Waisberg, who has worked in legal tech since 2011, is on the billable hour question. He says he is in favour of it changing but that it has changed far less than pundits forecast, so a company that needs it to die in order to succeed should be careful.
Yeah, I think there's a bunch of different limitations. Number one, the tech is like if you regularly use Gen AI tech, and I regularly use Gen AI tech, my experience has been that it makes mistakes all the time, right? Like it just, and worse, not only does it make mistakes, it makes mistakes in ways that can be really hard to spot. It'll make, it'll say things in a very convincing way that might be entirely untrue. I should have a post coming out in the next week or so with some more details about a specific experience around that. So I think number one, like the tools make mistakes and that doesn't necessarily say that that is reduced a lot less than I would have expected over the last bunch of years. So that's issue number one. Issue number two is large law firms are generally, and that's the market I know best is the kind of high-end big law market. And those firms are generally in the business of delivering very high quality work product, like 100%, but it's not like actually 100%, but trying to generate 100% quality work product. And they're doing it on the back of these sort of failuable tools, right? So I think those are two issues for sure. The third issue for me and like why I spent like while everybody else was like learning to play the ukulele or catching up on Netflix seasons during COVID, like I was sitting working. I think my wife and I managed like four episodes of succession or something like that because I was trying to like besides just the general heavy flow of cure work, I was trying to write AI for lawyers. And the reason I was writing AI for lawyers is to convince hourly billing lawyers that being more efficient was in their best interests. And I've had a, now that I'm not really in the business of trying to sell efficiency tech to lawyers, I get to have very candid conversations with them. And I would say that the third sort of real headwind is that I still think a lot of lawyers are kind of unconvinced that efficiency technology helps them make more money. I think right now they're sort of willing to go along with it because they think they have to do it and it's the future and maybe it's scary. But what we saw with Kira in 2020, and it was fine, like we didn't have a terrible financial year or anything like that. But when the market, when the firms themselves are feeling strained, they get a lot tighter on ROI. And we sort of knew that that was potentially coming. And, you know, in 2018 and 2019, especially thanks to the input of Peter Sobeloff, who has been on our board since then at Insight, we were really, really, really focused on trying to show the ROI of efficiency technology. And to be honest, like, especially with five years removed, it's hard in an hourly billing firm, right? Like, what is the ROI if sort of the technology enables you to build less hours? Like, I can make cases about how it enables you to sell clients work that they wouldn't have otherwise done, that maybe it allows you to win work from other firms that aren't using technology, but that doesn't really work when everybody is kind of using the technology. You know, like it can say that it might change a realization rate, but it's a tough case, right? And I think it remains a tough case. And I think in a different, different economic environment, I would expect that my experience was that firms focus pretty hard on that. And it's a lot harder to be an efficiency tech vendor when firms. Are focused on that. It was what about the inevitable
billable hour question. I mean, it's been all of, I think, four hours since I've had this conversation with anybody because everybody's talking. It keeps coming up all the time. But yeah,
I don't have to talk about it as much these days. But yeah, I think that's the basic problem, right? Like if you bill hourly, I think technology that helps you bill less hours has a mixed ROI case. Like the very best case you can make for it is it has a mixed ROI case. So then you could be like, well, the billable hour has to go away. But like one of the things that I think made us successful at Kira in our marketing was 10 years ago, 15 years ago, people were saying the billable hour has to go away. Like when we started Kira, maybe non-billable hour work was say, I don't know, like we'd have to check out the, I guess I could put this into GPT and maybe figure it out. But my guess off the top of my head is non-billable hour work in big law firms was say 18% in 2012, 2013. And maybe it's like 25, 26% today, right? There's a lot more capped fee work, which still doesn't exactly count that way, but I don't think the billable hour, like it's changed a lot less over the time that I've Ever in legal tech than I think a lot of pundits would have forecast. And personally, I like, I agree it should change. And I think there's a lot of, like, I'm pro-change in the billable hour, but I just, my experience having been in legal tech since 2011, and Bob, you longer than me, has been that, you know, rumors of its death are greatly exaggerated. Yeah. I've Ever 30 years to change. Like, I'm not, I'm not pro-billable hour, but I just, I think if you need that to change for your company to be successful, I would just be cognizant that it hasn't changed yet. It could. I think it would be great if it did. Yeah. Yeah. Don't hold
your breath. So I want to ask you: so, you know, your experience in selling Kira, the pain points of going through that whole process of selling Kira helped shape your product roadmap at Zuva. And so what happens now? Do you do you ever sell Zuva or are you now here for the long haul because you just don't ever want to go through that again? Oh,
no. It's like selling business is great. It's a wonderful, it's like a terrible, wonderful experience, right? Like you should definitely, if it's the right time to sell your business, you should sell your business, right? Like that's just it. It's, you should totally do it. It's not that bad. Like it's not like traumatic like that. And I'd been an MA pro before, right? Like I knew what I was getting into. Our CFO knew what she was getting into. Like there were no surprises here. Like we've done this before. It's just like a very high burden. Like it's a really hard professional thing to do, but you should definitely do it. Like businesses, I think they have a life and then they have another life after you sell. Like it's been really neat to watch Kira post sale and just and see people from Kira post sale as well, some of whom stayed at Latera and some of whom went off and did other things, but a bunch of whom have really been thriving. And I think there's just, I think an individual business is kind of like a period of time and you, you should try to sell it at the right point probably. Like I'm not, I think there are perpetual businesses that are super cool. Like, you know, I'm a big fan of Kushner, like the Thrive perpetual idea that there are these businesses that could go for tens or hundreds or whatever of years. I don't think like a random technology company is going to be one of those. And you should sell it. And if you are selling, you know, reach out. I'll try to help if I can. But you just have to recognize that. Yeah, but like whatever. It's going to be like a rough three months, four months. Like you'll be really tired afterwards. And then big deal. Like a big check or a small check. Who knows? But like, but you should. It's actually a great experience. It just is tough. But just because things are tough, like it doesn't mean you shouldn't do them.
Yeah. Our time is just about at an end here. And I always like to see if there's anything that you wanted to talk about that we haven't touched on yet. Anything else that's on your mind?