1 00:00:02,478 --> 00:00:04,319 Michelle, how are you this afternoon? 2 00:00:04,398 --> 00:00:06,123 I'm great, how are you Ted? 3 00:00:06,478 --> 00:00:06,978 I'm doing good. 4 00:00:06,978 --> 00:00:09,440 And I just realized my mic was not where it needed to be. 5 00:00:09,440 --> 00:00:13,863 Um, that probably sounds a lot better, hopefully. 6 00:00:13,863 --> 00:00:14,303 Good. 7 00:00:14,303 --> 00:00:18,131 uh so I found your article. 8 00:00:18,131 --> 00:00:26,190 You had an article on legal, well, particularly the chief innovation officer role within law firms. 9 00:00:26,190 --> 00:00:32,633 And there was a fantastic article by Mark Cohen called the enigma of 10 00:00:33,208 --> 00:00:35,309 big law innovation or something along those lines. 11 00:00:35,309 --> 00:00:47,096 And he, he had a link to your article in there or, and I found it was just fascinated dove in deep and knew I had to reach out to get you on the podcast here because this is legal 12 00:00:47,096 --> 00:00:48,086 innovation spotlight. 13 00:00:48,086 --> 00:00:55,090 We talk a lot about the CNO role and all of what's happening and what's not happening in legal innovation. 14 00:00:55,490 --> 00:01:02,518 So I looked at your background and yeah, so you've, you're currently a law professor. 15 00:01:02,518 --> 00:01:08,781 at University of Miami, guest faculty at Harvard School, uh Harvard Law School. 16 00:01:08,818 --> 00:01:13,164 I actually bought your book, Legal Upheaval. 17 00:01:13,824 --> 00:01:19,166 Actually, no, I bought Leader Upheaval, which is the second installment. 18 00:01:19,487 --> 00:01:20,528 Correct? 19 00:01:20,608 --> 00:01:26,411 And I'm just maybe 75 pages in, so still have some reading to do. 20 00:01:26,778 --> 00:01:30,353 I read at night, and it takes me forever because I fall asleep. 21 00:01:31,172 --> 00:01:32,406 So I put you to sleep. 22 00:01:32,406 --> 00:01:34,328 Yeah, it's not just you. 23 00:01:34,328 --> 00:01:36,339 Just reading in general puts me to sleep. 24 00:01:36,339 --> 00:01:38,180 So the book is very good so far. 25 00:01:38,180 --> 00:01:39,351 I've enjoyed it. 26 00:01:39,632 --> 00:01:51,460 But most interestingly about your background is you've interviewed a bunch of GC's law firm partners and heads of innovation and I can't wait to dig in. 27 00:01:51,460 --> 00:01:59,436 um So I covered a lot of your background there, but maybe fill in any gaps for us and you know what you're working on these days. 28 00:01:59,940 --> 00:02:00,280 Sure. 29 00:02:00,280 --> 00:02:04,211 So I'm the founder of Law Without Walls. 30 00:02:04,271 --> 00:02:16,655 And through that, as well as through my own consultancy, MoodLaw, over the last decade, I've led over 235 multidisciplinary teams with lawyers on them on a four-month innovation 31 00:02:16,655 --> 00:02:17,515 journey. 32 00:02:17,515 --> 00:02:21,516 And each team's charge is to solve a business of law problem. 33 00:02:21,536 --> 00:02:24,717 And I ran an internal program at Microsoft for five years. 34 00:02:24,717 --> 00:02:27,498 And I also did a program last year for DXC. 35 00:02:27,916 --> 00:02:39,586 And so in doing that and running these innovation journeys with law firms, I've done it as well, and in-house legal departments, I've learned a lot about what is innovation and what 36 00:02:39,586 --> 00:02:40,817 is not innovation. 37 00:02:40,817 --> 00:02:48,584 And I've learned a lot about leading innovation because as you can imagine in leading that many teams, you've made a lot of mistakes and that would be me. 38 00:02:48,584 --> 00:02:56,078 So my book uh is based not just on the interviews of general counsels and heads of innovation, but also on my own experience in 39 00:02:56,078 --> 00:03:03,010 leading teams and learning what it takes to actually lead innovation in today's marketplace. 40 00:03:03,224 --> 00:03:04,094 Yeah. 41 00:03:04,275 --> 00:03:11,580 Well, I would imagine as a law firm innovation leader, takes a lot of patience. 42 00:03:11,580 --> 00:03:17,184 takes a lot of um leadership skills. 43 00:03:17,244 --> 00:03:19,626 There's so much work to be done there. 44 00:03:19,626 --> 00:03:21,367 I've been in the space since 2008. 45 00:03:21,367 --> 00:03:30,478 We started as a consulting company, fell down the legal rabbit hole very early on and very quickly aligned to 46 00:03:30,478 --> 00:03:34,537 the knowledge management innovation didn't even exist 17 years ago. 47 00:03:34,537 --> 00:03:40,818 And, um, and I've just, it's an area that I've been very fascinated in our buyers. 48 00:03:40,818 --> 00:03:43,818 So we have a legal internet extranet platform. 49 00:03:43,858 --> 00:03:48,338 Our buyers typically sit in cam, uh, and innovation. 50 00:03:48,478 --> 00:03:51,418 So yeah, it's, something that I talk about a lot. 51 00:03:51,418 --> 00:03:53,778 Obviously the podcast is named after it. 52 00:03:53,778 --> 00:03:56,598 I present on, I present on the topic a lot. 53 00:03:56,618 --> 00:04:00,238 Um, and I have some perspectives on it that I think are somewhat unique. 54 00:04:00,238 --> 00:04:06,258 So over those 17 years, we have worked with over 110 AMLaw firms. 55 00:04:06,578 --> 00:04:16,398 So a very pretty wide cross-sectional view within what happens in KM departments and innovation departments in big law. 56 00:04:16,898 --> 00:04:25,938 And, you know, it's all over the board and innovation from my perspective really started to be a thing about 10 years ago. 57 00:04:25,998 --> 00:04:27,878 And I 58 00:04:28,270 --> 00:04:41,290 published a little mini infographic where I went back and looked at the Ilta roster from 2014 and I found all the roles that had the word innovation in the title and there were 16 59 00:04:41,290 --> 00:04:42,710 of them in 2014. 60 00:04:42,710 --> 00:04:44,390 There wasn't one C-suite. 61 00:04:45,170 --> 00:04:49,650 And then in 2024, 10 years later, there were over 300. 62 00:04:49,650 --> 00:04:51,650 There's like 360 now. 63 00:04:51,710 --> 00:04:54,990 So 2000 % growth roughly. 64 00:04:55,650 --> 00:04:58,450 And I found 65 00:04:58,528 --> 00:05:07,332 A really interesting data point from last December, the Blikstein Group does a, it's called LDO, Law Department Operation Survey. 66 00:05:07,332 --> 00:05:15,165 You may have seen where they talked to 80 uh big company GCs. 67 00:05:15,165 --> 00:05:21,868 And one of the questions they asked was, is your law firm innovative? 68 00:05:21,928 --> 00:05:26,430 And 63 % either disagreed or strongly disagreed. 69 00:05:26,690 --> 00:05:28,112 So we have this contrast. 70 00:05:28,112 --> 00:05:35,541 have 2000 % growth in the innovation function and almost two thirds of law firm clients who don't think that their law firms are innovative. 71 00:05:35,541 --> 00:05:38,285 And that is a huge disconnect in my mind. 72 00:05:38,285 --> 00:05:39,656 What is your take on? 73 00:05:41,690 --> 00:05:51,390 Well, like you, started studying this early on and the first time I became aware of the chief innovation officer role was in 2015, so 10 years ago. 74 00:05:51,930 --> 00:05:56,490 And I guess my take on that is twofold. 75 00:05:56,490 --> 00:06:01,270 One, I think law firms do what their clients push them to do. 76 00:06:01,270 --> 00:06:08,526 And so part of the reason why there's a disconnect or dissatisfaction is I don't think the... 77 00:06:08,526 --> 00:06:12,908 general councils have pushed hard enough to make the law firms innovate. 78 00:06:13,049 --> 00:06:23,354 I think that's changing because of generative AI and people are really seeing what innovation can do in terms of saving time. 79 00:06:24,075 --> 00:06:26,316 That's number one, I don't think they've pushed hard enough. 80 00:06:26,316 --> 00:06:32,819 Number two, like I mentioned in my article on chief innovation officers, there's some gaps. 81 00:06:32,819 --> 00:06:37,162 I don't think that the competency is there for some of them. 82 00:06:37,162 --> 00:06:38,072 We can't just 83 00:06:38,072 --> 00:06:40,004 miraculously learn how to innovate. 84 00:06:40,004 --> 00:06:41,984 You can't just go like, okay, I'll give you that title. 85 00:06:41,984 --> 00:06:43,156 You're smart. 86 00:06:43,156 --> 00:06:44,187 You're persuasive. 87 00:06:44,187 --> 00:06:50,071 uh You know, I think a lot of lawyers, including myself, think I can do that. 88 00:06:50,212 --> 00:06:56,997 And I think there's more to innovation than just creating a new tool. 89 00:06:57,638 --> 00:07:04,844 It's, you need to understand marketing, design thinking, project management, people skills. 90 00:07:04,844 --> 00:07:06,755 You need to know how to lead and follow. 91 00:07:06,755 --> 00:07:08,076 And I think that 92 00:07:08,344 --> 00:07:17,120 Look, the law firms were really well intentioned in trying to drive innovation and creating this role, but they weren't so great at the execution. 93 00:07:17,120 --> 00:07:21,728 So I guess that's what I think for why we're seeing that gap. 94 00:07:23,096 --> 00:07:27,878 So I did some interesting, I did a little interesting analysis earlier in the week. 95 00:07:27,878 --> 00:07:41,544 Uh, I was on a flight to Texas and I downloaded a podcast with, um, Mark Andreessen and Andrew Huberman, who I'm a big fan of his podcasts are way too long, but it's great 96 00:07:41,544 --> 00:07:42,134 content. 97 00:07:42,134 --> 00:07:43,254 They're like three hours long. 98 00:07:43,254 --> 00:07:44,495 It's ridiculous. 99 00:07:44,515 --> 00:07:52,492 But in this podcast, um, Mark Andreessen, who founder of Netscape, he's 100 00:07:52,492 --> 00:07:56,304 you know, the general partner at Andreessen Horowitz. 101 00:07:56,304 --> 00:08:01,686 This guy knows what has invested billions in innovative tech companies. 102 00:08:01,686 --> 00:08:03,887 He knows what innovation looks like. 103 00:08:03,887 --> 00:08:09,950 He listed out multiple characteristics of what a true innovator looks like. 104 00:08:09,950 --> 00:08:13,551 So I took that and then mapped it against Larry Richard, Dr. 105 00:08:13,551 --> 00:08:17,853 Larry Richards, personality traits from lawyer brain. 106 00:08:18,034 --> 00:08:19,444 It's not the same. 107 00:08:19,444 --> 00:08:21,345 it, there's not good alignment there. 108 00:08:21,345 --> 00:08:23,216 And it's not, it's not a knock on lawyers. 109 00:08:23,216 --> 00:08:27,498 Like there's some of the smartest, hardest working people I know. 110 00:08:27,599 --> 00:08:27,969 Right. 111 00:08:27,969 --> 00:08:39,245 It's just you're a lot of the traits that make you good at practicing law aren't necessarily the same traits that make you, um, think outside the box. 112 00:08:39,345 --> 00:08:45,429 And the post will be out, I'm sure by the time this podcast airs, um, but a risk orientation. 113 00:08:45,429 --> 00:08:48,258 of these seven categories that 114 00:08:48,258 --> 00:08:49,699 Mark Andreessen laid out. 115 00:08:49,699 --> 00:08:59,083 um He essentially said, you got to be a five out of five on these risk orientation, five out of five lawyers, one out of five. 116 00:08:59,083 --> 00:09:03,004 And this is, you know, using the way Dr. 117 00:09:03,004 --> 00:09:07,766 Richard frames it up is it's like a percentile based on the general population. 118 00:09:07,766 --> 00:09:13,128 So these, is rough estimates here, but probably pretty well aligned. 119 00:09:13,128 --> 00:09:17,440 um Outlook innovator optimism. 120 00:09:17,570 --> 00:09:19,831 Five out of five lawyer skepticism. 121 00:09:19,831 --> 00:09:33,727 So there are one out of five on that time focus um innovators future lawyers re you know the law is based on precedent and past one out of five comfort comfort with ambiguity 122 00:09:33,727 --> 00:09:46,282 innovators high lawyers low um resilience to setbacks you know again um action style velocity relationship to status quo you know if you look at this it just it's not good 123 00:09:46,282 --> 00:09:47,202 alignment. 124 00:09:47,202 --> 00:09:49,724 So does that mean that every lawyer is not innovative? 125 00:09:49,724 --> 00:09:50,664 Absolutely not. 126 00:09:50,664 --> 00:09:59,050 But if you really are taking the general population, the mapping out personality traits, it doesn't align well to this. 127 00:09:59,050 --> 00:10:01,071 It's a different type of skill. 128 00:10:01,091 --> 00:10:11,919 So, you know, I'm curious what your thoughts are on, you know, now that we have, you know, NLO like, you know, non-legal ownership rules changing in certain States. 129 00:10:11,919 --> 00:10:17,062 Are we going to see, are we going to see maybe people 130 00:10:17,282 --> 00:10:23,682 know, non-lawyers in on executive committees and having more influence within big law. 131 00:10:23,682 --> 00:10:25,362 How do you see this playing out? 132 00:10:25,946 --> 00:10:28,107 So it's interesting because I've been quoting Dr. 133 00:10:28,107 --> 00:10:31,090 Larry Richards for years and I talk about the same thing in my book. 134 00:10:31,090 --> 00:10:46,540 And I also compare lawyers to Clayton Christensen's book on the five DNA of an innovator, observing, networking, experimenting, questioning, and associating things that wouldn't 135 00:10:46,540 --> 00:10:47,701 otherwise be associated. 136 00:10:47,701 --> 00:10:49,222 And it's the same thing. 137 00:10:49,594 --> 00:10:52,954 Yeah, we know how to question, but we don't question the way innovators do. 138 00:10:52,954 --> 00:10:56,134 We question like we're looking for material evidence, right? 139 00:10:56,134 --> 00:10:58,394 So I see that and I totally agree. 140 00:10:58,394 --> 00:11:08,354 And the reason why I started Law Without Walls in 2011 was to fill that gap because I believe that lawyers need the skills they have to be really good at their job. 141 00:11:08,354 --> 00:11:10,414 They need to be a little combative. 142 00:11:10,414 --> 00:11:12,694 They need to be a little bit risk averse. 143 00:11:12,694 --> 00:11:15,254 They need to be strategic. 144 00:11:15,950 --> 00:11:20,252 They also need to be creative and inclusive and collaborative. 145 00:11:20,252 --> 00:11:23,054 And so I, as a professor, that's my job. 146 00:11:23,054 --> 00:11:24,215 That's what motivates me. 147 00:11:24,215 --> 00:11:32,379 I'm motivated to try to change the way lawyers think about the world, the way they see the world, and most importantly, the way they behave. 148 00:11:32,379 --> 00:11:41,324 And I'm doing it one lawyer at a time, but I always say this, also Larry Richards talks about how lawyers test really, really low on empathy. 149 00:11:41,324 --> 00:11:44,065 We don't just test low compared to other professions. 150 00:11:44,065 --> 00:11:45,274 We're off the charts low. 151 00:11:45,274 --> 00:11:48,534 Hey, so are tax accountants and insurance agents. 152 00:11:48,534 --> 00:11:50,574 So we're not alone there. 153 00:11:50,574 --> 00:11:57,154 But I think to myself as a professor, like, did you all come here with a bunch of empathy and I just squeezed it all out of you? 154 00:11:57,154 --> 00:12:01,994 Or are people that have the skill sets of lawyers more prone to go to law school? 155 00:12:01,994 --> 00:12:02,714 I don't know. 156 00:12:02,714 --> 00:12:05,894 And right now we're seeing a big growth in people applying to law school. 157 00:12:05,894 --> 00:12:07,614 So maybe that will change. 158 00:12:08,634 --> 00:12:14,424 Also in 2011, I wrote an article about the importance of non-lawyers influencing lawyers. 159 00:12:14,424 --> 00:12:24,019 Because if we miss that skill set, that's exactly how you can add value for your clients is work with people that aren't lawyers so that you're filling that gap, maybe that's on 160 00:12:24,019 --> 00:12:27,221 your team of lawyers with the business professionals. 161 00:12:27,221 --> 00:12:29,032 And I think we're already seeing it, Ted. 162 00:12:29,032 --> 00:12:32,664 I don't think it's whether or not we have more ABS's. 163 00:12:32,664 --> 00:12:44,040 I think we're already seeing more and more business people having impact and having a seat at the table in legal departments and in law firms than we ever have before. 164 00:12:44,118 --> 00:12:54,203 So I think one of the problems that the chief innovation officer role has struggled with is they took lawyers and gave them that title. 165 00:12:55,704 --> 00:12:56,931 Some lawyers can do it. 166 00:12:56,931 --> 00:12:58,606 I believe that. 167 00:12:58,686 --> 00:13:04,409 lot of lawyers think they can do it, but like you said, don't have the skill set or the mindset to do it. 168 00:13:04,409 --> 00:13:13,206 So my hope is that more and more business people will be hired and be part of law firms and these new aid 169 00:13:13,206 --> 00:13:18,791 these new structures that might help open it up, like if KPMG is successful. 170 00:13:18,791 --> 00:13:20,192 Yeah, I think so. 171 00:13:20,192 --> 00:13:22,445 uh I think it's necessary. 172 00:13:22,445 --> 00:13:31,023 And I always tell law firms, if you want to differentiate and you want to make a difference, hire more business professionals, learn how to market and sales and all those 173 00:13:31,023 --> 00:13:35,166 things that you think you are above, you're no longer above now that AI is there. 174 00:13:35,756 --> 00:13:42,935 Yeah, the question I have for you is I agree with you that we're already starting to see it, but are they sufficiently empowered? 175 00:13:42,935 --> 00:13:44,077 Do they have the? 176 00:13:44,077 --> 00:13:45,327 Yeah, yeah. 177 00:13:45,327 --> 00:13:46,548 attitude problem. 178 00:13:46,548 --> 00:13:52,473 mean, the second, so years ago at 25, 30 years ago, was a general councils were considered second class citizens. 179 00:13:52,473 --> 00:13:55,975 It took decades for them to get a seat at the table. 180 00:13:56,716 --> 00:14:05,762 I think it's going to take a long time because for some reason there's a second class citizen attitude towards the business professionals. 181 00:14:05,762 --> 00:14:12,157 And so you see more success for people like Kevin Doolin, who used to work at Eversheds and he was a partner there. 182 00:14:12,157 --> 00:14:15,590 Then he went and got a business degree and then ended up being head of marketing. 183 00:14:15,590 --> 00:14:24,898 Or Michael Hertz, same thing at Whiten Case, who's now retiring, but he was a partner before he became head of BD in marketing and innovation. 184 00:14:24,898 --> 00:14:29,882 And so he's got the street cred of really understanding what lawyers do. 185 00:14:29,882 --> 00:14:34,394 And I would say this, it's not just lawyers treating the business professionals. 186 00:14:34,394 --> 00:14:35,915 like second class citizens. 187 00:14:35,915 --> 00:14:38,796 A lot of the business professionals need to up their game. 188 00:14:38,796 --> 00:14:45,079 They come in and they don't actually study what lawyers do and then they don't realize what lawyers do and how they do it. 189 00:14:45,079 --> 00:14:46,860 So it's kind of a combo. 190 00:14:46,860 --> 00:14:48,670 I don't think we can blame it all on the lawyers. 191 00:14:48,670 --> 00:14:51,722 I think some of the business professionals haven't done their homework. 192 00:14:51,722 --> 00:15:01,358 And I think the reason why the lawyer turned business professional has the street cred and has a little bit more ability to make things happen is because 193 00:15:01,358 --> 00:15:05,001 They really understand their client, which is the lawyer. 194 00:15:05,144 --> 00:15:05,994 Yeah. 195 00:15:05,995 --> 00:15:07,876 Well, and you said it's going to take some time. 196 00:15:07,876 --> 00:15:11,317 guess my question back to you would be, do we have time? 197 00:15:11,398 --> 00:15:16,060 Because I honestly see KPMG coming in. 198 00:15:16,060 --> 00:15:17,881 They are 40 billion in revenue. 199 00:15:17,881 --> 00:15:21,864 They have 275,000 employees. 200 00:15:21,864 --> 00:15:23,595 They have 4,000 lawyers. 201 00:15:23,595 --> 00:15:26,786 They'd be Amlaw 10, right? 202 00:15:26,786 --> 00:15:33,550 If they were a law firm and they're coming in with uh a massive global footprint. 203 00:15:33,550 --> 00:15:37,090 with relationships all up and down the fortune 500. 204 00:15:37,090 --> 00:15:44,250 have extensive digital transformation capabilities, legions of lean six sigma black belts. 205 00:15:44,250 --> 00:15:55,950 They are very well positioned to capitalize on this new transformation of tech enabled legal services, uh, much better than any law firm by a huge stretch. 206 00:15:55,950 --> 00:15:57,730 I mean, to put it in perspective. 207 00:15:57,870 --> 00:16:01,370 So KPMG is the smallest of the big four, right? 208 00:16:01,370 --> 00:16:03,608 Uh, the biggest law firm is 209 00:16:03,608 --> 00:16:05,499 K &E at 7.2 billion. 210 00:16:05,499 --> 00:16:08,782 They're almost six times Kirkland analysis size. 211 00:16:08,843 --> 00:16:16,110 So they're going to come into the marketplace and this is going to be more of an evolution than a revolution. 212 00:16:16,110 --> 00:16:24,938 I think that they're going to take a lot of that blocking and tackling ALSP type work and they're going to make magic happen with AI. 213 00:16:24,938 --> 00:16:25,798 uh 214 00:16:25,880 --> 00:16:32,795 Well, look, they've all along been much better at giving full service service. 215 00:16:33,416 --> 00:16:34,547 They can do everything now. 216 00:16:34,547 --> 00:16:39,341 They can do law, they can do accounting, they can do business, they can do marketing, they can do it all. 217 00:16:39,341 --> 00:16:50,089 And the people that work there, as long as they hire the right lawyers, It depends on how they run their departments and how they train the lawyers that work in KPMG. 218 00:16:50,089 --> 00:16:51,410 uh 219 00:16:51,482 --> 00:16:56,942 You don't just get different output if you have the same input just because you're a part of a really big conglomerate. 220 00:16:56,942 --> 00:16:59,282 And we've seen that from some of the big four. 221 00:16:59,282 --> 00:17:07,602 Some of the big four's legal areas are being run like little law firms and therefore experiencing the same problems that law firms do. 222 00:17:07,602 --> 00:17:11,702 Do I think they can figure that an accounting firm like a KPMG can figure it out? 223 00:17:11,702 --> 00:17:14,062 I know I shouldn't call them an accounting firm because there's so much more than that. 224 00:17:14,062 --> 00:17:16,002 But do I think they can figure it out? 225 00:17:16,002 --> 00:17:16,644 Yeah. 226 00:17:16,644 --> 00:17:18,735 Do I think their size helps them? 227 00:17:18,735 --> 00:17:19,195 Yeah. 228 00:17:19,195 --> 00:17:21,875 Do I think it hurts them and may also hurt them? 229 00:17:21,875 --> 00:17:22,536 Yes. 230 00:17:22,536 --> 00:17:34,319 So it depends on how well they are at getting lawyers to play in the sandbox and really leverage their way of doing business consulting and advising. 231 00:17:34,319 --> 00:17:36,079 If they do that, I agree. 232 00:17:36,079 --> 00:17:40,270 And they say, oh, we're not going to touch this or that. 233 00:17:40,270 --> 00:17:42,521 We're not touching M &A. 234 00:17:42,521 --> 00:17:43,981 We're only going to touch these things. 235 00:17:43,981 --> 00:17:45,844 OK, right now. 236 00:17:45,844 --> 00:17:46,785 Exactly. 237 00:17:46,785 --> 00:17:51,496 know, you're just touching the sugar and the flour, but eventually you're going after the cake. 238 00:17:51,496 --> 00:17:52,168 Okay. 239 00:17:52,168 --> 00:17:53,571 Everyone knows that. 240 00:17:53,571 --> 00:17:54,532 Right. 241 00:17:54,573 --> 00:17:55,340 Yeah. 242 00:17:55,340 --> 00:17:56,481 I totally agree. 243 00:17:56,481 --> 00:17:59,023 It's going to be an incremental step. 244 00:17:59,023 --> 00:18:02,066 oh The bet the company matters are going to big law. 245 00:18:02,066 --> 00:18:04,548 I mean, that's not going to change anytime soon. 246 00:18:04,548 --> 00:18:06,463 And I'm not, I'm not chicken little. 247 00:18:06,463 --> 00:18:09,472 I don't think the sky is falling in big law. 248 00:18:09,472 --> 00:18:12,114 I just think there is going to be a massive shakeup. 249 00:18:12,114 --> 00:18:16,248 And I think some firms oh I'm, I'm going to take a even further step. 250 00:18:16,248 --> 00:18:21,742 I am certain that there are firms in the am law 200 that aren't going to make this, be able to make this jump. 251 00:18:21,742 --> 00:18:24,962 And how I know is because I see it every day. 252 00:18:24,962 --> 00:18:26,962 I see the hesitation. 253 00:18:26,962 --> 00:18:31,102 I see the slow movement towards the technology adoption. 254 00:18:31,182 --> 00:18:41,282 It's like a deer in the headlights at some of these firms and other, while other, there are plenty of other firms that are moving fast and investing big and really doubling down. 255 00:18:41,282 --> 00:18:46,482 And it's really a, a, a, there there's two different scenarios here. 256 00:18:46,482 --> 00:18:47,862 I don't see a lot in the middle. 257 00:18:47,862 --> 00:18:51,482 I see folks moving fast and I see folks moving real slow. 258 00:18:51,490 --> 00:19:04,377 But when I think about some of the more innovative approaches to, um, to business, like I use this example at a presentation in Chicago at an inside practice event. 259 00:19:04,377 --> 00:19:14,662 Um, Andreessen talked about something called the wild ducks at IBM, and it was a group of eight executives that reported directly to Andy or I'm sorry. 260 00:19:14,662 --> 00:19:19,705 Um, Watson was his last name, the, the CEO in the eighties and nineties. 261 00:19:19,865 --> 00:19:21,294 And they had, 262 00:19:21,294 --> 00:19:25,234 carte blanche access to pull people off of teams. 263 00:19:25,234 --> 00:19:29,954 They had a blank check to do whatever they innovate without within the organization. 264 00:19:29,954 --> 00:19:40,234 And there was one of these wild ducks executives in particular, Andy Heller, who they talked about wore jeans and cowboy boots into meetings and put his feet on the desk. 265 00:19:40,234 --> 00:19:43,394 And this is in the eighties, you know, with IBM and suit and ties. 266 00:19:43,394 --> 00:19:47,034 And I think about how that would play out in a, in in a law firm. 267 00:19:47,034 --> 00:19:49,734 like, man, I can't see that approach. 268 00:19:50,306 --> 00:19:52,546 happening in big law today. 269 00:19:52,546 --> 00:19:59,570 I, I don't know what's your, what's your take on their ability to think outside the box with stuff like that. 270 00:19:59,854 --> 00:20:09,388 Well, when you look at historical successes in innovation, even like there's stories of Mattel and IBM and Microsoft, that's exactly what you do. 271 00:20:09,388 --> 00:20:15,100 You pull a small group apart, you put them in a different location, you give them different rules, no rules. 272 00:20:15,100 --> 00:20:17,551 They dress different, behave different, different tools. 273 00:20:17,551 --> 00:20:24,364 They're out there finding their crayons and they have license to do what they want and the money to make it happen. 274 00:20:24,364 --> 00:20:26,885 And that is how you get innovation. 275 00:20:26,885 --> 00:20:28,996 And in fact, I think the little group that did 276 00:20:28,996 --> 00:20:32,079 develop that digital whatever and Kodak let them go, right? 277 00:20:32,079 --> 00:20:33,189 You hear stories about that. 278 00:20:33,189 --> 00:20:41,956 Well, at a law firm, the problem with the structure is how do you ever get, can't really give that power to a group. 279 00:20:42,397 --> 00:20:53,396 I guess if the managing partner had the confidence and the support of the lawyers and said, I'm gonna do this, I think there are probably a few special firms where you could do 280 00:20:53,396 --> 00:20:53,987 it. 281 00:20:53,987 --> 00:20:58,560 But it would be a special person that's the managing partner that everybody is. 282 00:20:58,616 --> 00:21:04,310 believes in, right, that is a leader and a follower and can inspire and people trust. 283 00:21:04,310 --> 00:21:06,182 And then you put this group on the side. 284 00:21:06,182 --> 00:21:09,194 But I don't think you can get a whole group of partners to do something. 285 00:21:09,194 --> 00:21:16,860 And the problem I always see with with law firms trying to innovate or even just a committee is, number one, there's too many people on the committee. 286 00:21:16,860 --> 00:21:18,821 They don't have a shared purpose. 287 00:21:18,821 --> 00:21:19,902 It's the biggest problem. 288 00:21:19,902 --> 00:21:26,114 If everybody wrote down what are we doing and why are we doing it and when are we going to measure it? 289 00:21:26,114 --> 00:21:27,214 And why does it matter? 290 00:21:27,214 --> 00:21:31,796 Those four questions or three questions, it would all be different and then you can't get anything done. 291 00:21:31,977 --> 00:21:34,578 And that's a huge problem at law firms. 292 00:21:34,578 --> 00:21:42,100 there's no one's willing to take on sub roles and let other people have the power and no one's project managing this stuff. 293 00:21:42,100 --> 00:21:50,184 So in the right firm with the right culture and the right leader and the willingness to pull people out and let them go rogue. 294 00:21:50,184 --> 00:21:53,285 The other thing law firms do to historically lawyers. 295 00:21:53,826 --> 00:21:54,490 Look. 296 00:21:54,490 --> 00:21:57,210 The way innovation happens is you go after the eager beavers. 297 00:21:57,210 --> 00:22:00,650 You go after the early adopters first, the people that want it. 298 00:22:00,650 --> 00:22:02,390 And instead, lawyers do the opposite. 299 00:22:02,390 --> 00:22:06,110 Oh no, we better go talk to Mark because he's no guy. 300 00:22:06,110 --> 00:22:08,570 And until we convince him, nothing's going to happen. 301 00:22:08,630 --> 00:22:12,810 No, go after the 25 % that believe and then get the next 25%. 302 00:22:12,810 --> 00:22:18,750 But instead, for some reason, I guess because we're combative and believe that we go after the one naysayer. 303 00:22:18,750 --> 00:22:20,570 No, make them busy doing something else. 304 00:22:20,570 --> 00:22:22,682 Don't even tell them you're doing this. 305 00:22:22,682 --> 00:22:25,517 ah But that isn't usually how it's approached. 306 00:22:25,654 --> 00:22:37,027 Yeah, so I actually see quite a few headwinds um in the law firm model to innovation, and I'm not exactly sure the path through it. 307 00:22:37,027 --> 00:22:40,518 I mapped these out um recently. 308 00:22:40,674 --> 00:22:46,720 I think one of the biggest headwinds is the partnership model itself. 309 00:22:46,960 --> 00:22:51,801 And for all the reasons that you just mentioned, it is anti-innovative. 310 00:22:51,801 --> 00:22:55,362 And the big four, they're partnerships as well. 311 00:22:55,650 --> 00:22:57,911 they're suffering right now in certain areas. 312 00:22:57,911 --> 00:23:14,140 I just heard about ENY um laying off partners in the UK, which doesn't happen frequently, but you have consensus driven decision making, which creates friction and slows rates of 313 00:23:14,140 --> 00:23:14,921 change. 314 00:23:14,921 --> 00:23:21,504 You have lateral mobility to the nth degree in legal where a lawyer can pick up his book of business and move down the street. 315 00:23:21,504 --> 00:23:24,766 And that inhibits long-term investment. 316 00:23:24,982 --> 00:23:29,384 You have healthy profit margins that make the status quo sticky. 317 00:23:29,384 --> 00:23:36,308 You have cash basis, accountant, accounting and retirement horizons that also affect capital investment. 318 00:23:36,308 --> 00:23:38,489 You have law schools that aren't keeping pace. 319 00:23:38,489 --> 00:23:52,177 Only I saw a ABA, stat from, think December that like 55 % of law schools have a gen AI class, 55 % like how is that not 95 % at this point? 320 00:23:52,177 --> 00:23:54,486 Um, empowering law. 321 00:23:54,486 --> 00:23:57,531 Non-lawyers, business professionals is a challenge. 322 00:23:57,531 --> 00:24:01,758 Risk aversion, diversity, lack of diversity within leadership ranks. 323 00:24:01,758 --> 00:24:09,280 All of these are massive headwinds to innovation and we got to figure them out if we're going to be successful, I think. 324 00:24:09,946 --> 00:24:11,666 That list was long, right? 325 00:24:11,666 --> 00:24:14,526 So we go back to your original point about the study. 326 00:24:14,526 --> 00:24:22,086 Why is there a difference between what general counsels want and what they think they're getting? 327 00:24:22,506 --> 00:24:27,646 You just justified that with that list a lot. 328 00:24:27,646 --> 00:24:29,626 And so you know what it makes you feel like doing. 329 00:24:29,626 --> 00:24:31,506 I bet if you're a lawyer, why bother? 330 00:24:31,725 --> 00:24:32,508 Yeah. 331 00:24:33,178 --> 00:24:34,001 It's exhausting. 332 00:24:34,001 --> 00:24:35,473 I'm exhausted just hearing that list. 333 00:24:35,473 --> 00:24:39,272 I the last thing in the world I'd want to do is be a managing partner of a law firm right now. 334 00:24:39,406 --> 00:24:43,734 Do you agree with that list or is there anything that you would take issue with? 335 00:24:44,058 --> 00:24:46,398 No, I totally agree with the list. 336 00:24:46,398 --> 00:24:50,678 And I think your point about education is going to get even worse. 337 00:24:51,578 --> 00:25:01,898 law schools never really prepared lawyers to be lawyers at law firms and or work collaboratively with the right mindset and skill set. 338 00:25:01,898 --> 00:25:10,058 And Law Without Walls back in 2011 was the first, if it's kind, even say like, no, we should be teaching our students design thinking and how to be creative and how to actually 339 00:25:10,058 --> 00:25:13,798 be humble and self-aware and collaborative. 340 00:25:13,882 --> 00:25:22,122 But, and I think it's gonna get worse because the schools that survive aren't gonna have to. 341 00:25:22,122 --> 00:25:32,362 And I think this training gap is gonna get worse as well because with AI, the how you do things matters so much more than what you do. 342 00:25:32,362 --> 00:25:38,762 So the kid in school that got a C in law school, he's caught up now with that tool or she. 343 00:25:38,782 --> 00:25:40,986 And now how you... 344 00:25:40,986 --> 00:25:45,266 deliver that service is more important than what you deliver, how you use the tool. 345 00:25:45,266 --> 00:25:53,306 And the problem right now is like, if you think about a contract that you would ask a junior associate to go through, and that's how they would learn, it would take them 10 346 00:25:53,306 --> 00:26:00,146 hours and some back and forth to identify, you know, the client wants this, but the other side said this, and which provision should we give on? 347 00:26:00,326 --> 00:26:01,666 Which ones matter? 348 00:26:02,286 --> 00:26:07,846 A senior associate can put it through a tool and in half hour do what took 10 hours and now we have no training. 349 00:26:07,930 --> 00:26:09,750 So we just ran this seminar. 350 00:26:09,750 --> 00:26:14,690 have a fellow, an AI fellow, or Cesson is amazing. 351 00:26:14,690 --> 00:26:19,530 And he and a former general counsel, Lynn Cherry, put together this conference on AI. 352 00:26:19,530 --> 00:26:25,650 we had the students be in teams and take a scenario in a contract and use the tool. 353 00:26:26,210 --> 00:26:30,810 And we had an answer key for what they were supposed to come up with. 354 00:26:31,210 --> 00:26:38,106 yeah, most of them came up with 80 % of the right issues, 80 % of the issues that were supposed to come up with. 355 00:26:38,106 --> 00:26:41,146 but they all came out with 200 % more. 356 00:26:41,526 --> 00:26:43,726 They just were bogus. 357 00:26:43,726 --> 00:26:47,506 they have no, they don't have the, they're one L's and two L's. 358 00:26:47,506 --> 00:26:51,626 They can't be expected to understand that that doesn't matter. 359 00:26:51,626 --> 00:26:54,446 in this tool was not a contract train tool, right? 360 00:26:54,446 --> 00:26:58,806 It was just one of the, I don't remember which one we used, whether it was Co-Pilot or whatever. 361 00:26:58,846 --> 00:27:03,286 But this is a problem because I don't know who's gonna train these associates. 362 00:27:03,404 --> 00:27:03,724 Yeah. 363 00:27:03,724 --> 00:27:04,936 And who's going to pay for it? 364 00:27:04,936 --> 00:27:10,143 Like clients have subsidized new associate training through the process that you just mentioned. 365 00:27:10,384 --> 00:27:15,550 And now not only do we, how are we going to train new lawyers? 366 00:27:15,931 --> 00:27:18,274 What's going to happen to law firm leverage? 367 00:27:20,386 --> 00:27:20,726 Right? 368 00:27:20,726 --> 00:27:23,268 mean, that's a big question mark in my mind. 369 00:27:23,268 --> 00:27:27,871 That's been the profit engine for law firms. 370 00:27:27,871 --> 00:27:34,796 it's going to get reduced at a minimum if we need fewer junior lawyers working on matters. 371 00:27:34,796 --> 00:27:38,878 um Yeah, I don't know how this all plays out. 372 00:27:38,906 --> 00:27:45,113 Plus this year, supposedly, at least in the US, we have more people applying to law school. 373 00:27:45,414 --> 00:27:48,467 presumably there's going to be less jobs in the next three years. 374 00:27:48,467 --> 00:27:51,680 This is a problem. 375 00:27:52,290 --> 00:27:56,913 Yeah, that is an interesting data point to think about. 376 00:27:57,630 --> 00:28:02,979 I wanted to talk to you a little bit about innovation theater, which is something that I talk a lot about. 377 00:28:02,979 --> 00:28:21,454 think that um in big law, in some firms, certainly not all, I won't even say most, but in some firms, there has been a reactive dynamic to the CINO role. 378 00:28:21,454 --> 00:28:24,034 Like, Hey, the firm down the street has a chief innovation officer. 379 00:28:24,034 --> 00:28:25,354 need a chief innovation officer. 380 00:28:25,354 --> 00:28:31,794 And they slapped the title on somebody's role and then don't give them the resources they need. 381 00:28:31,794 --> 00:28:42,454 In fact, I told a story at inside practice, a dear friend of mine who shall remain nameless is a director of innovation at about a three, 400 attorney law firm. 382 00:28:42,454 --> 00:28:45,774 think they're just in the AMLW rankings. 383 00:28:45,934 --> 00:28:51,214 And I was trying to, we were working on a project together and I couldn't get ahold of her for like a month. 384 00:28:51,214 --> 00:28:53,354 and send her a text message. 385 00:28:53,354 --> 00:28:54,934 she's, was like, where, where have you been? 386 00:28:54,934 --> 00:28:58,574 She's like, Oh, I've been working on, um, DMS upgrade. 387 00:28:58,574 --> 00:29:03,274 Like DMS upgrade was like, you're, you're, your innovation isn't it working on it. 388 00:29:03,274 --> 00:29:07,114 She's like, I am, I am it and I am innovation and I am cam. 389 00:29:07,114 --> 00:29:18,278 And it's just like, okay, whoever put that title on your or chart did not give you the people, the resources to really innovate your 390 00:29:18,286 --> 00:29:23,126 anybody who thinks DMS upgrades is innovation is wrong. 391 00:29:23,126 --> 00:29:25,946 And there's still a lot of that going on. 392 00:29:25,946 --> 00:29:30,906 I I'm hoping we're going to cycle through that and people are going to start taking it more seriously. 393 00:29:31,386 --> 00:29:35,126 Well, I think you hit the nail on the head because it's a tri-parot. 394 00:29:35,126 --> 00:29:35,806 Is that the word? 395 00:29:35,806 --> 00:29:36,346 Tri-parot? 396 00:29:36,346 --> 00:29:36,986 Tri-parot? 397 00:29:36,986 --> 00:29:37,486 Yes. 398 00:29:37,486 --> 00:29:37,806 Whatever. 399 00:29:37,806 --> 00:29:47,046 It's a three-part problem and it is related to tech and what tech departments are supposed to be doing because they still think they're supposed to be making sure your computers 400 00:29:47,046 --> 00:29:47,765 run. 401 00:29:47,765 --> 00:29:50,906 And I don't, there's a lot of tech deadweight in law firms. 402 00:29:50,906 --> 00:29:52,306 No offense to the tech people out there. 403 00:29:52,306 --> 00:29:57,806 There's some great tech people, but law firms, I don't think have revamped their tech departments. 404 00:29:57,806 --> 00:29:59,876 And I don't think the tech people. 405 00:29:59,876 --> 00:30:04,317 have revamped themselves the way they need to, then knowledge management, same thing. 406 00:30:04,317 --> 00:30:11,409 We've got knowledge management departments and law firms that have been around for 20 years, 15 years. 407 00:30:11,409 --> 00:30:15,591 And what they did originally was innovative, but it was manual. 408 00:30:15,591 --> 00:30:18,111 And now some of them are still doing it that way. 409 00:30:18,111 --> 00:30:22,806 And they've got too many tools and they're doing too many things without any ROI. 410 00:30:23,273 --> 00:30:27,834 And they've got too many things that they're supposed to be in charge of. 411 00:30:28,174 --> 00:30:30,384 well, we're supposed to give the knowledge to the lawyers. 412 00:30:30,384 --> 00:30:32,685 No, we're supposed to create stuff that we can sell to clients. 413 00:30:32,685 --> 00:30:34,356 Like it's all over the map. 414 00:30:34,356 --> 00:30:42,018 And then you've got this head of innovation floating around, not to mention then maybe it's a four part, then legal ops. 415 00:30:42,078 --> 00:30:53,061 And I think that the firms that have clearly defined roles and have revamped those are doing better than the ones that have the old dead weight of the tech department the way 416 00:30:53,061 --> 00:30:53,791 they always did. 417 00:30:53,791 --> 00:30:57,342 Then we slapped on a China role on top of the knowledge. 418 00:30:57,782 --> 00:31:00,594 It's like a mess. 419 00:31:01,006 --> 00:31:04,386 Yeah, I was trying to pull your paper up. 420 00:31:04,706 --> 00:31:07,546 You had, where is it here? 421 00:31:07,546 --> 00:31:08,086 There it is. 422 00:31:08,086 --> 00:31:19,186 So the name of your paper for those that want to take a look and we can include a link in the show notes is the law firm chief innovation officer, goals, roles, and holes. 423 00:31:19,186 --> 00:31:21,386 And I thought it was excellent. 424 00:31:21,846 --> 00:31:25,806 And one of, so you interviewed a bunch of folks in the seat. 425 00:31:25,806 --> 00:31:26,946 It's been a while now. 426 00:31:26,946 --> 00:31:30,566 I think this is like 18, 19 timeframe. 427 00:31:30,702 --> 00:31:38,802 But the first goal that you listed under your goal section was differentiate the law firm. 428 00:31:39,602 --> 00:31:53,442 you quoted from some of your interviews where it's just like, yeah, there's a big marketing component to this and not necessarily a really strong commitment to change. 429 00:31:53,442 --> 00:32:00,488 Do you feel like that is shifting now and there's more of a commitment today than there was when you did this? 430 00:32:00,488 --> 00:32:03,136 Uh, put this paper, wrote this paper. 431 00:32:03,790 --> 00:32:05,351 I think there's more of a commitment. 432 00:32:05,351 --> 00:32:09,462 I'm not so sure that there's more of a commitment to the chief innovation officer role. 433 00:32:09,462 --> 00:32:18,046 It's a little bit, feel like what's happening, and I'm not sure, but I feel like what's happening is a little bit about like what happened with compliance. 434 00:32:18,046 --> 00:32:21,737 did a kind of research into compliance officers. 435 00:32:22,078 --> 00:32:24,729 For a long time, compliance reported into legal. 436 00:32:24,729 --> 00:32:28,961 And then there was also the part, the thinking that, they should be separate. 437 00:32:28,961 --> 00:32:32,632 But if they're separate, then it isn't everybody's responsibility. 438 00:32:32,632 --> 00:32:33,763 to be compliant. 439 00:32:33,763 --> 00:32:36,004 that's the compliance department's problem. 440 00:32:36,445 --> 00:32:43,886 So on the one hand, while having a chief innovation officer was a great thing to put in your RFP answer because the clients want to hear what have you done? 441 00:32:43,886 --> 00:32:46,207 well, we made Joe a chief innovation officer. 442 00:32:46,207 --> 00:32:49,836 We're not going to give him any extra money, but 10 % of his time is supposed to go to that. 443 00:32:49,836 --> 00:32:51,417 You're like, wait, how is that going to work? 444 00:32:51,417 --> 00:32:56,671 If he gets paid by the hour, you're not giving him any more money, but 10 % of his time now he needs to cut back. 445 00:32:56,671 --> 00:32:58,513 So he's going to make less money and do more. 446 00:32:58,513 --> 00:32:59,574 Like this is wrong, right? 447 00:32:59,574 --> 00:33:02,676 So it's not supported, but they can put this in this RFP. 448 00:33:02,726 --> 00:33:03,876 that, we're innovative. 449 00:33:03,876 --> 00:33:11,508 And the thing back then too, and still it happens now, is clients don't go back and say, show me what you did that you said you were going to do in your RFP. 450 00:33:11,508 --> 00:33:13,649 So they let them off the hook, right? 451 00:33:13,649 --> 00:33:22,351 But also, I think some firms are thinking, well, we don't want a uh chief innovation officer because innovation should be everybody's job. 452 00:33:22,632 --> 00:33:25,282 Okay, but if you do that, then is it nobody's job? 453 00:33:25,282 --> 00:33:32,152 So I think a chief innovation officer without power and a team isn't going to do anything. 454 00:33:32,152 --> 00:33:35,050 but make sure everyone else thinks they don't have to do anything. 455 00:33:35,982 --> 00:33:37,103 That's a really good point. 456 00:33:37,103 --> 00:33:42,216 So, I spent 10 years in risk management and corporate audit at Bank of America. 457 00:33:42,216 --> 00:33:49,740 And I've mentioned this on the podcast before, we had four lines of defense you had in risk management. 458 00:33:49,740 --> 00:33:51,331 You had the line of business. 459 00:33:51,331 --> 00:34:00,916 So, this could be like the consumer bank, the control environment they have in place when you come in and make a deposit to make sure it isn't anti or money laundering activity, 460 00:34:00,916 --> 00:34:02,117 for example. 461 00:34:02,117 --> 00:34:04,098 Then you have your 462 00:34:04,364 --> 00:34:16,603 risk and compliance partners who are one level removed, but partner closely with the line of business to make sure these activities are taking place and effectively. 463 00:34:16,603 --> 00:34:18,904 The third line of defense is corporate audit. 464 00:34:18,904 --> 00:34:25,889 So internal audit comes in and evaluates the control environment and rights issues if they need to. 465 00:34:25,889 --> 00:34:28,411 The fourth line of defense is the wall street journal. 466 00:34:28,411 --> 00:34:32,716 So that's where you end up if the first three fail and 467 00:34:32,716 --> 00:34:43,692 You know, it's, it's true that it has to this mindset, whether it's risk management or it's innovation, it has to be embedded in the culture of the organization itself. 468 00:34:43,692 --> 00:34:45,353 It's not a department. 469 00:34:45,353 --> 00:34:45,653 Right. 470 00:34:45,653 --> 00:34:56,019 You can have a department that, that helps foster or creates a center of excellence around a particular activity, but it can't be isolated. 471 00:34:56,019 --> 00:34:59,481 And that's one of the biggest gaps I see today. 472 00:34:59,481 --> 00:35:02,322 And when I saw it is, is the cultural gap. 473 00:35:02,538 --> 00:35:03,378 in big law. 474 00:35:03,378 --> 00:35:08,283 It's not, innovation is not part of big law culture today for the most part. 475 00:35:08,283 --> 00:35:11,605 And I know there are exceptions to that using broad brushstrokes here. 476 00:35:11,605 --> 00:35:20,472 Um, and I see people, you know, again, KPMG entering the market, it is part of their DNA and their culture. 477 00:35:20,472 --> 00:35:25,376 And I'm wondering how this is going to play out is cause culture is hard to change. 478 00:35:25,376 --> 00:35:26,967 Um, I don't know. 479 00:35:26,967 --> 00:35:28,468 You got any thoughts on that? 480 00:35:29,208 --> 00:35:29,638 I agree. 481 00:35:29,638 --> 00:35:31,139 It's hard to change. 482 00:35:32,140 --> 00:35:41,888 think that least the law firms that sponsor teams in Law Without Walls, they bring their clients and they do a three-day hackathon with us, with the students in order to, I think 483 00:35:41,888 --> 00:35:42,478 they get it. 484 00:35:42,478 --> 00:35:46,411 The ones that are willing to take risks, take their clients on new things. 485 00:35:46,552 --> 00:35:51,976 But even the, you know, but the firms that aren't, yeah, I think it is cultural. 486 00:35:51,976 --> 00:35:55,438 And the thing is that with such, with firms that are so big, 487 00:35:56,378 --> 00:35:57,338 It's really hard. 488 00:35:57,338 --> 00:36:04,958 Like one of my favorite questions to ask when I do my interviews is like before I do a law firm retreat, which I speak at all the time, I'll say, well, I want to talk to like 10 or 489 00:36:04,958 --> 00:36:08,418 12 lawyers to get an understanding of the culture of the firm, blah, blah, blah. 490 00:36:08,418 --> 00:36:09,138 Okay. 491 00:36:09,198 --> 00:36:19,018 One of my favorite questions is if you were to personify the firm and put the firm on a lunch date, what, and you were going to set up, set me up with your firm, what three 492 00:36:19,018 --> 00:36:22,278 adjectives would you use to describe the firm? 493 00:36:23,338 --> 00:36:24,314 It's good. 494 00:36:24,314 --> 00:36:28,414 But what I get most of the time is collegial, which I'm like, I don't want to go out with them. 495 00:36:28,414 --> 00:36:37,554 But anyway, the problem most of them say is, well, that's really hard because we really vary by practice group. 496 00:36:38,474 --> 00:36:40,314 And I get that, right? 497 00:36:40,314 --> 00:36:43,954 Because each practice group is going to have their own culture. 498 00:36:43,954 --> 00:36:46,494 And that makes sense. 499 00:36:47,034 --> 00:36:51,114 I would be really curious to see if that's true with a KPMG. 500 00:36:52,258 --> 00:36:53,799 Yeah, it's a good question. 501 00:36:53,799 --> 00:37:01,105 know, I it's interesting um how law firms have not been able to scale. 502 00:37:01,126 --> 00:37:04,168 So the biggest law firm is K &E. 503 00:37:04,168 --> 00:37:09,613 They're not even they wouldn't even qualify to be in the Fortune 500 if they were public, which they're not. 504 00:37:09,613 --> 00:37:12,936 It's about seven point six billion is the floor of the Fortune 500. 505 00:37:12,936 --> 00:37:13,966 They're like seven point three. 506 00:37:13,966 --> 00:37:15,017 So they're close. 507 00:37:15,017 --> 00:37:17,059 But K &E is an outlier. 508 00:37:17,059 --> 00:37:21,166 The average revenue at a 509 00:37:21,166 --> 00:37:24,946 uh, AmLaw 100 firm is one, 1.4 billion. 510 00:37:24,946 --> 00:37:25,626 There is a hunt. 511 00:37:25,626 --> 00:37:30,526 Um, the entire AmLaw 100, if you add up the revenue is 140 billion. 512 00:37:31,126 --> 00:37:42,966 So that, so a hundred firms, 140 billion for in accounting and you know, advisory tax that are 220 billion. 513 00:37:42,966 --> 00:37:48,064 So that's how fragmented law and that's the AmLaw 100, you know, you've got 514 00:37:48,064 --> 00:37:49,905 another hundred on the AmLaw list. 515 00:37:49,905 --> 00:37:51,775 So it's very fragmented. 516 00:37:52,016 --> 00:37:58,918 And I think a lot of it is the bespoke nature of legal work that historically has been the case. 517 00:37:58,979 --> 00:38:07,422 It's exactly what you're talking about where, um you know, different cultural norms within practice areas. 518 00:38:07,462 --> 00:38:15,185 It's the lateral movement where, you know, entire practice areas sometimes pick up sticks and move to other law firms. 519 00:38:15,245 --> 00:38:17,526 It's really hard to build scale. 520 00:38:17,600 --> 00:38:21,533 when you have all of that in play. 521 00:38:21,533 --> 00:38:34,421 that's why, as I'm kind of mapping out what the future might look like, I think it looks like consolidation with the firms who actually figure out how to do this, gobbling up the 522 00:38:34,421 --> 00:38:35,261 ones that don't. 523 00:38:35,261 --> 00:38:38,943 That's the best guess I can put forward. 524 00:38:38,943 --> 00:38:41,565 And I'm not going to pretend to know, but I don't know. 525 00:38:41,565 --> 00:38:43,446 What do you see the future looking like? 526 00:38:43,522 --> 00:38:51,587 Well, I guess I would agree with you, except that what gives me pause is the firms that I've worked with after they've merged. 527 00:38:52,007 --> 00:38:55,129 When too big for it's really tough. 528 00:38:55,549 --> 00:38:59,372 It's rare that a merger seems super successful inside. 529 00:38:59,372 --> 00:39:02,393 still feels like an us versus them. 530 00:39:02,674 --> 00:39:10,298 You know, you got the group that are the, you know, we're still calling ourselves this, Ritz, despite the new name and. 531 00:39:11,330 --> 00:39:16,174 Mergers haven't been the most successful thing and what you're talking about is huge. 532 00:39:16,915 --> 00:39:26,510 And if humility is not a real top skill for lawyers, that's really gonna be hard to be gobbled up and be okay with it. 533 00:39:26,510 --> 00:39:27,050 Yeah. 534 00:39:27,050 --> 00:39:29,510 You know, and you're, you're a thousand percent correct. 535 00:39:29,510 --> 00:39:36,330 That's been my anecdotal observation as well is, you know, mergers have had mixed results. 536 00:39:36,370 --> 00:39:46,810 Um, but you know what I, one observation that I've had is a lot of mergers have taken two underperforming law firms and put them together. 537 00:39:47,010 --> 00:39:55,430 Um, there's been a lot of that, uh, you know, again, from, from the outside looking in, it hasn't always been more. 538 00:39:55,630 --> 00:39:56,690 Yeah. 539 00:39:57,068 --> 00:40:01,319 Yeah, it's been two flailing, underperforming firms. 540 00:40:01,319 --> 00:40:06,161 And again, that is not true across the board at all, but I've seen a lot of that over the years. 541 00:40:06,161 --> 00:40:08,341 And uh yeah, and you're right. 542 00:40:08,341 --> 00:40:14,513 And the cultures are so different and you know, the power, the power dynamics in law firms is a little bit unique. 543 00:40:14,513 --> 00:40:24,486 Like even though, even though the big four are partnerships, they don't behave like there's not nearly the friction in decision-making. 544 00:40:24,486 --> 00:40:26,392 Cause in those 10 years at B of A we worked 545 00:40:26,392 --> 00:40:34,488 closely with all the big four um and those outside the big four that are partnerships like the essentials of the world. 546 00:40:34,809 --> 00:40:41,155 They operate like an enterprise um and decision-making happens differently. 547 00:40:41,155 --> 00:40:48,121 It's not nearly, um you don't have people, maybe you do, but it's much less impactful. 548 00:40:48,121 --> 00:40:55,106 I see with law firms and executive committees with retirement horizons, you've got the senior most 549 00:40:55,310 --> 00:41:02,370 folks in the law firm that are leading and making the decisions and they got there because they're the best at lawyering. 550 00:41:02,370 --> 00:41:02,750 Right. 551 00:41:02,750 --> 00:41:09,690 That doesn't necessarily mean you're the best leader or you have the best vision or even that you can execute the best. 552 00:41:09,690 --> 00:41:13,490 It just means you're the best at lawyering and the demographic. 553 00:41:13,490 --> 00:41:16,550 I pulled some stats on this not too long ago. 554 00:41:16,870 --> 00:41:24,250 If I remember correctly, 50 % of law firm executive committees are 55 and older. 555 00:41:24,250 --> 00:41:24,782 Maybe 556 00:41:24,782 --> 00:41:25,082 Yeah. 557 00:41:25,082 --> 00:41:27,682 And I was actually surprised it wasn't higher. 558 00:41:27,682 --> 00:41:31,462 I was like, when I see the demographics, it seems older. 559 00:41:31,462 --> 00:41:34,182 So I'll have to go back and pull that up. 560 00:41:34,182 --> 00:41:39,822 But yeah, you I think that, you know, who really gets gen AI millennials? 561 00:41:40,762 --> 00:41:46,022 There was a McKinsey study that came out that I quoted and they buy a mile. 562 00:41:46,782 --> 00:41:55,078 It's that 35 to 44 age group, which is crazy to think that millennials are 44 now, but 563 00:41:55,240 --> 00:41:57,652 Um, I guess that's, that's right. 564 00:41:57,652 --> 00:42:05,356 I 81, I guess, but you know, you know, who's not on executive committees at law firms, millennials. 565 00:42:05,356 --> 00:42:08,638 Um, there's just not a lot that I've seen. 566 00:42:08,638 --> 00:42:12,680 And if you look at the data, it, it, it skews a lot older. 567 00:42:12,680 --> 00:42:14,321 So I don't know, man. 568 00:42:14,321 --> 00:42:19,895 I think we need, I think we need some diversity of thought in, the boardroom at law firms. 569 00:42:19,895 --> 00:42:21,126 That's not there today. 570 00:42:21,126 --> 00:42:22,286 Would you agree? 571 00:42:22,520 --> 00:42:23,971 I would totally agree. 572 00:42:23,971 --> 00:42:24,521 Totally. 573 00:42:24,521 --> 00:42:27,424 I mean, we also need a different compensation structure. 574 00:42:27,424 --> 00:42:32,639 That's a big driver. 575 00:42:32,639 --> 00:42:47,641 mean, if you compensate based on just the bill of blower and you continue to give credit to some old law firm partner that's no longer doing the work, um that's a big disincentive 576 00:42:47,641 --> 00:42:48,162 to do anything. 577 00:42:48,162 --> 00:42:51,314 And if you don't compensate innovation or doing something else, 578 00:42:52,918 --> 00:42:58,971 The hope is that generative AI is going to free up time so that lawyers will have the time. 579 00:42:58,971 --> 00:43:07,905 Because what I've found is, for example, with a couple of firms I've worked with and running these three to four month innovation journeys, it's the innovation committee. 580 00:43:07,905 --> 00:43:12,707 But it's the last thing they want to do because they don't get credit for it. 581 00:43:12,847 --> 00:43:14,768 They don't get paid for it. 582 00:43:14,988 --> 00:43:18,870 And it takes away from what they consider their real job. 583 00:43:18,870 --> 00:43:19,630 And I guess 584 00:43:19,630 --> 00:43:21,380 What I hope for is a mindset change. 585 00:43:21,380 --> 00:43:38,695 Now that we have AI, part of your job is innovating and using that extra time to find ways to add different and more value to your clients that you can charge for in a different 586 00:43:38,695 --> 00:43:39,195 way. 587 00:43:39,195 --> 00:43:42,476 um That's the goal, right? 588 00:43:42,476 --> 00:43:49,498 And the goal should be that your client comes to you and wants to give you 589 00:43:50,666 --> 00:43:58,750 all this information that's going to help you deliver something that on a go-forward is going to help you be a better lawyer for them and for your other clients that right now 590 00:43:58,750 --> 00:44:02,351 they would never give to you because you would actually charge them by the hour to read it. 591 00:44:02,351 --> 00:44:05,353 um And so I don't know. 592 00:44:05,353 --> 00:44:07,394 I mean, I have so much hope. 593 00:44:07,394 --> 00:44:16,658 just we've been hoping for a change to the billable hour model for so long that I'm scared to hope that I feel like I'm not being realistic. 594 00:44:16,952 --> 00:44:19,844 Yeah, it's been, did a little digging on that too. 595 00:44:19,844 --> 00:44:28,468 It's been around since I think the late forties, but it didn't really get traction until the seventies. 596 00:44:28,468 --> 00:44:31,770 And so it's been 50 plus years that it's been firmly entrenched. 597 00:44:31,770 --> 00:44:40,335 And you know, again, the profit margins of these law firms make it really the status quo really sticky. 598 00:44:40,335 --> 00:44:42,246 So yeah, what do you see? 599 00:44:42,246 --> 00:44:46,038 And I know we're running out of time here, but I'm just curious when 600 00:44:46,318 --> 00:45:01,118 how you see AI influencing those cornerstones of legal services, like law firms, like again, the billable hour, the partnership model, how we pay, internal firm compensation 601 00:45:01,118 --> 00:45:02,858 model, client engagement model. 602 00:45:02,918 --> 00:45:11,938 I don't know, do you got any thoughts on how AI is gonna, is it gonna be able to move these massive boulders that have been stuck in place for so long? 603 00:45:13,050 --> 00:45:21,073 So on the one hand, you're going to have some lawyers like a friend of mine who's a very successful female partner at a very big firm in real estate. 604 00:45:21,073 --> 00:45:25,775 She says, well, this is just going to give me more time to have more clients. 605 00:45:26,736 --> 00:45:30,798 So she has so many clients that she turns away and her team's too small. 606 00:45:30,798 --> 00:45:33,339 And it's so hard to find the right talent. 607 00:45:33,339 --> 00:45:36,180 she just, there's only one of her. 608 00:45:36,180 --> 00:45:40,702 And so what AI is going to enable is that like almost more of her. 609 00:45:40,918 --> 00:45:43,699 And so in her mind, don't want, she didn't want to change anything. 610 00:45:43,699 --> 00:45:46,219 This just means I'm going to keep going with the billable hour. 611 00:45:46,219 --> 00:45:49,140 could just do eight clients instead of one. 612 00:45:49,140 --> 00:45:51,921 And so I'll still make money, if not more. 613 00:45:51,921 --> 00:45:53,762 And I'll, it's different. 614 00:45:53,762 --> 00:46:02,244 Whereas you have the other side of it where you think, no, instead I'm going to think I use this, what this used to take me 10 hours to do. 615 00:46:02,244 --> 00:46:09,146 Now it's taking me an hour to do instead of thinking now I can do nine more of those. 616 00:46:10,562 --> 00:46:15,524 Instead think, how do I charge differently for that hour? 617 00:46:15,524 --> 00:46:16,604 And what can I do? 618 00:46:16,604 --> 00:46:25,268 What wrappings can I put around it to add value so that I'm giving some type of extra value to my client that they're willing to pay for? 619 00:46:25,268 --> 00:46:35,372 Whether that say, okay, I did this contract analysis, but because you gave me the past 10 years, I can predict for the future that this, this, this, and this. 620 00:46:35,452 --> 00:46:40,098 And let's build something together so that the next time, and you pay me a flat rate. 621 00:46:40,098 --> 00:46:52,525 not an hourly rate, and that flat rate should presumably be more than the hour it took you to do the work and more than the hours it took you to create the overlay, but not the 10, 622 00:46:52,525 --> 00:46:54,126 not maybe the same as the 10. 623 00:46:54,126 --> 00:47:02,134 And then the third view I have is maybe what everyone's just gonna do is start pricing things based on how much it would have cost before. 624 00:47:02,134 --> 00:47:09,654 Cause now we have AI, so they go, all the firms go back and figure out everything they did, how long on average it took them to do it. 625 00:47:10,414 --> 00:47:16,346 And then they can just do an AFA based on that, but that's not really a different business model. 626 00:47:16,346 --> 00:47:20,954 That's just back-ending what a billable hour would have been to come up with a fee. 627 00:47:22,626 --> 00:47:24,177 Yeah, it's a good point. 628 00:47:24,177 --> 00:47:30,253 I know there's not a lot of easy answers around that, around the pricing structure here. 629 00:47:30,253 --> 00:47:40,502 I've heard a lot of um like uh an AI multiple, know, essentially where they just charge a different hourly rate when AI is in the mix. 630 00:47:40,502 --> 00:47:43,045 don't, I mean, I don't know. 631 00:47:43,045 --> 00:47:44,479 um I definitely don't. 632 00:47:44,479 --> 00:47:46,292 Why does everyone assume that it should be cheaper? 633 00:47:46,292 --> 00:47:49,196 AI is helping you, so you're better. 634 00:47:49,580 --> 00:47:50,430 Right. 635 00:47:50,811 --> 00:47:51,491 Yeah. 636 00:47:51,491 --> 00:47:51,791 Yeah. 637 00:47:51,791 --> 00:47:52,252 Yeah. 638 00:47:52,252 --> 00:47:52,832 Exactly. 639 00:47:52,832 --> 00:47:58,775 I was thinking, you know, whatever it is, would be, it would be north of one, whatever that coefficient is. 640 00:47:58,775 --> 00:47:59,125 Right. 641 00:47:59,125 --> 00:48:05,579 Like because law firms have to somehow account for the cost of the infrastructure. 642 00:48:05,579 --> 00:48:05,959 Right. 643 00:48:05,959 --> 00:48:08,981 You know, Harvey co-counsel, they're not free far from it. 644 00:48:08,981 --> 00:48:11,442 Um, somebody's got to pay for that. 645 00:48:11,442 --> 00:48:16,495 In addition to the revenue decrease that, that the law firms are, yeah, I'm not sure. 646 00:48:16,495 --> 00:48:18,356 I'm not sure how it's going to play out. 647 00:48:18,424 --> 00:48:22,535 There was, There was a story I heard. 648 00:48:22,835 --> 00:48:31,968 This is a, like an old fable where there was a ship that was having some engine trouble and they had several mechanics come in, work on the engine. 649 00:48:31,968 --> 00:48:33,378 They couldn't get it fixed. 650 00:48:33,378 --> 00:48:46,482 Finally, they called an, uh, the most senior, um, engine mechanic in the shipyard and he came in, evaluated the situation, took out his hammer, hit it on a, uh, one particular 651 00:48:46,482 --> 00:48:48,598 spot on the boiler and 652 00:48:48,598 --> 00:48:50,780 Engine started running a couple of weeks later. 653 00:48:50,780 --> 00:48:56,344 Um, the ship operators get a bill for $10,000 and they were like, $10,000. 654 00:48:56,344 --> 00:48:59,296 You know, you came in here and tapped a hammer. 655 00:48:59,296 --> 00:49:09,198 So they asked for a detailed invoice and he sent one that said tapping with hammer $2 knowing where to tap $9,998. 656 00:49:09,995 --> 00:49:12,877 So I feel like lawyers are going to be that right. 657 00:49:12,877 --> 00:49:14,590 The doing 658 00:49:14,590 --> 00:49:15,220 I like that. 659 00:49:15,220 --> 00:49:17,070 That's a great analogy. 660 00:49:17,070 --> 00:49:18,041 I love that. 661 00:49:18,041 --> 00:49:22,333 I'm steal it from you, but if I use it, I'm going to, I'm going to quote that. 662 00:49:22,333 --> 00:49:30,225 I think that, I think that is how lawyers should be thinking of it instead of the people's screaming fire and we're going to lose our jobs. 663 00:49:30,225 --> 00:49:37,080 And, know, one thing we didn't talk about is all the new rules that this is creating, you know, the engineers, the data people, the 664 00:49:37,080 --> 00:49:40,986 you know, the strategy people and the big firms like great firms are doing it. 665 00:49:40,986 --> 00:49:50,634 White and Case has a whole team that's their strategy team and they've got people that are data engineers and they're hiring graduates from undergraduate school that are from MIT 666 00:49:50,634 --> 00:49:53,555 and other great schools to help them. 667 00:49:53,555 --> 00:50:04,097 And back to your point earlier about the business professionals and the KPMG's, if the law firms start thinking that way, thinking themselves as a business and valuing these extra 668 00:50:04,097 --> 00:50:06,358 expertise, maybe 669 00:50:07,598 --> 00:50:11,628 Maybe we will see some of the things that I'm hoping and I think you're hoping for. 670 00:50:11,628 --> 00:50:17,022 Yeah, I think that some will and I think they're the, they're going to be the winners. 671 00:50:17,043 --> 00:50:20,145 And I think there's going to be a lot who won't. 672 00:50:20,245 --> 00:50:27,912 And I don't know what, the future looks like there, but um yeah, this has been uh a fantastic conversation. 673 00:50:27,912 --> 00:50:29,873 I could sit here and chit chat with you all day. 674 00:50:29,873 --> 00:50:36,299 um How do you, so your book, the, lawyer upheaval is the older version. 675 00:50:36,299 --> 00:50:39,361 You're pointing people towards a leader upheaval now. 676 00:50:39,361 --> 00:50:39,781 Right. 677 00:50:39,781 --> 00:50:40,423 And I'm assuming 678 00:50:40,423 --> 00:50:42,548 web book, look I have it right there. 679 00:50:42,971 --> 00:50:46,840 Marketing, I did spend eight years in marketing before I went to law school. 680 00:50:46,882 --> 00:50:48,906 Can't get the marketer out of the person. 681 00:50:48,963 --> 00:50:53,545 Well, I'm only I'm still uh digging in, so far it's been it's been really good. 682 00:50:53,545 --> 00:50:59,748 um And then your your paper on the chief innovation role is that's available. 683 00:50:59,748 --> 00:51:05,219 mean, I think I I found it through that article, but that's available out in the I think you sent me a link. 684 00:51:05,219 --> 00:51:06,600 book, you can go to Amazon. 685 00:51:06,600 --> 00:51:07,861 That's easy. 686 00:51:08,582 --> 00:51:09,520 Or the ABA. 687 00:51:09,520 --> 00:51:13,446 You can get a big discount if you're an ABA member, if you go to the ABA and buy it. 688 00:51:13,446 --> 00:51:22,675 And then the article, if you go to my website, MoveLaw, M-O-V-E-L-A-W.com, and scroll through my writing, it goes by date. 689 00:51:22,675 --> 00:51:24,466 You can click there and get the full article. 690 00:51:24,466 --> 00:51:26,228 Because it was originally published in two parts. 691 00:51:26,228 --> 00:51:28,820 And think when we first spoke, you had only had the first part. 692 00:51:28,820 --> 00:51:31,600 So that's probably the best way to get the full article. 693 00:51:31,648 --> 00:51:32,098 Awesome. 694 00:51:32,098 --> 00:51:32,359 Yeah. 695 00:51:32,359 --> 00:51:33,249 And it's a good read. 696 00:51:33,249 --> 00:51:39,284 And I know that um it's been a few years now, but I think a lot of these same dynamics are in play. 697 00:51:39,284 --> 00:51:40,105 So I found it. 698 00:51:40,105 --> 00:51:41,806 I found it very valuable. 699 00:51:42,007 --> 00:51:43,498 Well, thanks so much for joining. 700 00:51:43,498 --> 00:51:54,356 I know I hope to meet you in person, maybe came and I or, um or somewhere else, but I really appreciate you spending a little time with me today. 701 00:51:55,618 --> 00:51:56,098 All right. 702 00:51:56,098 --> 00:51:57,138 Take care. 703 00:51:57,559 --> 00:51:58,559 Bye bye. 00:00:04,319 Michelle, how are you this afternoon? 2 00:00:04,398 --> 00:00:06,123 I'm great, how are you Ted? 3 00:00:06,478 --> 00:00:06,978 I'm doing good. 4 00:00:06,978 --> 00:00:09,440 And I just realized my mic was not where it needed to be. 5 00:00:09,440 --> 00:00:13,863 Um, that probably sounds a lot better, hopefully. 6 00:00:13,863 --> 00:00:14,303 Good. 7 00:00:14,303 --> 00:00:18,131 uh so I found your article. 8 00:00:18,131 --> 00:00:26,190 You had an article on legal, well, particularly the chief innovation officer role within law firms. 9 00:00:26,190 --> 00:00:32,633 And there was a fantastic article by Mark Cohen called the enigma of 10 00:00:33,208 --> 00:00:35,309 big law innovation or something along those lines. 11 00:00:35,309 --> 00:00:47,096 And he, he had a link to your article in there or, and I found it was just fascinated dove in deep and knew I had to reach out to get you on the podcast here because this is legal 12 00:00:47,096 --> 00:00:48,086 innovation spotlight. 13 00:00:48,086 --> 00:00:55,090 We talk a lot about the CNO role and all of what's happening and what's not happening in legal innovation. 14 00:00:55,490 --> 00:01:02,518 So I looked at your background and yeah, so you've, you're currently a law professor. 15 00:01:02,518 --> 00:01:08,781 at University of Miami, guest faculty at Harvard School, uh Harvard Law School. 16 00:01:08,818 --> 00:01:13,164 I actually bought your book, Legal Upheaval. 17 00:01:13,824 --> 00:01:19,166 Actually, no, I bought Leader Upheaval, which is the second installment. 18 00:01:19,487 --> 00:01:20,528 Correct? 19 00:01:20,608 --> 00:01:26,411 And I'm just maybe 75 pages in, so still have some reading to do. 20 00:01:26,778 --> 00:01:30,353 I read at night, and it takes me forever because I fall asleep. 21 00:01:31,172 --> 00:01:32,406 So I put you to sleep. 22 00:01:32,406 --> 00:01:34,328 Yeah, it's not just you. 23 00:01:34,328 --> 00:01:36,339 Just reading in general puts me to sleep. 24 00:01:36,339 --> 00:01:38,180 So the book is very good so far. 25 00:01:38,180 --> 00:01:39,351 I've enjoyed it. 26 00:01:39,632 --> 00:01:51,460 But most interestingly about your background is you've interviewed a bunch of GC's law firm partners and heads of innovation and I can't wait to dig in. 27 00:01:51,460 --> 00:01:59,436 um So I covered a lot of your background there, but maybe fill in any gaps for us and you know what you're working on these days. 28 00:01:59,940 --> 00:02:00,280 Sure. 29 00:02:00,280 --> 00:02:04,211 So I'm the founder of Law Without Walls. 30 00:02:04,271 --> 00:02:16,655 And through that, as well as through my own consultancy, MoodLaw, over the last decade, I've led over 235 multidisciplinary teams with lawyers on them on a four-month innovation 31 00:02:16,655 --> 00:02:17,515 journey. 32 00:02:17,515 --> 00:02:21,516 And each team's charge is to solve a business of law problem. 33 00:02:21,536 --> 00:02:24,717 And I ran an internal program at Microsoft for five years. 34 00:02:24,717 --> 00:02:27,498 And I also did a program last year for DXC. 35 00:02:27,916 --> 00:02:39,586 And so in doing that and running these innovation journeys with law firms, I've done it as well, and in-house legal departments, I've learned a lot about what is innovation and what 36 00:02:39,586 --> 00:02:40,817 is not innovation. 37 00:02:40,817 --> 00:02:48,584 And I've learned a lot about leading innovation because as you can imagine in leading that many teams, you've made a lot of mistakes and that would be me. 38 00:02:48,584 --> 00:02:56,078 So my book uh is based not just on the interviews of general counsels and heads of innovation, but also on my own experience in 39 00:02:56,078 --> 00:03:03,010 leading teams and learning what it takes to actually lead innovation in today's marketplace. 40 00:03:03,224 --> 00:03:04,094 Yeah. 41 00:03:04,275 --> 00:03:11,580 Well, I would imagine as a law firm innovation leader, takes a lot of patience. 42 00:03:11,580 --> 00:03:17,184 takes a lot of um leadership skills. 43 00:03:17,244 --> 00:03:19,626 There's so much work to be done there. 44 00:03:19,626 --> 00:03:21,367 I've been in the space since 2008. 45 00:03:21,367 --> 00:03:30,478 We started as a consulting company, fell down the legal rabbit hole very early on and very quickly aligned to 46 00:03:30,478 --> 00:03:34,537 the knowledge management innovation didn't even exist 17 years ago. 47 00:03:34,537 --> 00:03:40,818 And, um, and I've just, it's an area that I've been very fascinated in our buyers. 48 00:03:40,818 --> 00:03:43,818 So we have a legal internet extranet platform. 49 00:03:43,858 --> 00:03:48,338 Our buyers typically sit in cam, uh, and innovation. 50 00:03:48,478 --> 00:03:51,418 So yeah, it's, something that I talk about a lot. 51 00:03:51,418 --> 00:03:53,778 Obviously the podcast is named after it. 52 00:03:53,778 --> 00:03:56,598 I present on, I present on the topic a lot. 53 00:03:56,618 --> 00:04:00,238 Um, and I have some perspectives on it that I think are somewhat unique. 54 00:04:00,238 --> 00:04:06,258 So over those 17 years, we have worked with over 110 AMLaw firms. 55 00:04:06,578 --> 00:04:16,398 So a very pretty wide cross-sectional view within what happens in KM departments and innovation departments in big law. 56 00:04:16,898 --> 00:04:25,938 And, you know, it's all over the board and innovation from my perspective really started to be a thing about 10 years ago. 57 00:04:25,998 --> 00:04:27,878 And I 58 00:04:28,270 --> 00:04:41,290 published a little mini infographic where I went back and looked at the Ilta roster from 2014 and I found all the roles that had the word innovation in the title and there were 16 59 00:04:41,290 --> 00:04:42,710 of them in 2014. 60 00:04:42,710 --> 00:04:44,390 There wasn't one C-suite. 61 00:04:45,170 --> 00:04:49,650 And then in 2024, 10 years later, there were over 300. 62 00:04:49,650 --> 00:04:51,650 There's like 360 now. 63 00:04:51,710 --> 00:04:54,990 So 2000 % growth roughly. 64 00:04:55,650 --> 00:04:58,450 And I found 65 00:04:58,528 --> 00:05:07,332 A really interesting data point from last December, the Blikstein Group does a, it's called LDO, Law Department Operation Survey. 66 00:05:07,332 --> 00:05:15,165 You may have seen where they talked to 80 uh big company GCs. 67 00:05:15,165 --> 00:05:21,868 And one of the questions they asked was, is your law firm innovative? 68 00:05:21,928 --> 00:05:26,430 And 63 % either disagreed or strongly disagreed. 69 00:05:26,690 --> 00:05:28,112 So we have this contrast. 70 00:05:28,112 --> 00:05:35,541 have 2000 % growth in the innovation function and almost two thirds of law firm clients who don't think that their law firms are innovative. 71 00:05:35,541 --> 00:05:38,285 And that is a huge disconnect in my mind. 72 00:05:38,285 --> 00:05:39,656 What is your take on? 73 00:05:41,690 --> 00:05:51,390 Well, like you, started studying this early on and the first time I became aware of the chief innovation officer role was in 2015, so 10 years ago. 74 00:05:51,930 --> 00:05:56,490 And I guess my take on that is twofold. 75 00:05:56,490 --> 00:06:01,270 One, I think law firms do what their clients push them to do. 76 00:06:01,270 --> 00:06:08,526 And so part of the reason why there's a disconnect or dissatisfaction is I don't think the... 77 00:06:08,526 --> 00:06:12,908 general councils have pushed hard enough to make the law firms innovate. 78 00:06:13,049 --> 00:06:23,354 I think that's changing because of generative AI and people are really seeing what innovation can do in terms of saving time. 79 00:06:24,075 --> 00:06:26,316 That's number one, I don't think they've pushed hard enough. 80 00:06:26,316 --> 00:06:32,819 Number two, like I mentioned in my article on chief innovation officers, there's some gaps. 81 00:06:32,819 --> 00:06:37,162 I don't think that the competency is there for some of them. 82 00:06:37,162 --> 00:06:38,072 We can't just 83 00:06:38,072 --> 00:06:40,004 miraculously learn how to innovate. 84 00:06:40,004 --> 00:06:41,984 You can't just go like, okay, I'll give you that title. 85 00:06:41,984 --> 00:06:43,156 You're smart. 86 00:06:43,156 --> 00:06:44,187 You're persuasive. 87 00:06:44,187 --> 00:06:50,071 uh You know, I think a lot of lawyers, including myself, think I can do that. 88 00:06:50,212 --> 00:06:56,997 And I think there's more to innovation than just creating a new tool. 89 00:06:57,638 --> 00:07:04,844 It's, you need to understand marketing, design thinking, project management, people skills. 90 00:07:04,844 --> 00:07:06,755 You need to know how to lead and follow. 91 00:07:06,755 --> 00:07:08,076 And I think that 92 00:07:08,344 --> 00:07:17,120 Look, the law firms were really well intentioned in trying to drive innovation and creating this role, but they weren't so great at the execution. 93 00:07:17,120 --> 00:07:21,728 So I guess that's what I think for why we're seeing that gap. 94 00:07:23,096 --> 00:07:27,878 So I did some interesting, I did a little interesting analysis earlier in the week. 95 00:07:27,878 --> 00:07:41,544 Uh, I was on a flight to Texas and I downloaded a podcast with, um, Mark Andreessen and Andrew Huberman, who I'm a big fan of his podcasts are way too long, but it's great 96 00:07:41,544 --> 00:07:42,134 content. 97 00:07:42,134 --> 00:07:43,254 They're like three hours long. 98 00:07:43,254 --> 00:07:44,495 It's ridiculous. 99 00:07:44,515 --> 00:07:52,492 But in this podcast, um, Mark Andreessen, who founder of Netscape, he's 100 00:07:52,492 --> 00:07:56,304 you know, the general partner at Andreessen Horowitz. 101 00:07:56,304 --> 00:08:01,686 This guy knows what has invested billions in innovative tech companies. 102 00:08:01,686 --> 00:08:03,887 He knows what innovation looks like. 103 00:08:03,887 --> 00:08:09,950 He listed out multiple characteristics of what a true innovator looks like. 104 00:08:09,950 --> 00:08:13,551 So I took that and then mapped it against Larry Richard, Dr. 105 00:08:13,551 --> 00:08:17,853 Larry Richards, personality traits from lawyer brain. 106 00:08:18,034 --> 00:08:19,444 It's not the same. 107 00:08:19,444 --> 00:08:21,345 it, there's not good alignment there. 108 00:08:21,345 --> 00:08:23,216 And it's not, it's not a knock on lawyers. 109 00:08:23,216 --> 00:08:27,498 Like there's some of the smartest, hardest working people I know. 110 00:08:27,599 --> 00:08:27,969 Right. 111 00:08:27,969 --> 00:08:39,245 It's just you're a lot of the traits that make you good at practicing law aren't necessarily the same traits that make you, um, think outside the box. 112 00:08:39,345 --> 00:08:45,429 And the post will be out, I'm sure by the time this podcast airs, um, but a risk orientation. 113 00:08:45,429 --> 00:08:48,258 of these seven categories that 114 00:08:48,258 --> 00:08:49,699 Mark Andreessen laid out. 115 00:08:49,699 --> 00:08:59,083 um He essentially said, you got to be a five out of five on these risk orientation, five out of five lawyers, one out of five. 116 00:08:59,083 --> 00:09:03,004 And this is, you know, using the way Dr. 117 00:09:03,004 --> 00:09:07,766 Richard frames it up is it's like a percentile based on the general population. 118 00:09:07,766 --> 00:09:13,128 So these, is rough estimates here, but probably pretty well aligned. 119 00:09:13,128 --> 00:09:17,440 um Outlook innovator optimism. 120 00:09:17,570 --> 00:09:19,831 Five out of five lawyer skepticism. 121 00:09:19,831 --> 00:09:33,727 So there are one out of five on that time focus um innovators future lawyers re you know the law is based on precedent and past one out of five comfort comfort with ambiguity 122 00:09:33,727 --> 00:09:46,282 innovators high lawyers low um resilience to setbacks you know again um action style velocity relationship to status quo you know if you look at this it just it's not good 123 00:09:46,282 --> 00:09:47,202 alignment. 124 00:09:47,202 --> 00:09:49,724 So does that mean that every lawyer is not innovative? 125 00:09:49,724 --> 00:09:50,664 Absolutely not. 126 00:09:50,664 --> 00:09:59,050 But if you really are taking the general population, the mapping out personality traits, it doesn't align well to this. 127 00:09:59,050 --> 00:10:01,071 It's a different type of skill. 128 00:10:01,091 --> 00:10:11,919 So, you know, I'm curious what your thoughts are on, you know, now that we have, you know, NLO like, you know, non-legal ownership rules changing in certain States. 129 00:10:11,919 --> 00:10:17,062 Are we going to see, are we going to see maybe people 130 00:10:17,282 --> 00:10:23,682 know, non-lawyers in on executive committees and having more influence within big law. 131 00:10:23,682 --> 00:10:25,362 How do you see this playing out? 132 00:10:25,946 --> 00:10:28,107 So it's interesting because I've been quoting Dr. 133 00:10:28,107 --> 00:10:31,090 Larry Richards for years and I talk about the same thing in my book. 134 00:10:31,090 --> 00:10:46,540 And I also compare lawyers to Clayton Christensen's book on the five DNA of an innovator, observing, networking, experimenting, questioning, and associating things that wouldn't 135 00:10:46,540 --> 00:10:47,701 otherwise be associated. 136 00:10:47,701 --> 00:10:49,222 And it's the same thing. 137 00:10:49,594 --> 00:10:52,954 Yeah, we know how to question, but we don't question the way innovators do. 138 00:10:52,954 --> 00:10:56,134 We question like we're looking for material evidence, right? 139 00:10:56,134 --> 00:10:58,394 So I see that and I totally agree. 140 00:10:58,394 --> 00:11:08,354 And the reason why I started Law Without Walls in 2011 was to fill that gap because I believe that lawyers need the skills they have to be really good at their job. 141 00:11:08,354 --> 00:11:10,414 They need to be a little combative. 142 00:11:10,414 --> 00:11:12,694 They need to be a little bit risk averse. 143 00:11:12,694 --> 00:11:15,254 They need to be strategic. 144 00:11:15,950 --> 00:11:20,252 They also need to be creative and inclusive and collaborative. 145 00:11:20,252 --> 00:11:23,054 And so I, as a professor, that's my job. 146 00:11:23,054 --> 00:11:24,215 That's what motivates me. 147 00:11:24,215 --> 00:11:32,379 I'm motivated to try to change the way lawyers think about the world, the way they see the world, and most importantly, the way they behave. 148 00:11:32,379 --> 00:11:41,324 And I'm doing it one lawyer at a time, but I always say this, also Larry Richards talks about how lawyers test really, really low on empathy. 149 00:11:41,324 --> 00:11:44,065 We don't just test low compared to other professions. 150 00:11:44,065 --> 00:11:45,274 We're off the charts low. 151 00:11:45,274 --> 00:11:48,534 Hey, so are tax accountants and insurance agents. 152 00:11:48,534 --> 00:11:50,574 So we're not alone there. 153 00:11:50,574 --> 00:11:57,154 But I think to myself as a professor, like, did you all come here with a bunch of empathy and I just squeezed it all out of you? 154 00:11:57,154 --> 00:12:01,994 Or are people that have the skill sets of lawyers more prone to go to law school? 155 00:12:01,994 --> 00:12:02,714 I don't know. 156 00:12:02,714 --> 00:12:05,894 And right now we're seeing a big growth in people applying to law school. 157 00:12:05,894 --> 00:12:07,614 So maybe that will change. 158 00:12:08,634 --> 00:12:14,424 Also in 2011, I wrote an article about the importance of non-lawyers influencing lawyers. 159 00:12:14,424 --> 00:12:24,019 Because if we miss that skill set, that's exactly how you can add value for your clients is work with people that aren't lawyers so that you're filling that gap, maybe that's on 160 00:12:24,019 --> 00:12:27,221 your team of lawyers with the business professionals. 161 00:12:27,221 --> 00:12:29,032 And I think we're already seeing it, Ted. 162 00:12:29,032 --> 00:12:32,664 I don't think it's whether or not we have more ABS's. 163 00:12:32,664 --> 00:12:44,040 I think we're already seeing more and more business people having impact and having a seat at the table in legal departments and in law firms than we ever have before. 164 00:12:44,118 --> 00:12:54,203 So I think one of the problems that the chief innovation officer role has struggled with is they took lawyers and gave them that title. 165 00:12:55,704 --> 00:12:56,931 Some lawyers can do it. 166 00:12:56,931 --> 00:12:58,606 I believe that. 167 00:12:58,686 --> 00:13:04,409 lot of lawyers think they can do it, but like you said, don't have the skill set or the mindset to do it. 168 00:13:04,409 --> 00:13:13,206 So my hope is that more and more business people will be hired and be part of law firms and these new aid 169 00:13:13,206 --> 00:13:18,791 these new structures that might help open it up, like if KPMG is successful. 170 00:13:18,791 --> 00:13:20,192 Yeah, I think so. 171 00:13:20,192 --> 00:13:22,445 uh I think it's necessary. 172 00:13:22,445 --> 00:13:31,023 And I always tell law firms, if you want to differentiate and you want to make a difference, hire more business professionals, learn how to market and sales and all those 173 00:13:31,023 --> 00:13:35,166 things that you think you are above, you're no longer above now that AI is there. 174 00:13:35,756 --> 00:13:42,935 Yeah, the question I have for you is I agree with you that we're already starting to see it, but are they sufficiently empowered? 175 00:13:42,935 --> 00:13:44,077 Do they have the? 176 00:13:44,077 --> 00:13:45,327 Yeah, yeah. 177 00:13:45,327 --> 00:13:46,548 attitude problem. 178 00:13:46,548 --> 00:13:52,473 mean, the second, so years ago at 25, 30 years ago, was a general councils were considered second class citizens. 179 00:13:52,473 --> 00:13:55,975 It took decades for them to get a seat at the table. 180 00:13:56,716 --> 00:14:05,762 I think it's going to take a long time because for some reason there's a second class citizen attitude towards the business professionals. 181 00:14:05,762 --> 00:14:12,157 And so you see more success for people like Kevin Doolin, who used to work at Eversheds and he was a partner there. 182 00:14:12,157 --> 00:14:15,590 Then he went and got a business degree and then ended up being head of marketing. 183 00:14:15,590 --> 00:14:24,898 Or Michael Hertz, same thing at Whiten Case, who's now retiring, but he was a partner before he became head of BD in marketing and innovation. 184 00:14:24,898 --> 00:14:29,882 And so he's got the street cred of really understanding what lawyers do. 185 00:14:29,882 --> 00:14:34,394 And I would say this, it's not just lawyers treating the business professionals. 186 00:14:34,394 --> 00:14:35,915 like second class citizens. 187 00:14:35,915 --> 00:14:38,796 A lot of the business professionals need to up their game. 188 00:14:38,796 --> 00:14:45,079 They come in and they don't actually study what lawyers do and then they don't realize what lawyers do and how they do it. 189 00:14:45,079 --> 00:14:46,860 So it's kind of a combo. 190 00:14:46,860 --> 00:14:48,670 I don't think we can blame it all on the lawyers. 191 00:14:48,670 --> 00:14:51,722 I think some of the business professionals haven't done their homework. 192 00:14:51,722 --> 00:15:01,358 And I think the reason why the lawyer turned business professional has the street cred and has a little bit more ability to make things happen is because 193 00:15:01,358 --> 00:15:05,001 They really understand their client, which is the lawyer. 194 00:15:05,144 --> 00:15:05,994 Yeah. 195 00:15:05,995 --> 00:15:07,876 Well, and you said it's going to take some time. 196 00:15:07,876 --> 00:15:11,317 guess my question back to you would be, do we have time? 197 00:15:11,398 --> 00:15:16,060 Because I honestly see KPMG coming in. 198 00:15:16,060 --> 00:15:17,881 They are 40 billion in revenue. 199 00:15:17,881 --> 00:15:21,864 They have 275,000 employees. 200 00:15:21,864 --> 00:15:23,595 They have 4,000 lawyers. 201 00:15:23,595 --> 00:15:26,786 They'd be Amlaw 10, right? 202 00:15:26,786 --> 00:15:33,550 If they were a law firm and they're coming in with uh a massive global footprint. 203 00:15:33,550 --> 00:15:37,090 with relationships all up and down the fortune 500. 204 00:15:37,090 --> 00:15:44,250 have extensive digital transformation capabilities, legions of lean six sigma black belts. 205 00:15:44,250 --> 00:15:55,950 They are very well positioned to capitalize on this new transformation of tech enabled legal services, uh, much better than any law firm by a huge stretch. 206 00:15:55,950 --> 00:15:57,730 I mean, to put it in perspective. 207 00:15:57,870 --> 00:16:01,370 So KPMG is the smallest of the big four, right? 208 00:16:01,370 --> 00:16:03,608 Uh, the biggest law firm is 209 00:16:03,608 --> 00:16:05,499 K &E at 7.2 billion. 210 00:16:05,499 --> 00:16:08,782 They're almost six times Kirkland analysis size. 211 00:16:08,843 --> 00:16:16,110 So they're going to come into the marketplace and this is going to be more of an evolution than a revolution. 212 00:16:16,110 --> 00:16:24,938 I think that they're going to take a lot of that blocking and tackling ALSP type work and they're going to make magic happen with AI. 213 00:16:24,938 --> 00:16:25,798 uh 214 00:16:25,880 --> 00:16:32,795 Well, look, they've all along been much better at giving full service service. 215 00:16:33,416 --> 00:16:34,547 They can do everything now. 216 00:16:34,547 --> 00:16:39,341 They can do law, they can do accounting, they can do business, they can do marketing, they can do it all. 217 00:16:39,341 --> 00:16:50,089 And the people that work there, as long as they hire the right lawyers, It depends on how they run their departments and how they train the lawyers that work in KPMG. 218 00:16:50,089 --> 00:16:51,410 uh 219 00:16:51,482 --> 00:16:56,942 You don't just get different output if you have the same input just because you're a part of a really big conglomerate. 220 00:16:56,942 --> 00:16:59,282 And we've seen that from some of the big four. 221 00:16:59,282 --> 00:17:07,602 Some of the big four's legal areas are being run like little law firms and therefore experiencing the same problems that law firms do. 222 00:17:07,602 --> 00:17:11,702 Do I think they can figure that an accounting firm like a KPMG can figure it out? 223 00:17:11,702 --> 00:17:14,062 I know I shouldn't call them an accounting firm because there's so much more than that. 224 00:17:14,062 --> 00:17:16,002 But do I think they can figure it out? 225 00:17:16,002 --> 00:17:16,644 Yeah. 226 00:17:16,644 --> 00:17:18,735 Do I think their size helps them? 227 00:17:18,735 --> 00:17:19,195 Yeah. 228 00:17:19,195 --> 00:17:21,875 Do I think it hurts them and may also hurt them? 229 00:17:21,875 --> 00:17:22,536 Yes. 230 00:17:22,536 --> 00:17:34,319 So it depends on how well they are at getting lawyers to play in the sandbox and really leverage their way of doing business consulting and advising. 231 00:17:34,319 --> 00:17:36,079 If they do that, I agree. 232 00:17:36,079 --> 00:17:40,270 And they say, oh, we're not going to touch this or that. 233 00:17:40,270 --> 00:17:42,521 We're not touching M &A. 234 00:17:42,521 --> 00:17:43,981 We're only going to touch these things. 235 00:17:43,981 --> 00:17:45,844 OK, right now. 236 00:17:45,844 --> 00:17:46,785 Exactly. 237 00:17:46,785 --> 00:17:51,496 know, you're just touching the sugar and the flour, but eventually you're going after the cake. 238 00:17:51,496 --> 00:17:52,168 Okay. 239 00:17:52,168 --> 00:17:53,571 Everyone knows that. 240 00:17:53,571 --> 00:17:54,532 Right. 241 00:17:54,573 --> 00:17:55,340 Yeah. 242 00:17:55,340 --> 00:17:56,481 I totally agree. 243 00:17:56,481 --> 00:17:59,023 It's going to be an incremental step. 244 00:17:59,023 --> 00:18:02,066 oh The bet the company matters are going to big law. 245 00:18:02,066 --> 00:18:04,548 I mean, that's not going to change anytime soon. 246 00:18:04,548 --> 00:18:06,463 And I'm not, I'm not chicken little. 247 00:18:06,463 --> 00:18:09,472 I don't think the sky is falling in big law. 248 00:18:09,472 --> 00:18:12,114 I just think there is going to be a massive shakeup. 249 00:18:12,114 --> 00:18:16,248 And I think some firms oh I'm, I'm going to take a even further step. 250 00:18:16,248 --> 00:18:21,742 I am certain that there are firms in the am law 200 that aren't going to make this, be able to make this jump. 251 00:18:21,742 --> 00:18:24,962 And how I know is because I see it every day. 252 00:18:24,962 --> 00:18:26,962 I see the hesitation. 253 00:18:26,962 --> 00:18:31,102 I see the slow movement towards the technology adoption. 254 00:18:31,182 --> 00:18:41,282 It's like a deer in the headlights at some of these firms and other, while other, there are plenty of other firms that are moving fast and investing big and really doubling down. 255 00:18:41,282 --> 00:18:46,482 And it's really a, a, a, there there's two different scenarios here. 256 00:18:46,482 --> 00:18:47,862 I don't see a lot in the middle. 257 00:18:47,862 --> 00:18:51,482 I see folks moving fast and I see folks moving real slow. 258 00:18:51,490 --> 00:19:04,377 But when I think about some of the more innovative approaches to, um, to business, like I use this example at a presentation in Chicago at an inside practice event. 259 00:19:04,377 --> 00:19:14,662 Um, Andreessen talked about something called the wild ducks at IBM, and it was a group of eight executives that reported directly to Andy or I'm sorry. 260 00:19:14,662 --> 00:19:19,705 Um, Watson was his last name, the, the CEO in the eighties and nineties. 261 00:19:19,865 --> 00:19:21,294 And they had, 262 00:19:21,294 --> 00:19:25,234 carte blanche access to pull people off of teams. 263 00:19:25,234 --> 00:19:29,954 They had a blank check to do whatever they innovate without within the organization. 264 00:19:29,954 --> 00:19:40,234 And there was one of these wild ducks executives in particular, Andy Heller, who they talked about wore jeans and cowboy boots into meetings and put his feet on the desk. 265 00:19:40,234 --> 00:19:43,394 And this is in the eighties, you know, with IBM and suit and ties. 266 00:19:43,394 --> 00:19:47,034 And I think about how that would play out in a, in in a law firm. 267 00:19:47,034 --> 00:19:49,734 like, man, I can't see that approach. 268 00:19:50,306 --> 00:19:52,546 happening in big law today. 269 00:19:52,546 --> 00:19:59,570 I, I don't know what's your, what's your take on their ability to think outside the box with stuff like that. 270 00:19:59,854 --> 00:20:09,388 Well, when you look at historical successes in innovation, even like there's stories of Mattel and IBM and Microsoft, that's exactly what you do. 271 00:20:09,388 --> 00:20:15,100 You pull a small group apart, you put them in a different location, you give them different rules, no rules. 272 00:20:15,100 --> 00:20:17,551 They dress different, behave different, different tools. 273 00:20:17,551 --> 00:20:24,364 They're out there finding their crayons and they have license to do what they want and the money to make it happen. 274 00:20:24,364 --> 00:20:26,885 And that is how you get innovation. 275 00:20:26,885 --> 00:20:28,996 And in fact, I think the little group that did 276 00:20:28,996 --> 00:20:32,079 develop that digital whatever and Kodak let them go, right? 277 00:20:32,079 --> 00:20:33,189 You hear stories about that. 278 00:20:33,189 --> 00:20:41,956 Well, at a law firm, the problem with the structure is how do you ever get, can't really give that power to a group. 279 00:20:42,397 --> 00:20:53,396 I guess if the managing partner had the confidence and the support of the lawyers and said, I'm gonna do this, I think there are probably a few special firms where you could do 280 00:20:53,396 --> 00:20:53,987 it. 281 00:20:53,987 --> 00:20:58,560 But it would be a special person that's the managing partner that everybody is. 282 00:20:58,616 --> 00:21:04,310 believes in, right, that is a leader and a follower and can inspire and people trust. 283 00:21:04,310 --> 00:21:06,182 And then you put this group on the side. 284 00:21:06,182 --> 00:21:09,194 But I don't think you can get a whole group of partners to do something. 285 00:21:09,194 --> 00:21:16,860 And the problem I always see with with law firms trying to innovate or even just a committee is, number one, there's too many people on the committee. 286 00:21:16,860 --> 00:21:18,821 They don't have a shared purpose. 287 00:21:18,821 --> 00:21:19,902 It's the biggest problem. 288 00:21:19,902 --> 00:21:26,114 If everybody wrote down what are we doing and why are we doing it and when are we going to measure it? 289 00:21:26,114 --> 00:21:27,214 And why does it matter? 290 00:21:27,214 --> 00:21:31,796 Those four questions or three questions, it would all be different and then you can't get anything done. 291 00:21:31,977 --> 00:21:34,578 And that's a huge problem at law firms. 292 00:21:34,578 --> 00:21:42,100 there's no one's willing to take on sub roles and let other people have the power and no one's project managing this stuff. 293 00:21:42,100 --> 00:21:50,184 So in the right firm with the right culture and the right leader and the willingness to pull people out and let them go rogue. 294 00:21:50,184 --> 00:21:53,285 The other thing law firms do to historically lawyers. 295 00:21:53,826 --> 00:21:54,490 Look. 296 00:21:54,490 --> 00:21:57,210 The way innovation happens is you go after the eager beavers. 297 00:21:57,210 --> 00:22:00,650 You go after the early adopters first, the people that want it. 298 00:22:00,650 --> 00:22:02,390 And instead, lawyers do the opposite. 299 00:22:02,390 --> 00:22:06,110 Oh no, we better go talk to Mark because he's no guy. 300 00:22:06,110 --> 00:22:08,570 And until we convince him, nothing's going to happen. 301 00:22:08,630 --> 00:22:12,810 No, go after the 25 % that believe and then get the next 25%. 302 00:22:12,810 --> 00:22:18,750 But instead, for some reason, I guess because we're combative and believe that we go after the one naysayer. 303 00:22:18,750 --> 00:22:20,570 No, make them busy doing something else. 304 00:22:20,570 --> 00:22:22,682 Don't even tell them you're doing this. 305 00:22:22,682 --> 00:22:25,517 ah But that isn't usually how it's approached. 306 00:22:25,654 --> 00:22:37,027 Yeah, so I actually see quite a few headwinds um in the law firm model to innovation, and I'm not exactly sure the path through it. 307 00:22:37,027 --> 00:22:40,518 I mapped these out um recently. 308 00:22:40,674 --> 00:22:46,720 I think one of the biggest headwinds is the partnership model itself. 309 00:22:46,960 --> 00:22:51,801 And for all the reasons that you just mentioned, it is anti-innovative. 310 00:22:51,801 --> 00:22:55,362 And the big four, they're partnerships as well. 311 00:22:55,650 --> 00:22:57,911 they're suffering right now in certain areas. 312 00:22:57,911 --> 00:23:14,140 I just heard about ENY um laying off partners in the UK, which doesn't happen frequently, but you have consensus driven decision making, which creates friction and slows rates of 313 00:23:14,140 --> 00:23:14,921 change. 314 00:23:14,921 --> 00:23:21,504 You have lateral mobility to the nth degree in legal where a lawyer can pick up his book of business and move down the street. 315 00:23:21,504 --> 00:23:24,766 And that inhibits long-term investment. 316 00:23:24,982 --> 00:23:29,384 You have healthy profit margins that make the status quo sticky. 317 00:23:29,384 --> 00:23:36,308 You have cash basis, accountant, accounting and retirement horizons that also affect capital investment. 318 00:23:36,308 --> 00:23:38,489 You have law schools that aren't keeping pace. 319 00:23:38,489 --> 00:23:52,177 Only I saw a ABA, stat from, think December that like 55 % of law schools have a gen AI class, 55 % like how is that not 95 % at this point? 320 00:23:52,177 --> 00:23:54,486 Um, empowering law. 321 00:23:54,486 --> 00:23:57,531 Non-lawyers, business professionals is a challenge. 322 00:23:57,531 --> 00:24:01,758 Risk aversion, diversity, lack of diversity within leadership ranks. 323 00:24:01,758 --> 00:24:09,280 All of these are massive headwinds to innovation and we got to figure them out if we're going to be successful, I think. 324 00:24:09,946 --> 00:24:11,666 That list was long, right? 325 00:24:11,666 --> 00:24:14,526 So we go back to your original point about the study. 326 00:24:14,526 --> 00:24:22,086 Why is there a difference between what general counsels want and what they think they're getting? 327 00:24:22,506 --> 00:24:27,646 You just justified that with that list a lot. 328 00:24:27,646 --> 00:24:29,626 And so you know what it makes you feel like doing. 329 00:24:29,626 --> 00:24:31,506 I bet if you're a lawyer, why bother? 330 00:24:31,725 --> 00:24:32,508 Yeah. 331 00:24:33,178 --> 00:24:34,001 It's exhausting. 332 00:24:34,001 --> 00:24:35,473 I'm exhausted just hearing that list. 333 00:24:35,473 --> 00:24:39,272 I the last thing in the world I'd want to do is be a managing partner of a law firm right now. 334 00:24:39,406 --> 00:24:43,734 Do you agree with that list or is there anything that you would take issue with? 335 00:24:44,058 --> 00:24:46,398 No, I totally agree with the list. 336 00:24:46,398 --> 00:24:50,678 And I think your point about education is going to get even worse. 337 00:24:51,578 --> 00:25:01,898 law schools never really prepared lawyers to be lawyers at law firms and or work collaboratively with the right mindset and skill set. 338 00:25:01,898 --> 00:25:10,058 And Law Without Walls back in 2011 was the first, if it's kind, even say like, no, we should be teaching our students design thinking and how to be creative and how to actually 339 00:25:10,058 --> 00:25:13,798 be humble and self-aware and collaborative. 340 00:25:13,882 --> 00:25:22,122 But, and I think it's gonna get worse because the schools that survive aren't gonna have to. 341 00:25:22,122 --> 00:25:32,362 And I think this training gap is gonna get worse as well because with AI, the how you do things matters so much more than what you do. 342 00:25:32,362 --> 00:25:38,762 So the kid in school that got a C in law school, he's caught up now with that tool or she. 343 00:25:38,782 --> 00:25:40,986 And now how you... 344 00:25:40,986 --> 00:25:45,266 deliver that service is more important than what you deliver, how you use the tool. 345 00:25:45,266 --> 00:25:53,306 And the problem right now is like, if you think about a contract that you would ask a junior associate to go through, and that's how they would learn, it would take them 10 346 00:25:53,306 --> 00:26:00,146 hours and some back and forth to identify, you know, the client wants this, but the other side said this, and which provision should we give on? 347 00:26:00,326 --> 00:26:01,666 Which ones matter? 348 00:26:02,286 --> 00:26:07,846 A senior associate can put it through a tool and in half hour do what took 10 hours and now we have no training. 349 00:26:07,930 --> 00:26:09,750 So we just ran this seminar. 350 00:26:09,750 --> 00:26:14,690 have a fellow, an AI fellow, or Cesson is amazing. 351 00:26:14,690 --> 00:26:19,530 And he and a former general counsel, Lynn Cherry, put together this conference on AI. 352 00:26:19,530 --> 00:26:25,650 we had the students be in teams and take a scenario in a contract and use the tool. 353 00:26:26,210 --> 00:26:30,810 And we had an answer key for what they were supposed to come up with. 354 00:26:31,210 --> 00:26:38,106 yeah, most of them came up with 80 % of the right issues, 80 % of the issues that were supposed to come up with. 355 00:26:38,106 --> 00:26:41,146 but they all came out with 200 % more. 356 00:26:41,526 --> 00:26:43,726 They just were bogus. 357 00:26:43,726 --> 00:26:47,506 they have no, they don't have the, they're one L's and two L's. 358 00:26:47,506 --> 00:26:51,626 They can't be expected to understand that that doesn't matter. 359 00:26:51,626 --> 00:26:54,446 in this tool was not a contract train tool, right? 360 00:26:54,446 --> 00:26:58,806 It was just one of the, I don't remember which one we used, whether it was Co-Pilot or whatever. 361 00:26:58,846 --> 00:27:03,286 But this is a problem because I don't know who's gonna train these associates. 362 00:27:03,404 --> 00:27:03,724 Yeah. 363 00:27:03,724 --> 00:27:04,936 And who's going to pay for it? 364 00:27:04,936 --> 00:27:10,143 Like clients have subsidized new associate training through the process that you just mentioned. 365 00:27:10,384 --> 00:27:15,550 And now not only do we, how are we going to train new lawyers? 366 00:27:15,931 --> 00:27:18,274 What's going to happen to law firm leverage? 367 00:27:20,386 --> 00:27:20,726 Right? 368 00:27:20,726 --> 00:27:23,268 mean, that's a big question mark in my mind. 369 00:27:23,268 --> 00:27:27,871 That's been the profit engine for law firms. 370 00:27:27,871 --> 00:27:34,796 it's going to get reduced at a minimum if we need fewer junior lawyers working on matters. 371 00:27:34,796 --> 00:27:38,878 um Yeah, I don't know how this all plays out. 372 00:27:38,906 --> 00:27:45,113 Plus this year, supposedly, at least in the US, we have more people applying to law school. 373 00:27:45,414 --> 00:27:48,467 presumably there's going to be less jobs in the next three years. 374 00:27:48,467 --> 00:27:51,680 This is a problem. 375 00:27:52,290 --> 00:27:56,913 Yeah, that is an interesting data point to think about. 376 00:27:57,630 --> 00:28:02,979 I wanted to talk to you a little bit about innovation theater, which is something that I talk a lot about. 377 00:28:02,979 --> 00:28:21,454 think that um in big law, in some firms, certainly not all, I won't even say most, but in some firms, there has been a reactive dynamic to the CINO role. 378 00:28:21,454 --> 00:28:24,034 Like, Hey, the firm down the street has a chief innovation officer. 379 00:28:24,034 --> 00:28:25,354 need a chief innovation officer. 380 00:28:25,354 --> 00:28:31,794 And they slapped the title on somebody's role and then don't give them the resources they need. 381 00:28:31,794 --> 00:28:42,454 In fact, I told a story at inside practice, a dear friend of mine who shall remain nameless is a director of innovation at about a three, 400 attorney law firm. 382 00:28:42,454 --> 00:28:45,774 think they're just in the AMLW rankings. 383 00:28:45,934 --> 00:28:51,214 And I was trying to, we were working on a project together and I couldn't get ahold of her for like a month. 384 00:28:51,214 --> 00:28:53,354 and send her a text message. 385 00:28:53,354 --> 00:28:54,934 she's, was like, where, where have you been? 386 00:28:54,934 --> 00:28:58,574 She's like, Oh, I've been working on, um, DMS upgrade. 387 00:28:58,574 --> 00:29:03,274 Like DMS upgrade was like, you're, you're, your innovation isn't it working on it. 388 00:29:03,274 --> 00:29:07,114 She's like, I am, I am it and I am innovation and I am cam. 389 00:29:07,114 --> 00:29:18,278 And it's just like, okay, whoever put that title on your or chart did not give you the people, the resources to really innovate your 390 00:29:18,286 --> 00:29:23,126 anybody who thinks DMS upgrades is innovation is wrong. 391 00:29:23,126 --> 00:29:25,946 And there's still a lot of that going on. 392 00:29:25,946 --> 00:29:30,906 I I'm hoping we're going to cycle through that and people are going to start taking it more seriously. 393 00:29:31,386 --> 00:29:35,126 Well, I think you hit the nail on the head because it's a tri-parot. 394 00:29:35,126 --> 00:29:35,806 Is that the word? 395 00:29:35,806 --> 00:29:36,346 Tri-parot? 396 00:29:36,346 --> 00:29:36,986 Tri-parot? 397 00:29:36,986 --> 00:29:37,486 Yes. 398 00:29:37,486 --> 00:29:37,806 Whatever. 399 00:29:37,806 --> 00:29:47,046 It's a three-part problem and it is related to tech and what tech departments are supposed to be doing because they still think they're supposed to be making sure your computers 400 00:29:47,046 --> 00:29:47,765 run. 401 00:29:47,765 --> 00:29:50,906 And I don't, there's a lot of tech deadweight in law firms. 402 00:29:50,906 --> 00:29:52,306 No offense to the tech people out there. 403 00:29:52,306 --> 00:29:57,806 There's some great tech people, but law firms, I don't think have revamped their tech departments. 404 00:29:57,806 --> 00:29:59,876 And I don't think the tech people. 405 00:29:59,876 --> 00:30:04,317 have revamped themselves the way they need to, then knowledge management, same thing. 406 00:30:04,317 --> 00:30:11,409 We've got knowledge management departments and law firms that have been around for 20 years, 15 years. 407 00:30:11,409 --> 00:30:15,591 And what they did originally was innovative, but it was manual. 408 00:30:15,591 --> 00:30:18,111 And now some of them are still doing it that way. 409 00:30:18,111 --> 00:30:22,806 And they've got too many tools and they're doing too many things without any ROI. 410 00:30:23,273 --> 00:30:27,834 And they've got too many things that they're supposed to be in charge of. 411 00:30:28,174 --> 00:30:30,384 well, we're supposed to give the knowledge to the lawyers. 412 00:30:30,384 --> 00:30:32,685 No, we're supposed to create stuff that we can sell to clients. 413 00:30:32,685 --> 00:30:34,356 Like it's all over the map. 414 00:30:34,356 --> 00:30:42,018 And then you've got this head of innovation floating around, not to mention then maybe it's a four part, then legal ops. 415 00:30:42,078 --> 00:30:53,061 And I think that the firms that have clearly defined roles and have revamped those are doing better than the ones that have the old dead weight of the tech department the way 416 00:30:53,061 --> 00:30:53,791 they always did. 417 00:30:53,791 --> 00:30:57,342 Then we slapped on a China role on top of the knowledge. 418 00:30:57,782 --> 00:31:00,594 It's like a mess. 419 00:31:01,006 --> 00:31:04,386 Yeah, I was trying to pull your paper up. 420 00:31:04,706 --> 00:31:07,546 You had, where is it here? 421 00:31:07,546 --> 00:31:08,086 There it is. 422 00:31:08,086 --> 00:31:19,186 So the name of your paper for those that want to take a look and we can include a link in the show notes is the law firm chief innovation officer, goals, roles, and holes. 423 00:31:19,186 --> 00:31:21,386 And I thought it was excellent. 424 00:31:21,846 --> 00:31:25,806 And one of, so you interviewed a bunch of folks in the seat. 425 00:31:25,806 --> 00:31:26,946 It's been a while now. 426 00:31:26,946 --> 00:31:30,566 I think this is like 18, 19 timeframe. 427 00:31:30,702 --> 00:31:38,802 But the first goal that you listed under your goal section was differentiate the law firm. 428 00:31:39,602 --> 00:31:53,442 you quoted from some of your interviews where it's just like, yeah, there's a big marketing component to this and not necessarily a really strong commitment to change. 429 00:31:53,442 --> 00:32:00,488 Do you feel like that is shifting now and there's more of a commitment today than there was when you did this? 430 00:32:00,488 --> 00:32:03,136 Uh, put this paper, wrote this paper. 431 00:32:03,790 --> 00:32:05,351 I think there's more of a commitment. 432 00:32:05,351 --> 00:32:09,462 I'm not so sure that there's more of a commitment to the chief innovation officer role. 433 00:32:09,462 --> 00:32:18,046 It's a little bit, feel like what's happening, and I'm not sure, but I feel like what's happening is a little bit about like what happened with compliance. 434 00:32:18,046 --> 00:32:21,737 did a kind of research into compliance officers. 435 00:32:22,078 --> 00:32:24,729 For a long time, compliance reported into legal. 436 00:32:24,729 --> 00:32:28,961 And then there was also the part, the thinking that, they should be separate. 437 00:32:28,961 --> 00:32:32,632 But if they're separate, then it isn't everybody's responsibility. 438 00:32:32,632 --> 00:32:33,763 to be compliant. 439 00:32:33,763 --> 00:32:36,004 that's the compliance department's problem. 440 00:32:36,445 --> 00:32:43,886 So on the one hand, while having a chief innovation officer was a great thing to put in your RFP answer because the clients want to hear what have you done? 441 00:32:43,886 --> 00:32:46,207 well, we made Joe a chief innovation officer. 442 00:32:46,207 --> 00:32:49,836 We're not going to give him any extra money, but 10 % of his time is supposed to go to that. 443 00:32:49,836 --> 00:32:51,417 You're like, wait, how is that going to work? 444 00:32:51,417 --> 00:32:56,671 If he gets paid by the hour, you're not giving him any more money, but 10 % of his time now he needs to cut back. 445 00:32:56,671 --> 00:32:58,513 So he's going to make less money and do more. 446 00:32:58,513 --> 00:32:59,574 Like this is wrong, right? 447 00:32:59,574 --> 00:33:02,676 So it's not supported, but they can put this in this RFP. 448 00:33:02,726 --> 00:33:03,876 that, we're innovative. 449 00:33:03,876 --> 00:33:11,508 And the thing back then too, and still it happens now, is clients don't go back and say, show me what you did that you said you were going to do in your RFP. 450 00:33:11,508 --> 00:33:13,649 So they let them off the hook, right? 451 00:33:13,649 --> 00:33:22,351 But also, I think some firms are thinking, well, we don't want a uh chief innovation officer because innovation should be everybody's job. 452 00:33:22,632 --> 00:33:25,282 Okay, but if you do that, then is it nobody's job? 453 00:33:25,282 --> 00:33:32,152 So I think a chief innovation officer without power and a team isn't going to do anything. 454 00:33:32,152 --> 00:33:35,050 but make sure everyone else thinks they don't have to do anything. 455 00:33:35,982 --> 00:33:37,103 That's a really good point. 456 00:33:37,103 --> 00:33:42,216 So, I spent 10 years in risk management and corporate audit at Bank of America. 457 00:33:42,216 --> 00:33:49,740 And I've mentioned this on the podcast before, we had four lines of defense you had in risk management. 458 00:33:49,740 --> 00:33:51,331 You had the line of business. 459 00:33:51,331 --> 00:34:00,916 So, this could be like the consumer bank, the control environment they have in place when you come in and make a deposit to make sure it isn't anti or money laundering activity, 460 00:34:00,916 --> 00:34:02,117 for example. 461 00:34:02,117 --> 00:34:04,098 Then you have your 462 00:34:04,364 --> 00:34:16,603 risk and compliance partners who are one level removed, but partner closely with the line of business to make sure these activities are taking place and effectively. 463 00:34:16,603 --> 00:34:18,904 The third line of defense is corporate audit. 464 00:34:18,904 --> 00:34:25,889 So internal audit comes in and evaluates the control environment and rights issues if they need to. 465 00:34:25,889 --> 00:34:28,411 The fourth line of defense is the wall street journal. 466 00:34:28,411 --> 00:34:32,716 So that's where you end up if the first three fail and 467 00:34:32,716 --> 00:34:43,692 You know, it's, it's true that it has to this mindset, whether it's risk management or it's innovation, it has to be embedded in the culture of the organization itself. 468 00:34:43,692 --> 00:34:45,353 It's not a department. 469 00:34:45,353 --> 00:34:45,653 Right. 470 00:34:45,653 --> 00:34:56,019 You can have a department that, that helps foster or creates a center of excellence around a particular activity, but it can't be isolated. 471 00:34:56,019 --> 00:34:59,481 And that's one of the biggest gaps I see today. 472 00:34:59,481 --> 00:35:02,322 And when I saw it is, is the cultural gap. 473 00:35:02,538 --> 00:35:03,378 in big law. 474 00:35:03,378 --> 00:35:08,283 It's not, innovation is not part of big law culture today for the most part. 475 00:35:08,283 --> 00:35:11,605 And I know there are exceptions to that using broad brushstrokes here. 476 00:35:11,605 --> 00:35:20,472 Um, and I see people, you know, again, KPMG entering the market, it is part of their DNA and their culture. 477 00:35:20,472 --> 00:35:25,376 And I'm wondering how this is going to play out is cause culture is hard to change. 478 00:35:25,376 --> 00:35:26,967 Um, I don't know. 479 00:35:26,967 --> 00:35:28,468 You got any thoughts on that? 480 00:35:29,208 --> 00:35:29,638 I agree. 481 00:35:29,638 --> 00:35:31,139 It's hard to change. 482 00:35:32,140 --> 00:35:41,888 think that least the law firms that sponsor teams in Law Without Walls, they bring their clients and they do a three-day hackathon with us, with the students in order to, I think 483 00:35:41,888 --> 00:35:42,478 they get it. 484 00:35:42,478 --> 00:35:46,411 The ones that are willing to take risks, take their clients on new things. 485 00:35:46,552 --> 00:35:51,976 But even the, you know, but the firms that aren't, yeah, I think it is cultural. 486 00:35:51,976 --> 00:35:55,438 And the thing is that with such, with firms that are so big, 487 00:35:56,378 --> 00:35:57,338 It's really hard. 488 00:35:57,338 --> 00:36:04,958 Like one of my favorite questions to ask when I do my interviews is like before I do a law firm retreat, which I speak at all the time, I'll say, well, I want to talk to like 10 or 489 00:36:04,958 --> 00:36:08,418 12 lawyers to get an understanding of the culture of the firm, blah, blah, blah. 490 00:36:08,418 --> 00:36:09,138 Okay. 491 00:36:09,198 --> 00:36:19,018 One of my favorite questions is if you were to personify the firm and put the firm on a lunch date, what, and you were going to set up, set me up with your firm, what three 492 00:36:19,018 --> 00:36:22,278 adjectives would you use to describe the firm? 493 00:36:23,338 --> 00:36:24,314 It's good. 494 00:36:24,314 --> 00:36:28,414 But what I get most of the time is collegial, which I'm like, I don't want to go out with them. 495 00:36:28,414 --> 00:36:37,554 But anyway, the problem most of them say is, well, that's really hard because we really vary by practice group. 496 00:36:38,474 --> 00:36:40,314 And I get that, right? 497 00:36:40,314 --> 00:36:43,954 Because each practice group is going to have their own culture. 498 00:36:43,954 --> 00:36:46,494 And that makes sense. 499 00:36:47,034 --> 00:36:51,114 I would be really curious to see if that's true with a KPMG. 500 00:36:52,258 --> 00:36:53,799 Yeah, it's a good question. 501 00:36:53,799 --> 00:37:01,105 know, I it's interesting um how law firms have not been able to scale. 502 00:37:01,126 --> 00:37:04,168 So the biggest law firm is K &E. 503 00:37:04,168 --> 00:37:09,613 They're not even they wouldn't even qualify to be in the Fortune 500 if they were public, which they're not. 504 00:37:09,613 --> 00:37:12,936 It's about seven point six billion is the floor of the Fortune 500. 505 00:37:12,936 --> 00:37:13,966 They're like seven point three. 506 00:37:13,966 --> 00:37:15,017 So they're close. 507 00:37:15,017 --> 00:37:17,059 But K &E is an outlier. 508 00:37:17,059 --> 00:37:21,166 The average revenue at a 509 00:37:21,166 --> 00:37:24,946 uh, AmLaw 100 firm is one, 1.4 billion. 510 00:37:24,946 --> 00:37:25,626 There is a hunt. 511 00:37:25,626 --> 00:37:30,526 Um, the entire AmLaw 100, if you add up the revenue is 140 billion. 512 00:37:31,126 --> 00:37:42,966 So that, so a hundred firms, 140 billion for in accounting and you know, advisory tax that are 220 billion. 513 00:37:42,966 --> 00:37:48,064 So that's how fragmented law and that's the AmLaw 100, you know, you've got 514 00:37:48,064 --> 00:37:49,905 another hundred on the AmLaw list. 515 00:37:49,905 --> 00:37:51,775 So it's very fragmented. 516 00:37:52,016 --> 00:37:58,918 And I think a lot of it is the bespoke nature of legal work that historically has been the case. 517 00:37:58,979 --> 00:38:07,422 It's exactly what you're talking about where, um you know, different cultural norms within practice areas. 518 00:38:07,462 --> 00:38:15,185 It's the lateral movement where, you know, entire practice areas sometimes pick up sticks and move to other law firms. 519 00:38:15,245 --> 00:38:17,526 It's really hard to build scale. 520 00:38:17,600 --> 00:38:21,533 when you have all of that in play. 521 00:38:21,533 --> 00:38:34,421 that's why, as I'm kind of mapping out what the future might look like, I think it looks like consolidation with the firms who actually figure out how to do this, gobbling up the 522 00:38:34,421 --> 00:38:35,261 ones that don't. 523 00:38:35,261 --> 00:38:38,943 That's the best guess I can put forward. 524 00:38:38,943 --> 00:38:41,565 And I'm not going to pretend to know, but I don't know. 525 00:38:41,565 --> 00:38:43,446 What do you see the future looking like? 526 00:38:43,522 --> 00:38:51,587 Well, I guess I would agree with you, except that what gives me pause is the firms that I've worked with after they've merged. 527 00:38:52,007 --> 00:38:55,129 When too big for it's really tough. 528 00:38:55,549 --> 00:38:59,372 It's rare that a merger seems super successful inside. 529 00:38:59,372 --> 00:39:02,393 still feels like an us versus them. 530 00:39:02,674 --> 00:39:10,298 You know, you got the group that are the, you know, we're still calling ourselves this, Ritz, despite the new name and. 531 00:39:11,330 --> 00:39:16,174 Mergers haven't been the most successful thing and what you're talking about is huge. 532 00:39:16,915 --> 00:39:26,510 And if humility is not a real top skill for lawyers, that's really gonna be hard to be gobbled up and be okay with it. 533 00:39:26,510 --> 00:39:27,050 Yeah. 534 00:39:27,050 --> 00:39:29,510 You know, and you're, you're a thousand percent correct. 535 00:39:29,510 --> 00:39:36,330 That's been my anecdotal observation as well is, you know, mergers have had mixed results. 536 00:39:36,370 --> 00:39:46,810 Um, but you know what I, one observation that I've had is a lot of mergers have taken two underperforming law firms and put them together. 537 00:39:47,010 --> 00:39:55,430 Um, there's been a lot of that, uh, you know, again, from, from the outside looking in, it hasn't always been more. 538 00:39:55,630 --> 00:39:56,690 Yeah. 539 00:39:57,068 --> 00:40:01,319 Yeah, it's been two flailing, underperforming firms. 540 00:40:01,319 --> 00:40:06,161 And again, that is not true across the board at all, but I've seen a lot of that over the years. 541 00:40:06,161 --> 00:40:08,341 And uh yeah, and you're right. 542 00:40:08,341 --> 00:40:14,513 And the cultures are so different and you know, the power, the power dynamics in law firms is a little bit unique. 543 00:40:14,513 --> 00:40:24,486 Like even though, even though the big four are partnerships, they don't behave like there's not nearly the friction in decision-making. 544 00:40:24,486 --> 00:40:26,392 Cause in those 10 years at B of A we worked 545 00:40:26,392 --> 00:40:34,488 closely with all the big four um and those outside the big four that are partnerships like the essentials of the world. 546 00:40:34,809 --> 00:40:41,155 They operate like an enterprise um and decision-making happens differently. 547 00:40:41,155 --> 00:40:48,121 It's not nearly, um you don't have people, maybe you do, but it's much less impactful. 548 00:40:48,121 --> 00:40:55,106 I see with law firms and executive committees with retirement horizons, you've got the senior most 549 00:40:55,310 --> 00:41:02,370 folks in the law firm that are leading and making the decisions and they got there because they're the best at lawyering. 550 00:41:02,370 --> 00:41:02,750 Right. 551 00:41:02,750 --> 00:41:09,690 That doesn't necessarily mean you're the best leader or you have the best vision or even that you can execute the best. 552 00:41:09,690 --> 00:41:13,490 It just means you're the best at lawyering and the demographic. 553 00:41:13,490 --> 00:41:16,550 I pulled some stats on this not too long ago. 554 00:41:16,870 --> 00:41:24,250 If I remember correctly, 50 % of law firm executive committees are 55 and older. 555 00:41:24,250 --> 00:41:24,782 Maybe 556 00:41:24,782 --> 00:41:25,082 Yeah. 557 00:41:25,082 --> 00:41:27,682 And I was actually surprised it wasn't higher. 558 00:41:27,682 --> 00:41:31,462 I was like, when I see the demographics, it seems older. 559 00:41:31,462 --> 00:41:34,182 So I'll have to go back and pull that up. 560 00:41:34,182 --> 00:41:39,822 But yeah, you I think that, you know, who really gets gen AI millennials? 561 00:41:40,762 --> 00:41:46,022 There was a McKinsey study that came out that I quoted and they buy a mile. 562 00:41:46,782 --> 00:41:55,078 It's that 35 to 44 age group, which is crazy to think that millennials are 44 now, but 563 00:41:55,240 --> 00:41:57,652 Um, I guess that's, that's right. 564 00:41:57,652 --> 00:42:05,356 I 81, I guess, but you know, you know, who's not on executive committees at law firms, millennials. 565 00:42:05,356 --> 00:42:08,638 Um, there's just not a lot that I've seen. 566 00:42:08,638 --> 00:42:12,680 And if you look at the data, it, it, it skews a lot older. 567 00:42:12,680 --> 00:42:14,321 So I don't know, man. 568 00:42:14,321 --> 00:42:19,895 I think we need, I think we need some diversity of thought in, the boardroom at law firms. 569 00:42:19,895 --> 00:42:21,126 That's not there today. 570 00:42:21,126 --> 00:42:22,286 Would you agree? 571 00:42:22,520 --> 00:42:23,971 I would totally agree. 572 00:42:23,971 --> 00:42:24,521 Totally. 573 00:42:24,521 --> 00:42:27,424 I mean, we also need a different compensation structure. 574 00:42:27,424 --> 00:42:32,639 That's a big driver. 575 00:42:32,639 --> 00:42:47,641 mean, if you compensate based on just the bill of blower and you continue to give credit to some old law firm partner that's no longer doing the work, um that's a big disincentive 576 00:42:47,641 --> 00:42:48,162 to do anything. 577 00:42:48,162 --> 00:42:51,314 And if you don't compensate innovation or doing something else, 578 00:42:52,918 --> 00:42:58,971 The hope is that generative AI is going to free up time so that lawyers will have the time. 579 00:42:58,971 --> 00:43:07,905 Because what I've found is, for example, with a couple of firms I've worked with and running these three to four month innovation journeys, it's the innovation committee. 580 00:43:07,905 --> 00:43:12,707 But it's the last thing they want to do because they don't get credit for it. 581 00:43:12,847 --> 00:43:14,768 They don't get paid for it. 582 00:43:14,988 --> 00:43:18,870 And it takes away from what they consider their real job. 583 00:43:18,870 --> 00:43:19,630 And I guess 584 00:43:19,630 --> 00:43:21,380 What I hope for is a mindset change. 585 00:43:21,380 --> 00:43:38,695 Now that we have AI, part of your job is innovating and using that extra time to find ways to add different and more value to your clients that you can charge for in a different 586 00:43:38,695 --> 00:43:39,195 way. 587 00:43:39,195 --> 00:43:42,476 um That's the goal, right? 588 00:43:42,476 --> 00:43:49,498 And the goal should be that your client comes to you and wants to give you 589 00:43:50,666 --> 00:43:58,750 all this information that's going to help you deliver something that on a go-forward is going to help you be a better lawyer for them and for your other clients that right now 590 00:43:58,750 --> 00:44:02,351 they would never give to you because you would actually charge them by the hour to read it. 591 00:44:02,351 --> 00:44:05,353 um And so I don't know. 592 00:44:05,353 --> 00:44:07,394 I mean, I have so much hope. 593 00:44:07,394 --> 00:44:16,658 just we've been hoping for a change to the billable hour model for so long that I'm scared to hope that I feel like I'm not being realistic. 594 00:44:16,952 --> 00:44:19,844 Yeah, it's been, did a little digging on that too. 595 00:44:19,844 --> 00:44:28,468 It's been around since I think the late forties, but it didn't really get traction until the seventies. 596 00:44:28,468 --> 00:44:31,770 And so it's been 50 plus years that it's been firmly entrenched. 597 00:44:31,770 --> 00:44:40,335 And you know, again, the profit margins of these law firms make it really the status quo really sticky. 598 00:44:40,335 --> 00:44:42,246 So yeah, what do you see? 599 00:44:42,246 --> 00:44:46,038 And I know we're running out of time here, but I'm just curious when 600 00:44:46,318 --> 00:45:01,118 how you see AI influencing those cornerstones of legal services, like law firms, like again, the billable hour, the partnership model, how we pay, internal firm compensation 601 00:45:01,118 --> 00:45:02,858 model, client engagement model. 602 00:45:02,918 --> 00:45:11,938 I don't know, do you got any thoughts on how AI is gonna, is it gonna be able to move these massive boulders that have been stuck in place for so long? 603 00:45:13,050 --> 00:45:21,073 So on the one hand, you're going to have some lawyers like a friend of mine who's a very successful female partner at a very big firm in real estate. 604 00:45:21,073 --> 00:45:25,775 She says, well, this is just going to give me more time to have more clients. 605 00:45:26,736 --> 00:45:30,798 So she has so many clients that she turns away and her team's too small. 606 00:45:30,798 --> 00:45:33,339 And it's so hard to find the right talent. 607 00:45:33,339 --> 00:45:36,180 she just, there's only one of her. 608 00:45:36,180 --> 00:45:40,702 And so what AI is going to enable is that like almost more of her. 609 00:45:40,918 --> 00:45:43,699 And so in her mind, don't want, she didn't want to change anything. 610 00:45:43,699 --> 00:45:46,219 This just means I'm going to keep going with the billable hour. 611 00:45:46,219 --> 00:45:49,140 could just do eight clients instead of one. 612 00:45:49,140 --> 00:45:51,921 And so I'll still make money, if not more. 613 00:45:51,921 --> 00:45:53,762 And I'll, it's different. 614 00:45:53,762 --> 00:46:02,244 Whereas you have the other side of it where you think, no, instead I'm going to think I use this, what this used to take me 10 hours to do. 615 00:46:02,244 --> 00:46:09,146 Now it's taking me an hour to do instead of thinking now I can do nine more of those. 616 00:46:10,562 --> 00:46:15,524 Instead think, how do I charge differently for that hour? 617 00:46:15,524 --> 00:46:16,604 And what can I do? 618 00:46:16,604 --> 00:46:25,268 What wrappings can I put around it to add value so that I'm giving some type of extra value to my client that they're willing to pay for? 619 00:46:25,268 --> 00:46:35,372 Whether that say, okay, I did this contract analysis, but because you gave me the past 10 years, I can predict for the future that this, this, this, and this. 620 00:46:35,452 --> 00:46:40,098 And let's build something together so that the next time, and you pay me a flat rate. 621 00:46:40,098 --> 00:46:52,525 not an hourly rate, and that flat rate should presumably be more than the hour it took you to do the work and more than the hours it took you to create the overlay, but not the 10, 622 00:46:52,525 --> 00:46:54,126 not maybe the same as the 10. 623 00:46:54,126 --> 00:47:02,134 And then the third view I have is maybe what everyone's just gonna do is start pricing things based on how much it would have cost before. 624 00:47:02,134 --> 00:47:09,654 Cause now we have AI, so they go, all the firms go back and figure out everything they did, how long on average it took them to do it. 625 00:47:10,414 --> 00:47:16,346 And then they can just do an AFA based on that, but that's not really a different business model. 626 00:47:16,346 --> 00:47:20,954 That's just back-ending what a billable hour would have been to come up with a fee. 627 00:47:22,626 --> 00:47:24,177 Yeah, it's a good point. 628 00:47:24,177 --> 00:47:30,253 I know there's not a lot of easy answers around that, around the pricing structure here. 629 00:47:30,253 --> 00:47:40,502 I've heard a lot of um like uh an AI multiple, know, essentially where they just charge a different hourly rate when AI is in the mix. 630 00:47:40,502 --> 00:47:43,045 don't, I mean, I don't know. 631 00:47:43,045 --> 00:47:44,479 um I definitely don't. 632 00:47:44,479 --> 00:47:46,292 Why does everyone assume that it should be cheaper? 633 00:47:46,292 --> 00:47:49,196 AI is helping you, so you're better. 634 00:47:49,580 --> 00:47:50,430 Right. 635 00:47:50,811 --> 00:47:51,491 Yeah. 636 00:47:51,491 --> 00:47:51,791 Yeah. 637 00:47:51,791 --> 00:47:52,252 Yeah. 638 00:47:52,252 --> 00:47:52,832 Exactly. 639 00:47:52,832 --> 00:47:58,775 I was thinking, you know, whatever it is, would be, it would be north of one, whatever that coefficient is. 640 00:47:58,775 --> 00:47:59,125 Right. 641 00:47:59,125 --> 00:48:05,579 Like because law firms have to somehow account for the cost of the infrastructure. 642 00:48:05,579 --> 00:48:05,959 Right. 643 00:48:05,959 --> 00:48:08,981 You know, Harvey co-counsel, they're not free far from it. 644 00:48:08,981 --> 00:48:11,442 Um, somebody's got to pay for that. 645 00:48:11,442 --> 00:48:16,495 In addition to the revenue decrease that, that the law firms are, yeah, I'm not sure. 646 00:48:16,495 --> 00:48:18,356 I'm not sure how it's going to play out. 647 00:48:18,424 --> 00:48:22,535 There was, There was a story I heard. 648 00:48:22,835 --> 00:48:31,968 This is a, like an old fable where there was a ship that was having some engine trouble and they had several mechanics come in, work on the engine. 649 00:48:31,968 --> 00:48:33,378 They couldn't get it fixed. 650 00:48:33,378 --> 00:48:46,482 Finally, they called an, uh, the most senior, um, engine mechanic in the shipyard and he came in, evaluated the situation, took out his hammer, hit it on a, uh, one particular 651 00:48:46,482 --> 00:48:48,598 spot on the boiler and 652 00:48:48,598 --> 00:48:50,780 Engine started running a couple of weeks later. 653 00:48:50,780 --> 00:48:56,344 Um, the ship operators get a bill for $10,000 and they were like, $10,000. 654 00:48:56,344 --> 00:48:59,296 You know, you came in here and tapped a hammer. 655 00:48:59,296 --> 00:49:09,198 So they asked for a detailed invoice and he sent one that said tapping with hammer $2 knowing where to tap $9,998. 656 00:49:09,995 --> 00:49:12,877 So I feel like lawyers are going to be that right. 657 00:49:12,877 --> 00:49:14,590 The doing 658 00:49:14,590 --> 00:49:15,220 I like that. 659 00:49:15,220 --> 00:49:17,070 That's a great analogy. 660 00:49:17,070 --> 00:49:18,041 I love that. 661 00:49:18,041 --> 00:49:22,333 I'm steal it from you, but if I use it, I'm going to, I'm going to quote that. 662 00:49:22,333 --> 00:49:30,225 I think that, I think that is how lawyers should be thinking of it instead of the people's screaming fire and we're going to lose our jobs. 663 00:49:30,225 --> 00:49:37,080 And, know, one thing we didn't talk about is all the new rules that this is creating, you know, the engineers, the data people, the 664 00:49:37,080 --> 00:49:40,986 you know, the strategy people and the big firms like great firms are doing it. 665 00:49:40,986 --> 00:49:50,634 White and Case has a whole team that's their strategy team and they've got people that are data engineers and they're hiring graduates from undergraduate school that are from MIT 666 00:49:50,634 --> 00:49:53,555 and other great schools to help them. 667 00:49:53,555 --> 00:50:04,097 And back to your point earlier about the business professionals and the KPMG's, if the law firms start thinking that way, thinking themselves as a business and valuing these extra 668 00:50:04,097 --> 00:50:06,358 expertise, maybe 669 00:50:07,598 --> 00:50:11,628 Maybe we will see some of the things that I'm hoping and I think you're hoping for. 670 00:50:11,628 --> 00:50:17,022 Yeah, I think that some will and I think they're the, they're going to be the winners. 671 00:50:17,043 --> 00:50:20,145 And I think there's going to be a lot who won't. 672 00:50:20,245 --> 00:50:27,912 And I don't know what, the future looks like there, but um yeah, this has been uh a fantastic conversation. 673 00:50:27,912 --> 00:50:29,873 I could sit here and chit chat with you all day. 674 00:50:29,873 --> 00:50:36,299 um How do you, so your book, the, lawyer upheaval is the older version. 675 00:50:36,299 --> 00:50:39,361 You're pointing people towards a leader upheaval now. 676 00:50:39,361 --> 00:50:39,781 Right. 677 00:50:39,781 --> 00:50:40,423 And I'm assuming 678 00:50:40,423 --> 00:50:42,548 web book, look I have it right there. 679 00:50:42,971 --> 00:50:46,840 Marketing, I did spend eight years in marketing before I went to law school. 680 00:50:46,882 --> 00:50:48,906 Can't get the marketer out of the person. 681 00:50:48,963 --> 00:50:53,545 Well, I'm only I'm still uh digging in, so far it's been it's been really good. 682 00:50:53,545 --> 00:50:59,748 um And then your your paper on the chief innovation role is that's available. 683 00:50:59,748 --> 00:51:05,219 mean, I think I I found it through that article, but that's available out in the I think you sent me a link. 684 00:51:05,219 --> 00:51:06,600 book, you can go to Amazon. 685 00:51:06,600 --> 00:51:07,861 That's easy. 686 00:51:08,582 --> 00:51:09,520 Or the ABA. 687 00:51:09,520 --> 00:51:13,446 You can get a big discount if you're an ABA member, if you go to the ABA and buy it. 688 00:51:13,446 --> 00:51:22,675 And then the article, if you go to my website, MoveLaw, M-O-V-E-L-A-W.com, and scroll through my writing, it goes by date. 689 00:51:22,675 --> 00:51:24,466 You can click there and get the full article. 690 00:51:24,466 --> 00:51:26,228 Because it was originally published in two parts. 691 00:51:26,228 --> 00:51:28,820 And think when we first spoke, you had only had the first part. 692 00:51:28,820 --> 00:51:31,600 So that's probably the best way to get the full article. 693 00:51:31,648 --> 00:51:32,098 Awesome. 694 00:51:32,098 --> 00:51:32,359 Yeah. 695 00:51:32,359 --> 00:51:33,249 And it's a good read. 696 00:51:33,249 --> 00:51:39,284 And I know that um it's been a few years now, but I think a lot of these same dynamics are in play. 697 00:51:39,284 --> 00:51:40,105 So I found it. 698 00:51:40,105 --> 00:51:41,806 I found it very valuable. 699 00:51:42,007 --> 00:51:43,498 Well, thanks so much for joining. 700 00:51:43,498 --> 00:51:54,356 I know I hope to meet you in person, maybe came and I or, um or somewhere else, but I really appreciate you spending a little time with me today. 701 00:51:55,618 --> 00:51:56,098 All right. 702 00:51:56,098 --> 00:51:57,138 Take care. 703 00:51:57,559 --> 00:51:58,559 Bye bye. -->