Wait, Lawyers Talk Smack?

Episode Notes

Transcript

Above The Law – Thinking like A Lawyer

Wait, Lawyers Talk Smack

05/19/2020

[Music]

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. I am Joe Patrice from Above The Law and we are back once again to talk about law stuff. That’s about all I have as a plan for today. For that reason I brought on somebody else who can do some talking.

So, hey, Keith Lee is here. How are you?

Keith Lee: Hey, it’s me, Keith Lee.

Joe Patrice: Keith Lee from — I actually don’t know what to even call you at this point. It was Associate’s Mind, then it was LawyerSmack and now you are Marketing Officer. Like what should I be tagging your —

Keith Lee: I think it depends on like what day of the week it is, because I actually still maybe about once a quarter, I will get an email from someone on an article I wrote on Above the Law from like five years ago. I will get a Mr. Lee, really enjoyed that article dada dada and then they will ask me about like advertising on Above the Law. And it’s like I haven’t been there in five years, but I still get that.

So I created Associate’s Mind; I think a lot of people on Twitter know me as Associate’s Mind where I make — I find the best or the worst legal ethics opinions in the world and share them around.

And then I started Associate’s Mind the Blog. And then I created LawyerSmack, which is like the cool place for lawyers to hang out online and then currently I am the CMO of Case Status, which is a client management tool.

I am still running LawyerSmack as well. LawyerSmack is trucking along, still doing 10,000 messages a week, still having a good time, not being able to have cool parties anymore, but we are doing the Zoom thing, which is fun, but kind of sad. It’s not the same as Boojie rooftop parties somewhere.

Joe Patrice: Right. Well, what LawyerSmack is for those who don’t know, it began as a Slack channel for lawyers to talk about their business and lives and jokes, whatever and it evolved into this invite, like subscription lawyer.

Keith Lee: Yeah. Now it’s like a sort of like private label Bar Association as opposed to being like the New York Bar Association or even a practice specific area Bar Association, it’s more of a Bar Association for people who are sort of attitudinally aligned that want to have a sort of virtual water cooler to talk about their practice, that everybody has got some skin in the game like they are paying members. And yeah, still the private Slack group is there. We have member benefits things.

And then used to go around the country and throw really cool hangouts and parties and stuff, but can’t do that anymore, so that kind of sucks. But it’s trucking along. It’s good.

And yeah, life is good. I still fly the ATL colors on occasion. I have still got my shirt, every now and then I will wear it out on a call. Still love the crew and everything, but yeah, life is good, minus the current hellscape that is our current reality.

Joe Patrice: Yeah. Well, that’s actually what I was going to transition to was the question like with what’s been going on and lockdowns and you have got LawyerSmack people from all over the country. What have you seen trends wise on the channels, is there more activity, less activity, what’s going on?

Keith Lee: Yeah, so certainly I mean it’s as busy as ever. I mean we are doing the weekly Zoom calls with getting dozens of people. And for a while there we had guests and it goes through that every now and then, but mostly it’s just people wanting to see each other and hang out. Really the — what I get — what I have the unique ability to do is see lawyers from all across the country having frank, open and honest conversations about their practices.

Joe Patrice: Yeah.

Keith Lee: And with that being said, yeah, this is to confirm everything that is being put out there publicly, like yeah, this is the apocalypse for the legal industry. I mean I have written a lot about it at the Case Status blog, but it’s like what Clio came out with a couple of weeks ago where they had done their internal analysis and since the beginning of the year the matter of New Matters registered by Clio users has dropped by 40%. It’s fallen off a cliff.

(00:04:54)

Just this past week the Law Society of the UK said that they had surveyed small firms in the UK and that was quantified as four partners or less and the statistics they got back — they gave out was that 71% of small firms in the UK said they could not last six months in this current environment. That’s insane. That’s like extinction, right? I mean that’s saying small law firms in the UK are going to be no more.

And then I mean, I am sorry, Above the Law is partying like it’s 2008 again, like you look at the BigLaw side of things and it’s just layoffs, furloughs, everything is just being reduced across the board and inside LawyerSmack, yeah, people are having those same conversations. That’s true. People are like whoa, business is down, new matters are down.

There are certain highlights, certain — bankruptcy lawyers are like, I am doing great. But it’s tough, it’s tough out there man. It’s as, you know, I remember graduating in 2010 and being like wow, this is the worst time to ever graduate. Nope, now is the worst time to ever graduate.

Joe Patrice: Looking back on the Great Recession fondly. Yeah, no, it’s been crazy with the BigLaw cuts. We just heard another just coming across is that Cleary is going to push back starting its new class, but no cutbacks other than that. And actually they are going to increase the stipend that they are giving those students since they won’t be able to start work on time, which is nice. But there are very few firms that are sound at — in sound enough shape as a Cleary Gottlieb is to be able to do that unfortunately.

Keith Lee: Yeah, it’s really hard. I mean BigLaw, from my understanding and everybody I have spoken to, if you segment the legal industry into sort of BigLaw, midsize, and solo small firm and you talk to the classical professional services, Finders, Minders, Grinders pyramid in a BigLaw setting, those pyramids are just going to shrink, right? They are going to get a little bit smaller. The Finders are still going to stay at the top. Maybe some Minders don’t make it and yeah, they thin out the herd of Grinders, but the pyramid stays in place. As long as the economics of the firm are sound, they will get through, it will just be smaller.

Go down to the midsize bucket, that’s where I think the most interesting stuff is going to happen actually for the rest of this year and into next year. And it’s that I have spoken to so many people in different markets around the country that like after what happened in 2008, there has been this sort of weird inverted pyramid happening in midsized law firms, right? So instead of being lots of Grinders at the bottom and then a few Minders in the middle and then a very few Finders at the top of the pyramid, it’s been flipped where there might be 15 partners and then like four or five associates and if everything continues to go south, well, again, like what do you do in a recessionary environment where you begin to sell off assets?

Well, law firms — it’s the classic example where people say law firms’ assets leave the building every day in the elevator, right? You don’t — like law firms don’t have assets, it’s a professional services firm, like maybe they own a building or something, but that’s it.

So if you have to eliminate the bottom of the pyramid and your pyramid is top heavy, well, then the pyramid just falls over, right? So I think what you are going to end up seeing over the next 6 to 12 months is these midsized firms are going to break apart.

Joe Patrice: And in the meantime there is going to be, as you said, like a lot of pressure to cut costs, which brings me to the question. Are you trying to cut costs? You are not alone. In today’s climate a five-figure e-discovery bill per month is steep. Don’t pay that. Use Logikcull to reduce expense and control your discovery process. Get started today for only $250 per matter and they will waive migration costs from competing platforms. For more information, visit logikcull.com/ltn. That’s logikcull.com/ltn.

Keith Lee: That was amazing. You are such a pro.

Joe Patrice: See, how I like worked it in there. I think it’s important to do that or else people like — I certainly have podcasts that I listen to where I know the ad and I can hit the little 00:09:38 button, but if you work it in there just right where it’s part of the flow, people are willing to listen, which is great for our friends at Logikcull. But anyway.

Keith Lee: Man, love those Logikcull guys. They are amazing.

Joe Patrice: Yeah.

Keith Lee: I do know those guys. They are good guys.

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Joe Patrice: Yeah. But back to the cutbacks, and yeah, I do think that’s going to happen a lot and I think we are staring at a winnowing of that mid-tier as people either go out of business or bunch together or get sucked up by somebody else.

Keith Lee: And this was true in a lot of industries is that there used to be like sort of this almost soft middle in a number of industries that people were trying to crawl out of or get downsized from and I think what’s going to come through this is there is going to be kind of a bookending of the industry. Meaning there is going to be BigLaw and then there is going to be solo and small firm and this sort of nebulous like 20, 30, 40, 50, 60 lawyer firms are going to kind of go the way of the dodo bird.

I mean they have too much overhead to stay lean and compete with small firms, but then they don’t have the economies of scale to take on the business that BigLaw can. I don’t know where they really fit in the economic puzzle, it’s kind of odd.

Joe Patrice: Well, you know what I have been seeing a lot of is the growth of some of these “virtual law firms”. It’s not quite a fair assessment in that some of them do have offices and stuff, but I have noticed a lot, especially with the pandemic where people are getting used to working from home, getting used to getting their stuff done without a lot of associate help and they are starting — some of these firms are starting to reach out and say you know, if you are willing to do this from home, don’t need an office, don’t care whether you have associates, we are willing to set you up and give you a much bigger cut of your book of business.

And I think that’s where a lot of the midlevel Finders are going to end up is, they are going to realize that the model that they currently have with tons of overhead isn’t going to cut it and it’s time to look into some of these firms that are willing to basically let you do your own thing.

Keith Lee: Yeah, I mean you almost have a sort of like virtual of counsel relationship or something. It’s like you are there to do — you have some aspect, maybe you have some book of business or maybe you have some very specific practice area, knowledge base that is unique to you and that has values of these larger firms and yeah, if you are like yeah, I don’t care to come into the office, I don’t care about having associates, like I want to do the work I want to do. I don’t want to make equity partner, I don’t want to — and I don’t want to bill 2,400 hours a year, like I want to bill 1,400 hours a year or I want to bill 1,600 hours a year and have a sort of lifestyle that allows me to make good enough money and work virtually and I can live in Tulsa, Oklahoma and have a great life.

Joe Patrice: And these firms are, from what I have heard from chatting with people in the industry is, these firms are willing to — if you come to them with a book of business, they are willing to give you a large chunk of it, much larger than regular firms are because there is less overhead and so on, so you get to keep more of what you actually kill, which makes it an attractive option, and I think it’s one that people overlooked for years because nobody conceived of a world where I don’t go into an office and whatever, but right now they are starting to realize that they actually can do everything they need with Zoom.

Keith Lee: You know, I was having this conversation with a BigLaw associate the past week or two ago, how they have been adapting and how they are — this is like an Am Law 50 firm and they were just like you know, actually this is okay, now that they have been doing it for two months, they are like yeah, we are still going to maintain our office space in Manhattan or whatever, but do they think they need as much. They don’t. They are realizing they don’t, that people are still being productive to a pretty high level.

And it’s funny you said Zoom, what they are realizing doing; this guy was a PE M&A lawyer, is that doing these deals they just — what you really just need is sort of like — almost like a nice Zoom room. Do you need the marble floor mahogany this, leather, all this? No, you might need a meeting room that looks that way to do these video calls, but outside of that do you need that to be in downtown Manhattan or can you have that like in Jersey City.

Again, I have had this conversation with people about the pandemic is, I don’t think this is fundamentally changing the world, I think all this is doing is accelerating change that was natural. Like I feel like we are seeing 5-10 years of change over the next 6-18 months. I think we are just getting in it. It’s like someone is holding down the fast forward button on the world.

(00:14:59)

Joe Patrice: It’s so true and on the office front, so I do these office tours from time to time when BigLaw firms invite me in to show me what they are new — especially right after a renovation or something. And I looked at Boies Schiller’s offices a while ago and there was some push back among the young lawyers there because they really pushed away from offices. They have more carrels where people are working and the partner offices aren’t even all that good anymore, they are pushed in. And there was a little bit of complaining, but right now the genius of it is starting to — it starts to seem like it really was forward-thinking for this fast forward and probably is the hybrid model between where we were and where we will go, because what they did with all the extra space they got is they massively expanded the number of conference rooms.

So they pushed it in the direction of tons of conference rooms, all videoed up, all video conferencing and at the time I don’t think they expected that people were going to be working from home is a big factor, but in the long run utilizing expensive real estate for more collaboration and conference rooms rather than individual offices when you could just be doing that from home is probably the way this goes long-term.

Keith Lee: Oh yeah, for sure. I mean commercial real estate is about to get hammered over the next two years. I mean people are real — I was talking to some friends who work for a company in Atlanta and certainly Atlanta real estate is not Manhattan real estate, but they were saying they run a finance firm and this company had leased two floors of Class A office space right in the middle of Midtown Atlanta, new building and everything and they have been doing this for two months and they realized there everyone is working, everything is fine and they are going to just not go back, they are going to walk away from their lease.

Joe Patrice: Yeah.

Keith Lee: Because they realized — they asked that — they were like guess how much it is, and I was like I don’t know, I took all the guesses, two floors of Class A office space in Midtown Atlanta was costing them $178,000 a month.

Joe Patrice: Yeah, I mean —

Keith Lee: And so they were like — it was like, well, wait a minute, if we can all just work from home like the company can save over a million dollars a year.

Joe Patrice: That’s 12 first years right there.

Keith Lee: Yeah, exactly, it’s like crazy. There is no reason to do that. I mean yeah, still maintain some office space somewhere of some smaller size for client meetings and you need to cycle people in and out on occasion and have somewhere to have meetings and stuff, but as culturally, technologically, I think people, particularly the younger generation, is so comfortable with technology, is so comfortable being productive, wherever, it’s like have laptop, will travel, can work wherever and maybe you are only at 90% productivity or whatever versus being in an office, but man, that’s good enough. In terms of cost savings, if you can save million dollars a year in lease, sign me up.

Joe Patrice: Yeah, yeah.

Keith Lee: It doesn’t make sense. So I mean if I was really nervous in this moment, it would be I was somebody who was in the business of leasing lots of commercial properties, because I think that industry is about to get hurt for the next couple of years really, really bad.

Joe Patrice: Yeah, it’s interesting, I know a partner at one of the big firms who does specifically commercial real estate, I haven’t checked in with him on how he is seeing things, but I think you are right, it could be very interesting. On the other hand, maybe he will tell me that it works out great for him either direction the market goes, but we will see.

Keith Lee: Yeah, yeah, if you are just servicing them hey, you will handle the leasing or the sales and then if things go south, well then, you handle the liquidation. You win both ways. So that’s possible.

That’s the big thing in this that I have been parroting to a lot of people, something Warren Buffett says a lot, it’s like it’s only when the tide goes out do you learn who has been swimming naked, right? It’s like okay, the tide is going out, who is naked, right? Who is overly-leveraged, right, who has been overleveraged? And again, I think probably a lot of people, because the economy was booming, right?

Joe Patrice: Yeah.

Keith Lee: The fundamentals of the American economy and even the global economy are still really sound, like there was no underlying instability or something, like we were all going. And so I think people were probably leveraged to a pretty aggressive extent and then this just came out of left field and now everybody is like, oh God, the tide went out, I don’t have any clothes on.

(00:19:59)

Joe Patrice: Yeah, owning a lot of oil features right now is probably a poor decision.

Keith Lee: Yeah, that’s rough.

Joe Patrice: Yeah, I actually know somebody whose models were all based on oil prices, and it was like oh, this is problematic, but whatever. Hey, at least it didn’t happen in the dead of winter because I will say from the northeast perspective the amount of fuel oil we burned through in that era, if we had this kind of a collapse while it was still cold out, I could see actual energy companies going under.

Keith Lee: Yeah, that would be rough, that would be really, really rough.

Joe Patrice: Like it’s bad enough for them that no one is driving, but like that would be a real killer for them. On the other hand, people should transition away from that stuff anyway, so hey, maybe it’s for the best.

Keith Lee: That’s true, that’s true.

Joe Patrice: Transitioning. So you were mentioning kind of the general tenor of LawyerSmack is what we were talking about way back when and what they are seeing out there. Any non-COVID related trends that you have noticed over the last year amongst the private Bar Association that you have?

Keith Lee: Kind of general trends. It’s funny because I think the people who join LawyerSmack are already sort of like early adopter or technology curve people. They are people who are aggressively looking for something. They are like hey, I am trying to be, whether they are — I have — again, LawyerSmack honestly really maps the legal industry. I have BigLaw people, I have small law, I have midsized, I have in-house, I have government lawyers, it’s the whole — it runs the gamut.

But yeah, the unifying trend for all of them is definitely people who are trying to I think maybe be smart about technology and looking to sort of improve themselves or their practice and I think there is a greater — there was already the trend among LawyerSmack people, again, I mean this is just accelerating, but to leveraging technology in their practices and like doing remote work or using Slack as actually their firm internal comms tool.

Certainly there is — in multiple channels people are like okay, I am changing practice management software, like give me the pros and cons, let’s talk it out. What do you use to do this or what technology do you use for like client scheduling? Do you allow clients to self-schedule appointments with you? Yeah, I do. Well, what tool do you use to do that? Okay, how does that integrate with this?

There is a movement around forward-thinking lawyers about automating their practice, right? People who want to like adopt sort of like lean manufacturing methodology or like the Toyota method, like really understanding how can you run a law firm and as a slimmed down model as possible utilizing tech, and instead of leveraging people, instead of having lots of staff and personnel, like can you use all these automated systems in some way to like reduce your overhead? Like if an assistant is going to cost you $60,000, $70,000 a year, can you not get an assistant by using $10,000 worth of technology a year and then pocket that extra $50,000 a year and put it in your pocket.

Joe Patrice: Yeah. Well, and I have been saying this in a few different forms, but as somebody whose primary advertisers are in the legal technology business, they are reporting that things are going swimmingly on their front, even as the economy is in trouble, but it’s that fast-forward. They are saying that tons of people are calling them saying, we never were going to automate this or that but looks like we have to now. It’s just forcing the issue. And so those companies are working. Thankfully, they are very busy right now, thankfully for them.

Keith Lee: Yeah. So again, that’s the case. So if you are a business, times get tough, you eliminate, you sell assets. Law firms’ only assets are people like at the end of the day. If I am running a — say just to keep numbers small that are easily manageable, say you have got a law firm that has four lawyers and you have six staff and each staff member costs you $75,000 a year to pay them. And if times get tight you start being like, oh, we have got to slim down, we are going to have to — Sally has kind of just been floating around, she doesn’t really do anything, we have got to get rid of her, but is that going to allow us to — we need her — we have this personnel to keep the firm running, we have got to make sure this gets scheduled.

(00:25:09)

We have got to make sure you are getting client updates this way. We have got to make sure clients make their appointments or whatever else or discovery is getting filed. But again, if you can get some of these tools that can automate things in your practice, that can make things work more seamlessly, that you as the attorney can actually just click a few buttons and make things happen and have conflict tracks and all these amazing things happen just via technology, then it becomes more palatable to be like you know what, instead of six staff, let’s try having four staff, but we have to — and really this becomes an education and training problem. That’s difficult for a lot of lawyers to say all right, I am going to have to go back and I am going to have to learn something, because actually I think that’s the biggest hurdle for most legal technology companies is you have to educate lawyers, like lawyers are Luddites, you know that.

Joe Patrice: Yeah, yeah, yeah.

Keith Lee: Yeah. I mean they are not generally speaking technology adopters. It is a lagging industry. It is an industry addicted to precedent and the way things have always been done and they don’t want to change. So now we are in this fast-forward moment and the big hurdle is educating, almost coming into these law firms as a consultant, being like hey, we are going to actually help you become a modern practice. We are going to help you become a lean, mean technology-enabled law firm for the future, and in doing so, yeah, it’s going to cost you some money, but in the long run it’s going to save you money because you are going to be able to operate your law firm, instead of having six staff you can have three and that’s really the economic proposition.

And I think in the past people were like that’s too much, I will just keep my six staff, but in the current environment, when you are really watching your bottom dollar, when you are not sure you are going to be able to find the work, hey, you have got plenty of bandwidth to grind all day, but it doesn’t matter if you can grind all day if you can’t find. And so if you have limited finding you have got to be able to reduce your overhead and adoption of technology and elimination of sort of low hanging staff is probably — not probably, is the best way to navigate the current moment and keep your lights on.

Joe Patrice: Yeah. Well, I think we are coming to where we should be scheduled to conclude. So we will conclude on that happy note I guess.

Keith Lee: People should adopt.

Joe Patrice: Yeah, I guess, they should adopt, well, whatever. I will say whether it’s happy or not, that’s just where we are going to have to end it.

Keith Lee: We are ending it, we are done.

Joe Patrice: Exactly. Well, thank you to Keith Lee for joining us today.

Keith Lee: Thank you Joe Patrice.

Joe Patrice: You should all be listening to and subscribed to this podcast. You should be giving it reviews, that sort of thing. You should listen to the other podcasts that we have. We have a special COVID cast, Above the Law COVID cast that’s coming out, dealing just with all the COVID and the law news that we are getting.

You should listen to The Jabot. You should listen to the other Legal Talk Network shows. You should be reading Above the Law. I am @JosephPatrice on Twitter. You should do that too. All of those things I think cover us.

Keith Lee: And you should follow me, @associatesmind on Twitter as well.

Joe Patrice: There you go, yeah and join LawyerSmack and stuff like that.

Keith Lee: Join LawyerSmack, LawyerSmack is the best. It’s good times.

Joe Patrice: Excellent. And with all that, we will talk to you next week. Bye.

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