1 00:00:03,958 --> 00:00:05,828 Mark, how are you this afternoon? 2 00:00:06,067 --> 00:00:10,805 Ted Neverbitt, a really humbled and honored that you'd have me on your podcast. 3 00:00:10,805 --> 00:00:12,238 Thanks for the opportunity. 4 00:00:12,238 --> 00:00:13,118 Absolutely, man. 5 00:00:13,118 --> 00:00:14,738 I'm honored to have you. 6 00:00:14,738 --> 00:00:26,978 I first ran into you a couple of years ago at the KMNI conference and you had a very no BS style to your presentation and I thought that was really good. 7 00:00:26,978 --> 00:00:32,198 I like that no BS approach to tackling some of these issues. 8 00:00:32,198 --> 00:00:34,694 So I really, I'm happy to have you here. 9 00:00:34,834 --> 00:00:35,815 Well, I appreciate that. 10 00:00:35,815 --> 00:00:37,178 And I do remember meeting you. 11 00:00:37,178 --> 00:00:37,698 Thank you. 12 00:00:37,698 --> 00:00:43,447 um For one, the distinction of that baritone voice that you have that kind of carries through the room. 13 00:00:43,447 --> 00:00:45,782 oh But again, thanks very much. 14 00:00:45,782 --> 00:00:47,083 Yeah, absolutely. 15 00:00:47,083 --> 00:00:50,325 So why don't we get you introduced for the folks that don't know you? 16 00:00:50,626 --> 00:00:57,132 we, you know, our target audience is primarily knowledge management and innovation professionals at law firms. 17 00:00:57,132 --> 00:01:00,845 And you kind of sit on the other side of the buying table today. 18 00:01:00,845 --> 00:01:08,241 So, um, you're the chief legal officer at DHL, but you've had stints at safe light and Sherwin Williams. 19 00:01:08,241 --> 00:01:12,785 And then you have, um, you're active with ACC. 20 00:01:12,945 --> 00:01:14,176 Is that correct? 21 00:01:14,322 --> 00:01:18,364 I've been a member of ACC since I got out of law school quite some time ago. 22 00:01:18,364 --> 00:01:28,880 But yes, and just for visibility, at DHL I do serve as the chief legal officer for our supply chain operations in the Americas. 23 00:01:29,356 --> 00:01:31,549 Okay, good stuff. 24 00:01:31,549 --> 00:01:37,184 And then, so are you the primary interface between the company and outside counsel? 25 00:01:37,916 --> 00:01:49,009 Yeah, when it comes to the DHL organizations, the businesses, the operations, I am, but as you would anticipate, especially in an organization our size, in department our size, 26 00:01:49,009 --> 00:01:52,770 there's a number of folks that work in what we call legal innovation. 27 00:01:52,770 --> 00:01:54,971 LIDA is the acronym. 28 00:01:54,971 --> 00:02:05,423 Many people would know that as legal ops, but they're the ones day-to-day interfacing with the law firm, particularly with regard to billing, administrative issues, et cetera. 29 00:02:05,423 --> 00:02:07,994 But there are a number of senior people on the team. 30 00:02:08,306 --> 00:02:18,116 that also report to me, whether it's litigation, commercial, may and members of their team are interacting with law firms regularly, as do I. 31 00:02:18,872 --> 00:02:19,322 Okay. 32 00:02:19,322 --> 00:02:20,023 Well, good stuff. 33 00:02:20,023 --> 00:02:20,283 Yeah. 34 00:02:20,283 --> 00:02:29,638 So this is a real treat because it normally we have law firm folks from the law firm side on, this is the first time we've had somebody from the buy side on, which I'm really 35 00:02:29,638 --> 00:02:32,930 excited about because we got some interesting topics to tackle. 36 00:02:32,930 --> 00:02:36,372 Um, and it's, it's an interesting time in the industry. 37 00:02:36,372 --> 00:02:47,478 There's so much change going on with, with gen AI and how law firms are going about the process of thinking through pricing strategies and you know, how 38 00:02:48,002 --> 00:02:49,572 What's the future of the billable hour? 39 00:02:49,572 --> 00:03:02,326 Um, but before we jump into that, you and I discussed the last time we spoke, we discussed uh a very interesting statistic that I think didn't align well with your perspective. 40 00:03:02,326 --> 00:03:13,749 And it was a, it was a statistic from the legal value network and the Blikstein group do an annual, um, they call it LPPM it's legal pricing and project management. 41 00:03:13,989 --> 00:03:17,690 And they survey, I forget the number of GCs. 42 00:03:17,774 --> 00:03:20,714 or I'm sorry, this is law firm GCs. 43 00:03:20,714 --> 00:03:25,474 And one of the questions they asked that I thought was super interesting. 44 00:03:25,474 --> 00:03:26,534 So this is from December. 45 00:03:26,534 --> 00:03:28,494 I got this report in December. 46 00:03:28,574 --> 00:03:34,734 It says, our clients blank us to use generative AI. 47 00:03:37,174 --> 00:03:42,034 11 % said forbid, 30 % said discourage. 48 00:03:42,034 --> 00:03:45,750 So 41 % of these law firm GCs 49 00:03:45,750 --> 00:03:53,514 are under the impression that their clients either forbid or discourage them from using generative AI on their matters. 50 00:03:53,514 --> 00:03:59,397 And I think you had a different perspective from the buy side in your work with ACC. 51 00:03:59,397 --> 00:04:01,254 Can you share some of that? 52 00:04:01,254 --> 00:04:01,905 Sure. 53 00:04:01,905 --> 00:04:08,851 Well, my reaction initially was a bit of incredulousness of really? 54 00:04:08,851 --> 00:04:13,265 There's even that many that either forbid or discourage the use. 55 00:04:13,265 --> 00:04:17,609 Now, the Blixting group has got a phenomenal reputation. 56 00:04:17,609 --> 00:04:19,280 I know Brad quite well. 57 00:04:19,280 --> 00:04:28,058 um And the integrity of the data that he reports on is nothing less than purely factual and of course accurate. 58 00:04:28,058 --> 00:04:31,670 And he goes about doing what he's doing in a very, very objective way. 59 00:04:32,250 --> 00:04:38,073 But I have a very different perspective when it comes to embracing AI. 60 00:04:38,294 --> 00:04:46,578 The journey that we are on, Ted, as the buyers of legal services, we've been on for the better part of a decade. 61 00:04:46,978 --> 00:04:58,064 But we've really had no way of tying a lot of ideas together that ultimately are focused on how do legal services get delivered. 62 00:04:58,064 --> 00:05:03,107 by the sellers of legal services, the law firms, the ALSPs, et cetera, but also by the buyers. 63 00:05:03,107 --> 00:05:06,448 There are in-house teams, better, faster, and cheaper. 64 00:05:07,009 --> 00:05:17,185 And one of the ways that you can do that, not only now, but on a sustainable basis in the future, is by leveraging information that you have in your files, whether it doesn't 65 00:05:17,185 --> 00:05:21,857 matter if it's your law firm or in-house, but information that historically is just called data. 66 00:05:21,857 --> 00:05:23,628 It could be in your document management system. 67 00:05:23,628 --> 00:05:26,860 It could be on hard drives throughout your department. 68 00:05:27,302 --> 00:05:30,193 But that information, that data tells stories. 69 00:05:30,553 --> 00:05:43,157 And those stories allow you to leverage past to help make decisions going forward so that you don't repeat the missteps that you made in the past. 70 00:05:43,157 --> 00:05:47,358 But in many regards, you find ways of doing much more efficiently. 71 00:05:47,358 --> 00:05:54,990 And the data has always been there, whether in the traditional metal file cabinets or today's what you might refer to as an electronic filing cabinet. 72 00:05:55,270 --> 00:05:58,982 But the technology has not been there to help us sew all of this together. 73 00:05:59,143 --> 00:06:09,650 So when I look at the opportunity to leverage technology, whether you want to call it AI, which here we refer to as augmented intelligence as opposed to artificial intelligence, as 74 00:06:09,650 --> 00:06:21,118 a way of helping me as the buyer of legal services, not only acquire those services less expensively, but more efficiently, it really does cause me to scratch my head as to why 75 00:06:21,118 --> 00:06:24,920 you would not embrace an alternative way of thinking. 76 00:06:25,112 --> 00:06:28,268 leveraging that data to help you do things better, faster, cheaper. 77 00:06:28,760 --> 00:06:39,449 Yeah, you know, I'm wondering too, if there's not, you know, other factors in play with some of these numbers, like, you know, confirmation bias where, you know, there's maybe a 78 00:06:39,449 --> 00:06:56,613 perception from folks on the sell side of the table that there's resistance or, discouragement of using these technologies versus really what, the sentiment is on the buy 79 00:06:56,613 --> 00:06:57,014 side. 80 00:06:57,014 --> 00:06:57,846 I mean, 81 00:06:57,846 --> 00:07:03,249 You have a really good view of this through your work with ACC and as a buyer. 82 00:07:03,249 --> 00:07:14,816 And from your perspective, you absolutely want, it sounds like if I'm understanding correctly, you absolutely want firms leveraging this tech in being more efficient and cost 83 00:07:14,816 --> 00:07:16,707 effective in their service delivery. 84 00:07:16,707 --> 00:07:17,754 Is that accurate? 85 00:07:17,754 --> 00:07:19,054 Well, it is accurate. 86 00:07:19,054 --> 00:07:29,447 And my engagement with the ACC, particularly when I was chair of the law department management network, gave me visibility and insight into what other law departments are 87 00:07:29,447 --> 00:07:32,958 doing, how they're thinking, how they're embracing technology. 88 00:07:32,958 --> 00:07:40,460 albeit that was five years ago, which in many regards in technology, that was a lifetime ago. 89 00:07:40,600 --> 00:07:46,564 So change is continuous, but I think a great 90 00:07:46,564 --> 00:07:51,216 deal of the concern is a concern for the unknown. 91 00:07:51,236 --> 00:07:53,217 What can AI do? 92 00:07:53,257 --> 00:07:54,077 Unbridled. 93 00:07:54,077 --> 00:08:00,550 uh It's literally a racehorse that just continues around the track without a jockey. 94 00:08:00,550 --> 00:08:02,832 You've got to have some controls over it. 95 00:08:02,832 --> 00:08:12,826 We all have read about the attorney in New York, all that, a couple of years ago who submitted a brief in a litigation matter and everything. 96 00:08:12,984 --> 00:08:20,640 was driven by AI and conclusions were reached and everything was wrong with regard to citations and nobody wants to be in that situation. 97 00:08:21,061 --> 00:08:35,553 But I think those that take the time to really understand what is the opportunity ahead of them with regard to how to effectively use technology, whether it is AI or whether it is a 98 00:08:35,553 --> 00:08:41,944 new platform, are those that are going to put themselves, especially in this hyper competitive market, 99 00:08:41,944 --> 00:08:52,245 in which we all operate, Ted, in a very competitive position to really not only advance the interests of their clients, but to do so in a way where the service delivery is much 100 00:08:52,245 --> 00:08:53,386 more affordable. 101 00:08:54,478 --> 00:08:57,998 You know, and there are some numbers that kind of support this. 102 00:08:57,998 --> 00:09:09,178 So I just opened up the 2024 law department operations survey that is also a Blikstein group survey. 103 00:09:09,178 --> 00:09:16,758 And it shows some, a bit of uptick in sentiment around this. 104 00:09:16,758 --> 00:09:24,038 So it looks like in 2023, and that's, that may be the source of the disconnect here in 2023. 105 00:09:24,430 --> 00:09:29,570 only 63 % of law firms encouraged the use of GenAI. 106 00:09:29,690 --> 00:09:32,230 In 2024, that number rose to 78%. 107 00:09:32,230 --> 00:09:35,670 So things are clearly trending in that direction. 108 00:09:36,990 --> 00:09:49,110 One interesting stat here as part of this LDO survey that is a real head scratcher for me is I went back and listeners have heard me talk about this multiple times. 109 00:09:49,110 --> 00:09:53,454 They may be sick of hearing it at this point, but I went back and did a survey. 110 00:09:53,454 --> 00:09:58,474 or a quick analysis of the Ilta roster from 2014. 111 00:09:58,494 --> 00:10:05,354 And I looked at all the job titles for law firms that had the word innovation in the title. 112 00:10:05,354 --> 00:10:09,154 And there were 16 in 2014, 11 years ago. 113 00:10:09,314 --> 00:10:14,514 late 2024, 10 years later, there were about a little over 300. 114 00:10:14,514 --> 00:10:16,674 Today, there's close to 400. 115 00:10:16,674 --> 00:10:23,234 So there's been about a 2000 % increase in innovation roles within law firms. 116 00:10:23,234 --> 00:10:32,590 So a very, basically a 20 X increase in investment in innovation work, because that's how law firms invest is primarily through people. 117 00:10:32,590 --> 00:10:34,361 They do very little R and D. 118 00:10:34,402 --> 00:10:36,383 So it's primarily through people. 119 00:10:36,383 --> 00:10:42,887 So 2000 % increase in uh investment by law firms and innovation. 120 00:10:42,887 --> 00:10:53,024 And then the, uh the LDO survey, almost two thirds of law firm clients either disagree or strongly disagree that their law firms are innovative. 121 00:10:53,516 --> 00:10:56,950 And that is a massive disconnect in my mind. 122 00:10:56,950 --> 00:11:09,352 And I have some theories on why that disconnect exists, but I'm curious about your take on why are, if, if law firms are investing in innovation, why are clients not feeling it? 123 00:11:10,007 --> 00:11:22,324 because I think, and these are part of my theories as well, but they're also based on discussions that I've had with multiple law firm partners from many law firms, from the 124 00:11:22,324 --> 00:11:36,853 AmLaw 50 on down, where when I talk to the partners, especially those that are in the corporate setting, which of course involves providing services uh to DHL. 125 00:11:37,241 --> 00:11:41,341 What I am learning is they are investing significantly in technology. 126 00:11:42,041 --> 00:11:52,081 And although I don't go through a multiple 20 questions or 30 questions, Ted, with them, the theme that I get back is that investment is internal. 127 00:11:52,221 --> 00:12:04,141 It is driving internal efficiencies to allow them among their team to do things better, faster, and cheaper from the perspective of the law firm. 128 00:12:04,621 --> 00:12:11,965 And I've got some of the best law firms, I think, in the world and some very, very progressive law firms that are using technology. 129 00:12:12,125 --> 00:12:25,413 But when I look at my legal bills today versus five years ago versus 10 years ago, and I look, for example, just at a typical employment claim or an employment litigation, the 130 00:12:25,413 --> 00:12:30,296 costs today are significantly more than they were five years ago, let alone 10 years ago. 131 00:12:31,221 --> 00:12:32,491 But Ted, 132 00:12:32,491 --> 00:12:43,334 I see no efficiencies when it comes to leveraging technology to help them take all of the learnings from the past and ultimately cut down on the number of hours spent in delivering 133 00:12:43,334 --> 00:12:47,325 those services to me, not only today, but in the future. 134 00:12:47,705 --> 00:12:59,588 So part of my speculation is that a lot of investment among the law firms internally are driving opportunities for them to be self-sufficient internally, but it's not necessarily 135 00:12:59,588 --> 00:13:01,919 being reflected in the service offering. 136 00:13:02,019 --> 00:13:03,047 to the client. 137 00:13:03,650 --> 00:13:04,951 That's interesting. 138 00:13:04,951 --> 00:13:09,916 Yeah, I think there has been a, I didn't invent this term, but I use it a lot. 139 00:13:09,916 --> 00:13:22,448 Innovation theater as well in the law firm world where, you know, they'll stand up a chief innovation officer and then not either sufficient, give them sufficient resources or 140 00:13:22,448 --> 00:13:27,553 sufficiently empower them to make change across the law firm. 141 00:13:27,553 --> 00:13:28,942 I, you know, 142 00:13:30,594 --> 00:13:34,315 I guess oh how to phrase this the best way. 143 00:13:34,315 --> 00:13:44,178 um Law firm culture is unique and innovation is not deeply embedded in law firm culture today. 144 00:13:44,178 --> 00:13:45,608 Again, I'm using broad brushstrokes. 145 00:13:45,608 --> 00:13:55,281 There are exceptions to this and I think firms are making really good strides down this path now because we're kind of being forced to, but historically it's not been an 146 00:13:55,281 --> 00:13:56,181 innovative industry. 147 00:13:56,181 --> 00:13:59,342 Law firms have been laggards with technology adoption. 148 00:13:59,406 --> 00:14:01,186 That's well documented. 149 00:14:01,186 --> 00:14:05,166 They've had limited investment in technology infrastructure. 150 00:14:05,166 --> 00:14:08,846 They're just now moving to the cloud and we're in, you know, 2025. 151 00:14:08,846 --> 00:14:11,326 That's really a two, three year phenomenon. 152 00:14:11,326 --> 00:14:14,566 I've worked with 110 AM law firms over my 17 years. 153 00:14:14,566 --> 00:14:16,806 That's when I stopped counting the numbers higher. 154 00:14:16,806 --> 00:14:25,406 So I've had a really good cross-sectional view of what law firms do internally and they move slow. 155 00:14:25,406 --> 00:14:26,226 They play it safe. 156 00:14:26,226 --> 00:14:28,098 And that's kind of like 157 00:14:28,098 --> 00:14:29,190 being a lawyer, right? 158 00:14:29,190 --> 00:14:31,913 I your risk averse, you're cautious. 159 00:14:31,913 --> 00:14:34,778 This, you know, you're comfortable with the status quo. 160 00:14:34,778 --> 00:14:36,329 You're not comfortable with ambiguity. 161 00:14:36,329 --> 00:14:42,498 Um, so I don't know how much, you know, of that dynamic do you think is also playing into this? 162 00:14:42,561 --> 00:14:55,640 Well, but I think there's a balance because to use an analogy of two sides of the coin, think corporate law departments have been in the same mode as well to a certain extent. 163 00:14:56,000 --> 00:15:06,025 And historically, when I look back over my 30 plus year career in-house, we've always looked to our external law firm partners to help. 164 00:15:06,025 --> 00:15:13,619 drive best-in-class services from a legal perspective and use that as a barometer gauge against the services that we're delivering in-house. 165 00:15:13,619 --> 00:15:22,663 We're also looking to them for new ways of thinking with regard to how we might go about mitigating risk or identifying risk, et cetera. 166 00:15:22,844 --> 00:15:34,703 But when it comes to investing in new technologies, and we as the buyer of services have been so reliant on the seller of services to help guide us, that in many regards, we're in 167 00:15:34,703 --> 00:15:35,095 a 168 00:15:35,095 --> 00:15:43,840 we're finding ourselves in a position of saying, if we're not going to get that guidance with regard to use of technology, we've got to take the bull by the horns ourselves. 169 00:15:43,840 --> 00:15:58,548 And we got to find a way to not only address multiple levels of service offerings, whether it is commodity work or what have you, to help us better manage the monies for which we uh 170 00:15:58,548 --> 00:16:01,769 inherent responsibility for from the organization. 171 00:16:02,070 --> 00:16:04,745 It's not easy to sit before 172 00:16:04,745 --> 00:16:17,234 a head of finance or a CFO and say, look, my budget's going to increase just with regard to outside counsel by 10 or 12 or 15 or 20 % merely because the hourly billing rate is 173 00:16:17,234 --> 00:16:19,265 increasing that much. 174 00:16:19,345 --> 00:16:31,514 More and more CFOs and CEOs are finding themselves getting more and more immersed into the buy-sell equation with regard to legal services. 175 00:16:31,574 --> 00:16:33,205 They're putting pressure 176 00:16:33,306 --> 00:16:41,808 on generals council and heads of legal operations to involve procurement and negotiation position with regard to law firms. 177 00:16:41,848 --> 00:16:53,301 All because you can't continue to sustain an ever increasing legal budget, whether it's fixed cost with your in-house team or variable cost with your external team without having 178 00:16:53,301 --> 00:17:01,909 some way of re-evaluating the buy-sell relationship, how services are rendered, how they're bought and paid for and 179 00:17:02,129 --> 00:17:07,002 operating under the pressure of we've got to do things more efficiently and ultimately more cheaply. 180 00:17:07,744 --> 00:17:08,234 Interesting. 181 00:17:08,234 --> 00:17:08,474 Yeah. 182 00:17:08,474 --> 00:17:12,577 So I don't have a good cross-sectional view on the inside side of the house. 183 00:17:12,577 --> 00:17:19,341 um I spent 10 years at Bank of America and uh engaged with our legal team on a number of occasions. 184 00:17:19,341 --> 00:17:24,844 And my observation was they were pretty underfunded. 185 00:17:24,844 --> 00:17:29,507 um From a technology standpoint, it was toothpicks and bubble gum. 186 00:17:29,507 --> 00:17:34,570 So I filed a couple of patents for some technology solutions that we built. 187 00:17:34,656 --> 00:17:40,066 in the anti-money laundering group, which was a big area of focus in the late 2000s. 188 00:17:40,066 --> 00:17:53,397 it was like SharePoint lists and InfoPath forms and workflows that these lawyers and the legal ops teams cobbled together. 189 00:17:53,397 --> 00:17:56,209 There were no industry solutions. 190 00:17:56,209 --> 00:17:59,320 They didn't even have their own document management system. 191 00:17:59,541 --> 00:18:01,201 Is it our... 192 00:18:01,804 --> 00:18:04,999 You know, are the legal departments properly funded? 193 00:18:04,999 --> 00:18:10,486 Do they have what they need from a capital perspective to do what they need to do? 194 00:18:10,761 --> 00:18:12,212 That's a pretty broad question. 195 00:18:12,212 --> 00:18:17,104 I just look, for example, at the United States, I'd say it's a mixed bag. 196 00:18:17,525 --> 00:18:29,792 I I've had the opportunity to chat with some heads of legal of some of the largest companies in the world that say they feel very adequately funded and they've got the 197 00:18:29,792 --> 00:18:33,534 financial resources to make the investments that they'd like to make. 198 00:18:33,534 --> 00:18:37,035 Nobody has a blank check and we surely don't hear either. 199 00:18:37,276 --> 00:18:39,261 But those law departments... 200 00:18:39,261 --> 00:18:46,305 that have been very, very fiscally prudent in managing the money that we have, that they are extended to each year. 201 00:18:46,305 --> 00:18:58,552 They work very, very collaboratively with their finance teams, as do we, to make sure that not only do we appreciate just having the dollar to resolve our claims, to make 202 00:18:58,552 --> 00:19:07,297 investments, but the more and more we engage with them and we think like the business, we talk like the business, we understand and appreciate how much revenue has to get 203 00:19:07,297 --> 00:19:08,337 generated. 204 00:19:08,457 --> 00:19:17,862 just for us to have the money we need to operate, the more and more attuned you are with how the CFO thinks, the CEO thinks, et cetera. 205 00:19:17,882 --> 00:19:23,305 And it puts you in a position of having, well, I'll call it financial credibility. 206 00:19:23,305 --> 00:19:35,072 So for us, because of how disciplined we have been in managing our financial resources, we've been extended the opportunity to make some pretty significant investments in 207 00:19:35,072 --> 00:19:38,183 technology that are actually paying dividends. 208 00:19:38,215 --> 00:19:40,927 and showing a very, very positive ROI. 209 00:19:40,927 --> 00:19:57,349 It's not easy to get there, but establishing at least either early in the career of a GC or a head of legal operations on aligning with the business to make sure that they 210 00:19:57,349 --> 00:20:06,735 appreciate that you're running your function like a business makes it all the much more less challenging to get the money you need to make the investments that are necessary. 211 00:20:07,010 --> 00:20:09,190 Yeah, that makes sense. 212 00:20:09,431 --> 00:20:19,983 you you talked a minute ago about, you know, potentially the legal departments are sometimes holding back law firms. 213 00:20:19,983 --> 00:20:34,357 mean, in my experience with cloud specifically firm law firms that had a heavy focus on regulated industries, particularly financial services, cloud adoption became a real 214 00:20:34,357 --> 00:20:35,058 challenge. 215 00:20:35,058 --> 00:20:36,812 And these are firms who 216 00:20:36,812 --> 00:20:49,338 These are companies who were already themselves in the cloud, but having OCG is holding their clients back from going there, which, you know, didn't make sense to me because if 217 00:20:49,338 --> 00:20:53,550 I'm a law firm client, who do I want securing my data? 218 00:20:53,550 --> 00:20:59,012 The law firms, IT department or Microsoft, you know, for around a mail server, for example. 219 00:20:59,012 --> 00:21:01,013 So it never made sense to me. 220 00:21:01,013 --> 00:21:03,494 Um, it sounds like that's. 221 00:21:03,980 --> 00:21:06,874 those a lot of those a lot of that friction has been removed. 222 00:21:06,874 --> 00:21:10,026 Is that accurate with in terms 223 00:21:10,026 --> 00:21:11,607 to, yes, I think it's accurate. 224 00:21:11,607 --> 00:21:14,429 And I think it continues to get removed. 225 00:21:14,429 --> 00:21:20,954 The more and more uh traditionally conservative lawyers, and we all, that's how we're trained, right? 226 00:21:20,954 --> 00:21:29,130 To be very, very risk adverse, understand and appreciate, particularly the security issues associated with the cloud, the more comfortable that you get. 227 00:21:29,130 --> 00:21:36,339 And there's always a balance, because you can scare the heck out of anybody with regard to putting data in the cloud. 228 00:21:36,339 --> 00:21:37,939 and the theory and everything else. 229 00:21:37,939 --> 00:21:40,799 And then there's a balance of, what's the practicality? 230 00:21:40,799 --> 00:21:51,139 And that's what we as at least those in the legal department that are going to guide our business to make informed, sustainable decisions are charged with responsibility for 231 00:21:51,139 --> 00:21:51,719 doing. 232 00:21:51,719 --> 00:21:53,319 And that's part of the balance, Ted. 233 00:21:55,540 --> 00:21:56,471 sense. 234 00:21:56,471 --> 00:22:07,627 So the last time you and I spoke, you talked about like sometimes, you know, again, that the resistance can come from either side of the table, but law firms being resistant to 235 00:22:07,627 --> 00:22:18,814 new technologies and you, I think you had an M &A deal where AI was rejected and I think you ended up shopping and maybe finding an alternative provider. 236 00:22:18,814 --> 00:22:21,491 Do you remember that discussion? 237 00:22:21,491 --> 00:22:25,833 bit of a different twist to that. 238 00:22:25,833 --> 00:22:33,896 And that is how can we think way outside the box with regard to something involving an M&A deal? 239 00:22:34,137 --> 00:22:39,278 And, you know, there's multiple phases or stages in an M&A deal, one of which is due diligence. 240 00:22:39,339 --> 00:22:50,233 And historically for, because longer than I've been a lawyer, either in-house counsel or outside counsel, physically a number of people would get access to that data room. 241 00:22:50,321 --> 00:22:59,258 And they would review the documents, prepare a summary that would be reviewed by a partner, be culminated in some kind of due diligence book and shared with the client or 242 00:22:59,258 --> 00:23:00,698 the decision makers. 243 00:23:01,379 --> 00:23:06,503 But there are technologies that will automate every element of that process. 244 00:23:06,503 --> 00:23:12,107 And we're actually using some of that now in an acquisition that we are undertaking. 245 00:23:12,287 --> 00:23:17,651 And the results of that, when you compare what the law firm is doing, 246 00:23:17,651 --> 00:23:28,431 And when you compare what the AI-driven tool is doing, it's remarkable because the integrity of the data is showing that there's really no deficiency with regard to that 247 00:23:28,431 --> 00:23:29,451 integrity. 248 00:23:29,631 --> 00:23:39,951 So I see massive opportunities just with regard to document review, whether it's an M M&A setting, whether it's a finance setting, et cetera, to really drive significant savings 249 00:23:39,951 --> 00:23:44,471 when it comes to doing things such as due diligence in a transaction. 250 00:23:45,058 --> 00:23:45,726 Interesting. 251 00:23:45,726 --> 00:23:48,637 have had some resistance. 252 00:23:48,637 --> 00:24:02,913 I've had some firms that have openly said, boy, this is a hyper-competitive position for us to offer, realizing that significant amounts of fees will no longer be billed by them 253 00:24:02,913 --> 00:24:05,034 to conduct the due diligence. 254 00:24:05,314 --> 00:24:06,615 But you embrace it. 255 00:24:06,615 --> 00:24:13,687 And as one of the partners at a regional law firm told me about a month ago, he said, I do this on one deal. 256 00:24:13,687 --> 00:24:15,376 You'll probably give me the next one. 257 00:24:15,376 --> 00:24:19,487 and maybe even the next one because ultimately I'm going to save you money in the long run. 258 00:24:19,647 --> 00:24:23,849 And I've had at least one law firm said, no, that's just not part of the way that we think. 259 00:24:23,849 --> 00:24:27,130 We want to do it the way that we have traditionally done it. 260 00:24:28,430 --> 00:24:30,671 And that's fine if that model works for them. 261 00:24:30,671 --> 00:24:39,394 But for me, when I look at the cost of due diligence and the opportunity to take out quite a bit of external costs, it's something I'm surely going to pursue. 262 00:24:39,788 --> 00:24:47,063 Yeah, mean, that sounds like a anti-competitive position to take. 263 00:24:47,063 --> 00:25:02,014 you're a law firm and you have a client asking for these capabilities, you're either so busy with incoming work that you could take it or leave it, or you're out of tune with 264 00:25:02,115 --> 00:25:03,455 where the market is heading. 265 00:25:03,455 --> 00:25:07,098 em I can't imagine telling my customers, 266 00:25:07,170 --> 00:25:10,782 Hey, yeah, I know you want that, but we're just, we're just not going to do it. 267 00:25:11,066 --> 00:25:12,639 It wouldn't work for me. 268 00:25:12,889 --> 00:25:14,512 Yeah, it didn't work for us either. 269 00:25:14,512 --> 00:25:14,872 Yeah. 270 00:25:14,872 --> 00:25:16,714 eh 271 00:25:17,027 --> 00:25:21,188 Well, what about, um, the last time we spoke, you mentioned labor and employment. 272 00:25:21,188 --> 00:25:24,449 We have several L and E firms as clients here at InfoDash. 273 00:25:24,449 --> 00:25:30,190 One of them is a long-term client, done a lot of press with us so I can, I can talk about them a little bit. 274 00:25:31,290 --> 00:25:44,204 Ogletree Deacons, I have seen their L and E, um, business balloon and their KM and their, um, their data analytics team they have invested so much in it's grown. 275 00:25:44,204 --> 00:25:44,974 So, 276 00:25:45,080 --> 00:25:52,252 When the current CKIO took over, were in, it was right after COVID 2020. 277 00:25:52,252 --> 00:26:01,055 Within five years, they've tripled the size of that team and a big chunk of that um head count is focused on data and analytics. 278 00:26:01,055 --> 00:26:03,515 And they're doing some really neat stuff over there. 279 00:26:03,515 --> 00:26:09,717 um I know other firms are, are, doing the same thing. 280 00:26:09,717 --> 00:26:12,758 I see the investment, but like from a 281 00:26:13,450 --> 00:26:28,546 The reason I brought that up is you mentioned oh the cost of a labor and employment matter and the fact that you didn't feel like you were getting uh insights into past cases and 282 00:26:28,546 --> 00:26:37,480 all the sorts of stuff that I see other firms really getting sophisticated in how they're bringing to bear some of this information. 283 00:26:37,480 --> 00:26:42,004 um 284 00:26:42,004 --> 00:26:51,744 far do you dig in when you're evaluating your panel firms on, what's your, what's your data analytics team looks like, look like, um, how, how big is it today? 285 00:26:51,744 --> 00:26:54,036 How plant, how much investment are you putting there? 286 00:26:54,036 --> 00:26:58,240 How big a factor is that when you're deciding where to send work to? 287 00:26:58,594 --> 00:27:01,925 it's becoming an increasingly important factor. 288 00:27:02,585 --> 00:27:08,227 Every lawyer among our panel firms with whom we interact, they're all good lawyers. 289 00:27:08,847 --> 00:27:23,971 And whether or not I've got 21 firms on a panel or 30 firms, let alone 300 firms, no matter what firm I use, I'm going to get good legal representation for the issue at hand. 290 00:27:24,011 --> 00:27:27,692 So from a competitive environment, for those 291 00:27:27,692 --> 00:27:37,508 members of the law or those law firms that are listening, when it comes to delivery of legal services in just a traditional way, you've got to find a way to set yourself out 292 00:27:37,508 --> 00:27:38,859 from your competition. 293 00:27:38,859 --> 00:27:41,860 Because the underlying service offering is generally the same. 294 00:27:41,860 --> 00:27:42,771 The law is the law. 295 00:27:42,771 --> 00:27:46,503 Yeah, people will interpret it differently, but not so radically differently. 296 00:27:46,623 --> 00:27:53,697 And when I look at, for example, what we do on a day-to-day basis, which is probably no different than a lot of corporate law departments. 297 00:27:53,697 --> 00:27:55,312 And even though we are a large 298 00:27:55,312 --> 00:28:01,632 department, whether you're a department of one or a department of thousands, you're going to have employment claims. 299 00:28:01,932 --> 00:28:10,032 And they're going to either be involving the EEOC or maybe a local state level authority. 300 00:28:10,392 --> 00:28:17,492 But every one of those claims, especially from the EEOC, is based on a consistent set of laws. 301 00:28:17,532 --> 00:28:18,932 Now, the facts are different. 302 00:28:18,932 --> 00:28:21,412 The allegations are different, right? 303 00:28:21,412 --> 00:28:22,632 But there's common threads. 304 00:28:22,632 --> 00:28:24,172 And for years, 305 00:28:24,176 --> 00:28:28,916 we have had external counsel represent us on a number of those claims. 306 00:28:28,916 --> 00:28:33,036 And a claim would get opened and it would get closed and a new one open and a new one closed. 307 00:28:33,176 --> 00:28:41,436 But it was about 10 years ago where I started asking my internal team, what's the common thread to all of these matters? 308 00:28:41,436 --> 00:28:49,836 Now there wasn't technology to do anything other than put everything on a spreadsheet, an Excel spreadsheet and say, here's what we're seeing with regard to the consistency. 309 00:28:50,296 --> 00:28:52,142 But we realized at the time, 310 00:28:52,142 --> 00:28:56,353 Okay, we now have visibility into what the common denominator is. 311 00:28:56,353 --> 00:29:00,544 Where do we need to go train people in our organization to help mitigate these risks? 312 00:29:00,544 --> 00:29:02,175 And we went about doing that. 313 00:29:02,395 --> 00:29:10,817 But Ted, it led to a decision about two and a half years ago, where now we've got all of this data with, for example, employment claims. 314 00:29:10,998 --> 00:29:17,059 And we said, is there technology available to us that will help us completely streamline this process? 315 00:29:17,059 --> 00:29:20,196 Do we really need a 316 00:29:20,512 --> 00:29:27,274 an in-house or an external attorney writing that first responsive brief to the agency. 317 00:29:27,394 --> 00:29:30,175 So we went about partnering with our IT department. 318 00:29:30,175 --> 00:29:31,685 We leveraged Gen. 319 00:29:31,685 --> 00:29:42,418 and we developed a tool that in many regards will fully automate this process, pulling together the responsive information that we need from the HR system about the employee 320 00:29:42,418 --> 00:29:50,147 that has filed the claim to drafting the first responsive pleading without any human being 321 00:29:50,147 --> 00:29:51,288 getting involved. 322 00:29:51,288 --> 00:29:59,164 Now we're still going through the development stage, but this is going to be a breakthrough for us because it's going to save a significant amount of money in internal 323 00:29:59,164 --> 00:30:00,175 and external costs. 324 00:30:00,175 --> 00:30:07,881 And when we get this right and we said this is why we'll never just let it go unfettered like that resource I talked about. 325 00:30:07,881 --> 00:30:10,463 There will always be somebody to manage this. 326 00:30:10,503 --> 00:30:17,659 But the more corporate law departments that begin to think this way, the more and more the savings are going to only continue to generate. 327 00:30:17,659 --> 00:30:19,380 And it's all going to be driven. 328 00:30:19,394 --> 00:30:21,365 by the effective use, number one, of data. 329 00:30:21,365 --> 00:30:23,718 Because without the data, Ted, you can't do anything. 330 00:30:23,799 --> 00:30:27,194 Don't even waste your time with regard to a shiny AI or tech tool. 331 00:30:27,194 --> 00:30:29,985 You've got to have the data organized and structured. 332 00:30:29,985 --> 00:30:35,550 And once you do, you can overlay any type of technology to really help you make much better decisions. 333 00:30:36,098 --> 00:30:36,818 Yeah. 334 00:30:36,818 --> 00:30:43,389 It's interesting to see, you know, um, how sophisticated the clients are getting as well. 335 00:30:43,389 --> 00:30:48,843 I, you know, I see it on the law firm side, but hearing stories like this is, is, is really interesting. 336 00:30:48,843 --> 00:31:02,588 Well, that, that brings us to another topic, which is the impact of gen AI and the law firm world and you know, what, what they can expect and how they manage, how they change 337 00:31:02,588 --> 00:31:03,889 their business practices. 338 00:31:03,889 --> 00:31:05,356 Um, 339 00:31:05,356 --> 00:31:15,779 you know, because it's not going to be long when clients like you invest and start handling matters in house rather than, you know, sending those to outside council. 340 00:31:15,779 --> 00:31:19,450 That's going to have a top line impact on these, on these businesses. 341 00:31:19,450 --> 00:31:27,832 And you know, the, hourly billing model has, we've been talking about the death of it for at least 15 years. 342 00:31:27,832 --> 00:31:30,783 Um, it just doesn't seem to want to die. 343 00:31:30,783 --> 00:31:33,344 And when I look at 344 00:31:33,474 --> 00:31:39,197 you know, like the percentage of AFAs versus hourly, it's still overwhelmingly hourly. 345 00:31:39,197 --> 00:31:49,883 And I think we're going to start to see a shift in that, but how, from a client's perspective, how would you like to see your law, your law firm partners structuring their 346 00:31:49,883 --> 00:31:53,245 pricing in a way that works for everybody? 347 00:31:53,245 --> 00:32:00,819 don't, what I, what I think I'm hearing from you is taking what it would cost hourly and then just automating it on the backend and charging you the same thing. 348 00:32:00,819 --> 00:32:02,296 That's not what you're looking for. 349 00:32:02,296 --> 00:32:03,910 You're looking for something different. 350 00:32:03,910 --> 00:32:10,506 um How would you like your law firm partners to be thinking about their pricing strategy? 351 00:32:11,106 --> 00:32:19,270 Well, one, when it comes to the relationship I have with my law firms, I want to pay a fair price for the work delivered. 352 00:32:19,530 --> 00:32:32,966 And I do think that when we look at the progressive increases of just the traditional billing rate over the course of the past 10 years, and we fast forward that just to 2030, 353 00:32:33,157 --> 00:32:40,585 know, the average, the data shows that the average hourly rate of a partner in a law firm of 354 00:32:40,585 --> 00:32:43,386 Any size is going be $984 an hour. 355 00:32:44,207 --> 00:32:45,628 That's huge. 356 00:32:45,968 --> 00:32:53,492 I think no matter where you get, okay, I've got a thousand hours involved in something before you know you got a million dollars spent, which is of course egregious. 357 00:32:53,652 --> 00:32:57,694 But what I'm looking for from my law firms is really two things. 358 00:32:58,375 --> 00:33:09,501 Work into your billing model, the value, opportunity, uh proposition, but also work in the risk balance. 359 00:33:09,911 --> 00:33:14,203 What are you willing to put at risk with me when you're billing? 360 00:33:14,203 --> 00:33:18,435 It's easy just to say, look, I put in 400 hours times the hourly rate. 361 00:33:18,435 --> 00:33:19,565 Here it is. 362 00:33:19,825 --> 00:33:25,967 But we all know that there, whether you're in-house or whether you're external, there's always inefficiencies built into that equation. 363 00:33:26,208 --> 00:33:37,142 But I really would like to see the law firms come back to me and say, look, we have evaluated, and I'm going to give a hypothetical, all of the litigation that we've handled 364 00:33:37,142 --> 00:33:39,233 for you over the course of the past five years. 365 00:33:39,233 --> 00:33:41,814 And let's assume it's employment related. 366 00:33:42,135 --> 00:33:43,775 And here are the common denominators. 367 00:33:43,775 --> 00:33:47,217 The average cost of the first responsive pleading is X. 368 00:33:47,337 --> 00:33:48,788 Of the summary judgment is X. 369 00:33:48,788 --> 00:33:51,980 Of the interrogatories, it's X, et cetera, et cetera. 370 00:33:51,980 --> 00:34:00,664 And here is our path forward with regard to how we're going to bring the total cost of that down. 371 00:34:00,904 --> 00:34:05,766 Now, for example, we have well over 100 employment claims at any one time. 372 00:34:05,927 --> 00:34:08,658 And you can take any responsive pleading 373 00:34:08,714 --> 00:34:13,326 And Ted, you can recycle those from cut and paste from one into another. 374 00:34:13,407 --> 00:34:16,268 I don't want to pay for it time after time after time. 375 00:34:16,268 --> 00:34:24,973 Again, I do think there's a lot of billing like that from various law firms where you do pay from dollar one, hour one with regard to the billing. 376 00:34:24,973 --> 00:34:32,538 But I would like to see at least verification from law firms how they really are driving efficiencies with regard to their billing. 377 00:34:32,538 --> 00:34:37,261 If at the end of the day they say, look, it's 100 hours times our 378 00:34:37,261 --> 00:34:39,442 $600 hourly rate. 379 00:34:39,442 --> 00:34:40,833 And here's how we got to that. 380 00:34:40,833 --> 00:34:42,144 Here's the value we delivered. 381 00:34:42,144 --> 00:34:46,636 Here's how we're leveraging the opportunities to bring costs down. 382 00:34:46,636 --> 00:34:47,086 That's great. 383 00:34:47,086 --> 00:34:48,867 Just give me visibility to it. 384 00:34:48,988 --> 00:34:59,493 But without that visibility, I'm operating under the assumption that there's not any incentive that you have to drive those efficiencies, except for me saying, look, Ted, you 385 00:34:59,493 --> 00:35:00,104 got to change. 386 00:35:00,104 --> 00:35:04,498 Because if you don't, I got to go somewhere else, which is tough to do with a law firm. 387 00:35:05,219 --> 00:35:05,669 it is. 388 00:35:05,669 --> 00:35:13,922 Those are strong relationships and your law firm partners really get to understand your business and your people and your risk profiles. 389 00:35:14,242 --> 00:35:16,933 yeah, you invest in your law firm partner. 390 00:35:16,933 --> 00:35:21,885 So I'm sure changing is not uh the top of your priority list. 391 00:35:22,285 --> 00:35:22,836 What about? 392 00:35:22,836 --> 00:35:29,218 part of that, excuse me, if I may, part of that balance, we in-house cannot exist. 393 00:35:29,458 --> 00:35:32,819 We simply cannot exist without our external law firms. 394 00:35:32,879 --> 00:35:34,719 And they can't exist without us. 395 00:35:35,119 --> 00:35:43,982 And we know that there's this tension with regard to the delivery of services, this tension with regard to we want to see things done more efficiently. 396 00:35:44,382 --> 00:35:51,756 The balance, and whoever figures out this proposition as to how to achieve the law firm's objective of 397 00:35:51,756 --> 00:35:59,752 still being paid a fair price for the work that they are delivering, while still creating the perception and the reality in the minds of their clients that they are really 398 00:35:59,752 --> 00:36:04,845 delivering value and that there is a justification for what is being billed. 399 00:36:04,845 --> 00:36:09,388 That's a massive recipe for sustainable success. 400 00:36:10,018 --> 00:36:17,520 Yeah, you know, from my perspective, so we, we are a internet and extranet platform for large law firms. 401 00:36:17,520 --> 00:36:29,544 And as part of our extranet offering that is client facing, which is, is new, uh, we've built dozens of bespoke solutions, but we just released our product maybe six weeks ago 402 00:36:29,804 --> 00:36:33,325 and we're seeing our strategy is a little different. 403 00:36:33,325 --> 00:36:36,992 So rather than, you know, the incumbent in that space is high Q. 404 00:36:36,992 --> 00:36:37,912 It's on an island. 405 00:36:37,912 --> 00:36:38,803 It's very ring fence. 406 00:36:38,803 --> 00:36:42,043 It's hard to get data in there to share with clients. 407 00:36:42,043 --> 00:36:44,134 Our solution we deploy in the clients environment. 408 00:36:44,134 --> 00:36:48,015 So they have the opportunity to share anything internally, right? 409 00:36:48,015 --> 00:36:55,707 We have integration so they could share uh analytics around uh matter profile. 410 00:36:55,707 --> 00:36:58,488 They could, they can share, you know, past invoices. 411 00:36:58,488 --> 00:37:02,910 They could share legal spend by practice area, by timekeeper, all the sorts. 412 00:37:02,910 --> 00:37:05,140 I don't see a huge appetite. 413 00:37:05,726 --> 00:37:06,317 for that. 414 00:37:06,317 --> 00:37:20,576 And I'm wondering, from a client's perspective, how important is it to have visibility into metrics and data that maybe are on the law firm side? 415 00:37:20,576 --> 00:37:30,312 I know you guys have built systems to create visibility on your side, but how important is it for you to have those data points from inside the law firm? 416 00:37:32,308 --> 00:37:34,049 It's secondary for me. 417 00:37:34,049 --> 00:37:44,011 What I really want to see is a reflection in my bills of the law firm's investment in technology that is driving efficiencies for me. 418 00:37:44,011 --> 00:37:47,192 Now that's selfish because I'm only one of many, clients. 419 00:37:47,212 --> 00:37:49,833 But if you're doing it for me, you're doing it for others. 420 00:37:49,893 --> 00:38:00,256 And the more and more you as a law firm can show how that investment that you're making with those 2000 or 3000 different percentage increases that you were quoting a little bit 421 00:38:00,256 --> 00:38:02,015 earlier are really turning in 422 00:38:02,015 --> 00:38:06,577 to efficiencies for the clients, the better off that you're going to be. 423 00:38:06,577 --> 00:38:10,698 Because right now, I think there's a resistance to share that insight. 424 00:38:10,879 --> 00:38:15,501 And my advice to any law firm listening is open the kimono. 425 00:38:15,501 --> 00:38:16,451 Show us what it is. 426 00:38:16,451 --> 00:38:26,776 Because the more that you share with us, the deeper the trust, the more the engagement, and much more opportunity to be open, particularly when it comes to discussion with regard 427 00:38:26,776 --> 00:38:27,666 to fees. 428 00:38:28,206 --> 00:38:28,676 Interesting. 429 00:38:28,676 --> 00:38:28,947 Yeah. 430 00:38:28,947 --> 00:38:29,987 That makes a lot of sense. 431 00:38:29,987 --> 00:38:32,168 Um, okay. 432 00:38:32,168 --> 00:38:45,379 One, one topic that I'm really curious to get a buyer of legal services perspective on is the rise of, uh, alternative business structures. 433 00:38:45,379 --> 00:38:52,904 Now we have two states, Arizona and Utah, and we have KPMG who was just licensed to practice law in Arizona. 434 00:38:53,205 --> 00:38:55,286 And you know, from 435 00:38:55,776 --> 00:39:02,458 My perspective, it seems like the law firm, the big law world should be more concerned that they are. 436 00:39:02,458 --> 00:39:08,030 And I think there's a little bit of complacency because the big four have tried multiple times. 437 00:39:08,030 --> 00:39:12,371 And when you look at the legal services act over in the UK, it really hasn't done much, right? 438 00:39:12,371 --> 00:39:15,752 Things haven't really changed dramatically as a result of that. 439 00:39:15,812 --> 00:39:23,042 However, I think this time is different because the means of legal production now are changing very rapidly. 440 00:39:23,042 --> 00:39:32,645 And when I look at like, okay, who's best positioned to capitalize on this transformation, I see the resources of the big four, know, KPMG is the smallest, the 40 billion in 441 00:39:32,645 --> 00:39:35,965 revenue, their 275,000 employees. 442 00:39:36,266 --> 00:39:38,766 Innovation is deeply ingrained in their culture. 443 00:39:38,766 --> 00:39:45,398 They have a incredible advisory practice with all sorts of gen AI experts and lean Six Sigma black belts. 444 00:39:45,398 --> 00:39:51,510 And I look at all those resources and then I look at law firms and the resources that they have at their disposal. 445 00:39:51,510 --> 00:39:52,920 They've got, you know, and 446 00:39:52,920 --> 00:39:55,011 KPMG has 4,000 lawyers. 447 00:39:55,012 --> 00:40:01,637 If you were to spin that out into a law firm, they'd be Amlaw 15, at least maybe Amlaw 10. 448 00:40:01,637 --> 00:40:05,800 So, you know, they've got tremendous resources as a buyer. 449 00:40:06,502 --> 00:40:21,454 How, how do you think about this movement and how willing would you be to explore options like, you know, the, K I don't know what their KPMG law or whatever in, in Arizona. 450 00:40:21,454 --> 00:40:26,554 How willing would you be to testing these new offerings? 451 00:40:26,684 --> 00:40:34,298 Very open, very, very open, not because I'm overly progressive, because it's a different model. 452 00:40:34,298 --> 00:40:42,162 It's opening up a whole new avenue of competition for the traditional law firms. 453 00:40:42,243 --> 00:40:54,989 I think that it is only a matter of time before more and more states drop the barriers with regard to mandatory lawyer ownership of law firms. 454 00:40:55,270 --> 00:40:56,390 There are 455 00:40:56,394 --> 00:41:01,279 still trillions of dollars on the sidelines with PE firms waiting to invest. 456 00:41:01,279 --> 00:41:13,910 And who would have thought that 20 years ago when the whole idea of litigation funding would now be, least in one regard, a $48 billion opportunity for one company participating 457 00:41:13,910 --> 00:41:15,171 in that space. 458 00:41:15,632 --> 00:41:17,273 There's money out there. 459 00:41:17,353 --> 00:41:19,925 And there is money to invest in this space. 460 00:41:19,925 --> 00:41:23,068 And there are organizations that are having these discussions. 461 00:41:23,089 --> 00:41:29,952 right now about alternative ways of setting up law firms that are not owned by lawyers. 462 00:41:30,092 --> 00:41:41,036 So, you know, if there's any regret I have is that I'm probably in the closing stages of my career, because if I was early on, think I'd be closing my still very, very young early 463 00:41:41,036 --> 00:41:44,818 on in my career, I'd be closing my career with a lot more states being open to this. 464 00:41:44,818 --> 00:41:49,760 But I do think it's going to be very, very good for the industry as a whole. 465 00:41:49,760 --> 00:41:52,989 There's so much work that what comes out of a law department 466 00:41:52,989 --> 00:41:59,693 that is commodity work, drafting an NDA, drafting a contract, a real estate lease of procurement vendor. 467 00:41:59,693 --> 00:42:05,746 There's a way to systematize that through processes, leveraging technology to help you do that. 468 00:42:05,746 --> 00:42:11,579 And I would predict that well over 50 % of what comes out of my department is commodity type work. 469 00:42:11,919 --> 00:42:22,801 So it gives us an opportunity to find a way to streamline that whether it is with uh corporate owned providers of legal services such as we will see in. 470 00:42:22,801 --> 00:42:29,477 Arizona for a time, but I would be very, very open to it as long as they've got the infrastructure to support our needs. 471 00:42:30,274 --> 00:42:30,915 Yeah. 472 00:42:30,915 --> 00:42:33,957 I posted an article today on LinkedIn. 473 00:42:33,957 --> 00:42:38,500 I called it Big Law 2.0, a radical blueprint. 474 00:42:38,721 --> 00:42:48,589 And it's a model where the partnership model in law firms really holds them back from innovation in so many ways. 475 00:42:48,589 --> 00:42:52,251 The partnership model is anti-innovative just by its very nature. 476 00:42:52,332 --> 00:42:57,236 It prioritizes uh short-term profits over long-term investment. 477 00:42:57,236 --> 00:43:00,236 uh There's lateral mobility where 478 00:43:00,236 --> 00:43:10,283 lawyers can take their book of business elsewhere that also impairs capital investment, cash basis, accounting, um, business professionals that aren't sufficiently empowered at 479 00:43:10,283 --> 00:43:13,676 the inability to create equity incentives for top talent. 480 00:43:13,676 --> 00:43:18,940 Um, it's almost zero R and D, investment. 481 00:43:18,940 --> 00:43:27,666 So yeah, I posted something on LinkedIn today about an idea where law firms could transition to, uh and 482 00:43:27,726 --> 00:43:33,251 to your point in terms of investment in PE money, PE money brings more than just money. 483 00:43:33,251 --> 00:43:36,074 It brings operational discipline, right? 484 00:43:36,074 --> 00:43:46,562 And a corporate structure that's actually uh not dysfunctional, where you don't have consensus driven decision making, a board puts management in place and lets management do 485 00:43:46,562 --> 00:43:49,044 their job and holds them accountable. 486 00:43:49,145 --> 00:43:50,266 Not everything's a vote. 487 00:43:50,266 --> 00:43:53,889 People are empowered to make decisions. 488 00:43:53,889 --> 00:43:55,810 but man, is there... 489 00:43:56,032 --> 00:43:57,434 It feels like an uphill battle. 490 00:43:57,434 --> 00:44:01,789 This, this ABS movement, um, start and slow. 491 00:44:02,751 --> 00:44:03,161 I don't know. 492 00:44:03,161 --> 00:44:13,364 Do you think it's viable for this to catch traction and move quickly, at least fast enough in time for law firms to potentially make a transition? 493 00:44:13,364 --> 00:44:15,386 Or do you think this is going to be a slow process? 494 00:44:17,042 --> 00:44:19,353 Sometimes you've got to go slow to go fast. 495 00:44:19,413 --> 00:44:21,334 I think it will be slow for a bit. 496 00:44:22,015 --> 00:44:25,125 And there will be multiple parallel paths. 497 00:44:25,125 --> 00:44:32,960 This will be one where people will be keenly watching what other states may be doing to emulate what is going on in Arizona. 498 00:44:33,100 --> 00:44:45,396 But at the same time, the buyers of legal services are going to be much more forceful when it comes to partnering with their law firms to help drive down the total cost of legal and 499 00:44:45,396 --> 00:44:47,065 to do things much more efficiently. 500 00:44:47,065 --> 00:44:51,217 And that's where data and technology are going to come into play. 501 00:44:51,538 --> 00:45:02,794 The other is there's going to be an introspective look from law firms, particularly as the folks my age peel off on a retired that are replaced by people who have grown up with 502 00:45:02,794 --> 00:45:09,607 technology where there's going to be some just natural change that will come about because of a more of an affinity. 503 00:45:09,848 --> 00:45:16,111 Part of the challenge is the infrastructure with which the traditional law firms are structured. 504 00:45:16,273 --> 00:45:20,746 from the partner, the associate, the senior associate, and the compensation structures as well. 505 00:45:20,746 --> 00:45:22,427 That's not easy to change. 506 00:45:22,527 --> 00:45:24,268 It's no different than any business. 507 00:45:24,268 --> 00:45:34,315 It's not easy to change how you not only receive revenue, but how revenue is ultimately used to fund your organization. 508 00:45:34,536 --> 00:45:44,123 So I've used the word balance a number of times, but you know, if there's anything that I would really love to see, and it's one that I've been actively thinking about seeking the 509 00:45:44,123 --> 00:45:45,133 champion. 510 00:45:45,145 --> 00:45:56,744 It's bringing together a group of CLOs and managing partners from law firms just to get in the same ballroom somewhere and say, look, this is where we're at with regard to the 511 00:45:56,744 --> 00:45:57,825 industry. 512 00:45:57,825 --> 00:46:02,849 This is what the sellers are seeking to do, and this is what the buyers want. 513 00:46:02,849 --> 00:46:13,257 And how do we come together in an environment where there's no discussion with regard to pricing or all the appropriate antitrust and competition boxes are checked? 514 00:46:13,298 --> 00:46:14,951 But just have that open dialogue. 515 00:46:14,951 --> 00:46:20,671 How are we going to do things better, faster, cheaper so that we have a much more sustainable solution going forward? 516 00:46:20,671 --> 00:46:31,731 Can you imagine if you and I had this conversation 30 years from now and I took that $984 rate and it now becomes $3,000 or $4,000, if not $5,000 an hour? 517 00:46:32,251 --> 00:46:35,966 It's incomprehensible, at least to me right now. 518 00:46:36,142 --> 00:46:38,162 Yeah, it doesn't seem sustainable. 519 00:46:38,162 --> 00:46:39,442 Well, I know we're running out of time. 520 00:46:39,442 --> 00:46:47,062 I just wanted to ask you one, one last question to wrap up here because I thought, um, the last time that we spoke, I thought you had an interesting vision. 521 00:46:47,062 --> 00:46:55,342 Like how do you see legal departments and law firms and their operating models evolving in the next few years? 522 00:46:55,342 --> 00:46:58,222 Let's say five years, like 2030, right? 523 00:46:58,222 --> 00:47:03,842 I know a lot is unpredictable with respect to technology and how that's going to evolve, but 524 00:47:03,842 --> 00:47:07,975 We kind of are seeing a trajectory of which way it's going, but I don't know. 525 00:47:07,975 --> 00:47:14,712 What is your vision for what that world looks like in the next few years? 526 00:47:14,712 --> 00:47:16,621 it'll be forced to change. 527 00:47:18,918 --> 00:47:27,445 20 minutes ago I was talking about as the buyer we relied on the seller of the services for a lot of insight, a lot of creative ways of thinking. 528 00:47:28,006 --> 00:47:31,248 We're getting uncompromising quality service. 529 00:47:31,269 --> 00:47:36,773 So thank you to every law firm out there, especially those that service DHL. 530 00:47:37,374 --> 00:47:46,442 But you have to understand that as a CLO, GC, head of legal operations, we're not making decisions on our own. 531 00:47:46,502 --> 00:47:57,082 We're being held accountable by people to whom we report, the CFO and the CEO or the board, and they are putting us under more more scrutiny with regard to what we're doing to 532 00:47:57,082 --> 00:47:58,842 rein in the costs of legal. 533 00:47:59,102 --> 00:48:01,482 And we can only do so much internally. 534 00:48:02,042 --> 00:48:08,882 When I look at my internal fixed costs, 90 plus percent are my people, and I'm going to continue to invest in them. 535 00:48:08,942 --> 00:48:15,453 So yeah, I can cut out couple of pencils and paper clips and paper, but I'm not going to save any significant amounts of money. 536 00:48:15,728 --> 00:48:22,681 So the pressure really becomes if I can't really drive significant savings internally, the only other place to go is externally. 537 00:48:22,681 --> 00:48:26,642 And those are forces that I can't control because of the pressures put on me. 538 00:48:26,743 --> 00:48:38,408 So I really want to work proactively with our law firms, and I'd to see every corporate law department do the same, to really have a tough, sit-down, open discussion about the 539 00:48:38,408 --> 00:48:42,379 mutual needs of both and how we are going to find a way. 540 00:48:42,479 --> 00:48:49,275 to really leverage the tools that are available to us and the resources to bring a better balance to the buy-sell relationship. 541 00:48:49,275 --> 00:48:54,519 Historically, Ted, the seller has dictated the terms of sale and still do. 542 00:48:55,200 --> 00:48:59,784 But the buyers are now getting more and more leery of that. 543 00:48:59,784 --> 00:49:01,865 And now they're being pushing back. 544 00:49:01,865 --> 00:49:06,869 And I think that's only going to continue and sure will over the next three to five years. 545 00:49:07,256 --> 00:49:09,207 Yeah, that makes a lot of sense. 546 00:49:09,207 --> 00:49:11,168 Mark, this has been a fantastic conversation. 547 00:49:11,168 --> 00:49:20,104 I can't tell you how much I appreciate you taking a few minutes and uh you're our first Inside Council guest on the show. 548 00:49:20,104 --> 00:49:26,417 We're 70 episodes in at this point and I know that our audience is just gonna love hearing your perspective on all of this. 549 00:49:26,417 --> 00:49:27,828 So thank you. 550 00:49:27,981 --> 00:49:28,791 Well, I appreciate it. 551 00:49:28,791 --> 00:49:34,964 It'll only get better from here because the first one, it's kind of a trial and error, but I'm sure everybody else after me will do much, much better. 552 00:49:35,084 --> 00:49:43,624 But you know, everything that we've talked about and what I've been able to do, at least here at DHL, it's because I'm surrounded by an incredible team. 553 00:49:43,624 --> 00:49:50,300 And I'm sure that's true of a lot of your guests from the law firms and those that you will have as well from the corporate side. 554 00:49:50,300 --> 00:49:52,941 But again, thank you for the opportunity to share some insight. 555 00:49:52,941 --> 00:49:54,032 I really appreciate it. 556 00:49:54,032 --> 00:49:56,453 And I'm a huge fan of what you're seeking to do. 557 00:49:56,453 --> 00:49:57,503 So thanks. 558 00:49:57,590 --> 00:49:58,071 Awesome. 559 00:49:58,071 --> 00:49:58,871 All right. 560 00:49:58,871 --> 00:49:59,762 Have a good one, Mark. 561 00:49:59,762 --> 00:50:01,032 I appreciate it. 562 00:50:01,233 --> 00:50:03,234 Hope to see, hope to see you soon. 563 00:50:03,575 --> 00:50:04,035 All right. 564 00:50:04,035 --> 00:50:04,996 Bye bye. 00:00:05,828 Mark, how are you this afternoon? 2 00:00:06,067 --> 00:00:10,805 Ted Neverbitt, a really humbled and honored that you'd have me on your podcast. 3 00:00:10,805 --> 00:00:12,238 Thanks for the opportunity. 4 00:00:12,238 --> 00:00:13,118 Absolutely, man. 5 00:00:13,118 --> 00:00:14,738 I'm honored to have you. 6 00:00:14,738 --> 00:00:26,978 I first ran into you a couple of years ago at the KMNI conference and you had a very no BS style to your presentation and I thought that was really good. 7 00:00:26,978 --> 00:00:32,198 I like that no BS approach to tackling some of these issues. 8 00:00:32,198 --> 00:00:34,694 So I really, I'm happy to have you here. 9 00:00:34,834 --> 00:00:35,815 Well, I appreciate that. 10 00:00:35,815 --> 00:00:37,178 And I do remember meeting you. 11 00:00:37,178 --> 00:00:37,698 Thank you. 12 00:00:37,698 --> 00:00:43,447 um For one, the distinction of that baritone voice that you have that kind of carries through the room. 13 00:00:43,447 --> 00:00:45,782 oh But again, thanks very much. 14 00:00:45,782 --> 00:00:47,083 Yeah, absolutely. 15 00:00:47,083 --> 00:00:50,325 So why don't we get you introduced for the folks that don't know you? 16 00:00:50,626 --> 00:00:57,132 we, you know, our target audience is primarily knowledge management and innovation professionals at law firms. 17 00:00:57,132 --> 00:01:00,845 And you kind of sit on the other side of the buying table today. 18 00:01:00,845 --> 00:01:08,241 So, um, you're the chief legal officer at DHL, but you've had stints at safe light and Sherwin Williams. 19 00:01:08,241 --> 00:01:12,785 And then you have, um, you're active with ACC. 20 00:01:12,945 --> 00:01:14,176 Is that correct? 21 00:01:14,322 --> 00:01:18,364 I've been a member of ACC since I got out of law school quite some time ago. 22 00:01:18,364 --> 00:01:28,880 But yes, and just for visibility, at DHL I do serve as the chief legal officer for our supply chain operations in the Americas. 23 00:01:29,356 --> 00:01:31,549 Okay, good stuff. 24 00:01:31,549 --> 00:01:37,184 And then, so are you the primary interface between the company and outside counsel? 25 00:01:37,916 --> 00:01:49,009 Yeah, when it comes to the DHL organizations, the businesses, the operations, I am, but as you would anticipate, especially in an organization our size, in department our size, 26 00:01:49,009 --> 00:01:52,770 there's a number of folks that work in what we call legal innovation. 27 00:01:52,770 --> 00:01:54,971 LIDA is the acronym. 28 00:01:54,971 --> 00:02:05,423 Many people would know that as legal ops, but they're the ones day-to-day interfacing with the law firm, particularly with regard to billing, administrative issues, et cetera. 29 00:02:05,423 --> 00:02:07,994 But there are a number of senior people on the team. 30 00:02:08,306 --> 00:02:18,116 that also report to me, whether it's litigation, commercial, may and members of their team are interacting with law firms regularly, as do I. 31 00:02:18,872 --> 00:02:19,322 Okay. 32 00:02:19,322 --> 00:02:20,023 Well, good stuff. 33 00:02:20,023 --> 00:02:20,283 Yeah. 34 00:02:20,283 --> 00:02:29,638 So this is a real treat because it normally we have law firm folks from the law firm side on, this is the first time we've had somebody from the buy side on, which I'm really 35 00:02:29,638 --> 00:02:32,930 excited about because we got some interesting topics to tackle. 36 00:02:32,930 --> 00:02:36,372 Um, and it's, it's an interesting time in the industry. 37 00:02:36,372 --> 00:02:47,478 There's so much change going on with, with gen AI and how law firms are going about the process of thinking through pricing strategies and you know, how 38 00:02:48,002 --> 00:02:49,572 What's the future of the billable hour? 39 00:02:49,572 --> 00:03:02,326 Um, but before we jump into that, you and I discussed the last time we spoke, we discussed uh a very interesting statistic that I think didn't align well with your perspective. 40 00:03:02,326 --> 00:03:13,749 And it was a, it was a statistic from the legal value network and the Blikstein group do an annual, um, they call it LPPM it's legal pricing and project management. 41 00:03:13,989 --> 00:03:17,690 And they survey, I forget the number of GCs. 42 00:03:17,774 --> 00:03:20,714 or I'm sorry, this is law firm GCs. 43 00:03:20,714 --> 00:03:25,474 And one of the questions they asked that I thought was super interesting. 44 00:03:25,474 --> 00:03:26,534 So this is from December. 45 00:03:26,534 --> 00:03:28,494 I got this report in December. 46 00:03:28,574 --> 00:03:34,734 It says, our clients blank us to use generative AI. 47 00:03:37,174 --> 00:03:42,034 11 % said forbid, 30 % said discourage. 48 00:03:42,034 --> 00:03:45,750 So 41 % of these law firm GCs 49 00:03:45,750 --> 00:03:53,514 are under the impression that their clients either forbid or discourage them from using generative AI on their matters. 50 00:03:53,514 --> 00:03:59,397 And I think you had a different perspective from the buy side in your work with ACC. 51 00:03:59,397 --> 00:04:01,254 Can you share some of that? 52 00:04:01,254 --> 00:04:01,905 Sure. 53 00:04:01,905 --> 00:04:08,851 Well, my reaction initially was a bit of incredulousness of really? 54 00:04:08,851 --> 00:04:13,265 There's even that many that either forbid or discourage the use. 55 00:04:13,265 --> 00:04:17,609 Now, the Blixting group has got a phenomenal reputation. 56 00:04:17,609 --> 00:04:19,280 I know Brad quite well. 57 00:04:19,280 --> 00:04:28,058 um And the integrity of the data that he reports on is nothing less than purely factual and of course accurate. 58 00:04:28,058 --> 00:04:31,670 And he goes about doing what he's doing in a very, very objective way. 59 00:04:32,250 --> 00:04:38,073 But I have a very different perspective when it comes to embracing AI. 60 00:04:38,294 --> 00:04:46,578 The journey that we are on, Ted, as the buyers of legal services, we've been on for the better part of a decade. 61 00:04:46,978 --> 00:04:58,064 But we've really had no way of tying a lot of ideas together that ultimately are focused on how do legal services get delivered. 62 00:04:58,064 --> 00:05:03,107 by the sellers of legal services, the law firms, the ALSPs, et cetera, but also by the buyers. 63 00:05:03,107 --> 00:05:06,448 There are in-house teams, better, faster, and cheaper. 64 00:05:07,009 --> 00:05:17,185 And one of the ways that you can do that, not only now, but on a sustainable basis in the future, is by leveraging information that you have in your files, whether it doesn't 65 00:05:17,185 --> 00:05:21,857 matter if it's your law firm or in-house, but information that historically is just called data. 66 00:05:21,857 --> 00:05:23,628 It could be in your document management system. 67 00:05:23,628 --> 00:05:26,860 It could be on hard drives throughout your department. 68 00:05:27,302 --> 00:05:30,193 But that information, that data tells stories. 69 00:05:30,553 --> 00:05:43,157 And those stories allow you to leverage past to help make decisions going forward so that you don't repeat the missteps that you made in the past. 70 00:05:43,157 --> 00:05:47,358 But in many regards, you find ways of doing much more efficiently. 71 00:05:47,358 --> 00:05:54,990 And the data has always been there, whether in the traditional metal file cabinets or today's what you might refer to as an electronic filing cabinet. 72 00:05:55,270 --> 00:05:58,982 But the technology has not been there to help us sew all of this together. 73 00:05:59,143 --> 00:06:09,650 So when I look at the opportunity to leverage technology, whether you want to call it AI, which here we refer to as augmented intelligence as opposed to artificial intelligence, as 74 00:06:09,650 --> 00:06:21,118 a way of helping me as the buyer of legal services, not only acquire those services less expensively, but more efficiently, it really does cause me to scratch my head as to why 75 00:06:21,118 --> 00:06:24,920 you would not embrace an alternative way of thinking. 76 00:06:25,112 --> 00:06:28,268 leveraging that data to help you do things better, faster, cheaper. 77 00:06:28,760 --> 00:06:39,449 Yeah, you know, I'm wondering too, if there's not, you know, other factors in play with some of these numbers, like, you know, confirmation bias where, you know, there's maybe a 78 00:06:39,449 --> 00:06:56,613 perception from folks on the sell side of the table that there's resistance or, discouragement of using these technologies versus really what, the sentiment is on the buy 79 00:06:56,613 --> 00:06:57,014 side. 80 00:06:57,014 --> 00:06:57,846 I mean, 81 00:06:57,846 --> 00:07:03,249 You have a really good view of this through your work with ACC and as a buyer. 82 00:07:03,249 --> 00:07:14,816 And from your perspective, you absolutely want, it sounds like if I'm understanding correctly, you absolutely want firms leveraging this tech in being more efficient and cost 83 00:07:14,816 --> 00:07:16,707 effective in their service delivery. 84 00:07:16,707 --> 00:07:17,754 Is that accurate? 85 00:07:17,754 --> 00:07:19,054 Well, it is accurate. 86 00:07:19,054 --> 00:07:29,447 And my engagement with the ACC, particularly when I was chair of the law department management network, gave me visibility and insight into what other law departments are 87 00:07:29,447 --> 00:07:32,958 doing, how they're thinking, how they're embracing technology. 88 00:07:32,958 --> 00:07:40,460 albeit that was five years ago, which in many regards in technology, that was a lifetime ago. 89 00:07:40,600 --> 00:07:46,564 So change is continuous, but I think a great 90 00:07:46,564 --> 00:07:51,216 deal of the concern is a concern for the unknown. 91 00:07:51,236 --> 00:07:53,217 What can AI do? 92 00:07:53,257 --> 00:07:54,077 Unbridled. 93 00:07:54,077 --> 00:08:00,550 uh It's literally a racehorse that just continues around the track without a jockey. 94 00:08:00,550 --> 00:08:02,832 You've got to have some controls over it. 95 00:08:02,832 --> 00:08:12,826 We all have read about the attorney in New York, all that, a couple of years ago who submitted a brief in a litigation matter and everything. 96 00:08:12,984 --> 00:08:20,640 was driven by AI and conclusions were reached and everything was wrong with regard to citations and nobody wants to be in that situation. 97 00:08:21,061 --> 00:08:35,553 But I think those that take the time to really understand what is the opportunity ahead of them with regard to how to effectively use technology, whether it is AI or whether it is a 98 00:08:35,553 --> 00:08:41,944 new platform, are those that are going to put themselves, especially in this hyper competitive market, 99 00:08:41,944 --> 00:08:52,245 in which we all operate, Ted, in a very competitive position to really not only advance the interests of their clients, but to do so in a way where the service delivery is much 100 00:08:52,245 --> 00:08:53,386 more affordable. 101 00:08:54,478 --> 00:08:57,998 You know, and there are some numbers that kind of support this. 102 00:08:57,998 --> 00:09:09,178 So I just opened up the 2024 law department operations survey that is also a Blikstein group survey. 103 00:09:09,178 --> 00:09:16,758 And it shows some, a bit of uptick in sentiment around this. 104 00:09:16,758 --> 00:09:24,038 So it looks like in 2023, and that's, that may be the source of the disconnect here in 2023. 105 00:09:24,430 --> 00:09:29,570 only 63 % of law firms encouraged the use of GenAI. 106 00:09:29,690 --> 00:09:32,230 In 2024, that number rose to 78%. 107 00:09:32,230 --> 00:09:35,670 So things are clearly trending in that direction. 108 00:09:36,990 --> 00:09:49,110 One interesting stat here as part of this LDO survey that is a real head scratcher for me is I went back and listeners have heard me talk about this multiple times. 109 00:09:49,110 --> 00:09:53,454 They may be sick of hearing it at this point, but I went back and did a survey. 110 00:09:53,454 --> 00:09:58,474 or a quick analysis of the Ilta roster from 2014. 111 00:09:58,494 --> 00:10:05,354 And I looked at all the job titles for law firms that had the word innovation in the title. 112 00:10:05,354 --> 00:10:09,154 And there were 16 in 2014, 11 years ago. 113 00:10:09,314 --> 00:10:14,514 late 2024, 10 years later, there were about a little over 300. 114 00:10:14,514 --> 00:10:16,674 Today, there's close to 400. 115 00:10:16,674 --> 00:10:23,234 So there's been about a 2000 % increase in innovation roles within law firms. 116 00:10:23,234 --> 00:10:32,590 So a very, basically a 20 X increase in investment in innovation work, because that's how law firms invest is primarily through people. 117 00:10:32,590 --> 00:10:34,361 They do very little R and D. 118 00:10:34,402 --> 00:10:36,383 So it's primarily through people. 119 00:10:36,383 --> 00:10:42,887 So 2000 % increase in uh investment by law firms and innovation. 120 00:10:42,887 --> 00:10:53,024 And then the, uh the LDO survey, almost two thirds of law firm clients either disagree or strongly disagree that their law firms are innovative. 121 00:10:53,516 --> 00:10:56,950 And that is a massive disconnect in my mind. 122 00:10:56,950 --> 00:11:09,352 And I have some theories on why that disconnect exists, but I'm curious about your take on why are, if, if law firms are investing in innovation, why are clients not feeling it? 123 00:11:10,007 --> 00:11:22,324 because I think, and these are part of my theories as well, but they're also based on discussions that I've had with multiple law firm partners from many law firms, from the 124 00:11:22,324 --> 00:11:36,853 AmLaw 50 on down, where when I talk to the partners, especially those that are in the corporate setting, which of course involves providing services uh to DHL. 125 00:11:37,241 --> 00:11:41,341 What I am learning is they are investing significantly in technology. 126 00:11:42,041 --> 00:11:52,081 And although I don't go through a multiple 20 questions or 30 questions, Ted, with them, the theme that I get back is that investment is internal. 127 00:11:52,221 --> 00:12:04,141 It is driving internal efficiencies to allow them among their team to do things better, faster, and cheaper from the perspective of the law firm. 128 00:12:04,621 --> 00:12:11,965 And I've got some of the best law firms, I think, in the world and some very, very progressive law firms that are using technology. 129 00:12:12,125 --> 00:12:25,413 But when I look at my legal bills today versus five years ago versus 10 years ago, and I look, for example, just at a typical employment claim or an employment litigation, the 130 00:12:25,413 --> 00:12:30,296 costs today are significantly more than they were five years ago, let alone 10 years ago. 131 00:12:31,221 --> 00:12:32,491 But Ted, 132 00:12:32,491 --> 00:12:43,334 I see no efficiencies when it comes to leveraging technology to help them take all of the learnings from the past and ultimately cut down on the number of hours spent in delivering 133 00:12:43,334 --> 00:12:47,325 those services to me, not only today, but in the future. 134 00:12:47,705 --> 00:12:59,588 So part of my speculation is that a lot of investment among the law firms internally are driving opportunities for them to be self-sufficient internally, but it's not necessarily 135 00:12:59,588 --> 00:13:01,919 being reflected in the service offering. 136 00:13:02,019 --> 00:13:03,047 to the client. 137 00:13:03,650 --> 00:13:04,951 That's interesting. 138 00:13:04,951 --> 00:13:09,916 Yeah, I think there has been a, I didn't invent this term, but I use it a lot. 139 00:13:09,916 --> 00:13:22,448 Innovation theater as well in the law firm world where, you know, they'll stand up a chief innovation officer and then not either sufficient, give them sufficient resources or 140 00:13:22,448 --> 00:13:27,553 sufficiently empower them to make change across the law firm. 141 00:13:27,553 --> 00:13:28,942 I, you know, 142 00:13:30,594 --> 00:13:34,315 I guess oh how to phrase this the best way. 143 00:13:34,315 --> 00:13:44,178 um Law firm culture is unique and innovation is not deeply embedded in law firm culture today. 144 00:13:44,178 --> 00:13:45,608 Again, I'm using broad brushstrokes. 145 00:13:45,608 --> 00:13:55,281 There are exceptions to this and I think firms are making really good strides down this path now because we're kind of being forced to, but historically it's not been an 146 00:13:55,281 --> 00:13:56,181 innovative industry. 147 00:13:56,181 --> 00:13:59,342 Law firms have been laggards with technology adoption. 148 00:13:59,406 --> 00:14:01,186 That's well documented. 149 00:14:01,186 --> 00:14:05,166 They've had limited investment in technology infrastructure. 150 00:14:05,166 --> 00:14:08,846 They're just now moving to the cloud and we're in, you know, 2025. 151 00:14:08,846 --> 00:14:11,326 That's really a two, three year phenomenon. 152 00:14:11,326 --> 00:14:14,566 I've worked with 110 AM law firms over my 17 years. 153 00:14:14,566 --> 00:14:16,806 That's when I stopped counting the numbers higher. 154 00:14:16,806 --> 00:14:25,406 So I've had a really good cross-sectional view of what law firms do internally and they move slow. 155 00:14:25,406 --> 00:14:26,226 They play it safe. 156 00:14:26,226 --> 00:14:28,098 And that's kind of like 157 00:14:28,098 --> 00:14:29,190 being a lawyer, right? 158 00:14:29,190 --> 00:14:31,913 I your risk averse, you're cautious. 159 00:14:31,913 --> 00:14:34,778 This, you know, you're comfortable with the status quo. 160 00:14:34,778 --> 00:14:36,329 You're not comfortable with ambiguity. 161 00:14:36,329 --> 00:14:42,498 Um, so I don't know how much, you know, of that dynamic do you think is also playing into this? 162 00:14:42,561 --> 00:14:55,640 Well, but I think there's a balance because to use an analogy of two sides of the coin, think corporate law departments have been in the same mode as well to a certain extent. 163 00:14:56,000 --> 00:15:06,025 And historically, when I look back over my 30 plus year career in-house, we've always looked to our external law firm partners to help. 164 00:15:06,025 --> 00:15:13,619 drive best-in-class services from a legal perspective and use that as a barometer gauge against the services that we're delivering in-house. 165 00:15:13,619 --> 00:15:22,663 We're also looking to them for new ways of thinking with regard to how we might go about mitigating risk or identifying risk, et cetera. 166 00:15:22,844 --> 00:15:34,703 But when it comes to investing in new technologies, and we as the buyer of services have been so reliant on the seller of services to help guide us, that in many regards, we're in 167 00:15:34,703 --> 00:15:35,095 a 168 00:15:35,095 --> 00:15:43,840 we're finding ourselves in a position of saying, if we're not going to get that guidance with regard to use of technology, we've got to take the bull by the horns ourselves. 169 00:15:43,840 --> 00:15:58,548 And we got to find a way to not only address multiple levels of service offerings, whether it is commodity work or what have you, to help us better manage the monies for which we uh 170 00:15:58,548 --> 00:16:01,769 inherent responsibility for from the organization. 171 00:16:02,070 --> 00:16:04,745 It's not easy to sit before 172 00:16:04,745 --> 00:16:17,234 a head of finance or a CFO and say, look, my budget's going to increase just with regard to outside counsel by 10 or 12 or 15 or 20 % merely because the hourly billing rate is 173 00:16:17,234 --> 00:16:19,265 increasing that much. 174 00:16:19,345 --> 00:16:31,514 More and more CFOs and CEOs are finding themselves getting more and more immersed into the buy-sell equation with regard to legal services. 175 00:16:31,574 --> 00:16:33,205 They're putting pressure 176 00:16:33,306 --> 00:16:41,808 on generals council and heads of legal operations to involve procurement and negotiation position with regard to law firms. 177 00:16:41,848 --> 00:16:53,301 All because you can't continue to sustain an ever increasing legal budget, whether it's fixed cost with your in-house team or variable cost with your external team without having 178 00:16:53,301 --> 00:17:01,909 some way of re-evaluating the buy-sell relationship, how services are rendered, how they're bought and paid for and 179 00:17:02,129 --> 00:17:07,002 operating under the pressure of we've got to do things more efficiently and ultimately more cheaply. 180 00:17:07,744 --> 00:17:08,234 Interesting. 181 00:17:08,234 --> 00:17:08,474 Yeah. 182 00:17:08,474 --> 00:17:12,577 So I don't have a good cross-sectional view on the inside side of the house. 183 00:17:12,577 --> 00:17:19,341 um I spent 10 years at Bank of America and uh engaged with our legal team on a number of occasions. 184 00:17:19,341 --> 00:17:24,844 And my observation was they were pretty underfunded. 185 00:17:24,844 --> 00:17:29,507 um From a technology standpoint, it was toothpicks and bubble gum. 186 00:17:29,507 --> 00:17:34,570 So I filed a couple of patents for some technology solutions that we built. 187 00:17:34,656 --> 00:17:40,066 in the anti-money laundering group, which was a big area of focus in the late 2000s. 188 00:17:40,066 --> 00:17:53,397 it was like SharePoint lists and InfoPath forms and workflows that these lawyers and the legal ops teams cobbled together. 189 00:17:53,397 --> 00:17:56,209 There were no industry solutions. 190 00:17:56,209 --> 00:17:59,320 They didn't even have their own document management system. 191 00:17:59,541 --> 00:18:01,201 Is it our... 192 00:18:01,804 --> 00:18:04,999 You know, are the legal departments properly funded? 193 00:18:04,999 --> 00:18:10,486 Do they have what they need from a capital perspective to do what they need to do? 194 00:18:10,761 --> 00:18:12,212 That's a pretty broad question. 195 00:18:12,212 --> 00:18:17,104 I just look, for example, at the United States, I'd say it's a mixed bag. 196 00:18:17,525 --> 00:18:29,792 I I've had the opportunity to chat with some heads of legal of some of the largest companies in the world that say they feel very adequately funded and they've got the 197 00:18:29,792 --> 00:18:33,534 financial resources to make the investments that they'd like to make. 198 00:18:33,534 --> 00:18:37,035 Nobody has a blank check and we surely don't hear either. 199 00:18:37,276 --> 00:18:39,261 But those law departments... 200 00:18:39,261 --> 00:18:46,305 that have been very, very fiscally prudent in managing the money that we have, that they are extended to each year. 201 00:18:46,305 --> 00:18:58,552 They work very, very collaboratively with their finance teams, as do we, to make sure that not only do we appreciate just having the dollar to resolve our claims, to make 202 00:18:58,552 --> 00:19:07,297 investments, but the more and more we engage with them and we think like the business, we talk like the business, we understand and appreciate how much revenue has to get 203 00:19:07,297 --> 00:19:08,337 generated. 204 00:19:08,457 --> 00:19:17,862 just for us to have the money we need to operate, the more and more attuned you are with how the CFO thinks, the CEO thinks, et cetera. 205 00:19:17,882 --> 00:19:23,305 And it puts you in a position of having, well, I'll call it financial credibility. 206 00:19:23,305 --> 00:19:35,072 So for us, because of how disciplined we have been in managing our financial resources, we've been extended the opportunity to make some pretty significant investments in 207 00:19:35,072 --> 00:19:38,183 technology that are actually paying dividends. 208 00:19:38,215 --> 00:19:40,927 and showing a very, very positive ROI. 209 00:19:40,927 --> 00:19:57,349 It's not easy to get there, but establishing at least either early in the career of a GC or a head of legal operations on aligning with the business to make sure that they 210 00:19:57,349 --> 00:20:06,735 appreciate that you're running your function like a business makes it all the much more less challenging to get the money you need to make the investments that are necessary. 211 00:20:07,010 --> 00:20:09,190 Yeah, that makes sense. 212 00:20:09,431 --> 00:20:19,983 you you talked a minute ago about, you know, potentially the legal departments are sometimes holding back law firms. 213 00:20:19,983 --> 00:20:34,357 mean, in my experience with cloud specifically firm law firms that had a heavy focus on regulated industries, particularly financial services, cloud adoption became a real 214 00:20:34,357 --> 00:20:35,058 challenge. 215 00:20:35,058 --> 00:20:36,812 And these are firms who 216 00:20:36,812 --> 00:20:49,338 These are companies who were already themselves in the cloud, but having OCG is holding their clients back from going there, which, you know, didn't make sense to me because if 217 00:20:49,338 --> 00:20:53,550 I'm a law firm client, who do I want securing my data? 218 00:20:53,550 --> 00:20:59,012 The law firms, IT department or Microsoft, you know, for around a mail server, for example. 219 00:20:59,012 --> 00:21:01,013 So it never made sense to me. 220 00:21:01,013 --> 00:21:03,494 Um, it sounds like that's. 221 00:21:03,980 --> 00:21:06,874 those a lot of those a lot of that friction has been removed. 222 00:21:06,874 --> 00:21:10,026 Is that accurate with in terms 223 00:21:10,026 --> 00:21:11,607 to, yes, I think it's accurate. 224 00:21:11,607 --> 00:21:14,429 And I think it continues to get removed. 225 00:21:14,429 --> 00:21:20,954 The more and more uh traditionally conservative lawyers, and we all, that's how we're trained, right? 226 00:21:20,954 --> 00:21:29,130 To be very, very risk adverse, understand and appreciate, particularly the security issues associated with the cloud, the more comfortable that you get. 227 00:21:29,130 --> 00:21:36,339 And there's always a balance, because you can scare the heck out of anybody with regard to putting data in the cloud. 228 00:21:36,339 --> 00:21:37,939 and the theory and everything else. 229 00:21:37,939 --> 00:21:40,799 And then there's a balance of, what's the practicality? 230 00:21:40,799 --> 00:21:51,139 And that's what we as at least those in the legal department that are going to guide our business to make informed, sustainable decisions are charged with responsibility for 231 00:21:51,139 --> 00:21:51,719 doing. 232 00:21:51,719 --> 00:21:53,319 And that's part of the balance, Ted. 233 00:21:55,540 --> 00:21:56,471 sense. 234 00:21:56,471 --> 00:22:07,627 So the last time you and I spoke, you talked about like sometimes, you know, again, that the resistance can come from either side of the table, but law firms being resistant to 235 00:22:07,627 --> 00:22:18,814 new technologies and you, I think you had an M &A deal where AI was rejected and I think you ended up shopping and maybe finding an alternative provider. 236 00:22:18,814 --> 00:22:21,491 Do you remember that discussion? 237 00:22:21,491 --> 00:22:25,833 bit of a different twist to that. 238 00:22:25,833 --> 00:22:33,896 And that is how can we think way outside the box with regard to something involving an M&A deal? 239 00:22:34,137 --> 00:22:39,278 And, you know, there's multiple phases or stages in an M&A deal, one of which is due diligence. 240 00:22:39,339 --> 00:22:50,233 And historically for, because longer than I've been a lawyer, either in-house counsel or outside counsel, physically a number of people would get access to that data room. 241 00:22:50,321 --> 00:22:59,258 And they would review the documents, prepare a summary that would be reviewed by a partner, be culminated in some kind of due diligence book and shared with the client or 242 00:22:59,258 --> 00:23:00,698 the decision makers. 243 00:23:01,379 --> 00:23:06,503 But there are technologies that will automate every element of that process. 244 00:23:06,503 --> 00:23:12,107 And we're actually using some of that now in an acquisition that we are undertaking. 245 00:23:12,287 --> 00:23:17,651 And the results of that, when you compare what the law firm is doing, 246 00:23:17,651 --> 00:23:28,431 And when you compare what the AI-driven tool is doing, it's remarkable because the integrity of the data is showing that there's really no deficiency with regard to that 247 00:23:28,431 --> 00:23:29,451 integrity. 248 00:23:29,631 --> 00:23:39,951 So I see massive opportunities just with regard to document review, whether it's an M M&A setting, whether it's a finance setting, et cetera, to really drive significant savings 249 00:23:39,951 --> 00:23:44,471 when it comes to doing things such as due diligence in a transaction. 250 00:23:45,058 --> 00:23:45,726 Interesting. 251 00:23:45,726 --> 00:23:48,637 have had some resistance. 252 00:23:48,637 --> 00:24:02,913 I've had some firms that have openly said, boy, this is a hyper-competitive position for us to offer, realizing that significant amounts of fees will no longer be billed by them 253 00:24:02,913 --> 00:24:05,034 to conduct the due diligence. 254 00:24:05,314 --> 00:24:06,615 But you embrace it. 255 00:24:06,615 --> 00:24:13,687 And as one of the partners at a regional law firm told me about a month ago, he said, I do this on one deal. 256 00:24:13,687 --> 00:24:15,376 You'll probably give me the next one. 257 00:24:15,376 --> 00:24:19,487 and maybe even the next one because ultimately I'm going to save you money in the long run. 258 00:24:19,647 --> 00:24:23,849 And I've had at least one law firm said, no, that's just not part of the way that we think. 259 00:24:23,849 --> 00:24:27,130 We want to do it the way that we have traditionally done it. 260 00:24:28,430 --> 00:24:30,671 And that's fine if that model works for them. 261 00:24:30,671 --> 00:24:39,394 But for me, when I look at the cost of due diligence and the opportunity to take out quite a bit of external costs, it's something I'm surely going to pursue. 262 00:24:39,788 --> 00:24:47,063 Yeah, mean, that sounds like a anti-competitive position to take. 263 00:24:47,063 --> 00:25:02,014 you're a law firm and you have a client asking for these capabilities, you're either so busy with incoming work that you could take it or leave it, or you're out of tune with 264 00:25:02,115 --> 00:25:03,455 where the market is heading. 265 00:25:03,455 --> 00:25:07,098 em I can't imagine telling my customers, 266 00:25:07,170 --> 00:25:10,782 Hey, yeah, I know you want that, but we're just, we're just not going to do it. 267 00:25:11,066 --> 00:25:12,639 It wouldn't work for me. 268 00:25:12,889 --> 00:25:14,512 Yeah, it didn't work for us either. 269 00:25:14,512 --> 00:25:14,872 Yeah. 270 00:25:14,872 --> 00:25:16,714 eh 271 00:25:17,027 --> 00:25:21,188 Well, what about, um, the last time we spoke, you mentioned labor and employment. 272 00:25:21,188 --> 00:25:24,449 We have several L and E firms as clients here at InfoDash. 273 00:25:24,449 --> 00:25:30,190 One of them is a long-term client, done a lot of press with us so I can, I can talk about them a little bit. 274 00:25:31,290 --> 00:25:44,204 Ogletree Deacons, I have seen their L and E, um, business balloon and their KM and their, um, their data analytics team they have invested so much in it's grown. 275 00:25:44,204 --> 00:25:44,974 So, 276 00:25:45,080 --> 00:25:52,252 When the current CKIO took over, were in, it was right after COVID 2020. 277 00:25:52,252 --> 00:26:01,055 Within five years, they've tripled the size of that team and a big chunk of that um head count is focused on data and analytics. 278 00:26:01,055 --> 00:26:03,515 And they're doing some really neat stuff over there. 279 00:26:03,515 --> 00:26:09,717 um I know other firms are, are, doing the same thing. 280 00:26:09,717 --> 00:26:12,758 I see the investment, but like from a 281 00:26:13,450 --> 00:26:28,546 The reason I brought that up is you mentioned oh the cost of a labor and employment matter and the fact that you didn't feel like you were getting uh insights into past cases and 282 00:26:28,546 --> 00:26:37,480 all the sorts of stuff that I see other firms really getting sophisticated in how they're bringing to bear some of this information. 283 00:26:37,480 --> 00:26:42,004 um 284 00:26:42,004 --> 00:26:51,744 far do you dig in when you're evaluating your panel firms on, what's your, what's your data analytics team looks like, look like, um, how, how big is it today? 285 00:26:51,744 --> 00:26:54,036 How plant, how much investment are you putting there? 286 00:26:54,036 --> 00:26:58,240 How big a factor is that when you're deciding where to send work to? 287 00:26:58,594 --> 00:27:01,925 it's becoming an increasingly important factor. 288 00:27:02,585 --> 00:27:08,227 Every lawyer among our panel firms with whom we interact, they're all good lawyers. 289 00:27:08,847 --> 00:27:23,971 And whether or not I've got 21 firms on a panel or 30 firms, let alone 300 firms, no matter what firm I use, I'm going to get good legal representation for the issue at hand. 290 00:27:24,011 --> 00:27:27,692 So from a competitive environment, for those 291 00:27:27,692 --> 00:27:37,508 members of the law or those law firms that are listening, when it comes to delivery of legal services in just a traditional way, you've got to find a way to set yourself out 292 00:27:37,508 --> 00:27:38,859 from your competition. 293 00:27:38,859 --> 00:27:41,860 Because the underlying service offering is generally the same. 294 00:27:41,860 --> 00:27:42,771 The law is the law. 295 00:27:42,771 --> 00:27:46,503 Yeah, people will interpret it differently, but not so radically differently. 296 00:27:46,623 --> 00:27:53,697 And when I look at, for example, what we do on a day-to-day basis, which is probably no different than a lot of corporate law departments. 297 00:27:53,697 --> 00:27:55,312 And even though we are a large 298 00:27:55,312 --> 00:28:01,632 department, whether you're a department of one or a department of thousands, you're going to have employment claims. 299 00:28:01,932 --> 00:28:10,032 And they're going to either be involving the EEOC or maybe a local state level authority. 300 00:28:10,392 --> 00:28:17,492 But every one of those claims, especially from the EEOC, is based on a consistent set of laws. 301 00:28:17,532 --> 00:28:18,932 Now, the facts are different. 302 00:28:18,932 --> 00:28:21,412 The allegations are different, right? 303 00:28:21,412 --> 00:28:22,632 But there's common threads. 304 00:28:22,632 --> 00:28:24,172 And for years, 305 00:28:24,176 --> 00:28:28,916 we have had external counsel represent us on a number of those claims. 306 00:28:28,916 --> 00:28:33,036 And a claim would get opened and it would get closed and a new one open and a new one closed. 307 00:28:33,176 --> 00:28:41,436 But it was about 10 years ago where I started asking my internal team, what's the common thread to all of these matters? 308 00:28:41,436 --> 00:28:49,836 Now there wasn't technology to do anything other than put everything on a spreadsheet, an Excel spreadsheet and say, here's what we're seeing with regard to the consistency. 309 00:28:50,296 --> 00:28:52,142 But we realized at the time, 310 00:28:52,142 --> 00:28:56,353 Okay, we now have visibility into what the common denominator is. 311 00:28:56,353 --> 00:29:00,544 Where do we need to go train people in our organization to help mitigate these risks? 312 00:29:00,544 --> 00:29:02,175 And we went about doing that. 313 00:29:02,395 --> 00:29:10,817 But Ted, it led to a decision about two and a half years ago, where now we've got all of this data with, for example, employment claims. 314 00:29:10,998 --> 00:29:17,059 And we said, is there technology available to us that will help us completely streamline this process? 315 00:29:17,059 --> 00:29:20,196 Do we really need a 316 00:29:20,512 --> 00:29:27,274 an in-house or an external attorney writing that first responsive brief to the agency. 317 00:29:27,394 --> 00:29:30,175 So we went about partnering with our IT department. 318 00:29:30,175 --> 00:29:31,685 We leveraged Gen. 319 00:29:31,685 --> 00:29:42,418 and we developed a tool that in many regards will fully automate this process, pulling together the responsive information that we need from the HR system about the employee 320 00:29:42,418 --> 00:29:50,147 that has filed the claim to drafting the first responsive pleading without any human being 321 00:29:50,147 --> 00:29:51,288 getting involved. 322 00:29:51,288 --> 00:29:59,164 Now we're still going through the development stage, but this is going to be a breakthrough for us because it's going to save a significant amount of money in internal 323 00:29:59,164 --> 00:30:00,175 and external costs. 324 00:30:00,175 --> 00:30:07,881 And when we get this right and we said this is why we'll never just let it go unfettered like that resource I talked about. 325 00:30:07,881 --> 00:30:10,463 There will always be somebody to manage this. 326 00:30:10,503 --> 00:30:17,659 But the more corporate law departments that begin to think this way, the more and more the savings are going to only continue to generate. 327 00:30:17,659 --> 00:30:19,380 And it's all going to be driven. 328 00:30:19,394 --> 00:30:21,365 by the effective use, number one, of data. 329 00:30:21,365 --> 00:30:23,718 Because without the data, Ted, you can't do anything. 330 00:30:23,799 --> 00:30:27,194 Don't even waste your time with regard to a shiny AI or tech tool. 331 00:30:27,194 --> 00:30:29,985 You've got to have the data organized and structured. 332 00:30:29,985 --> 00:30:35,550 And once you do, you can overlay any type of technology to really help you make much better decisions. 333 00:30:36,098 --> 00:30:36,818 Yeah. 334 00:30:36,818 --> 00:30:43,389 It's interesting to see, you know, um, how sophisticated the clients are getting as well. 335 00:30:43,389 --> 00:30:48,843 I, you know, I see it on the law firm side, but hearing stories like this is, is, is really interesting. 336 00:30:48,843 --> 00:31:02,588 Well, that, that brings us to another topic, which is the impact of gen AI and the law firm world and you know, what, what they can expect and how they manage, how they change 337 00:31:02,588 --> 00:31:03,889 their business practices. 338 00:31:03,889 --> 00:31:05,356 Um, 339 00:31:05,356 --> 00:31:15,779 you know, because it's not going to be long when clients like you invest and start handling matters in house rather than, you know, sending those to outside council. 340 00:31:15,779 --> 00:31:19,450 That's going to have a top line impact on these, on these businesses. 341 00:31:19,450 --> 00:31:27,832 And you know, the, hourly billing model has, we've been talking about the death of it for at least 15 years. 342 00:31:27,832 --> 00:31:30,783 Um, it just doesn't seem to want to die. 343 00:31:30,783 --> 00:31:33,344 And when I look at 344 00:31:33,474 --> 00:31:39,197 you know, like the percentage of AFAs versus hourly, it's still overwhelmingly hourly. 345 00:31:39,197 --> 00:31:49,883 And I think we're going to start to see a shift in that, but how, from a client's perspective, how would you like to see your law, your law firm partners structuring their 346 00:31:49,883 --> 00:31:53,245 pricing in a way that works for everybody? 347 00:31:53,245 --> 00:32:00,819 don't, what I, what I think I'm hearing from you is taking what it would cost hourly and then just automating it on the backend and charging you the same thing. 348 00:32:00,819 --> 00:32:02,296 That's not what you're looking for. 349 00:32:02,296 --> 00:32:03,910 You're looking for something different. 350 00:32:03,910 --> 00:32:10,506 um How would you like your law firm partners to be thinking about their pricing strategy? 351 00:32:11,106 --> 00:32:19,270 Well, one, when it comes to the relationship I have with my law firms, I want to pay a fair price for the work delivered. 352 00:32:19,530 --> 00:32:32,966 And I do think that when we look at the progressive increases of just the traditional billing rate over the course of the past 10 years, and we fast forward that just to 2030, 353 00:32:33,157 --> 00:32:40,585 know, the average, the data shows that the average hourly rate of a partner in a law firm of 354 00:32:40,585 --> 00:32:43,386 Any size is going be $984 an hour. 355 00:32:44,207 --> 00:32:45,628 That's huge. 356 00:32:45,968 --> 00:32:53,492 I think no matter where you get, okay, I've got a thousand hours involved in something before you know you got a million dollars spent, which is of course egregious. 357 00:32:53,652 --> 00:32:57,694 But what I'm looking for from my law firms is really two things. 358 00:32:58,375 --> 00:33:09,501 Work into your billing model, the value, opportunity, uh proposition, but also work in the risk balance. 359 00:33:09,911 --> 00:33:14,203 What are you willing to put at risk with me when you're billing? 360 00:33:14,203 --> 00:33:18,435 It's easy just to say, look, I put in 400 hours times the hourly rate. 361 00:33:18,435 --> 00:33:19,565 Here it is. 362 00:33:19,825 --> 00:33:25,967 But we all know that there, whether you're in-house or whether you're external, there's always inefficiencies built into that equation. 363 00:33:26,208 --> 00:33:37,142 But I really would like to see the law firms come back to me and say, look, we have evaluated, and I'm going to give a hypothetical, all of the litigation that we've handled 364 00:33:37,142 --> 00:33:39,233 for you over the course of the past five years. 365 00:33:39,233 --> 00:33:41,814 And let's assume it's employment related. 366 00:33:42,135 --> 00:33:43,775 And here are the common denominators. 367 00:33:43,775 --> 00:33:47,217 The average cost of the first responsive pleading is X. 368 00:33:47,337 --> 00:33:48,788 Of the summary judgment is X. 369 00:33:48,788 --> 00:33:51,980 Of the interrogatories, it's X, et cetera, et cetera. 370 00:33:51,980 --> 00:34:00,664 And here is our path forward with regard to how we're going to bring the total cost of that down. 371 00:34:00,904 --> 00:34:05,766 Now, for example, we have well over 100 employment claims at any one time. 372 00:34:05,927 --> 00:34:08,658 And you can take any responsive pleading 373 00:34:08,714 --> 00:34:13,326 And Ted, you can recycle those from cut and paste from one into another. 374 00:34:13,407 --> 00:34:16,268 I don't want to pay for it time after time after time. 375 00:34:16,268 --> 00:34:24,973 Again, I do think there's a lot of billing like that from various law firms where you do pay from dollar one, hour one with regard to the billing. 376 00:34:24,973 --> 00:34:32,538 But I would like to see at least verification from law firms how they really are driving efficiencies with regard to their billing. 377 00:34:32,538 --> 00:34:37,261 If at the end of the day they say, look, it's 100 hours times our 378 00:34:37,261 --> 00:34:39,442 $600 hourly rate. 379 00:34:39,442 --> 00:34:40,833 And here's how we got to that. 380 00:34:40,833 --> 00:34:42,144 Here's the value we delivered. 381 00:34:42,144 --> 00:34:46,636 Here's how we're leveraging the opportunities to bring costs down. 382 00:34:46,636 --> 00:34:47,086 That's great. 383 00:34:47,086 --> 00:34:48,867 Just give me visibility to it. 384 00:34:48,988 --> 00:34:59,493 But without that visibility, I'm operating under the assumption that there's not any incentive that you have to drive those efficiencies, except for me saying, look, Ted, you 385 00:34:59,493 --> 00:35:00,104 got to change. 386 00:35:00,104 --> 00:35:04,498 Because if you don't, I got to go somewhere else, which is tough to do with a law firm. 387 00:35:05,219 --> 00:35:05,669 it is. 388 00:35:05,669 --> 00:35:13,922 Those are strong relationships and your law firm partners really get to understand your business and your people and your risk profiles. 389 00:35:14,242 --> 00:35:16,933 yeah, you invest in your law firm partner. 390 00:35:16,933 --> 00:35:21,885 So I'm sure changing is not uh the top of your priority list. 391 00:35:22,285 --> 00:35:22,836 What about? 392 00:35:22,836 --> 00:35:29,218 part of that, excuse me, if I may, part of that balance, we in-house cannot exist. 393 00:35:29,458 --> 00:35:32,819 We simply cannot exist without our external law firms. 394 00:35:32,879 --> 00:35:34,719 And they can't exist without us. 395 00:35:35,119 --> 00:35:43,982 And we know that there's this tension with regard to the delivery of services, this tension with regard to we want to see things done more efficiently. 396 00:35:44,382 --> 00:35:51,756 The balance, and whoever figures out this proposition as to how to achieve the law firm's objective of 397 00:35:51,756 --> 00:35:59,752 still being paid a fair price for the work that they are delivering, while still creating the perception and the reality in the minds of their clients that they are really 398 00:35:59,752 --> 00:36:04,845 delivering value and that there is a justification for what is being billed. 399 00:36:04,845 --> 00:36:09,388 That's a massive recipe for sustainable success. 400 00:36:10,018 --> 00:36:17,520 Yeah, you know, from my perspective, so we, we are a internet and extranet platform for large law firms. 401 00:36:17,520 --> 00:36:29,544 And as part of our extranet offering that is client facing, which is, is new, uh, we've built dozens of bespoke solutions, but we just released our product maybe six weeks ago 402 00:36:29,804 --> 00:36:33,325 and we're seeing our strategy is a little different. 403 00:36:33,325 --> 00:36:36,992 So rather than, you know, the incumbent in that space is high Q. 404 00:36:36,992 --> 00:36:37,912 It's on an island. 405 00:36:37,912 --> 00:36:38,803 It's very ring fence. 406 00:36:38,803 --> 00:36:42,043 It's hard to get data in there to share with clients. 407 00:36:42,043 --> 00:36:44,134 Our solution we deploy in the clients environment. 408 00:36:44,134 --> 00:36:48,015 So they have the opportunity to share anything internally, right? 409 00:36:48,015 --> 00:36:55,707 We have integration so they could share uh analytics around uh matter profile. 410 00:36:55,707 --> 00:36:58,488 They could, they can share, you know, past invoices. 411 00:36:58,488 --> 00:37:02,910 They could share legal spend by practice area, by timekeeper, all the sorts. 412 00:37:02,910 --> 00:37:05,140 I don't see a huge appetite. 413 00:37:05,726 --> 00:37:06,317 for that. 414 00:37:06,317 --> 00:37:20,576 And I'm wondering, from a client's perspective, how important is it to have visibility into metrics and data that maybe are on the law firm side? 415 00:37:20,576 --> 00:37:30,312 I know you guys have built systems to create visibility on your side, but how important is it for you to have those data points from inside the law firm? 416 00:37:32,308 --> 00:37:34,049 It's secondary for me. 417 00:37:34,049 --> 00:37:44,011 What I really want to see is a reflection in my bills of the law firm's investment in technology that is driving efficiencies for me. 418 00:37:44,011 --> 00:37:47,192 Now that's selfish because I'm only one of many, clients. 419 00:37:47,212 --> 00:37:49,833 But if you're doing it for me, you're doing it for others. 420 00:37:49,893 --> 00:38:00,256 And the more and more you as a law firm can show how that investment that you're making with those 2000 or 3000 different percentage increases that you were quoting a little bit 421 00:38:00,256 --> 00:38:02,015 earlier are really turning in 422 00:38:02,015 --> 00:38:06,577 to efficiencies for the clients, the better off that you're going to be. 423 00:38:06,577 --> 00:38:10,698 Because right now, I think there's a resistance to share that insight. 424 00:38:10,879 --> 00:38:15,501 And my advice to any law firm listening is open the kimono. 425 00:38:15,501 --> 00:38:16,451 Show us what it is. 426 00:38:16,451 --> 00:38:26,776 Because the more that you share with us, the deeper the trust, the more the engagement, and much more opportunity to be open, particularly when it comes to discussion with regard 427 00:38:26,776 --> 00:38:27,666 to fees. 428 00:38:28,206 --> 00:38:28,676 Interesting. 429 00:38:28,676 --> 00:38:28,947 Yeah. 430 00:38:28,947 --> 00:38:29,987 That makes a lot of sense. 431 00:38:29,987 --> 00:38:32,168 Um, okay. 432 00:38:32,168 --> 00:38:45,379 One, one topic that I'm really curious to get a buyer of legal services perspective on is the rise of, uh, alternative business structures. 433 00:38:45,379 --> 00:38:52,904 Now we have two states, Arizona and Utah, and we have KPMG who was just licensed to practice law in Arizona. 434 00:38:53,205 --> 00:38:55,286 And you know, from 435 00:38:55,776 --> 00:39:02,458 My perspective, it seems like the law firm, the big law world should be more concerned that they are. 436 00:39:02,458 --> 00:39:08,030 And I think there's a little bit of complacency because the big four have tried multiple times. 437 00:39:08,030 --> 00:39:12,371 And when you look at the legal services act over in the UK, it really hasn't done much, right? 438 00:39:12,371 --> 00:39:15,752 Things haven't really changed dramatically as a result of that. 439 00:39:15,812 --> 00:39:23,042 However, I think this time is different because the means of legal production now are changing very rapidly. 440 00:39:23,042 --> 00:39:32,645 And when I look at like, okay, who's best positioned to capitalize on this transformation, I see the resources of the big four, know, KPMG is the smallest, the 40 billion in 441 00:39:32,645 --> 00:39:35,965 revenue, their 275,000 employees. 442 00:39:36,266 --> 00:39:38,766 Innovation is deeply ingrained in their culture. 443 00:39:38,766 --> 00:39:45,398 They have a incredible advisory practice with all sorts of gen AI experts and lean Six Sigma black belts. 444 00:39:45,398 --> 00:39:51,510 And I look at all those resources and then I look at law firms and the resources that they have at their disposal. 445 00:39:51,510 --> 00:39:52,920 They've got, you know, and 446 00:39:52,920 --> 00:39:55,011 KPMG has 4,000 lawyers. 447 00:39:55,012 --> 00:40:01,637 If you were to spin that out into a law firm, they'd be Amlaw 15, at least maybe Amlaw 10. 448 00:40:01,637 --> 00:40:05,800 So, you know, they've got tremendous resources as a buyer. 449 00:40:06,502 --> 00:40:21,454 How, how do you think about this movement and how willing would you be to explore options like, you know, the, K I don't know what their KPMG law or whatever in, in Arizona. 450 00:40:21,454 --> 00:40:26,554 How willing would you be to testing these new offerings? 451 00:40:26,684 --> 00:40:34,298 Very open, very, very open, not because I'm overly progressive, because it's a different model. 452 00:40:34,298 --> 00:40:42,162 It's opening up a whole new avenue of competition for the traditional law firms. 453 00:40:42,243 --> 00:40:54,989 I think that it is only a matter of time before more and more states drop the barriers with regard to mandatory lawyer ownership of law firms. 454 00:40:55,270 --> 00:40:56,390 There are 455 00:40:56,394 --> 00:41:01,279 still trillions of dollars on the sidelines with PE firms waiting to invest. 456 00:41:01,279 --> 00:41:13,910 And who would have thought that 20 years ago when the whole idea of litigation funding would now be, least in one regard, a $48 billion opportunity for one company participating 457 00:41:13,910 --> 00:41:15,171 in that space. 458 00:41:15,632 --> 00:41:17,273 There's money out there. 459 00:41:17,353 --> 00:41:19,925 And there is money to invest in this space. 460 00:41:19,925 --> 00:41:23,068 And there are organizations that are having these discussions. 461 00:41:23,089 --> 00:41:29,952 right now about alternative ways of setting up law firms that are not owned by lawyers. 462 00:41:30,092 --> 00:41:41,036 So, you know, if there's any regret I have is that I'm probably in the closing stages of my career, because if I was early on, think I'd be closing my still very, very young early 463 00:41:41,036 --> 00:41:44,818 on in my career, I'd be closing my career with a lot more states being open to this. 464 00:41:44,818 --> 00:41:49,760 But I do think it's going to be very, very good for the industry as a whole. 465 00:41:49,760 --> 00:41:52,989 There's so much work that what comes out of a law department 466 00:41:52,989 --> 00:41:59,693 that is commodity work, drafting an NDA, drafting a contract, a real estate lease of procurement vendor. 467 00:41:59,693 --> 00:42:05,746 There's a way to systematize that through processes, leveraging technology to help you do that. 468 00:42:05,746 --> 00:42:11,579 And I would predict that well over 50 % of what comes out of my department is commodity type work. 469 00:42:11,919 --> 00:42:22,801 So it gives us an opportunity to find a way to streamline that whether it is with uh corporate owned providers of legal services such as we will see in. 470 00:42:22,801 --> 00:42:29,477 Arizona for a time, but I would be very, very open to it as long as they've got the infrastructure to support our needs. 471 00:42:30,274 --> 00:42:30,915 Yeah. 472 00:42:30,915 --> 00:42:33,957 I posted an article today on LinkedIn. 473 00:42:33,957 --> 00:42:38,500 I called it Big Law 2.0, a radical blueprint. 474 00:42:38,721 --> 00:42:48,589 And it's a model where the partnership model in law firms really holds them back from innovation in so many ways. 475 00:42:48,589 --> 00:42:52,251 The partnership model is anti-innovative just by its very nature. 476 00:42:52,332 --> 00:42:57,236 It prioritizes uh short-term profits over long-term investment. 477 00:42:57,236 --> 00:43:00,236 uh There's lateral mobility where 478 00:43:00,236 --> 00:43:10,283 lawyers can take their book of business elsewhere that also impairs capital investment, cash basis, accounting, um, business professionals that aren't sufficiently empowered at 479 00:43:10,283 --> 00:43:13,676 the inability to create equity incentives for top talent. 480 00:43:13,676 --> 00:43:18,940 Um, it's almost zero R and D, investment. 481 00:43:18,940 --> 00:43:27,666 So yeah, I posted something on LinkedIn today about an idea where law firms could transition to, uh and 482 00:43:27,726 --> 00:43:33,251 to your point in terms of investment in PE money, PE money brings more than just money. 483 00:43:33,251 --> 00:43:36,074 It brings operational discipline, right? 484 00:43:36,074 --> 00:43:46,562 And a corporate structure that's actually uh not dysfunctional, where you don't have consensus driven decision making, a board puts management in place and lets management do 485 00:43:46,562 --> 00:43:49,044 their job and holds them accountable. 486 00:43:49,145 --> 00:43:50,266 Not everything's a vote. 487 00:43:50,266 --> 00:43:53,889 People are empowered to make decisions. 488 00:43:53,889 --> 00:43:55,810 but man, is there... 489 00:43:56,032 --> 00:43:57,434 It feels like an uphill battle. 490 00:43:57,434 --> 00:44:01,789 This, this ABS movement, um, start and slow. 491 00:44:02,751 --> 00:44:03,161 I don't know. 492 00:44:03,161 --> 00:44:13,364 Do you think it's viable for this to catch traction and move quickly, at least fast enough in time for law firms to potentially make a transition? 493 00:44:13,364 --> 00:44:15,386 Or do you think this is going to be a slow process? 494 00:44:17,042 --> 00:44:19,353 Sometimes you've got to go slow to go fast. 495 00:44:19,413 --> 00:44:21,334 I think it will be slow for a bit. 496 00:44:22,015 --> 00:44:25,125 And there will be multiple parallel paths. 497 00:44:25,125 --> 00:44:32,960 This will be one where people will be keenly watching what other states may be doing to emulate what is going on in Arizona. 498 00:44:33,100 --> 00:44:45,396 But at the same time, the buyers of legal services are going to be much more forceful when it comes to partnering with their law firms to help drive down the total cost of legal and 499 00:44:45,396 --> 00:44:47,065 to do things much more efficiently. 500 00:44:47,065 --> 00:44:51,217 And that's where data and technology are going to come into play. 501 00:44:51,538 --> 00:45:02,794 The other is there's going to be an introspective look from law firms, particularly as the folks my age peel off on a retired that are replaced by people who have grown up with 502 00:45:02,794 --> 00:45:09,607 technology where there's going to be some just natural change that will come about because of a more of an affinity. 503 00:45:09,848 --> 00:45:16,111 Part of the challenge is the infrastructure with which the traditional law firms are structured. 504 00:45:16,273 --> 00:45:20,746 from the partner, the associate, the senior associate, and the compensation structures as well. 505 00:45:20,746 --> 00:45:22,427 That's not easy to change. 506 00:45:22,527 --> 00:45:24,268 It's no different than any business. 507 00:45:24,268 --> 00:45:34,315 It's not easy to change how you not only receive revenue, but how revenue is ultimately used to fund your organization. 508 00:45:34,536 --> 00:45:44,123 So I've used the word balance a number of times, but you know, if there's anything that I would really love to see, and it's one that I've been actively thinking about seeking the 509 00:45:44,123 --> 00:45:45,133 champion. 510 00:45:45,145 --> 00:45:56,744 It's bringing together a group of CLOs and managing partners from law firms just to get in the same ballroom somewhere and say, look, this is where we're at with regard to the 511 00:45:56,744 --> 00:45:57,825 industry. 512 00:45:57,825 --> 00:46:02,849 This is what the sellers are seeking to do, and this is what the buyers want. 513 00:46:02,849 --> 00:46:13,257 And how do we come together in an environment where there's no discussion with regard to pricing or all the appropriate antitrust and competition boxes are checked? 514 00:46:13,298 --> 00:46:14,951 But just have that open dialogue. 515 00:46:14,951 --> 00:46:20,671 How are we going to do things better, faster, cheaper so that we have a much more sustainable solution going forward? 516 00:46:20,671 --> 00:46:31,731 Can you imagine if you and I had this conversation 30 years from now and I took that $984 rate and it now becomes $3,000 or $4,000, if not $5,000 an hour? 517 00:46:32,251 --> 00:46:35,966 It's incomprehensible, at least to me right now. 518 00:46:36,142 --> 00:46:38,162 Yeah, it doesn't seem sustainable. 519 00:46:38,162 --> 00:46:39,442 Well, I know we're running out of time. 520 00:46:39,442 --> 00:46:47,062 I just wanted to ask you one, one last question to wrap up here because I thought, um, the last time that we spoke, I thought you had an interesting vision. 521 00:46:47,062 --> 00:46:55,342 Like how do you see legal departments and law firms and their operating models evolving in the next few years? 522 00:46:55,342 --> 00:46:58,222 Let's say five years, like 2030, right? 523 00:46:58,222 --> 00:47:03,842 I know a lot is unpredictable with respect to technology and how that's going to evolve, but 524 00:47:03,842 --> 00:47:07,975 We kind of are seeing a trajectory of which way it's going, but I don't know. 525 00:47:07,975 --> 00:47:14,712 What is your vision for what that world looks like in the next few years? 526 00:47:14,712 --> 00:47:16,621 it'll be forced to change. 527 00:47:18,918 --> 00:47:27,445 20 minutes ago I was talking about as the buyer we relied on the seller of the services for a lot of insight, a lot of creative ways of thinking. 528 00:47:28,006 --> 00:47:31,248 We're getting uncompromising quality service. 529 00:47:31,269 --> 00:47:36,773 So thank you to every law firm out there, especially those that service DHL. 530 00:47:37,374 --> 00:47:46,442 But you have to understand that as a CLO, GC, head of legal operations, we're not making decisions on our own. 531 00:47:46,502 --> 00:47:57,082 We're being held accountable by people to whom we report, the CFO and the CEO or the board, and they are putting us under more more scrutiny with regard to what we're doing to 532 00:47:57,082 --> 00:47:58,842 rein in the costs of legal. 533 00:47:59,102 --> 00:48:01,482 And we can only do so much internally. 534 00:48:02,042 --> 00:48:08,882 When I look at my internal fixed costs, 90 plus percent are my people, and I'm going to continue to invest in them. 535 00:48:08,942 --> 00:48:15,453 So yeah, I can cut out couple of pencils and paper clips and paper, but I'm not going to save any significant amounts of money. 536 00:48:15,728 --> 00:48:22,681 So the pressure really becomes if I can't really drive significant savings internally, the only other place to go is externally. 537 00:48:22,681 --> 00:48:26,642 And those are forces that I can't control because of the pressures put on me. 538 00:48:26,743 --> 00:48:38,408 So I really want to work proactively with our law firms, and I'd to see every corporate law department do the same, to really have a tough, sit-down, open discussion about the 539 00:48:38,408 --> 00:48:42,379 mutual needs of both and how we are going to find a way. 540 00:48:42,479 --> 00:48:49,275 to really leverage the tools that are available to us and the resources to bring a better balance to the buy-sell relationship. 541 00:48:49,275 --> 00:48:54,519 Historically, Ted, the seller has dictated the terms of sale and still do. 542 00:48:55,200 --> 00:48:59,784 But the buyers are now getting more and more leery of that. 543 00:48:59,784 --> 00:49:01,865 And now they're being pushing back. 544 00:49:01,865 --> 00:49:06,869 And I think that's only going to continue and sure will over the next three to five years. 545 00:49:07,256 --> 00:49:09,207 Yeah, that makes a lot of sense. 546 00:49:09,207 --> 00:49:11,168 Mark, this has been a fantastic conversation. 547 00:49:11,168 --> 00:49:20,104 I can't tell you how much I appreciate you taking a few minutes and uh you're our first Inside Council guest on the show. 548 00:49:20,104 --> 00:49:26,417 We're 70 episodes in at this point and I know that our audience is just gonna love hearing your perspective on all of this. 549 00:49:26,417 --> 00:49:27,828 So thank you. 550 00:49:27,981 --> 00:49:28,791 Well, I appreciate it. 551 00:49:28,791 --> 00:49:34,964 It'll only get better from here because the first one, it's kind of a trial and error, but I'm sure everybody else after me will do much, much better. 552 00:49:35,084 --> 00:49:43,624 But you know, everything that we've talked about and what I've been able to do, at least here at DHL, it's because I'm surrounded by an incredible team. 553 00:49:43,624 --> 00:49:50,300 And I'm sure that's true of a lot of your guests from the law firms and those that you will have as well from the corporate side. 554 00:49:50,300 --> 00:49:52,941 But again, thank you for the opportunity to share some insight. 555 00:49:52,941 --> 00:49:54,032 I really appreciate it. 556 00:49:54,032 --> 00:49:56,453 And I'm a huge fan of what you're seeking to do. 557 00:49:56,453 --> 00:49:57,503 So thanks. 558 00:49:57,590 --> 00:49:58,071 Awesome. 559 00:49:58,071 --> 00:49:58,871 All right. 560 00:49:58,871 --> 00:49:59,762 Have a good one, Mark. 561 00:49:59,762 --> 00:50:01,032 I appreciate it. 562 00:50:01,233 --> 00:50:03,234 Hope to see, hope to see you soon. 563 00:50:03,575 --> 00:50:04,035 All right. 564 00:50:04,035 --> 00:50:04,996 Bye bye. -->