Joe attended this year’s Clio Cloud Conference and sat down with Sarah Schaff of Headnote to discuss her legal career and how she’s shifted to become an entrepreneur with a product that helps attorneys collect on their bills within hours instead of months.
Above the Law – Thinking Like a Lawyer
Getting Paid As A Lawyer Really Shouldn’t Be So Hard
Intro: Welcome to Thinking Like a Lawyer with your hosts Elie Mystal and Joe Patrice, talking about legal news and pop culture, all while thinking like a lawyer, here on Legal Talk Network.
Joe Patrice: Hello. Welcome to another edition of Thinking Like a Lawyer; America’s favorite explicit tagged legal podcast. I’m Joe Patrice from Above the Law. With me not at all today is Elie Mystal, who is not here because I’m not in New York. I’m actually in New Orleans at the Clio Cloud Conference.
If you don’t know what a legal-tech conference is, well, this actually isn’t like most legal-tech conferences, but it is an amazing one that Clio puts on every year for their product, which if you’re not in the small law space is kind of the windows of small law. It kind of runs everything for a lot of firms and so I’m here and today, because we don’t have Elie to grind his gears, I’m just going to get right into it.
So, my guest is Sarah Schaaf from Headnote. Welcome to the party.
Sarah Schaaf: Thank you Joe. Happy to be here.
Joe Patrice: Yeah, this conference is a lot of fun, isn’t it?
Sarah Schaaf: It is a lot of fun. I think exceeding expectations. I can’t say I’m impressed that often maybe that says something about me, but I actually have found myself feeling impressed over the past 24 hours.
Joe Patrice: So, I’ve been to several legal-tech conferences in my life and this one I went to two years ago, but after I’d been to ILTA, which is big, and — but I’ve been to a bunch of places and I finally went to this one and went oh, oh, this is what money can do.
Sarah Schaaf: Yeah, oh, well, that’s what I know I said to a few people, we’re located in San Francisco and so we’re constantly going to tech conferences run by like infinitely wealthy companies.
Joe Patrice: Apple, OneStock, yeah.
Sarah Schaaf: Right and like the Salesforce, Dreamforce these kind of conferences were no expenses spared and then you go to like a Bar Association, a convention or even like the ABA when they’re really well done and it’s like it just doesn’t compare to what some of these places are doing and Clio actually has figured out how to bring that here.
Joe Patrice: We were in a parade last night.
Sarah Schaaf: We were in a parade last night.
Joe Patrice: That the police escorted us on a parade through the streets of New Orleans.
Sarah Schaaf: Yes, I will say though, I spoke to my folks this morning who are both practicing lawyers and the ABA midwinter did that when they were here. So, it was an amazing idea and we’ll give credit where credit is due because some other lawyers did think of that at one point.
Joe Patrice: Okay, all right. So somebody’s thought of it before.
Sarah Schaaf: And they were not impressed with my story, what’s the other part. I thought this was so cool, they’re like did it, they’ve done it before.
Joe Patrice: Yeah, but meanwhile just on the other side of the wall here there is a hangover bar for everybody who partied too much last night filled with 5-hour energies which — it do make you feel like a junkie if you drink one.
Sarah Schaaf: Right, right. Get you jacked up and then feel real bad.
Joe Patrice: Yeah, so yeah, we’re here, it’s a fun show, if you’ve never been you should come listeners and we don’t know where it’s going to be next year that we haven’t had that announcement yet.
Sarah Schaaf: Oh, that’s this morning, right?
Joe Patrice: I thought he was going to do it at the closing.
Sarah Schaaf: Oh, is it closing that’s why —
Joe Patrice: Yeah, so I haven’t heard yet.
Sarah Schaaf: Yeah, loves the drama.
Joe Patrice: Yeah, why not.
Sarah Schaaf: It’s got dramatic effect.
Joe Patrice: But let’s talk Headnote.
Sarah Schaaf: Yes.
Joe Patrice: So, what is it the Headnote brings to the table for those who are either already kind of practicing in their own firms or thinking about moving to their own firms?
Sarah Schaaf: Right, so Headnote is the easiest way for law firms of any size but we really have found a lot of success with smaller firms, just start getting paid online, does not matter what your workflow is, it does not matter what your current process is, you can start getting online payment, whether you’re on a cloud-based practice management like Clio, whether you have a legacy system that you can’t get off of, if you have Dropbox and Gmail and a hodgepodge of things, you can use Headnote for all of those things without making big changes to your internal process.
Joe Patrice: Yeah, getting paid that’s one thing I was going to say we talked earlier and that’s actually a different show, hey everybody who listens to this, you can also listen to On The Road which is another Legal Talk Network show that occasionally I host.
Anyway, on one that I talked about yesterday, we talked about the Legal Trends report that Clio comes out with and one of the primary drags on the legal profession is not collecting.
Sarah Schaaf: Yes, yes.
Joe Patrice: I mean, you bill people and then you don’t get your money and that’s where you really come in.
Sarah Schaaf: Absolutely. Yeah, so I — like I said my folks are lawyers so I grew up in a family of lawyers, they both left large corporate or big law jobs and started two separate firms. So I grew up working at their firms and they had us doing like everything you could do. Then I worked at a couple other firms, went to law school, got out, practiced when ended up at Google.
And like everywhere that I worked this was an ongoing issue which is why the passion for me kind of took shape. And what we see like you said and what we’re seeing in this report is that we are the like last major industry in the US to have these issues with how we collect and we’ve become complacent with it because it’s just like it’s normal to take 90 days to get paid and only realize 85% of what I earn.
And anybody else like my pool guy wouldn’t stand for that and I pay him online like why do I still have to ride my dusty checkbook to pay my lawyer. So we’re just making it hard, but I don’t think it’s the lawyers’ fault. I mean, we have rules, right? Or risk-averse, we take them seriously, and so the trust accounting issue is a big one and that’s part of why we made Headnote.
We wanted to make a tool that was as easy as PayPal or Venmo that you could start getting paid online with as little pain as possible with a very clear fee structure, that’s it.
Joe Patrice: And that fee structure like people just buy transaction, yeah.
Sarah Schaaf: Exactly. Exactly. So a lot of payment platforms will have a monthly fee and then they’ll also have like a transaction fee with an asterisk and that means you’re not just going to pay that fee, you’re actually going to be paying for these like “merchant acquirer fees” and all of these kind of ambiguous things, which essentially means we have carte blanche to just charge you what we want, we’re going to pay it, we don’t do that.
We just have one transaction fee for e-check, one for credit card, that’s all you ever pay. You can go to headnote.com/pricing there’s a calculator where you can actually put in what you’re processing volume was and the fees you paid, it will tell you what your actual transaction fee was, and then what Headnote can save you.
So that’s something we believe really deeply and this should be a transparent process.
Joe Patrice: Cool. So, a thing you just said along there let’s go back because one thing that a lot of our listeners care about is we have a lot of pre-law listeners, what a legal career can look like and we often kind of say, oh, there’s this path that is like you go to your law firm whatever but you’ve chosen kind of a different path and how did you Plinko down to where you are now?
Sarah Schaaf: Yeah, Plinko is a great way to describe it. I say it’s not — it was not linear. So I was like a total — I don’t know if a rule-follower is the best way to think of it but I had this idea with two practicing lawyer parents, go to law school, get to a firm, spend five to seven years to get on partnership track, and then I don’t know what comes after that.
You’re just like you’re gunning to be a partner, and then I got a couple years into it and right away was just like, that is not — like — it was not for me and I would sit with my other junior colleagues and we’d be saying like, oh yeah, that’s what we’re going to do and then we’d go get a drink and everyone’s like, I don’t think I want to be a partner and we were like, I don’t think I do either, like what are we doing?
Joe Patrice: So, were you working in the Bay Area then?
Sarah Schaaf: Yes, yes, I was working in the Bay Area. I actually graduated in 2008 so like — the like real interesting time.
Joe Patrice: So right before everything was right.
Sarah Schaaf: Right, right and then while I was waiting for my Bar results like everything really hit the skids. So that was fun. But got a job right away, luckily, and the number one thing I noticed was that we had more of a transactionally based economy within legal than we ever had like there was so much fewer in-house employees, support staff, like that was a really a big part of this like aha moment for Headnote. It was like, oh, we have to transact more and we don’t know how to do it as lawyers.
But spent a couple of years at one firm and knew right away I was like this is not the kind of work I was litigating, always thought I was like I’m going to be a litigator and I’m going to become a partner and I’m going to like save the world and within a year, I was like, ooh.
Joe Patrice: So, your parents — lawyers, were they litigators too or —
Sarah Schaaf: One of each.
Joe Patrice: One of each.
Sarah Schaaf: So my mom was actually GC for the Dial Corporation in Greyhound Bus Lines like super-corporate track, does not like to litigate or come to conferences like this. She has a different thing, my dad’s like consummate marketer, litigator and I just thought, oh, I’m going to be like my dad. I’m going to go and I’m going to litigate and kind of got to start a couple years in I’m like second chairing or third chairing cases and I was just like, eeh, there’s not very much I love about this.
Got to another larger firm, I am like then I’ll start doing like some other kinds of law, nope, I was still litigating and somehow got this role at Google and was like now I’m going to love everything. Life is going to be perfect because this is the exact kind of company that I want to work at yeah.
And it was and the company itself was very fun to work at especially when you’re at a company where legal is not like the highest stress department like engineering is much more important.
Joe Patrice: Yeah.
Sarah Schaaf: So they could care really like a little bit less about us like engineers have way more going on than we do. And after I did it for a while I was like I just don’t — I know this is not right and at that point, I knew I wanted to be an entrepreneur and made this really tough decision to leave. I just had my first kid and a lot of people including my parents were like you’ve lost your mind but what are you doing.
And that was just like a really hard leap but I really felt like I’ve been practicing six years. I was at that point where like I didn’t figure out the right path for me, I was going to spend the rest of my life. Like it was going to be harder to get out and there’s a lot of unhappy lawyers in this profession and I wanted to not be one of those and try to do something about it.
Joe Patrice: Yeah, and there are places. It may not feel this way for those of you pre-law or just in law school, but there are places where your law degree can be put to a good use that are not being a lawyer necessarily.
Sarah Schaaf: Yeah.
Joe Patrice: And like yeah.
Sarah Schaaf: Which you don’t think about maybe that much when you’re in law school and I will say I did an AMA with Reddit yesterday from the conference and like the number one thing that I’ve been seeing even in the past day coming in are like 2Ls or 3Ls of new lawyers that are like how do I make the transition to working with startups or to working in tech.
And so, I think same thing that I wrote to some of them like you got that network of yours, that LinkedIn like all of those connections and I tell people like if they know me and they want to look at mine and if there’s somebody they want an intro to, find the person with your dream job and then write to them, like call, email them and just say like, I am really a fan of your career, I’m hoping that I can do something similar. Can I buy you a coffee or can we jump on the phone and I can — I’ll send you a bottle of wine or something to thank you to — just like can I just pick your ear or can I pick your brain?
Joe Patrice: Yeah.
Sarah Schaaf: People will do it nine times out of ten. I think that’s one of my superpowers is that all like dig in and ask anyone for help or advice because most people are afraid to do it and because they’re like, oh, they won’t want to do it, or they’re too important, but most people have had someone help them and they’re like looking for that opportunity and ask that person like what was your Plinko path to get here, like what did you learn that I should not do, and then other than that like that meetups are everywhere now, like go to meetups for startups, take a pay cut, ask if you can like hang around and do some work and prove your value and figure out how to get in there.
A lot of cool companies need young lawyers and maybe you will end up practicing just maybe a little different than you thought you would when you are in law school.
Joe Patrice: Yeah, a minute ago when I asked about the litigation angle is, so I did not have any lawyers in my family and that’s how I basically ended up in litigation —
Sarah Schaaf: Right.
Joe Patrice: — because I was like I don’t know what else I am supposed to do.
Sarah Schaaf: That’s what lawyers do.
Joe Patrice: Yeah.
Sarah Schaaf: Yeah, exactly.
Joe Patrice: And so I always find it interesting when people do have a sense of what, what else as out there ending up in litigation still.
Sarah Schaaf: Yeah, yeah, I think that for me it was like I just I do mostly enjoyed this kind of thing, I love talking to people like you and like I — for instance coming to a conference right away I’m like this, I’m like — I’m not presenting or doing anything like that, I’m like this is going to be just fun, like I just get to hang out with my friends and like talk about cool stuff all weekend. That for me I had this translation to like it felt a little bit like acting like if when you litigate — at least when you like see it on TV and then when you do it, you’re like, oh, actually that’s like 8% is me —
Joe Patrice: Yeah, motion practice is the 00:12:54.
Sarah Schaaf: Right, right. And a lot of writing.
Joe Patrice: Yeah.
Sarah Schaaf: Like, so you don’t really think about that when you’re like watching ‘Law & Order’, ‘A Few Good Men’ or something, but I do think that there was part of me, that was like — that is the part that is like you get to be dramatic and you’re going to argue that point and I really thought at that point I liked arguing for fun and now I’m like, oh god, I’d rather not.
Joe Patrice: Yeah, it’s interesting like I feel having been on the litigation side myself.
Sarah Schaaf: Yeah.
Joe Patrice: At the end of the day, I really felt like my friends who went the transactional side did more actual arguing.
Sarah Schaaf: Yes, it’s so interesting, especially now because almost nothing actually like gets to court.
Joe Patrice: Yeah.
Sarah Schaaf: It’s all pre — everything you’re doing in the settlement process ahead of time.
Joe Patrice: Yeah, they were on conference calls yelling at people and being dramatic.
Sarah Schaaf: Right, right.
Joe Patrice: Yeah.
Sarah Schaaf: Right, who knew, and so yeah, I just don’t think that I fully — I think too because of the difference in the personalities of my folks and that was like my archetype and so I was like, oh no, I know that I’m going to do more of like that kind of thing and then it turns out there’s a lot of different things you can do.
Joe Patrice: Really are. It’s an interesting path to go down and —
Sarah Schaaf: So many of the entrepreneurs that I deal with in Silicon Valley are ex-attorneys.
Joe Patrice: Oh yeah.
Sarah Schaaf: I mean, like in that way I think there is a feeling of — at least when I was going to leave traditional practice I know my — folks who are more traditional lawyers were like, oh god, was that a waste of an education and all that time and like it’s so isn’t just the ability to think analytically, you can do so much with your degree whatever you end up wanting to do.
Joe Patrice: It’s costly but —
Sarah Schaaf: It is.
Joe Patrice: It’s good but it’s —
Sarah Schaaf: Right. I don’t know if I would like say do that if you know you don’t want to practice, and if you do it and then you decide not to like fret not.
Joe Patrice: You could find your way out.
Sarah Schaaf: Yes, yes.
Joe Patrice: I mean —
Sarah Schaaf: Look at us, yeah, there you go.
Joe Patrice: Look at us not really practicing anymore.
Sarah Schaaf: Exactly; reformed.
Joe Patrice: Well, yeah.
Sarah Schaaf: Reformed.
Joe Patrice: Yes. So, thanks so much for joining us.
Sarah Schaaf: Absolutely.
Joe Patrice: Enjoy the rest of the conference.
Sarah Schaaf: I know.
For everybody else, thanks for listening. You should read Above the Law. You should follow me on Twitter. I am @JosephPatrice. You can follow Elie too, even though he is not really here. He is @ElieNYC.
And you should give us reviews and stars and all that sort of good stuff, so that more people listen to this and you should listen to other Legal Talk Network shows, in particular On The Road, which has a ton of coverage of this very conference, some of which I am actually the host of. So you will hear more of my dulcet tones if you do that.
And with that thanks for this and we will talk again next week.
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