George Psiharis, Chief Operating Officer at Clio, on the 2019 Legal Trends Report
Kevin speaks with George Psiharis, Chief Operating Officer at Clio, at the #ClioCloud9 conference in San Diego. Kevin and George discuss the recently released 2019 Legal Trends Report, and where the company stands in the legal tech ecosystem with now over 200 app integrations.
Transcript
Kevin O’Keefe: So who am I talking with?
George Psiharis: Well, my name is George Psiharis. I’m the chief operating officer at Clio.
Kevin: Really? How long have you been a chief operating officer?
George: I’ve been the chief operating officer for about a year and a half. I’ve been with the company for nine years.
Kevin: Yeah, nine years. So you’re two years maybe after it’s foundation?
George: Yep, exactly.
Kevin: What attracted you to Clio?
George: You know, I actually went to school with one of Clio’s co-founders. Rian Gauvreau.
Kevin: You did go to school with Rian. I did know that.
George: Yeah, we did. We get our business degrees together, post-grad. So, uh, we met, we were startup guys. We were hammers looking for a nail and as we were looking at, in retrospect, what I think are a lot of really bad startup ideas, he uh, got incidentally involved in a project that became the first version of Clio and he kept in touch with me after we graduated and went our separate ways, uh, and eventually got me curious enough about the business to join the team very early on.
Kevin: What were you doing on right before Clio?
George: That’s a great question. I was working for a company called Canadian Education Network. It is a company that long story short specialized in the higher education space and in working with foreign markets to deliver a Canadian based curriculum programming overseas and then to also bring students over into our major markets.
Kevin: (1:09) Where were you living then?
George: Still in Vancouver.
Kevin: You were?
George: Yep. Born and raised actually.
Kevin: And so he knew Rian from there with Jack out in the hinterlands.
George: Yeah. Over in Edmonton bitterly cold.
Kevin: When you’re talking about a startup that was the precursor to Clio that you were in touch with Rian on. What was that, that was different than Clio?
George: Yeah, I mean, so to put things into perspective, uh, one of our industry projects from school was a bike storage facility that was like high end for, for like downtown business people in Vancouver basically. So we actually went as far as talking to the city of Vancouver about that. It was codenamed, “the change room”, actually, back in the day, really original. Uh, we looked at a whole bunch of different stuff that just for a variety of reasons, I’m really glad that we didn’t pursue. And, uh, you know, you mentioned sort of what got me curious enough about Clio, even in 2009 when Rian was talking to me about this, I was really surprised to take a look at this space and see that a technology transformation really hadn’t happened. It was almost a little too good to be true. I was like, “that can’t be right or there must be tech that is cloud based and starting to consume the space and there just wasn’t”. It was one of those moments where you’re like, “wow, this is a real opportunity here and a real opportunity to drive impact”. So yeah, that’s where it all began for me at least.
Kevin: (2:27) You started at, what was your position when you first started?
George: Yeah, so when I first started, I didn’t actually have like a rank, I was just this role that we called the “customer development”. Okay. If you’re familiar with Steve Blank, he wrote some great a, you know, a foundational Silicon Valley, uh, style book, uh, called “Four Steps to Your Epiphany” in which he describes as customer development model and finding product market fit. And so my job is to kind of do all those things. We had no sales, we had no marketing. You know, we’re still figuring out the pricing of the products, still figuring out our kind of market entry overall go to market strategy and uh, kinda just took it from the top.
Kevin: Jack and Rian would go out and stand behind a card table and company at bar associations come back and tell you what they heard.
George: Yeah. Or as soon as I started actually like my first week with no training, I was on a flight to one of those with Rian. We went to, I’ll never forget this as the ABA GP solo conference in Austin, Texas that year. And then immediately afterward I was off to Wisconsin with Jack to response and Dell’s for the solo’s conference they do there. So honestly, as soon as they started, like I kind of subbed in for one of them. So instead of two of them, it’d be like Jack with me or Rian with me.
Kevin: (3:27) Ah is that the placed that had the indoor waterslide?
George: Yeah, that’s the one in the Dell’s. Yeah, that’s a heck of a place.
Kevin: No, the reason I asked you that is, that I, just as an outsider’s perspective, you know, meeting Jack before they launched it, seeing he and Rian at the ABA Tech show, you know, with a white shirt and a black tie.
George: The now infamous photo.
Kevin: Doing video with Rian trying to get off the video and Jack feeling like he was stuck on it. It felt very at home. I mean people felt at home. As I managed to watch the company grow, you’re finding people to join the company but then assume large roles and responsibility and you’re your COO and a company that just raised a quarter billion dollars in a relatively short period of time. You did that. How did the people come into Clio and start like you just described, “Hey, there’s a lot of hats. We just had to get stuff done. Come in one week. Next week I’m on an airplane”? What’s the culture for that and how do people rise to that occasion?
George: (4:32) Yeah, that’s a great question. You know, the one qualifier I’ll say is it’s very different these days that Clio was when I joined. So we’re much better at on-boarding and helping people feel set up for success. I tell you that, but you know, the big parts are screening for the intangibles, right? There are many skills and abilities that we consider are things that people can learn on the job, but things that we can’t teach someone are to be an authentic values fit. So a lot of those values of scaled with us as we’ve grown over time and they’d be complimented with new values or new takes on how we’re going to build their company and our culture. And I often describe those as “curiosity” and “grit”. I look at those as these two Angela Duckworth wrote some great books on grit and this, this thing that you find in and really awesome people to work with who are highly successful. Those are the two pieces for me, right? You got to be curious enough to learn anything that you need to and you’ve got to have a little bit of grit to just say, “look, if things get frosty, that’s okay”, right? I can embrace the discomfort. And the thing I find is like, if that’s not okay for some people that’s totally acceptable. It’s just we’re not putting them in a place like Clio in a situation where they’ll succeed.
Kevin: (5:39) And it’s tough.
George: It’s tough.
Kevin: Don’t come back to the person that asked you to do something and ask them how to do it.
George: Yeah, exactly. You know, as of late, we also described our mantra as building an organization that’s human and high-performing. Our take at Clio is, “we’re here to win”, right? Like we’re, we’re here to go forward here to close that amazing record round and challenge ourselves and stretch like we all have along the way. We don’t believe that in order to get there, we can’t afford to be human and being awesome, an amazing workplace, and culture. So yeah, those are a few of the pieces that stand out.
Kevin: You’ve been an entrepreneur then your whole life since college and whatnot. What made you that way? Did your folks, you know, they do things that you’re going, wow, that’s just the way I guess you’re going to live, or what is it?
George: Ah, you know, that’s, that’s a tough one to, to pinpoint. I’m sure they had their influences, of course, like they’re huge part of all of it. But, um, for me, I have always had this impatience. For better for worse, I see something, I want to move there. I can’t wait. And I find that that quality kind of like just pulls you toward entrepreneurship. Certainly it’s a faster pace than you might encounter anywhere else. It’s also a lot more discomfort and uncertainty versus, you know, having a more curated path put in front of you. But that impatience is a big driver. And um, I didn’t see a lot of like, to be honest, growing up in Vancouver, we’re an amazing lifestyle city, but not a city historically that is huge number of explosive opportunities. Right? It tends to be like regional offices for some companies, a bit of a banking sector, but at the time, not a thriving technology ecosystem.
Kevin: (7:10) Imagine me living in a small town on the Mississippi river.
George: Exactly right.
Kevin: Northwest of Wisconsin dells and I tell the family, “Hey, I think we need to load up the family of five and move to Seattle and I don’t know anybody there because they have lots of cool stuff going on and the internet for the law looks real”.
George: You probably need to go with a compelling case at the time.
Kevin: You can sell chocolate on internet, you should be able to do something with the law on the internet. Um, you guys released another report and you did some cool stuff as far as you know, contacting lawyers, seeing how they respond. I mean, and that’s your bailiwick as for reporting on that and whatnot. Tell me a little bit about that report. What was some of the most shocking things you saw?
George: Yeah, “shocking” is a good way to describe them. So, uh, we had a few different elements of the report this year. They’re a little bit new and built off of our earnings from previous years.
Kevin: This is the legal trends report.
George: (8:00) The Legal Trends Report, yup. Anybody can download, go online for free. So by all means, check it out.
Kevin: Kind of a road-map to what you, what the opportunities are.
George: Exactly. And certainly our take on how we’re informing ourselves, but then also using our unique position to communicate insights back to our audience and to our ecosystem. So, um, a couple of key takeaways. Like one, we were able to study firms that we have worked with for years, like thousands of law firms aggregate their information and pick out some of the qualities of what the top performers over a five year period have been. And this is a study inspired by a great book by Jim Collins called “Good to Great” big fan of that book. And we chose to be inspired by his work and say, “what does that look like in legal?”. Aspirationally pointing to what a rapid growth firm looks like. “Could we analyze our data trends?” and actually answer that question for real with what we would call “production data” in that space. You know, and that was super interesting. What we found was over a five year period, firms that were able to just tweak their utilization rates from 28% to 33% overall are putting their time towards billable work, saw on average 122% revenue growth in that period of time. Then they kept their prices the same. Essentially, they didn’t raise the rates. They got a little bit more efficient and drove more revenue and more business per lawyer and it just had an explosive impact on their firms. And of course on the other side, uh, firms have struggle to do that and saw decline in utilization rates. So just as disproportionate impacts on their revenue, uh, going down. So that was a big one. Um, building off of that, uh, we, we developed this thing we call the “law firm maturity model” where there are two axis “firm performance” and “client experience”. We kind of thought, “okay, how can we benchmark the industry and our ability to serve our customers as well along these two axis?”. So the film performance piece definitely fits in that like KPI revenue category. The client experience piece is more about how are we doing in helping clients prospective clients shop for a law firm and then do business with a law firm.
Kevin: (9:56) Yeah, to consume more services.
George: Yeah. And so we did two parts of that. We surveyed a whole bunch of consumers on their experience and then we put that to the test by actually reaching out, getting a research firm to reach out to a thousand firms by email to test their response times and the quality of their responses.
Kevin: As a potential customer, potential clients.
George: Customer, client matched up to areas that they publish on their websites, that they provide legal advice for us. So it wasn’t like, you know, out of their wheelhouse. Very directly in their wheelhouse and, and the results were surprising.
Kevin: (10:35) It’s shocking with what I had seen today. It was like somebody contacting you, “you do workers compensation. I got a matter I’d like to talk to you on”. I got a 50-50 chance you’re gonna respond.
George: Exactly like 60% of responses didn’t, or inquiries rather, didn’t get a response at all.
Kevin: Before phone got voicemail. I mean, emails said, why don’t you get ahold of me and you get a little time to talk.
George: The two key takeaways we found there were responsiveness is really, really important. Like people will go with the first firm or lawyer that they really like and their tendency is to say they will “shop around”, but to not actually do it if they’re satisfied with the right provider they find. And then the second piece is they’re dying for information. They really want their responses they get to be timely, but also clear, easy to understand, and to kind of map out for them what their legal matters or their issue.
Kevin: And in a format they’re used to. Yeah. I go around and I tell your story. You say, “what do you mean by that?” Well, let me, I’m telling a story George told last year and “ I have a child, I want to get a will”. He finds a good law firm and goes into the law firm. And George was asked by the receptionist for a check for the retainer. Okay. now he’s got to realize “I don’t have checks, I’d have to go to the bank to get checks. When was the last time I had checks?”. You said, “the entry point for working with that firm was to go to my bank?
George: Yes.
Kevin: (11:41) Let me think about it. To find the bank first, like I don’t even know where the branch might even be and go in and ask for a check, stand in line, get a check come back. You guys are doing a really nice job in getting people to understand how people consume things today. I’m willing to pay more and I think Jack said it in his book, you know, 86% of us are willing to pay more for the service just to give us that service. So when I went on to Amazon and I go, “okay, this is 20 this one’s 13 Oh shit, I can’t afford not to buy Amazon. How would I return it when, if there’s a problem” and I pushed the button and it’s so damn Thursday night at 10 o’clock and says it’s going to be here tomorrow. It’s 10 o’clock at night.
George: Can’t be beat. Right?
Kevin: It can’t be beat, done.
George: You’re not going back from that experience to going to the bank to get the check to start the whole process over.
Kevin: (12:28) From a law firm standpoint, what can they do to get us to that level of the Amazon like experience? It doesn’t have to be Amazon, but it is the mindset. It’s, I’m on my phone right now. What happens? You’re like, I mean Jack was talking about today, maybe I should came out with a scheduling system.
George: Yep. Exactly.
Kevin: Boom. There’s the times.
George: You know that’s the key thing, you know like I think be inspired by the Amazons of the world and yet keep in mind that the, the changes we can make today that already drive meaningful impact are actually a lot smaller than we think.
Kevin: Where do you see, to wrap this up, but where do you see clear starts as a cloud prac, cloud-based practice management solution, I mean even your, your mission changed over time, you know, from that to, you know, transforming the practice of law or the business of law for good to now you’re doing things like, “okay, now we need an app for scheduling”?. “We need to run $1 billion worth of charges for the system”. Do you envision being this platform for the law?
George: (13:31) We do. We’re thrilled to be in a position to earn the right to be that platform. We describe it as kind of the operating system for legal and our take is we look out and we see this tremendous opportunity of an underserved market, right? We estimate that the latent legal services market, the people who could be getting that will but won’t because it’s too much of a pain in the ass.
Kevin: Until lawyers are irrelevant.
George: Right. At the businesses out there is on the order of one point $1.4 trillion. Our job is to help provide the tools. And this is a place where technology can help to make it more accessible. And I think the other thing for me that’s really important is it’s not necessarily all about commoditization and price. I think there is certainly an access to justice gap angle that is about making services available on a pro bono basis for those who can’t afford them. But we actually see this huge opportunity for people who want to page for legal services, but the experience is what holds them back or the inconvenience, interruption, especially for stuff that isn’t as, as sizable or kind of like doesn’t have a hard time committed to it. And so we’d like to be the operating system that people can use. Uh, and again, I mentioned it’s kind of about firm performance and helping firms master that. But the big one in the future for us is, this client experience piece. So what can we do to help law firms deliver buying journeys, buying experiences similar to what people are accustomed to in other verticals and other consumer experiences. Technology has a major role to play in that.
Kevin: Is the $1.4 million, is that in a certain size law firm? Or is that, you know, corporate consumer legal services?
George: (14:57) We’re looking at that in the legal market overall, yeah, the whole gap.
Kevin: It’s interesting what you’re saying. Cause we, we look at ourselves to saying, “okay, lawyers are irrelevant. There’s 70 or 85% because lawyers don’t go hang on on the internet where the people are”. So how would you expect anybody to find the lawyers or to trust the lawyers because they’re sitting there behind websites? How do we get them to connect with people for good? A similar type of thing. So you guys see Clio as being that ecosystem, that platform. The whole gamut of the consumption.
George: Yeah we do. We see it being the platform of what we expect to participate in is the thriving ecosystem around it. Right? So we’re up at around 200 app integration partners who all take the basis, the foundation that Clio provides, and deliver all of these different client facing and productivity facing experiences. So we’re certainly not going to do it all, but I think we’re.
Kevin: (15:50) But you can be a platform to provide that infrastructure.
George: Exactly. And that’s, that’s where we see our future. And before we wrap up, I just do want to take a rare opportunity to say that we don’t often say enough how impactful you have been on our journey and what an inspiration your work in getting lawyers to adopt technology. And one of the very first ways in the blogging sphere or the first time is to have vendors like us to, right. I think it’s easy to overlook that or we first journey into tech for the profession was, was the grind in a foundational building piece. And it will be half all of us at Clio too. I do want to say, yeah, you’re one of the people we’ve looked up to the most over the years, but you’ve made breakthroughs that, uh, at the very least paved the way for us to even have a chance to do what we do.
Kevin: We’re sitting here on video today and it was two weeks before Clio was kind of launched at the ABA Tech Show. But I told the team, I said, “we’ve got this Lex conference dot domain. Could you put a site on that?” And I go, “well, what would be on the site?” So, I go, “I think I’m gonna take a couple of your guys. We’re going to go to Chicago”. “Do what?”. “Well, Jake’s got a video camera on a monopod. He’s got a really good mic. Says the sound is really important”. “Who are we going to take the interviews of?”. “I dunno, I’ll just point out people and they’ll think it’s cool”.
George: There you go.
Kevin: So it was Colin, my son, who was still in college and one of our project managers, they go and people started calling. People started looking at us, “who are these people taking videos?” And then the conference didn’t know what to do to stop them.
George: That’s amazing.
Kevin: I remember walking, “Oh that’s judge so-and-so go interview him. That’s Richard Susko”, and I go, “Hello Richard!”. “I’m here to talk and who are you?”, I can remember walking into the exhibit hall and I go, “I know those, I know that guy. I met Jack Newton”. You might’ve been the first company that LexBlog ever interviewed.
George: Oh wow. That’s crazy.
Kevin: That’s going back. So when you talk about that, I mean we were learning at the same time. Um, and I just been a hoot. And, uh, I think our function should be how do we shine a light on the good things being done in the legal industry to inspire people and then be there to empower them when they need help. So I appreciate it. Take care.
George: Of course. Thank you. Pleasure. As always. Thank you.