If you think about how most firms are focused 100% on the billable hour, and then you start thinking about what technology achieves … that ends up reducing billable hours, you immediately start to realize that there’s a big contradiction…. Unless you have an incentive structure that is consistent with the notion of efficiency and better, faster, cheaper, you’re not going to get adoption. Everyone’s going to run in the opposite direction of that tool.” – Sanjay Kamlani
Marlene Gebauer 0:23
Welcome to The Geek in Review, the podcast focused on innovative and creative ideas in the legal industry. I’m Marlene Gebauer.
Greg Lambert 0:30
And I’m Greg Lambert. Well, this week we talk with Maker5 CEO and founder Sanjay Kamlani about the inner workings of software development in the legal industry, along with the related issues of do you build it, buy it or collaborate on development? And of course, the the big issues around adoption. So you know, Sanjay, is she’s such an expert on this topic. And he has some some insights and perspectives that quite frankly, I hadn’t really thought about. So, you know, we got a great discussion coming coming your way.
Marlene Gebauer 1:02
Yeah, I really liked his take on a lot of these points that we were talking about, you know, lead. And as you pointed out, it was, you know, it was it was really a unique way of thinking about it. So, yeah, this is good. This is a good one,
Greg Lambert 1:16
we, you know, Marlene, on a side note, you and I have been lining up some really exciting guests for the upcoming episodes. So for the listeners out there, if you’re not a subscriber or follower, whatever they’re calling it these days to to The Geek in Review, might we suggest that you just go ahead and click that follow button now, so you don’t miss any of the great content that’s on the horizon?
Marlene Gebauer 1:37
Absolutely. So stick around for our interview with Sanjay but now let’s get to our information inspirations.
Greg Lambert 1:49
Tomorrow, Marlene, I don’t think that my inspiration this week is going to surprise anyone. But I did want to highlight all of the great content that was put out in last week’s skills conference, where there were some 400 Plus knowledge management it and legal information professionals in attendance. So I wrote up a quick Yeah, it was. So I wrote up a quick summary of all the 20 presentations along with the links to the full conference, as well as to the individual presentation recordings. And I have to say that, you know, this was perhaps the only online conference that I’ve been to in the last couple of years, where I actually sat down and sat through all of the different sessions. So yeah, you know, I didn’t leave to go do some work. In the meantime,
Marlene Gebauer 2:40
I was I was able to get some most of them. And yeah, I mean, it was it was really, really excellent content.
Greg Lambert 2:47
Yeah, the content was really good. And, and the other thing that I enjoyed is I got to reestablish a lot of professional connections that had lapsed over the past couple of years. And I like the platform that they used for the social interaction piece called Shindig, you know, it’s pretty easy and intuitive for the end user to manipulate. So check out the skills session review that we did on the three geeks blog.
Marlene Gebauer 3:12
My inspiration is about more great resignation news. A new record number of worker ages 55 and up are quitting the workforce over COVID fears, some for other jobs, and some for good as the Center for Retirement Research at Boston College found a 50% increase over pre pandemic rates. And there’s four types of near retirees leaving their jobs. Older women have a rise of 9% Post pandemic and this reflects a growing trend of all women leaving their jobs more than men, troubling Asian Americans and this is very sobering. 48% of the Asian American unemployed workforce have been without jobs for over six months. And that’s according to the Bureau of Labor Statistics. And the 12% of older Asians leaving the workforce has risen an additional 12%. Now, the article I read suggests that these folks may have worked in low wage industries that really have not bounced back and so they have left for good. The third group is high school graduates. So while college graduates they are also leaving the workforce at about 6% high school grads are at 11%. And you know, I’m wondering if this also has to do with lower wage industries not making a quick comeback. And last those who cannot work remotely. You know, I’m trying to come up with a very clever acronym for this group and I am failing. So if anybody has anything, send it along. This one’s no surprise. So remote workers are leaving it about 4% but non remote workers are leaving at over double that rate. 10%. I think it would be really interesting to follow this and see what other groups may show up in these statistics. You know, I feel that other groups aren’t ready presented here that have also been impacted. And I’m also curious whether people who are classified as not returning, you know, are actually returning in time and in what capacity? You know, are they going back to full time jobs? Are they gigging? You know? Or if they are returning? How are they living? How are their lifestyles changed? So we have the link in the notes for you to take a look at.
Greg Lambert 5:23
Yeah. And I, I saw something earlier. I think it was earlier today where and this I think, will surprise no one where there’s a number of baby boomers who are doing a semi retirement so they’re not fully retiring. And, you know, again, I don’t think that surprises
Marlene Gebauer 5:44
me a lot of people like taking the package and then what do they do after that, right?
Greg Lambert 5:47
Yeah, yeah, exactly. So Well, that wraps up this week’s information inspirations.
Marlene Gebauer 5:57
Today’s guest brings the big picture of legal technology development, platform structure, maintenance and adoption into focus, and discusses how one of the biggest issues that the legal profession faces is one of misaligned incentives to actually improve the process. I’d like to welcome Sanjay Kalani founder and CEO of Maker5 Inc. Sanjay, welcome to The Geek in Review.
Sanjay Kamlani 6:21
Thank you, Marlene, happy to be here.
Greg Lambert 6:23
Sanjay, do you mind just give us a little bit of background on Maker5 in the journey that has taken you there?
Sanjay Kamlani 6:31
Sure. So Maker5 is a legal technology venture studio. Venture studio. For those who don’t know what a venture studio is, is a is a company that incubates its own businesses to spin them off as independent businesses. So most people are familiar with incubators, that that are often funding and helping third party entrepreneurs build their businesses. And venture studios do a similar thing, except they are building and and creating these businesses out of their own operations. So that’s what Maker5 does. And the rest of our operations includes innovation advisory to law firms and software development services for law firms, which is where our inspiration for the legal tech business spin offs come from.
Marlene Gebauer 7:18
That’s interesting. I mean, how do you sort of build those businesses and then spin them off?
Sanjay Kamlani 7:25
So we have a team of experts, who are consultants with or are part of our team together, we also have collaboration partners who work with us. So depending on what business we’re focused on, we bring together or build a team just for that particular business. And then we coach that team to get to a point where they can be independent, much like an incubator does.
Greg Lambert 7:50
Are you based in a particular city? Or are you dispersed?
Sanjay Kamlani 7:54
Yes. So I’m In Miami, which is where I grew up. So it’s been a long journey. I left here and in 87, and landed up back here in 2014, the rest of our team is, is dispersed. So we have people in New Jersey, New York, Mumbai, and a number of other locations as well.
Marlene Gebauer 8:14
We hear that the tech solutions need to solve real problems. But, you know, part of the problem is the disconnect between the operation side of the house and the practice side of the house, or at least I think it is, what one may see as a significant problem. The other doesn’t. And you know, that has a lot to do of because of their varying expertise and an outlook and your experience, how do we bridge that gap and get them to better speak the same language?
Sanjay Kamlani 8:43
Sure, that certainly resonates Marlene, I’ve seen this issue in firms, particularly where the technology side of the of the firm, the CIO, the CTO, do not have enough practicing lawyers integrated with what they’re trying to accomplish at the firm. So I don’t believe that the CIO function in a firm can do innovation or select Tools, implement tools and win adoption, without having practicing lawyers working very closely with them. And I don’t believe they can do it independently and in some kind of vacuum. I think when they do, even if they select the right tools, they I don’t think they know how to how to achieve adoption on their own. I have seen firms very successful with adoption with with selection and adoption, when they have an innovation partner or other practicing attorneys, very integrated with the technology group and having real authority or responsibility for the implementation.
Greg Lambert 9:54
The Negative Nelly inside me is saying that That sounds really, really good. But how do you get a partner? Who is especially one who is active with clients to take the time to become an innovation partner?
Marlene Gebauer 10:13
How do you incentivize them?
Sanjay Kamlani 10:16
Well, I think in my experience, the innovation partners tend to be people who have an affinity for technology have some connection to technology and want to take their career in that direction. And I think they tend to become less of a practicing attorney, as their focus becomes more more towards innovation.
Greg Lambert 10:39
Okay, sticking with my negativity. So another challenge that, you know, firms and organizations in general have is maintaining the right skill set to keep up with the changing tech and the changing solutions that are out there. In fact, we did a podcast a few weeks ago with Matt Coatney, where we talked about a bit about the distributed workforces. And one of the benefits of putting together a distributed team is that you can pull in all of these specialized skill sets when you need them. So how is it that firms with an employee base how is it that firms can be more nimble?
Sanjay Kamlani 11:20
Look, I agree 100%. And being a champion of outsourcing myself, like in my, in my prior career, focusing on outsourcing different types of services for firms, it’s been 20 years that I’ve been pitching to firms, the need to outsource where experts can do things better, faster, cheaper than the firm can do independently with with their own employment employee group. And, and now with Maker5, we’re focused on on having firms think about using experts on the on the technology and innovation side to accomplish the same thing rather than relying solely on their employee group. So I agree 100%. And I think certainly seeing firms at this point, feeling that they can do that without without the kind of restrictive, they used to feel very restrictive about this. And I would say that when we were trying to pitch Professional Support Services outsourcing 20 years ago, I think the idea of giving confidential information and letting people from outside the firm be involved with what the firm was doing, or touching client data was a huge leap. I think they’ve come a long way. And today, the firm’s realize that when they don’t have the internal experts, they understand the benefit of use utilizing teams outside the firm, particularly as you suggested, when they don’t have a need for those people on a full time scalable basis.
Greg Lambert 12:56
Yeah, it’s one of the things I’ve said for years, as I tried to remind some of my technology folks that we’re a law firm, not a software development company. But sometimes it’s really hard not to want to develop all of that in house mature, but you’re saying you’re seeing less and less of that now?
Sanjay Kamlani 13:17
Well, I am seeing firms wanting to develop soft, bespoke software. But I think they realize that they shouldn’t be trying to build it themselves with their own resources, because they don’t have the economic, the economics of scale, to have enough of a team to really do that successfully on an ongoing basis.
Marlene Gebauer 13:39
So Sanjay, you know, in that light, you know, we hear it’s important to take these risks and fail fast, and we hear that a lot. But in your experience, you know, our firms actually doing that, you know, I for one, I’m a little skeptical that that is sort of happening a lot. But if so, you know, are there any characteristics that these organizations share?
Sanjay Kamlani 14:04
I’ve certainly seen a number of situations as you described, where firms will license technology, put the technology out there. And then, for a number of reasons, the way that firms operate, you will see that software languish in the firm, fail to get user adoption, and continue to be a licensed product for potentially a few years generating all kinds of aggravation before it’s finally removed, certainly not failing fast. On the other hand, I’ve also seen firms figure out how to get the right sort of team of people in the firm around trying out new tools, efficiently seeing how they work and then deciding that this is something that that should be rolled out to a larger group and ultimately the whole firm or not at all. And sometimes I’ve seen this same firm make, you know, do both. In some cases, they do it right. And then in other cases, you have a situation where they license something, and it sits on the platform, and no one uses it.
Marlene Gebauer 15:10
So when they do it, right, like what are what are the traits or characteristics that you’re seeing in terms of the process or the skill set involved.
Sanjay Kamlani 15:22
So this goes back to something we talked about earlier, which is, first of all, having the right stakeholders involved, and the right experts involved. So a combination of people from the technology group, as well as people who are practicing attorneys to be involved in selecting a tool and then running a real pilot. And, and then, really making a decision about whether it was successful and doing the analysis of how the results of that pilot compared to how they did work without the tool or how they were doing work with it with whatever tool they were using with they were using before. Right. And I think when they when they do that, I think they’re able to make good effective quick decisions about what to do with some of the technology.
Marlene Gebauer 16:11
So it’s very evidence based.
Sanjay Kamlani 16:14
It is look in situations where for whatever reason, say a head of knowledge management or a CIO decides to license software before they have attorneys actually try the software. You You know, then it could be a bit of a crapshoot as to what happens after they finally licensed the tool. And maybe that’s happening less. And I would think it depends on the firm.
Greg Lambert 16:39
Yeah, I’m just I’m just wondering, because a lot of the products that you see on the market now, there’s almost this common theme where it’s, you know, a couple of people at the firm, maybe some senior associates, they’ve got an idea, but the firm’s just not set up to help them launch the idea. So they end up leaving the firm and creating the product rather than than dealing with with the internal strife that they run into. In the firm. Do you think just the end? I imagine it’s the partner structure of American firms that caused this? Is there incentives for people with really good ideas on on solving a problem in the legal industry to stay in the firm? Or is it smarter for them to go out and start their own company?
Sanjay Kamlani 17:27
I think there’s a lot, there’s a lot there with that. I think if you have attorneys who have the bug that I had, when I was when I was a lawyer at PricewaterhouseCoopers thinking, I want to have you know, I want to be an entrepreneur and I want to build the business. And they have a proclivity to do that, you know you you’re going to see them do it, as opposed to, you know, attorneys who really want to be practicing attorneys and want to just get credit for their idea. And a number of firms have implemented programs where they reward attorneys for sharing ideas, trying out ideas, and then let them go back to being the practicing attorneys they want. So I think there’s different paths for different people and some firms are doing the right thing by rewarding, rewarding attorneys who who are innovative, right, I think you may have heard of like a bug bounty program, a program where they, they’re able to earn a bonus if they come up with an idea and it actually gets implemented as an example.
Greg Lambert 18:34
Yeah, that actually sounds kind of exciting. You know, a few weeks ago, we had Alex Babin on he’s the CEO from zero in, and he gave us this really good quote on the fact that the best software is no software, you know, but it’s, it’s kind of hard to find out of the box products that in fact, do that. So there’s always some kind of problem getting products work within that environment that we have in the legal industry, with people trying to understand how to use it the adoption, maybe the biggest obstacle that we constantly run into is we may have a great product, but it really failed to get the adoption on there. So with all that said, do we need to be a little bit more focused on more bespoke product sets within the law firms or legal industry?
Sanjay Kamlani 19:27
i Let’s talk about bespoke software and talk about and maybe talk about adoption separately, I think I think that they’re not necessarily the same issue. In terms of bespoke software, I think the real reason that firms are starting to really think about bespoke software and developing an aversion to off the shelf SAS software solutions is a little bit about the economics. So you know if you are going be charged by by a company that has off the shelf SAS software, anywhere from 10 to $30 per seat per year, and they insist on charging you for every attorney in the firm, regardless of how many people are actually using it, you know, you you end up with something like, you know, you could, you could end up spending $300,000 a year per product. And when you get to 10 products, here are 3 million. And so you know, over time, that’s, that can be an extraordinary amount of money. And firms realize that every time they add a new SAS product, where they’re paying for per seat per month, that when you when you when you look at it, 10 years out or longer, it’s it just doesn’t make economic sense. And so they’re starting to really look at what does it cost to build what we really need. Because often these, these tools that come off the shelf, do, you know, maybe the firm needs 60%, of what it does. And so why get into that situation where they’re beholden to that company, for so long, rather than build what they need, if it can be done for a far more reasonable amount of money. And that’s why if you look at bespoke, you know, building something bespoke and spending, maybe you spend, you can spend anywhere from 100 to 300,000, building something, instead of spending 300,000 a year, it’s, it really makes sense, provided that whoever’s helping you do that can maintain it for you, and continue to evolve that product, so that it doesn’t go stale.
Marlene Gebauer 21:38
Yeah, I was just gonna ask about the maintenance, that’s always been kind of a stumbling block. So having someone else handle the maintenance is also key.
Sanjay Kamlani 21:45
That’s right. And so if you’re, if you, if you’re going to build something that’s, that’s one off, and it’s something that no one else is interested in, you know, then one wonders whether you really need it. Because no one’s really incentivized and keep evolving that software and keep the trend and keep maintaining it. And it’s not going to make economic sense for the firm to do so. But if they’re trying to build something bespoke that a third party is able to, is able to continue to maintain and build a market around that product. And I think you will see that happening quite frequently.
Marlene Gebauer 22:19
Do you find yourself in the position as a trusted advisor to your clients, and you know, not just on specific projects, but in general, I think it makes a lot of sense in terms of tech adoption, because not only do you improve your service and product by the feedback you receive, but you know, you can pass knowledge on to others so that products are better. You may even have resources that a firm can take advantage of like project managers and other specialist expertise. So what lessons can firms and in house departments learn from this?
Sanjay Kamlani 22:57
Absolutely. I think sitting down with firms with experts that have different x different areas of expertise, I think really helps firms come up with solutions, both by learning from what what the experts have learned from other firms, what’s working, what’s not working, and understand the issues from different perspective. So from a technology perspective, from a practicing attorney, user adoption perspective, is the problem occurring in other firms? Or is this a one off if it’s a one off, and then the firm needs to think about why it’s a problem for them and not for others? So I certainly find that, together with our own consultants and our collaboration partners. So we’ll go in with firms with Lex fusion, with Barrett’s Brunel, new law. And others, depending on what the issue is, and what it is they’re looking at, we’re able to get the right group together to really look at an issue from from all angles and help them arrive at the right solution.
Greg Lambert 24:07
When it comes to adoption and change management. I think a lot of it goes into the communication, you know, where everyone has these competing interests in values in large organizations. So when you’re working with change management, how is it that you take this large ship that is the legal organization and get it to turn?
Sanjay Kamlani 24:31
So I think that the biggest issue with adoption is there’s a few issues, but one, one big issue is the incentive structure in firms and, and thinking about the incentives from all constituents involved. And when I say that I’m talking about the clients, the partners and the associates. And if you think about how most firms are focused 100% on the billable hour, and then you You start thinking about what technology achieves, automation, for example, you know, any RPA, or automation solution that ends up reducing billable hours, you immediately start to realize that there’s a big contradiction. And that you’re you’re going to have unless you have an incentive structure that is consistent with the notion of efficiency and better, faster, cheaper, you’re not going to get adoption, everyone’s going to run in the opposite direction of that tool. So I think the first step for firms was to think about RPA, fee arrangements, where they are getting rewarded for saving time. So and the client is happy with a lower cost and understanding that they’re getting a lower cost, and they’re getting efficiency. But so long as the firm is still making, making money, everybody’s happy, it would seem to solve the problem. But if the firm is still rewarding partners and associates only based on their billable time, then they haven’t solved the equation for those those constituents. So fixed fee arrangement, great, we’re going to do something in in 10% of the time that we used to do it. Why are the associates not using it? Well, because they’re running on to other engagements where they’ll get the billable hours and get paid, because they’re still they’re still rewarded that way. So this means having a conversation about profitability, and then rewarding associates and partners for profitability and not just CLT. And I think that’s a big, big part of why a lot of the innovation tools do not get utilized. I do think there are other issues that relate to technology. And happy to talk about those. But I think this is the biggest issue.
Greg Lambert 26:49
Yeah, I’m just wondering, you started off by talking about having the right people in the room. And the first name that you threw out there was, was working with the client. I just wonder, in your experience, when you have firms that do that, when they when they have the client involved in the innovation part of it and looking at the structure of the way they provide services? Are you finding that those clients are much more open to alternative pricing are structures on on how they pay for legal services, because they understand what what the firm is doing?
Sanjay Kamlani 27:32
I think in many cases it works. However, law firms are rightly fearful that once their clients understand what they’re doing, the clients are going to say, well, you know, we want the benefit of that. So if it only takes 10% of your time, and it costs x, we want x plus y. And they then are getting into the business of trying to decide the law firms profit, it certainly happens. But I think law firms are often too fearful that if they if they build a successful business around delivering a product, or, or delivering delivering work product for a particular fee, and winning the clients the trust about that product, that they’re able, they’re able to charge a particular flat fee that’s competitive.
Marlene Gebauer 28:20
So Sanjay, I think you touched a little bit on this topic before. And you know, you and I have certainly discussed different payment models. And you you have some very interesting ideas about how those should look. In fact, you know, you’ve proposed, and when we’ve talked in the past that, you know, we go a little bit more old school and you know, pay for the software solution rather than than licensing it. You know, why is that a better model in today’s world,
Sanjay Kamlani 28:45
in the case of products that are more commoditized. And the the software development firms or the software companies that go tech companies are trying to charge these annual license fees on a SaaS model on a per user basis, the economics are way out of whack with what the firm is actually getting in the value delivered. And so at this point, there are products out there in the market, or that firms need where a more appropriate model would be to charge a reasonable fee for them to acquire that software and then pay an annual maintenance fee. And that will change their equation of deciding to build something for themselves. If firms are deciding that it makes sense to build their own software for 100 to 300,000 a year and maintain it. Then the idea of charging them $30 a month per user every year. There’s a huge disconnect there. And I think it’s in those in those situations where it’s time for some of those products to go back to the old school mechanism of pricing because that’s that’s what they deserve and have that kind of product. Before we
Greg Lambert 30:03
let you go, I want to ask one more question. And that’s our there our infamous crystal ball. Question where where we kind of asked you to peek into the to the future. When it comes to development models like this, were either building in house, buy it off the shelf, bespoke software outsourcing, what do you see is going to be the trend, say over the next five years when it comes to, we’ll stick with law firms or large law firms developing innovation in products,
Sanjay Kamlani 30:40
I believe that we will see more innovation teams more in house development, as well as more situations of firms working with developers to build the bespoke software to build what they need. And there’s also a desire to write code to stitch together existing tools, rather than to keep replacing tools with a new back next best thing. So as as firms acquire development capability or partners that had development capability, and they understand that one can write code to achieve some of their objectives with existing tools that are embedded. I think we’ll see a lot more of that. And I think you’ll see a lot more of the technology people at the firms and and practicing attorneys, collaborating far more than they have historically.
Marlene Gebauer 31:38
Well, Sanjay Kimani, thank you so much for joining us today.
Sanjay Kamlani 31:42
Great, thank you.
Marlene Gebauer 31:46
Well, that was a really great conversation with with Sanjay and honestly, like, we had further conversation after we stopped recording, that was just as good. And, you know,
Greg Lambert 31:56
I wish I wish I was recording that, right.
Marlene Gebauer 31:58
I mean, I should have just like, put that back on. But, you know, he was talking a little bit about the tech providers, and then the firm’s and how, you know, people, you know, that are sort of tech minded, they get a little frustrated at firms, and they go off and, you know, to this entrepreneurial situation, and so that’s all they want to do, but then it sort of leaves the firms in a situation where, you know, they don’t have anybody like that, who can sort of facilitate that discussion in the firm. And so I guess it goes back to the discussion we did have on that we did record about how you have to incentivize folks like that.
Greg Lambert 32:36
Yeah, it’s really hard. Especially I mean, you know, again, we’ve talked for 13 years now to get rid of rid of the billable hour, and that that type of incentives, but it goes back to that, you know, the the whole incentivizing, and when we’re stuck in the billable hour, time, it’s it’s just the incentives are just really tough. Now, he also, when we were talking afterwards, he also mentioned that there are some incentives on the company side as well, when it comes to venture capital, supporting the ability for them to provide services to to the law firms that they’re providing these products do so it’s not all rainbows and unicorns on the other side, as well, either,
Marlene Gebauer 33:23
you know, I am very interested to really kind of take a step back and sort of look at the suite of products and, you know, that I’m responsible for and be like, you know, hey, you know, are any of these would they be a better fit for, you know, some of the the modeling he’s talking about, because, you know, he raises a really good point, you know, that some of the, the way these these prices are set, there’s a core group of people that may use them. And it’s not the nearly the amount of people that you’re being charged for. So, you know, maybe that doesn’t make sense, as long as they can spin it off into a business.
Greg Lambert 34:00
Yeah. Well, again, fascinating conversation. And so thanks again to Sanjay commodity from Maker5 for taking the time to talk with us.
Marlene Gebauer 34:09
Yeah, thank you, Sanjay. And of course, thanks to all of you for taking the time to listen to The Geek in Review podcast. If you enjoy the show, share it with a colleague. We’d love to hear from you. So reach out to us on social media. I can be found at @gebauer on Twitter,
Greg Lambert 34:25
and I can be reached at @glambert on Twitter.
Marlene Gebauer 34:28
Or you can always leave us a voicemail on The Geek in Review Hotline at 713-487-7270. And as always, the music you hear is from Jerry David DeCicca. Thank you so much, Jerry.
Greg Lambert 34:41
Thanks, Jerry. Alright, Marlene will talk to you later. Okay, bye bye. So Hey Scott devils back back