1 00:00:00,151 --> 00:00:01,829 Rob Saccone, how are ya? 2 00:00:01,829 --> 00:00:02,839 Doing well, Ted. 3 00:00:02,839 --> 00:00:03,755 How you doing? 4 00:00:03,755 --> 00:00:04,365 Good man. 5 00:00:04,365 --> 00:00:06,806 This episode is long overdue. 6 00:00:09,006 --> 00:00:12,048 You and I have known each other for probably 15 years. 7 00:00:12,048 --> 00:00:16,989 we shared a similar, God, I guess kind of product path journey. 8 00:00:16,989 --> 00:00:25,093 you were kind of the beginning of the legal internet movement and handed it off to handshake, which handed it off to us. 9 00:00:25,093 --> 00:00:27,416 And, um, yeah, so 10 00:00:27,416 --> 00:00:31,467 You and I have been kept in touch over the years and worked together. 11 00:00:31,467 --> 00:00:33,593 So man, it's good to finally have you on. 12 00:00:33,593 --> 00:00:35,186 Yeah, excited for this. 13 00:00:35,186 --> 00:00:38,644 Yeah, long time listener, first time caller. 14 00:00:38,644 --> 00:00:41,777 So yeah, let's do it. 15 00:00:41,777 --> 00:00:51,206 for those that don't know you, I mentioned you were a product company CEO with XM Law, but why don't you kind of fill in the gaps? 16 00:00:51,206 --> 00:00:54,428 Like what, you know, what are you doing now? 17 00:00:54,428 --> 00:00:55,599 What got you into legal? 18 00:00:55,599 --> 00:00:56,360 How long you've been here? 19 00:00:56,360 --> 00:00:57,881 All that sort of good stuff. 20 00:00:58,337 --> 00:00:59,657 Sure, sure. 21 00:00:59,657 --> 00:01:10,597 Well, in a nutshell, it's been a little over 26 years, dare I say it aloud, that I've been at the often messy intersection of business tech and law. 22 00:01:10,597 --> 00:01:13,761 And I've worn a lot of hats during that time. 23 00:01:13,761 --> 00:01:22,941 I actually started as a self-taught software engineer and just worked my way into building enterprise systems in a few different verticals until I kind of stumbled into the legal 24 00:01:22,941 --> 00:01:33,861 market back in 1999 when I joined Goodwin to help them build out their relatively new KN function. 25 00:01:34,197 --> 00:01:43,454 It didn't take me very long to see that there were plenty of opportunities in legal service at the high end to bring business tech, lots of things that I was comfortable with 26 00:01:43,454 --> 00:01:46,768 that were kind of foreign to firms at the time, it seemed to me. 27 00:01:46,768 --> 00:01:50,768 Uh, didn't take me, I don't know, maybe 2002 or three. 28 00:01:50,888 --> 00:01:58,528 I leapt headfirst into entrepreneurship and started XM Law back before we called them Legal Tech startups, think. 29 00:01:58,528 --> 00:02:06,068 Um, and, uh, built that company out, did a lot of really fun, awesome work and sold to Thompson in 2009. 30 00:02:06,128 --> 00:02:15,788 I stayed with them for a few years and a couple of different roles in product and strategy until I felt the edge to get back to startups and small, small teams, small organizations. 31 00:02:15,788 --> 00:02:16,752 Uh, so I. 32 00:02:16,752 --> 00:02:27,337 shifted back into startup work, this time doing little more investing, advising, like broad range things, but continued working with law firms at the time when internal startup 33 00:02:27,337 --> 00:02:29,749 efforts were kind of nascent. 34 00:02:29,749 --> 00:02:32,260 Innovation teams and roles were still forming. 35 00:02:32,260 --> 00:02:34,591 ALSPs were gaining a lot of attention. 36 00:02:34,591 --> 00:02:41,375 So there was a lot of hustle in the market to like go after this new form of legal service delivery. 37 00:02:41,604 --> 00:02:45,466 And that, fortunately for me, led me to the leadership team at Stifarth. 38 00:02:45,466 --> 00:02:51,708 And Steve Poore, Lisa Damon, and others have been fighting the innovation fight for years before I showed up there. 39 00:02:51,708 --> 00:02:53,310 So they were well ahead of the curve. 40 00:02:53,310 --> 00:03:05,013 And I designed and built a subsidiary of the business called Stifarth Lean Consulting, where we served our clients and even non-clients directly with legal ops and analytics and 41 00:03:05,013 --> 00:03:06,934 service design and so on. 42 00:03:06,970 --> 00:03:20,010 Um, since then I've done a whole range of different random projects and work with a lot of cool startups and legal tech companies, including info dash and, um, uh, even took a break 43 00:03:20,010 --> 00:03:26,610 as an operating partner in private equity for a little over a year, you know, so that was my one escape from legal, guess. 44 00:03:26,610 --> 00:03:31,470 Um, uh, but then chat, GPT appeared in the world in 2022. 45 00:03:31,470 --> 00:03:35,110 And like many of us, I jumped on the AI train. 46 00:03:35,290 --> 00:03:36,844 Um, I. 47 00:03:36,844 --> 00:03:43,174 was able to work with a few firms on very early, like some of the first pilot projects with products like Co-Counsel. 48 00:03:43,174 --> 00:03:49,641 We worked with Jake and his team to sort of bring it and get feedback from a lot of big practitioners. 49 00:03:49,641 --> 00:03:55,883 And that brought me to where I am today, fully back in the startup mode as CTO here at LEGO. 50 00:03:55,883 --> 00:04:02,286 And my day job now is putting GEN.AI to the test and helping firms figure out practical, safe ways to use it. 51 00:04:02,286 --> 00:04:05,968 So yeah, I've been really fortunate to work with a lot of 52 00:04:05,968 --> 00:04:14,152 very smart people and teams over the years and it's definitely made me opinionated on how things work and how innovation can and can't work. 53 00:04:14,152 --> 00:04:16,588 So can't wait to dig in. 54 00:04:16,588 --> 00:04:17,329 Yeah, man. 55 00:04:17,329 --> 00:04:24,535 Well, your experience with Cypharth Lean, and for those that don't know, you were on our first iteration of an advisory board. 56 00:04:24,535 --> 00:04:29,016 I think we were too early, really, to make that work. 57 00:04:29,016 --> 00:04:32,830 And then one board member got a job, and it kind of fell apart. 58 00:04:32,830 --> 00:04:37,974 We're reestablishing that very slowly and intentionally. 59 00:04:37,974 --> 00:04:42,993 But yeah, you had a lot of very valuable input for us in the early days. 60 00:04:42,993 --> 00:04:45,285 We uh were happy to work with you. 61 00:04:45,285 --> 00:04:56,971 Your work at Cypharth was especially interesting in the conversation that we're about to have, which I think is super relevant right now, which is the alternative business 62 00:04:56,971 --> 00:04:58,411 structure. 63 00:04:58,572 --> 00:05:05,205 You and I were bantering back and forth on a post about Burford Capital standing up. 64 00:05:05,237 --> 00:05:21,031 managed services organizations, MSOs, as a vehicle to get outside capital into law firms, which is prohibited by ABA Model Rule 5.4 in every state except two, with the addition of 65 00:05:21,031 --> 00:05:22,603 DC and Puerto Rico. 66 00:05:22,603 --> 00:05:26,627 And we were kind of kicking it back and forth on, will it work this time? 67 00:05:26,627 --> 00:05:29,668 And we had some different viewpoints. 68 00:05:29,908 --> 00:05:40,499 I think that it, you know, the earlier attempts failed for interesting reasons that I think exist to a much lesser extent today. 69 00:05:40,499 --> 00:05:50,512 And that the innovation around gen AI, a language, I mean, when, when have we seen a disruption in how language gets processed? 70 00:05:50,512 --> 00:05:53,875 It's been, you know, it's, it's, this is really the first major. 71 00:05:53,875 --> 00:05:59,587 disruptive tech, which has so much relevance to how lawyers work. 72 00:05:59,587 --> 00:06:01,687 So I think the timing is right. 73 00:06:01,687 --> 00:06:10,358 think we're starting to see the Legal Services Act in the UK has been around for 15 years now, almost, maybe even a little bit longer. 74 00:06:10,358 --> 00:06:15,718 And so we've got a model to look at. 75 00:06:15,718 --> 00:06:17,496 it hasn't been... 76 00:06:17,496 --> 00:06:20,249 really moved the dial a whole lot over there. 77 00:06:20,249 --> 00:06:35,262 But I think that it also hasn't caused a ton of issues that so many lawyers have presented as why you need rule 5.4 and making non-legal ownership prohibited. 78 00:06:35,262 --> 00:06:41,402 So yeah, man, let's talk a little bit about like, so Cypharth lean, you know, I'm a lean Six Sigma black belt. 79 00:06:41,402 --> 00:06:47,542 got trained at bank of America and it is a rigorous, uh, it is a rigorous training. 80 00:06:47,542 --> 00:06:52,982 mean, I think I went through a month of training and you know, first you get your green belt. 81 00:06:52,982 --> 00:07:04,603 So the way it works there, I assume there's similar thresholds, um, at other places you have to save the bank, uh, 250 K or generate 250 K in, in 82 00:07:04,603 --> 00:07:08,923 in new revenue to get your green belt, the threshold is a million. 83 00:07:08,923 --> 00:07:11,265 And those have to be, yeah. 84 00:07:11,365 --> 00:07:22,390 So when I saw Cypharth Lean, I was like, man, is this a Lean Six Sigma kind of approach to, lens that you're taking to legal services, which I thought was interesting. 85 00:07:22,390 --> 00:07:26,802 yeah, like how did, and is the Cypharth Lean, are they still around? 86 00:07:26,802 --> 00:07:29,722 It does in a different form, right? 87 00:07:29,722 --> 00:07:32,582 I think it's more integral to the firm's practice now. 88 00:07:32,582 --> 00:07:41,542 It's not a standalone business with its own P &L and the other reasons which we chose to explore that, guess. 89 00:07:42,022 --> 00:07:44,473 yeah, a lot has been written about this in the world. 90 00:07:44,473 --> 00:07:45,653 You can find it online. 91 00:07:45,653 --> 00:07:47,893 It's a fascinating story. 92 00:07:48,333 --> 00:07:55,337 I showed up at a time, oh God, I can't remember the year, 2015, 14, where... 93 00:07:55,397 --> 00:07:57,163 they, the firm. 94 00:07:57,297 --> 00:08:04,642 uh through the efforts of Steve and Lisa and Pete and others who they would describe it as hand-to-hand combat. 95 00:08:04,642 --> 00:08:09,604 Every day they were converting a new partner to think differently about how they serve their clients. 96 00:08:09,604 --> 00:08:21,410 And as an L &E firm, they did a fair amount of high-end, big ticket work, bet the business type work, but much of the work was routine, single-planet employment litigation. 97 00:08:21,410 --> 00:08:25,973 was regular employment matters, advice and counsel on state-by-state 98 00:08:25,973 --> 00:08:29,195 regulatory and compliance challenges and so on. 99 00:08:29,195 --> 00:08:36,860 Many LNE firms were facing the squeeze and they got ahead of it by saying, look, we need to change our model if we're going to survive. 100 00:08:36,860 --> 00:08:51,550 So they were working with clients like DuPont and Motorola, who went very deep in hardcore lean Six Sigma, probably more like a bank, right? 101 00:08:51,550 --> 00:08:53,484 oh 102 00:08:53,484 --> 00:09:01,084 you know, fast forward over, you know, a tough several years to convert the firm to think differently. 103 00:09:01,084 --> 00:09:05,544 They introduced like flavors of lean Six Sigma over time. 104 00:09:05,684 --> 00:09:11,864 The Six Sigma math heavy, metrics heavy part of it, a little bit lightened and compressed. 105 00:09:11,864 --> 00:09:21,228 The lean part of it, like Toyota lean and so on, with the emphasis on leaning out processes that are not lean, right? 106 00:09:21,228 --> 00:09:30,831 They made huge headway on through introducing people with Lean Six Sigma, green belts and black belts to process map everything, everything. 107 00:09:30,831 --> 00:09:33,912 And they started, as I recall, with internal processes. 108 00:09:33,912 --> 00:09:37,393 So looking at, you know, new business intake, conflict checks and so on. 109 00:09:37,393 --> 00:09:46,936 And as they hone their skills, they started pulling in practices and looking at legal processes, particularly the ones that were under tremendous margin pressure. 110 00:09:46,936 --> 00:09:48,958 They would call it working with the willing. 111 00:09:48,958 --> 00:09:51,971 because if you're losing money, you're pretty willing to try something new. 112 00:09:51,971 --> 00:10:01,506 But then eventually, including clients, and it became probably the most critical piece of what they did was the collaborative way they approach it by bringing clients in with the 113 00:10:01,506 --> 00:10:04,627 client teams and finding ways to do business together. 114 00:10:04,627 --> 00:10:10,421 Now, naturally, that fits really nicely at the high end, a little more difficult to scale up across routine work. 115 00:10:10,421 --> 00:10:15,403 at the time I was consulting to the leadership team, they had 116 00:10:15,403 --> 00:10:25,447 30, maybe more individuals and roles that were labeled legal process improvement specialists, legal project managers. 117 00:10:25,447 --> 00:10:29,226 I think they had the biggest team of LPMs in the market at the time. 118 00:10:29,226 --> 00:10:32,668 We had tech and analytics and data experts. 119 00:10:32,668 --> 00:10:34,979 Many of these resources were held JDs. 120 00:10:34,979 --> 00:10:35,959 They just didn't practice. 121 00:10:35,959 --> 00:10:39,151 They shifted gears career-wise. 122 00:10:39,151 --> 00:10:43,463 And the question from the partnership was, can we do more with these resources? 123 00:10:43,463 --> 00:10:44,643 Can we organize them differently? 124 00:10:44,643 --> 00:10:46,164 Could we do anything with them? 125 00:10:46,164 --> 00:10:55,079 So pretty broad-stroke scan of the market and looking at scenarios in which these resources, these specialized resources could be used in the best, highest value way. 126 00:10:55,104 --> 00:11:06,058 uh That led to a desire to organize them into a single business, not just for observability into the business, but also to better leverage each other to build 127 00:11:06,058 --> 00:11:09,593 multidisciplinary teams along with the lawyers. 128 00:11:09,593 --> 00:11:18,859 and to serve that to clients in a much more structured and at the time we were hoping more scalable way, like reach more clients, more partners with these resources. 129 00:11:18,859 --> 00:11:22,579 So that led to the creation of Cypherthleen Consulting. 130 00:11:22,579 --> 00:11:23,873 The bones were there. 131 00:11:23,873 --> 00:11:28,496 I was the commercial guy who came in and helped sort of bring it together. 132 00:11:28,535 --> 00:11:33,137 And then we went to market and it was a lot of recognition for Cyphart at the time. 133 00:11:33,137 --> 00:11:35,398 the conversations were excellent. 134 00:11:35,398 --> 00:11:37,719 Like client demand was very high. 135 00:11:37,719 --> 00:11:39,542 We had a lot of inbound interest. 136 00:11:39,542 --> 00:11:50,077 Can you come help us with, imagine scenarios where we're asked to help with a panel consolidation project and Cyphart, the firm is on the panel. 137 00:11:50,197 --> 00:11:52,458 And this happened more than once, right? 138 00:11:52,458 --> 00:11:55,830 So that was the, might help you understand the 139 00:11:55,830 --> 00:12:05,293 part of it right but it wasn't without its challenges you know and we set out to do at least an experiment of one year like can we bring this as a business and as discrete 140 00:12:05,293 --> 00:12:08,227 products to market and see how far we can get 141 00:12:08,680 --> 00:12:10,880 So yes, you've got a great perspective. 142 00:12:10,880 --> 00:12:18,840 mean, you lived this scenario where you've got kind of a spin-off of a law firm. 143 00:12:19,300 --> 00:12:32,827 I wrote an article called Big Law 2.0, kind of a blueprint for the future, and proposed a model where law firms stand up a C Corp. 144 00:12:32,827 --> 00:12:35,747 a standalone C Corp, not a subsidiary. 145 00:12:35,747 --> 00:12:41,139 don't even know if legally that would work, uh having a C Corp subsidiary of a partnership. 146 00:12:41,139 --> 00:12:53,185 anyway, a standalone subsidiary in the C Corp structure and the independent nature of being standalone, I think are very important aspects because it allows a traditional 147 00:12:53,185 --> 00:12:57,679 enterprise governance model to be applied, which doesn't exist in law firms. 148 00:12:57,679 --> 00:13:03,244 So, you know, I spent years at Bank of America, as I mentioned earlier, mostly in risk management roles. 149 00:13:03,244 --> 00:13:04,065 I was in. 150 00:13:04,065 --> 00:13:08,128 So you have you have really four lines of defense in financial services. 151 00:13:08,128 --> 00:13:09,299 You have the line of business. 152 00:13:09,299 --> 00:13:14,493 So this could be consumer lending or the investment bank or the commercial bank. 153 00:13:14,694 --> 00:13:19,378 And you have controls within the line of business to mitigate risk. 154 00:13:19,378 --> 00:13:20,282 Then you have. 155 00:13:20,282 --> 00:13:25,802 risk management partners, that's the second line of defense, that are aligned directly to these business units. 156 00:13:25,842 --> 00:13:29,562 Then the third layer of defense is internal audit. 157 00:13:29,562 --> 00:13:41,562 And I also worked in internal audit where you would come in and evaluate the control environment and throw flags that would sometimes get escalated to an independent audit 158 00:13:41,562 --> 00:13:44,622 committee that reported directly to the board. 159 00:13:44,882 --> 00:13:46,862 And you know, they could get things done. 160 00:13:46,862 --> 00:13:53,125 A lot of people lost jobs over SEV one audit issues, especially if they were repeat offenders. 161 00:13:53,125 --> 00:13:55,736 and then the fourth line of defense is the wall street journal. 162 00:13:55,736 --> 00:13:59,450 that's where you end up if the first line of three lines of defense fail. 163 00:13:59,450 --> 00:14:09,374 we jokingly, yeah, it's not a good day for a bank to end up in the wall street journal for, one of those issues, but yeah, that model doesn't exist in law firms. 164 00:14:09,374 --> 00:14:10,854 and it's a. 165 00:14:11,051 --> 00:14:23,976 a risk structure like that is very important amongst other structures, like having shareholders elect a board that installs professional management and holds management 166 00:14:23,976 --> 00:14:27,198 accountable to goals and KPIs. 167 00:14:27,198 --> 00:14:33,222 And again, very different than the law firm partnership model and the non-legal ownership. 168 00:14:33,222 --> 00:14:37,972 So you raised some really interesting points that I want to dig into. 169 00:14:37,972 --> 00:14:39,565 And you pointed to some 170 00:14:39,565 --> 00:14:48,691 past failures with models kind of like this, know, atrium and clear spire were a couple and yeah, those, those did not succeed. 171 00:14:48,691 --> 00:14:53,453 think clear spire was early and their timing was bad for a couple of reasons. 172 00:14:53,453 --> 00:15:04,018 One, it was like right in the middle of the reset, great recession, which you could argue what better a time to save clients money, but that's also a time where everybody's risk, 173 00:15:04,179 --> 00:15:05,159 you know, 174 00:15:05,231 --> 00:15:10,375 shields are up, like you're trying to manage risk and this was a risky new path. 175 00:15:10,375 --> 00:15:19,160 and then with, with atrium, it's not going to be some 30 something tech bro who's going to come in and disrupt legal services. 176 00:15:19,160 --> 00:15:25,474 It's just not, you know, somebody like that with a big Silicon Valley war chest. 177 00:15:25,474 --> 00:15:32,890 Um, I just don't see that happening as I think, you know, with no legal experience, he, Justin hadn't, he 178 00:15:32,890 --> 00:15:34,933 no legal experience, he founded Twitch. 179 00:15:34,933 --> 00:15:46,699 So, you know, what is your take on, you know, those scenarios and how, what we can learn from those past experiences to what might be coming next? 180 00:15:46,699 --> 00:15:48,231 Lot to unpack. 181 00:15:48,231 --> 00:15:55,417 Justin would say at the time that he was a power user of legal services and wasn't satisfied. 182 00:15:55,437 --> 00:15:57,949 Therefore, we need a new way of doing it. 183 00:15:57,949 --> 00:16:00,411 So I think it started from the right thinking. 184 00:16:00,411 --> 00:16:06,245 Fast forward to today, we're seeing a lot of tech bro money come into the space. 185 00:16:06,245 --> 00:16:08,946 And sometimes that can come with a little bit of hubris. 186 00:16:09,100 --> 00:16:15,878 I try to separate me being a cynical old timer in the space from recognizing that we can learn from the past. 187 00:16:15,878 --> 00:16:26,599 I don't mean get anchored in the past, but a lot of attempts, like success and fail, successful and failed, have been made to change the model from inside and from outside. 188 00:16:26,616 --> 00:16:28,887 ClearSpire and Atrium are both really good examples. 189 00:16:28,887 --> 00:16:37,359 That was sort of a structural attempt to work around the model rules to allow for fee sharing and ownership and so on. 190 00:16:37,359 --> 00:16:43,546 So you have a tech company and then you have the professional partnership, the law firm, the LLP, whatever, right? 191 00:16:43,546 --> 00:16:53,623 And they just come up with a relationship that in my non-legal opinion is skirting those rules just enough so that they can operate, right? 192 00:16:53,623 --> 00:17:02,712 I think you could make a good case that both those companies were ahead of their time because the premise makes sense to almost anyone, think, right? 193 00:17:02,712 --> 00:17:05,374 Lower cost, better access to legal services. 194 00:17:05,374 --> 00:17:10,659 I'm, you know, excluding the consumer law access to justice. 195 00:17:10,659 --> 00:17:13,962 Like we're just talking like big business buying from big law, right? 196 00:17:13,962 --> 00:17:19,680 And, you know, but they want better service at lower cost always, right? 197 00:17:19,680 --> 00:17:24,743 But I think in a nutshell with both of them, the demand wasn't there to warrant the business. 198 00:17:24,743 --> 00:17:27,104 And it takes two to tango, right? 199 00:17:27,104 --> 00:17:37,928 I think one thing I've learned, you know, it was sort of ingrained in me at CyPharth is that the voice of the client always wins, barring from the Lean Six Sigma terminology 200 00:17:37,928 --> 00:17:39,428 playbook, right? 201 00:17:39,488 --> 00:17:41,523 VOC wins and... 202 00:17:41,523 --> 00:17:53,376 If I needed to make a business case for any change, for anything, for any amount, for any resource, if I did not have the VOC with me, I wouldn't get it. 203 00:17:53,376 --> 00:18:03,347 So that's led me to this point of view that not only need to, should involve clients in the provisioning of legal service when you're talking about changing it, but it's 204 00:18:03,347 --> 00:18:04,908 necessary, right? 205 00:18:04,908 --> 00:18:15,800 Now, if you believe that, and the clients might be saying a lot about what they'd like to be different, how they'd like it to change, but then the doing part isn't there. 206 00:18:15,800 --> 00:18:20,725 For example, we've been talking about AFAs and non-hourly billing for decades. 207 00:18:20,725 --> 00:18:30,774 We're still at, I don't know, I haven't studied this in a while, but probably 20, 30 % of MLM work is subject to AFAs in some way, at best, at best. 208 00:18:30,774 --> 00:18:32,677 And it's gonna vary from practice firm to firm. 209 00:18:32,677 --> 00:18:34,676 In my... 210 00:18:34,776 --> 00:18:46,586 experience being in the room, like observing this myself firsthand, even clients asking for non-hourly billing, will almost always say, give us shadow billing and give us your 211 00:18:46,586 --> 00:18:47,846 time records along with that. 212 00:18:47,846 --> 00:18:50,289 And you're like, well, wait a minute, like, that's not how it works. 213 00:18:50,289 --> 00:18:59,288 And I think the work that cleanly fell into AFAs took sophistication on both sides by cell, right? 214 00:18:59,288 --> 00:19:01,891 and the work needed to fit the pricing model. 215 00:19:01,891 --> 00:19:13,053 So again, like if you're a massive retailer with hundreds of thousands of employees, you're probably churning through thousands of small wage and hour issues and other things 216 00:19:13,053 --> 00:19:15,105 just year over year, month over month. 217 00:19:15,105 --> 00:19:19,502 So to sort of lump sum that into some volume arrangement, I wouldn't say it's easy. 218 00:19:19,502 --> 00:19:22,694 but it's a better fit because they look at it as a cost of business. 219 00:19:22,694 --> 00:19:24,115 It's no longer a legal service. 220 00:19:24,115 --> 00:19:26,387 It's a business service that has lawyers involved. 221 00:19:26,387 --> 00:19:28,909 Maybe, maybe, right? 222 00:19:28,909 --> 00:19:39,199 So not to get off track, but back to the attempts, like without the demand of the markets they served, you know, and I'm a little more familiar with atrium than clairspire. 223 00:19:39,199 --> 00:19:41,821 Like Mark Cohen was early and you're right. 224 00:19:41,821 --> 00:19:45,227 I think it was probably 2006, seven, eight, something like that. 225 00:19:45,227 --> 00:19:46,529 Definitely ahead of his time. 226 00:19:46,529 --> 00:19:53,667 Probably spent a little more too fast on the tech platform side of things. 227 00:19:53,667 --> 00:20:03,288 Clients were, I'm gonna guess, clients were pretty curious in the idea, but they weren't willing to just displace entire slots of legal work that was flowing out to incumbents, 228 00:20:03,288 --> 00:20:04,781 even if they're overspending, right? 229 00:20:04,781 --> 00:20:07,925 Because the credibility and the trust wasn't there yet. 230 00:20:07,925 --> 00:20:10,206 And that might be to your point, what's shifting now. 231 00:20:10,206 --> 00:20:10,820 It's like... 232 00:20:10,820 --> 00:20:15,252 I think buyers are beginning to realize that some of this is somewhat mechanical. 233 00:20:15,252 --> 00:20:20,466 It can be delivered in ways that don't need a massive brand attached to it. 234 00:20:20,466 --> 00:20:24,048 But I still think that carries a lot of weight, right? 235 00:20:24,048 --> 00:20:33,374 With Atrium though, serve the, know, amongst others, they serve the startup market, like trying to get those early stage, like from C to A, maybe to B, you know. 236 00:20:33,374 --> 00:20:38,577 They're competing with the Wilsons and the Coolies and the others, you know, Gundersons of the world. 237 00:20:39,353 --> 00:20:51,544 Same thing, like even those that invested in Atrium, I'm not sure they all signed up to be buyers of Atrium services, is my opinion, I have no special knowledge of it, right? 238 00:20:51,844 --> 00:20:54,975 So yeah, demand wasn't quite there. 239 00:20:54,975 --> 00:21:06,535 Justin, think, went on record later saying, yeah, I'm a power user, but I was a little more interested in the big thinking change than remembering to build a product that the 240 00:21:06,535 --> 00:21:07,835 market actually wanted. 241 00:21:07,835 --> 00:21:16,906 So after raising 70, 75 million, investing in lot of software, it just didn't work. 242 00:21:17,226 --> 00:21:19,957 And again, in my opinion, 243 00:21:19,957 --> 00:21:30,263 Ignoring the past to some extent sort of rebuilding reinventing the wheel And sort of ignoring the difficulty it is to have a relationship based business 244 00:21:30,263 --> 00:21:37,524 you know, with lawyers with deep expertise, like pairing that with software and the mentality it takes to run a software business with the scale you get with them. 245 00:21:37,524 --> 00:21:40,185 Like those two are like, you know, oil and water. 246 00:21:40,185 --> 00:21:42,316 So you got to find a way to like make those work. 247 00:21:42,316 --> 00:21:51,418 And that was one of the differences with Syfar to their credit is that yes, subsidiary, but it wasn't designed to be like so removed from the firm. 248 00:21:51,418 --> 00:21:53,640 We were pretty integral with the firm. 249 00:21:53,640 --> 00:21:56,816 And if that wasn't there and we didn't have the brand, 250 00:21:56,816 --> 00:22:00,167 like presence of Cypharth with us, nothing would have worked. 251 00:22:00,167 --> 00:22:02,088 Nothing would have worked, right? 252 00:22:02,088 --> 00:22:07,011 So yeah, I think those were like unique attempts, similar structural model. 253 00:22:07,011 --> 00:22:15,714 I think I said at one point somewhere along the way, they were a business by design, a law firm by regulation. 254 00:22:15,714 --> 00:22:19,095 Like they wouldn't have had any law firm involved. 255 00:22:19,471 --> 00:22:20,453 if they didn't need to. 256 00:22:20,453 --> 00:22:22,815 But that doesn't mean they wouldn't have lawyers involved, right? 257 00:22:22,815 --> 00:22:25,457 So they never figured that out, either of them. 258 00:22:25,457 --> 00:22:27,999 And I'd let Mark speak to Claire's fire. 259 00:22:27,999 --> 00:22:31,037 That was a little bit before I paid very close attention to this stuff. 260 00:22:31,037 --> 00:22:32,283 It'd be a great guess, think, too. 261 00:22:32,283 --> 00:22:38,849 But yeah, think both are very similar attempts, very different personalities and situations coming in. 262 00:22:38,849 --> 00:22:42,632 Did it pave the way for future efforts? 263 00:22:42,632 --> 00:22:43,579 I'm not sure. 264 00:22:43,579 --> 00:22:45,310 Yeah, that's a really good question. 265 00:22:45,310 --> 00:22:45,530 Yeah. 266 00:22:45,530 --> 00:22:47,131 And Mark was an insider, right? 267 00:22:47,131 --> 00:22:54,356 He was a, he was an attorney and he's one of the, in my opinion, one of the great thought leaders in the space. 268 00:22:54,356 --> 00:22:57,158 really enjoy reading. 269 00:22:58,359 --> 00:22:59,139 Exactly. 270 00:22:59,139 --> 00:22:59,579 Yeah. 271 00:22:59,579 --> 00:23:06,244 In fact, he hit me up on that article, the blueprint and, cause I comment on his stuff. 272 00:23:06,244 --> 00:23:07,725 He wrote a 273 00:23:07,785 --> 00:23:09,706 He wrote an article for Forbes. 274 00:23:09,706 --> 00:23:10,957 He's a Forbes author now. 275 00:23:10,957 --> 00:23:17,452 And it was, I think it was called the Enigma of Innovation in Big Law. 276 00:23:17,452 --> 00:23:19,774 he made very good points. 277 00:23:19,774 --> 00:23:25,238 I've been beating on that drum for a while, which would be a good segue into talking about that. 278 00:23:25,238 --> 00:23:31,893 So law firms, historically, are one of the least innovative industries on the planet. 279 00:23:31,893 --> 00:23:34,214 by a pretty big margin by myself. 280 00:23:34,214 --> 00:23:36,375 There's no real metrics on that. 281 00:23:36,375 --> 00:23:42,557 There are some proxies you can use like tech investment would be one, but not all innovation is tech related. 282 00:23:42,557 --> 00:23:49,040 Some innovation is your business model or your client engagement model or your internal firm compensation model. 283 00:23:49,040 --> 00:23:53,957 But all those things I just mentioned haven't changed at all in 40 years. 284 00:23:53,957 --> 00:23:58,863 40 years ago is really when, well, shit, it's been 50 years now. 285 00:23:58,966 --> 00:24:03,980 the hourly, the billable hour really started to get traction, right? 286 00:24:03,980 --> 00:24:10,146 I mean, it was, it's from, it's a concept from the fifties, but it didn't really get traction until the seventies. 287 00:24:10,146 --> 00:24:20,094 And we've been stuck in that silo for, for so very long, which, you know, this is way before my time, but I've, I've read the history on it. 288 00:24:20,094 --> 00:24:23,716 It was actually a partner at Wilmer, what is today Wilmer Hale. 289 00:24:23,770 --> 00:24:25,121 who proposed in it. 290 00:24:25,121 --> 00:24:30,885 It was to save clients money because a lot of work was being done on a flat fee basis then. 291 00:24:30,885 --> 00:24:37,101 this provided more accountability to what the costs were to deliver the work. 292 00:24:37,101 --> 00:24:38,304 and visibility, right? 293 00:24:38,304 --> 00:24:44,730 Like I think it was intended to be sort of a breakdown of what we did for you, but it was their only measure of value they could come up with. 294 00:24:44,730 --> 00:24:45,350 Yeah. 295 00:24:45,350 --> 00:24:47,221 And it's not just them that suffer from it. 296 00:24:47,221 --> 00:24:49,492 know, professional services in general. 297 00:24:49,492 --> 00:24:54,414 So I owned a consulting company for 14 years before I started InfoDash. 298 00:24:54,575 --> 00:24:55,985 man, we struggled too. 299 00:24:55,985 --> 00:24:58,206 Like firms would try and push us down. 300 00:24:58,206 --> 00:25:00,597 And we did business with only law firms. 301 00:25:00,597 --> 00:25:05,860 And it's so ironic that they would try and push us down the flat fee path. 302 00:25:05,860 --> 00:25:10,042 And really, the first, they would always lead off with it does not exceeds. 303 00:25:10,042 --> 00:25:11,269 And I'm like, look, 304 00:25:11,269 --> 00:25:23,009 does not exceed as a non-starter for first of all, what it does not exceed engagement is, is you build me hourly up until you hit a point and then you work for free until after 305 00:25:23,009 --> 00:25:24,160 scope is delivered. 306 00:25:24,160 --> 00:25:27,913 It's like, all right, you've taken away all the upside, right? 307 00:25:27,913 --> 00:25:30,885 It's only downside for me as the provider, right? 308 00:25:30,885 --> 00:25:38,772 If it's a flat fee, then at least if I'm efficient, can have something in the bank to offset. 309 00:25:39,520 --> 00:25:41,687 you know the engagements where it doesn't go well. 310 00:25:41,687 --> 00:25:46,720 Yeah, I mean, some of this is relatively basic economics, but I think it escapes. 311 00:25:46,917 --> 00:25:57,472 Not individuals, like there are lots of smart people and innovative people in law firms, but the sum total, the model, legacy comp structure, the way the money flows, they're all 312 00:25:57,472 --> 00:25:58,643 passed through entities, right? 313 00:25:58,643 --> 00:26:02,785 Like the way all of that works just makes it very hard to actually do anything about it. 314 00:26:02,785 --> 00:26:05,176 But what do you do in a fixed price scenario? 315 00:26:05,176 --> 00:26:07,767 You can make it up in volume, it's a portfolio play. 316 00:26:07,767 --> 00:26:10,498 Like if I do 100 projects and I win some, I lose some. 317 00:26:10,498 --> 00:26:13,691 If I net okay, then okay, right? 318 00:26:13,691 --> 00:26:15,062 Or if it's like, 319 00:26:15,062 --> 00:26:24,475 one large consulting project, but the client can't seem to lock in on scope, then how could you commit to a do not exceed? 320 00:26:24,475 --> 00:26:27,395 And this is exactly what plays out in legal work. 321 00:26:27,395 --> 00:26:35,423 And some practice areas, some matter types are more easily boxed into a scope. 322 00:26:35,423 --> 00:26:44,862 But if you can get the planets to align with that stuff, then the margin opportunity or challenge, depending on how you look at it. 323 00:26:44,862 --> 00:26:46,064 is in the hands of the firm. 324 00:26:46,064 --> 00:26:52,131 And if they can reduce their cost, but charge the same, they make more money. 325 00:26:52,131 --> 00:26:56,336 Like that's the simple economic part of it, easier said than done. 326 00:26:56,336 --> 00:27:04,865 But sometimes I think the, especially with AI fueled automation and efficiency that's being touted right now, we can't forget that. 327 00:27:04,989 --> 00:27:08,429 If we value the input of time, like that's how we get paid. 328 00:27:08,429 --> 00:27:11,369 And then we reduce the time, like quite obviously that's not going to work. 329 00:27:11,369 --> 00:27:20,549 So you have to look at all four P's of product management when you're dealing with this and product management as a discipline is not something a lot of firms have very deeply 330 00:27:20,549 --> 00:27:22,569 ingrained in their ethos. 331 00:27:22,669 --> 00:27:32,049 And, but certainly there's a lot of pricing people who understand this, but pricing is one of those services just kind of almost like innovation that is very difficult to scale 332 00:27:32,049 --> 00:27:35,252 across all the partners, all the clients in the same way. 333 00:27:35,252 --> 00:27:40,816 And I think that's one of the fundamental challenges of innovation in a firm is the scale side. 334 00:27:40,816 --> 00:27:47,190 Just like conversely, some of the biggest challenges the firm faces as an entity is scale if they want to grow. 335 00:27:47,190 --> 00:27:49,342 Because you base it on hours. 336 00:27:49,342 --> 00:27:50,963 There are only so many hours, so many people. 337 00:27:50,963 --> 00:27:52,764 Again, simple economics, 338 00:27:52,972 --> 00:28:04,517 Um, but it's also the idea that not all, particularly with innovation, like not all partners, not all practices and not even all clients are the same and warrant the same 339 00:28:04,517 --> 00:28:08,559 level of innovation investment, which creates a feeling of unfairness. 340 00:28:08,559 --> 00:28:19,014 And that freaks firms out and partnerships, you know, really start scrutinizing these things when they don't feel like getting the share of innovation that others might be, you 341 00:28:19,014 --> 00:28:22,846 know, and that's, that's one of the biggest things I've seen in my advisory work with firms. 342 00:28:22,846 --> 00:28:29,137 I wrote a thing, an article a few years back, where I talked about this concept of IPP, Innovation Per Partner. 343 00:28:29,137 --> 00:28:34,997 And the idea is that, well, it touches on the scale issue. 344 00:28:35,217 --> 00:28:41,917 There's an imbalance between consumption of innovation and contribution to the pot that funds innovation. 345 00:28:41,917 --> 00:28:48,661 And if you ask all partners to spend on it, but they don't all feel the benefits coming from it, you're going to have a challenge. 346 00:28:48,661 --> 00:28:49,951 That's a great point. 347 00:28:49,951 --> 00:29:04,695 And that's one of the reasons that I believe that the law firm partnership model, and I say that very intentionally, are iterations, implementations of the partnership model that 348 00:29:04,695 --> 00:29:05,696 does scale. 349 00:29:05,696 --> 00:29:08,698 accounting and advisory is a good example of that. 350 00:29:08,698 --> 00:29:17,719 But the law firm partnership model does not scale, which is why we have the AmLaw 200 and we have the big four in accounting. 351 00:29:17,719 --> 00:29:18,069 Right. 352 00:29:18,069 --> 00:29:25,111 And the big four have almost twice as much revenue as the entire AmLaw 100, which is 140 billion for the AmLaw 100. 353 00:29:25,111 --> 00:29:27,453 It's about 240 billion for the big four. 354 00:29:27,453 --> 00:29:36,577 And you know, some number north of 90 % of all public companies use a big four, firm for, for their audit work. 355 00:29:36,577 --> 00:29:36,917 Right. 356 00:29:36,917 --> 00:29:39,347 So tremendous consolidation in that space. 357 00:29:39,347 --> 00:29:41,258 And so the number five, 358 00:29:41,750 --> 00:29:46,322 accounting firm is Grant Thornton and they're in the single digit billions. 359 00:29:46,322 --> 00:29:48,883 And the last time I looked, it's been a while. 360 00:29:48,883 --> 00:29:50,845 My COO used to work there. 361 00:29:50,845 --> 00:29:56,348 and the smallest big four company is KPMG at 40 plus billion. 362 00:29:56,348 --> 00:29:57,228 was last year's number. 363 00:29:57,228 --> 00:29:58,769 It's probably bigger now. 364 00:29:58,769 --> 00:30:01,540 So, and there's no R and D at law firms. 365 00:30:01,540 --> 00:30:03,096 They spend less than 1%. 366 00:30:03,096 --> 00:30:06,772 And I think that number is even generous on R and D. 367 00:30:06,772 --> 00:30:08,313 Um, there's this 368 00:30:08,611 --> 00:30:17,084 There is this emphasis placed on profit taking at the end of the year, which creates challenges. 369 00:30:17,084 --> 00:30:23,846 The not being able to give non-lawyers options to own a piece of the business is a challenge. 370 00:30:23,846 --> 00:30:31,468 Consensus driven decision making, retirement horizons, the lateral mobility of lawyers to move from one firm to a next. 371 00:30:31,468 --> 00:30:35,449 Why am going to invest in innovation in this firm when 372 00:30:35,603 --> 00:30:41,895 They may piss me off in six months and I take my business across the street to the competing firm. 373 00:30:41,895 --> 00:30:49,089 It's just too transient to really encourage long-term investment and that has to get fixed. 374 00:30:49,089 --> 00:30:55,012 Otherwise, how are we going to, we can't just buy off the shelf tools to differentiate ourselves. 375 00:30:55,012 --> 00:30:58,182 That's by definition, not differentiating. 376 00:30:58,182 --> 00:30:59,216 zero, right? 377 00:30:59,216 --> 00:30:59,654 Yeah. 378 00:30:59,654 --> 00:31:09,852 Yeah, so like I see really fundamental challenges with the law firm partnership model on making the leap to what's coming next. 379 00:31:09,852 --> 00:31:10,794 How do you see it? 380 00:31:10,794 --> 00:31:13,107 I agree, of course, right? 381 00:31:13,107 --> 00:31:20,272 But I think I tend to look at the partnership model as like a necessary evil for a while longer. 382 00:31:20,272 --> 00:31:24,924 Like I don't think we're going to easily see firms break that, right? 383 00:31:24,924 --> 00:31:31,739 Now, I just read an article, started reading an article earlier about accelerated de-equitization across firms. 384 00:31:31,739 --> 00:31:34,304 And I didn't dig in with enough to see the data, but... 385 00:31:34,304 --> 00:31:36,035 I think it's a trend over the longer term. 386 00:31:36,035 --> 00:31:39,468 Yeah, we've seen more income partners, fewer equity partners. 387 00:31:39,468 --> 00:31:44,472 So I think there is a shift toward the role of a partner as a stakeholder. 388 00:31:44,472 --> 00:31:46,769 And look, by and large, they've earned it. 389 00:31:46,769 --> 00:31:47,764 They've worked hard to get there. 390 00:31:47,764 --> 00:31:49,535 They put capital in. 391 00:31:49,535 --> 00:31:51,477 They're an owner, right? 392 00:31:51,477 --> 00:31:57,041 So if we accept that, how do you work with that model to achieve the same benefits? 393 00:31:57,041 --> 00:32:01,012 Well, some of it is like the hand-to-hand combat we're talking about, right? 394 00:32:01,012 --> 00:32:07,712 It's hard to have a firm culture and strategy when each individual equity partner might have their own different opinion. 395 00:32:07,712 --> 00:32:18,792 But in firms that can all march to beat of the same drum, so to speak, if you take, like even looking at the MLOG 100, right? 396 00:32:18,792 --> 00:32:24,472 150, 160 billion, I think average PPEP is about three million, right? 397 00:32:24,932 --> 00:32:28,992 If you do the math, if you took one basis point, 398 00:32:29,320 --> 00:32:39,443 like not percentage point of their annual average income, put that into a pool, you'd have a tub of money bigger than the legal tech fund. 399 00:32:39,483 --> 00:32:42,946 So it's like, look, they can afford investment if they want. 400 00:32:42,946 --> 00:32:44,556 But the question is why? 401 00:32:44,556 --> 00:32:46,827 Well, why would we? 402 00:32:46,827 --> 00:32:51,758 If I'm making $3 million, again, am I going to make 3.1 as a result of this investment? 403 00:32:51,758 --> 00:32:52,398 What's my ROI? 404 00:32:52,398 --> 00:32:53,863 And it's a fair question. 405 00:32:53,863 --> 00:32:59,167 Oh man, lots of opinions on how you command innovation in those scenarios. 406 00:32:59,167 --> 00:33:02,809 Because if you don't, somebody eventually will come along and eat your lunch. 407 00:33:02,809 --> 00:33:04,750 But we've been saying that for a long time. 408 00:33:04,750 --> 00:33:06,411 Will AI change that? 409 00:33:06,771 --> 00:33:07,813 Maybe, right? 410 00:33:07,813 --> 00:33:14,936 So I look at partners as shareholders, and they've earned the rewards and benefits that come with that. 411 00:33:14,936 --> 00:33:16,717 are challenges certainly within that. 412 00:33:16,717 --> 00:33:19,750 But then partners are also managers, usually. 413 00:33:19,750 --> 00:33:20,702 Mm-hmm. 414 00:33:20,852 --> 00:33:32,313 If you look at partners as investors in the way I was describing, even with the story at Sidebar, like absolutely true that the equity partnership would be asking for, know, what 415 00:33:32,313 --> 00:33:38,369 is my ROI on all these investments, especially when they become pretty visible like SLC, right? 416 00:33:38,369 --> 00:33:39,229 And... 417 00:33:39,460 --> 00:33:45,273 then the challenge for the innovator inside the firm is that the partners are also the primary customer of what they're doing. 418 00:33:45,273 --> 00:33:49,195 So there's all these conflicting roles as a result of this model that I think is not hard. 419 00:33:49,195 --> 00:33:58,835 But if people were honest about what role they're in, at what moment in time, and based on what decisions they need to make, which is hard, then it'd be easier for everyone, right? 420 00:33:58,835 --> 00:34:08,635 A good example, like an opposite example of this is that you saw that 650, Wilson's subsidiary, they sold paychecks. 421 00:34:08,855 --> 00:34:14,366 And we don't know how much, like it was reported 70 million or 80 million or something like that. 422 00:34:14,366 --> 00:34:20,021 Wilson has about 250 equity partners, I think, out of 1,000 attorneys in the firm. 423 00:34:20,021 --> 00:34:23,123 Their PEP is right at the average about three million, right? 424 00:34:23,123 --> 00:34:35,894 So if you do the math there and you assume that they owned say half of the 650 business as a partnership You know that they grab another hundred hundred and fifty thousand dollars 425 00:34:35,894 --> 00:34:39,978 each from that sale if it happened the way it was reported, right? 426 00:34:39,978 --> 00:34:42,900 150 relative to three million is not a ton of money. 427 00:34:42,900 --> 00:34:45,878 I mean I would like hundred and fifty thousand extra but 428 00:34:45,878 --> 00:34:51,387 So when you look at them wearing the investor hat, I think you gotta play a different game. 429 00:34:51,387 --> 00:34:54,953 And that's how you make your business case as an innovator inside of a firm. 430 00:34:54,953 --> 00:35:00,214 But the case I would make is like, look, do you want to design a future where... 431 00:35:00,214 --> 00:35:03,846 you even sustain the level of income and success that you have today? 432 00:35:03,846 --> 00:35:08,728 Or do you want to be a victim of a future that is going to change how it all works around you? 433 00:35:08,728 --> 00:35:17,871 like, so this proactive feeling I found is what drives more firms today because either new leadership, new market conditions, the combination of all of that is like making them 434 00:35:17,871 --> 00:35:23,573 think real hard about like, how do we fit into the legal ecosystem five years from now, 10 years from now? 435 00:35:23,573 --> 00:35:27,102 It's not like this future 50 year scenario that 436 00:35:27,102 --> 00:35:29,984 you know, it feels closer, whether it's accurate or not. 437 00:35:30,025 --> 00:35:31,356 And I think that's good. 438 00:35:31,356 --> 00:35:35,110 Like I think it drives the market toward substantive change. 439 00:35:35,110 --> 00:35:42,418 I think there's risk for firms like clients, maybe figuring some of this out on their own and giving less work out to outside counsel. 440 00:35:42,418 --> 00:35:44,750 But that's, that's another path to follow. 441 00:35:44,750 --> 00:35:45,200 Yeah. 442 00:35:45,200 --> 00:35:47,311 Well, and so I think there's two things. 443 00:35:47,311 --> 00:35:51,252 ROI is important, but there's also, have you heard of Coney? 444 00:35:51,252 --> 00:35:54,363 know, cost of not investing, right? 445 00:35:54,363 --> 00:36:07,168 That's kind of a, you know, that, that, that is a very real number that is hard to quantify, but could have massive impact on the fundamentals of the business. 446 00:36:07,168 --> 00:36:09,609 And so much of, of 447 00:36:09,617 --> 00:36:14,627 like decision-making, it's rooted too much in kind of the here and now. 448 00:36:14,627 --> 00:36:19,036 ROI is mostly a here and now concept, right? 449 00:36:19,036 --> 00:36:28,905 When you say ROI, you're not typically thinking, yeah, I'm gonna acquire some learning that's gonna benefit me five years from now. 450 00:36:28,905 --> 00:36:34,550 That's very intangible and ROI tends to be very quantitative. 451 00:36:34,550 --> 00:36:35,447 So, 452 00:36:35,447 --> 00:36:42,671 You know, much of what firms get by investing in R &D and this experimentation is learning. 453 00:36:42,671 --> 00:36:50,338 it is an, it's one step in the journey to what, what's coming next, which is going to be a long path. 454 00:36:50,338 --> 00:36:56,430 And if you're not heading in the right direction, it's, I think it's going to end badly for firms. 455 00:36:56,430 --> 00:37:01,416 Like I see firms in the AMLAW at the lower end of the AMLAW, especially 456 00:37:01,416 --> 00:37:09,695 who are stuck in the mud, Their gen AI strategy is they're doing a co-pilot implementation or POC in IT. 457 00:37:09,695 --> 00:37:11,567 this is real, by the way. 458 00:37:11,567 --> 00:37:14,680 This is a real AMLO firm that shall remain nameless. 459 00:37:14,680 --> 00:37:19,073 But I had a conversation with them and just kind of asked what they were doing in the space. 460 00:37:19,073 --> 00:37:21,645 And it's like, yeah, that's what we're doing. 461 00:37:21,746 --> 00:37:25,650 And I'm thinking to myself, you are not going to exist in 462 00:37:25,698 --> 00:37:34,729 Definitely 10 maybe five years unless you pivot so hard and start sprinting which the culture just doesn't Align to that. 463 00:37:34,729 --> 00:37:42,788 So it's like yeah, man The the concept of Kony is is is real and I think it's I think it's something firms should think about 464 00:37:42,788 --> 00:37:46,140 I think that's really important point, I think. 465 00:37:46,140 --> 00:37:48,313 I've even done this. 466 00:37:48,313 --> 00:37:58,199 It's easy to look at so-called innovation investments from some of these firms and just shrug them off and say, what are you doing? 467 00:37:58,199 --> 00:38:00,922 How is that going to move the needle for everyone, anyone? 468 00:38:00,922 --> 00:38:05,605 But if we just called it something else, like marketing, 469 00:38:05,830 --> 00:38:07,692 Would we be so judgmental? 470 00:38:07,692 --> 00:38:08,350 Would I? 471 00:38:08,350 --> 00:38:09,453 No. 472 00:38:09,453 --> 00:38:14,778 If it, like to your point, an investment in learning, like future-proofing, call it future-proofing, right? 473 00:38:14,778 --> 00:38:26,287 Where we're not expecting a short-term result from this, but we're setting ourselves up to be better prepared for a long-term future and therefore judge it appropriately, right? 474 00:38:26,287 --> 00:38:31,141 And you know, if you're doing a, you you're Kirkland doing what? 475 00:38:31,141 --> 00:38:33,753 Nine billion dollars, you know, like. 476 00:38:33,790 --> 00:38:36,813 to spend a few million here and there. 477 00:38:36,813 --> 00:38:38,824 on experimental projects and stuff. 478 00:38:38,824 --> 00:38:42,346 Like I think it's fair to call that R and D in some cases. 479 00:38:42,346 --> 00:38:44,917 I think it's fair to call it investments in marketing. 480 00:38:44,917 --> 00:38:47,878 And as they say, like half my marketing is working. 481 00:38:47,878 --> 00:38:59,013 I don't know which one or whatever the old nugget is, but so yeah, like do you budget a certain amount of reinvestment back in the business, even as a partnership where 482 00:38:59,013 --> 00:39:06,394 technically speaking you are asking each individual part investor slap, you IE partner to pony up. 483 00:39:06,394 --> 00:39:16,499 Yeah, if everyone just, most of them generally believe that these are good, sound investments, just costs, like no problem, no problem with that. 484 00:39:16,499 --> 00:39:25,893 Where I think it gets firms in trouble is when you get too far out ahead of your skis, you position yourselves as super innovative, but then those who would be receiving the 485 00:39:25,893 --> 00:39:28,698 benefits of said innovation are like, where are they? 486 00:39:28,698 --> 00:39:32,310 Why weren't, well, how come I'm not getting this, you know? 487 00:39:32,310 --> 00:39:35,170 That's where the partnership model turns against itself. 488 00:39:35,331 --> 00:39:38,032 And I've seen it and it's nasty. 489 00:39:38,032 --> 00:39:41,633 Like, so yeah, I think some of that is maybe comms, it's leadership. 490 00:39:41,633 --> 00:39:46,765 It's like a tough ask for the innovation and leadership of the firm in general to like really position. 491 00:39:46,765 --> 00:39:51,337 These are the investments we're making as an organization to move ourselves into the future. 492 00:39:51,337 --> 00:39:57,398 And again, easier said than done, but probably not said enough, I think, in my experience. 493 00:39:57,398 --> 00:40:11,838 yeah, I know you know, Brad Blixstein, his group did a law that their annual LDO survey and last December, one of the questions was my law firm partner or law firm partners are 494 00:40:11,838 --> 00:40:12,693 innovative. 495 00:40:12,693 --> 00:40:16,995 almost two thirds either strongly disagreed or disagreed. 496 00:40:16,995 --> 00:40:17,465 Right. 497 00:40:17,465 --> 00:40:19,985 So two thirds, 63%. 498 00:40:19,985 --> 00:40:29,322 I still know the number because I did a presentation on it and we've had almost a 2000 % increase in innovation investment within the last 10 years. 499 00:40:29,322 --> 00:40:30,282 Now 11. 500 00:40:30,282 --> 00:40:33,084 I did a little kind of survey of the Ilta roster. 501 00:40:33,084 --> 00:40:34,284 That's the main way. 502 00:40:34,284 --> 00:40:37,267 That is the big ticket investment item is people. 503 00:40:37,267 --> 00:40:40,624 today that's gonna, that's gonna change over time. 504 00:40:40,624 --> 00:40:52,109 um Well, we're almost out of time and we got to touch on this one topic because this is why we came here to talk about the Burford kind of MSO model that is interesting and you 505 00:40:52,109 --> 00:41:05,503 know until the ABS rules either start to expand it here in the US or something else happens like you you had some interesting thoughts about some of the challenges that that 506 00:41:05,503 --> 00:41:06,513 model 507 00:41:06,525 --> 00:41:08,686 presents based on your past experience? 508 00:41:08,686 --> 00:41:13,927 Like what are some of the hurdles that standing up a managed services organization? 509 00:41:13,927 --> 00:41:20,649 And just so people know what the difference between like an MSO and an ALSP, I had to look this up because I really didn't know the difference. 510 00:41:20,649 --> 00:41:23,110 An ALSP is more kind of horizontal. 511 00:41:23,110 --> 00:41:30,457 An MSO is designed for when a client actually outsources an entire function. 512 00:41:30,457 --> 00:41:35,714 So it could be maybe your intellectual property, your patent application, 513 00:41:35,714 --> 00:41:42,339 and process you would do that in an MSO where ALSP's are more kind of horizontal and task driven. 514 00:41:42,539 --> 00:41:50,346 That's at least what I was able to come up with but what do you see as some of the challenges with that model going forward? 515 00:41:51,058 --> 00:42:01,917 well, I think there is nuance in the difference between MSO, ALSP and so on, but the bread and butter of it is like, well, what are they investing in and what are they outsourcing 516 00:42:01,917 --> 00:42:02,988 and what are they building? 517 00:42:02,988 --> 00:42:09,434 And look, I can see from Burford's standpoint, creating a new investment class for them. 518 00:42:09,434 --> 00:42:11,176 And this is what they do. 519 00:42:11,176 --> 00:42:17,251 They've created litigation as investment for people. 520 00:42:17,251 --> 00:42:18,863 Some firms participate in that. 521 00:42:18,863 --> 00:42:22,025 Some corporates participate in that. 522 00:42:22,025 --> 00:42:36,465 So when it comes to the MSO idea, if it's related at all to legal service, then yeah, they're skirting a lot of issues that have been skirted before, or at least we've tried. 523 00:42:36,465 --> 00:42:41,360 But the way I can help but look at it is from the partner's perspective in the firm. 524 00:42:41,360 --> 00:42:52,126 Even if there were a way to do that then when you give up some of the upside of it you give up some of the control of it whatever it is and In a firm big enough now, and maybe 525 00:42:52,126 --> 00:43:01,232 this is down market Maybe there's some really interesting way to look at this that I haven't bought but I think for a big firm Like I was saying earlier like there is capital 526 00:43:01,232 --> 00:43:02,152 to invest. 527 00:43:02,152 --> 00:43:07,335 They just need to choose to invest it they can afford it They the partnership the owners, right? 528 00:43:07,335 --> 00:43:19,671 And I would think that most reasonable partners would want to look at several investment strategies, including those that don't involve giving up control or risking, you know, 529 00:43:19,671 --> 00:43:21,652 brand reputation and anything else. 530 00:43:21,652 --> 00:43:21,862 Right. 531 00:43:21,862 --> 00:43:24,033 Like, so what are they looking for? 532 00:43:24,033 --> 00:43:30,456 If the problem trying that they're trying to solve together here is like, need capital to invest in X. 533 00:43:30,456 --> 00:43:37,719 Like I can think of 10 other ways to do that, including if we were to sort of break the regulatory hold on this stuff, like the LSA 534 00:43:38,873 --> 00:43:42,815 sure, you know, like you can go get money from private equity if you want it. 535 00:43:42,815 --> 00:43:48,908 There's a range of options include today they go to the bank and they have rotating lines and stuff, right? 536 00:43:48,908 --> 00:43:51,210 so I just don't, I don't, I don't see it. 537 00:43:51,210 --> 00:44:03,581 Now, if it's more sort of non-essential paralegal or administrative functions in this NSO, others have tried that too, including companies like Harbor or HBR or anyone like that, 538 00:44:03,581 --> 00:44:04,248 right? 539 00:44:04,296 --> 00:44:05,476 tech front. 540 00:44:06,617 --> 00:44:14,131 So yeah, to be honest, like I've not studied it enough to have, you know, a precise opinion, nor have I called and asked anyone. 541 00:44:14,131 --> 00:44:20,966 But, you know, I've seen this like desire to get money into the industry before investing in legal tech is one thing. 542 00:44:21,027 --> 00:44:23,609 And I do feel there's a bit of a bubble already to pop there. 543 00:44:23,609 --> 00:44:25,522 investing in legal services directly. 544 00:44:25,522 --> 00:44:34,081 I would think those that provision the legal services would be the first to want to make that decision and decide if and when they need capital and why and so on, whether it's 545 00:44:34,081 --> 00:44:35,512 tech related or not. 546 00:44:35,512 --> 00:44:38,634 I don't see Burford coming up with anything here. 547 00:44:39,216 --> 00:44:50,109 Or interested outside of maybe some sort of consolidation of very small firms interested in, like could Burford help design a consortium of firms that are working together? 548 00:44:50,109 --> 00:44:51,321 quite possibly, right? 549 00:44:51,321 --> 00:44:55,010 And that would actually make sense in some ways to me. 550 00:44:55,010 --> 00:45:04,140 What makes you say there's a bubble like Harvey had a three billion or three billion valuation and then four months later it was five billion. 551 00:45:04,140 --> 00:45:05,344 Totally rational. 552 00:45:05,870 --> 00:45:10,890 Even Sam Altman is like saying people are going to lose a tremendous amount of money. 553 00:45:10,890 --> 00:45:11,550 And you know what? 554 00:45:11,550 --> 00:45:14,210 You're starting to see some investor shakiness. 555 00:45:14,310 --> 00:45:19,381 Like, I don't know if you followed a TR had like a 15 % drop in one day. 556 00:45:19,381 --> 00:45:32,401 Monday.com dropped at 30 % in, I don't know, a one or two day period because on an earnings call, they had talked about their SEO traction was slipping. 557 00:45:32,570 --> 00:45:41,643 and didn't have good answers when they asked about implications to client acquisition costs, which they're very reliant on that channel for client acquisition. 558 00:45:41,643 --> 00:45:54,808 So when you start to see huge swings like that, means investors are getting nervous and all it's going to take is one match to light that fire and then boom, we're going to end 559 00:45:54,808 --> 00:45:55,729 up in a correction. 560 00:45:55,729 --> 00:45:56,960 I couldn't agree more. 561 00:45:56,960 --> 00:46:01,661 Even though I'm on someone on the receiving side of that right now. 562 00:46:01,661 --> 00:46:09,194 I think that's why the slow steady practical approach without over investing could make sense for some, right? 563 00:46:09,194 --> 00:46:14,365 But inevitably massive consolidation and carnage coming. 564 00:46:14,485 --> 00:46:16,406 That's my prediction. 565 00:46:16,406 --> 00:46:19,007 My optimistic prediction. 566 00:46:19,007 --> 00:46:21,841 oh 567 00:46:21,841 --> 00:46:22,252 man. 568 00:46:22,252 --> 00:46:26,746 um We didn't even get to half the things we were going to talk about, so I'll have to have you back on. 569 00:46:26,746 --> 00:46:32,874 But before we wrap up, man, how do people find out more about LEGO or find you on social media? 570 00:46:32,874 --> 00:46:34,136 Yeah, thanks for asking. 571 00:46:34,136 --> 00:46:38,200 LEGO.ai, our website, Get The Basics. 572 00:46:38,200 --> 00:46:39,857 Always happy to talk with anyone. 573 00:46:39,857 --> 00:46:42,524 I'm pretty active on LinkedIn, or try to be. 574 00:46:42,524 --> 00:46:44,926 And we had really good ILTA. 575 00:46:44,926 --> 00:46:46,277 I think you guys did too, right? 576 00:46:46,277 --> 00:46:48,329 It was a great event this year. 577 00:46:48,329 --> 00:46:49,420 Some strong tailwinds. 578 00:46:49,420 --> 00:46:53,424 I think I'm seeing a shift to more pragmatic. 579 00:46:53,424 --> 00:46:56,846 uh approaches to thinking about gen AI in practice. 580 00:46:56,846 --> 00:47:01,298 I'm seeing more people focus on literacy instead of throwing tools at people. 581 00:47:01,298 --> 00:47:06,391 I'm seeing plenty of fatigue from trying 50 products at the same time. 582 00:47:06,391 --> 00:47:16,257 Like, so a lot of those things play in our favor where we sort of focus on flexibility without provider and model and vendor law. 583 00:47:16,443 --> 00:47:19,956 or even use case lot, like would like to say you are the use case. 584 00:47:19,956 --> 00:47:27,263 We're trying to enable people to figure out how to use this stuff before you scale this stuff, which implies spend a lot of money on this stuff. 585 00:47:27,263 --> 00:47:29,768 yeah, I think the message is landing. 586 00:47:29,768 --> 00:47:36,075 We'd love to talk to people about it, but obviously I'm always happy to talk about anything clearly. 587 00:47:36,075 --> 00:47:38,733 So yeah, I would love to come back on and talk more. 588 00:47:38,733 --> 00:47:39,753 All right, good stuff. 589 00:47:39,753 --> 00:47:45,753 And we'll put links to your site and your LinkedIn profile in the show notes. 590 00:47:46,073 --> 00:47:47,993 But hey, man, it was a great conversation. 591 00:47:47,993 --> 00:47:50,953 I appreciate you spending a little time with me this afternoon. 592 00:47:52,553 --> 00:47:54,084 All right, take care. 593 00:47:54,084 --> 00:47:54,502 Bye. 00:00:01,829 Rob Saccone, how are ya? 2 00:00:01,829 --> 00:00:02,839 Doing well, Ted. 3 00:00:02,839 --> 00:00:03,755 How you doing? 4 00:00:03,755 --> 00:00:04,365 Good man. 5 00:00:04,365 --> 00:00:06,806 This episode is long overdue. 6 00:00:09,006 --> 00:00:12,048 You and I have known each other for probably 15 years. 7 00:00:12,048 --> 00:00:16,989 we shared a similar, God, I guess kind of product path journey. 8 00:00:16,989 --> 00:00:25,093 you were kind of the beginning of the legal internet movement and handed it off to handshake, which handed it off to us. 9 00:00:25,093 --> 00:00:27,416 And, um, yeah, so 10 00:00:27,416 --> 00:00:31,467 You and I have been kept in touch over the years and worked together. 11 00:00:31,467 --> 00:00:33,593 So man, it's good to finally have you on. 12 00:00:33,593 --> 00:00:35,186 Yeah, excited for this. 13 00:00:35,186 --> 00:00:38,644 Yeah, long time listener, first time caller. 14 00:00:38,644 --> 00:00:41,777 So yeah, let's do it. 15 00:00:41,777 --> 00:00:51,206 for those that don't know you, I mentioned you were a product company CEO with XM Law, but why don't you kind of fill in the gaps? 16 00:00:51,206 --> 00:00:54,428 Like what, you know, what are you doing now? 17 00:00:54,428 --> 00:00:55,599 What got you into legal? 18 00:00:55,599 --> 00:00:56,360 How long you've been here? 19 00:00:56,360 --> 00:00:57,881 All that sort of good stuff. 20 00:00:58,337 --> 00:00:59,657 Sure, sure. 21 00:00:59,657 --> 00:01:10,597 Well, in a nutshell, it's been a little over 26 years, dare I say it aloud, that I've been at the often messy intersection of business tech and law. 22 00:01:10,597 --> 00:01:13,761 And I've worn a lot of hats during that time. 23 00:01:13,761 --> 00:01:22,941 I actually started as a self-taught software engineer and just worked my way into building enterprise systems in a few different verticals until I kind of stumbled into the legal 24 00:01:22,941 --> 00:01:33,861 market back in 1999 when I joined Goodwin to help them build out their relatively new KN function. 25 00:01:34,197 --> 00:01:43,454 It didn't take me very long to see that there were plenty of opportunities in legal service at the high end to bring business tech, lots of things that I was comfortable with 26 00:01:43,454 --> 00:01:46,768 that were kind of foreign to firms at the time, it seemed to me. 27 00:01:46,768 --> 00:01:50,768 Uh, didn't take me, I don't know, maybe 2002 or three. 28 00:01:50,888 --> 00:01:58,528 I leapt headfirst into entrepreneurship and started XM Law back before we called them Legal Tech startups, think. 29 00:01:58,528 --> 00:02:06,068 Um, and, uh, built that company out, did a lot of really fun, awesome work and sold to Thompson in 2009. 30 00:02:06,128 --> 00:02:15,788 I stayed with them for a few years and a couple of different roles in product and strategy until I felt the edge to get back to startups and small, small teams, small organizations. 31 00:02:15,788 --> 00:02:16,752 Uh, so I. 32 00:02:16,752 --> 00:02:27,337 shifted back into startup work, this time doing little more investing, advising, like broad range things, but continued working with law firms at the time when internal startup 33 00:02:27,337 --> 00:02:29,749 efforts were kind of nascent. 34 00:02:29,749 --> 00:02:32,260 Innovation teams and roles were still forming. 35 00:02:32,260 --> 00:02:34,591 ALSPs were gaining a lot of attention. 36 00:02:34,591 --> 00:02:41,375 So there was a lot of hustle in the market to like go after this new form of legal service delivery. 37 00:02:41,604 --> 00:02:45,466 And that, fortunately for me, led me to the leadership team at Stifarth. 38 00:02:45,466 --> 00:02:51,708 And Steve Poore, Lisa Damon, and others have been fighting the innovation fight for years before I showed up there. 39 00:02:51,708 --> 00:02:53,310 So they were well ahead of the curve. 40 00:02:53,310 --> 00:03:05,013 And I designed and built a subsidiary of the business called Stifarth Lean Consulting, where we served our clients and even non-clients directly with legal ops and analytics and 41 00:03:05,013 --> 00:03:06,934 service design and so on. 42 00:03:06,970 --> 00:03:20,010 Um, since then I've done a whole range of different random projects and work with a lot of cool startups and legal tech companies, including info dash and, um, uh, even took a break 43 00:03:20,010 --> 00:03:26,610 as an operating partner in private equity for a little over a year, you know, so that was my one escape from legal, guess. 44 00:03:26,610 --> 00:03:31,470 Um, uh, but then chat, GPT appeared in the world in 2022. 45 00:03:31,470 --> 00:03:35,110 And like many of us, I jumped on the AI train. 46 00:03:35,290 --> 00:03:36,844 Um, I. 47 00:03:36,844 --> 00:03:43,174 was able to work with a few firms on very early, like some of the first pilot projects with products like Co-Counsel. 48 00:03:43,174 --> 00:03:49,641 We worked with Jake and his team to sort of bring it and get feedback from a lot of big practitioners. 49 00:03:49,641 --> 00:03:55,883 And that brought me to where I am today, fully back in the startup mode as CTO here at LEGO. 50 00:03:55,883 --> 00:04:02,286 And my day job now is putting GEN.AI to the test and helping firms figure out practical, safe ways to use it. 51 00:04:02,286 --> 00:04:05,968 So yeah, I've been really fortunate to work with a lot of 52 00:04:05,968 --> 00:04:14,152 very smart people and teams over the years and it's definitely made me opinionated on how things work and how innovation can and can't work. 53 00:04:14,152 --> 00:04:16,588 So can't wait to dig in. 54 00:04:16,588 --> 00:04:17,329 Yeah, man. 55 00:04:17,329 --> 00:04:24,535 Well, your experience with Cypharth Lean, and for those that don't know, you were on our first iteration of an advisory board. 56 00:04:24,535 --> 00:04:29,016 I think we were too early, really, to make that work. 57 00:04:29,016 --> 00:04:32,830 And then one board member got a job, and it kind of fell apart. 58 00:04:32,830 --> 00:04:37,974 We're reestablishing that very slowly and intentionally. 59 00:04:37,974 --> 00:04:42,993 But yeah, you had a lot of very valuable input for us in the early days. 60 00:04:42,993 --> 00:04:45,285 We uh were happy to work with you. 61 00:04:45,285 --> 00:04:56,971 Your work at Cypharth was especially interesting in the conversation that we're about to have, which I think is super relevant right now, which is the alternative business 62 00:04:56,971 --> 00:04:58,411 structure. 63 00:04:58,572 --> 00:05:05,205 You and I were bantering back and forth on a post about Burford Capital standing up. 64 00:05:05,237 --> 00:05:21,031 managed services organizations, MSOs, as a vehicle to get outside capital into law firms, which is prohibited by ABA Model Rule 5.4 in every state except two, with the addition of 65 00:05:21,031 --> 00:05:22,603 DC and Puerto Rico. 66 00:05:22,603 --> 00:05:26,627 And we were kind of kicking it back and forth on, will it work this time? 67 00:05:26,627 --> 00:05:29,668 And we had some different viewpoints. 68 00:05:29,908 --> 00:05:40,499 I think that it, you know, the earlier attempts failed for interesting reasons that I think exist to a much lesser extent today. 69 00:05:40,499 --> 00:05:50,512 And that the innovation around gen AI, a language, I mean, when, when have we seen a disruption in how language gets processed? 70 00:05:50,512 --> 00:05:53,875 It's been, you know, it's, it's, this is really the first major. 71 00:05:53,875 --> 00:05:59,587 disruptive tech, which has so much relevance to how lawyers work. 72 00:05:59,587 --> 00:06:01,687 So I think the timing is right. 73 00:06:01,687 --> 00:06:10,358 think we're starting to see the Legal Services Act in the UK has been around for 15 years now, almost, maybe even a little bit longer. 74 00:06:10,358 --> 00:06:15,718 And so we've got a model to look at. 75 00:06:15,718 --> 00:06:17,496 it hasn't been... 76 00:06:17,496 --> 00:06:20,249 really moved the dial a whole lot over there. 77 00:06:20,249 --> 00:06:35,262 But I think that it also hasn't caused a ton of issues that so many lawyers have presented as why you need rule 5.4 and making non-legal ownership prohibited. 78 00:06:35,262 --> 00:06:41,402 So yeah, man, let's talk a little bit about like, so Cypharth lean, you know, I'm a lean Six Sigma black belt. 79 00:06:41,402 --> 00:06:47,542 got trained at bank of America and it is a rigorous, uh, it is a rigorous training. 80 00:06:47,542 --> 00:06:52,982 mean, I think I went through a month of training and you know, first you get your green belt. 81 00:06:52,982 --> 00:07:04,603 So the way it works there, I assume there's similar thresholds, um, at other places you have to save the bank, uh, 250 K or generate 250 K in, in 82 00:07:04,603 --> 00:07:08,923 in new revenue to get your green belt, the threshold is a million. 83 00:07:08,923 --> 00:07:11,265 And those have to be, yeah. 84 00:07:11,365 --> 00:07:22,390 So when I saw Cypharth Lean, I was like, man, is this a Lean Six Sigma kind of approach to, lens that you're taking to legal services, which I thought was interesting. 85 00:07:22,390 --> 00:07:26,802 yeah, like how did, and is the Cypharth Lean, are they still around? 86 00:07:26,802 --> 00:07:29,722 It does in a different form, right? 87 00:07:29,722 --> 00:07:32,582 I think it's more integral to the firm's practice now. 88 00:07:32,582 --> 00:07:41,542 It's not a standalone business with its own P &L and the other reasons which we chose to explore that, guess. 89 00:07:42,022 --> 00:07:44,473 yeah, a lot has been written about this in the world. 90 00:07:44,473 --> 00:07:45,653 You can find it online. 91 00:07:45,653 --> 00:07:47,893 It's a fascinating story. 92 00:07:48,333 --> 00:07:55,337 I showed up at a time, oh God, I can't remember the year, 2015, 14, where... 93 00:07:55,397 --> 00:07:57,163 they, the firm. 94 00:07:57,297 --> 00:08:04,642 uh through the efforts of Steve and Lisa and Pete and others who they would describe it as hand-to-hand combat. 95 00:08:04,642 --> 00:08:09,604 Every day they were converting a new partner to think differently about how they serve their clients. 96 00:08:09,604 --> 00:08:21,410 And as an L &E firm, they did a fair amount of high-end, big ticket work, bet the business type work, but much of the work was routine, single-planet employment litigation. 97 00:08:21,410 --> 00:08:25,973 was regular employment matters, advice and counsel on state-by-state 98 00:08:25,973 --> 00:08:29,195 regulatory and compliance challenges and so on. 99 00:08:29,195 --> 00:08:36,860 Many LNE firms were facing the squeeze and they got ahead of it by saying, look, we need to change our model if we're going to survive. 100 00:08:36,860 --> 00:08:51,550 So they were working with clients like DuPont and Motorola, who went very deep in hardcore lean Six Sigma, probably more like a bank, right? 101 00:08:51,550 --> 00:08:53,484 oh 102 00:08:53,484 --> 00:09:01,084 you know, fast forward over, you know, a tough several years to convert the firm to think differently. 103 00:09:01,084 --> 00:09:05,544 They introduced like flavors of lean Six Sigma over time. 104 00:09:05,684 --> 00:09:11,864 The Six Sigma math heavy, metrics heavy part of it, a little bit lightened and compressed. 105 00:09:11,864 --> 00:09:21,228 The lean part of it, like Toyota lean and so on, with the emphasis on leaning out processes that are not lean, right? 106 00:09:21,228 --> 00:09:30,831 They made huge headway on through introducing people with Lean Six Sigma, green belts and black belts to process map everything, everything. 107 00:09:30,831 --> 00:09:33,912 And they started, as I recall, with internal processes. 108 00:09:33,912 --> 00:09:37,393 So looking at, you know, new business intake, conflict checks and so on. 109 00:09:37,393 --> 00:09:46,936 And as they hone their skills, they started pulling in practices and looking at legal processes, particularly the ones that were under tremendous margin pressure. 110 00:09:46,936 --> 00:09:48,958 They would call it working with the willing. 111 00:09:48,958 --> 00:09:51,971 because if you're losing money, you're pretty willing to try something new. 112 00:09:51,971 --> 00:10:01,506 But then eventually, including clients, and it became probably the most critical piece of what they did was the collaborative way they approach it by bringing clients in with the 113 00:10:01,506 --> 00:10:04,627 client teams and finding ways to do business together. 114 00:10:04,627 --> 00:10:10,421 Now, naturally, that fits really nicely at the high end, a little more difficult to scale up across routine work. 115 00:10:10,421 --> 00:10:15,403 at the time I was consulting to the leadership team, they had 116 00:10:15,403 --> 00:10:25,447 30, maybe more individuals and roles that were labeled legal process improvement specialists, legal project managers. 117 00:10:25,447 --> 00:10:29,226 I think they had the biggest team of LPMs in the market at the time. 118 00:10:29,226 --> 00:10:32,668 We had tech and analytics and data experts. 119 00:10:32,668 --> 00:10:34,979 Many of these resources were held JDs. 120 00:10:34,979 --> 00:10:35,959 They just didn't practice. 121 00:10:35,959 --> 00:10:39,151 They shifted gears career-wise. 122 00:10:39,151 --> 00:10:43,463 And the question from the partnership was, can we do more with these resources? 123 00:10:43,463 --> 00:10:44,643 Can we organize them differently? 124 00:10:44,643 --> 00:10:46,164 Could we do anything with them? 125 00:10:46,164 --> 00:10:55,079 So pretty broad-stroke scan of the market and looking at scenarios in which these resources, these specialized resources could be used in the best, highest value way. 126 00:10:55,104 --> 00:11:06,058 uh That led to a desire to organize them into a single business, not just for observability into the business, but also to better leverage each other to build 127 00:11:06,058 --> 00:11:09,593 multidisciplinary teams along with the lawyers. 128 00:11:09,593 --> 00:11:18,859 and to serve that to clients in a much more structured and at the time we were hoping more scalable way, like reach more clients, more partners with these resources. 129 00:11:18,859 --> 00:11:22,579 So that led to the creation of Cypherthleen Consulting. 130 00:11:22,579 --> 00:11:23,873 The bones were there. 131 00:11:23,873 --> 00:11:28,496 I was the commercial guy who came in and helped sort of bring it together. 132 00:11:28,535 --> 00:11:33,137 And then we went to market and it was a lot of recognition for Cyphart at the time. 133 00:11:33,137 --> 00:11:35,398 the conversations were excellent. 134 00:11:35,398 --> 00:11:37,719 Like client demand was very high. 135 00:11:37,719 --> 00:11:39,542 We had a lot of inbound interest. 136 00:11:39,542 --> 00:11:50,077 Can you come help us with, imagine scenarios where we're asked to help with a panel consolidation project and Cyphart, the firm is on the panel. 137 00:11:50,197 --> 00:11:52,458 And this happened more than once, right? 138 00:11:52,458 --> 00:11:55,830 So that was the, might help you understand the 139 00:11:55,830 --> 00:12:05,293 part of it right but it wasn't without its challenges you know and we set out to do at least an experiment of one year like can we bring this as a business and as discrete 140 00:12:05,293 --> 00:12:08,227 products to market and see how far we can get 141 00:12:08,680 --> 00:12:10,880 So yes, you've got a great perspective. 142 00:12:10,880 --> 00:12:18,840 mean, you lived this scenario where you've got kind of a spin-off of a law firm. 143 00:12:19,300 --> 00:12:32,827 I wrote an article called Big Law 2.0, kind of a blueprint for the future, and proposed a model where law firms stand up a C Corp. 144 00:12:32,827 --> 00:12:35,747 a standalone C Corp, not a subsidiary. 145 00:12:35,747 --> 00:12:41,139 don't even know if legally that would work, uh having a C Corp subsidiary of a partnership. 146 00:12:41,139 --> 00:12:53,185 anyway, a standalone subsidiary in the C Corp structure and the independent nature of being standalone, I think are very important aspects because it allows a traditional 147 00:12:53,185 --> 00:12:57,679 enterprise governance model to be applied, which doesn't exist in law firms. 148 00:12:57,679 --> 00:13:03,244 So, you know, I spent years at Bank of America, as I mentioned earlier, mostly in risk management roles. 149 00:13:03,244 --> 00:13:04,065 I was in. 150 00:13:04,065 --> 00:13:08,128 So you have you have really four lines of defense in financial services. 151 00:13:08,128 --> 00:13:09,299 You have the line of business. 152 00:13:09,299 --> 00:13:14,493 So this could be consumer lending or the investment bank or the commercial bank. 153 00:13:14,694 --> 00:13:19,378 And you have controls within the line of business to mitigate risk. 154 00:13:19,378 --> 00:13:20,282 Then you have. 155 00:13:20,282 --> 00:13:25,802 risk management partners, that's the second line of defense, that are aligned directly to these business units. 156 00:13:25,842 --> 00:13:29,562 Then the third layer of defense is internal audit. 157 00:13:29,562 --> 00:13:41,562 And I also worked in internal audit where you would come in and evaluate the control environment and throw flags that would sometimes get escalated to an independent audit 158 00:13:41,562 --> 00:13:44,622 committee that reported directly to the board. 159 00:13:44,882 --> 00:13:46,862 And you know, they could get things done. 160 00:13:46,862 --> 00:13:53,125 A lot of people lost jobs over SEV one audit issues, especially if they were repeat offenders. 161 00:13:53,125 --> 00:13:55,736 and then the fourth line of defense is the wall street journal. 162 00:13:55,736 --> 00:13:59,450 that's where you end up if the first line of three lines of defense fail. 163 00:13:59,450 --> 00:14:09,374 we jokingly, yeah, it's not a good day for a bank to end up in the wall street journal for, one of those issues, but yeah, that model doesn't exist in law firms. 164 00:14:09,374 --> 00:14:10,854 and it's a. 165 00:14:11,051 --> 00:14:23,976 a risk structure like that is very important amongst other structures, like having shareholders elect a board that installs professional management and holds management 166 00:14:23,976 --> 00:14:27,198 accountable to goals and KPIs. 167 00:14:27,198 --> 00:14:33,222 And again, very different than the law firm partnership model and the non-legal ownership. 168 00:14:33,222 --> 00:14:37,972 So you raised some really interesting points that I want to dig into. 169 00:14:37,972 --> 00:14:39,565 And you pointed to some 170 00:14:39,565 --> 00:14:48,691 past failures with models kind of like this, know, atrium and clear spire were a couple and yeah, those, those did not succeed. 171 00:14:48,691 --> 00:14:53,453 think clear spire was early and their timing was bad for a couple of reasons. 172 00:14:53,453 --> 00:15:04,018 One, it was like right in the middle of the reset, great recession, which you could argue what better a time to save clients money, but that's also a time where everybody's risk, 173 00:15:04,179 --> 00:15:05,159 you know, 174 00:15:05,231 --> 00:15:10,375 shields are up, like you're trying to manage risk and this was a risky new path. 175 00:15:10,375 --> 00:15:19,160 and then with, with atrium, it's not going to be some 30 something tech bro who's going to come in and disrupt legal services. 176 00:15:19,160 --> 00:15:25,474 It's just not, you know, somebody like that with a big Silicon Valley war chest. 177 00:15:25,474 --> 00:15:32,890 Um, I just don't see that happening as I think, you know, with no legal experience, he, Justin hadn't, he 178 00:15:32,890 --> 00:15:34,933 no legal experience, he founded Twitch. 179 00:15:34,933 --> 00:15:46,699 So, you know, what is your take on, you know, those scenarios and how, what we can learn from those past experiences to what might be coming next? 180 00:15:46,699 --> 00:15:48,231 Lot to unpack. 181 00:15:48,231 --> 00:15:55,417 Justin would say at the time that he was a power user of legal services and wasn't satisfied. 182 00:15:55,437 --> 00:15:57,949 Therefore, we need a new way of doing it. 183 00:15:57,949 --> 00:16:00,411 So I think it started from the right thinking. 184 00:16:00,411 --> 00:16:06,245 Fast forward to today, we're seeing a lot of tech bro money come into the space. 185 00:16:06,245 --> 00:16:08,946 And sometimes that can come with a little bit of hubris. 186 00:16:09,100 --> 00:16:15,878 I try to separate me being a cynical old timer in the space from recognizing that we can learn from the past. 187 00:16:15,878 --> 00:16:26,599 I don't mean get anchored in the past, but a lot of attempts, like success and fail, successful and failed, have been made to change the model from inside and from outside. 188 00:16:26,616 --> 00:16:28,887 ClearSpire and Atrium are both really good examples. 189 00:16:28,887 --> 00:16:37,359 That was sort of a structural attempt to work around the model rules to allow for fee sharing and ownership and so on. 190 00:16:37,359 --> 00:16:43,546 So you have a tech company and then you have the professional partnership, the law firm, the LLP, whatever, right? 191 00:16:43,546 --> 00:16:53,623 And they just come up with a relationship that in my non-legal opinion is skirting those rules just enough so that they can operate, right? 192 00:16:53,623 --> 00:17:02,712 I think you could make a good case that both those companies were ahead of their time because the premise makes sense to almost anyone, think, right? 193 00:17:02,712 --> 00:17:05,374 Lower cost, better access to legal services. 194 00:17:05,374 --> 00:17:10,659 I'm, you know, excluding the consumer law access to justice. 195 00:17:10,659 --> 00:17:13,962 Like we're just talking like big business buying from big law, right? 196 00:17:13,962 --> 00:17:19,680 And, you know, but they want better service at lower cost always, right? 197 00:17:19,680 --> 00:17:24,743 But I think in a nutshell with both of them, the demand wasn't there to warrant the business. 198 00:17:24,743 --> 00:17:27,104 And it takes two to tango, right? 199 00:17:27,104 --> 00:17:37,928 I think one thing I've learned, you know, it was sort of ingrained in me at CyPharth is that the voice of the client always wins, barring from the Lean Six Sigma terminology 200 00:17:37,928 --> 00:17:39,428 playbook, right? 201 00:17:39,488 --> 00:17:41,523 VOC wins and... 202 00:17:41,523 --> 00:17:53,376 If I needed to make a business case for any change, for anything, for any amount, for any resource, if I did not have the VOC with me, I wouldn't get it. 203 00:17:53,376 --> 00:18:03,347 So that's led me to this point of view that not only need to, should involve clients in the provisioning of legal service when you're talking about changing it, but it's 204 00:18:03,347 --> 00:18:04,908 necessary, right? 205 00:18:04,908 --> 00:18:15,800 Now, if you believe that, and the clients might be saying a lot about what they'd like to be different, how they'd like it to change, but then the doing part isn't there. 206 00:18:15,800 --> 00:18:20,725 For example, we've been talking about AFAs and non-hourly billing for decades. 207 00:18:20,725 --> 00:18:30,774 We're still at, I don't know, I haven't studied this in a while, but probably 20, 30 % of MLM work is subject to AFAs in some way, at best, at best. 208 00:18:30,774 --> 00:18:32,677 And it's gonna vary from practice firm to firm. 209 00:18:32,677 --> 00:18:34,676 In my... 210 00:18:34,776 --> 00:18:46,586 experience being in the room, like observing this myself firsthand, even clients asking for non-hourly billing, will almost always say, give us shadow billing and give us your 211 00:18:46,586 --> 00:18:47,846 time records along with that. 212 00:18:47,846 --> 00:18:50,289 And you're like, well, wait a minute, like, that's not how it works. 213 00:18:50,289 --> 00:18:59,288 And I think the work that cleanly fell into AFAs took sophistication on both sides by cell, right? 214 00:18:59,288 --> 00:19:01,891 and the work needed to fit the pricing model. 215 00:19:01,891 --> 00:19:13,053 So again, like if you're a massive retailer with hundreds of thousands of employees, you're probably churning through thousands of small wage and hour issues and other things 216 00:19:13,053 --> 00:19:15,105 just year over year, month over month. 217 00:19:15,105 --> 00:19:19,502 So to sort of lump sum that into some volume arrangement, I wouldn't say it's easy. 218 00:19:19,502 --> 00:19:22,694 but it's a better fit because they look at it as a cost of business. 219 00:19:22,694 --> 00:19:24,115 It's no longer a legal service. 220 00:19:24,115 --> 00:19:26,387 It's a business service that has lawyers involved. 221 00:19:26,387 --> 00:19:28,909 Maybe, maybe, right? 222 00:19:28,909 --> 00:19:39,199 So not to get off track, but back to the attempts, like without the demand of the markets they served, you know, and I'm a little more familiar with atrium than clairspire. 223 00:19:39,199 --> 00:19:41,821 Like Mark Cohen was early and you're right. 224 00:19:41,821 --> 00:19:45,227 I think it was probably 2006, seven, eight, something like that. 225 00:19:45,227 --> 00:19:46,529 Definitely ahead of his time. 226 00:19:46,529 --> 00:19:53,667 Probably spent a little more too fast on the tech platform side of things. 227 00:19:53,667 --> 00:20:03,288 Clients were, I'm gonna guess, clients were pretty curious in the idea, but they weren't willing to just displace entire slots of legal work that was flowing out to incumbents, 228 00:20:03,288 --> 00:20:04,781 even if they're overspending, right? 229 00:20:04,781 --> 00:20:07,925 Because the credibility and the trust wasn't there yet. 230 00:20:07,925 --> 00:20:10,206 And that might be to your point, what's shifting now. 231 00:20:10,206 --> 00:20:10,820 It's like... 232 00:20:10,820 --> 00:20:15,252 I think buyers are beginning to realize that some of this is somewhat mechanical. 233 00:20:15,252 --> 00:20:20,466 It can be delivered in ways that don't need a massive brand attached to it. 234 00:20:20,466 --> 00:20:24,048 But I still think that carries a lot of weight, right? 235 00:20:24,048 --> 00:20:33,374 With Atrium though, serve the, know, amongst others, they serve the startup market, like trying to get those early stage, like from C to A, maybe to B, you know. 236 00:20:33,374 --> 00:20:38,577 They're competing with the Wilsons and the Coolies and the others, you know, Gundersons of the world. 237 00:20:39,353 --> 00:20:51,544 Same thing, like even those that invested in Atrium, I'm not sure they all signed up to be buyers of Atrium services, is my opinion, I have no special knowledge of it, right? 238 00:20:51,844 --> 00:20:54,975 So yeah, demand wasn't quite there. 239 00:20:54,975 --> 00:21:06,535 Justin, think, went on record later saying, yeah, I'm a power user, but I was a little more interested in the big thinking change than remembering to build a product that the 240 00:21:06,535 --> 00:21:07,835 market actually wanted. 241 00:21:07,835 --> 00:21:16,906 So after raising 70, 75 million, investing in lot of software, it just didn't work. 242 00:21:17,226 --> 00:21:19,957 And again, in my opinion, 243 00:21:19,957 --> 00:21:30,263 Ignoring the past to some extent sort of rebuilding reinventing the wheel And sort of ignoring the difficulty it is to have a relationship based business 244 00:21:30,263 --> 00:21:37,524 you know, with lawyers with deep expertise, like pairing that with software and the mentality it takes to run a software business with the scale you get with them. 245 00:21:37,524 --> 00:21:40,185 Like those two are like, you know, oil and water. 246 00:21:40,185 --> 00:21:42,316 So you got to find a way to like make those work. 247 00:21:42,316 --> 00:21:51,418 And that was one of the differences with Syfar to their credit is that yes, subsidiary, but it wasn't designed to be like so removed from the firm. 248 00:21:51,418 --> 00:21:53,640 We were pretty integral with the firm. 249 00:21:53,640 --> 00:21:56,816 And if that wasn't there and we didn't have the brand, 250 00:21:56,816 --> 00:22:00,167 like presence of Cypharth with us, nothing would have worked. 251 00:22:00,167 --> 00:22:02,088 Nothing would have worked, right? 252 00:22:02,088 --> 00:22:07,011 So yeah, I think those were like unique attempts, similar structural model. 253 00:22:07,011 --> 00:22:15,714 I think I said at one point somewhere along the way, they were a business by design, a law firm by regulation. 254 00:22:15,714 --> 00:22:19,095 Like they wouldn't have had any law firm involved. 255 00:22:19,471 --> 00:22:20,453 if they didn't need to. 256 00:22:20,453 --> 00:22:22,815 But that doesn't mean they wouldn't have lawyers involved, right? 257 00:22:22,815 --> 00:22:25,457 So they never figured that out, either of them. 258 00:22:25,457 --> 00:22:27,999 And I'd let Mark speak to Claire's fire. 259 00:22:27,999 --> 00:22:31,037 That was a little bit before I paid very close attention to this stuff. 260 00:22:31,037 --> 00:22:32,283 It'd be a great guess, think, too. 261 00:22:32,283 --> 00:22:38,849 But yeah, think both are very similar attempts, very different personalities and situations coming in. 262 00:22:38,849 --> 00:22:42,632 Did it pave the way for future efforts? 263 00:22:42,632 --> 00:22:43,579 I'm not sure. 264 00:22:43,579 --> 00:22:45,310 Yeah, that's a really good question. 265 00:22:45,310 --> 00:22:45,530 Yeah. 266 00:22:45,530 --> 00:22:47,131 And Mark was an insider, right? 267 00:22:47,131 --> 00:22:54,356 He was a, he was an attorney and he's one of the, in my opinion, one of the great thought leaders in the space. 268 00:22:54,356 --> 00:22:57,158 really enjoy reading. 269 00:22:58,359 --> 00:22:59,139 Exactly. 270 00:22:59,139 --> 00:22:59,579 Yeah. 271 00:22:59,579 --> 00:23:06,244 In fact, he hit me up on that article, the blueprint and, cause I comment on his stuff. 272 00:23:06,244 --> 00:23:07,725 He wrote a 273 00:23:07,785 --> 00:23:09,706 He wrote an article for Forbes. 274 00:23:09,706 --> 00:23:10,957 He's a Forbes author now. 275 00:23:10,957 --> 00:23:17,452 And it was, I think it was called the Enigma of Innovation in Big Law. 276 00:23:17,452 --> 00:23:19,774 he made very good points. 277 00:23:19,774 --> 00:23:25,238 I've been beating on that drum for a while, which would be a good segue into talking about that. 278 00:23:25,238 --> 00:23:31,893 So law firms, historically, are one of the least innovative industries on the planet. 279 00:23:31,893 --> 00:23:34,214 by a pretty big margin by myself. 280 00:23:34,214 --> 00:23:36,375 There's no real metrics on that. 281 00:23:36,375 --> 00:23:42,557 There are some proxies you can use like tech investment would be one, but not all innovation is tech related. 282 00:23:42,557 --> 00:23:49,040 Some innovation is your business model or your client engagement model or your internal firm compensation model. 283 00:23:49,040 --> 00:23:53,957 But all those things I just mentioned haven't changed at all in 40 years. 284 00:23:53,957 --> 00:23:58,863 40 years ago is really when, well, shit, it's been 50 years now. 285 00:23:58,966 --> 00:24:03,980 the hourly, the billable hour really started to get traction, right? 286 00:24:03,980 --> 00:24:10,146 I mean, it was, it's from, it's a concept from the fifties, but it didn't really get traction until the seventies. 287 00:24:10,146 --> 00:24:20,094 And we've been stuck in that silo for, for so very long, which, you know, this is way before my time, but I've, I've read the history on it. 288 00:24:20,094 --> 00:24:23,716 It was actually a partner at Wilmer, what is today Wilmer Hale. 289 00:24:23,770 --> 00:24:25,121 who proposed in it. 290 00:24:25,121 --> 00:24:30,885 It was to save clients money because a lot of work was being done on a flat fee basis then. 291 00:24:30,885 --> 00:24:37,101 this provided more accountability to what the costs were to deliver the work. 292 00:24:37,101 --> 00:24:38,304 and visibility, right? 293 00:24:38,304 --> 00:24:44,730 Like I think it was intended to be sort of a breakdown of what we did for you, but it was their only measure of value they could come up with. 294 00:24:44,730 --> 00:24:45,350 Yeah. 295 00:24:45,350 --> 00:24:47,221 And it's not just them that suffer from it. 296 00:24:47,221 --> 00:24:49,492 know, professional services in general. 297 00:24:49,492 --> 00:24:54,414 So I owned a consulting company for 14 years before I started InfoDash. 298 00:24:54,575 --> 00:24:55,985 man, we struggled too. 299 00:24:55,985 --> 00:24:58,206 Like firms would try and push us down. 300 00:24:58,206 --> 00:25:00,597 And we did business with only law firms. 301 00:25:00,597 --> 00:25:05,860 And it's so ironic that they would try and push us down the flat fee path. 302 00:25:05,860 --> 00:25:10,042 And really, the first, they would always lead off with it does not exceeds. 303 00:25:10,042 --> 00:25:11,269 And I'm like, look, 304 00:25:11,269 --> 00:25:23,009 does not exceed as a non-starter for first of all, what it does not exceed engagement is, is you build me hourly up until you hit a point and then you work for free until after 305 00:25:23,009 --> 00:25:24,160 scope is delivered. 306 00:25:24,160 --> 00:25:27,913 It's like, all right, you've taken away all the upside, right? 307 00:25:27,913 --> 00:25:30,885 It's only downside for me as the provider, right? 308 00:25:30,885 --> 00:25:38,772 If it's a flat fee, then at least if I'm efficient, can have something in the bank to offset. 309 00:25:39,520 --> 00:25:41,687 you know the engagements where it doesn't go well. 310 00:25:41,687 --> 00:25:46,720 Yeah, I mean, some of this is relatively basic economics, but I think it escapes. 311 00:25:46,917 --> 00:25:57,472 Not individuals, like there are lots of smart people and innovative people in law firms, but the sum total, the model, legacy comp structure, the way the money flows, they're all 312 00:25:57,472 --> 00:25:58,643 passed through entities, right? 313 00:25:58,643 --> 00:26:02,785 Like the way all of that works just makes it very hard to actually do anything about it. 314 00:26:02,785 --> 00:26:05,176 But what do you do in a fixed price scenario? 315 00:26:05,176 --> 00:26:07,767 You can make it up in volume, it's a portfolio play. 316 00:26:07,767 --> 00:26:10,498 Like if I do 100 projects and I win some, I lose some. 317 00:26:10,498 --> 00:26:13,691 If I net okay, then okay, right? 318 00:26:13,691 --> 00:26:15,062 Or if it's like, 319 00:26:15,062 --> 00:26:24,475 one large consulting project, but the client can't seem to lock in on scope, then how could you commit to a do not exceed? 320 00:26:24,475 --> 00:26:27,395 And this is exactly what plays out in legal work. 321 00:26:27,395 --> 00:26:35,423 And some practice areas, some matter types are more easily boxed into a scope. 322 00:26:35,423 --> 00:26:44,862 But if you can get the planets to align with that stuff, then the margin opportunity or challenge, depending on how you look at it. 323 00:26:44,862 --> 00:26:46,064 is in the hands of the firm. 324 00:26:46,064 --> 00:26:52,131 And if they can reduce their cost, but charge the same, they make more money. 325 00:26:52,131 --> 00:26:56,336 Like that's the simple economic part of it, easier said than done. 326 00:26:56,336 --> 00:27:04,865 But sometimes I think the, especially with AI fueled automation and efficiency that's being touted right now, we can't forget that. 327 00:27:04,989 --> 00:27:08,429 If we value the input of time, like that's how we get paid. 328 00:27:08,429 --> 00:27:11,369 And then we reduce the time, like quite obviously that's not going to work. 329 00:27:11,369 --> 00:27:20,549 So you have to look at all four P's of product management when you're dealing with this and product management as a discipline is not something a lot of firms have very deeply 330 00:27:20,549 --> 00:27:22,569 ingrained in their ethos. 331 00:27:22,669 --> 00:27:32,049 And, but certainly there's a lot of pricing people who understand this, but pricing is one of those services just kind of almost like innovation that is very difficult to scale 332 00:27:32,049 --> 00:27:35,252 across all the partners, all the clients in the same way. 333 00:27:35,252 --> 00:27:40,816 And I think that's one of the fundamental challenges of innovation in a firm is the scale side. 334 00:27:40,816 --> 00:27:47,190 Just like conversely, some of the biggest challenges the firm faces as an entity is scale if they want to grow. 335 00:27:47,190 --> 00:27:49,342 Because you base it on hours. 336 00:27:49,342 --> 00:27:50,963 There are only so many hours, so many people. 337 00:27:50,963 --> 00:27:52,764 Again, simple economics, 338 00:27:52,972 --> 00:28:04,517 Um, but it's also the idea that not all, particularly with innovation, like not all partners, not all practices and not even all clients are the same and warrant the same 339 00:28:04,517 --> 00:28:08,559 level of innovation investment, which creates a feeling of unfairness. 340 00:28:08,559 --> 00:28:19,014 And that freaks firms out and partnerships, you know, really start scrutinizing these things when they don't feel like getting the share of innovation that others might be, you 341 00:28:19,014 --> 00:28:22,846 know, and that's, that's one of the biggest things I've seen in my advisory work with firms. 342 00:28:22,846 --> 00:28:29,137 I wrote a thing, an article a few years back, where I talked about this concept of IPP, Innovation Per Partner. 343 00:28:29,137 --> 00:28:34,997 And the idea is that, well, it touches on the scale issue. 344 00:28:35,217 --> 00:28:41,917 There's an imbalance between consumption of innovation and contribution to the pot that funds innovation. 345 00:28:41,917 --> 00:28:48,661 And if you ask all partners to spend on it, but they don't all feel the benefits coming from it, you're going to have a challenge. 346 00:28:48,661 --> 00:28:49,951 That's a great point. 347 00:28:49,951 --> 00:29:04,695 And that's one of the reasons that I believe that the law firm partnership model, and I say that very intentionally, are iterations, implementations of the partnership model that 348 00:29:04,695 --> 00:29:05,696 does scale. 349 00:29:05,696 --> 00:29:08,698 accounting and advisory is a good example of that. 350 00:29:08,698 --> 00:29:17,719 But the law firm partnership model does not scale, which is why we have the AmLaw 200 and we have the big four in accounting. 351 00:29:17,719 --> 00:29:18,069 Right. 352 00:29:18,069 --> 00:29:25,111 And the big four have almost twice as much revenue as the entire AmLaw 100, which is 140 billion for the AmLaw 100. 353 00:29:25,111 --> 00:29:27,453 It's about 240 billion for the big four. 354 00:29:27,453 --> 00:29:36,577 And you know, some number north of 90 % of all public companies use a big four, firm for, for their audit work. 355 00:29:36,577 --> 00:29:36,917 Right. 356 00:29:36,917 --> 00:29:39,347 So tremendous consolidation in that space. 357 00:29:39,347 --> 00:29:41,258 And so the number five, 358 00:29:41,750 --> 00:29:46,322 accounting firm is Grant Thornton and they're in the single digit billions. 359 00:29:46,322 --> 00:29:48,883 And the last time I looked, it's been a while. 360 00:29:48,883 --> 00:29:50,845 My COO used to work there. 361 00:29:50,845 --> 00:29:56,348 and the smallest big four company is KPMG at 40 plus billion. 362 00:29:56,348 --> 00:29:57,228 was last year's number. 363 00:29:57,228 --> 00:29:58,769 It's probably bigger now. 364 00:29:58,769 --> 00:30:01,540 So, and there's no R and D at law firms. 365 00:30:01,540 --> 00:30:03,096 They spend less than 1%. 366 00:30:03,096 --> 00:30:06,772 And I think that number is even generous on R and D. 367 00:30:06,772 --> 00:30:08,313 Um, there's this 368 00:30:08,611 --> 00:30:17,084 There is this emphasis placed on profit taking at the end of the year, which creates challenges. 369 00:30:17,084 --> 00:30:23,846 The not being able to give non-lawyers options to own a piece of the business is a challenge. 370 00:30:23,846 --> 00:30:31,468 Consensus driven decision making, retirement horizons, the lateral mobility of lawyers to move from one firm to a next. 371 00:30:31,468 --> 00:30:35,449 Why am going to invest in innovation in this firm when 372 00:30:35,603 --> 00:30:41,895 They may piss me off in six months and I take my business across the street to the competing firm. 373 00:30:41,895 --> 00:30:49,089 It's just too transient to really encourage long-term investment and that has to get fixed. 374 00:30:49,089 --> 00:30:55,012 Otherwise, how are we going to, we can't just buy off the shelf tools to differentiate ourselves. 375 00:30:55,012 --> 00:30:58,182 That's by definition, not differentiating. 376 00:30:58,182 --> 00:30:59,216 zero, right? 377 00:30:59,216 --> 00:30:59,654 Yeah. 378 00:30:59,654 --> 00:31:09,852 Yeah, so like I see really fundamental challenges with the law firm partnership model on making the leap to what's coming next. 379 00:31:09,852 --> 00:31:10,794 How do you see it? 380 00:31:10,794 --> 00:31:13,107 I agree, of course, right? 381 00:31:13,107 --> 00:31:20,272 But I think I tend to look at the partnership model as like a necessary evil for a while longer. 382 00:31:20,272 --> 00:31:24,924 Like I don't think we're going to easily see firms break that, right? 383 00:31:24,924 --> 00:31:31,739 Now, I just read an article, started reading an article earlier about accelerated de-equitization across firms. 384 00:31:31,739 --> 00:31:34,304 And I didn't dig in with enough to see the data, but... 385 00:31:34,304 --> 00:31:36,035 I think it's a trend over the longer term. 386 00:31:36,035 --> 00:31:39,468 Yeah, we've seen more income partners, fewer equity partners. 387 00:31:39,468 --> 00:31:44,472 So I think there is a shift toward the role of a partner as a stakeholder. 388 00:31:44,472 --> 00:31:46,769 And look, by and large, they've earned it. 389 00:31:46,769 --> 00:31:47,764 They've worked hard to get there. 390 00:31:47,764 --> 00:31:49,535 They put capital in. 391 00:31:49,535 --> 00:31:51,477 They're an owner, right? 392 00:31:51,477 --> 00:31:57,041 So if we accept that, how do you work with that model to achieve the same benefits? 393 00:31:57,041 --> 00:32:01,012 Well, some of it is like the hand-to-hand combat we're talking about, right? 394 00:32:01,012 --> 00:32:07,712 It's hard to have a firm culture and strategy when each individual equity partner might have their own different opinion. 395 00:32:07,712 --> 00:32:18,792 But in firms that can all march to beat of the same drum, so to speak, if you take, like even looking at the MLOG 100, right? 396 00:32:18,792 --> 00:32:24,472 150, 160 billion, I think average PPEP is about three million, right? 397 00:32:24,932 --> 00:32:28,992 If you do the math, if you took one basis point, 398 00:32:29,320 --> 00:32:39,443 like not percentage point of their annual average income, put that into a pool, you'd have a tub of money bigger than the legal tech fund. 399 00:32:39,483 --> 00:32:42,946 So it's like, look, they can afford investment if they want. 400 00:32:42,946 --> 00:32:44,556 But the question is why? 401 00:32:44,556 --> 00:32:46,827 Well, why would we? 402 00:32:46,827 --> 00:32:51,758 If I'm making $3 million, again, am I going to make 3.1 as a result of this investment? 403 00:32:51,758 --> 00:32:52,398 What's my ROI? 404 00:32:52,398 --> 00:32:53,863 And it's a fair question. 405 00:32:53,863 --> 00:32:59,167 Oh man, lots of opinions on how you command innovation in those scenarios. 406 00:32:59,167 --> 00:33:02,809 Because if you don't, somebody eventually will come along and eat your lunch. 407 00:33:02,809 --> 00:33:04,750 But we've been saying that for a long time. 408 00:33:04,750 --> 00:33:06,411 Will AI change that? 409 00:33:06,771 --> 00:33:07,813 Maybe, right? 410 00:33:07,813 --> 00:33:14,936 So I look at partners as shareholders, and they've earned the rewards and benefits that come with that. 411 00:33:14,936 --> 00:33:16,717 are challenges certainly within that. 412 00:33:16,717 --> 00:33:19,750 But then partners are also managers, usually. 413 00:33:19,750 --> 00:33:20,702 Mm-hmm. 414 00:33:20,852 --> 00:33:32,313 If you look at partners as investors in the way I was describing, even with the story at Sidebar, like absolutely true that the equity partnership would be asking for, know, what 415 00:33:32,313 --> 00:33:38,369 is my ROI on all these investments, especially when they become pretty visible like SLC, right? 416 00:33:38,369 --> 00:33:39,229 And... 417 00:33:39,460 --> 00:33:45,273 then the challenge for the innovator inside the firm is that the partners are also the primary customer of what they're doing. 418 00:33:45,273 --> 00:33:49,195 So there's all these conflicting roles as a result of this model that I think is not hard. 419 00:33:49,195 --> 00:33:58,835 But if people were honest about what role they're in, at what moment in time, and based on what decisions they need to make, which is hard, then it'd be easier for everyone, right? 420 00:33:58,835 --> 00:34:08,635 A good example, like an opposite example of this is that you saw that 650, Wilson's subsidiary, they sold paychecks. 421 00:34:08,855 --> 00:34:14,366 And we don't know how much, like it was reported 70 million or 80 million or something like that. 422 00:34:14,366 --> 00:34:20,021 Wilson has about 250 equity partners, I think, out of 1,000 attorneys in the firm. 423 00:34:20,021 --> 00:34:23,123 Their PEP is right at the average about three million, right? 424 00:34:23,123 --> 00:34:35,894 So if you do the math there and you assume that they owned say half of the 650 business as a partnership You know that they grab another hundred hundred and fifty thousand dollars 425 00:34:35,894 --> 00:34:39,978 each from that sale if it happened the way it was reported, right? 426 00:34:39,978 --> 00:34:42,900 150 relative to three million is not a ton of money. 427 00:34:42,900 --> 00:34:45,878 I mean I would like hundred and fifty thousand extra but 428 00:34:45,878 --> 00:34:51,387 So when you look at them wearing the investor hat, I think you gotta play a different game. 429 00:34:51,387 --> 00:34:54,953 And that's how you make your business case as an innovator inside of a firm. 430 00:34:54,953 --> 00:35:00,214 But the case I would make is like, look, do you want to design a future where... 431 00:35:00,214 --> 00:35:03,846 you even sustain the level of income and success that you have today? 432 00:35:03,846 --> 00:35:08,728 Or do you want to be a victim of a future that is going to change how it all works around you? 433 00:35:08,728 --> 00:35:17,871 like, so this proactive feeling I found is what drives more firms today because either new leadership, new market conditions, the combination of all of that is like making them 434 00:35:17,871 --> 00:35:23,573 think real hard about like, how do we fit into the legal ecosystem five years from now, 10 years from now? 435 00:35:23,573 --> 00:35:27,102 It's not like this future 50 year scenario that 436 00:35:27,102 --> 00:35:29,984 you know, it feels closer, whether it's accurate or not. 437 00:35:30,025 --> 00:35:31,356 And I think that's good. 438 00:35:31,356 --> 00:35:35,110 Like I think it drives the market toward substantive change. 439 00:35:35,110 --> 00:35:42,418 I think there's risk for firms like clients, maybe figuring some of this out on their own and giving less work out to outside counsel. 440 00:35:42,418 --> 00:35:44,750 But that's, that's another path to follow. 441 00:35:44,750 --> 00:35:45,200 Yeah. 442 00:35:45,200 --> 00:35:47,311 Well, and so I think there's two things. 443 00:35:47,311 --> 00:35:51,252 ROI is important, but there's also, have you heard of Coney? 444 00:35:51,252 --> 00:35:54,363 know, cost of not investing, right? 445 00:35:54,363 --> 00:36:07,168 That's kind of a, you know, that, that, that is a very real number that is hard to quantify, but could have massive impact on the fundamentals of the business. 446 00:36:07,168 --> 00:36:09,609 And so much of, of 447 00:36:09,617 --> 00:36:14,627 like decision-making, it's rooted too much in kind of the here and now. 448 00:36:14,627 --> 00:36:19,036 ROI is mostly a here and now concept, right? 449 00:36:19,036 --> 00:36:28,905 When you say ROI, you're not typically thinking, yeah, I'm gonna acquire some learning that's gonna benefit me five years from now. 450 00:36:28,905 --> 00:36:34,550 That's very intangible and ROI tends to be very quantitative. 451 00:36:34,550 --> 00:36:35,447 So, 452 00:36:35,447 --> 00:36:42,671 You know, much of what firms get by investing in R &D and this experimentation is learning. 453 00:36:42,671 --> 00:36:50,338 it is an, it's one step in the journey to what, what's coming next, which is going to be a long path. 454 00:36:50,338 --> 00:36:56,430 And if you're not heading in the right direction, it's, I think it's going to end badly for firms. 455 00:36:56,430 --> 00:37:01,416 Like I see firms in the AMLAW at the lower end of the AMLAW, especially 456 00:37:01,416 --> 00:37:09,695 who are stuck in the mud, Their gen AI strategy is they're doing a co-pilot implementation or POC in IT. 457 00:37:09,695 --> 00:37:11,567 this is real, by the way. 458 00:37:11,567 --> 00:37:14,680 This is a real AMLO firm that shall remain nameless. 459 00:37:14,680 --> 00:37:19,073 But I had a conversation with them and just kind of asked what they were doing in the space. 460 00:37:19,073 --> 00:37:21,645 And it's like, yeah, that's what we're doing. 461 00:37:21,746 --> 00:37:25,650 And I'm thinking to myself, you are not going to exist in 462 00:37:25,698 --> 00:37:34,729 Definitely 10 maybe five years unless you pivot so hard and start sprinting which the culture just doesn't Align to that. 463 00:37:34,729 --> 00:37:42,788 So it's like yeah, man The the concept of Kony is is is real and I think it's I think it's something firms should think about 464 00:37:42,788 --> 00:37:46,140 I think that's really important point, I think. 465 00:37:46,140 --> 00:37:48,313 I've even done this. 466 00:37:48,313 --> 00:37:58,199 It's easy to look at so-called innovation investments from some of these firms and just shrug them off and say, what are you doing? 467 00:37:58,199 --> 00:38:00,922 How is that going to move the needle for everyone, anyone? 468 00:38:00,922 --> 00:38:05,605 But if we just called it something else, like marketing, 469 00:38:05,830 --> 00:38:07,692 Would we be so judgmental? 470 00:38:07,692 --> 00:38:08,350 Would I? 471 00:38:08,350 --> 00:38:09,453 No. 472 00:38:09,453 --> 00:38:14,778 If it, like to your point, an investment in learning, like future-proofing, call it future-proofing, right? 473 00:38:14,778 --> 00:38:26,287 Where we're not expecting a short-term result from this, but we're setting ourselves up to be better prepared for a long-term future and therefore judge it appropriately, right? 474 00:38:26,287 --> 00:38:31,141 And you know, if you're doing a, you you're Kirkland doing what? 475 00:38:31,141 --> 00:38:33,753 Nine billion dollars, you know, like. 476 00:38:33,790 --> 00:38:36,813 to spend a few million here and there. 477 00:38:36,813 --> 00:38:38,824 on experimental projects and stuff. 478 00:38:38,824 --> 00:38:42,346 Like I think it's fair to call that R and D in some cases. 479 00:38:42,346 --> 00:38:44,917 I think it's fair to call it investments in marketing. 480 00:38:44,917 --> 00:38:47,878 And as they say, like half my marketing is working. 481 00:38:47,878 --> 00:38:59,013 I don't know which one or whatever the old nugget is, but so yeah, like do you budget a certain amount of reinvestment back in the business, even as a partnership where 482 00:38:59,013 --> 00:39:06,394 technically speaking you are asking each individual part investor slap, you IE partner to pony up. 483 00:39:06,394 --> 00:39:16,499 Yeah, if everyone just, most of them generally believe that these are good, sound investments, just costs, like no problem, no problem with that. 484 00:39:16,499 --> 00:39:25,893 Where I think it gets firms in trouble is when you get too far out ahead of your skis, you position yourselves as super innovative, but then those who would be receiving the 485 00:39:25,893 --> 00:39:28,698 benefits of said innovation are like, where are they? 486 00:39:28,698 --> 00:39:32,310 Why weren't, well, how come I'm not getting this, you know? 487 00:39:32,310 --> 00:39:35,170 That's where the partnership model turns against itself. 488 00:39:35,331 --> 00:39:38,032 And I've seen it and it's nasty. 489 00:39:38,032 --> 00:39:41,633 Like, so yeah, I think some of that is maybe comms, it's leadership. 490 00:39:41,633 --> 00:39:46,765 It's like a tough ask for the innovation and leadership of the firm in general to like really position. 491 00:39:46,765 --> 00:39:51,337 These are the investments we're making as an organization to move ourselves into the future. 492 00:39:51,337 --> 00:39:57,398 And again, easier said than done, but probably not said enough, I think, in my experience. 493 00:39:57,398 --> 00:40:11,838 yeah, I know you know, Brad Blixstein, his group did a law that their annual LDO survey and last December, one of the questions was my law firm partner or law firm partners are 494 00:40:11,838 --> 00:40:12,693 innovative. 495 00:40:12,693 --> 00:40:16,995 almost two thirds either strongly disagreed or disagreed. 496 00:40:16,995 --> 00:40:17,465 Right. 497 00:40:17,465 --> 00:40:19,985 So two thirds, 63%. 498 00:40:19,985 --> 00:40:29,322 I still know the number because I did a presentation on it and we've had almost a 2000 % increase in innovation investment within the last 10 years. 499 00:40:29,322 --> 00:40:30,282 Now 11. 500 00:40:30,282 --> 00:40:33,084 I did a little kind of survey of the Ilta roster. 501 00:40:33,084 --> 00:40:34,284 That's the main way. 502 00:40:34,284 --> 00:40:37,267 That is the big ticket investment item is people. 503 00:40:37,267 --> 00:40:40,624 today that's gonna, that's gonna change over time. 504 00:40:40,624 --> 00:40:52,109 um Well, we're almost out of time and we got to touch on this one topic because this is why we came here to talk about the Burford kind of MSO model that is interesting and you 505 00:40:52,109 --> 00:41:05,503 know until the ABS rules either start to expand it here in the US or something else happens like you you had some interesting thoughts about some of the challenges that that 506 00:41:05,503 --> 00:41:06,513 model 507 00:41:06,525 --> 00:41:08,686 presents based on your past experience? 508 00:41:08,686 --> 00:41:13,927 Like what are some of the hurdles that standing up a managed services organization? 509 00:41:13,927 --> 00:41:20,649 And just so people know what the difference between like an MSO and an ALSP, I had to look this up because I really didn't know the difference. 510 00:41:20,649 --> 00:41:23,110 An ALSP is more kind of horizontal. 511 00:41:23,110 --> 00:41:30,457 An MSO is designed for when a client actually outsources an entire function. 512 00:41:30,457 --> 00:41:35,714 So it could be maybe your intellectual property, your patent application, 513 00:41:35,714 --> 00:41:42,339 and process you would do that in an MSO where ALSP's are more kind of horizontal and task driven. 514 00:41:42,539 --> 00:41:50,346 That's at least what I was able to come up with but what do you see as some of the challenges with that model going forward? 515 00:41:51,058 --> 00:42:01,917 well, I think there is nuance in the difference between MSO, ALSP and so on, but the bread and butter of it is like, well, what are they investing in and what are they outsourcing 516 00:42:01,917 --> 00:42:02,988 and what are they building? 517 00:42:02,988 --> 00:42:09,434 And look, I can see from Burford's standpoint, creating a new investment class for them. 518 00:42:09,434 --> 00:42:11,176 And this is what they do. 519 00:42:11,176 --> 00:42:17,251 They've created litigation as investment for people. 520 00:42:17,251 --> 00:42:18,863 Some firms participate in that. 521 00:42:18,863 --> 00:42:22,025 Some corporates participate in that. 522 00:42:22,025 --> 00:42:36,465 So when it comes to the MSO idea, if it's related at all to legal service, then yeah, they're skirting a lot of issues that have been skirted before, or at least we've tried. 523 00:42:36,465 --> 00:42:41,360 But the way I can help but look at it is from the partner's perspective in the firm. 524 00:42:41,360 --> 00:42:52,126 Even if there were a way to do that then when you give up some of the upside of it you give up some of the control of it whatever it is and In a firm big enough now, and maybe 525 00:42:52,126 --> 00:43:01,232 this is down market Maybe there's some really interesting way to look at this that I haven't bought but I think for a big firm Like I was saying earlier like there is capital 526 00:43:01,232 --> 00:43:02,152 to invest. 527 00:43:02,152 --> 00:43:07,335 They just need to choose to invest it they can afford it They the partnership the owners, right? 528 00:43:07,335 --> 00:43:19,671 And I would think that most reasonable partners would want to look at several investment strategies, including those that don't involve giving up control or risking, you know, 529 00:43:19,671 --> 00:43:21,652 brand reputation and anything else. 530 00:43:21,652 --> 00:43:21,862 Right. 531 00:43:21,862 --> 00:43:24,033 Like, so what are they looking for? 532 00:43:24,033 --> 00:43:30,456 If the problem trying that they're trying to solve together here is like, need capital to invest in X. 533 00:43:30,456 --> 00:43:37,719 Like I can think of 10 other ways to do that, including if we were to sort of break the regulatory hold on this stuff, like the LSA 534 00:43:38,873 --> 00:43:42,815 sure, you know, like you can go get money from private equity if you want it. 535 00:43:42,815 --> 00:43:48,908 There's a range of options include today they go to the bank and they have rotating lines and stuff, right? 536 00:43:48,908 --> 00:43:51,210 so I just don't, I don't, I don't see it. 537 00:43:51,210 --> 00:44:03,581 Now, if it's more sort of non-essential paralegal or administrative functions in this NSO, others have tried that too, including companies like Harbor or HBR or anyone like that, 538 00:44:03,581 --> 00:44:04,248 right? 539 00:44:04,296 --> 00:44:05,476 tech front. 540 00:44:06,617 --> 00:44:14,131 So yeah, to be honest, like I've not studied it enough to have, you know, a precise opinion, nor have I called and asked anyone. 541 00:44:14,131 --> 00:44:20,966 But, you know, I've seen this like desire to get money into the industry before investing in legal tech is one thing. 542 00:44:21,027 --> 00:44:23,609 And I do feel there's a bit of a bubble already to pop there. 543 00:44:23,609 --> 00:44:25,522 investing in legal services directly. 544 00:44:25,522 --> 00:44:34,081 I would think those that provision the legal services would be the first to want to make that decision and decide if and when they need capital and why and so on, whether it's 545 00:44:34,081 --> 00:44:35,512 tech related or not. 546 00:44:35,512 --> 00:44:38,634 I don't see Burford coming up with anything here. 547 00:44:39,216 --> 00:44:50,109 Or interested outside of maybe some sort of consolidation of very small firms interested in, like could Burford help design a consortium of firms that are working together? 548 00:44:50,109 --> 00:44:51,321 quite possibly, right? 549 00:44:51,321 --> 00:44:55,010 And that would actually make sense in some ways to me. 550 00:44:55,010 --> 00:45:04,140 What makes you say there's a bubble like Harvey had a three billion or three billion valuation and then four months later it was five billion. 551 00:45:04,140 --> 00:45:05,344 Totally rational. 552 00:45:05,870 --> 00:45:10,890 Even Sam Altman is like saying people are going to lose a tremendous amount of money. 553 00:45:10,890 --> 00:45:11,550 And you know what? 554 00:45:11,550 --> 00:45:14,210 You're starting to see some investor shakiness. 555 00:45:14,310 --> 00:45:19,381 Like, I don't know if you followed a TR had like a 15 % drop in one day. 556 00:45:19,381 --> 00:45:32,401 Monday.com dropped at 30 % in, I don't know, a one or two day period because on an earnings call, they had talked about their SEO traction was slipping. 557 00:45:32,570 --> 00:45:41,643 and didn't have good answers when they asked about implications to client acquisition costs, which they're very reliant on that channel for client acquisition. 558 00:45:41,643 --> 00:45:54,808 So when you start to see huge swings like that, means investors are getting nervous and all it's going to take is one match to light that fire and then boom, we're going to end 559 00:45:54,808 --> 00:45:55,729 up in a correction. 560 00:45:55,729 --> 00:45:56,960 I couldn't agree more. 561 00:45:56,960 --> 00:46:01,661 Even though I'm on someone on the receiving side of that right now. 562 00:46:01,661 --> 00:46:09,194 I think that's why the slow steady practical approach without over investing could make sense for some, right? 563 00:46:09,194 --> 00:46:14,365 But inevitably massive consolidation and carnage coming. 564 00:46:14,485 --> 00:46:16,406 That's my prediction. 565 00:46:16,406 --> 00:46:19,007 My optimistic prediction. 566 00:46:19,007 --> 00:46:21,841 oh 567 00:46:21,841 --> 00:46:22,252 man. 568 00:46:22,252 --> 00:46:26,746 um We didn't even get to half the things we were going to talk about, so I'll have to have you back on. 569 00:46:26,746 --> 00:46:32,874 But before we wrap up, man, how do people find out more about LEGO or find you on social media? 570 00:46:32,874 --> 00:46:34,136 Yeah, thanks for asking. 571 00:46:34,136 --> 00:46:38,200 LEGO.ai, our website, Get The Basics. 572 00:46:38,200 --> 00:46:39,857 Always happy to talk with anyone. 573 00:46:39,857 --> 00:46:42,524 I'm pretty active on LinkedIn, or try to be. 574 00:46:42,524 --> 00:46:44,926 And we had really good ILTA. 575 00:46:44,926 --> 00:46:46,277 I think you guys did too, right? 576 00:46:46,277 --> 00:46:48,329 It was a great event this year. 577 00:46:48,329 --> 00:46:49,420 Some strong tailwinds. 578 00:46:49,420 --> 00:46:53,424 I think I'm seeing a shift to more pragmatic. 579 00:46:53,424 --> 00:46:56,846 uh approaches to thinking about gen AI in practice. 580 00:46:56,846 --> 00:47:01,298 I'm seeing more people focus on literacy instead of throwing tools at people. 581 00:47:01,298 --> 00:47:06,391 I'm seeing plenty of fatigue from trying 50 products at the same time. 582 00:47:06,391 --> 00:47:16,257 Like, so a lot of those things play in our favor where we sort of focus on flexibility without provider and model and vendor law. 583 00:47:16,443 --> 00:47:19,956 or even use case lot, like would like to say you are the use case. 584 00:47:19,956 --> 00:47:27,263 We're trying to enable people to figure out how to use this stuff before you scale this stuff, which implies spend a lot of money on this stuff. 585 00:47:27,263 --> 00:47:29,768 yeah, I think the message is landing. 586 00:47:29,768 --> 00:47:36,075 We'd love to talk to people about it, but obviously I'm always happy to talk about anything clearly. 587 00:47:36,075 --> 00:47:38,733 So yeah, I would love to come back on and talk more. 588 00:47:38,733 --> 00:47:39,753 All right, good stuff. 589 00:47:39,753 --> 00:47:45,753 And we'll put links to your site and your LinkedIn profile in the show notes. 590 00:47:46,073 --> 00:47:47,993 But hey, man, it was a great conversation. 591 00:47:47,993 --> 00:47:50,953 I appreciate you spending a little time with me this afternoon. 592 00:47:52,553 --> 00:47:54,084 All right, take care. 593 00:47:54,084 --> 00:47:54,502 Bye. -->