For the first time ever, Clio has released a special trends report focused specifically on solo law firms! To talk about how this report came about and the helpful data it has to offer solo attorneys, Sharon Nelson and guest host John Simek welcome Clio’s CEO Jack Newton. Jack shares some of the most surprising insights gleaned from their solo survey, discusses pandemic-era changes in the behaviors of solos and their clients, and gives his take on what solo firms might do to become more agile and improve their revenue.
Jack Newton is CEO and co-founder of Clio.
Special thanks to our sponsors, Scorpion, Blackletter Podcast, Alert Communications and Nota.
The Digital Edge
Clio’s 2021 Legal Trends for Solo Law Firms
Intro: Welcome to The Digital Edge with, Sharon Nelson and Jim Calloway, your hosts, both legal technologists, authors, and lecturers, invite industry professionals to discuss a new topic related to lawyers and technology. You’re listening to Legal Talk Network.
Sharon D. Nelson: Welcome to 159th edition of The Digital Edge: Lawyers and Technology. We’re glad to have you with us. I’m, Sharon Nelson, president of Sensei Enterprises, an information technology, cybersecurity, and digital forensics firm in Fairfax, Virginia, and I’m very pleased to say today that since Jim Calloway cannot be with me as my co-host because he is lecturing an ABA TECHSHOW, my husband and partner, John Simek, is joining us. So, thank you very much, John, for being with us today.
John W. Simek: Yeah, I’m John Simek, vice president of Sensei Enterprises, and today our topic is Clio’s 2021 Legal Trends for Solo Law Firms.
Sharon D. Nelson: But first, we would like to thank our sponsors. We would like to welcome our new sponsor, Nota, powered by M&T Bank. Nota is banking built for lawyers and provides smart, no-cost IOLTA account management. Visit trustnota.com/legal to learn more. Terms and conditions may apply.
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Our guest today is our good friend, Jack Newton., Jack, is the chief executive officer and co-founder of Clio, an experienced business leader, software developer, and entrepreneur., Jack, began his career with a snow shoveling business and a foray into the life sciences industry before focusing his strategic vision on making Clio the leader in legal cloud computing. Despite his hectic schedule, he has made time to run every day for the last 20 years. It’s great to have you with us today, Jack.
Jack Newton: Thanks for having me. Pleased to be here, Sharon and John.
Sharon D. Nelson: Well, Jack, I don’t remember you ever doing a report quite like this one focusing on solo lawyers. Why did you decide to do this report?
Jack Newton: Well, for a few reasons. I think one, solos are the majority of the legal market, a full half of all lawyers practice as solos. So, we felt like this was a really important demographic to speak to and Clio has long served the solo market. When we launched back in 2008, we were first adopted by solos. That’s really where we saw rapid uptake and rapid adoption. So, solos are still you know, even as we’ve grown up market and seen larger and larger firms use Clio, solos are still the majority of the users of Clio and the majority of the legal market.
So, they deserve I believe a report targeted at their specific needs and what underscored that this year more than ever was that we actually saw different patterns in the behaviors of solos and saw different metrics and data points and data insights coming out of the solo data analysis we did relative to what we saw in the overall market.
John W. Simek: Well, Jack, I’m sure folks would be really curious about what kind of feedback you’ve gotten since this report was released.
Jack Newton: Yeah, it’s been super positive and you know, I think alongside the full-blown 2020 Legal Trends Report that we shipped back at Clio Con in October of 2020, coupled with this report with the solo-based insights based on fundamentally the same kind of data analysis and consumer and lawyer surveys, what we’ve heard from the industry is one, this is an amazing source of insight for us. This is really as best we have a real-time monitoring system on three things. One is a real-time monitoring system on how the legal industry is being impacted by COVID-19, how is new caseload being impacted, how are billings being impacted, how is utilization and realization and collection rates being impacted?
We’re also seeing that this report is giving us real-time insights on how consumer behavior is shifting and how lawyer behavior is shifting, and how consumers and lawyers are meeting each other in different ways amidst the pandemic than they were pre-pandemic.
So, maybe this year more than ever, we’ve had a response that amounts to thank you for this report because this gives us invaluable data to navigate our law firm with and to navigate the future of both what a pandemic law firm and what a thriving pandemic law firm looks like, and more importantly what kinds of permanent changes we might expect in a post-pandemic world that we can start adapting to and readying ourselves for today.
Sharon D. Nelson: Well, I thought it was just terrific and the first day it came out, I read it all. So, you did a really good job.
Jack Newton: Thank you. Thank you, that is an eagerly-awaited report in the industry now.
Sharon D. Nelson: Absolutely. And when you do, when you survey and do something like this, there’s generally something that pops out and surprises you. So, what surprised you, Jack?
Jack Newton: It was surprising on so many levels. There’s a lot to be surprised by in this report, you know. As one surprising data point that I think has a lot to do with some of the broader-based impacts we saw on the legal industry as a whole, we saw at some points in the pandemic 30-plus percent of consumers believed that lawyers had stopped offering their legal services, full stop, and you know I believe you know, it’s understandable how a consumer might lead to that conclusion, you know. You hear about courts being closed or courts being slowed down significantly. It’s not a huge leap of faith to believe you know maybe lawyers have all packed up and gone home for the pandemic, you know. There’s a lot of questioning even at a state level, are lawyers an essential service or not?
So, I think what we saw was you know, on the consumer side some very surprising data points that you know, if you’re a lawyer thinking about, “How do I navigate this pandemic?” Maybe just an email to your clients saying, “I’m open for business. I can meet with you. We can meet safely over a Zoom call,” would be a great step forward. Maybe bar associations and even law firms need to be taking out billboard ads saying, you know, “Legal is open,” you know, and getting that messaging out there, that was one very surprising data point. When we drilled down to some of the data that we saw in the report, one of the interesting data points was that solos were actually more significantly negatively impacted by the pandemic than their peers that were at firms of two lawyers or more, and why that surprised me was you know, my intuition was solo lawyers are more nimble and more agile, and more able to adopt new technologies and change the way they’re doing things. I would have expected them potentially to just naturally be in a position to adapt to these changes more easily, and I think what we saw instead was that while there is that underlying agility, solos also lack resources, they’re often stretched and some of the financial impacts of the pandemic were felt by them more directly, more quickly than by their larger firm colleagues that could maybe have a little bit more of a cushion to absorb that shock.
So, one of the clear messages from the data we saw from the LTR was, you know, solos were hit harder but in the end, we’ve seen how a subset of solo firms have been able to really recover in a nice way over the course of the last 12 months and that there’s a pattern of behaviors and a pattern of technology adoption that we’ve seen in a sub-segment of solos that are really helping them thrive despite these difficult conditions.
John W. Simek: Sharon, I hear a lot of solos lamenting a declining caseload. Jack, what did your statistics tell you about that?
Jack Newton: Well, we did see a very significant decline in caseload and compared to the previous year in the lowest month, we saw caseloads dropped by 32 percent relative to the previous year in April, so really significant drop, a third — almost a third relative to the previous year, and that was a steeper decline than we saw across non-solo law firms.
We saw a recovery start to begin in May and throughout the summer to approximately 19 percent relative to the baseline, but that’s still a pretty significant decline year over year. So, we saw correspondingly that, you know, a new caseload is obviously a leading indicator of revenue and billings. So, what we saw was about 3 months lagging that drop in caseload, a commensurate drop in billing volume as well, so a really significant caseload impact, a really significant monetary and billing impact for solo lawyers, that as I mentioned was even more significant than what the broader industry saw.
So, solos are being hurt and what you and Sharon have been hearing anecdotally, John, is certainly reinforced by what we saw in our broader data analysis.
John W. Simek: Well, before we move on to our next segment, let’s take a quick commercial break.
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Welcome back to The Digital Edge on the Legal Talk Network. Today, our subject is Clio’s 2021 Legal Trends for Solo Law Firms. Our guest today is Jack Newton, the chief executive officer and co-founder of Clio. So, Jack, what did this survey show you about solo lawyers who made considerably more money than other solo lawyers?
Jack Newton: So, what we saw in the survey, Sharon, and we’ve talked about this a little bit earlier, is the fact that we really saw almost a speciation of law firms if you want to think about it that way, and in my keynote at Clio Con, I talked about this concept that Stephen Jay Gould talks about in the context of evolutionary biology and this idea that we’re in a punctuated equilibrium and that if you look at the evolution of species, they maintain themselves at basically a level of a period of stasis where they don’t change all that much, and then there’s some big geological event that causes rapid speciation and one of those species ends up thriving and becoming the dominant species, and we enter another period of stasis, and one of those, those punctuated equilibria in evolutionary biology like I said, is usually a geological moment of some kind and I think in the legal industry, what we’re having is a punctuated moment and going through one of these punctuated equilibria right now where the event is not a geological one but the coronavirus and the conditions it created, and what we’ve seen is that you know, if there’s any profession that’s gone through a long period of stasis, you might argue it’s the legal industry, and we’ve seen now just in the course of 12 months, I would argue a decade or more of technology adoption compressed into that 12-month period, and it was about a year ago to the day that we’re having this conversation that I think COVID really hit North America hard, and what we’ve seen is over the course of the last 12 months, if you look at what will eventually be the geological record of lawyers that made it and lawyers that didn’t amidst this pandemic, I think what you’ll see is that there were law firms that figured out ways of calibrating to this new environment and law firms that were clinging to the old world hoping it would return.
I think those law firms that are clinging to the old world are struggling and will eventually fail, and the law firms that have made this pivot to the new world and are embracing technology and embracing the way that the new generation of clients and the new set of expectations that consumers have in this new era will be the law firms that are set up to thrive, and what’s very interesting is that even in the slice of data we’ve got of the year of the pandemic and the data that existed pre-pandemic, we can already see that speciation happening, and what we’re seeing is that lawyers that adopt cloud-based technologies and lawyers in particular adopt cloud-based technologies that are client-centered, and this is key, technologies like online payments, technologies like client portals, and technologies like client intake software and CRM solutions, collect over 50,000 dollars more than their solo counterparts that do not adopt those technologies, and 50,000 dollars is a lot of money. You know, for a lot of solos, this is 100 percent or a 50 percent increase over what their typical earnings might be.
So, there’s a really substantial outcome that we’re seeing through the adoption of these technologies, and I don’t want –- one nuanced point I want to make here is I don’t necessarily want to say this is causation versus correlation. What we’re observing here is a correlation, where there’s a very strong correlation between the adoption of these technologies and better financial outcomes. I don’t necessarily think adopting these technologies causes this bump in revenue, but I think what it’s reflective of is a mindset around both technology adoption, technology adoption that makes you inherently more agile and better able to adapt to these rapidly changing circumstances that we’ve been navigating over the course of the last 12 months, and I think that the adoption of these technologies also reflects a client-centered mindset in the law firm that begets success.
I think what we see in each of these technologies, online payments, client portals, intake, and CRM software, is reflective of a lawyer that cares about making experiences effortless, that cares about eliminating friction for their customers, that cares about delivering a great communication experience through a secure client portal, and just thinks overall about how do I create end-to-end and effortless experience for my clients, and by the way on the client side, the other data point we’re seeing that’s so encouraging and so exciting is that clients want to see this technology adopted as well.
They prefer to have Zoom calls and so on. They prefer just to access data through a client portal rather than an email. They’d rather pay by credit card than by check. So, we’re seeing this — I think what the COVID-19 pandemic has done is almost forced lawyers, or at least a subset of lawyers, these newly-speciated, next generation of lawyers to deliver legal services in a way that is a better fit for how the majority of consumers want to consume legal services.
Sharon D. Nelson: Well, I think you’re absolutely right, Jack, and I think the solo lawyers I worry most about are the ones who say, “I want to go back to practicing law the way we did in 2019,” and those are the ones who I expect will fail. So, I agree with you.
Jack Newton: Exactly.
John W. Simek: Well, I’ve heard a lot of folks say that one of the problems is that big firms tend to represent businesses where solos often represent individuals. And so, what do you think about that, Jack, and what was the effect of the pandemic?
Jack Newton: Well, I think there’s a broader issue at hand than just the relative makeup of whether you’re serving businesses or individuals. When we look at the World Justice Project data for example, that shows us that 77 percent of legal problems did not receive legal help, a corresponding data point that 86 percent of civil legal problems faced by low-income individuals received either inadequate or no legal help at all.
I think what we’re seeing is a huge, untapped market opportunity. This is on one hand an access to justice problem, and people with legal problems both businesses and individuals, consumers of all stripes, are not seeing their legal issues identified and solved effectively, and this is 77 percent of the legal market, you know? The 500 billion dollar a year legal industry that exists in the U.S. today is only servicing 23 percent of the market, is another way of thinking about that, and you know for all the lawyers whether you’re serving businesses or individuals, I think the question is how can I think about approaching my legal services in a different way, how can I be more client-centered, how can I adopt technologies to reduce friction around finding me, accessing me, becoming a client, working with me, how can I adopt technology, become more efficient so that I might be able to deliver my legal services in a more affordable way, how can I think innovatively about pricing and packaging, can I adopt subscriptions, can I adopt fixed fees, can I do other things to make my legal services more affordable? That might even be as simple as offering credit cards or offering payment plans.
So, what this data tells me is that regardless of which market you’re serving, there is a vast opportunity to expand that market and tap into that latent legal market that is unserved right now, and there’s boundless opportunity there. If you do the back-of-the-napkin ,math that’s a trillion-dollar opportunity for innovative law firms to go after and by the way, I think solos thanks to their agility, are best-positioned to experiment with new business models and to experiment with ways of getting into these new market opportunities, and that’s the mindset. That innovative mindset is what I would encourage any solo lawyers, and frankly any lawyers at all listening to this, to adopt.
Sharon D. Nelson: Well, yesterday at ABA TECHSHOW, I heard you talk about lawyers in general in physical offices, but what did the survey tell you about solo lawyers in physical offices?
Jack Newton: Yeah. So, it’s interesting. I think one of the broader trends we see in the Legal Trends Report data is that the need for physical offices is certainly reduced over what we thought it was pre-pandemic, and we’ve seen a really broad adoption of technologies that have allowed law firms to move away from using physical offices with over 80 percent of law firms set up to meet clients virtually, and correspondingly consumers having an ever increased willingness to meet online and meet face to face. So, what I’m seeing in the solo market in particular that’s interesting is that number one, solos in general have less office space than their large firm counterparts. Only 58 percent of solo law firms indicated in our survey that they have commercial office space. 10 percent of the respondents in our survey of solos indicated they were thinking about giving up their office space altogether.
There weren’t many larger firms that were responding that they were thinking about giving up their commercial office space. So, what I see here is a unique — maybe an early signal, maybe this is the canary in the coal mine for bricks and mortar office space that we’re seeing solo law firms already depend on physical office space less than the average firm. We’re seeing a big bump in, you know, one in ten solos saying they’re going to walk away from their commercial office space, and again as the most agile of the legal industry, we might see the beginning of a trend here where physical office space, bricks and mortar office space, is just not something that is needed in the same way it was pre-pandemic and for at least some law firms, maybe not needed at all.
John W. Simek: Well, Jack, earlier you talked a little bit about cloud computing but what did the survey tell you about solo lawyers and cloud computing?
Jack Newton: So, number one, there’s a few data points I can talk about with respect to cloud computing and what we saw the pandemic drive. Sharon and John, you guys have known me for 12 years now. We met at the very first TECHSHOW I think, where we had a very modest little outpost in a far-flung corner of the ABA TECHSHOW talking about this crazy idea that was cloud computing.
John W. Simek: Yup.
Jack Newton: And, you know, even over the last 12 years what we’ve seen is that the adoption has been very strong. We’ve got over 150,000 customers around the world using the platform. We’re the most widely used practice management platform on the planet, but still even at that level of success and penetration, we’re still single-digit, penetrated into the broader legal market. There’s still a lot of headroom for us to grow in the legal sector and correspondingly, a lot of cloud adoption left to happen in the legal sector. What we saw with the pandemic is that, you know, over the last 12 years as I mentioned, what we’ve seen was just an ever-growing, you know, first early-adopter crowd then early majority starting to adopt cloud computing, but adopting it essentially in the vein of, “Let’s be forward-looking, let’s be vanguards in technology adoption,” and there’s this notion that you’re kind of ahead of the curve if you’re using cloud computing as a law firm, even as recently I would say as 2019, and what changed in March of 2020 was overnight, cloud computing became table stakes. It became oxygen, it became something that law firms needed to survive and if they didn’t, if they weren’t already in the cloud, they were figuring out, “How do I get in the cloud,” not in a matter of months or even days but, “How do I get my law firm in the cloud in a matter of hours so that my lawyers can collaborate with one another, so that we can meet the expectations of our client?” And we at Clio, we just dealt with a tsunami of demand.
It was unreal how significant the demand was and we talked internally about, you know, the fact we were facilitating this mass exodus from on-prem software, from bricks and mortar systems, from even pen and paper for some law firms, to Clio, and we were one of the businesses fortunate enough to really thrive amidst this crazy pandemic. We went on a hiring spree. We’ve grown to 550 people and we’re hiring 250 more people this year to meet that demand. So, we just saw an inflection point, a massive tipping of this scale where, you know, the legal industry is thinking about cloud computing as a foundational aspect of how it operates internally within the law firm, but I think what is really key and the shift I’ve seen and a shift I’ve been advocating for a long time is, cloud computing and technology like Clio’s technology is not just about productivity inside the law office.
It’s not just about being a safe and secure system of record for your law firm. What the cloud ultimately enables is us to deliver legal services in a completely different way than we have in the past and what we’re seeing, I believe and what’s so exciting for me is, as an innovator and a technology person, is seeing that the legal industry is now looking at a potential impact of cloud computing in a very client-centered way, realizing this opens up new market opportunities, this opens up new consumers to tap into, and a new way of even working within a law firm that, “Hey, if we play our cards right, maybe we can make the legal profession a happier, more successful profession that’s able to deliver better client service and better outcomes for its clients,” and as a side effect of all of that, increased access to justice, and that would be pretty cool if we’re able to pull that off.
John W. Simek: Well, before we move on to our next segment, let’s take a quick commercial break.
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Sharon D. Nelson: Welcome back to The Digital Edge on the Legal Talk Network. Today our subject is Clio’s 2021 Legal Trends for Solo Law Firms report. Our guest is Jack Newton, the chief executive officer and co-founder of Clio.
John W. Simek: So, Jack, what are some of the steps a solo lawyer might take today to improve their revenues?
Jack Newton: So, number one, I think I talked about two pillars of thinking that a solo lawyer needs to take on to navigate this new environment. I think you do need to think about how do you become cloud-based, go figure out how you put your law firm into the cloud, and what I mean by into the cloud by the way is a much more expansive meaning than what I meant when I said that 12 years ago. When I said put your practice in the cloud 12 years ago, I meant put your practice management system in the cloud. When I say put your practice in the cloud in 2021, what I mean is figure out how you put every workflow, how you put your client acquisition, how you put your internal firm collaboration, how you collaborate with clients, how you bill your clients, how you get NPS feedback and reviews from your clients, figure out how you put all of those workflows into the cloud so that your firm is literally in the cloud and you can then as a result work from anywhere, you have the agility to pivot with all the changes we’re seeing in the environment, and you are truly cloud-based. That’s step one.
Step two I think is re-evaluating how you deliver your legal services, re-evaluate the client journey that you’re attempting to facilitate re-evaluate how you’re pricing and packaging and delivering your legal services, and as a broad umbrella, what I talk about in that basket of tasks, is how do you become client-centered as a law firm. And I’m so passionate about this topic I actually wrote an entire book on it. So, maybe one way of thinking about my background is I’m really passionate about the technology being part of the solution and the mindset being part of the solution.
I founded a company, Clio, to solve the technology part and I wrote a book, The Client-Centered Law Firm, to solve the mindset part of the equation, and I think those two things taken together are so important, and by the way, the system doesn’t need to be Clio. There’s lots of great systems out there. Evaluate all of them, choose the one that’s the best fit for your needs, but look at the set, the ecosystem of tools that you could use to put your law firm in the cloud, and adopt some of these ideas around how you become truly client-centered and embrace the fact that this pandemic, if we’re looking for any kind of silver lining, it’s given us permission to really pivot and change how we’re delivering legal services.
It’s given us permission to experiment, and it’s radically shifted consumer expectations in a way that we not only should be innovating but we need to be innovating, to meet those new expectations.
Sharon D. Nelson: Well, as everyone knows who listens to us talk, we are always showing a picture of you and your book, The Client-Centered Law Firm, which is available for the bargain price of 19.99 on Amazon, definitely worth reading not only for solos but for anyone else interested in how the legal sector can grow and prosper through tough times, after these tough times, and whenever we get to a new normal. So, would highly recommend that you get that. And then, I did want to ask you, Jack, because it was just announced today as we are recording, Clio Con 2021 is going to be in October. So, would you tell us a little bit about the conference? I gather it’s going to be virtual. And please tell us how to register, which I by the way have already done.
Jack Newton: That’s great. And happy to give you the download on the Clio Cloud Conference. We just announced the 2021 Clio Cloud Conference will be happening virtually from October 26 to October 29, 2021.
We launched last year our first virtual conference in Clio Con 2020. It was widely recognized as the best legal virtual conference anyone had experienced. I really enjoyed it. What I was thrilled by was the sense of community, the real-time chat that’s happening, sessions we had incredible keynotes, like Seth Godin for example and Angela Duckworth talking about Grit. We saw just so much incredible content from so many incredible speakers, and again something that’s so important about Clio Con is this incredible community of innovative lawyers, innovative legal professionals, thought leaders in the industry, thought leaders from outside of the industry to kind of inject a new perspective on things, and it was just so exciting to take that conference virtual.
One of the things I loved about taking Clio Con virtually as well is it really increases the accessibility of the conference. Going to a conference is time-consuming, it’s expensive going to a physical conference to be clear, and a virtual conference is something you can kind of take sips from when you want to. You can do it from the convenience of your home. We saw over 4,500 attendees come to Clio Con last year and we’re going to do a bigger and better Clio Con in every sense of the word this year. So, please sign up. Early bird pricing, the super early bird pricing, is available until April 1st, and it is only 49 dollars per pass to sign up until April 1st, and to sign up you can go to cliocloudconference.com. We’d love to see you there.
Sharon D. Nelson: Well, Jack, we certainly want to thank you for joining us today. It’s always insightful to have you on the program and we never get enough. So, come back again because it’s always wonderful to have a chat with you. We really appreciate your time.
Jack Newton: Well, thanks for having me. It was a wonderful chat, and maybe the last note I’ll end on, Sharon and John, is just an invitation to read the Legal Trends Report. It’s available, free of charge. If you search for Clio Legal Trends Report, it’ll be there right at the top of your search results, and it’s available for free and what we ran through very quickly today, it is a 45-page report that you can download and enjoy at your leisure.
Sharon D. Nelson: And have your highlighter by your side.
Jack Newton: And have your highlighter, absolutely.
Sharon D. Nelson: And that does it for this edition of The Digital Edge: Lawyers and Technology. And remember, you can subscribe to all of the editions of this podcast at legaltalknetwork.com or on Apple Podcasts, and if you enjoyed our podcast, please rate us on Apple Podcasts.
John W. Simek: Well, I hope I didn’t mess up too bad as Jim’s substitute today. So, I’ll just close by saying thanks for joining us. Goodbye, Ms. Sharon.
Sharon D. Nelson: It’s kind of nice that I have an East Coast cowboy too. So, happy trails to my East Coast cowboy. Bye, everybody.
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