What Lawyers Don’t (But Should!) Know About the Business of Law

Episode Notes

Transcript

Legal Toolkit

What Lawyers Don’t (But Should!) Know About the Business of Law

09/18/2020

 

[Music]

 

Intro: Welcome to Legal Toolkit. Bringing you the latest legal trends and business initiatives to help you manage your law firm with your host, Jared Correia. You’re listening to Legal Talk Network.

 

Jared Correia: Hello my online friends and welcome back to yet another episode of the award-winning Legal Toolkit podcast only on the Legal Talk Network. If you’re looking for new episodes of “Better Call Saul,” you may be in for a long wait. Let’s all hope Kim Wexler is okay. If you’re a returning listener, welcome back. If you’re a first time listener, welcome home, and if you’re Waylon Jennings, you’re unsure whether Hank done it this way.

 

As always, I’m your show host, Jared Correia, and in addition to casting this pod, I am the CEO of Red Cave Law Firm Consulting, which offers subscription-based law practice management consulting services for law firms, bar associations and legal vendors. Check us out at redcavelegal.com. Because I don’t have enough to do, I’m also the CEO of Gideon Software Inc., which offers chat bot software built specifically for law firms. Find out more at www.gideon.legal. Here on the Legal Toolkit, we provide you with a new tool each month to add your own legal toolkit, so that your practices will become more and more like best practices.

 

In this episode, we’re going to talk about law firm technology adoption and alternative legal service providers. But before I introduce today’s guests, I’m going to build a suspense a little bit. Let’s take a moment to thank our sponsors. We would like to thank Alert Communications for sponsoring this podcast. If any law firm is looking for call intake or retainer services available 24/7, 365, just call (866) 827-5568. Scorpion is the leading provider of marketing solutions for the legal industry. With nearly 20 years of experience serving attorneys, Scorpion can help grow your practice. Learn more at scorpionlegal.com. Abby Connect has delivered premium live receptionist and answering services to lawyers since 2006. You can try them out for free at abbyconnect.com. Time Solve is the number one web-based time and billing software for lawyers. Providing solutions since 1999, Time Solve provides the most comprehensive billing features for law firms, big and small, www.timesolve.com.

 

All right, sponsors have been thanked. And now, I can tell you that my guest today is Scott Brennan, CEO of Lexicon, a new case management software for law firms. Scott, that’s a very brief bio. Anything you would like to add.

 

Scott Brennan: Yeah, thanks Jared. So, I am not a lawyer by training, and my background has been in finance and travel tech. Then, I joined the legal space about 18 months ago. When Lexicon really was envisioned as something that could be built and could be used to help other law firms really expand and operate, you know, more effectively. We had an existing practice management platform. We were using with a couple Legacy customers. We were operating sort of as a captive back office, but we’ve really, really exploded the amount of development we’ve been doing and we completely rebranded the platform and we issued a new version of the software that we did brand as Lexicon Software within the last six months. So, we are definitely the new kids on the block. We just see so much opportunity to help law firms grow and operate more effectively.

 

Jared Correia: Awesome. So, we will tell people more information about how to get in touch with you, how to find out more about Lexicon at the end of the show as well. But Scott, welcome to the big show. We’re happy to have you.

 

Scott Brennan: I’m happy to be here.

 

Jared Correia: Great. All right. So, I always start out with an icebreaker question. When I say I did a little research, this is your point to say, “Oh, no.” All right. So, actually, you’ve got a very clean reputation online, might I say.

 

Scott Brennan: Thank you.

 

Jared Correia: I didn’t see anything bad out there.

 

Scott Brennan: Those services are worth all the every penny.

 

Jared Correia: Right. But there are a lot of Scott Brennan’s on the web. Did you know this?

 

Scott Brennan: There are a ton of them out there, yeah.

 

Jared Correia: All right. So, I want to play a little game with you. It’s called which Scott Brennan would you be if you couldn’t be the Scott Brennan. Are you ready?

 

Scott Brennan: I am ready.

 

Jared Correia: So, I found three Scott Brennan’s online who might be good alternative identities for you. I’m going to read to you their descriptions of themselves and then you can tell me which one is your favorite. Scott Brennan number one, Native Iowan and lifelong progressive. My idea of fun is caucusing, sounds like a loser. Scott Brennan number two, happy to be a butcher. His avatar is actually the head of a pig. Scott Brennan number three, biomechanics nerd in the UK fueled by coffee and whiskey. So, I have my preference, but  let me know like of those Scott Brennan’s. If you couldn’t be yourself, which one would you choose?

 

(00:05:05)

 

Scott Brennan: I’ve got to go with the biomechanic nerd fueled by coffee and whiskey in the UK.

 

Jared Correia: I know. Was it even a choice really? He seems to have the best life.

 

Scott Brennan: It wasn’t. But you missed the Scott Brennan, the Australian Olympic rowing champion.

 

Jared Correia: I miss that Scott Brennan. You want to talk about him a little bit?

 

Scott Brennan: He’s the one I want to be.

 

Jared Correia: That’s totally my bad. I got to get my research game up and running. All right. Now, we’ve gone through five Scott Brennan’s already and we’re in like a minute ten of them. So, let’s make the sponsors happy and, probably, your company. Let’s talk about legal specific issues. You’re new to the legal industry. By the way, great work not going to law school. Probably, the best decision you ever made. You know that already lawyers basically practice law. That’s all they want to do. That’s all they’re trained to do. They don’t know or care in some cases about the business of law. What is it that lawyers should know about the business of law that they don’t.

 

Scott Brennan: Yeah. So, I see a lot of firms that don’t really understand what drives their business. It’s not enough to just know what was my revenue last year, what was my net income, but really understanding those operational metrics that allow them to understand what’s my actual real collection rate, which clients am I making money on or which matters depending on your client or matter centric, am I really making money on, how much am I writing down, are my billing terms proper. It’s really getting down to the nuts and bolts of understanding what drives their business. The other thing I would sort of as a corollary add to that is a lot of lawyers get involved in a whole bunch of stuff that probably isn’t adding a ton of value to their law firm and helping either their top line or their bottom line for their firm.

 

Jared Correia: True. They very much do. Lawyers like hobbies.

 

Scott Brennan: Yeah.

 

Jared Correia: Every lawyer I talked to is like, “Boy, I’d like to be a consultant rather than practicing law. I’d like to write the great American novel,” so totally true.

 

Scott Brennan: Yeah.

 

Jared Correia: So, let’s kind of talk about like the law firm as a business, right, and how lawyers could make better decisions about business management. So, because firms and businesses that means they need to make smart investments that help drive revenue. So, what are law firms need to consider when they’re investing in technology and also, by the way, the strategic outsourcing of services, which we’ll also talk about in detail during the show.

 

Scott Brennan: Yeah, thanks. So, I think that most lawyers and most firm managers would be really surprised at how affordable good tech solutions can be today. If you go back not that long ago, right, if you really wanted to implement a world-class practice management system and all of the things that would go along with that, you’d be out buying server racks and servers and putting in Halon systems and none of that is necessary anymore, right? So, through software as service offerings like ours and everybody else’s really, it’s a lot easier to get on board. There’s no infrastructure challenge to speak of and certainly not anywhere on the scale that it used to be and, on top of it, you know SaaS allows for relatively easy switching, you know, unless you’ve got a provider who likes to hold people hostage like pirates.

 

Jared Correia: Right.

 

Scott Brennan: If you make a bad call, you can get out of a SaaS offering relatively without a lot of damage, yeah.

 

Jared Correia: No, totally. And I think you’re right like 10 years ago if somebody was like I want the same basic technology set I’m asking for today. The price would be like a hundred times.

 

Scott Brennan: Yes.

 

Jared Correia: Now, it’s crazy. I tell people all the time. It’s like a great time to be running a law firm, really.

 

Scott Brennan: Yeah.

 

Jared Correia: It’s a great time to be running a small business, frankly. So, let’s talk a little bit more about this notion of like picking the right technology. What do lawyers need to understand when it comes to the economics of implementing legal tech platforms and management services within their practices? Because I think like a lot of lawyers make ad hoc decisions, emotional choices. So, how do you look at this from like a bottom line economic perspective as a law firm.

 

Scott Brennan: Yeah. Well, first I’d say if you’re making a significant investment in your business, in some cases, this is what it is. Don’t be afraid to use an expert like you, Jared, right, like what you do to help you make those decisions, right? It goes back to again, you  know, as a firm you guys have trained to be lawyers and you’re a litigator or you’re a business lawyer. You’re not a tech evaluator and you don’t necessarily even know the right questions to ask. One thing is use an expert that can help you think through those things. The other thing is make sure you’re really partnering with somebody who’s got a good reputation that you know you can trust. I’d say and, you know, I’m not from the legal industry, but the rest of my team is, choose a provider that specializes in law firms. I can tell you from coming outside of the law.

 

(00:10:02)

 

Law operates differently than almost any other industry I’ve ever interacted with, but there’s always something weird in law that you wouldn’t focus on in another industry. And so, having a partner who really specializes in legal services or legal technology, there’s more value there probably in law than any other industry I’ve encountered.

 

Jared Correia: Oh, totally. And I think like there’s an explosion of new legal tech as well.

 

Scott Brennan: Yeah.

 

Jared Correia: It’s actually a really good thing because I think a lot of lawyers think there’s like a lot of legal tech in the marketplace already, but it’s only a small sliver of what can be covered. So, I think a lot of the innovation going on out there is really great and you guys are doing some of that as well.

 

Scott Brennan: Yeah, thanks. It’s also legal. It has been — I mean, to the law, you know, ecosystem. It might feel like there are a lot of providers out there, but coming out of like Traveltech or Fintech, —

 

Jared Correia: Right.

 

Scott Brennan: There are not.

 

Jared Correia: Right. It’s out in the bucket. Yeah.

 

Scott Brennan: There are far more providers in other industries who really, you know, aren’t as complicated as supporting a law firm are. So, we think there’s a lot of people out there, but there is just so much untapped opportunity to help law firms grow and operate more efficiently.

 

Jared Correia: Absolutely, we’re totally on the same page about that. We’re going to take a quick break here, but we’re going to jump into that topic again in some greater detail after the break. So, let’s take that first commercial break. Let me draw some of your attention to some of our sponsors, and we’ll be right back.

 

[Music]

 

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All right. Thanks for coming back everybody. I’ve returned from putting down an entire row of side batch chocolate chip cookies. They were great. Thanks for asking. So now, that I’m satiated, let’s get back to our conversation with Scott Brennan of Lexicon. We’re talking about law firm tech adoption firstly. So, Scott, in the first segment of the show, we talked a little bit about adding legal tech solutions as well as outsourced services in the right way, right, because there’s a wrong way to do it. So, here’s the softball question of the show for you. How will those things positively affect a law firm’s business model?

 

Scott Brennan: Yeah. If done well, they will dramatically improve whatever metric it is that you say your firm is focusing on, right? So, we talk to some firms who are really interested in driving top-line growth and the solutions that they’re going to be looking for, the partners they should be searching may be different than firms that we talk to who are looking to really just drive net income and get more out of the business they’re doing. I mean, it sounds funny, but there are a lot of firms who say we are happy with the number of clients we have. We’re happy, you know, with our current number of locations and our staff. In fact, the idea of hiring more staff gives us a headache, but we think we’re not making enough money per matter or per client. And so, those people are going to be looking for pure efficiency place and they may be, you know, one way we could help them would be to move to a virtual receptionist and virtual call taking or potentially taking on their billing rather than having them pay somebody 40 to $60,000 a year for a billing position, right? Could you pay us per bill or could you pay us per minute and only pay for the time you need which should drive some significant savings back to the firm. That’s a different solution than the firm that comes in saying it is my aspiration to be in five states in five years and to have a hundred attorneys on my firm.

 

Jared Correia: Well, I guess that’s a good point that you bring up, which is that I think a lot of lawyers think that only certain pieces of law practice could be automated or supplemented by technology, but really it’s almost every aspect of law practice at this point.

 

(00:15:04)

 

Scott Brennan: Yeah, absolutely. And we play in a lot of that, right?  For us, we view our practice management software as kind of the core offering we have and that you can track your matters, you can track your clients and your associations. You can do your billing; you can do all of that stuff through the software that’s necessary to operate your firm. And then we offer the services that go along with those things and it’s up to the firm and what their strategy is to decide which of those services make the most at.

 

Jared Correia: Oh, totally, yeah. And so, that’s a good segue into the next question I have for you, which is like, you could buy like 20 different softwares to manage that, right?  But there’s also a value to having one software that manages more components of that than others. And I think that’s what some folks are driving at in the legal industry, like is there a way to have like an operating platform that could run most of the automations or most of the technology within a law firm. And that seems to have been your approach and can you talk to me a little bit about the value of an approach like that from the perspective of a vendor and also from the perspective of an attorney.

 

Scott Brennan: Yeah, my perspective from the attorney will be a little slanted, so we’ll disclaim that up front.

 

Jared Correia: Fair, yes.

 

Scott Brennan: From the vendor’s perspective, there is a lot to be said for interoperability. And so making sure that what we offer truly feels like a seamless experience and you don’t feel like you’re moving from one platform to another platform, to a third platform as you move through your case phasing or as you go from entering new clients into the system to collections at the end of the day, right?  We think that having that seamless interoperability and a uniform look and feel, and a uniform interface from a vendor perspective means that we’re not dropping the ball anywhere, data isn’t getting lost, there isn’t a reclassification somewhere along the way. And that means that from the end user’s perspective, it’s simple and easy, right?

 

So we spent a lot of time thinking about if I were an attorney, I wouldn’t want to manage 14 vendors if I could manage one. Because even if you say managing a vendor is only, you have 10 minutes a week. If you got 14, that’s over two hours a week of billable time that you just lost. And if you could do that by managing one vendor at 10 minutes a week, well, you just saved two hours of billable time and anybody can do the math and say, at my billable rate, what’s that mean to me?

 

Jared Correia: Yeah, I also used to have a universal bill as well.

 

Scott Brennan: Yeah. And then there’s the training and the understanding of the software aspect. Technology isn’t always as seamless and as wonderful as we all want it to be. And if you’re trying to cobble together three or four different platforms that really don’t want to talk together and act as a uniform thing, you’re really training your staff or yourself on multiple platforms with different interfaces. And eventually, that’s going to lead to frustration and potentially disaster.

 

Jared Correia: Oh, totally, yeah. So let’s follow up on that with a more generic question. In terms of technology and elsewhere potentially, what areas do law firms typically overlook when they’re trying to maximize revenue or profitability?

 

Scott Brennan: Yeah, there are a lot.

 

Jared Correia: Pick one. No.

 

Scott Brennan: I think, again, if you go back to the original statement. A lot of firms don’t understand their actual cost and profitability at a per client or per matter level. That is definitely a big issue. And I think it sounds really basic but a lot of firms don’t really capture their time well. And if you are a firm or you’re a lawyer who’s entering their time once a week, I can almost guarantee you that you are leaving money on the table every week. So you’re getting time tracking right and getting to timely entry of that time and proper categorization. That is absolutely a missed opportunity when it comes to maximizing revenue and profitability. The other one is workforce allocation, and are you really putting that work into the right hands within your firm. If you have a paralegal, a junior associate and a senior associate, is the senior associate really working on the right parts of that matter or that case for the client?  Or is the paralegal doing things that maybe would be better served going to an attorney. That’s not to say that you should go out and intentionally try to put everything into the hands of the attorney with the highest rate in your firm because that’s not going to allow you to have satisfied or repeat business. But really thinking through, what’s that workforce allocation and do you even understand what it is on a per matter basis?

 

(00:20:04)

 

Jared Correia: Yeah, those are two good ones that you pulled out there. All right, let’s take our second break I think it’s about time. Just checking my watch. The rest of you can all listen to some words from our sponsors now and Scott and I will come back for the next and last segment of the show.

 

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Jared Correia: Thanks for staying with us, I never left. Didn’t get any better offers. So now let’s continue with Scott Brennan of Lexicon who’s been walking us through legal tech adoption. Now, for something totally different, let’s talk about alternative legal service providers or ALSPs, which I’m going to pronounce as ALSPs the entire time. So I’m just going to say the whole thing every time.

 

Scott Brennan: The third S is silent, Jared.

 

Jared Correia: Yeah, that’s right. See, this is just bad news if I try and do it. So Scott, for those who are out of the know, tell me, what are alternative legal service providers?

 

Scott Brennan: Yeah. Well one thing they’re not in our opinion, Lexicon. Right?  So they typically are companies that a firm would use for, I think of it as more single use or per case basis as opposed to an ongoing partnership with the firm. So litigation and investigation support, legal research, document review and e-discovery, regulatory risk. Those things that you’re going to need occasionally, that you can outsource to a company that specializes in and do it either more efficiently, smarter or cheaper than if you were to try to do them yourself.

 

We don’t view what we do as being in your term an ELP. We view ourselves as more of an ongoing —

 

Jared Correia: I see what you did there.

 

Scott Brennan: Yeah. So we don’t come in and out on a per trial or per matter basis. We’re more of an ongoing partnership with our customer firms, helping them either grow their revenue or maximize their net income or drive client satisfaction.

 

Jared Correia: Right, fair. So whether or not you consider a law practice management software, alternative legal service provider or not and I think you’re probably right on that, there’s still a lot of those alternative legal service providers out there in the legal industry and that number is growing. So what risk does a law firm run if it doesn’t adopt technology and outsource services in that environment?

 

Scott Brennan: Well, I think depending on the type of law you practice or you specialize. And you’re beginning to see varying levels of pressure on price, certainly any firm who does outsource work for in-house counsel in the corporate world is being moved into more and more kind of fix fee arrangements not to exceed arrangements. And a firm that is in that world and is not smartly outsourcing what they can to drive their cost down is probably not making a lot of money anymore. That’s one.

 

And I also think there’s always the disadvantage of not adopting technology beyond eroding margin. You may contract your revenue. You may have poor information security. So I think I saw a statistic just the other day that year-to-date, phishing attempts against law firms in particular are up 70% year over year.

 

Jared Correia: That’s wild, yeah.

 

Scott Brennan: And this is an industry that was already heavily targeted because the information that we have about our clients and — pretty much, if you do anything family law related, business, real estate law related, wills and estates. Access to some of these data basically gives me access to houses in the Bahamas and second mortgages all over the world, right? And because of that, they’re getting targeted. And so, maybe this a little bit beyond alternative legal service providers. But if you’re still trying to operate your firm using Outlook for people to email things around, you’re exposing yourself to some massive, massive risk.

 

(00:25:06)

 

Jared Correia: Yes. I talk about that quite a bit, but let’s not dive too deep into the security discussion.

 

Scott Brennan: Yup. Sure.

 

Jared Correia: Although it is very interesting. We should do another entire podcast on that, right?

 

Scott Brennan: Yeah.

 

Jared Correia: You talked a little bit about some of the typical service provision for alternative legal service providers, right?  Litigation and investigation report, legal research, e-discovery, et cetera. But like that reach could be significantly expanded, right? So what other outsourced services can law firms take advantage of to give them a competitive or even a financial edge?

 

Scott Brennan: There are a lot. Virtual receptionist to me is a massive opportunity for a lot of firms. Who’s taking your phone calls?  How many people do you have across your firm taking phone calls and setting appointments?  And do you need all of those people on site earning a 40-hour a week wage?  Or do you need maybe one with some supplemental help, not there with the company really understands your business?  I would say the same with paralegal support.

 

And then there are some interesting ones that may not necessarily bubble up as normal to you, but quality control. We have a quality audit group that will actually help a law firm process map their case phasing. And then, what point do firms need to be communicating with their clients and making sure that they are doing so in a way that maximizes the client’s satisfaction with the firm even if the outcome of that case or matter isn’t positive. IT support, process improvement, project management, procurement and facilities. Most law firms unless you’re a real estate firm probably have no business trying to negotiate multiple leases around a city or around multiple states. Marketing and PR, everybody thinks they’re a marketer but I’ve never met a person who didn’t think they had better marketing ideas than a marketing firm, but you probably don’t, right?  And so trying —

 

Jared Correia: It can’t all be Don Draper, right?

 

Scott Brennan: Yeah, right. But we all want to be Don Draper desperately. So finding a company that understands how to market a law firm in a bar compliant manner, take that off of your plate and off your staff’s plate and outsource that. PR, website hosting, social media. Again, your odds are if your firm is doing social media, you’ve given it to the lowest paid person in the entire company who has no background or expertise in social media. And it’s not expensive to hire a company to help you craft intelligent post on a regular basis. And then all the HR stuff, lawyers were not necessarily trained to manage other people. And as your firm is growing, you want to make sure you don’t have business practices that get you sued or drive massive turnover in your staff. Because hiring and training is really pricing.

 

Jared Correia: Yeah. That’s a lot of stuff, that’s A pretty good list, man. just off the top of your head, that’s really impressive.

 

Scott Brennan: I’m sure I forgot a couple. somebody in my company is going to yell at me for forgetting them.

 

Jared Correia: All right. So you went to college in Buffalo, right?

 

Scott Brennan: I did, yeah.

 

Jared Correia: All right. Did you ever party with the Gronkowskis.

 

Scott Brennan: I did not party with the Gronkowskis.

 

Jared Correia: It’s too bad, man. Do you got any good Bills Mafia stories that you want to share before we finish up?

 

Scott Brennan: Not Bills Mafia, but I was at Mighty Taco with Jim Kelly back when Jim Kelly basically could do anything he wanted in that city and be forgiven for it/

 

Jared Correia: Like even lose four consecutive super bowls.

 

Scott Brennan: Don’t. Definitely a hard no. Come on.

 

Jared Correia: All right. Did you grow up there? Are you Bills fan?

 

Scott Brennan: I grew up in Rochester, which is the next city?

 

Jared Correia: Oh, I know Rochester, yeah.

 

Scott Brennan: And I grew up a Bills fan, and I will admit to crying like a baby in the four falls of Buffalo 30 for 30. Like my kid came in and he’s like, “What is happening?”

 

Jared Correia:  Like, I’m all right. Just turn off the lights and walk slowly away. I got to tell you though, I’ve always liked the Bills. I was on the Drew Bledsoe side in the Tom Brady-Drew Bledsoe debate, which is probably not a good look for me. But when Drew was with the Bills, that team was amazing. Like Eric Moulds and Pearce Price(ph), that team was great. I loved watching that team.

 

Scott Brennan: Yeah, it’s a hard team to love. I’ll tell you, my heart has been toyed with so many times.

 

Jared Correia: They’re looking good this year, though. This could be their year.

 

Scott Brennan: They are, but they always do.

 

Jared Correia: I know. Well, let’s see. They could get a division title here. I think the Patriots could probably throw somebody a division title every 20 years or so. It’s the least they could do. All right, on that note, I think we should finish up. Getting off the rails a little bit here. We’ve reached the end of yet another episode of the Legal Toolkit Podcast. This was the one where we talked about legal tech adoption and alternative legal service providers. And we’ve been chatting with Scott Brennan of Lexicon.

 

(00:30:06)

 

Now, I’ll be back on future shows with further insights into my soul, the soul of America or what’s left of it and the legal market. If you’re feeling nostalgic from my dulcet tones however, you can check them out anytime you want, as well as our entire show archive at legaltalknetwork.com. So thanks again to Scott Brennan of Lexicon for appearing as my guest today. Scott, can you tell everyone how they can find out more about you and about Lexicon.

 

Scott Brennan: Yeah, lexiconservices.com is the easiest way to get in touch with us. My email is [email protected]. Happy to talk to anybody who’s got interest in what we’re doing.

 

Jared Correia: All right. Reach out to this man, check out Lexicon. Thanks again, Scott. This was a lot of fun.

 

Scott Brennan: Yeah, thank you.

 

Jared Correia: And finally, thanks to all of you out there for listening. This has been the Legal Toolkit Podcast where somewhere is here and it’s always five o’clock.

 

Outro: Thanks for listening to Legal Toolkit, produced by the broadcast professionals at Legal Talk Network. Join host, Jared Correia for his next podcast covering the current business trends for law firms. If you’d like more information about today’s show, please visit legaltalknetwork.com. Subscribe via iTunes and RSS. Find Legal Talk Network on Twitter and Facebook and LinkedIn or download the free app from Legal Talk Network in Google Play and iTunes.

 

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The views expressed by the participants of this program are their own and do not represent the views of nor are they endorsed by Legal Talk Network, its officers, directors, employees, agents, representatives, shareholders and subsidiaries. None of the content should be considered legal advice. As always consult a lawyer.

 

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