Clio CEO Jack Newton Reflects on his Vision, the Industry Direction, and #ClioCloud9
Kevin speaking with Clio CEO Jack Newton on his vision for the company, the industry’s direction, and ClioCloud9. Jack reflects on the early days of Clio and how much he’s learned a long the way, saying “For me it’s almost a time of reflection, where I realize we’re now the grandfather of this new wave of technology as one of the first cloud based applications and first cloud based practice management product when we launched back in 2008.”
Kevin O’Keefe: I won’t even ask you who I’m talking with. Talking with Jack Newton from the Clio. How many years for Clio Con?
Jack Newton: This is our seventh Clio Con, if you can believe it. So, we started back in 2013 at the Hotel Sachs, with just over 200 attendees at that very first Clio Con. And six short years later, we’re celebrating our seventh Clio Con and it’s grown to about 2000 attendees. We’ve got over 90, exhibitors and sponsors of the conference here. We’ve got keynote speakers like Daniel Pink and Glenn Greenwald presented yesterday. So yeah, it’s unbelievable how far this conference has come, a relatively short amount of time.
Kevin: I was walking, taking the escalator up, you know, to get to talk to some of the keynote speakers in the back room. Not that long ago, there was like this impression of, “okay, this is kind of cool. You go, people go to Chicago and you’ve got this quaint user conference, you know, will it ever grow?”. Now you have some vision of what you thought it could be. I guess I wouldn’t have underestimated you, but I’ve never really thought it would’ve been like this.
Jack:Yeah. Well, truth be told, you know, I had a vision for what I hoped it would eventually become. And this is, this is really, I think in a lot of ways become even grander and bigger than what that initial vision was. You know, I think, and maybe it’s in step a little bit with I think our growing ambitions for Clio as well. Um, where, you know, six years ago we had a different series of goals in mind for where we wanted to take with Clio.And I think especially when we celebrated our 10th anniversary and thought about the kind of opportunity that lies ahead for Clio and the way we want to transform the legal industry, we started doing this conference as a really essential tool for us catalyzing that change. I think there was a real moment for me probably three or four years ago, that I realized Clio has gotta be way more than just a software product to really have the kind of impact from a mission perspective as you know, but maybe not all of your viewers do. Our mission is to transform the practice of law for good. And we realized, you know, like I said, four or five years ago that things like Clio Con need to be about obviously evangelizing the product and hopefully getting people more successful with Clio. But it’s also about how do we need to innovate in the way that we’re delivering legal services. How can Clio be part of helping the legal industry as a whole thrive? And that’s really what the conference has become is a really important both communication platform for us to talk to the industry outward, but also to bring together, you know, the thought leaders in the legal industry and you look around and it’s really a who’s who of everyone who’s doing anything interesting in legal.
Kevin: And leave them inspired. Making them inspired to go do great things on their own.
Jack: Right and create a space for them to collaborate and get together.
Kevin: (3:15) I mean, you’ve grown into this role, I’m talking Clio and you personally. You guys would become very worthy of the role you’re now playing in the industry. And so you, I mean, things are dramatically changed. I mean, you’re off sitting on other boards right now. How do you view your role in that regard? You have positions at other companies and boards and whatnot based on your stature in legal.
Jack: I mean, it’s humbling for me on one end where I’m, you know, sought after as this seasoned professional in legal technology. And I look back and there’s a little bit of a disconnect almost where I still think about Clio and myself as the upstart. Um, and the startup that is still trying to disrupt incumbents and disrupt an industry with established on premise players. So for me it’s almost a moment of reflection where I realize, wow, “we’re actually the grandfather of this new wave of technology as one of the first cloud based applications and the first cloud based practice management product when we launched back in 2008”. I realized they with the benefit of hindsight like, “wow, I have learned a lot”. I’ve got a lot of knowledge and experience and hard learned lessons. I always talk about, you know, I view part of my role is I was really just trying to pay it forward. I want the next generation of founders to be successful. I think there is a lot of what I describe as, “avoidable scar tissue” that, you know, if I can pass on a lesson that, you know, it was maybe a hard learned lesson for me to a younger founder or to an up and coming founder, that’s massively valuable and something I want to, you know, really evolve into is somebody who is helping create large scale impact in the legal industry and in a way that is bigger than just Clio. Clio is obviously the primary platform for that, but I want to be strategically helping out, you know, a lot of different companies who are kind of locking arms with us and trying to transform this industry.
Kevin: (5:14) Maybe you can’t do it all.
Jack: That’s right.
Kevin: You did a wonderful job in taking that brand from the cloud-based and what it could do there for people to transforming the business in the practice of law. And you know, in addition to how that’s perceived in the outside world, probably 80 times more important is the belief that your team has and how it inspires them to do great things that you’re not doing, that they could do better than you’ve ever wanted. You guys continue to bout above your weight. We’re learning things as we go. We try new things and we’re not afraid to try things. And all of a sudden you’re up here and you’re up here. You’re up here. Cause I mean, recently you just raised a huge sum of money, you know, it’s staggering when you think about it. I mean, I tried to imagine if I would have told you and Rian, you know at your stand at the ABA Tech Show 10 or 11 years ago, “do you know what, you guys are going to raise a quarter of $1 billion in about 10 years?”.
Jack: (6:17) Yeah. We would’ve laughed you out of our booth.
Kevin: “Do you realize we gotta return this back to the Apple store to get our money back?”
Unidentified Person: So sorry to bug you Jack, can I steal a selfie with you man?
Kevin: Can you wait a minute?
Jack: I’m just, Uh, sure, sure.
Unidentified Person: I’m so sorry.
Jack: No problem, okay.
Unidentified Person: That’s all I need man.
Jack: Great to meet you.
Kevin: See who you are.
Jack: There we go. There we go.
Kevin: He didn’t ask you to sit on his board.
Jack: Not yet, we’ll wait for that.
Kevin: If I would have told you “there’s things you just do with that. Well, I might go to the moon in a rocket”. And there might be better chance maybe.
Jack: (6:55) It’s truly astonishing. And I think, you know, huge validation of what the mission has grown into. You know, that we’ve got some of the most sophisticated and smartest investors on the planet. Um, underwriting.
Kevin: Tell me about them. And you know, how you came together with them and how they grew with Clio for some of time. And now there’s new investors and new people, you know, what you think they see in you and your team.
Jack: So, yeah, I think that what they, you know, what they saw. So, so number one, you know, Clio was in the very fortunate position of a seeing enormous growth over the last decade. We’ve been growing, you know, dramatically year over year. And we’ve been in the very fortunate position of actually not needing to raise capital. Which only makes investors only want to invest in you more, is if you say, don’t worry, I don’t need your money. Um, but we were at an inflection point, you know, as a company where we saw an opportunity to really double down and accelerate in our vision. And we had, we had dozens of venture capital firms and growth equity firms pursuing us, you know, trying to convince us to take their money. And I’ve got to say TCD and JMI who are the two firms we ended up partnering with were two of the most persistent firms that, you know, spent literally four years building relationships with me and the management team and even our existing investors. Um, you know, TCV, you know, leveraged Mark for example, saying “we really want to get in on this Clio deal. Do you know, Jack, can you make an intro? Can you help, you know, get us to the table if they ended up doing a deal?” which is, exactly what Mark did. And it all came together in a way that I’m super happy with where, you know, I shared with them the vision they’re buying into is a, well a few of the facts in a few of the aspects of the vision they’re buying into is, number one, they want to invest it in and back a clear industry leaders, they want to back the number one company in a space that has the opportunity to become the overall winner and dominant player in that space, the long-term enduring winners. So, you know, I think with Clio, they saw the opportunity to say, “look, this is the Salesforce for legal”. And in the same way that salesforce.com utterly dominates the sales automation industry, they saw the opportunity for Clio to really do that in legal. They saw an industry that has still really, like, even with all the success Clio has seen, they see us as not even being in the early innings, but just walking out onto the field when it comes to technology adoption in legal. And you know, even with the success we’ve had to this point, we still see a vast amount of under penetration of technology in the legal industry. As I mentioned in my opening keynote, I truly believe it legal is the last major industry to be fundamentally transformed by technology.
Kevin: (9:58) What do you guys see is the size of the market?
Jack: The size of the market I would say is, you know, number one, we’ve got a million attorneys in the U.S. I think we have two to three times that in terms of staff surrounding those attorneys and the worldwide market is two or three times bigger than that. So I think there’s an opportunity and the vision for Clio, the longer term vision is not only to transform the practice of law for good, but we think we have a really solid shot at becoming an IPO scale company from a revenue and growth perspective and that’s always been mine ann the team’s dream is “can we build and show that a legal tech company can not only drive a lot of positive change for the industry and create more opportunity for lawyers, but also in the process of doing that become an enormous and successful company where, you know, myself and the management team are able to, you know, number one, foster the amazing culture that’s helped get us, get us to this point, catalyze this industry change, make our customers more successful and happier, make their clients happier and more satisfied with the interactions they’re having with their lawyer. And as a side effect of doing all of this, I think we’re also really increasing access to justice by allowing lawyers to operate more efficiently and deliver client experiences that match their client expectations”.
Kevin: You have all that leading to demand. Access to legal service that people thought of using a lawyer because not sure they knew of one or not sure they they don’t interact in that world. So when I go out and you probably run into the same crew that I run a lot. So, I’m talking about Clio, the culture, what you guys are building, you know, being a platform that people can integrate onto it and he’s going to continue to grow and grow and people haven’t seen probably anything there in large. So they’re looking at, well, “Clio is doing this thing and they’re doing really good and they’re doing mom and pop shops and solo lawyers or whatever, but it’s obviously nothing we’ll ever be involved in”. You know, I’d never looked at it that way. Now when you realize the opportunity in the foundation in this platform that you built, now to grown from, you guys see the opportunity for, like you just described, “it’s a million lawyers in the States”. It’s doesn’t matter what size of organization you’re in. They could be using things on our platform.
Jack: (12:25) Yeah, yeah. I view every lawyer in the U S as a potential customer. I see that there’s going to be, you know, I believe a longterm advantages to solos and smaller firms and boutique firms over the very large firms. I think that, you know, there’s been plenty published about this, but there’s diseconomies of scale as you grow. And I think technology is actually interestingly enough, rapidly creating this asymmetry where solos and small firms and mid size firms have better tools at their disposal with tools like Clio then there their large firm counterparts do. I had a small firm mentioned me recently that they were using Clio connect to interact with a client and give them a secure portal for logging in at his client had previously been working with, you know, an AmLaw 10 firm and with their, you know, literally millions of dollars of on-prem systems they were still not able to deliver this kind of a client of experience. And this client preferred using the smaller firms using these cloud tools that deliver a better client experience. You know, as Clio does over working with a big firm that doesn’t have these tools. So I think what’s really interesting is, all of a sudden, and it’s just happened over the course of a decade, but the scales have really tipped in favor of nimble firms that can adopt new technology rapidly and use that to become more efficient and to deliver better client experiences.
Kevin: (14:00) Yeah. I mean like when we introduced blogs, all of a sudden lawyers are going, “this is amazing”. I’m sitting there next to skin because I’m publishing in environments that they could only have access to before and they’re not even using it as well to reach to reach people. You know, it’s phenomenal when you think about it, you know, in that fashion. I mean, the other thing that has to be going on too, is you have greater and greater efficiencies of technology, which is disrupting the large firm model of, “well, I’ve got 500 associate lawyers and junior partners below me that are billing it $4-$500 an hour and it’s going out to the corporation. And so I’ll sit at the end and I get my $800,000 salary, but I get my one and a half or $2 million profits, them compensate them”. You’re going to be gone because who’s going to pay four or $500 an hour because It can be somewhat automated and it requires less people
Jack: (14:48) A bunch of things, right? I mean, there’s things that can be automated. There’s the structural cost of having that AAA office space in downtown, wherever. You know, a good friend of mine works at a very large law firm in Canada. He was sharing with me the other day that his overhead is $20,000 a month. So he needs to do $20,000 of billings before he even breaks even for the firm, because of the administrative overhead, the technology overhead, the AAA office space he has in downtown Vancouver, all of that stuff. And that’s what creates the structural access to justice problem.
Kevin: Mine was $30,000 in Lacrosse, Wisconsin in 1996.
Jack: I’m sure $20,000 is actually not bad compared. So you just think about that and you think about like and about all that we do.
Kevin: Why don’t we start to strip that all away?
Jack: We’re just on the cusp and this is the division for Clio and where I think things are happening very rapidly heading is the need for bricks and mortar law offices are going to go away. The need to impress your client by inviting them into your, you know, marble lined lobby and expensive walnut burled office environment is going to be in the rear view mirror. And we’re going to have nimble lawyers delivering legal solutions to their clients. Working out of a WeWork working out about some other co-working space.
Kevin: (16:02) And I remember a lawyer telling me this morning that’s she’s working out of a trailer.
Jack: In an RV. I spoke to the same lady.
Kevin: She was speaking today.
Jack: It was like a roving law office.
Kevin: With three kids.
Jack: With three kids. Amazing. So I think that’s it. You’ll see people working out of their home office, but they’ll be able to deliver better legal experiences using technology at like, not just a slightly more efficient cost basis, but you know, an order of magnitude better cost basis than what their traditional bricks and mortar, large law firm competitors, are doing.
Kevin: That woman that we both talked with, she’s doing sophisticated energy work.
Jack: Oh yeah.
Kevin: I mean, well somebody will say, “well, our firm does all this stuff”. She has some really sophisticated clients.
Jack: Oh yeah. And I meet those lawyers all the time. They’ve left very large firms, they’ve moved into a boutique practice or a small practice. The phrase I keep hearing is, “I work half as much as I make twice as much”. You know, I’ve talked to several customers that have been able to make that transition. They’re able to keep all of the revenue they’re generating, their overhead costs are minimal. You know they’re able to essentially pay for a few software as a service subscriptions and other minor, maybe a. I love the legal research tool and they’ve got a fully, they’ve got everything they need to run an efficient law practice.
Kevin: (17:27) You need to keep the drive and the energy going for that with your team and with all these people that are becoming advanced. Even me, because at times I get cynical as to whether I can push this rock over the hill. I come here and I go, “I can do that”. You know, based on you and Clio, but even some of the speakers you have in here.
Jack: Yeah, absolutely. Yeah.
Kevin: I’m not afraid to say what I think. Which you guys have a heck of a swagger right now and saying, “this is the way it’s going to be. Look what we just found in our report. Lawyers are woefully inefficient. Lawyers are pathetic in the way they’re responding to customer service issues”. Um, it’s really inspiring to hear that from you.
Jack: Well, thank you. I’m glad to hear that. And that’s, you know, that’s exactly what we’re trying to do. We think there’s, you know, there’s so much gnashing of teeth around what the future of the legal profession looks like. And, um, you know, I talk a lot about a growth mindset versus a fixed mindset. And I think the legal industry, if they take a growth mindset approach to things, if they look at something that outlined in the opening keynote, which is this product market fit opportunity, if they look at it not as, you know, this “$437 billion industry is highly competitive and getting commodified”. How about the fact that there’s 77% of this market that is completely untapped.
Kevin: It’s all about these niches.
Jack: (18:51) If you innovate, even in the most minimal of ways.
Kevin: Yeah, you showed that.
Jack: If you innovate in a way that lets you be more responsive to inbound leads, if you find a way to pick up the phone, you know, and maybe that’s hiring one of the three call answering services that are here and directly integrated with Clio so that you make sure you’re picking up every single inbound lead. You’re using a proper lead tracking system to make sure you’re nurturing those leads and moving them through a pipeline. You look at your law firm as a business. And that’s something that Mark Britton talked about yesterday to, you know, great reviews is the fact that, you know, lawyers need to look at themselves as business people. They need to look at lead generation and they need to look at their prospective clients really as leads that they need to be responsive to.
Kevin: And here’s this guy and how Jack Newton was, with what, three kids?
Jack: Three kids on yeah.
Kevin: You’re not on lawyer.
Jack: Nope. Not a lawyer.
Kevin: Your technology guy. You’re building the following. How’d that happen? Just very quickly. How did Jack Newton get here to lead all these lawyers to somewhat the promised land? How you can use technology to have a better life?
Jack: (20:03) I think number one there’s, as non obvious as it might be, there’s so many parallels between how I’ve built Clio and the lessons I’ve applied and the way I’ve built Clio and the way that I think lawyers need to be looking at developing their clients and developing their opportunity. And you know, when even the book I just published “The Clientcentric Law Firm” and I know you’ve got a preview copy, it’s really an adaptation of the lessons I’ve learned in building Clio and being clientcentric and how we’ve built Clio. Um, and I think what happened, you know, I think, to your question more completely, I think one of the really important things that happened is, I realized at some point along our journey, you know, we started off kind of building a product and then throwing it across the fence and just asking the lawyers “is this useful?”. And again, we were building that product market fit over time and initially there was, okay product market fit and it just kept getting better and better and better. Um, and then, you know, cut to maybe five years ago, I realize we’re working with thousands of the best and smartest law firms in the country. We’re at the forefront of innovation and we’re co-creators with these firms around what the future of the practice of law looks like. And furthermore, we’ve got this, I’ve got, and we’ve got this unique vantage point where we’re almost like a, I’m a Kinsey or Boston consulting group where we get this, this kind of lateral view of all the great works that that’s happening across all these different firms. Um, and that just makes me, puts me in a really great place to observe, “what are the important trends, what are the leaders in this space doing? How are we helping catalyze change with technology and co-creating with them?”. And then, “How can I gather all of those learnings up?”. Also, you know, I’m a technology guy, I see what’s happening in other consumer spaces. I see what Amazon’s doing. Right? I see what, um, you know, I talked about Zoom and Slack and all these other.
Kevin: (22:15) The way you’ve done it. To say “I had all this. Now, I’m co-creating with the lawyers”. It’s a great model.
Jack: It’s an amazing place to be in. And then at an event like this, we’re able to, to turn around and say, “look, here’s everything we learned”. To answer your question, you know, as, “how do we draw this crowd and audience to hear that message?”, you know, my only hope is we’re saying something that’s worth hearing and that we’re inspiring people.
Kevin: We go home and you tell them what to come back to, then we gotta be here next year and year after year and continuing to grow, and I expect we’ll be 2,500 people here, if not 3000.
Jack: Yeah. And I have every expectation that this’ll keep growing.
Kevin: Thank you for doing it. I really appreciate it personally.
Jack: Well, thanks. Thanks for supporting it.
Kevin: Thank you.