Jack Newton: CEO & Co-Founder, Clio
#BakersDozen is a series of interviews with leading professionals in the fields of law, consulting, finance, tech, and more.
Tell us a bit about yourself and how you came to be in the legal business?
I’m a technology guy with a computer science master’s degree in machine learning. Back in 2007, my co-founder and I saw the impact the cloud was having, and we were looking for an industry that could benefit from its transformative influence. The legal industry jumped out as a great opportunity to do that.
What surprised us was how the legal industry, despite being a really huge space, really hadn’t been fundamentally transformed by technology like other industries. In many respects, legal hasn’t changed all that much in its 4,000-year history. We saw the cloud as a medium that could catalyze that transformation, and that was the genesis of the idea that led to Clio.
What we saw back in 2007 was that a huge portion of the market was made up of small-to-medium sized firms, but the majority of technology at the time was targeted at large firms. We saw the cloud as a great way to deliver even more advantages than what existed for the bigger firms, but to also make them accessible to small and medium-sized firms.
What has been your greatest success in the legal services field and what did you learn from it?
My greatest success is launching the first cloud-based practice management system in the world, ushering in the age of cloud computing for legal. The learning from that success was that, to enable that kind of change and transformation in an industry, you need to try and lead the narrative rather than be dragged along by it.
When we launched Clio in 2008, we quickly realized that the security and ethics of cloud computing for lawyers would be a fundamental issue for us to address, and to get ahead of—especially with the number of large, on-premise players sowing campaigns of fear, doubt, and uncertainty in the marketplace. We made a decision to quarterback education around cloud computing for lawyers: we wrote some of the first white papers on the implications for legal professionals, and I embarked on a national speaking circuit. I also founded the Legal Cloud Computing Association (LCCA). We’re still in the early days of the overall adoption cycle, but we’re certainly well-poised to see the majority of law firms embracing cloud computing confidently, with a clear mandate around security and ethics going forward.
Do you think the legal industry is headed in the right direction, the wrong direction – or which direction?
I think there are parts of the legal industry that are headed in the right direction. But there are still a lot of firms that don’t realize how much the landscape has already changed beneath them. Law firms are starting to understand they need to become more client-oriented. They’re starting to understand they need to embrace technology to deliver a better client experience, and to be more efficient with their time. They realize clients want to consume legal services differently than they have in the past—that clients want flat rate billing, that they might prefer a video chat over an in-person consultation, that they want to buy legal services online and not across a boardroom table. There’s more and more firms everyday that have clued into that, but there’s a large chunk of the industry that remains woefully out of touch.
What do you consider is the greatest challenge facing the legal industry?
I think the greatest challenge is that the average consumer doesn’t understand how to access legal services, when they should access legal services, and how best to do it. The key to unlocking a large part of the potential market is improving education around when someone should engage a lawyer, while also making it easier to do so with more predictable costs.
What do you see as the greatest opportunity for the sector looking forward?
The greatest opportunity will be provided by the confluence of technologies that are coming together, and the power of the Internet. I think we’ll very rapidly see the Internet as the primary way that customers find lawyers, as well as the prefered way of interacting with lawyers once they’ve found them—through a client portal or through real-time video chat. Technology will provide a unique way for lawyers to tap into a larger market in a cost-effective manner, and therefore allow them to deliver more cost-effective legal services—through everything from document automation, to artificial intelligence, to automating the more routine parts of their practice.
Will the current regulatory framework around law help or hinder it in the future?
I think the regulatory framework, in many cases, hinders the evolution of the practice of law due to the conservatism that it breeds in lawyers, and the amount of perceived risk that lawyers see in doing new things or doing things differently. The cloud is a great example of that. The legal industry is 5 to 10 years behind in embracing cloud technology when compared to other industries, in large part due to the perceived risk cloud computing had in its early days. Protecting consumers and ensuring the integrity of the profession is important, but it needs to be balanced against the evolving expectations and demand from consumers.
One of the friction points we see is that making decisions at the regulatory level can be a challenging and slow process. Advocacy groups, or consortiums like the LCCA, can certainly help accelerate that process, but even at that, many regulatory processes move at a geological pace. For example, we’re still seeing state bars issuing ethics opinions on cloud computing more than a decade after the technology was introduced. If you’re measuring your response to technological change at the decade scale, it’s just not fast enough, and lawyers are missing out on delivering legal services to a larger audience in a different way.
What are your thoughts on the increasing availability of data to guide client-side procurement of legal services?
We’re seeing data finally becoming a really important driver for law firms and their decision-making. The availability of that data will increase the amount of transparency, and the level of competitiveness, in the legal industry, and will further drive the need for more technology adoption. Data can also be used by lawyers to benchmark against other firms, to better understand where they have opportunities to level up their revenue and overall profitability.
For the small-to-medium-sized market, the Legal Trends Report gives lawyers, for the first time ever, a comprehensive set of data relating to their legal practice. From this report, lawyers can understand how their performance relates to their peers, as well as how their billable rate compares—and I think it’s important for the industry as a whole to reflect on areas it has opportunities to improve upon.
For me, the big takeaway from the 2016 Legal Trends Report was the devastatingly low average of utilization rates, which amounted to only 28%, or 2.2 hours of a given 8-hour workday. The rest of their time is going to anything from marketing to sales to administrative tasks. I would encourage lawyers to read the report to get a better sense of how their firm compares to national averages, and then to look at ways to improve.
Are we seeing the demise of the “profession” and the real emergence of the “business” of law?
No. We’re seeing lawyers recognize that running a successful law firm is both a business and a profession, and the most successful lawyers are great at both.
There’s also a big shortcoming in how lawyers are trained—there’s very little education on running a business, which includes skills like marketing and sales. Many lawyers are graduating in an environment where they’re hanging out a shingle and becoming a solo, or founding a small firm with a partner, and you need that business knowledge coming out of the gate. You don’t have the privilege of time to learn via apprenticeship, which was maybe the old model. Having those skills as part of the legal education system is crucial.
In ten years, do you see an industry much as it is – or do you see new players, new technology and an altered state?
In ten years, I think we’ll see an industry that’s been transformed significantly in a few different ways. The ongoing impact of the Internet and of the cloud will have significantly transformed the industry and how clients find lawyers and access legal services. In the space of 10 years, we’ll have seen substantial impact from artificial intelligence and machine learning on the profession. We’ll see transformation by way of other players, such as accounting firms that are providing new sources of competition for legal work. I think there will be a number of significant opportunities, as well as new sources of competition, for lawyers.
Who do you think are the greatest influencers on the industry these days?
At Clio, our mission is to “transform the practice of law, for good.” We recognize that technology is only part of the equation, and that educating the industry around what’s possible—about what the data and what the market is telling us, what the legal industry itself is telling us, and where visionaries see things going—is part of the overall process in transforming this industry and helping bring it to the endpoint we think it needs to get to.
Look at the list of keynote speakers we’ve had at the Clio Cloud Conference. We’ve had Richard Susskind talk about how lawyers need to adopt technology and innovate to stay relevant, as well as Gary Vaynerchuk, who talked about how law firms need to build their brand. These are just two examples of how diverse the range of influences can be, and how many industries law has to draw inspiration from when it comes to thinking about the next era of legal.
What advice would you give to the younger generation contemplating law as a career?
There’s such a huge amount of opportunity in figuring out how to combine technology and legal practices to create an innovative niche for yourself, and the bar is so low for what you would consider to be innovation in legal. Be keen to adopt technology, embrace change, and deliver legal services in a new way, would be one piece of advice. I think the second is to be more client-focused. There are too many lawyers who deliver legal services the way they have been delivered, or who deliver legal services the way they want to deliver them, without appropriate focus on what the client needs and wants. If you become obsessively client-focused, you’ll discover the innovations you need to set your firm apart.
Do you think law can improve its track record on diversity and inclusion? How?
Frankly, there is nowhere to go but up. Diversity is low, and from that baseline, I would certainly hope there’s room for improvement and progress. For firms that need a business incentive, scientific research has shown that diverse teams perform better than homogenous teams, and for any law firm that’s aiming to be high-performing, diversity is one way to improve.
Who – or what – inspires you – and why?
Hearing from customers about how Clio helps them, or hearing about new ways they’d like to see Clio help them, really inspires me. I come away from any conference or customer visit, where I get to be face-to-face with customers, more energized than ever.
I’ve also been a huge fan of Elon Musk for a long time. Even before it was cool to be a fan of Elon Musk. If you look at the audacity of some of his goals with the big industries he wants to transform, anything from ground transport to space flight, he’s an inspiration to any entrepreneur looking to make their dent in their own space. The scale that he’s operating at is both humbling and inspirational for anyone embarking on a similar mission.
If you weren’t doing this, what would you be doing?
Pursuing a PHD in machine learning or working on deep thinking at Google.
What’s your favorite hobby or activity outside of law?
Backpacking, camping, photography.
What’s your favorite sports team?
What’s your favorite city?
What’s your favorite food?
Hû Tiêu Bò Saté (Spicy Beef Satay Soup) from the Thanh Thanh Oriental Noodle House in Edmonton.
Jack Newton is the co-founder and CEO of Clio and a pioneer of cloud-based practice management. Jack has spearheaded efforts to educate the legal community on the security, ethics, and privacy-related issues surrounding cloud computing, and has become a nationally recognized writer and speaker on these topics. Jack also co-founded and is President of the Legal Cloud Computing Association (LCCA), a consortium of leading cloud computing providers with a mandate to help accelerate the adoption of cloud computing in the legal industry. Learn more at clio.com