Marc-Henri Chamay

[00:00:00] Mark Henry, how are you this afternoon? Very good. Nice to see you, Ted. It's good to see you too. Are you in London? Uh, I'm cur-- I'm normally based in London, but I'm currently in Switzerland. Oh, okay. So this is, yeah, this is evening for you, not afternoon. Yeah, yeah. Late, uh, a late, uh, podcast, yes. Well, thank you for, for carving out the time.

I appreciate that. Um, why don't y-just start with a quick, quick intro. Tell us a little bit about yourself and, and your background. Yeah. So just to give a, a bit of background. So I'm a... I was the CEO and a co-founder of EOSphere. And just to explain a bit, uh, what we did. So we were for twenty-three years, uh, part of Allen & Overy.

So we-- the, the business was-- I created the business, uh, within Allen & Overy. And what we, what we do is we create very sophisticated, uh, information resources, uh, and essentially data, uh, tools [00:01:00] to analyze, uh, the legal and compliance position for various, uh, pain points that in-house would have. And, uh, we built the business, as I explained, over kind of more than twenty years.

Uh, we currently have, uh, about fourteen hundred clients globally, so it's truly a, a global business. We have a lot of clients, US, Europe, uh, Asia, and all the rest of the world. And all our products are based, uh, are, are... The business model we use is a subsc-subscription-based, um, uh, business model. Um, so yeah, as, as I explained, I was, I was the CEO, and since February, I'm the chair of the company, so I've kind of transitioned to a new role, but I'm still very involved, uh, in the journey of EOSphere.

And just to explain perhaps just who our clients are. So a lot of the verticals we target, or I would say our primary verticals we target are aimed at financial [00:02:00] institutions. Um, so when we say fourteen hundred clients, probably about ninety percent or even more are financial institutions and all kinds.

So we're talking about banks, we're talking about, uh, funds, we're talking about asset managers, uh, some insu-insurance companies. Uh, so really a wide spectrum of, uh, different types of entities, uh, in the financial services, uh, industry. And just to give a flavor of the type of pain point we address, maybe just to, to, uh- Yeah

give a bit of color when I say we create all those very sophisticated tools, uh, for in-house teams. Uh, just maybe take, uh, uh, one, one example, which is one of our biggest area in terms of products. We, we look at the rule when you are, uh, marketing, uh, financial services, uh, cross-border. So when an institution, it could be a bank, it could be a fund, uh, even a private bank, [00:03:00] we also cover private banks, uh, now, uh, market their services worldwide.

They obviously a lot of restrictions, a lot of rules they've got to comply with. And using our tools, we would give them the analysis of all those laws, regulations, market practices in typically eighty to a hundred plus, uh, jurisdictions. So really our... I would say our sweet spot is, um, kind of Very complex targeted verticals where our clients have like big pain points.

And then probably the other sweet spot to mention, and maybe comes from our DNA from having started a big international law firm, is solving those problems on a global basis. So not just looking at one jurisdiction, but providing the same data across, sometimes 100 plus, uh, jurisdictions. And how do you source that data?

So we [00:04:00] have, uh, at the core of EOS Suite, we have a, uh, dedicated legal team. So even when, uh, when we were part of Allen & Overy, we always had our kind of own dedicated legal resources, uh, within, within the law firm. So we're, we're kind of, I guess you could call it like a mini practice, but we were like almost like a separate company within Allen & Overy.

And then, um, the-- And what we do is we then work, uh, with local lawyers ar-around the world. So obviously we worked historically and still nowadays a lot, uh, with AO She- AO, A- uh, Sherman, but we also work, uh, with local counsel, uh, a-a-across the world. So our model can basically work with any, any law firm. It doesn't need to be just one law firm.

So we use, uh, local lawyers on the ground to help us, uh, analyzing the data and basically doing some very, very complex, um, uh, [00:05:00] analysis of the rules and laws, uh, in those jurisdictions. And how, how has, uh, how has AI transformed your business? So I would say i-i-it's interesting because I, I think AI, uh, I think I'm seeing AI, I don't know how you look at it, but I, I th- I think we're gonna see a lot of different waves with AI in terms of adoption and problems it solves and so on.

So to me, I think the first wave of AI is all about kind of the technology proving how amazing it can be with data. I mean, I think we're all probably amazed by what AI can do, uh, with data and its ability to just analyze data, uh, crudely. So I think that's what I think, uh, I, I think it would be hard to find people who are not convinced about that nowadays.

I think everyone take that as granted. Um, I think what we're seeing now, um, is if you start relying a lot of AI, and [00:06:00] I guess we all do our own experiment, we work with AI every day, um, you, you still realize AI gets it wrong. So AI will hallucinate, AI will use the wrong data or inaccurate data to give you an answer.

So what we are seeing, and, uh, when I say seeing, I'll always like to look at our clients first because I think our clients, in a way, tell us what's happening and what they need. So what we are, what we are seeing at the moment, and I, I think most data providers see that, is, is a massive demand to use quality data in AI solutions.

So I think where we see our path, uh, I think we still see, you know, some clients using our applications and using our tools, uh, the way they are historically, and obviously we keep improving them. But I think more and more we think, uh, our clients will consume, uh, our data through, um Kind of AI, uh, connectors like MCPs [00:07:00] and, and those types of things.

So that's really where we are seeing kind of the future right now, uh, this, this huge demand from clients, uh, to, to have quality data. So clients are not questioning the quality of our data. I mean, we, we, we don't get tons of, uh, tons of queries where people are saying, you know, "I can replace you with AI" or those types of things.

It's more a drive of leveraging quality data into AI solutions. And then the other thing we're seeing with AI is obviously the ability to provide, you know, great new tools, things you couldn't do before. So just give you an example on those, um, kind of cross-border marketing of financial services. We-we've done some prototypes where you could take, for instance, some marketing materials and pass them through, you know, an AI tool, and in seconds it would tell you if you-- what you're doing is compliant with the different, uh, rules in play.

So you could do those types of things, whereas, you know, maybe three, four years for, uh, ago, [00:08:00] those would not be applications we would have thought of at the time. So I think it's opening a, a kind of a raft of, of, of, of new opportunities. Um, I mean, I personally think it's, you know, it's gonna be a long game.

I mean, it's not like, uh, I think we are, uh, and we obviously are connecting, particularly in my new role and because we, we have, uh, investors in the business and meet a lot of people in other data businesses. I think everyone is a bit wondering about the future, how things will evolve, but you-- I think you, you have to just adopt it.

And, and so I think what I'd like to almost categorize our journey is almost like we need to be A data AI enabled business to be, you know, still market leading in five or 10 years from now. If we don't do that, then if-- I think if you're a data business and you don't do that, I mean, probably very bad news.

Good point. Y- um, you mentioned the, the waves of AI. So I just did a post. I'm gonna share this graphic that I [00:09:00] created for, um, people who are watching on YouTube, you'll be able to see it. For those listening, I'll just kinda talk through it. So I started off thinking there would be three waves, but I-- that was n- it was at, defined at too high a level.

Um, I think there will be five waves. Uh, we're currently in wave one. May- some firms are in wave two, but wave one is the copilot era, lowercase C, not Microsoft Copilot, but the bolt-on where existing workflows, you have a practice-facing tool that generates incremental improvements in that process. Um, and then wave two is infrastructure, where, you know, uh, firms are gonna have to, after decades of having zero focus on data hygiene, are gonna have to clean it, clean that up and, and their content and their document management system.

Then I think the third wave, and there's gonna be some overlap between these waves. They're not discrete. In [00:10:00] fact, you might make a argument that number five will happen before number four, but, um, the third wave I believe is gonna be like true process re-engineering. So breaking down legal work Um, delivery in based on first principles and rebuilding with tech in mind, figuring out where humans need to be in the loop, where work-- where tasks can be automated, which of course, um, then kind of the autopilot era or the agentic era or wave.

And then five, and again, five is I, I think if you wait until all this is done to change your business model, you might be in some trouble, like you were saying earlier. But, um, yeah, this is kind of how I see things playing out. I don't know. What's your, what's your take on this sequence? Yeah, I think, I th- yeah, I, I think I agree with, you know, your-- the, the different phases you showed definitely on the, uh, uh, you know, the importance [00:11:00] of data and quality of data.

I mean, that's is, I think, at the core of it. Um, and it's interesting when you talk about process re-engineering. Um, when we were selling to clients up to about a couple of years ago, you would see mostly, uh, lawyers, compliance people. Now we see to start to see, uh, data transformation people, AI people, uh, data people.

So we are starting to see, uh, particularly inside the large banks, but also with smaller clients, uh, people who are coming from other functions to streamline, uh, legal. Uh, and it's not-- I don't think it's driven by, you know, cost-cutting efforts. I think it's really driven by trying to make, uh, legal more embedded in the different processes, uh, of the bank and, and, and, and, and basically trying to reduce, uh, the risk of errors, uh, [00:12:00] inaccuracies, uh, and so on.

So we, we're seeing that now kind of more and more, uh, from our clients. So I, I think, you know, the, the, the phases we-- you were showing, we're seeing it from, from the client's angle and people who now participate in, in discussions. Yeah. You know, I see the future, like, when there's a lot of fear, uncertainty, and doubt about, you know, is employment going to crater in legal?

I think I, I, I don't think the answer is yes. I-- But I do think that the, the role, especially in-house, is going to change significantly. I think that tech is going to enable eventually a lot of the black, uh, blocking and tackling to be automated, um, or to get it really far down the field before a human has to get involved that will free up capacity and allow, allow the legal team to get further embedded in the business and more proactive.

Because [00:13:00] I'll tell you my experience, I mean, it's a sample size of two when I was at Microsoft and Bank of America, those were very siloed functions. Um, I mean, firewall between the business and the legal function, even a separate reporting structure. Like the chief legal officer reported for administrative purposes to the CEO, but his real reporting structure was to the board.

So, um, that I think was done with the Um, with the intention of resource management and, uh, objectivity, but I don't see that as a future state. That's a very siloed... I see a more integrated future for lawyers that allow them to get more, um, closer to, you know, boots on the ground and maybe prevent some risks before they materialize, because that's when, uh, lawyers get called a lot, is when things go sideways, right?

When things break. Um, I don't know. What's your take [00:14:00] on that? I, I think 100%. I think when you talk about those silos, um, uh, again, around some of the use cases we tackle in our products, um, you would, you would typically have, um, you know, kind of different steps when a bank would onboard counterparties. At some point, they would go to legal.

Legal has to perform certain checks. We have our products helping them to perform some of those checks. Um, if you think about a fund manager, um, you know, going on the road, like someone in their, uh, re-relationship team going on the road trying to promote the fund, they have to comply with the rules. They have to ask legal, "What can I do, not do?"

and so on. You've got those back and forth. So when you talk about those types of things, like if you have a fund manager going or someone in a bank going on a plane, going into a jurisdiction where there might some risk, might be some risk, you could automate all of that. Potentially, you could, you could have, uh, when someone books a [00:15:00] flight, automatically you could generate what rules need people should be aware of y-you know, based on the jurisdiction they are visiting.

Whereas, you know, in the current model, in many cases, they would still talk to the legal department, and the legal department will have to respond and deal with all that noise. So those would be like examples where I think you're gonna streamline completely the process. But I think y-y-you're still gonna have the in-house team responsible for deciding what level of risk they want to take.

Because, again, when we do our products, if I take what we do at EOSphere, we can, we can tell them what we think, we can tell them what the position is, but there will be many cases where someone has to make a call about what level of risk they're ready to take, uh, and so on. So, uh, and, and again, you could automate all of that.

You could also, you know, the, the, the capture of the r- level of risk you want to take, you could also automate that and put it into [00:16:00] AI systems and so on. But I think that's where we're gonna see all these kind of, kind of daily pain points and daily, you know, kind of delays in a process train, uh, being Being streamlined, I think.

And, uh, and I think if you ask people kind of outside legal and compliance, you know, I, I think we meet some of them from time to time. I, I think everyone would, you know, would welcome that because you don't want, you don't want to have like a department being a bottleneck in your organization. Um, so I think that's where things are gonna, I think are gonna move, uh, it, you know, amazingly fast in the next few years.

Yeah, that makes sense. Um, how did, uh, how did A&O think about potential cannibalization with AO Sphere? Like, did it-- I, I would imagine that you guys got paid hourly, the firm got paid hourly to provide this information, and then you productized it. [00:17:00] How did they think about that trade-off? Yeah, that's, that's-- I mean, in terms of the business model we had, that's definitely one.

Um, I mean, the first few years we didn't, we didn't do-- we, we, we didn't pay the time at hourly rates, like in probably the first two, three years, which frankly give us, give us the break to survive. Uh, I think if we had got hit by, uh, hourly rates straight on, I'm not sure the business would have got to where it was.

Um, but then the, the business model, we, we would formally instruct, uh, the different offices, whether it's, uh, would be an Ainu office or a third party, uh, law firm for the work. We'd pay them at market rate. Uh, so we would, we would do, uh, all of that. And from, from my experience, they-- we, we-- I mean, I had those discussions from time to time.

I had probably two, three partners who've, who've, uh, raised it over the [00:18:00] years. Uh, but I think the vision from the management of Ainu was always, and I think you, you did a podcast with David Morley, who was the senior partner at the time, and David said something, uh, one day. He said, um, "If something can be put on screen, someone will do it, and we have to do it first," or something along those lines.

And I think that's right. I think you can't, um... You, you've got clients who have-- I think the areas we operate are kind of high demand advice, if you want, like, like repeat high demand advice. People want answers straight away. They don't want to call a lawyer every time. Uh, they want it at a price point which is, uh, competitive.

So I don't think you have any, any choice really. So I had those conversation, yeah, a few times, but I would say largely people wouldn't see it as a cannibalization risk. But we also need to remember, you know, firms like Allen Overy or Shearman now are transactional [00:19:00] firms primarily, and they're not, you know, they're not firms who like to do small piece of advice like in the way we do.

So I think there was definitely something where we were an answer on those client demands without compromising the, the model of the main law firm. Yeah. I mean, this, this model has proven to be successful in, in not just with AO Sphere. Wilson Sonsini had a, a captive entity, I think it was called 65- Yep

that they sold f- to Paychex. Um, Ogletree Deakins has a client portal that they sell subscriptions, similar model to yours. They compile and curate labor and employment regs for all 50 states, and then provide that information through a portal that is paid for by a subscription. And they've been-- Like both of those were really successful.

So the-- I think [00:20:00] one of the challenges, and it sounds like you had really solid leadership, and that's how you got around it, but there is some scarcity mindset thinking in, uh, uh, it's not-- Legal doesn't have a monopoly on that, but there is a lot of it in legal with respect to there's so much like tradition, you know, this is how we do things.

Like, you know, the hourly model's a, a, a great example. You know, it just won't die, uh, no matter how hard we try and kill it. Um, so was the difference really the, the leadership? Because you're right, if you're a high dollar M&A firm, this other stuff is a distraction Yeah, I would say, I mean, the le-leadership was important at, uh, I would say key points of the journey.

Um, so you know, obviously when we, you know, started launching some things, I mean, when we decided to do a carve-out, you know, all those kind of big milestones. [00:21:00] But I think on the day-to-day, um, p- a partnership model, um, and, and some-sometimes people are surprised when I say that. Actually, a, a law firm is a great, um, shareholder.

Um, uh, quite, quite passive shareholder, I would probably say. Um, and as long as you make profit for the partnership, you don't damage the reputation of the partnership, and you add value for the clients, uh, you get, you get some autonomy, or at least I did, uh, with Allen & Overy. I don't know if it'd be the same in every law firm.

I mean, I only have experience of one. Um, but the way I used to say to my team, I think I used to call it freedom through profitability. Um, so we, we, we became pretty quickly quite profitable, and we, we became, uh, you know, one, one of the very profitable, uh, part of, uh, of the law firm, and that gave us the mandate, uh, to [00:22:00] continue.

So I think that's where I think the difficulty can rise, and I've been talking to kind of people at other law firms who've been trying to get some stuff off the ground and some businesses which have been around for a few years, not super successful and all of that. And I think those, those businesses as soon-- if you, if you don't start ticking the box in terms of profitability and basically you don't become-- you become a contributor to the partnership, I could see that becoming a very difficult journey.

So for us, uh, we crossed that line, uh, quite rapidly. Uh, and then every year it was kind of, uh, uh... I'm originally from Switzerland. They used to call it the Swiss clock. It was just kind of rising and rising every year. Um, and, uh, and that gave us really the mandate to do, to do, uh, what we needed to do. Um, so, so I think ultimately, I think what prevails, you ha- you just have to be successful.

I mean, I think that's, uh, that's the answer. [00:23:00] And many of our competitors we've seen in other law firms or law firms which launch products, we've seen people kind of many, many times launching something and then not sustaining it and not maintaining it. And, you know, we would kind of worry about them for a year, and then they would kind of disappear and do something else or whatever.

So again, I think one of the things Again, to get the trust of management, going back to management and the trust of the law firm is, I think if you embark on those journeys and you are successful in what you do, you have to do it on an ongoing basis really, really well. So that means, you know, for clients doing very high quality, doing things which never compromise the brand, uh, and, uh, you know, just, just add that value.

Um, and maybe just to give you an example of that, um, when we did, uh, and we, we can talk about it a bit later, but [00:24:00] when we did the carve-out, I think the biggest risks people saw in the carve-out was the brand, was like, what would... You know, what happens when we lose the association with Allen & Overy? And, uh, and we didn't lose any clients.

We didn't lose any clients. We didn't lose any staff. People just are clients basically kept surprise s-s-subscribing to our products. We, we got a few queries, not a lot, maybe 10 queries. Um, but people were trusting what we do and the quality never changed. So again, I think

that's ultimately what matters the most, I think, in, in, in making it work in a, in a, in a partnership. Yeah. And you know, I feel like what you did there was a glimpse into the future a-as to where law firms are going to need to start, how they're gonna need to start to think. Um, yes, you can take existing incoming work [00:25:00] and redesign your client or your legal delivery model and package that up.

Uh, but I think there's gonna be a ton of law firm or there's gonna be a ton of opportunity for these law firms as they tech enable and they realize all of the amazing data that the, that the, and content that they have access to. And they're gonna-- I think the, the firms that are gonna be the most successful are the ones that are think innovatively about how to go to market with a product offering, right?

And by product, I mean could be a product like AO Sphere, it could be just productized services. Um, I, I think that firms are gonna need to start thinking that way and, uh, and some already do. Obviously, we, we, we mentioned three, A&O, uh, Wilson Sonsini, Ogletree Deakins, and there are more. Um, but it's still an outlier a little bit.

And, um, yeah, I'm [00:26:00] curious, like do you have a sense of like if you were a law firm leader listening to this podcast, where would you start to look for opportunities inside the business to do innovative things like you did at AO Sphere? I think the first thing I would do, um, and again, I think it's, uh, uh, you know, and I had the same view within, within Ainu.

So for 10 years I w- I ran legal tech kind of in parallel at Ainu. I think you have to be selective. That's kind of the first thing you, you need to have in your, in your mind is, um, yes, you know, law firms think they are big. You know, they've got, you know 4,000, 5,000 people and so on. But I mean, that's small in the scale of corporates, right?

So when you start thinking about productizing, uh, we are-- we've seen law firms, as I explained earlier, come and go trying to compete with us and so on. But those law firms we've [00:27:00] seen many times, they were just trying to do too many things, and they were not trying to just tackle maybe one opportunity, do it really, really well, get critical mass, get that, you know, turn the corner on profitability so you start, you know, having that dynamic that within the partnership you're perceived to be something positive and not just, you know, uh, something which is, uh, consuming investment.

So to me, that's, that's the f- the, the first, um, the first element. You then need, I think, something you can sell to lots of clients. Uh, so again, all, all the different topics we, we've targeted over the years, we always-- we, we can't make our model work if there's only 20 institutions buying a product. We need, you know, 100.

If, if we can, 200 or more, or 300, uh, and so on. So you, you have to select things which have enough [00:28:00] legs, uh, in the market to succeed. And then you have to pick, uh, I think areas where there are, you know, big pain points. Uh, so in our case, the big pain points tend to be kind of big regulatory requirements with, you know, kind of sanctions on the back of it.

Um, we have found and we, we did over the years experiment, you know, across, uh, some products where sometimes those, um, restrictions were not as strong, and it's more difficult because clients are not as in-incentivized to adopt your, your product. So I think you, you need to-- And then you need to start small, I think, um, again.

I think when you, when you do these things, if you, if you have the focus and, and start somewhere, um, you know, start small, make it work, and then become more ambitious. Again, I think trying to do everything too quickly is not necessarily the answer, particularly in a [00:29:00] partnership. Yeah. Um, what, what, what you were talking about is total addressable market.

We, we know th-those, these sorts of terms well in the software business, but it's a little different. Um, I, I'm, I'm curious how well equipped, uh, equipped are law firms to execute a strategy like this? Because I'll tell you, I've dealt with a lot of lawyers over my 32 years in business, and Many of them thought they knew more about my business than I did.

You know, it's like they really fancy themselves sometimes to be, you know, business people and, um, because they're adjacent, right? They're, they're building the legal structures and, you know, helping the risk management strategy and dealing with the issues that come out of running a business, but it's not running a business.

Practicing law, the business of law is, is running a business. The practice of law is exactly that. It's practicing law. So I'm curious like how [00:30:00] well-equipped law firms are to grapple with things like TAM and, you know, customer acquisition cost and lifetime value and all of these things that are second nature to software companies, but they're gonna be new concepts to law firms.

Yeah, I, I think again, having worked, you know, 20 years and I, you know, I've seen how the law firm was operating. I, I, I, I agree with you. I don't think-- And, and now seeing, you know, be- being, being kind of private equity owned, you know, how that world looks at go to market. Um, I, I-- You know, clearly it's not a sweet spot of, of law firms.

So again, um, that doesn't mean you can't succeed there. I think law firms have to be, um, open to welcoming the right skills to do that. Uh, so if, you know, if they don't get... If they don't have the lawyers who have those skills, they should just [00:31:00] probably hire people from a different industry. Um, that's not necessarily, I think, an easy journey.

So, um, I mean, I'm not a lawyer by background and, um, I guess when I joined Aino, it was a bit of my personal mission to, uh, try to succeed in a, in a law firm, uh, by, by not being a, a lawyer. And, um, uh, just, yeah, I think trying to, to do that. And again, talking to management and the support, uh, I personally got from management, I mean, that's where, um, you know, the management of Aino, um, in, I think it was 2009 or '10, uh, supported me to become partner of Allen & Overy.

So I was, uh... I mean, I could never have the title partner because I was, uh, I was not a lawyer, but, uh, I went through the partnership selection process and all of that. Uh, and again, I don't think-- I, I really always [00:32:00] thought Aino there was definitely ahead of the game. I don't think that would have happened in all law firms.

Um, and it depended also, you know, on who are the leaders at the time, uh, clearly, and getting the right backing. So I think that, that-- those problems you talk about can be, can be solved, I think, by attracting people. But probably coming back to the root of it before, you know, how you solve it, I think you have to recognize that marketing your products is absolutely critical to success.

So just to give you, like, some figures, uh, from our kind of Aino days, um, we were getting about less than 10% referrals from Aino at Eosphere, so in terms of client acquisitions. So if we didn't get out of bed, pursue our own, do our own marketing, have our own sales team, there was no way the business would have been where it is [00:33:00] now.

Absolutely no way. Uh, and it's not that Aeno wasn't helping. I think people were ready to help. It's just, it's, it's, it's very difficult to cross-sell in a law firm because it, you know, you-- everyone's got like their own practice. Not everyone knows what, what people are doing. Even Aosphere was 20 years, 20-plus years part of Aeno.

Not all the partners knew well the business, the products, and so on. So I think go-to-market is absolutely critical. And if I had to do it all again, um, that's the area where I would have invested even more. Uh, so we, we, we boosted massively our go-to-market since we've done the carve-out. If there's one regret I have, I would have done that much more Even part of Aino.

I think that's the area where we could have done even better at the time. So I think you have to recognize that go-to-market is, you know, a great product, yes, but go-to-market, absolutely critical. [00:34:00] And, and how much pushback did you get? You know, I mean, l- law firms are funded with partner capital, and every dollar that goes into an investment like Ainosphere is a dollar that doesn't get distributed at the end of the year to the partners.

So h- how was that-- Which creates tension, right? Like, let's say, you know, one of the challenges I talk a lot about is the, you know, the retirement horizon problem in, in law firms. The most senior influential decision-makers with the most votes inside a law firm are the ones closest to retirement. So if I'm retiring in two years and this has a break even in five, why am I gonna vote for it?

And I've got the most influence, right? Um, h- h- how do you, how do you navigate that? So in our case, it was very simple. We self-funded from about 2007, 2008. So everything we were doing was self-funded from our profits. So we were basically lowering our profits, [00:35:00] uh, to do new products. So pretty simple. But where we were constrained, obviously, um, not to a point where it damaged the business, but obviously was like not perhaps realizing all the opportunities around it, is obviously we didn't have any opportunities to really acquire the businesses.

We're doing the types of things we've been doing the last couple of years since we've done the carve-out. So we were kind of growing organically, self-funded. So we, we didn't have that challenge of, uh, getting, um, getting challenged by, uh, by, by the partnership. And I would say even more that we were-- I was always great friends of the, the CF- CFO at the time because we are very profitable and very predictable.

Yeah. Well, and you know, a-another interesting dynamic, so there's the Legal Tech Fund now, TLTF, and, um, they're, they're backers of ours, and they're-- I don't know if this is still true, [00:36:00] but it, it, it certainly was with their first fund. Their LPs are law firms. So law firms have said, "Hey, you know what? I don't know what's a good opportunity or not, but you guys are investors for a living.

I'm gonna write you a check to go pursue opportunities and, you know, improve." I think there's multiple benefits for law firms who invest. One, they're making the ecosystem stronger. Two, hopefully generating a return for the business. But, you know, um, I, if, if law firms had to do what Zach and Gordon do at TLTF, they're not gonna do it as well because that's, that's, that-- this is their business.

So, um, I'm wondering how How, how do they would they be better off, you know, maybe even, I don't know, is there a consultant you could hire to come in and help evaluate, like, "Hey, I've got these opportunities." I'm, I'm curious how I would approach that as a, [00:37:00] as a law firm leader. I mean, I guess it depends where you are on the journey, right?

I mean, you would, uh... I th- I think, yeah, I th-- I mean, it's interesting because I think, uh, you know, for a number of years, um, in Ainu, uh, we, we... I mean, the, the, the main pain point we had, funny enough, in Ainu was getting resources. So we didn't have that profitability issues, but the law firms for, you know, the last few years had pretty strict rules about, um, hiring staff, and we had to go through the same processes as any other kind of parts of, of, of the law firms.

And that was, um, probably our biggest pain point, was getting the resources. And when we were having those discussions, I always said to them, you know, "I don't think you realize how valuable this business is." Um, and I think nobody realized that. I think people were just like, [00:38:00] you know, kind of laughed and didn't realize what, what we were building.

And then obviously, when we did the carve-out, I think that started to materialize. That actually was a very valuable business. Um, so again, I think, I think you're right. I think perhaps they should get some external perspective. So when we started, um, discussing the carve-out, um, and that was pre-merger, uh, with Sherman, um, we were, you know, certainly we said, "Okay, should we have a, a discussion with, you know, a banker?"

And we, we went to the banker who did, uh, uh, with, with Lazard, who was advising Ainu on the, on the merger with Sherman. And immediately, um, they started giving their perspective, and immediately it was pretty clear, you know, what the asset was worth and, and all of that. So I think, I think, uh, you know, perhaps when there are key decisions to be taken, like should they invest more?

Should they accelerate [00:39:00] more? Uh, what should they do? You know, perhaps they should get some external expertise to do that. And it doesn't necessarily need to be a banker or, or, you know, if they could use, you know, probably a consultant or, you know, someone who's worked in the field to make that assessment, then you're probably gonna get better quality actually if you do that.

Um, so I th- I think that's, yeah, I, I, I would, I would definitely encourage people to do that because otherwise very hard also to justify, as you said earlier, to the rest of the partnership of why you should make those investments. And if you start having You know, some assessment, independent assessment, I think it would help the case.

Yeah. What, what did you, what did you learn as part of the carve-out? Like, what were the lessons learned, um, along that jour- that part of the journey? Yeah. So maybe just set the background just to perhaps explain what has happened. So we did, uh, we did the carve-out in, uh... We, [00:40:00] we, we, we decided to do the carve-out in, uh, 2023, summer of 2023.

Um, and then we, we signed, so in, in October, uh, with-- So, so the new structure in terms of the investors, we, we have two private equity funds, uh, who've invested in Eosphere. The leading one is a, a private equity firm called Inflection, and then we have another private equity firm called, uh, Endicott Capital.

And then the, um, legacy partners of Allen & Overy are still shareholders, uh, in the business, so there's still an interest, uh, of the, uh, the, um, kind of the legacy, uh, A&O partners in the business. So the lessons I've learned, first, I would say If a law firm ever contemplates doing a carve out, I think-- And I, I've been having some of those discussions with some law firms and some people have been contacting me, like on a, on an informal [00:41:00] basis.

The first is to structure your business very well. So I think if you say you've got a business in a law firm and it's kind of sitting, you know, middle of a practice and so on, you've got to, you know, turn it into almost like an entity within the law firm, which we, which we had. So Aosfera was always a separate LLP from the main law firm.

So it

was AOS LLP was like-- And it was owned by the partners of Allen & Overy. And then you want to make sure that this business has all the critical parts that you need to operate. So for us, we were controlling content creation, so all our teams of experts, obviously not the local providers be-- because we are commissioning the advice.

We are controlling our technology in terms of not our email systems, but not the technology to deliver the data to the clients. We were controlling our marketing, we were controlling, uh, [00:42:00] our sales, we were controlling our client support. So everything was ring-fenced. So the services we're using for main law was, uh, kind of general IT, obviously office space, HR, finance, and so on.

So that's the first thing which I think is really key, is to prepare that. And then the other thing you have to prepare when you do that is also have a financial track record. Because when you start, you know, engaging in a carve out, the first question is: What are your numbers? And again, if your numbers are too buried in the law firm, I think that's not a plus.

Definitely not. So the fact we were paying, uh, if you take like our interaction with the in offices, the fact we were paying them at arm's length Was, you know, it's all these elements where when someone looks at the business, they want to feel they can take it out and, you know, and, and, and, and sustain that business.

So that was like, [00:43:00] I would say the first thing, uh, to really think about when, when a law firm wants to do that. The next thing then obviously is decide what you want to do with the business and have clarity around that. That's definitely an area where you need, uh, very strong, uh, central management. So if I take our case, I think you'll probably find a lot of Aino partners who would say, "Let's sell."

You'd probably find a lot of Aino partners who would say, "Let's keep it." And at some point, someone has to, you know, draw a line and take it to the board and, you know, make it happen in a way. Uh, and then the next stage of the journey is ta-take a very good advisor. So again, I was quite surprised because a l- a law firm like Aino do M&A all the time, but doing their own M&A is harder.

It's like operating on yourself. So we had, uh, obviously a, [00:44:00] a bank, and then we commissioned, uh, consultants, like sell-side consultants to do a piece on commercials, a piece on financial, uh, you know, kind of, uh, the kind of your DD sell side. And then, uh, we, we t- we, we, we gave the mandate to another law firm to document the transaction, funnily enough.

So it was all-- And we did it, uh, we did, we kickstarted the project in, uh, in July, and we, we signed it at the end of October. And that was a kind of very, very fast process, and that's really because I th- I think we had all these elements, uh, in place. Was it scary? I mean, to, to leave the mothership? Uh, it's it took us definitely-- I mean, what's scary is to think, you know, despite the fact we were controlling, we, we thought we were controlling all the elements.

You know, like we had our own Salesforce, our own systems there, our [00:45:00] own team and so on. Then someone says, "Oh, you're gonna need, you know, a new email system. You're gonna need a new HR system. You're gonna need to hire HR. You need to hire a CFO. You need to hire all those people." Um It is a bit scary, but, um, I think private equity has kind of a magic formula on these things.

Um, and w-what they do is, yeah, very, very quickly they, they, they bring you a team of, uh, interim. So they give you like an interim s-- uh, interim C-CFO, interim HR,

interim IT, you know, all these people to put the systems in place. But still, it took us, um, it took us about 10 months to, uh... So, so, so we, we signed, we, we completed in February, and we were on our own IT systems around October, but the deal was signed in October the year before. So we had the time between [00:46:00] signature and completion to prepare a lot, and it still took us like, yeah, seven, eight months to, uh, to do the rest.

Um, so yeah, it's not, uh, it's, uh-- And in terms of the business itself, of course it has an impact because for pretty much a year you get distracted by the process, you get distracted by the carve-outs, uh, and all of that. Yeah. Well, we're almost out of time, but one, one final question for you. Um, what about the leadership of the-- not your law firm leadership, but like maybe how law firm leadership looks at the, the management that they're putting in place in charge of this initiative.

Like, um, I, I've seen like what you've done, I've seen done in legal, I've seen it done in other industries and where I've seen it be successful, w-what seems from an outside [00:47:00] observer, what made the difference when I look at, all right, why was that one successful, but that one wasn't? A lot of it came down to leadership.

Um, you had people who I, I used to ser-- I used to do work in, uh, consulting work in shipping long, long time ago. And, uh, they decided somehow that this IT group in this massive shipping company, one of the biggest in the world, talked their leadership into spinning off the IT group and then contracting back.

It didn't work very well. Um, th-there was discontent before the spinoff in terms of the service that was being delivered. It only got worse. And again, I feel like from an outside observer, and I knew them well because I, I worked with them, it was a, it was a leadership gap. So like, you know, how, how do law firms need to think about who do I put in charge of this thing if I decide to do it?

What's the, uh, what's the lens they need to look through? So I think when I look at, [00:48:00] you know, I think when I look just not us but all around, um, the people I know who've done, you know, nice businesses in the space, uh, it always comes down to a dedicated team who wants to make it happen. I mean, it's, it's, it's That's, uh, you know, that's, that's kind of the m- the, the, the, the magic formula in a way.

So when I look at EuSphere, you know, we- What about, what about resume though? Like, okay, you can have the desire, but do you have the chops? Um, how, how does that factor in? Yeah. Um, yeah, I guess y- you need to have the-- yes, you, you need to have the skills, you know, in the first place and, and the dedication and believe in what you're doing.

Um, so yes, it's definitely, you know, the experience. So if you take, you know, what my, my, my background, I, I, uh, I worked in data before in financial data, so I launched, um, Reuters' first web products in the-- [00:49:00] during the internet days. So I already had a background in subscription products, in, you know, turning data into a product and selling that, and so on.

So I had, I had that kind of knowledge, if you want. But then around me, I needed also, you know, the amazing lawyers to, to do the work. And the people we have in EuSphere, like, uh, driving our products are the same people we had for the last 15 years plus. Mm. Uh, so all our, our turnover was the lowest by a mile, uh, when we were within Aino.

We, we hardly-- we lost virtually no one over the years, um, because we, we created something where I think there was focus for, for our teams. Uh, we, we did, um, introduce initiatives like flexible working way before COVID. So most of our lawyers only come one day a week in the office. Most of them work [00:50:00] four days a week, and we've done that for 15 plus years.

So it's not like COVID, and we changed and hybrid. We had hybrid way before. So we, we, we designed a few things like that where-- which, which, uh, kind of help us keeping a, a great team together. And you were talking about the nightmares of the carve-outs. I think if, if we didn't have that great team, I could see that being like an absolute nightmare.

The fact the team was kind of holding together was absolutely key. Um, so again, and, and when I looked at how we were operating within Aino, we were kind of a, a small, like a-- We had our, our own culture, I would almost say, within the law firm. We were like our own little world in a big law firm. And I think that's what you need to create ultimately to, to be successful.

Because you're not doing transactions, you're doing something different, and you need to create that very, very strong culture around products and what you do. Yeah. Yeah, you're-- I mean, and again, [00:51:00] I, I attribute the leadership and culture are tightly coupled. Your leadership strategy and routines is what dictates your culture.

Right? And, um, so that, that is super helpful. Well, um, this has been a fantastic conversation, Marc. I knew it would be, uh, when David, you know, I-- David Morley had on the podcast, I don't know, three, four months ago, and he's, he was absolutely fantastic, and afterwards he goes, "You should talk to Marc about the, uh, about the AO Sphere."

So, um, yeah, man, thank you very much. Before we go, how do people find out more about AO Sphere and what you guys do? So just check on our website, aosphere.com. I think that's the best, uh, that's the best route. And, uh, if you, you know, if you are in a, in an area where you would-- could use our product, just get in touch, and happily we do free trials and, you know, do demos and give you access to our products.

Great. And we'll put some links in the show notes. [00:52:00] Very good. Awesome. It was great talking to you. Thank you very much, Ted. All right. Great. Thank you very much. Bye-bye. Bye-bye. Thanks for listening to Legal Innovation Spotlight. If you found value in this chat, hit the subscribe button to be notified when we release new episodes.

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