> 00:17:29,623 But I think that what's going to be a more lasting and a more uh effective approach to take to it is when you ask the question, and why do you want to know this stuff? 186 00:17:29,843 --> 00:17:37,747 Because then you can say as a lawyer or the kind of super provider, because I'm actually really interested because I want you to do well. 187 00:17:37,747 --> 00:17:39,709 I want your business to succeed. 188 00:17:39,709 --> 00:17:41,969 I'm interested in what you've got to offer. 189 00:17:42,382 --> 00:17:52,322 And I think that kind of thing is important because one of the things that you as a founder understand this and anybody who runs a business or has founded a business, you 190 00:17:52,322 --> 00:17:55,162 care about your business desperately. 191 00:17:55,162 --> 00:17:56,582 It's incredibly important to you. 192 00:17:56,582 --> 00:17:57,442 It's meaningful to you. 193 00:17:57,442 --> 00:18:01,962 It matters in your heart, not just in your brain or in your pocketbook or wherever. 194 00:18:01,962 --> 00:18:03,782 It actually really matters. 195 00:18:04,022 --> 00:18:12,110 And you welcome people, whether they are investors or employees or supporters, whatever, who share that to say, I believe in the mission. 196 00:18:12,110 --> 00:18:12,670 that you have. 197 00:18:12,670 --> 00:18:14,080 You've just explained your mission to me. 198 00:18:14,080 --> 00:18:15,411 You've explained what you want to accomplish. 199 00:18:15,411 --> 00:18:17,973 Yeah, I want to accomplish that too. 200 00:18:17,973 --> 00:18:18,573 Right. 201 00:18:18,573 --> 00:18:25,096 And if I were to come across a lawyer who said, yeah, I believe in what you're doing and I want to be part of that. 202 00:18:25,096 --> 00:18:30,478 They got my business right, right there off the park because they've made that genuine connection. 203 00:18:30,478 --> 00:18:31,138 Right. 204 00:18:31,138 --> 00:18:36,881 And going back to, know, you can't, you know, if you fake authenticity, I just don't see the point in that. 205 00:18:36,881 --> 00:18:39,340 And this is why one of my statements to lawyers is 206 00:18:39,340 --> 00:18:46,414 you're going to be more selective about your clients because you're not going to care that much about all of your clients, right? 207 00:18:46,414 --> 00:18:48,735 You know, and some of them don't want to be cared about. 208 00:18:48,735 --> 00:18:49,336 That's fine. 209 00:18:49,336 --> 00:18:56,379 I don't think Citibank cares too much if, you know, if we have a genuine belief in their desire to achieve whatever their corporate mission is. 210 00:18:56,379 --> 00:19:02,023 But for the rest of the world, for the real world, I think it really matters. 211 00:19:02,023 --> 00:19:08,746 And to your point about lawyers keeping uh clients at arm's length, keeping people at arm's length, 212 00:19:09,038 --> 00:19:11,718 that is absolutely built into this profession. 213 00:19:11,718 --> 00:19:13,938 Number one, I think we self-select for it. 214 00:19:13,938 --> 00:19:20,958 I think a lot of us went to law school because we were smart, we didn't like the sight of blood, and we didn't want to have to do math on a daily basis. 215 00:19:20,958 --> 00:19:22,418 So, law school we go. 216 00:19:22,418 --> 00:19:23,078 Okay. 217 00:19:23,078 --> 00:19:29,158 But you've seen all those studies, I'm sure, and the dude's name is Richard, come back. 218 00:19:29,158 --> 00:19:29,558 Dr. 219 00:19:29,558 --> 00:19:37,486 Larry Richard has done all these studies to talk about how lawyers are extraordinarily below the mean in terms of things like 220 00:19:37,486 --> 00:19:43,306 empathy and resilience and sociability and so forth. 221 00:19:43,306 --> 00:19:45,586 And part of it is in law school, we were trained that way. 222 00:19:45,586 --> 00:19:54,946 I remember distinctly being told by multiple professors in the context of client relations, now the one thing is not to become a dupe of your client. 223 00:19:54,946 --> 00:19:56,406 Don't let your client fool you. 224 00:19:56,406 --> 00:19:57,466 Don't get drawn in. 225 00:19:57,466 --> 00:19:58,726 Don't get pulled in. 226 00:19:58,726 --> 00:20:00,826 them, keep professional, keep your distance. 227 00:20:00,826 --> 00:20:01,766 And it's like, 228 00:20:01,816 --> 00:20:05,028 That's a pretty miserable way to conduct yourself as a professional. 229 00:20:05,028 --> 00:20:12,654 So we've got a lot of bad work to undo as a profession in a very short period of time and not everyone's going to figure it out. 230 00:20:12,654 --> 00:20:23,402 But my hope is that that message can get out to enough people that they will trust themselves and know themselves well enough to be able to make that kind of commitment to 231 00:20:23,402 --> 00:20:27,665 say, it's got to matter to me more than just in my head and more than just in the wallet. 232 00:20:27,665 --> 00:20:29,766 It's got to matter to me in the heart as well. 233 00:20:29,851 --> 00:20:34,051 Yeah, that's a great point is showing genuine interest. 234 00:20:34,051 --> 00:20:44,111 And I think that genuine interest also serves the client because lawyers are really focused on the risk side of the equation. 235 00:20:44,111 --> 00:20:47,931 Every business decision is a risk reward trade off. 236 00:20:47,931 --> 00:20:57,631 And when I go to legal counsel and I say, hey, I have a resource that I want to hire from another company, he or she has a non-compete. 237 00:20:57,971 --> 00:20:59,771 I don't want to just hear, 238 00:21:00,205 --> 00:21:01,096 what I can't do. 239 00:21:01,096 --> 00:21:03,138 I want to hear what I can do. 240 00:21:03,138 --> 00:21:14,627 And if you know my business and you understand how important this role may be to my business and or this person, you're in a better position to help me navigate my way 241 00:21:14,627 --> 00:21:19,431 through this risk reward balancing exercise. 242 00:21:19,431 --> 00:21:24,595 So I really think that because I've, you over the years I've got, I've had, 243 00:21:24,655 --> 00:21:26,806 My wife and I own five gyms here in St. 244 00:21:26,806 --> 00:21:28,767 Louis and we moved once. 245 00:21:28,767 --> 00:21:35,561 We've done six commercial leases and they are, it is a really miserable exercise negotiating that with landlords. 246 00:21:35,561 --> 00:21:52,141 um And then when you get lawyers involved, it's even worse uh because you have, you have lawyers on both sides that are, you know, becomes a tug of war on semantics and horse 247 00:21:52,141 --> 00:21:53,151 trading. 248 00:21:53,197 --> 00:21:56,199 And instead of stepping back and say, what are we trying to accomplish here? 249 00:21:56,199 --> 00:21:58,420 This landlord wants this tenant in the building. 250 00:21:58,420 --> 00:22:01,091 This tenant wants to do business here. 251 00:22:01,091 --> 00:22:03,092 Let's find a way to get that done. 252 00:22:03,292 --> 00:22:16,366 And yeah, I feel like as a consumer of legal services, understanding me and my goals will help you as a lawyer help me reach those goals more effectively. 253 00:22:16,366 --> 00:22:17,846 Yeah, no question. 254 00:22:17,866 --> 00:22:24,926 And just two quick things in that, yes, so much of lawyer involvement, like you sort of said, when the lawyers are involved, it makes it worse. 255 00:22:24,926 --> 00:22:28,506 And I said, well, there's an evergreen statement if I've ever heard one. 256 00:22:28,886 --> 00:22:30,666 But so much of it is CYA. 257 00:22:30,666 --> 00:22:39,646 So much of it is, I'm going to raise all these risks for you only because when or if something goes wrong, I don't want you to blame me for it. 258 00:22:39,646 --> 00:22:41,366 I don't want you to sue me for it. 259 00:22:41,366 --> 00:22:43,126 I don't want to get in trouble. 260 00:22:43,178 --> 00:22:52,526 For this so I'll flag these and I'll say well, it's up to you if you want to take on this risk That's your business right which is incredibly unhelpful but also and I think this 261 00:22:52,526 --> 00:23:06,298 again goes to this this idea of having a genuine interest in uh in the business and in the people Involved with it if you have that kind of relationship with the client entity then 262 00:23:06,298 --> 00:23:11,874 your advice is not going to be about covering your ass your advice is going to be about well 263 00:23:11,874 --> 00:23:15,977 this is what I think is best for the business, right? 264 00:23:15,998 --> 00:23:20,862 And sometimes you have to give advice as a lawyer to your client that is not what they want to hear. 265 00:23:20,862 --> 00:23:29,431 would say maybe more than sometimes there's that classic, I think it's learned hand who said half the business of a good lawyer is telling his client is a damn fool and should 266 00:23:29,431 --> 00:23:37,462 stop, you know, and, and, and, and, and you gotta, but you can't say that unless you've established that rapport. 267 00:23:37,462 --> 00:23:40,083 and that level of trust and reliability and effectiveness. 268 00:23:40,083 --> 00:23:47,916 But once you do, then you are, you are knitted in and you talk about unbreakable client relationships, right? 269 00:23:47,916 --> 00:23:55,159 No one's going to come along and take that client relationship from you because it is a solid, as my mother would say, a solid to the church. 270 00:23:55,159 --> 00:23:56,230 It's not going anywhere. 271 00:23:56,230 --> 00:24:03,433 so yeah, that's, this is where I keep encouraging lawyers to, to migrate. 272 00:24:03,433 --> 00:24:06,895 I think it takes a lot of courage, but I think it is absolutely essential. 273 00:24:06,895 --> 00:24:11,879 Yeah, yeah, it helps, you know, helps understanding the reward side of the equation. 274 00:24:11,879 --> 00:24:20,897 You as my legal counsel can help me navigate the best trade off of risk and reward if you understand both sides of the equation. 275 00:24:20,897 --> 00:24:28,713 And you talked about a client first law firm model, which this is a good segue into. 276 00:24:28,713 --> 00:24:30,987 um 277 00:24:30,987 --> 00:24:34,820 centering operations around client needs rather than lawyer convenience. 278 00:24:34,820 --> 00:24:36,521 Can you talk a little bit about that? 279 00:24:36,521 --> 00:24:43,822 Yeah, and that phrase was like the subtitle of a book I wrote back in 2017 called Law is a Buyer's Market. 280 00:24:44,482 --> 00:24:45,962 A bit of an aspirational title. 281 00:24:45,962 --> 00:24:50,602 do think, as with many things I say, I don't think I was wrong, but I do think I was a bit early. 282 00:24:51,582 --> 00:24:54,922 But building a client-first law firm was the subtitle. 283 00:24:54,922 --> 00:25:03,922 Now what's interesting is a few years later, I was asked to write the foreword for another book, and this was written by Jack Newton, who was the CEO of Clio. 284 00:25:04,198 --> 00:25:10,463 And uh he called his uh book, The Client-Centered Law Firm. 285 00:25:10,463 --> 00:25:14,666 And we're very friendly, so I was happy for him to do this. 286 00:25:14,666 --> 00:25:17,508 He kind of took friendly issue with client first. 287 00:25:17,508 --> 00:25:28,356 He said, you can't put the client first because there's all kinds of good reasons why that's a short road to disaster for you, for your wellness, for your firm, et cetera. 288 00:25:28,356 --> 00:25:32,224 It's not about putting the client first, it's about putting the client at the center. 289 00:25:32,224 --> 00:25:33,585 of what you do and the core of what you do. 290 00:25:33,585 --> 00:25:39,097 I thought, that was, you know, as they say in court, that was a friendly amendment I was happy to accept. 291 00:25:39,837 --> 00:25:50,582 But I think the overall point is very much the same and reflects back to that point I raised earlier about how law firms are so internally focused. 292 00:25:50,582 --> 00:25:53,623 All of the sensors or most of the sensors are internal. 293 00:25:53,623 --> 00:25:57,805 Very few of them are turned out to the rest of the world. 294 00:25:57,805 --> 00:26:00,245 And the ability to 295 00:26:02,222 --> 00:26:14,042 make that transition where you are paying more and more attention, you're more alert to, you are more sensitive to monitoring and paying attention to and understanding what's 296 00:26:14,042 --> 00:26:15,462 going on in the world. 297 00:26:15,582 --> 00:26:27,158 that, mean, like I wrote a piece of a couple of months back at my Substack about the idea that every law firm these days with the world being absolutely on fire, 298 00:26:27,158 --> 00:26:33,002 you need to have people in your firm whose job it is to geopolitically monitor the world. 299 00:26:33,002 --> 00:26:34,963 And this applies to you. 300 00:26:34,963 --> 00:26:41,028 You don't have to be like an international conglomerate law firm with a thousand lawyers. 301 00:26:41,028 --> 00:26:50,670 I gave the example of you could be um a law firm in a sleepy little town in Florida, and you do a lot of work with the local tourist trade. 302 00:26:50,670 --> 00:27:01,130 And if you're not paying attention to the fact that Canadian tourism has dropped 70 % to the US since Donald Trump began talking about us as the 51st state, your clients are gonna 303 00:27:01,130 --> 00:27:04,910 be caught absolutely dead to rights. 304 00:27:05,650 --> 00:27:07,890 you've gotta have that awareness. 305 00:27:07,890 --> 00:27:14,750 And that's just one dimension, But that awareness of what's going on with your clients, with their business, with the world. 306 00:27:14,750 --> 00:27:17,470 And honestly, that's where we should be, right? 307 00:27:17,470 --> 00:27:20,670 It bothers me so much that we have 308 00:27:20,844 --> 00:27:24,637 found ourselves, have kind of wandered, you know, what's the old saying? 309 00:27:24,637 --> 00:27:26,958 You know, he wandered away and left his mouth running. 310 00:27:26,958 --> 00:27:32,462 I think I do that a fair bit, but the professions kind of wandered off from where it to have been. 311 00:27:32,462 --> 00:27:38,636 And it's wound up in the place where we are such naval gazers and we are so focused on what we're doing. 312 00:27:38,636 --> 00:27:49,323 And something that I say on a regular basis when I'm giving presentations and I said, I have not yet come across a law firm anywhere in the world that does not track down to the 313 00:27:49,323 --> 00:27:50,764 last hour. 314 00:27:50,846 --> 00:27:56,989 every amount of billable time that its clients that is what those lawyers have done for its clients. 315 00:27:56,989 --> 00:27:57,949 How much was done? 316 00:27:57,949 --> 00:27:58,839 Was it billed out? 317 00:27:58,839 --> 00:27:59,690 Was it collected? 318 00:27:59,690 --> 00:28:00,850 How much to what extent? 319 00:28:00,850 --> 00:28:02,421 To whom do we give the credit? 320 00:28:02,421 --> 00:28:03,328 Blah, blah, blah, blah, blah. 321 00:28:03,328 --> 00:28:05,532 It's down to a science. 322 00:28:05,572 --> 00:28:10,214 said I have yet to come across a law firm that maintains actually that's not even true. 323 00:28:10,214 --> 00:28:12,825 I've come across a couple of small firms recently that have done this. 324 00:28:12,825 --> 00:28:14,736 I think one of them said they did it because of me, which is great. 325 00:28:14,736 --> 00:28:17,937 um A spreadsheet with four columns. 326 00:28:17,937 --> 00:28:19,788 What did the client ask for? 327 00:28:19,880 --> 00:28:21,391 What did they end up getting? 328 00:28:21,391 --> 00:28:23,413 Because those two things are often very different. 329 00:28:23,413 --> 00:28:30,599 um What was the overall cost and the final bill to the client and what did they think about their whole experience? 330 00:28:30,599 --> 00:28:33,862 And that fourth column is the absolutely essential one. 331 00:28:33,862 --> 00:28:37,505 What did your clients think about what you did for them? 332 00:28:37,505 --> 00:28:45,452 And so many lawyers, if you ask that about their, last 10 client engagements, how do you, what did your client think about it? 333 00:28:45,452 --> 00:28:46,523 How do they feel about it? 334 00:28:46,523 --> 00:28:47,944 And how do you know? 335 00:28:48,002 --> 00:28:54,780 And I think a lot of them would be very hard pressed to give a good answer to that for even half of them. 336 00:28:54,780 --> 00:29:04,062 So yeah, that's what it means to be client centric, client focused, just outward centric, outward focused, externally centered. 337 00:29:04,062 --> 00:29:06,825 It's much better out there in the world than it is in here. 338 00:29:07,363 --> 00:29:18,266 Yeah, you know, it's, it's almost like when I look at when I look at law, so I spent a few years in financial services at Bank of America, and I was on the risk management uh in the 339 00:29:18,266 --> 00:29:20,407 risk management world for most of that time. 340 00:29:20,407 --> 00:29:33,330 I did three years in global treasury, the rest were in consumer risk, uh corporate audit, I was an internal auditor for anti money laundering, uh compliance, um and then regulatory 341 00:29:33,330 --> 00:29:34,310 relations. 342 00:29:34,310 --> 00:29:37,291 And I got to see what a mature 343 00:29:38,275 --> 00:29:51,319 risk governance organization and structure looks like and there's it just doesn't exist in law firms like customer success like when you were talking about those outward measures 344 00:29:51,319 --> 00:30:01,562 and how our you know our clients do they enjoy working with us are they are we delivering the outcomes they expect you know i immediately think because that's customer success 345 00:30:01,562 --> 00:30:03,513 there's no customer success and 346 00:30:03,611 --> 00:30:05,391 legal services and law firms. 347 00:30:05,391 --> 00:30:07,291 Um, there's no risk management. 348 00:30:07,291 --> 00:30:08,731 There's no internal audit. 349 00:30:08,731 --> 00:30:13,371 You know, it's, um, it's a, it's such a different beast. 350 00:30:13,371 --> 00:30:23,471 And I don't know if you remember, but during the talk, I had, um, I had mentioned how, you know, the big four now entering in Arizona and KPMG. 351 00:30:23,471 --> 00:30:33,571 And I went through all of their resources and capabilities, like 4,000 lawyers, 40 billion in revenue, 275,000 employees. 352 00:30:34,243 --> 00:30:41,868 Innovation is in their culture and in their DNA, legions of Six Sigma Black Belts and Gen. 353 00:30:41,868 --> 00:30:47,072 AI experts and like they're setting up shop over there to compete with you. 354 00:30:47,072 --> 00:31:01,662 um Who do we think is more better positioned to capitalize on this next iteration because you know where the means of legal production have really changed. 355 00:31:01,662 --> 00:31:03,811 Who do we think is really better positioned? 356 00:31:03,811 --> 00:31:14,078 Now, there's lots of caveats and you can make lots of arguments about different aspects of that, but it's really hard to argue that an organization like KPMG, which is the smallest 357 00:31:14,078 --> 00:31:15,349 of the big four, right? 358 00:31:15,349 --> 00:31:21,614 Deloitte's twice their size at 80 billion, um where the biggest law firm in the world is like seven and a half billion, right? 359 00:31:21,614 --> 00:31:31,350 So from a resources perspective, as we get into an era where R &D is going to become part of the equation, because buying, there's no differentiation. 360 00:31:31,350 --> 00:31:32,485 If I go by 361 00:31:32,485 --> 00:31:38,864 Harvey and co-counsel or Paxton or LaGora and my competitor can do the same thing down the street. 362 00:31:38,864 --> 00:31:50,019 So I don't know, what do you see in terms of how law firms in this next, I like to call it 2.0, in this 2.0 big law world, how are firms gonna differentiate themselves? 363 00:31:50,638 --> 00:31:54,338 It's a really good question, it's a really tough question. 364 00:31:54,358 --> 00:32:08,338 And one of the reasons it's tough is that more and more these days, the answer I am inclined to give, and I don't often give it because, you know, for obvious reasons, is it 365 00:32:08,338 --> 00:32:11,798 might not matter a little bit. 366 00:32:11,798 --> 00:32:17,998 mean, we've just spent like a good 20, 30 minutes, you know, going through any number of... 367 00:32:17,998 --> 00:32:25,418 the drawbacks and failings and shortcomings and problems within large law firms, which are chronic, right? 368 00:32:25,418 --> 00:32:32,958 They've been around since I began poking my head into this area in earnest back around 2003 or 2004. 369 00:32:33,558 --> 00:32:36,438 And they've been around for quite some time. 370 00:32:36,438 --> 00:32:41,398 And one of the reasons that firms, going back to that, why don't firms shift out of this stuff? 371 00:32:41,398 --> 00:32:44,498 Because firms are large law firms. 372 00:32:44,498 --> 00:32:47,638 I'll use them specifically, although you could apply this to pretty much any size. 373 00:32:47,638 --> 00:32:51,331 Lodge law firms are incredibly poorly run businesses. 374 00:32:51,331 --> 00:32:52,802 They are not capitalized. 375 00:32:52,802 --> 00:32:59,887 um They don't have any, uh hardly at all, uh permanent assets. 376 00:32:59,887 --> 00:33:02,509 All the assets of value, as the saying goes, walk out every night. 377 00:33:02,509 --> 00:33:05,791 Increasingly, they get poached by other firms and you have to leave them out. 378 00:33:05,791 --> 00:33:08,553 um They are self-absorbed. 379 00:33:08,553 --> 00:33:10,194 They're self-interested. 380 00:33:10,795 --> 00:33:15,790 Their entire pricing system is 100 % risk placed on the client. 381 00:33:15,790 --> 00:33:29,110 They're miserable businesses and yet here we are at what the AMLA, what's the average profit of the one of the 100th firm in the AMLA 100? 382 00:33:29,110 --> 00:33:33,270 Is it like 800 grand a year, 900 grand a year, maybe more than that at some point? 383 00:33:33,270 --> 00:33:34,410 I don't know. 384 00:33:34,410 --> 00:33:35,170 Right. 385 00:33:35,810 --> 00:33:42,230 So yeah, so you're in a position where these firms say, it doesn't matter that we're bad businesses. 386 00:33:42,230 --> 00:33:45,260 It doesn't matter that we're not actually any good at this. 387 00:33:45,260 --> 00:33:52,673 because for whatever reason, we are just set up to make money and we're just gonna keep on doing it year after year. 388 00:33:52,673 --> 00:33:55,104 We're not differentiated from our competitors. 389 00:33:55,104 --> 00:33:56,575 It doesn't matter. 390 00:33:56,675 --> 00:33:58,336 We don't pay attention to client service. 391 00:33:58,336 --> 00:33:59,636 It doesn't matter. 392 00:34:00,036 --> 00:34:02,497 And this is what I've come across. 393 00:34:03,578 --> 00:34:06,089 I've done some consulting with firms. 394 00:34:06,089 --> 00:34:10,841 I've worked with uh consulting firms. 395 00:34:10,921 --> 00:34:13,382 And any number of conversations I have with 396 00:34:13,382 --> 00:34:15,743 veteran consultants in this industry. 397 00:34:16,123 --> 00:34:23,876 And so many of them come down to the end of the day to saying, you know what, it doesn't actually matter how great a strategy you give them, or what a great insight, what have 398 00:34:23,876 --> 00:34:27,168 you, they're just going to keep on doing what they've always done. 399 00:34:27,168 --> 00:34:27,688 Right? 400 00:34:27,688 --> 00:34:35,761 It's one of the reasons why a number of people who've been at this, like, I don't do a lot of consulting for law firms of any particular size. 401 00:34:35,761 --> 00:34:37,952 And from what I've just said, you can probably see why. 402 00:34:37,952 --> 00:34:42,958 But part of it is the people I know who have, they get kind of jaded. 403 00:34:42,958 --> 00:34:44,978 They get kind of sure what the hell. 404 00:34:44,978 --> 00:34:46,318 Yeah, here's the strategy for you. 405 00:34:46,318 --> 00:34:46,977 Go nuts. 406 00:34:46,977 --> 00:34:49,598 You know, I hope I hope it enjoys its time on the shelf. 407 00:34:49,878 --> 00:34:52,058 Um, that's not going to happen. 408 00:34:52,118 --> 00:35:02,758 So, so I look at all that and I look at AI coming in and look at a technology that, well, take a look at the Thompson Reuters future. 409 00:35:02,758 --> 00:35:13,044 The law firm report came out a few months back where they said, uh, we foresee over the course of the next five to 10 years, the decline of 40 % 410 00:35:13,044 --> 00:35:20,855 the number of billable hours that will be required to carry out legal work and for routine, highly repeatable work, it's closer to 80%. 411 00:35:20,855 --> 00:35:24,259 And it's like, I'm sorry, that's an extinction level event. 412 00:35:24,259 --> 00:35:33,662 You cannot collapse inventory like that, that dramatically in that short a space of time and not have catastrophic consequences. 413 00:35:33,662 --> 00:35:42,510 um yeah, and I'm very bearish on the ability of even well-run 414 00:35:42,510 --> 00:35:51,514 uh firms with a strong central culture and uh in general consensus amongst the ownership about what to do. 415 00:35:51,514 --> 00:35:54,655 I'm embarrassed that they can handle what's coming. 416 00:35:54,655 --> 00:36:07,491 ah I look at the larger firms and I just think, um if the regulations were to change tomorrow and I could buy shares in your law firm, I would choose to bypass that 417 00:36:07,491 --> 00:36:08,161 opportunity. 418 00:36:08,161 --> 00:36:10,146 um So that's 419 00:36:10,146 --> 00:36:13,708 That's heavy statement that I'm making here and it's a heavy declaration. 420 00:36:13,708 --> 00:36:19,910 But um yeah, but it's very difficult for me to see in realistic terms. 421 00:36:19,910 --> 00:36:22,591 Is it theoretically possible that you could do this? 422 00:36:22,591 --> 00:36:24,292 Absolutely. 423 00:36:24,292 --> 00:36:25,523 You can come up with a strategy. 424 00:36:25,523 --> 00:36:36,377 You can read books on the prospect of how to make your law firm, you know, to make the transition to uh the new kind of world. 425 00:36:36,377 --> 00:36:38,488 But in practical terms, 426 00:36:38,488 --> 00:36:50,173 The way these law firms, most law firms are set up, way, the, how, where power is localized within the firms, how power is exercised, how privilege is maintained. 427 00:36:50,173 --> 00:36:52,504 And I don't mean evidentiary privilege. 428 00:36:52,504 --> 00:36:54,165 mean, the sense of privilege. 429 00:36:54,165 --> 00:36:58,526 The fact that as someone pointed out to me years ago, and I don't know why I didn't ever notice this myself. 430 00:36:58,526 --> 00:37:05,930 Um, there is not one ounce of quality control in law firms at the partner level, right? 431 00:37:05,930 --> 00:37:06,830 A partner. 432 00:37:06,830 --> 00:37:15,770 can serve their client, and it's their client by the way, not the firm's client, serve their client with something and nobody else in the firm ever so much as glances at it. 433 00:37:15,770 --> 00:37:22,970 And if you suggested to that partner, maybe Bob or Barbara or whatever should take a look at that just to make sure and give you some feedback. 434 00:37:23,430 --> 00:37:25,510 They'd be out the door the next day. 435 00:37:25,650 --> 00:37:34,175 So this is a little bit of my own frustration with law firms coming through over this time, but I am bearish. 436 00:37:34,175 --> 00:37:37,433 on the prospects if I'm being absolutely honest with you. 437 00:37:37,433 --> 00:37:39,684 Yeah, no, I would agree with you. 438 00:37:39,684 --> 00:37:44,246 you know, that's, are solely dependent on law firms. 439 00:37:44,246 --> 00:37:46,507 I we have a hundred percent law firm business. 440 00:37:46,507 --> 00:37:59,332 So it has me, my eyes open and I've been trying to play out different scenarios in my head, almost like a Monte Carlo simulation, like, okay, if this then that, and you know 441 00:37:59,332 --> 00:38:06,715 what, what I keep, I keep running into, I keep running into the concept of consolidation. 442 00:38:06,907 --> 00:38:10,727 So the Amlon 100 is extremely fragmented. 443 00:38:11,067 --> 00:38:20,627 Again, listeners are familiar with the stat that if you add up the revenues of all 100 firms, it's 140 billion. 444 00:38:20,647 --> 00:38:27,307 If you add up the revenues of the big four, it's about 220 billion, right? 445 00:38:27,307 --> 00:38:28,667 So extremely fragmented. 446 00:38:28,667 --> 00:38:32,767 The largest five players in the space own about 4 % of the market. 447 00:38:32,923 --> 00:38:42,251 um on the accounting side, public accounting side, this is on audit, the top four own 97 % of the Fortune 500. 448 00:38:42,251 --> 00:38:44,733 You know, so very, very different dynamics. 449 00:38:44,733 --> 00:38:50,858 And I keep thinking, okay, what has driven the fragmentation that exists in big law today? 450 00:38:50,858 --> 00:38:52,629 And I think it's what you just described. 451 00:38:52,629 --> 00:38:55,902 They're not really well run businesses. 452 00:38:55,902 --> 00:38:57,883 A lot of times they've been... 453 00:38:58,041 --> 00:39:08,026 You know, they've grown organically with some acquisition in here and there with maybe some opportunistic, not necessarily a corporate development strategy, but, this firm 454 00:39:08,026 --> 00:39:09,257 across the street is suck and win. 455 00:39:09,257 --> 00:39:12,778 Let's swoop in and get them at a fire sale price. 456 00:39:13,759 --> 00:39:18,661 you know, when I think about, right, there's going to be somebody's going to figure it out how to do this. 457 00:39:18,661 --> 00:39:22,683 And the ones that do, I think there's going to be a much smaller number. 458 00:39:22,879 --> 00:39:26,539 And I think there's going to be buying opportunities and consolidation. 459 00:39:26,539 --> 00:39:27,086 I don't know. 460 00:39:27,086 --> 00:39:30,422 Does that fit with how you see things playing out? 461 00:39:30,422 --> 00:39:31,343 Yeah, for sure. 462 00:39:31,343 --> 00:39:45,914 I can absolutely see a wave of consolidation um and, a friend of mine, the business coined a term, which I won't be able to pull together at the moment, but the idea of, it, they, 463 00:39:45,914 --> 00:39:54,100 they look like mergers, but they're actually just wind downs, um, of a firm, you know, like a firm, a will acquire firm B it's a merger. 464 00:39:54,100 --> 00:39:57,512 No, because from B's name is disappearing. 465 00:39:57,514 --> 00:40:02,038 and ah only about a third of the lawyers are joining the new firm. 466 00:40:02,038 --> 00:40:06,381 No, this is a harvest um of firm B. 467 00:40:06,381 --> 00:40:15,228 um And the only negotiations really are around things like unfunded pension liabilities and who's gonna pay for those sorts of things. 468 00:40:15,228 --> 00:40:16,459 And I can see lots more of that. 469 00:40:16,459 --> 00:40:19,131 I think we're gonna see consolidation in two respects. 470 00:40:19,131 --> 00:40:21,233 One, a lot of firms are going to... 471 00:40:21,233 --> 00:40:23,118 uh 472 00:40:23,118 --> 00:40:25,338 be the victims of what you call coyote gravity. 473 00:40:25,338 --> 00:40:33,358 know, the coyote runs off the cliff and then takes a few seconds, he looks down and says, Oh, know, she sign comes out off, goes ears follow. 474 00:40:33,938 --> 00:40:35,778 Um, so it's gonna be part of it. 475 00:40:35,778 --> 00:40:46,178 But part of it also is going to be, um, again, it's difficult for me to look at the advance of AI and where it's come already in two years and think about where it's going to 476 00:40:46,178 --> 00:40:51,960 be in five and imagine that law firms are going to have anywhere close to the same number of lawyers. 477 00:40:51,960 --> 00:40:56,391 that they do today, especially non-equity partners and associates. 478 00:40:56,391 --> 00:41:03,293 I would not be the least bit surprised to see a pretty significant culling of lawyers in those positions. 479 00:41:03,293 --> 00:41:10,495 And there's not going to be any obvious place for them to go other than into their own oh individual businesses. 480 00:41:10,495 --> 00:41:19,398 there'll be consolidation in terms of firms are kind of glommed together a little bit, but also as they shrink and become more compressed. 481 00:41:19,398 --> 00:41:21,454 Now that's to say the firms will become 482 00:41:21,454 --> 00:41:30,934 less profitable, you can make an argument, and I think there's one good one to be made, that the winners and all this are going to be insanely profitable, right? 483 00:41:30,934 --> 00:41:33,754 Because profit again belongs to the owners. 484 00:41:33,754 --> 00:41:44,274 And if you're lucky enough to be a current owner of one of these law firms in New York, and you're in that sweet spot of your career, you can probably make bank off this whole 485 00:41:44,274 --> 00:41:45,314 process. 486 00:41:45,514 --> 00:41:50,574 But it's one of those things where it's a short term 487 00:41:50,734 --> 00:42:03,057 uh crystallization of value that is going to uh massively reduce the population of law firms, suspect, or at least firms that we understand them now. 488 00:42:03,057 --> 00:42:05,518 Not to say that new firms won't emerge. 489 00:42:05,518 --> 00:42:07,759 I think new firms can and will emerge. 490 00:42:07,959 --> 00:42:11,160 And in a way, I think they kind of have to, because this is the thing. 491 00:42:11,160 --> 00:42:19,576 Every so often when a firm collapses or disappears, whatever, and the legal press writes that, the death of a law firm. 492 00:42:19,576 --> 00:42:22,917 And I'm like, I'm sorry, law firms aren't people. 493 00:42:22,917 --> 00:42:24,948 Nobody died, right? 494 00:42:24,948 --> 00:42:29,680 know, yeah, a grand old brand disappeared. 495 00:42:29,680 --> 00:42:33,672 Okay, well, I guess I can shed a tear for that nostalgia bit. 496 00:42:33,672 --> 00:42:37,524 the businesses that aren't working are supposed to go down. 497 00:42:37,524 --> 00:42:38,835 They're supposed to fall apart. 498 00:42:38,835 --> 00:42:41,806 And then labor disperses because that's what happens. 499 00:42:41,806 --> 00:42:47,060 Labor disperses, people go out and they read amalgamate in different combinations. 500 00:42:47,060 --> 00:42:51,673 in models and in structures that make more sense for the market of which we have now. 501 00:42:51,694 --> 00:42:56,498 So I think there is going to be a massive downscaling of the number of law firms. 502 00:42:56,498 --> 00:43:03,083 I think the concept of an AmLaw 100 itself is relatively shortly going to be very dated. 503 00:43:03,083 --> 00:43:06,846 But I think we will see new entities establish themselves. 504 00:43:06,846 --> 00:43:08,788 And I don't think they're going to be huge entities. 505 00:43:08,788 --> 00:43:09,519 They don't have to be. 506 00:43:09,519 --> 00:43:10,329 They probably shouldn't be. 507 00:43:10,329 --> 00:43:15,333 um Because again, this idea of chasing growth by adding lawyers is actually pretty stupid. 508 00:43:15,333 --> 00:43:16,774 um 509 00:43:16,810 --> 00:43:24,592 And you're going to see them recomb reconstitute in new combinations where you're not at your inventory is not the time and effort of your lawyers. 510 00:43:24,592 --> 00:43:35,855 It is in the value you're producing or the relationships you're establishing or in the uh percentage of the value that your client is, is uh generating through your work, whatever 511 00:43:35,855 --> 00:43:37,136 the case might be. 512 00:43:37,176 --> 00:43:45,598 So, so for me, I, I, I see a kind of a grand reconstitution. 513 00:43:45,634 --> 00:43:48,657 I don't know that's a word or not, but if it's not, it maybe should be. 514 00:43:48,657 --> 00:43:50,018 That's where I think we're going to go. 515 00:43:50,018 --> 00:43:55,163 Old models, old systems and structures falling away because they don't work anymore. 516 00:43:55,163 --> 00:43:59,206 New models emerging that are better adapted to the environment in which we'll find ourselves. 517 00:43:59,495 --> 00:44:01,135 That makes perfect sense to me. 518 00:44:01,135 --> 00:44:07,681 Well, we're almost out of time, but I did want to get a touch on one last subject that I think you have some interesting thoughts around, and that is pricing. 519 00:44:08,202 --> 00:44:11,445 And what pricing might look like in a post-AI world. 520 00:44:11,445 --> 00:44:23,004 It's really a tricky problem, and I've heard lots of interesting ideas put forward, but I've not really heard anything that just goes, oh that makes sense. 521 00:44:23,004 --> 00:44:25,576 I haven't heard it yet. 522 00:44:25,576 --> 00:44:29,311 What are your thoughts on what pricing might look like in the future? 523 00:44:29,311 --> 00:44:30,571 Yeah. 524 00:44:30,651 --> 00:44:39,335 So, if you thought, first of all, pricing period is difficult in any industry, in any area, it's really, really difficult to figure out what the right price is. 525 00:44:39,335 --> 00:44:46,668 Most of the time we have, we have mostly a reliable objective market dynamics to guide us. 526 00:44:46,668 --> 00:44:50,660 can say, well, the market will decide what the price for plasma TVs is. 527 00:44:50,660 --> 00:44:54,092 The market will decide what the price for uh SUVs is. 528 00:44:54,092 --> 00:44:54,764 Okay. 529 00:44:54,764 --> 00:44:55,334 That's great. 530 00:44:55,334 --> 00:45:12,281 If you have a functioning marketplace, which is to say a relatively informed um buying population and a uh very um diversified and highly inter competitive set of uh suppliers 531 00:45:12,281 --> 00:45:19,439 um and uh no real information asymmetry, then okay, you've got yourself a normal market. 532 00:45:19,439 --> 00:45:20,764 We don't have any of that. 533 00:45:21,445 --> 00:45:22,275 Yeah, exactly. 534 00:45:22,275 --> 00:45:24,076 In like literal economic terms. 535 00:45:24,076 --> 00:45:26,248 We don't have any of that in the law, right? 536 00:45:26,248 --> 00:45:28,439 So pricing is hard enough in an efficient market. 537 00:45:28,439 --> 00:45:38,556 It's almost impossible in a market like legal services where for the most part, unless you are in a litigation with a very specific dollar amount attached, unless you were involved 538 00:45:38,556 --> 00:45:46,301 in a merger or some other operation where there's a very specific dollar amount in terms of this is the total value that this thing will be worth or the case might be. 539 00:45:46,301 --> 00:45:47,504 And sometimes that happens. 540 00:45:47,504 --> 00:45:48,523 A lot of times it doesn't. 541 00:45:48,523 --> 00:45:51,505 Uncertainty is the norm. 542 00:45:51,505 --> 00:45:53,576 It's by a wide margin. 543 00:45:54,190 --> 00:46:00,430 then there's no obvious dollar amount you can hang on to and do something like, we'll throw a percentage onto it, right? 544 00:46:00,430 --> 00:46:03,970 So then you're in a position of, okay, well, then what's the value? 545 00:46:03,970 --> 00:46:09,450 And here's the thing, and this is the reason why the billable hour has been as effective as long as it has. 546 00:46:09,450 --> 00:46:12,290 A big reason is because it's really profitable for lawyers. 547 00:46:12,290 --> 00:46:18,010 But the other is that nobody knows the value of what we do as lawyers. 548 00:46:18,010 --> 00:46:21,420 There is no obvious way to say what it's worth. 549 00:46:21,420 --> 00:46:21,710 Right? 550 00:46:21,710 --> 00:46:24,252 How much is it worth for me to help your business get set up? 551 00:46:24,252 --> 00:46:24,772 I don't know. 552 00:46:24,772 --> 00:46:29,454 If the business fails in the first week, not very much, if the business goes on to become Google, it was worth quite a lot. 553 00:46:29,454 --> 00:46:31,216 But you won't know that. 554 00:46:31,216 --> 00:46:31,433 Right? 555 00:46:31,433 --> 00:46:33,777 There's no way to know it at the time. 556 00:46:33,777 --> 00:46:35,388 How much is good advice worth? 557 00:46:35,388 --> 00:46:36,519 It could be invaluable. 558 00:46:36,519 --> 00:46:36,839 Right? 559 00:46:36,839 --> 00:46:40,200 If it's not listened to, well, what's the impact over there? 560 00:46:40,301 --> 00:46:46,924 So we don't know the value of what we're selling and our clients, for the most part, don't know the value of what we're buying. 561 00:46:46,924 --> 00:46:50,266 So of course we kind of default to this proxy of 562 00:46:50,312 --> 00:46:58,819 What the hell this many dollars per hour and will bill you for the time that we spend doing it because you know what we don't have a better idea you don't have a better idea 563 00:46:58,819 --> 00:47:08,566 client let's go ahead with this and the client doesn't love it but it says all right at least I get it it's simple it's straightforward and I can live with that okay um so so 564 00:47:08,566 --> 00:47:15,894 that's why I mean like I think the billable hour has a number of drawbacks of surprising mechanism but it's workable I think it is 565 00:47:15,894 --> 00:47:21,967 toxic as a compensation advancement and internal value assessment metric, which is where the real problem exists. 566 00:47:21,967 --> 00:47:31,021 We don't have time for that today, but I will say this again, along comes this technology, which is a massive compressor of time. 567 00:47:31,021 --> 00:47:39,645 And it's going, what it's going to mean as it gets adopted more and more, not just within law firms, but especially within clients, especially on the corporate side, you're going 568 00:47:39,645 --> 00:47:42,776 to see a lot of work, a lot of tasks. 569 00:47:42,776 --> 00:47:46,209 Are we going to be fully automated entirely by the AI? 570 00:47:46,209 --> 00:47:47,951 That won't be that common at the start. 571 00:47:47,951 --> 00:47:50,753 Maybe in five years, we'll see. 572 00:47:50,753 --> 00:47:51,403 We don't know. 573 00:47:51,403 --> 00:48:02,763 We don't know enough about how AI is going to develop, but that is certainly a reasonable possibility, but it's either entirely automated or at least massively accelerated. 574 00:48:02,864 --> 00:48:10,678 If you're in a position where you are still selling your work according to the time and effort that lawyers put in to produce it, 575 00:48:10,678 --> 00:48:16,681 you're going to be out of business within a few years time because your inventory is going to collapse. 576 00:48:16,681 --> 00:48:17,201 Right. 577 00:48:17,201 --> 00:48:21,583 And you only and you're going to find yourself going around saying, how do we get more hours? 578 00:48:21,583 --> 00:48:22,943 How do I get more time? 579 00:48:22,943 --> 00:48:25,444 uh Let's go out and get more work from the clients. 580 00:48:25,444 --> 00:48:26,165 Okay. 581 00:48:26,165 --> 00:48:31,527 But as you know, that is, there's a lot of unrecoverable costs associated with that. 582 00:48:31,527 --> 00:48:36,469 You're marketing and you're calling and you're meeting people and you're networking and all this kind of stuff. 583 00:48:36,469 --> 00:48:39,840 And it takes a long time to land work from. 584 00:48:40,056 --> 00:48:48,152 client because either the client is brand new to the world, which case great, or the client already has a lawyer and it can be very hard to pry someone else away from their 585 00:48:48,152 --> 00:48:49,453 legal counsel. 586 00:48:49,453 --> 00:48:56,436 And even if you do get this new client or this new work, it comes in and a lot of that's going to be susceptible to the AI. 587 00:48:56,436 --> 00:49:06,804 the hours you're going to find yourself on this treadmill running faster and faster and faster, as long as you believe that what you are selling your clients is time and effort. 588 00:49:06,804 --> 00:49:09,454 And you were never selling that really. 589 00:49:09,454 --> 00:49:15,194 You are always selling outcomes and experiences and peace of mind, but you weren't pricing according to that. 590 00:49:15,814 --> 00:49:26,574 So the way I look at it is that what, what are we going to be valued for in future as lawyers to the extent we exist to the extent there is any demand for us hope to God there 591 00:49:26,574 --> 00:49:38,294 is, but it's going to be about what kind of relationships of reliable, sincere relationships of the effectiveness have we established with our clients? 592 00:49:38,294 --> 00:49:39,138 If you've 593 00:49:39,138 --> 00:49:47,811 got one of those, if you've got several of those, you can charge whatever the hell you want for that because that's incredibly valuable to clients. 594 00:49:47,811 --> 00:49:52,302 Just like that bank that said, we care enough about you to make this effort. 595 00:49:52,302 --> 00:49:58,344 You will pay as much as is necessary, as much as you can to get that kind of asset. 596 00:49:58,344 --> 00:50:03,785 It's got to be about the relationship because fundamentally that's what it means to be a lawyer. 597 00:50:03,785 --> 00:50:06,860 To be a lawyer means to be in relationship 598 00:50:06,860 --> 00:50:16,991 with someone who you are giving guidance to based on your knowledge of the law, based on your professional responsibility and ethics and your personal integrity, that they are 599 00:50:16,991 --> 00:50:19,544 relying on you for help. 600 00:50:19,544 --> 00:50:22,287 And that is at the heart of what we do as lawyers. 601 00:50:22,287 --> 00:50:25,970 You might as well make that the basis of your pricing mechanism. 602 00:50:26,703 --> 00:50:27,804 That is great feedback. 603 00:50:27,804 --> 00:50:28,104 Yeah. 604 00:50:28,104 --> 00:50:35,309 I loved, I loved, oh I love this topic because it's not, it, there's no, there are no easy answers. 605 00:50:35,309 --> 00:50:37,611 the billable hour was, was, was an easy answer. 606 00:50:37,611 --> 00:50:39,312 It's a low risk answer. 607 00:50:39,312 --> 00:50:47,898 It's a logical answer, but looking forward, none of those easy, low risk, logical answers exist. 608 00:50:47,898 --> 00:50:53,141 And it's, and I find that exciting because it's a Rubik's cube. 609 00:50:53,141 --> 00:50:56,503 We get to, we get to figure this thing out. 610 00:50:56,558 --> 00:50:56,892 So. 611 00:50:56,892 --> 00:50:57,739 um 612 00:50:57,739 --> 00:51:05,441 if you can figure it out, you can buy your own Caribbean island because yeah, that's going to be, that's the question. 613 00:51:05,441 --> 00:51:06,365 You're absolutely right. 614 00:51:06,365 --> 00:51:07,966 And that is not just from pricing. 615 00:51:07,966 --> 00:51:11,908 Across the board, all the easy answers are gone. 616 00:51:11,908 --> 00:51:13,690 We're out of that time. 617 00:51:13,690 --> 00:51:16,601 We're no longer in high school, right? 618 00:51:16,601 --> 00:51:24,597 We're going immediately into master's level, um PhD level uh university as an industry. 619 00:51:24,597 --> 00:51:26,671 And wow, it's going to be a hell of leap. 620 00:51:26,671 --> 00:51:28,172 Yeah, it's gonna be fun. 621 00:51:28,172 --> 00:51:30,094 Like I said, I've never been more excited. 622 00:51:30,094 --> 00:51:40,454 know I, um like you, I point out a lot of the challenges and the obstacles in front of us, but it's not because I'm pessimistic. 623 00:51:40,454 --> 00:51:48,372 I just wanna make sure there's awareness and um not complacency around them because I'm married to this industry. 624 00:51:48,372 --> 00:51:49,623 My livelihood depends on it. 625 00:51:49,623 --> 00:51:51,435 I wanna see it succeed. 626 00:51:51,607 --> 00:51:54,333 So yeah, this has been a great conversation. 627 00:51:54,333 --> 00:52:03,415 can um people, I've been reading your work for a long time, but how can people find out more about what you write and where you speak? 628 00:52:03,415 --> 00:52:04,095 thanks, Ted. 629 00:52:04,095 --> 00:52:09,477 um Almost everything that I'm writing these days is at my substack, which is just my name, Jordan Furlong. 630 00:52:09,477 --> 00:52:11,927 ah I try to get something out every couple of weeks. 631 00:52:11,927 --> 00:52:13,538 The summer, I'm busy with a bunch of projects. 632 00:52:13,538 --> 00:52:14,919 I've been writing as much now. 633 00:52:14,919 --> 00:52:16,999 Every couple of weeks, I'll try to publish something. 634 00:52:16,999 --> 00:52:19,780 It's free because I'm, two reasons. 635 00:52:19,780 --> 00:52:21,861 One, I want the information to spread. 636 00:52:21,861 --> 00:52:25,032 I'm actually most interested in the IDs getting out there and circulating. 637 00:52:25,038 --> 00:52:27,808 ah But also I don't make my money off what I write. 638 00:52:27,808 --> 00:52:30,209 I make my money off people reading what I write and say, that's great. 639 00:52:30,209 --> 00:52:32,340 Can we pay you a lot of money to come and talk to us as a firm? 640 00:52:32,340 --> 00:52:34,821 I said, awesome um about that. 641 00:52:34,821 --> 00:52:40,143 uh I'm moving into doing more strategic consulting with firms that are interested in it. 642 00:52:40,143 --> 00:52:49,446 Right now there's a very, very small universe of law firms of any kind interested in that kind of guidance, but I suspect it's going to increase over the course of. 643 00:52:49,517 --> 00:52:53,750 Yeah, and Furlong is spelled F-U-R-L-O-N-G. 644 00:52:54,451 --> 00:52:56,713 We're recording here on video. 645 00:52:56,713 --> 00:53:07,042 Most of our uh engagement comes, it's audio, Spotify and Apple Podcasts, but we do have a, we get quite a few YouTube views as well. 646 00:53:07,042 --> 00:53:10,505 um Well, was a, yeah, there you go. 647 00:53:10,505 --> 00:53:13,648 It was a, I always have my info dashed around a little free advertising. 648 00:53:13,648 --> 00:53:16,120 um Well, it was great having you on. 649 00:53:16,120 --> 00:53:17,583 I really appreciate you. 650 00:53:17,583 --> 00:53:23,766 taking the time and hopefully we'll get to uh chat again at a conference real soon. 651 00:53:27,179 --> 00:53:27,620 Awesome. 652 00:53:27,620 --> 00:53:28,081 All right. 653 00:53:28,081 --> 00:53:29,403 Have a good weekend. 654 00:53:29,746 --> 00:53:30,767 Take care. 00:00:01,494 Mr. 2 00:00:01,494 --> 00:00:03,402 Furlong, how are you this afternoon? 3 00:00:03,402 --> 00:00:07,183 I am very well Ted, thank you very much for having me on your show today. 4 00:00:07,183 --> 00:00:08,624 Yeah, I'm super excited. 5 00:00:08,624 --> 00:00:19,243 I've been following your work for many a year and you and I got to speak together at the Inside Practice event earlier this year. 6 00:00:19,243 --> 00:00:31,923 I gave the uh opening presentation and you followed up with a keynote and it almost seemed like we had collaborated because it was you kind of carried the theme and I was glad that 7 00:00:31,923 --> 00:00:36,727 you didn't completely disagree with everything I just said because people would listen to you before they did me. 8 00:00:36,788 --> 00:00:40,620 Well, uh I don't know about that, but no, I think you're absolutely right. 9 00:00:40,620 --> 00:00:50,896 think we're very much tuned in, I think, on the same wavelength, but that's a good part is that we're able to kind of offer complimentary viewpoints on all the stuff that's going on 10 00:00:50,896 --> 00:00:51,599 out there. 11 00:00:51,599 --> 00:00:52,800 which there's plenty of. 12 00:00:52,800 --> 00:00:57,842 um There's no shortage of things to talk about in the legal sector these days. 13 00:00:57,842 --> 00:01:00,673 um Well, let's get you introduced. 14 00:01:00,673 --> 00:01:02,714 I think most people probably know who you are. 15 00:01:02,714 --> 00:01:04,815 You've been around for quite a while. 16 00:01:04,815 --> 00:01:09,867 Why don't you tell us a little bit about who you are, what you do, and where you do it? 17 00:01:09,998 --> 00:01:10,838 Cool. 18 00:01:10,838 --> 00:01:17,858 So I am a, I guess, a legal market or legal sector analyst, consultant, forecaster. 19 00:01:18,218 --> 00:01:23,178 Sometimes I say sideline reporter if I'm feeling particularly acerbic. 20 00:01:23,178 --> 00:01:31,818 What I mostly do is I write and I speak with law firms, legal organizations, anybody really in the legal sector. 21 00:01:31,818 --> 00:01:39,796 And what I try to do is to describe what I'm seeing in terms of the extraordinary changes taking place in the legal world. 22 00:01:39,796 --> 00:01:49,293 anticipate what's coming our way in that regard and then to make my recommendations look this is what I really think we ought to be doing about this what you in particular in your 23 00:01:49,293 --> 00:01:58,480 whatever circumstance happens to be should be doing about this and just trying to give people a bit of it like a framework and and and some guidance in terms of where we can we 24 00:01:58,480 --> 00:02:06,666 can all go next on this and I do all this from Ottawa Canada which uh is a very nice place to live 25 00:02:06,767 --> 00:02:11,235 and so long as it's not any time between October and March. 26 00:02:12,699 --> 00:02:14,180 Just half the year. 27 00:02:15,340 --> 00:02:29,014 Well, so going back to that Inside Practice event, so my opening presentation was regarding the innovation efforts in legal over the last 10 years and putting a little bit 28 00:02:29,014 --> 00:02:31,085 of structure around it. 29 00:02:31,085 --> 00:02:38,619 And my listeners have heard many times about the little analysis that I did with looking at 30 00:02:38,619 --> 00:02:45,499 the number of innovation resources that existed in 2014 and then again 10 years later in 2024. 31 00:02:45,779 --> 00:02:54,839 And it was there were 16 people in the Ilta roster, which doesn't have 100 % coverage, but it's a good, fairly good data source. 32 00:02:54,979 --> 00:03:00,239 And then there were over 300 in 2024. 33 00:03:00,719 --> 00:03:03,079 There's approaching 400 now. 34 00:03:03,079 --> 00:03:08,195 So massive 200%, I'm sorry, 2000 % plus growth. 35 00:03:08,195 --> 00:03:22,389 And then I cited some additional numbers like the law department operation survey where almost two thirds of law firm clients said that they disagree or strongly disagree that 36 00:03:22,389 --> 00:03:28,551 their law firm partners are innovative and really points to a pretty big disconnect. 37 00:03:28,551 --> 00:03:37,763 And I outlined a few reasons I think uh that gap exists, one of which is there's been a lot of innovation theater. 38 00:03:37,901 --> 00:03:38,471 illegal. 39 00:03:38,471 --> 00:03:47,894 um You know, it's been I had Michele uh DeStefano on a couple episodes ago and she wrote a great paper. 40 00:03:47,914 --> 00:04:00,688 God, that paper is probably five, six years old by now, where she went and interviewed like, I don't know, 40 CINOs and, you know, asked them about their remit and the name of 41 00:04:00,688 --> 00:04:03,238 the paper was Rolls, Holes and Goals. 42 00:04:03,238 --> 00:04:06,139 You know, the chief innovation Officer role. 43 00:04:06,283 --> 00:04:08,183 in law firms. 44 00:04:08,264 --> 00:04:14,865 it was the number one remit was um around a marketing. 45 00:04:14,865 --> 00:04:22,007 was, um They had cited, you know, the need for the firms to appear innovative within the marketplace. 46 00:04:22,007 --> 00:04:27,219 And, you know, and I had seen it, obviously, we sell into the KM and Innovation space. 47 00:04:27,219 --> 00:04:33,770 And, you know, we had a bird's eye view into those functions. 48 00:04:33,811 --> 00:04:35,491 And then you followed up. 49 00:04:35,587 --> 00:04:53,042 with a really interesting metaphor about the immovable object that has been Big Law and the billable hour and the uh impending impact of this new transformation that's underway. 50 00:04:53,042 --> 00:04:58,987 Maybe you could just say a few words about the message that you were delivering that day and so we can get a sense of that. 51 00:04:59,062 --> 00:05:07,444 Yeah, and I guess one of the things I was hoping to communicate to people is a part of it was to bring forward a little bit more sense of urgency. 52 00:05:07,444 --> 00:05:20,808 um I think that for a lot of people in the legal sector, a lot of lawyers and understandably, the take they have or the way they kind of approach AI at the moment is 53 00:05:21,128 --> 00:05:22,439 mostly curiosity. 54 00:05:22,439 --> 00:05:23,669 It's like, huh, what's this? 55 00:05:23,669 --> 00:05:24,779 I wonder what this can do. 56 00:05:24,779 --> 00:05:26,030 wow, it's full of problems. 57 00:05:26,030 --> 00:05:28,070 And look at all these hallucinations. 58 00:05:29,433 --> 00:05:35,394 And maybe not taking it with quite the seriousness that I thought it required. 59 00:05:36,654 --> 00:05:45,054 And owning up to the fact that, as you say, we've got this, I think I used like a brick wall on a cannon to symbolize the two. 60 00:05:45,054 --> 00:05:47,234 And I said, look, I know that brick wall very well. 61 00:05:47,234 --> 00:05:50,894 I've been banging my head off it for the last 20, 25 years. 62 00:05:50,894 --> 00:05:54,394 The recalcitrance of the legal profession and of law firms. 63 00:05:54,394 --> 00:06:02,918 is just extraordinary and where so many other industries and professions have buckled under the pressure of outside forces, law has held firm. 64 00:06:02,938 --> 00:06:12,972 Now, the easiest thing in the world to say is this time is different and we've been wrong about these things before, but I look at what AI in particular is bringing. 65 00:06:12,972 --> 00:06:15,183 There's other forces at work here. 66 00:06:15,183 --> 00:06:18,365 There's other evolutions, developments taking place. 67 00:06:18,365 --> 00:06:22,030 You mentioned the law department operations survey. 68 00:06:22,030 --> 00:06:29,213 10 years ago, was no such thing as law department operations that legal ops was like this brand new concept. 69 00:06:29,213 --> 00:06:34,415 we're seeing any number of other factors coming in into play. 70 00:06:34,556 --> 00:06:40,788 so part of my message was, I didn't want to call it like a wake up call necessarily, because people don't, know, no one likes getting woken up. 71 00:06:40,788 --> 00:06:42,419 That's why we have this news button. 72 00:06:42,419 --> 00:06:49,334 But it really was just to bring a sense of urgency to say, we are running out of time. 73 00:06:49,334 --> 00:07:00,050 in order for us to make the adjustments to, yes, our business models as lawyers, but also how we perceive ourselves, how we present ourselves to the market, where we think our 74 00:07:00,050 --> 00:07:02,542 value is located. 75 00:07:02,542 --> 00:07:09,825 All of the ways in which we have traditionally defined that, I think have maybe five years to run, maybe if we're lucky. 76 00:07:09,906 --> 00:07:12,887 And so that really was kind of what I was hoping to communicate. 77 00:07:12,887 --> 00:07:18,142 Hopefully uh some of it came across, but it's a message that I feel even more strongly about today than I did. 78 00:07:18,403 --> 00:07:20,835 Yeah, and you know, I have a similar sentiment. 79 00:07:20,835 --> 00:07:29,352 So I've been in the space since 2008, so 17 years, and I've had the opportunity to work with 110 Amla firms. 80 00:07:29,352 --> 00:07:39,620 That's when I stopped counting the number because it gets hard to count, you know, like um they merge and you know, okay, we had Drinker Biddle and Fagry Baker Daniels. 81 00:07:39,620 --> 00:07:41,742 Now they're Drinker Biddle or they're Fagry Drinker. 82 00:07:41,742 --> 00:07:44,604 Does that count as three or is that one? 83 00:07:45,245 --> 00:07:46,676 You lose track. 84 00:07:46,676 --> 00:07:47,927 So I just... 85 00:07:47,927 --> 00:07:50,808 I'm going to stay with 110, but more than half. 86 00:07:50,808 --> 00:07:58,170 And um in that time, I've gotten to know people and understand the industry uh pretty well. 87 00:07:58,170 --> 00:08:02,431 And I see a tremendous amount of complacency in the marketplace. 88 00:08:02,431 --> 00:08:05,532 It's almost a tale of two extremes. 89 00:08:05,532 --> 00:08:16,335 I see firms that are really making moves and really investing and, you know, um the clearies of the world and, you know, the coolies and you see them making big moves with 90 00:08:16,335 --> 00:08:17,005 the 91 00:08:17,005 --> 00:08:22,648 Springbok acquisition and um hiring of really talented personnel. 92 00:08:22,648 --> 00:08:27,301 you see now um Liz Grennan going to Simpson Thatcher. 93 00:08:27,301 --> 00:08:32,474 And it's like, I'm seeing some big, like you didn't see things like this five years ago. 94 00:08:32,474 --> 00:08:38,507 So I'm really encouraged by that, but I'm also seeing a big, it's almost like a bell shaped curve. 95 00:08:38,507 --> 00:08:44,431 You know, you've, you've got the firms on one tail that are really dialing it in. 96 00:08:44,431 --> 00:08:45,441 You've got 97 00:08:45,891 --> 00:08:58,335 the ostriches on the other end that are sticking their head in the sand and then you have the middle which I think is where most of a big law sits and It's it's a smattering of 98 00:08:58,335 --> 00:09:11,598 well, we've got some POCs in flight We're you defining a gen AI strategy and policy and you know, we're doing some co-counsel Harvey um Experimentation maybe looking at co-pilot, 99 00:09:11,598 --> 00:09:14,991 but what I'm not seeing is 100 00:09:15,695 --> 00:09:23,609 really clear strategic um paths among the masses that seem to be being followed. 101 00:09:23,609 --> 00:09:30,379 So I'm curious from your perspective, where are you seeing kind of the same distribution or a little different? 102 00:09:30,594 --> 00:09:31,654 Yeah, very much so. 103 00:09:31,654 --> 00:09:42,188 And I think one significant difference, and it's not minor at all, from five or 10 years ago, back when innovation was still such a novelty that an organization I was working 104 00:09:42,188 --> 00:09:46,709 with, the College of Law Practice and Management, had an award specifically about innovation, right? 105 00:09:46,709 --> 00:09:50,740 To say, yay, a law firm or a legal entity did something innovative. 106 00:09:50,740 --> 00:09:55,122 And now I don't think we need to make as much uh of a deal about that. 107 00:09:55,122 --> 00:09:56,042 So I think... 108 00:09:56,078 --> 00:10:00,920 The firms that maybe were like bleeding edge back then are now the leading edge. 109 00:10:00,940 --> 00:10:12,525 But you're right, we still have this kind of Rogers diffusion, curvy thing where it's still taking a lot of time for that mass of firms in that bell shape in the middle uh to 110 00:10:12,525 --> 00:10:15,466 really cotton on to all this. 111 00:10:15,466 --> 00:10:23,759 And in a lot of respects, it's understandable and not just for the classic Richard Susskind, you know, explanation of it's difficult to tell a room full of millionaires 112 00:10:23,759 --> 00:10:25,470 their business model is wrong. 113 00:10:25,486 --> 00:10:31,530 um But also because there's no particular and there's two aspects of this. 114 00:10:31,530 --> 00:10:38,310 Number one, there's no particular market incentive for them right now to be going out and doing all kinds of different things. 115 00:10:38,310 --> 00:10:43,497 I mean, we talk about and I will want to talk a little bit later on about pricing strategies. 116 00:10:43,497 --> 00:10:52,482 But when you talk to, as I'm sure you have people in mid-size and large firms about this and as often as not, you'll hear them say something like, 117 00:10:52,482 --> 00:10:55,743 you know, we floated this by our clients and the clients don't want it. 118 00:10:55,743 --> 00:11:02,386 They they they they would prefer the billable hour not because they love it, but because it's the devil they know. 119 00:11:02,386 --> 00:11:11,190 um And also because I've heard this on a number of occasions, people with firms saying the clients don't want it because they think if we're pushing it on them, it means it's bad 120 00:11:11,190 --> 00:11:13,070 for them and good for the firm. 121 00:11:13,191 --> 00:11:18,433 So and I said, Okay, I think you know, you don't have a pricing problem, you have a trust problem, but okay. 122 00:11:18,433 --> 00:11:21,390 um And and the other piece of it 123 00:11:21,390 --> 00:11:35,014 ah in terms of the inability of lot of firms to kind of move forward, I think is the, it's not just the external, it's the internal issues that are far more gripping. 124 00:11:35,014 --> 00:11:45,457 uh I find law firms are incredibly alive to internal pressures and internal signals and so forth, and very little from the market itself. 125 00:11:45,457 --> 00:11:51,342 This is consistent with my experience that lawyers are very inward looking, not very outward looking. 126 00:11:51,342 --> 00:12:01,802 Um, but you know, like I've been, I've been yapping often on about AI for a couple of years now, but easily three quarters of my engagements with law firms of all kinds over 127 00:12:01,802 --> 00:12:04,522 the last couple of years have not been about AI. 128 00:12:04,602 --> 00:12:12,082 It's been around associates and attrition and productivity and work from home and all this kind of stuff. 129 00:12:12,082 --> 00:12:18,934 And, and, and common theme of w we don't think we have, we don't have enough engagement. 130 00:12:18,934 --> 00:12:22,596 by our younger lawyers with this and it's a problem and so forth. 131 00:12:22,596 --> 00:12:26,017 So, and that's not to say those aren't important issues. 132 00:12:26,017 --> 00:12:31,740 What I try to say to the firm is this is symptomatic of something bigger, which you need to take it address. 133 00:12:31,740 --> 00:12:44,245 But I think for all those reasons, I think it's just so difficult for firms to really respond to anything other than truly macro level forces like a pandemic, right? 134 00:12:44,245 --> 00:12:47,286 Or like, as we'll probably see the next five years. 135 00:12:47,558 --> 00:12:49,820 collapse of the bill of the lower regime that kind of thing. 136 00:12:49,820 --> 00:13:03,289 um So yeah, I'm hoping that there is some awareness being built and as you've suggested, at least some preliminary framework work being done internally, but we'll see I guess. 137 00:13:03,289 --> 00:13:05,010 Yeah, it's going to be interesting. 138 00:13:05,010 --> 00:13:10,583 And you know, you had written about a future lawyer starter kit, which I think is interesting. 139 00:13:10,583 --> 00:13:16,206 And um maybe you can talk a little bit about that and the human competencies. 140 00:13:16,206 --> 00:13:20,749 You know, I had a recent experience with a bank. 141 00:13:20,749 --> 00:13:26,092 We're an early stage tech company and we needed a credit facility. 142 00:13:26,092 --> 00:13:30,274 And we're a little different than most companies our size. 143 00:13:30,274 --> 00:13:32,773 Most companies have taken a bunch of VC money. 144 00:13:32,773 --> 00:13:42,910 They're lighting cash on fire, um but they've got venture funds in their cap table and banks like to loan with when there's a backstop. 145 00:13:42,910 --> 00:13:47,754 So they know the VCs will step in if there's a situation. 146 00:13:47,754 --> 00:13:49,835 We don't really fall into that. 147 00:13:49,835 --> 00:13:51,256 We're mostly bootstrap. 148 00:13:51,256 --> 00:13:57,841 TLTF gave us a little bit of money, but we're trying to go as long as we can in a capital efficient way. 149 00:13:57,841 --> 00:14:01,603 Well, as I was out shopping around for banks, I had... 150 00:14:01,627 --> 00:14:10,307 one bank in particular that asked me for all of this stuff, which is usually annoying, but the stuff that they asked for was really cool. 151 00:14:10,307 --> 00:14:13,067 They asked for our pitch deck. 152 00:14:13,067 --> 00:14:15,967 They asked for our business plan. 153 00:14:15,967 --> 00:14:20,347 They asked for a video of me delivering, explaining the pitch deck. 154 00:14:20,347 --> 00:14:23,927 They really got, wanted to know us and our business. 155 00:14:23,927 --> 00:14:29,059 And I thought about all of the, I've been an entrepreneur for 32 years and 156 00:14:29,059 --> 00:14:32,120 I've never had a law firm ask me for that. 157 00:14:32,120 --> 00:14:44,265 And when you think about the relationship and the importance of knowing your customer's business as someone who loans you money versus someone who helps you mitigate legal risks, 158 00:14:44,766 --> 00:14:49,017 you know, that that's a much bigger need in the latter scenario. 159 00:14:49,017 --> 00:14:57,881 So, you know, it really I think the industry has been largely reactive, largely kept clients at arm's length. 160 00:14:58,235 --> 00:15:07,121 Um, and there hasn't been like that proactive engagement and even willingness to turn off the billing clock and get to know me a little bit as a client. 161 00:15:07,121 --> 00:15:17,319 And I really think that all the, all of the human competencies that you listed out help align with that. 162 00:15:17,319 --> 00:15:19,380 And there's been a little bit of a deficit of that. 163 00:15:19,380 --> 00:15:20,618 feel like historically. 164 00:15:20,618 --> 00:15:21,398 yeah. 165 00:15:21,408 --> 00:15:22,210 I think massively. 166 00:15:22,210 --> 00:15:22,489 Yeah. 167 00:15:22,489 --> 00:15:33,019 And, and yeah, I mean, that was when I was writing about that topic, I was really trying to identify, given that we are very likely on the cusp of a technology that is going to be 168 00:15:33,019 --> 00:15:45,741 able to replicate a lot of what you might call our cognitive or our uh documentary or transactional tasks and, and, and skills and, and aspects and so forth. 169 00:15:45,741 --> 00:15:47,566 Um, that 170 00:15:47,566 --> 00:15:53,006 those are going to become less important to us because now we have, if you will, competition for that. 171 00:15:53,126 --> 00:16:00,826 And the possibility that your any given lawyer is going to be competitive for that kind of work, if you will, is dwindling daily. 172 00:16:00,826 --> 00:16:07,666 And so I said, what's going to matter is your human skill, your human attributes and capacities. 173 00:16:07,846 --> 00:16:16,986 And yes, and that includes things like, you know, how well do you communicate and what's, you know, do you have anything more than a sociopathic level of empathy, for instance? 174 00:16:16,986 --> 00:16:24,048 and so forth, but even kind of goes beyond and deeper than that. 175 00:16:24,048 --> 00:16:30,070 And something you mentioned about how like the bank is out there saying, we're interested, we want to get to know your business. 176 00:16:30,070 --> 00:16:35,872 And you will occasionally find this amongst law firms and more often among individual lawyers. 177 00:16:35,872 --> 00:16:41,773 It's very rare to see it expressed as a corporate or entity wide approach. 178 00:16:41,813 --> 00:16:44,594 But for me, I'm always about drilling down. 179 00:16:44,594 --> 00:16:45,545 Digging into it, right? 180 00:16:45,545 --> 00:16:51,980 So let's say for instance, I have uh a Service provider that wants to get to know my business really well. 181 00:16:51,980 --> 00:16:55,323 Okay Why do they want why do they want to get to know my business, right? 182 00:16:55,323 --> 00:17:05,361 And of course, you know one potential answer to that which I think is probably an accurate answer in a number of cases is because they want to get Work and money from us and they 183 00:17:05,361 --> 00:17:13,994 figured out the best way to do that is to show interest in the business itself So it's you know, the classic, you know authenticity if you can fake that you got it made 184 00:17:13,994 --> 00:17:14,974 Okay. 185 00:17:15,135 --> 00:17:29,623 But I think that what's going to be a more lasting and a more uh effective approach to take to it is when you ask the question, and why do you want to know this stuff? 186 00:17:29,843 --> 00:17:37,747 Because then you can say as a lawyer or the kind of super provider, because I'm actually really interested because I want you to do well. 187 00:17:37,747 --> 00:17:39,709 I want your business to succeed. 188 00:17:39,709 --> 00:17:41,969 I'm interested in what you've got to offer. 189 00:17:42,382 --> 00:17:52,322 And I think that kind of thing is important because one of the things that you as a founder understand this and anybody who runs a business or has founded a business, you 190 00:17:52,322 --> 00:17:55,162 care about your business desperately. 191 00:17:55,162 --> 00:17:56,582 It's incredibly important to you. 192 00:17:56,582 --> 00:17:57,442 It's meaningful to you. 193 00:17:57,442 --> 00:18:01,962 It matters in your heart, not just in your brain or in your pocketbook or wherever. 194 00:18:01,962 --> 00:18:03,782 It actually really matters. 195 00:18:04,022 --> 00:18:12,110 And you welcome people, whether they are investors or employees or supporters, whatever, who share that to say, I believe in the mission. 196 00:18:12,110 --> 00:18:12,670 that you have. 197 00:18:12,670 --> 00:18:14,080 You've just explained your mission to me. 198 00:18:14,080 --> 00:18:15,411 You've explained what you want to accomplish. 199 00:18:15,411 --> 00:18:17,973 Yeah, I want to accomplish that too. 200 00:18:17,973 --> 00:18:18,573 Right. 201 00:18:18,573 --> 00:18:25,096 And if I were to come across a lawyer who said, yeah, I believe in what you're doing and I want to be part of that. 202 00:18:25,096 --> 00:18:30,478 They got my business right, right there off the park because they've made that genuine connection. 203 00:18:30,478 --> 00:18:31,138 Right. 204 00:18:31,138 --> 00:18:36,881 And going back to, know, you can't, you know, if you fake authenticity, I just don't see the point in that. 205 00:18:36,881 --> 00:18:39,340 And this is why one of my statements to lawyers is 206 00:18:39,340 --> 00:18:46,414 you're going to be more selective about your clients because you're not going to care that much about all of your clients, right? 207 00:18:46,414 --> 00:18:48,735 You know, and some of them don't want to be cared about. 208 00:18:48,735 --> 00:18:49,336 That's fine. 209 00:18:49,336 --> 00:18:56,379 I don't think Citibank cares too much if, you know, if we have a genuine belief in their desire to achieve whatever their corporate mission is. 210 00:18:56,379 --> 00:19:02,023 But for the rest of the world, for the real world, I think it really matters. 211 00:19:02,023 --> 00:19:08,746 And to your point about lawyers keeping uh clients at arm's length, keeping people at arm's length, 212 00:19:09,038 --> 00:19:11,718 that is absolutely built into this profession. 213 00:19:11,718 --> 00:19:13,938 Number one, I think we self-select for it. 214 00:19:13,938 --> 00:19:20,958 I think a lot of us went to law school because we were smart, we didn't like the sight of blood, and we didn't want to have to do math on a daily basis. 215 00:19:20,958 --> 00:19:22,418 So, law school we go. 216 00:19:22,418 --> 00:19:23,078 Okay. 217 00:19:23,078 --> 00:19:29,158 But you've seen all those studies, I'm sure, and the dude's name is Richard, come back. 218 00:19:29,158 --> 00:19:29,558 Dr. 219 00:19:29,558 --> 00:19:37,486 Larry Richard has done all these studies to talk about how lawyers are extraordinarily below the mean in terms of things like 220 00:19:37,486 --> 00:19:43,306 empathy and resilience and sociability and so forth. 221 00:19:43,306 --> 00:19:45,586 And part of it is in law school, we were trained that way. 222 00:19:45,586 --> 00:19:54,946 I remember distinctly being told by multiple professors in the context of client relations, now the one thing is not to become a dupe of your client. 223 00:19:54,946 --> 00:19:56,406 Don't let your client fool you. 224 00:19:56,406 --> 00:19:57,466 Don't get drawn in. 225 00:19:57,466 --> 00:19:58,726 Don't get pulled in. 226 00:19:58,726 --> 00:20:00,826 them, keep professional, keep your distance. 227 00:20:00,826 --> 00:20:01,766 And it's like, 228 00:20:01,816 --> 00:20:05,028 That's a pretty miserable way to conduct yourself as a professional. 229 00:20:05,028 --> 00:20:12,654 So we've got a lot of bad work to undo as a profession in a very short period of time and not everyone's going to figure it out. 230 00:20:12,654 --> 00:20:23,402 But my hope is that that message can get out to enough people that they will trust themselves and know themselves well enough to be able to make that kind of commitment to 231 00:20:23,402 --> 00:20:27,665 say, it's got to matter to me more than just in my head and more than just in the wallet. 232 00:20:27,665 --> 00:20:29,766 It's got to matter to me in the heart as well. 233 00:20:29,851 --> 00:20:34,051 Yeah, that's a great point is showing genuine interest. 234 00:20:34,051 --> 00:20:44,111 And I think that genuine interest also serves the client because lawyers are really focused on the risk side of the equation. 235 00:20:44,111 --> 00:20:47,931 Every business decision is a risk reward trade off. 236 00:20:47,931 --> 00:20:57,631 And when I go to legal counsel and I say, hey, I have a resource that I want to hire from another company, he or she has a non-compete. 237 00:20:57,971 --> 00:20:59,771 I don't want to just hear, 238 00:21:00,205 --> 00:21:01,096 what I can't do. 239 00:21:01,096 --> 00:21:03,138 I want to hear what I can do. 240 00:21:03,138 --> 00:21:14,627 And if you know my business and you understand how important this role may be to my business and or this person, you're in a better position to help me navigate my way 241 00:21:14,627 --> 00:21:19,431 through this risk reward balancing exercise. 242 00:21:19,431 --> 00:21:24,595 So I really think that because I've, you over the years I've got, I've had, 243 00:21:24,655 --> 00:21:26,806 My wife and I own five gyms here in St. 244 00:21:26,806 --> 00:21:28,767 Louis and we moved once. 245 00:21:28,767 --> 00:21:35,561 We've done six commercial leases and they are, it is a really miserable exercise negotiating that with landlords. 246 00:21:35,561 --> 00:21:52,141 um And then when you get lawyers involved, it's even worse uh because you have, you have lawyers on both sides that are, you know, becomes a tug of war on semantics and horse 247 00:21:52,141 --> 00:21:53,151 trading. 248 00:21:53,197 --> 00:21:56,199 And instead of stepping back and say, what are we trying to accomplish here? 249 00:21:56,199 --> 00:21:58,420 This landlord wants this tenant in the building. 250 00:21:58,420 --> 00:22:01,091 This tenant wants to do business here. 251 00:22:01,091 --> 00:22:03,092 Let's find a way to get that done. 252 00:22:03,292 --> 00:22:16,366 And yeah, I feel like as a consumer of legal services, understanding me and my goals will help you as a lawyer help me reach those goals more effectively. 253 00:22:16,366 --> 00:22:17,846 Yeah, no question. 254 00:22:17,866 --> 00:22:24,926 And just two quick things in that, yes, so much of lawyer involvement, like you sort of said, when the lawyers are involved, it makes it worse. 255 00:22:24,926 --> 00:22:28,506 And I said, well, there's an evergreen statement if I've ever heard one. 256 00:22:28,886 --> 00:22:30,666 But so much of it is CYA. 257 00:22:30,666 --> 00:22:39,646 So much of it is, I'm going to raise all these risks for you only because when or if something goes wrong, I don't want you to blame me for it. 258 00:22:39,646 --> 00:22:41,366 I don't want you to sue me for it. 259 00:22:41,366 --> 00:22:43,126 I don't want to get in trouble. 260 00:22:43,178 --> 00:22:52,526 For this so I'll flag these and I'll say well, it's up to you if you want to take on this risk That's your business right which is incredibly unhelpful but also and I think this 261 00:22:52,526 --> 00:23:06,298 again goes to this this idea of having a genuine interest in uh in the business and in the people Involved with it if you have that kind of relationship with the client entity then 262 00:23:06,298 --> 00:23:11,874 your advice is not going to be about covering your ass your advice is going to be about well 263 00:23:11,874 --> 00:23:15,977 this is what I think is best for the business, right? 264 00:23:15,998 --> 00:23:20,862 And sometimes you have to give advice as a lawyer to your client that is not what they want to hear. 265 00:23:20,862 --> 00:23:29,431 would say maybe more than sometimes there's that classic, I think it's learned hand who said half the business of a good lawyer is telling his client is a damn fool and should 266 00:23:29,431 --> 00:23:37,462 stop, you know, and, and, and, and, and you gotta, but you can't say that unless you've established that rapport. 267 00:23:37,462 --> 00:23:40,083 and that level of trust and reliability and effectiveness. 268 00:23:40,083 --> 00:23:47,916 But once you do, then you are, you are knitted in and you talk about unbreakable client relationships, right? 269 00:23:47,916 --> 00:23:55,159 No one's going to come along and take that client relationship from you because it is a solid, as my mother would say, a solid to the church. 270 00:23:55,159 --> 00:23:56,230 It's not going anywhere. 271 00:23:56,230 --> 00:24:03,433 so yeah, that's, this is where I keep encouraging lawyers to, to migrate. 272 00:24:03,433 --> 00:24:06,895 I think it takes a lot of courage, but I think it is absolutely essential. 273 00:24:06,895 --> 00:24:11,879 Yeah, yeah, it helps, you know, helps understanding the reward side of the equation. 274 00:24:11,879 --> 00:24:20,897 You as my legal counsel can help me navigate the best trade off of risk and reward if you understand both sides of the equation. 275 00:24:20,897 --> 00:24:28,713 And you talked about a client first law firm model, which this is a good segue into. 276 00:24:28,713 --> 00:24:30,987 um 277 00:24:30,987 --> 00:24:34,820 centering operations around client needs rather than lawyer convenience. 278 00:24:34,820 --> 00:24:36,521 Can you talk a little bit about that? 279 00:24:36,521 --> 00:24:43,822 Yeah, and that phrase was like the subtitle of a book I wrote back in 2017 called Law is a Buyer's Market. 280 00:24:44,482 --> 00:24:45,962 A bit of an aspirational title. 281 00:24:45,962 --> 00:24:50,602 do think, as with many things I say, I don't think I was wrong, but I do think I was a bit early. 282 00:24:51,582 --> 00:24:54,922 But building a client-first law firm was the subtitle. 283 00:24:54,922 --> 00:25:03,922 Now what's interesting is a few years later, I was asked to write the foreword for another book, and this was written by Jack Newton, who was the CEO of Clio. 284 00:25:04,198 --> 00:25:10,463 And uh he called his uh book, The Client-Centered Law Firm. 285 00:25:10,463 --> 00:25:14,666 And we're very friendly, so I was happy for him to do this. 286 00:25:14,666 --> 00:25:17,508 He kind of took friendly issue with client first. 287 00:25:17,508 --> 00:25:28,356 He said, you can't put the client first because there's all kinds of good reasons why that's a short road to disaster for you, for your wellness, for your firm, et cetera. 288 00:25:28,356 --> 00:25:32,224 It's not about putting the client first, it's about putting the client at the center. 289 00:25:32,224 --> 00:25:33,585 of what you do and the core of what you do. 290 00:25:33,585 --> 00:25:39,097 I thought, that was, you know, as they say in court, that was a friendly amendment I was happy to accept. 291 00:25:39,837 --> 00:25:50,582 But I think the overall point is very much the same and reflects back to that point I raised earlier about how law firms are so internally focused. 292 00:25:50,582 --> 00:25:53,623 All of the sensors or most of the sensors are internal. 293 00:25:53,623 --> 00:25:57,805 Very few of them are turned out to the rest of the world. 294 00:25:57,805 --> 00:26:00,245 And the ability to 295 00:26:02,222 --> 00:26:14,042 make that transition where you are paying more and more attention, you're more alert to, you are more sensitive to monitoring and paying attention to and understanding what's 296 00:26:14,042 --> 00:26:15,462 going on in the world. 297 00:26:15,582 --> 00:26:27,158 that, mean, like I wrote a piece of a couple of months back at my Substack about the idea that every law firm these days with the world being absolutely on fire, 298 00:26:27,158 --> 00:26:33,002 you need to have people in your firm whose job it is to geopolitically monitor the world. 299 00:26:33,002 --> 00:26:34,963 And this applies to you. 300 00:26:34,963 --> 00:26:41,028 You don't have to be like an international conglomerate law firm with a thousand lawyers. 301 00:26:41,028 --> 00:26:50,670 I gave the example of you could be um a law firm in a sleepy little town in Florida, and you do a lot of work with the local tourist trade. 302 00:26:50,670 --> 00:27:01,130 And if you're not paying attention to the fact that Canadian tourism has dropped 70 % to the US since Donald Trump began talking about us as the 51st state, your clients are gonna 303 00:27:01,130 --> 00:27:04,910 be caught absolutely dead to rights. 304 00:27:05,650 --> 00:27:07,890 you've gotta have that awareness. 305 00:27:07,890 --> 00:27:14,750 And that's just one dimension, But that awareness of what's going on with your clients, with their business, with the world. 306 00:27:14,750 --> 00:27:17,470 And honestly, that's where we should be, right? 307 00:27:17,470 --> 00:27:20,670 It bothers me so much that we have 308 00:27:20,844 --> 00:27:24,637 found ourselves, have kind of wandered, you know, what's the old saying? 309 00:27:24,637 --> 00:27:26,958 You know, he wandered away and left his mouth running. 310 00:27:26,958 --> 00:27:32,462 I think I do that a fair bit, but the professions kind of wandered off from where it to have been. 311 00:27:32,462 --> 00:27:38,636 And it's wound up in the place where we are such naval gazers and we are so focused on what we're doing. 312 00:27:38,636 --> 00:27:49,323 And something that I say on a regular basis when I'm giving presentations and I said, I have not yet come across a law firm anywhere in the world that does not track down to the 313 00:27:49,323 --> 00:27:50,764 last hour. 314 00:27:50,846 --> 00:27:56,989 every amount of billable time that its clients that is what those lawyers have done for its clients. 315 00:27:56,989 --> 00:27:57,949 How much was done? 316 00:27:57,949 --> 00:27:58,839 Was it billed out? 317 00:27:58,839 --> 00:27:59,690 Was it collected? 318 00:27:59,690 --> 00:28:00,850 How much to what extent? 319 00:28:00,850 --> 00:28:02,421 To whom do we give the credit? 320 00:28:02,421 --> 00:28:03,328 Blah, blah, blah, blah, blah. 321 00:28:03,328 --> 00:28:05,532 It's down to a science. 322 00:28:05,572 --> 00:28:10,214 said I have yet to come across a law firm that maintains actually that's not even true. 323 00:28:10,214 --> 00:28:12,825 I've come across a couple of small firms recently that have done this. 324 00:28:12,825 --> 00:28:14,736 I think one of them said they did it because of me, which is great. 325 00:28:14,736 --> 00:28:17,937 um A spreadsheet with four columns. 326 00:28:17,937 --> 00:28:19,788 What did the client ask for? 327 00:28:19,880 --> 00:28:21,391 What did they end up getting? 328 00:28:21,391 --> 00:28:23,413 Because those two things are often very different. 329 00:28:23,413 --> 00:28:30,599 um What was the overall cost and the final bill to the client and what did they think about their whole experience? 330 00:28:30,599 --> 00:28:33,862 And that fourth column is the absolutely essential one. 331 00:28:33,862 --> 00:28:37,505 What did your clients think about what you did for them? 332 00:28:37,505 --> 00:28:45,452 And so many lawyers, if you ask that about their, last 10 client engagements, how do you, what did your client think about it? 333 00:28:45,452 --> 00:28:46,523 How do they feel about it? 334 00:28:46,523 --> 00:28:47,944 And how do you know? 335 00:28:48,002 --> 00:28:54,780 And I think a lot of them would be very hard pressed to give a good answer to that for even half of them. 336 00:28:54,780 --> 00:29:04,062 So yeah, that's what it means to be client centric, client focused, just outward centric, outward focused, externally centered. 337 00:29:04,062 --> 00:29:06,825 It's much better out there in the world than it is in here. 338 00:29:07,363 --> 00:29:18,266 Yeah, you know, it's, it's almost like when I look at when I look at law, so I spent a few years in financial services at Bank of America, and I was on the risk management uh in the 339 00:29:18,266 --> 00:29:20,407 risk management world for most of that time. 340 00:29:20,407 --> 00:29:33,330 I did three years in global treasury, the rest were in consumer risk, uh corporate audit, I was an internal auditor for anti money laundering, uh compliance, um and then regulatory 341 00:29:33,330 --> 00:29:34,310 relations. 342 00:29:34,310 --> 00:29:37,291 And I got to see what a mature 343 00:29:38,275 --> 00:29:51,319 risk governance organization and structure looks like and there's it just doesn't exist in law firms like customer success like when you were talking about those outward measures 344 00:29:51,319 --> 00:30:01,562 and how our you know our clients do they enjoy working with us are they are we delivering the outcomes they expect you know i immediately think because that's customer success 345 00:30:01,562 --> 00:30:03,513 there's no customer success and 346 00:30:03,611 --> 00:30:05,391 legal services and law firms. 347 00:30:05,391 --> 00:30:07,291 Um, there's no risk management. 348 00:30:07,291 --> 00:30:08,731 There's no internal audit. 349 00:30:08,731 --> 00:30:13,371 You know, it's, um, it's a, it's such a different beast. 350 00:30:13,371 --> 00:30:23,471 And I don't know if you remember, but during the talk, I had, um, I had mentioned how, you know, the big four now entering in Arizona and KPMG. 351 00:30:23,471 --> 00:30:33,571 And I went through all of their resources and capabilities, like 4,000 lawyers, 40 billion in revenue, 275,000 employees. 352 00:30:34,243 --> 00:30:41,868 Innovation is in their culture and in their DNA, legions of Six Sigma Black Belts and Gen. 353 00:30:41,868 --> 00:30:47,072 AI experts and like they're setting up shop over there to compete with you. 354 00:30:47,072 --> 00:31:01,662 um Who do we think is more better positioned to capitalize on this next iteration because you know where the means of legal production have really changed. 355 00:31:01,662 --> 00:31:03,811 Who do we think is really better positioned? 356 00:31:03,811 --> 00:31:14,078 Now, there's lots of caveats and you can make lots of arguments about different aspects of that, but it's really hard to argue that an organization like KPMG, which is the smallest 357 00:31:14,078 --> 00:31:15,349 of the big four, right? 358 00:31:15,349 --> 00:31:21,614 Deloitte's twice their size at 80 billion, um where the biggest law firm in the world is like seven and a half billion, right? 359 00:31:21,614 --> 00:31:31,350 So from a resources perspective, as we get into an era where R &D is going to become part of the equation, because buying, there's no differentiation. 360 00:31:31,350 --> 00:31:32,485 If I go by 361 00:31:32,485 --> 00:31:38,864 Harvey and co-counsel or Paxton or LaGora and my competitor can do the same thing down the street. 362 00:31:38,864 --> 00:31:50,019 So I don't know, what do you see in terms of how law firms in this next, I like to call it 2.0, in this 2.0 big law world, how are firms gonna differentiate themselves? 363 00:31:50,638 --> 00:31:54,338 It's a really good question, it's a really tough question. 364 00:31:54,358 --> 00:32:08,338 And one of the reasons it's tough is that more and more these days, the answer I am inclined to give, and I don't often give it because, you know, for obvious reasons, is it 365 00:32:08,338 --> 00:32:11,798 might not matter a little bit. 366 00:32:11,798 --> 00:32:17,998 mean, we've just spent like a good 20, 30 minutes, you know, going through any number of... 367 00:32:17,998 --> 00:32:25,418 the drawbacks and failings and shortcomings and problems within large law firms, which are chronic, right? 368 00:32:25,418 --> 00:32:32,958 They've been around since I began poking my head into this area in earnest back around 2003 or 2004. 369 00:32:33,558 --> 00:32:36,438 And they've been around for quite some time. 370 00:32:36,438 --> 00:32:41,398 And one of the reasons that firms, going back to that, why don't firms shift out of this stuff? 371 00:32:41,398 --> 00:32:44,498 Because firms are large law firms. 372 00:32:44,498 --> 00:32:47,638 I'll use them specifically, although you could apply this to pretty much any size. 373 00:32:47,638 --> 00:32:51,331 Lodge law firms are incredibly poorly run businesses. 374 00:32:51,331 --> 00:32:52,802 They are not capitalized. 375 00:32:52,802 --> 00:32:59,887 um They don't have any, uh hardly at all, uh permanent assets. 376 00:32:59,887 --> 00:33:02,509 All the assets of value, as the saying goes, walk out every night. 377 00:33:02,509 --> 00:33:05,791 Increasingly, they get poached by other firms and you have to leave them out. 378 00:33:05,791 --> 00:33:08,553 um They are self-absorbed. 379 00:33:08,553 --> 00:33:10,194 They're self-interested. 380 00:33:10,795 --> 00:33:15,790 Their entire pricing system is 100 % risk placed on the client. 381 00:33:15,790 --> 00:33:29,110 They're miserable businesses and yet here we are at what the AMLA, what's the average profit of the one of the 100th firm in the AMLA 100? 382 00:33:29,110 --> 00:33:33,270 Is it like 800 grand a year, 900 grand a year, maybe more than that at some point? 383 00:33:33,270 --> 00:33:34,410 I don't know. 384 00:33:34,410 --> 00:33:35,170 Right. 385 00:33:35,810 --> 00:33:42,230 So yeah, so you're in a position where these firms say, it doesn't matter that we're bad businesses. 386 00:33:42,230 --> 00:33:45,260 It doesn't matter that we're not actually any good at this. 387 00:33:45,260 --> 00:33:52,673 because for whatever reason, we are just set up to make money and we're just gonna keep on doing it year after year. 388 00:33:52,673 --> 00:33:55,104 We're not differentiated from our competitors. 389 00:33:55,104 --> 00:33:56,575 It doesn't matter. 390 00:33:56,675 --> 00:33:58,336 We don't pay attention to client service. 391 00:33:58,336 --> 00:33:59,636 It doesn't matter. 392 00:34:00,036 --> 00:34:02,497 And this is what I've come across. 393 00:34:03,578 --> 00:34:06,089 I've done some consulting with firms. 394 00:34:06,089 --> 00:34:10,841 I've worked with uh consulting firms. 395 00:34:10,921 --> 00:34:13,382 And any number of conversations I have with 396 00:34:13,382 --> 00:34:15,743 veteran consultants in this industry. 397 00:34:16,123 --> 00:34:23,876 And so many of them come down to the end of the day to saying, you know what, it doesn't actually matter how great a strategy you give them, or what a great insight, what have 398 00:34:23,876 --> 00:34:27,168 you, they're just going to keep on doing what they've always done. 399 00:34:27,168 --> 00:34:27,688 Right? 400 00:34:27,688 --> 00:34:35,761 It's one of the reasons why a number of people who've been at this, like, I don't do a lot of consulting for law firms of any particular size. 401 00:34:35,761 --> 00:34:37,952 And from what I've just said, you can probably see why. 402 00:34:37,952 --> 00:34:42,958 But part of it is the people I know who have, they get kind of jaded. 403 00:34:42,958 --> 00:34:44,978 They get kind of sure what the hell. 404 00:34:44,978 --> 00:34:46,318 Yeah, here's the strategy for you. 405 00:34:46,318 --> 00:34:46,977 Go nuts. 406 00:34:46,977 --> 00:34:49,598 You know, I hope I hope it enjoys its time on the shelf. 407 00:34:49,878 --> 00:34:52,058 Um, that's not going to happen. 408 00:34:52,118 --> 00:35:02,758 So, so I look at all that and I look at AI coming in and look at a technology that, well, take a look at the Thompson Reuters future. 409 00:35:02,758 --> 00:35:13,044 The law firm report came out a few months back where they said, uh, we foresee over the course of the next five to 10 years, the decline of 40 % 410 00:35:13,044 --> 00:35:20,855 the number of billable hours that will be required to carry out legal work and for routine, highly repeatable work, it's closer to 80%. 411 00:35:20,855 --> 00:35:24,259 And it's like, I'm sorry, that's an extinction level event. 412 00:35:24,259 --> 00:35:33,662 You cannot collapse inventory like that, that dramatically in that short a space of time and not have catastrophic consequences. 413 00:35:33,662 --> 00:35:42,510 um yeah, and I'm very bearish on the ability of even well-run 414 00:35:42,510 --> 00:35:51,514 uh firms with a strong central culture and uh in general consensus amongst the ownership about what to do. 415 00:35:51,514 --> 00:35:54,655 I'm embarrassed that they can handle what's coming. 416 00:35:54,655 --> 00:36:07,491 ah I look at the larger firms and I just think, um if the regulations were to change tomorrow and I could buy shares in your law firm, I would choose to bypass that 417 00:36:07,491 --> 00:36:08,161 opportunity. 418 00:36:08,161 --> 00:36:10,146 um So that's 419 00:36:10,146 --> 00:36:13,708 That's heavy statement that I'm making here and it's a heavy declaration. 420 00:36:13,708 --> 00:36:19,910 But um yeah, but it's very difficult for me to see in realistic terms. 421 00:36:19,910 --> 00:36:22,591 Is it theoretically possible that you could do this? 422 00:36:22,591 --> 00:36:24,292 Absolutely. 423 00:36:24,292 --> 00:36:25,523 You can come up with a strategy. 424 00:36:25,523 --> 00:36:36,377 You can read books on the prospect of how to make your law firm, you know, to make the transition to uh the new kind of world. 425 00:36:36,377 --> 00:36:38,488 But in practical terms, 426 00:36:38,488 --> 00:36:50,173 The way these law firms, most law firms are set up, way, the, how, where power is localized within the firms, how power is exercised, how privilege is maintained. 427 00:36:50,173 --> 00:36:52,504 And I don't mean evidentiary privilege. 428 00:36:52,504 --> 00:36:54,165 mean, the sense of privilege. 429 00:36:54,165 --> 00:36:58,526 The fact that as someone pointed out to me years ago, and I don't know why I didn't ever notice this myself. 430 00:36:58,526 --> 00:37:05,930 Um, there is not one ounce of quality control in law firms at the partner level, right? 431 00:37:05,930 --> 00:37:06,830 A partner. 432 00:37:06,830 --> 00:37:15,770 can serve their client, and it's their client by the way, not the firm's client, serve their client with something and nobody else in the firm ever so much as glances at it. 433 00:37:15,770 --> 00:37:22,970 And if you suggested to that partner, maybe Bob or Barbara or whatever should take a look at that just to make sure and give you some feedback. 434 00:37:23,430 --> 00:37:25,510 They'd be out the door the next day. 435 00:37:25,650 --> 00:37:34,175 So this is a little bit of my own frustration with law firms coming through over this time, but I am bearish. 436 00:37:34,175 --> 00:37:37,433 on the prospects if I'm being absolutely honest with you. 437 00:37:37,433 --> 00:37:39,684 Yeah, no, I would agree with you. 438 00:37:39,684 --> 00:37:44,246 you know, that's, are solely dependent on law firms. 439 00:37:44,246 --> 00:37:46,507 I we have a hundred percent law firm business. 440 00:37:46,507 --> 00:37:59,332 So it has me, my eyes open and I've been trying to play out different scenarios in my head, almost like a Monte Carlo simulation, like, okay, if this then that, and you know 441 00:37:59,332 --> 00:38:06,715 what, what I keep, I keep running into, I keep running into the concept of consolidation. 442 00:38:06,907 --> 00:38:10,727 So the Amlon 100 is extremely fragmented. 443 00:38:11,067 --> 00:38:20,627 Again, listeners are familiar with the stat that if you add up the revenues of all 100 firms, it's 140 billion. 444 00:38:20,647 --> 00:38:27,307 If you add up the revenues of the big four, it's about 220 billion, right? 445 00:38:27,307 --> 00:38:28,667 So extremely fragmented. 446 00:38:28,667 --> 00:38:32,767 The largest five players in the space own about 4 % of the market. 447 00:38:32,923 --> 00:38:42,251 um on the accounting side, public accounting side, this is on audit, the top four own 97 % of the Fortune 500. 448 00:38:42,251 --> 00:38:44,733 You know, so very, very different dynamics. 449 00:38:44,733 --> 00:38:50,858 And I keep thinking, okay, what has driven the fragmentation that exists in big law today? 450 00:38:50,858 --> 00:38:52,629 And I think it's what you just described. 451 00:38:52,629 --> 00:38:55,902 They're not really well run businesses. 452 00:38:55,902 --> 00:38:57,883 A lot of times they've been... 453 00:38:58,041 --> 00:39:08,026 You know, they've grown organically with some acquisition in here and there with maybe some opportunistic, not necessarily a corporate development strategy, but, this firm 454 00:39:08,026 --> 00:39:09,257 across the street is suck and win. 455 00:39:09,257 --> 00:39:12,778 Let's swoop in and get them at a fire sale price. 456 00:39:13,759 --> 00:39:18,661 you know, when I think about, right, there's going to be somebody's going to figure it out how to do this. 457 00:39:18,661 --> 00:39:22,683 And the ones that do, I think there's going to be a much smaller number. 458 00:39:22,879 --> 00:39:26,539 And I think there's going to be buying opportunities and consolidation. 459 00:39:26,539 --> 00:39:27,086 I don't know. 460 00:39:27,086 --> 00:39:30,422 Does that fit with how you see things playing out? 461 00:39:30,422 --> 00:39:31,343 Yeah, for sure. 462 00:39:31,343 --> 00:39:45,914 I can absolutely see a wave of consolidation um and, a friend of mine, the business coined a term, which I won't be able to pull together at the moment, but the idea of, it, they, 463 00:39:45,914 --> 00:39:54,100 they look like mergers, but they're actually just wind downs, um, of a firm, you know, like a firm, a will acquire firm B it's a merger. 464 00:39:54,100 --> 00:39:57,512 No, because from B's name is disappearing. 465 00:39:57,514 --> 00:40:02,038 and ah only about a third of the lawyers are joining the new firm. 466 00:40:02,038 --> 00:40:06,381 No, this is a harvest um of firm B. 467 00:40:06,381 --> 00:40:15,228 um And the only negotiations really are around things like unfunded pension liabilities and who's gonna pay for those sorts of things. 468 00:40:15,228 --> 00:40:16,459 And I can see lots more of that. 469 00:40:16,459 --> 00:40:19,131 I think we're gonna see consolidation in two respects. 470 00:40:19,131 --> 00:40:21,233 One, a lot of firms are going to... 471 00:40:21,233 --> 00:40:23,118 uh 472 00:40:23,118 --> 00:40:25,338 be the victims of what you call coyote gravity. 473 00:40:25,338 --> 00:40:33,358 know, the coyote runs off the cliff and then takes a few seconds, he looks down and says, Oh, know, she sign comes out off, goes ears follow. 474 00:40:33,938 --> 00:40:35,778 Um, so it's gonna be part of it. 475 00:40:35,778 --> 00:40:46,178 But part of it also is going to be, um, again, it's difficult for me to look at the advance of AI and where it's come already in two years and think about where it's going to 476 00:40:46,178 --> 00:40:51,960 be in five and imagine that law firms are going to have anywhere close to the same number of lawyers. 477 00:40:51,960 --> 00:40:56,391 that they do today, especially non-equity partners and associates. 478 00:40:56,391 --> 00:41:03,293 I would not be the least bit surprised to see a pretty significant culling of lawyers in those positions. 479 00:41:03,293 --> 00:41:10,495 And there's not going to be any obvious place for them to go other than into their own oh individual businesses. 480 00:41:10,495 --> 00:41:19,398 there'll be consolidation in terms of firms are kind of glommed together a little bit, but also as they shrink and become more compressed. 481 00:41:19,398 --> 00:41:21,454 Now that's to say the firms will become 482 00:41:21,454 --> 00:41:30,934 less profitable, you can make an argument, and I think there's one good one to be made, that the winners and all this are going to be insanely profitable, right? 483 00:41:30,934 --> 00:41:33,754 Because profit again belongs to the owners. 484 00:41:33,754 --> 00:41:44,274 And if you're lucky enough to be a current owner of one of these law firms in New York, and you're in that sweet spot of your career, you can probably make bank off this whole 485 00:41:44,274 --> 00:41:45,314 process. 486 00:41:45,514 --> 00:41:50,574 But it's one of those things where it's a short term 487 00:41:50,734 --> 00:42:03,057 uh crystallization of value that is going to uh massively reduce the population of law firms, suspect, or at least firms that we understand them now. 488 00:42:03,057 --> 00:42:05,518 Not to say that new firms won't emerge. 489 00:42:05,518 --> 00:42:07,759 I think new firms can and will emerge. 490 00:42:07,959 --> 00:42:11,160 And in a way, I think they kind of have to, because this is the thing. 491 00:42:11,160 --> 00:42:19,576 Every so often when a firm collapses or disappears, whatever, and the legal press writes that, the death of a law firm. 492 00:42:19,576 --> 00:42:22,917 And I'm like, I'm sorry, law firms aren't people. 493 00:42:22,917 --> 00:42:24,948 Nobody died, right? 494 00:42:24,948 --> 00:42:29,680 know, yeah, a grand old brand disappeared. 495 00:42:29,680 --> 00:42:33,672 Okay, well, I guess I can shed a tear for that nostalgia bit. 496 00:42:33,672 --> 00:42:37,524 the businesses that aren't working are supposed to go down. 497 00:42:37,524 --> 00:42:38,835 They're supposed to fall apart. 498 00:42:38,835 --> 00:42:41,806 And then labor disperses because that's what happens. 499 00:42:41,806 --> 00:42:47,060 Labor disperses, people go out and they read amalgamate in different combinations. 500 00:42:47,060 --> 00:42:51,673 in models and in structures that make more sense for the market of which we have now. 501 00:42:51,694 --> 00:42:56,498 So I think there is going to be a massive downscaling of the number of law firms. 502 00:42:56,498 --> 00:43:03,083 I think the concept of an AmLaw 100 itself is relatively shortly going to be very dated. 503 00:43:03,083 --> 00:43:06,846 But I think we will see new entities establish themselves. 504 00:43:06,846 --> 00:43:08,788 And I don't think they're going to be huge entities. 505 00:43:08,788 --> 00:43:09,519 They don't have to be. 506 00:43:09,519 --> 00:43:10,329 They probably shouldn't be. 507 00:43:10,329 --> 00:43:15,333 um Because again, this idea of chasing growth by adding lawyers is actually pretty stupid. 508 00:43:15,333 --> 00:43:16,774 um 509 00:43:16,810 --> 00:43:24,592 And you're going to see them recomb reconstitute in new combinations where you're not at your inventory is not the time and effort of your lawyers. 510 00:43:24,592 --> 00:43:35,855 It is in the value you're producing or the relationships you're establishing or in the uh percentage of the value that your client is, is uh generating through your work, whatever 511 00:43:35,855 --> 00:43:37,136 the case might be. 512 00:43:37,176 --> 00:43:45,598 So, so for me, I, I, I see a kind of a grand reconstitution. 513 00:43:45,634 --> 00:43:48,657 I don't know that's a word or not, but if it's not, it maybe should be. 514 00:43:48,657 --> 00:43:50,018 That's where I think we're going to go. 515 00:43:50,018 --> 00:43:55,163 Old models, old systems and structures falling away because they don't work anymore. 516 00:43:55,163 --> 00:43:59,206 New models emerging that are better adapted to the environment in which we'll find ourselves. 517 00:43:59,495 --> 00:44:01,135 That makes perfect sense to me. 518 00:44:01,135 --> 00:44:07,681 Well, we're almost out of time, but I did want to get a touch on one last subject that I think you have some interesting thoughts around, and that is pricing. 519 00:44:08,202 --> 00:44:11,445 And what pricing might look like in a post-AI world. 520 00:44:11,445 --> 00:44:23,004 It's really a tricky problem, and I've heard lots of interesting ideas put forward, but I've not really heard anything that just goes, oh that makes sense. 521 00:44:23,004 --> 00:44:25,576 I haven't heard it yet. 522 00:44:25,576 --> 00:44:29,311 What are your thoughts on what pricing might look like in the future? 523 00:44:29,311 --> 00:44:30,571 Yeah. 524 00:44:30,651 --> 00:44:39,335 So, if you thought, first of all, pricing period is difficult in any industry, in any area, it's really, really difficult to figure out what the right price is. 525 00:44:39,335 --> 00:44:46,668 Most of the time we have, we have mostly a reliable objective market dynamics to guide us. 526 00:44:46,668 --> 00:44:50,660 can say, well, the market will decide what the price for plasma TVs is. 527 00:44:50,660 --> 00:44:54,092 The market will decide what the price for uh SUVs is. 528 00:44:54,092 --> 00:44:54,764 Okay. 529 00:44:54,764 --> 00:44:55,334 That's great. 530 00:44:55,334 --> 00:45:12,281 If you have a functioning marketplace, which is to say a relatively informed um buying population and a uh very um diversified and highly inter competitive set of uh suppliers 531 00:45:12,281 --> 00:45:19,439 um and uh no real information asymmetry, then okay, you've got yourself a normal market. 532 00:45:19,439 --> 00:45:20,764 We don't have any of that. 533 00:45:21,445 --> 00:45:22,275 Yeah, exactly. 534 00:45:22,275 --> 00:45:24,076 In like literal economic terms. 535 00:45:24,076 --> 00:45:26,248 We don't have any of that in the law, right? 536 00:45:26,248 --> 00:45:28,439 So pricing is hard enough in an efficient market. 537 00:45:28,439 --> 00:45:38,556 It's almost impossible in a market like legal services where for the most part, unless you are in a litigation with a very specific dollar amount attached, unless you were involved 538 00:45:38,556 --> 00:45:46,301 in a merger or some other operation where there's a very specific dollar amount in terms of this is the total value that this thing will be worth or the case might be. 539 00:45:46,301 --> 00:45:47,504 And sometimes that happens. 540 00:45:47,504 --> 00:45:48,523 A lot of times it doesn't. 541 00:45:48,523 --> 00:45:51,505 Uncertainty is the norm. 542 00:45:51,505 --> 00:45:53,576 It's by a wide margin. 543 00:45:54,190 --> 00:46:00,430 then there's no obvious dollar amount you can hang on to and do something like, we'll throw a percentage onto it, right? 544 00:46:00,430 --> 00:46:03,970 So then you're in a position of, okay, well, then what's the value? 545 00:46:03,970 --> 00:46:09,450 And here's the thing, and this is the reason why the billable hour has been as effective as long as it has. 546 00:46:09,450 --> 00:46:12,290 A big reason is because it's really profitable for lawyers. 547 00:46:12,290 --> 00:46:18,010 But the other is that nobody knows the value of what we do as lawyers. 548 00:46:18,010 --> 00:46:21,420 There is no obvious way to say what it's worth. 549 00:46:21,420 --> 00:46:21,710 Right? 550 00:46:21,710 --> 00:46:24,252 How much is it worth for me to help your business get set up? 551 00:46:24,252 --> 00:46:24,772 I don't know. 552 00:46:24,772 --> 00:46:29,454 If the business fails in the first week, not very much, if the business goes on to become Google, it was worth quite a lot. 553 00:46:29,454 --> 00:46:31,216 But you won't know that. 554 00:46:31,216 --> 00:46:31,433 Right? 555 00:46:31,433 --> 00:46:33,777 There's no way to know it at the time. 556 00:46:33,777 --> 00:46:35,388 How much is good advice worth? 557 00:46:35,388 --> 00:46:36,519 It could be invaluable. 558 00:46:36,519 --> 00:46:36,839 Right? 559 00:46:36,839 --> 00:46:40,200 If it's not listened to, well, what's the impact over there? 560 00:46:40,301 --> 00:46:46,924 So we don't know the value of what we're selling and our clients, for the most part, don't know the value of what we're buying. 561 00:46:46,924 --> 00:46:50,266 So of course we kind of default to this proxy of 562 00:46:50,312 --> 00:46:58,819 What the hell this many dollars per hour and will bill you for the time that we spend doing it because you know what we don't have a better idea you don't have a better idea 563 00:46:58,819 --> 00:47:08,566 client let's go ahead with this and the client doesn't love it but it says all right at least I get it it's simple it's straightforward and I can live with that okay um so so 564 00:47:08,566 --> 00:47:15,894 that's why I mean like I think the billable hour has a number of drawbacks of surprising mechanism but it's workable I think it is 565 00:47:15,894 --> 00:47:21,967 toxic as a compensation advancement and internal value assessment metric, which is where the real problem exists. 566 00:47:21,967 --> 00:47:31,021 We don't have time for that today, but I will say this again, along comes this technology, which is a massive compressor of time. 567 00:47:31,021 --> 00:47:39,645 And it's going, what it's going to mean as it gets adopted more and more, not just within law firms, but especially within clients, especially on the corporate side, you're going 568 00:47:39,645 --> 00:47:42,776 to see a lot of work, a lot of tasks. 569 00:47:42,776 --> 00:47:46,209 Are we going to be fully automated entirely by the AI? 570 00:47:46,209 --> 00:47:47,951 That won't be that common at the start. 571 00:47:47,951 --> 00:47:50,753 Maybe in five years, we'll see. 572 00:47:50,753 --> 00:47:51,403 We don't know. 573 00:47:51,403 --> 00:48:02,763 We don't know enough about how AI is going to develop, but that is certainly a reasonable possibility, but it's either entirely automated or at least massively accelerated. 574 00:48:02,864 --> 00:48:10,678 If you're in a position where you are still selling your work according to the time and effort that lawyers put in to produce it, 575 00:48:10,678 --> 00:48:16,681 you're going to be out of business within a few years time because your inventory is going to collapse. 576 00:48:16,681 --> 00:48:17,201 Right. 577 00:48:17,201 --> 00:48:21,583 And you only and you're going to find yourself going around saying, how do we get more hours? 578 00:48:21,583 --> 00:48:22,943 How do I get more time? 579 00:48:22,943 --> 00:48:25,444 uh Let's go out and get more work from the clients. 580 00:48:25,444 --> 00:48:26,165 Okay. 581 00:48:26,165 --> 00:48:31,527 But as you know, that is, there's a lot of unrecoverable costs associated with that. 582 00:48:31,527 --> 00:48:36,469 You're marketing and you're calling and you're meeting people and you're networking and all this kind of stuff. 583 00:48:36,469 --> 00:48:39,840 And it takes a long time to land work from. 584 00:48:40,056 --> 00:48:48,152 client because either the client is brand new to the world, which case great, or the client already has a lawyer and it can be very hard to pry someone else away from their 585 00:48:48,152 --> 00:48:49,453 legal counsel. 586 00:48:49,453 --> 00:48:56,436 And even if you do get this new client or this new work, it comes in and a lot of that's going to be susceptible to the AI. 587 00:48:56,436 --> 00:49:06,804 the hours you're going to find yourself on this treadmill running faster and faster and faster, as long as you believe that what you are selling your clients is time and effort. 588 00:49:06,804 --> 00:49:09,454 And you were never selling that really. 589 00:49:09,454 --> 00:49:15,194 You are always selling outcomes and experiences and peace of mind, but you weren't pricing according to that. 590 00:49:15,814 --> 00:49:26,574 So the way I look at it is that what, what are we going to be valued for in future as lawyers to the extent we exist to the extent there is any demand for us hope to God there 591 00:49:26,574 --> 00:49:38,294 is, but it's going to be about what kind of relationships of reliable, sincere relationships of the effectiveness have we established with our clients? 592 00:49:38,294 --> 00:49:39,138 If you've 593 00:49:39,138 --> 00:49:47,811 got one of those, if you've got several of those, you can charge whatever the hell you want for that because that's incredibly valuable to clients. 594 00:49:47,811 --> 00:49:52,302 Just like that bank that said, we care enough about you to make this effort. 595 00:49:52,302 --> 00:49:58,344 You will pay as much as is necessary, as much as you can to get that kind of asset. 596 00:49:58,344 --> 00:50:03,785 It's got to be about the relationship because fundamentally that's what it means to be a lawyer. 597 00:50:03,785 --> 00:50:06,860 To be a lawyer means to be in relationship 598 00:50:06,860 --> 00:50:16,991 with someone who you are giving guidance to based on your knowledge of the law, based on your professional responsibility and ethics and your personal integrity, that they are 599 00:50:16,991 --> 00:50:19,544 relying on you for help. 600 00:50:19,544 --> 00:50:22,287 And that is at the heart of what we do as lawyers. 601 00:50:22,287 --> 00:50:25,970 You might as well make that the basis of your pricing mechanism. 602 00:50:26,703 --> 00:50:27,804 That is great feedback. 603 00:50:27,804 --> 00:50:28,104 Yeah. 604 00:50:28,104 --> 00:50:35,309 I loved, I loved, oh I love this topic because it's not, it, there's no, there are no easy answers. 605 00:50:35,309 --> 00:50:37,611 the billable hour was, was, was an easy answer. 606 00:50:37,611 --> 00:50:39,312 It's a low risk answer. 607 00:50:39,312 --> 00:50:47,898 It's a logical answer, but looking forward, none of those easy, low risk, logical answers exist. 608 00:50:47,898 --> 00:50:53,141 And it's, and I find that exciting because it's a Rubik's cube. 609 00:50:53,141 --> 00:50:56,503 We get to, we get to figure this thing out. 610 00:50:56,558 --> 00:50:56,892 So. 611 00:50:56,892 --> 00:50:57,739 um 612 00:50:57,739 --> 00:51:05,441 if you can figure it out, you can buy your own Caribbean island because yeah, that's going to be, that's the question. 613 00:51:05,441 --> 00:51:06,365 You're absolutely right. 614 00:51:06,365 --> 00:51:07,966 And that is not just from pricing. 615 00:51:07,966 --> 00:51:11,908 Across the board, all the easy answers are gone. 616 00:51:11,908 --> 00:51:13,690 We're out of that time. 617 00:51:13,690 --> 00:51:16,601 We're no longer in high school, right? 618 00:51:16,601 --> 00:51:24,597 We're going immediately into master's level, um PhD level uh university as an industry. 619 00:51:24,597 --> 00:51:26,671 And wow, it's going to be a hell of leap. 620 00:51:26,671 --> 00:51:28,172 Yeah, it's gonna be fun. 621 00:51:28,172 --> 00:51:30,094 Like I said, I've never been more excited. 622 00:51:30,094 --> 00:51:40,454 know I, um like you, I point out a lot of the challenges and the obstacles in front of us, but it's not because I'm pessimistic. 623 00:51:40,454 --> 00:51:48,372 I just wanna make sure there's awareness and um not complacency around them because I'm married to this industry. 624 00:51:48,372 --> 00:51:49,623 My livelihood depends on it. 625 00:51:49,623 --> 00:51:51,435 I wanna see it succeed. 626 00:51:51,607 --> 00:51:54,333 So yeah, this has been a great conversation. 627 00:51:54,333 --> 00:52:03,415 can um people, I've been reading your work for a long time, but how can people find out more about what you write and where you speak? 628 00:52:03,415 --> 00:52:04,095 thanks, Ted. 629 00:52:04,095 --> 00:52:09,477 um Almost everything that I'm writing these days is at my substack, which is just my name, Jordan Furlong. 630 00:52:09,477 --> 00:52:11,927 ah I try to get something out every couple of weeks. 631 00:52:11,927 --> 00:52:13,538 The summer, I'm busy with a bunch of projects. 632 00:52:13,538 --> 00:52:14,919 I've been writing as much now. 633 00:52:14,919 --> 00:52:16,999 Every couple of weeks, I'll try to publish something. 634 00:52:16,999 --> 00:52:19,780 It's free because I'm, two reasons. 635 00:52:19,780 --> 00:52:21,861 One, I want the information to spread. 636 00:52:21,861 --> 00:52:25,032 I'm actually most interested in the IDs getting out there and circulating. 637 00:52:25,038 --> 00:52:27,808 ah But also I don't make my money off what I write. 638 00:52:27,808 --> 00:52:30,209 I make my money off people reading what I write and say, that's great. 639 00:52:30,209 --> 00:52:32,340 Can we pay you a lot of money to come and talk to us as a firm? 640 00:52:32,340 --> 00:52:34,821 I said, awesome um about that. 641 00:52:34,821 --> 00:52:40,143 uh I'm moving into doing more strategic consulting with firms that are interested in it. 642 00:52:40,143 --> 00:52:49,446 Right now there's a very, very small universe of law firms of any kind interested in that kind of guidance, but I suspect it's going to increase over the course of. 643 00:52:49,517 --> 00:52:53,750 Yeah, and Furlong is spelled F-U-R-L-O-N-G. 644 00:52:54,451 --> 00:52:56,713 We're recording here on video. 645 00:52:56,713 --> 00:53:07,042 Most of our uh engagement comes, it's audio, Spotify and Apple Podcasts, but we do have a, we get quite a few YouTube views as well. 646 00:53:07,042 --> 00:53:10,505 um Well, was a, yeah, there you go. 647 00:53:10,505 --> 00:53:13,648 It was a, I always have my info dashed around a little free advertising. 648 00:53:13,648 --> 00:53:16,120 um Well, it was great having you on. 649 00:53:16,120 --> 00:53:17,583 I really appreciate you. 650 00:53:17,583 --> 00:53:23,766 taking the time and hopefully we'll get to uh chat again at a conference real soon. 651 00:53:27,179 --> 00:53:27,620 Awesome. 652 00:53:27,620 --> 00:53:28,081 All right. 653 00:53:28,081 --> 00:53:29,403 Have a good weekend. 654 00:53:29,746 --> 00:53:30,767 Take care. -->