Tell us a bit about yourself and how you came to be in (or a customer of) the legal business?
My name is Doug Ellenoff and I am a partner in the NYC- based 80 lawyer firm of Ellenoff Grossman & Schole LLP. EGS is very proud that it recently celebrated our 25th anniversary. I decided to pursue a career in law because my father, with whom I was extremely close, also practiced corporate and securities law.
What do you do for a living right now?
In addition to being a partner of EGS where I am a transactional and corporate finance lawyer, I am also Chairman of iDisclose, which is a legal technology company that provides documentation automation solutions for start-up and entrepreneurial companies. iDisclose facilitates regulatory filings with the Securities and Exchange Commission, such as Form Ds, Form IDs, Form C-ARs, PPMs. Recently, iDisclose also launched a library of nearly 100 legal forms, which clients may complete by answering a series of questions that automatically populate the entire library. To further EGS’s interest in investing and assisting legal technology company start-ups, we also established ESQvest, which manages our investments in a portfolio of interesting young entrepreneurs.
What has been your greatest triumph and your greatest success in the legal services field and what did you learn from each?
What distinguishes EGS from many traditional law firms is our commitment to identifying and taking leadership positions in emerging areas of practice. For over 15 years, we have been the most active law practice in the world with respect to an alternative finance technique commonly referred to as a SPAC. When very few finance law firms would involve themselves in this program, we committed ourselves to it and worked with the various constituent parties (bankers, accountants, etc.) involved and improved it with them. SPACs represented 15% of the IPO activity in the US in 2017 and EGS participated in one third of those financings. Building on our success in that practice area, we were on the ground floor of the 2012 presidential initiative known as the JOBS Act. We worked directly with the SEC, FINRA, various state and international regulators to formulate the proper rules to implement that statutory provisions known as Crowdfunding. Today, Crowdfunding is increasing as a means for entrepreneurs to raise early-stage capital and we are thrilled to have played a role.
Do you think the legal industry is headed in the right direction, the wrong direction – or which direction?
There is no one single answer to that broad question since the legal industry has many components (corporate is completely different than litigation, etc.) but I am generally encouraged by what I would observe that there are more and more entrepreneurial initiatives seeking to resolve many of its shortcomings. While it is axiomatic that change and adoption is slower in our industry than many, it is also an enormous opportunity. Many large law firms do seem genuinely interested in technology adoption and integration and that does seem to be encouraging entrepreneurs to invest in new solutions. What is often lost and under appreciated by entrepreneurs peddling their solutions though is that the practice of law does require a personal touch and empathetic ear and technology is not a replacement but merely an efficiency tool to be properly used by lawyers to deliver better, faster, cheaper legal solutions.
Who – or what – inspires you – and why?
Life is so interesting and complex that numerous people and things inspire me in a range of industry and through many voices. To avoid going off topic though, I will limit my comments to the law, legal industry and lawyers- this inspiration is not static just like the law itself which is constantly changing. My first cut at this answer had me steering into all of the lawyers that routinely devote their services to our social and civic infrastructure that is the backbone of the rule of law in the US, who are daily tasked with maintaining and improving our society. While they go unnamed, they use their licenses in an incredibly important foundational manner. Their devotion to our democracy does inspire me. Hokey, I know. More particular to my daily professional corporate orientation, I follow on social media and in the news generally, those lawyers that cause change to create new industries; whether it is in bitcoin/blockchain, cannabis or crowdfunding. Their collective efforts to work with existing law makers and regulators to advance the interest of their communities (whether you agree with them or not) inspires me to carry the flag as well.
What advice would you give to the younger generation contemplating law as a career?
Often lost in the analysis of becoming a lawyer nowadays is the people (your clients) that you have the privilege to represent. Yes, they can be difficult, demanding and even unreasonable, but your license gives you the right to become their confident through very personal moments in their lives. While there are many other industries to make more money, there are few where you can have this meaningful and fulfilling relationship and that is why you will be referred to as a “professional” because it is exceptionally satisfying and gratifying (sometimes).
How ready for change do you think the legal industry is?
Remarkably, unprepared and not very receptive. Other than the few top AMlaw firms that are investing and integrating legal technology, most firms are simply not interested. The best story I can share with you to demonstrate the point is my experience exhibiting our iDisclose solutions at one industry conference. Our booth was directly across from a dictation service, using the old handheld recording devices that you hand to your administrative assistant to have them type up. You guessed it, they were bustling with business, whereas our booth had limited interest. Keeping in mind that 70% of the practice is litigation so I do better understand the general need, but, handheld devices, really.
Is more – or different – leadership required? In what ways?
In my mind, until the incentives are properly aligned for both the innovaters and the law firms, there will be ongoing tension for adoption. Technology that reduces billable hours, like it or not, and notwithstanding all good intention, will inhibit adoption. If you look beyond large law, most practicing attorneys are having a hard time balancing getting new clients and servicing them much less devoting time on training on new technology and applications. More leadership is always welcome and the current Chair of the ABA does seem quite committed to exploring new technologies to close the justice gap but no matter how compelling the rhetoric is when it meets with the realities of potentially making more money, the sales cycle will continue to be frustrating.
How deep do you think will be the inroads of technology in the industry?
Inevitably an increasing amount but implemented slowly and at different rates depending upon the practice area. I don’t believe that technology replaces lawyers at all at any time but reduces their billable hours over time for individual assignments. If you think about legal research prior to Lexis/Westlaw and now there has been a near complete shift. Most law firms have significantly reduced their law library footprint, which actually used to be the signature space in many firms. Now it’s more likely to be their servers and IT infrastructure. I think of this question in terms of what is the appropriate percentage relationship between lawyers and technology in delivering legal services. With either form driven practices or highly evolved technology applications, the possibility could be that the ratio could get up to 20% lawyers and 80% technology (with clients directly entering much of the necessary information themselves). I am highly confident that the trend towards adoption is meaningful and real but the rate is slow and deliberate. Ultimately, no practice area will be immune.
In ten years, do you see an industry much as it is – or do you see new players, new technology and an altered state?
While we still have fax machines and pay for the telephone lines, I am highly confident they get very limited use in our firm, except as a backup to an emailed .pdf. Yeh, that took nearly 30 years from the first time I watched in awe as a fax was being delivered at my father’s firm to how we practice today through emails todays, but it is a truism that the only thing you can be certain of is that change (even in the practice of law) is inevitable. Early on in my practice, I actually used to have to travel to Washington DC (or use an outside service) to manually file documents with the SEC. Even in the relatively short 10 year timeframe that you ask about, I am sure that such changes will be even more profound. New tools are being marketed already that will continue to make lawyers lives more efficient and their work product more accurate. The use of AI will become commonplace within large law and big companies and will hopefully to lead to the more efficient and predictable delivery of services. Integration of blockchain applications are already being implemented. Even though, 10 years from now though, young lawyers will still be learning about Adverse Possession and Res Ipsa.
Are consultants and lawyers looking increasingly similar? Should the distinction continue?
In our areas of practice, while there is some competition between regulatory consultants and lawyers, the vast majority of our practice doesn’t see that as a meaningful incursion on our business. While I support either limited law licenses for certain areas of practice or even unlicensed consultants to drive down the regulatory costs for clients, due attention needs to be paid to ensure that the quality of the advice limits the potential for clients to be given bad advice even though it is more affordable.
What are your thoughts on the increasing availability of data to guide client-side procurement of legal services?
Generally in favor. As Sy Symms, the sports broadcaster used to say, “an education consumer is our best customer”. EGS has a substantial amount of our business done on a truly “flat fee” basis and we have for the history of our practice. We believe that such a service would be quite beneficial for our approach and the more pricing discovery would result in more business for us.
Lawyers have typically regulated to keep non-lawyer investors out but that’s a two-edged sword these days. What are your thoughts?
I don’t believe that the reasons for the adherence to that those professional rules of ethics continue to be relevant in todays practice of law and am a proponent generally of the UK/Australian liberalization. While there may be reasons in certain areas of practice to maintain or modify those rules for continued application, I am in full support of the elimination of those prohibitions. A look at the last 30 years I would think make it reasonably clear that one of the major problems with law firm going out of business is a poor capital structure due to excessive bank loans. I believe that equity investments from non-lawyers might have prevented some of these 100 year old firms from going under and causing issues for their thousands of clients.
What’s the one most significant factor that will drive change in your view?
If we are discussing technology adoption, it would have to be a better alignment of economic interest. If we are discussing other changes to the practice, those will have to be either regulatory through our licenses or by requirement of clients or our malpractice insurers, which seems unlikely.
Are we seeing the demise of the “profession” and the real emergence of the “business” of law?
I don’t believe that the two are mutually exclusive. EGS is equally committed to properly managing our practice and being “professionals” at the same time. This goes back to my earlier response about recognizing that it is a privilege to be a licensed professional to deliver legal services on a personal or business matter. With this as our orientation, we want to provide outstanding results for our clients and are willing to work really hard to accomplish our representation (i.e. being a “professional”) but clients rightly also require a high quality experience, which necessarily requires from our lawyers long hours of thoughtfulness and responsiveness, which deserves a market rate of compensation (i.e. “business”). The real dividing line though in my judgement is that when there are two competing interests, you must keep the interests of the clients higher than you are own. While this isn’t always easy and certainly not always financially prudent, it you take the long view, it almost always is the better business approach as well.
What do you consider is the greatest challenge facing the industry?
There is a related problem which permeates —lawyers need to better appreciate client upset with the services being provided (expense, responsiveness, poor communication and cost) and client’s need to better appreciate that the delivery of legal services is more complex and nuanced then they as clients appreciate. Technology has a very definite role to play in solving those issues.
What do you see as the greatest opportunity for the sector looking forward?
Whether or not a rising tide comes to float all boats in the industry, we have been and continue to be focused on (i) continuing to better our service to existing clients every day, (ii) provide increasing and more sophisticated services, (iii) identifying and analyzing new niche opportunities that present themselves that aren’t being properly assessed by others.
Do you think law can improve its track record on diversity and inclusion? How?
Will the current regulatory framework around law help or hinder it in the future?
I am not sure. I haven’t really given this question enough thought over the years, I am embarrassed to say. While there are issues that I have touched on, like allowing non-lawyers to have an ownership interest in a law firm, there are so many other potential issues to consider if you want to re-imagine the practice, such as single purpose law licenses, attorney advertising, non-lawyer commissions—to name a few. I’d review CLE which seems not to have achieved its intended goals. Keeping on topic, I think serious consideration ought to be given to how to incentivize lawyers/law firms to integrated legal technology better into their practices. Thanks, now, I have a new project to spend more time and attention considering.
Who do you think are the greatest influencers on the industry these days?
While there are many individuals in their respective areas of practice, I wouldn’t point to any individuals as the “greatest influencers” on the industry as a whole. The practice of law as I mentioned earlier, just like other professions, is the sum of numerous different disciplines and there isn’t one single voice that I can think of that broadly impacts how I or EGS approaches our daily tasks.
If you had to do it all over again, would you? Or what would you do differently?
I have made many mistakes during my 30 years of practice, the totality of which I am pleased to say has brought me to where I am today, which is extremely satisfied and without regret, so “No” I wouldn’t have done it any differently given who I am and how I wanted to approach both the practice and management of law.
If a law firm was a startup pitching for investors, would you be an investor?
Considering my response to question #13, I absolutely would love that opportunity. Right in my wheelhouse. From your lips to …………….. I hope that happens one day.
If you weren’t doing this, what would you be doing?
What would you like to be known for?
Establishment of alternative finance programs for entrepreneurs.