EP 294 - Robert Scott - Navigating the Cloud: AI, Contracts, and Intellectual Property

What's different now is we used to send our deliverables through an email with a word document. Today our deliverables live on smart hyperlinks that provide one directional integration into our clients CRM tools and quoting tools, so that we're helping them collapse the sales and contracting steps into one online process. Then we're delivering what is much more than just a word document. You're listening to the Legal Mastermind podcast presented by Market My Market, the go to podcasts for learning from the experts in the legal community about effective ways to grow and manage your law firm.

Hello and welcome to another episode of the Legal Mastermind podcast. Today I have with me the co founder of manjer Rob Scott. Rob, thanks for joining us today. Thank you for having me.

It's a pleasure to be here. So could you start off with a little history on how you came to be one of the co founders of manar. Sure So, I started a boutique technology law firm in nineteen ninety nine and I started representing IT managed services firms and working in the software field at that time. By twenty twenty two, I had hundreds of IT services firms that had relied on our firm for council in connection with developing their customer contracts for the service engagements that they entered into, and so I envisioned a platform where I would be able to dynamically push updates to agreements that I had recommended to clients originally, and thus the vision for the Mandra platform was launched.

We went live in March of twenty twenty two and we're now approaching five hundred clients on the platform, which is a cloud based contracts as a service offering where for a subscription fee, a small business owner can sign up and have their customer contracts not only developed initially, but proactively managed through the cloud. Now, was this an idea that was before its time and it wasn't until recent technology that you were able to do it exactly how you wanted to. Yeah, I think that's a safe way to think about it.

I think that there was a time where we were starting to recommend to clients that digital contracting and contracting online was an option, and I think it wasn't that far of elite to go from online contracting where maybe a client has their agreements on their website to a model like what Mondra does, which is we host those agreements for our clients in the cloud, and because we're hosting them, we're able to manage the updates and make sure that they're the integrity of the agreements is maintained and they're not edited by sales teams or something like that.

So what is the biggest problem that Mondor solves. Well, First and foremost, the underlying intellectual property of the monitor platform are the agreements that we developed for clients over five hundred engagements in two decades. Those are service agreements that reflect the philosophy of IT services and SAZ and AI. You know, we have a number of different libraries, but all of them reflect our philosophy on what is market when it comes to these types of solutions, and so that's the underlying you know IP that has not changed that much.

What's different now is we used to send our deliverables through an email with a word document. Today our deliverables live on smart hyperlinks that provide one directional integration into our clients CRM tools and quoting tools. So they were helping them collapse the sales and contracting steps into one online process. Then we're delivering what is much more than just a word document we're developed.

We're delivering to them a platform that has things in it like browser wrap that says that the provider can update the terms and conditions and give the customer notice. So now we're able to put all of the clients on a single template, which then gets maintained over time, reduces risk, makes you m and a ready you know, freely assignable for example. But they're constantly evolving in particularly in the IT field. We've seen the regulatory explosion at the international, federal and state levels in the United States or privacy regulations, and we're seeing three to five states, for example, passing their own versions of consumer protection laws around privacy, and every time one of those laws come out, our team analyzes them and if appropriate, we'll push a data processing terms update to all of our subscribers as those new laws come out.

So the need for dynamic updates both to keep up with industry trends, to continuously improve the legal protections and the documents, as well as to stay current with the emerging landscape of new regulations or really the things that as a service model would bring to the table. Over the traditional deliverable of just say a word. Document does this make the entire process more efficient, and are we limiting people that we didn't need before Because this software is doing so.

Much well, I think that there's no question that we're able to handle a lot more clients with the same amount of resources. And when you think about transitioning a traditional legal service into a SAS business, which is what we've done, it requires you to rethink a number of things, one of which is who's touching this, why? How many times right? And so you start to really ring out a lot of the efficiencies.

And what we have is a templated based approach where we have one tier that the subscribers are just subscribing to get our best practice as templates, and we have another tier where we actually will customize for each individual client. And so we've created this lower level of service primarily for the reason that you've offered what you've suggested, which is we want to offer the most value for the lowest cost. And the way to do that is you know, figure out where in your delivery your delivering value, and which components of that are relatively scalable, say based on documents or libraries or methodologies, and which ones require legal You know professionals.

You know, legal time, partner time, associate time is another way to think about it. And and so with this platform, we have a hugely scalable way because we manage one template that can then be pushed to hundreds of clients. I mean, you know, automatically, with no intervention by the client whatsoever. And so when you have that kind of scalability, now you can offer the opportunity to bring the prices down relatively and drive the volumes up.

So, for example, before I made the transition to a subscription based approach, I was doing about four of these engagements a month. I was doing about thirteen thousand roughly per engagement and doing about fifty three thousand a month. You know, fast forward to today, we now are approaching five hundred subscribers. We're doing four times as much as we ever did on the traditional model, and everybody signed up to three year recurring revenue contracts.

And there's no billing, there's no hourly billing. Everything is managed through software. All the subscriptions are no back office overhead at all. And so if you think about a traditional sas offering, and you think about all of the IP that's locked up with in law firms that aren't even protecting it.

They give it away to get hourly fees. If you can reimagine your law firm as a SAS platform is what we did, then it opens a lot of opportunities for you to really grow at a rate that law firms traditionally would struggle to grow at. So who is this ideal for? Is there a specific practice area or a specific size firm that that this is really an ideal fit.

I would say that I think the monitor platform will help law firms that found themselves in a similar position to where we were. They've become known for in a particular niche. They have hundreds of clients that are legacy clients for whom they offered the services in a traditional way. Now they move to a SAS based approach, they offer it first to all those legacy clients.

As far as firm sizes, I think you're going to need to be in a firm that's fairly innovative because you are going to give up profits and billing credits to use you know, traditional legal you know terms as you transition. You know, we went from making fifty thousand a month in April of twenty twenty two and we made three hundred and ninety nine dollars in March of twenty twenty two, So there is a big transition and you as a law firm would need to have supportive partners. So from that perspective, I think smaller firms probably would would benefit from it the most.

But anytime you have a one to many relationship of document templates, think M and A, think trusts and the states, any contracting practice that result what's based on templates or best practices, that Manitra platform would be purpose built for those types of services. We offer that we use Monitra platform for the expertise that we have as a law firm, which is in tech law. So our clients are it managed service providers typically with revenues of one million to twenty five million, and software as a service firms typically with five hundred thousand to five million in annual recurring revenue.

So it sounds like there's two people that need to buy into the software. You've got the person who's using it, and then there's going to be the partners or the owners. So how would you talk to the partner who's more on the accounting side, and then how would you talk about the efficiencies and how is it going to make more sense to the person who's going to be using it. Yeah.

So, so the way we envision addressing the first concern is there is no cost to you. This is a revenue share model. If we determine that your practice is a good fit for the Monitor platform, we'll partner with you and we'll come up with a split that costs you nothing. So that's how we answer the question.

For the business guy, for the business development guy, we're going to explain to them how when you get very focused on offering a very specific solution, and you start by offering it to your existing clients by calling them and inviting them to a dema or a consultation. First of all, a high percentage of your former clients will say yes. Many of them will be receptive to a new model that is more proactive, offers better services. It's predictable.

The clients love these models, and that's why every business is really thinking hard about recurring revenue. And what Monitor has proven is that legal services are as amenable to recurring revenue models as streaming services on TV. So and if that's true, then what is the opportunity for lawyers. You know, to that same lawyer that's concerned about money, I would say, how much intellectual property do you have in your firm in terms of your forms, documents and templates that is being unmonetized at the present time.

How much of it's unprotected from an IP perspective, And let's start with an audit of what IP you have, what value it has, and how we can deliver it through a platform like Monitor to drastically change the economic position of your firm, not only now but into the future. Because the difference between a practice that's based on licensed templates with services bundled and a law practice that's traditional is a huge difference because you can sell to a non lawyer that licensing business.

So you got a lot of IP that's in your current templates. If you are a practice that has a deep and rich history of serving clients and document intensive practices, and you want to think about revolutionizing that service delivery for the next generations, I'm gen X gen. The millennials are already, you know, starting to take over and making buying decisions. And I can tell you because I have two of them that I raised, the gen Z kids, are not going to be thinking about traditional law firm services where you go in to a stuffy building with library books and you sit down and you meet with a lawyer in their office, and you know that's not how business is going to get done, even for lawyers, even in very traditional practices.

So I think that there's a number of areas you mentioned the associate, the worker bee, you know, the one that's got to manage all the projects. Well. Monitor is a project management platform. It allows you to visualize every one of your engagements, to color code them to make sure they're on track, to do full project management around each one all the way down to the task level.

And the ability to have reporting against all of the activity that you're responsible for is going to help you give better customer service, be more proactive, less reactive, and really deliver a solution and satisfaction. You know, lawyers as a group have very high customer dissatisfaction rates. You know, we don't as a group score extremely well on customer satisfaction in art because we're so far behind the times. And solutions like Monitor will allow traditional legal services to transition to a SaaS based model based on recurring revenue to capture what is now dormant intellectual property value within the firm and develop a practice based on licensing revenue that's easy to manage with no billing to worry about, where your customers pay every month, and as long as you're doing a good job on delivering the services, you could have an existing base of subscribers and that you can grow pretty dramatically on a monthly basis.

And the net economic impact of the practice that looks like that is considerably more value than valuable than a traditional practice without those components. What does that transition process look like and how involved are you in that? Is it your team training them or are their online tools. Use it's a combination of both.

We have an academy, a Mandra Academy, which is an online resource that's continuing to develop. But yes, we as I mentioned to you, the vision for the Mondra platform is lawyers working together. So we would look at this as co counseling with other lawyers that want to access the platform. It's not a it's not a here you go, you know, do it yourself type of thing.

And again, Mondra is more than just a platform, it's also a business process, a business model and it's a paradigm shift for lawyers. You know, traditional hourly billing and fixed fee billing giving way to long term recurrent revenue contracts using language that's similar to what you'd see in the SAS or subscription based model. And the biggest challenge is related to cash flow. So think about my story where I was charging roughly thirteen thousand upfront, and today my subscribers are paying anywhere from one ninety nine to six ninety nine a month, and so you got to sell a lot of those to catch up to four thirteen thousands every month.

But you get to a point where your existing revenue is surpassed, and then you're sort of in a really good spot. And then as that continues to grow, you really can see some transformative type numbers. But the transition is difficult at first, particularly if you're practicing in a traditional law firm partnership where partners are paid on net change in cash. For example, there's going to be a period of time where your cash flow will be negatively impacted because you're foregoing current hourly billing or current fixed fee billing in exchange for a long term recurring revenue contract.

Now, for the businesses of the right fit, that have the right offerings. You know, we're now adding thirty five new logos a month. I had never been able to do that before, and now approaching five hundred customers where it took me two decades to get to two hundred. So you could see that it gives you the ability to accelerate your growth.

It requires you to really get efficient and really understand where that value is coming from and what you do, and to really get good at delivering that to client sufficiently because all the risk is on you. But what we've seen is there's some time in the beginning and you lose a little, but over a three year period, you know in year three you're going to have a lot of those customers pay and not needing a lot of services, and you could deliver a great deal of value just by managing your contracts or your wills or whatever your paperwork is for that industry.

What Mondra does is it allows you to deliver it in ways that empower the digital transformation by delivering those agreements into the CRM tools, into the quoting tools, and into the e commerce platforms of the end user customer. The thing that I'm thinking about from a potential client side is three years. What does that period look like? Is there some type of a hybrid.

Do they have to transfer everything to this monthly recurring model or can they do a little bit of the old school a little bit of the new school to kind of bridge the gap between that three year process. You could, you could do a hybrid. What I have found is, if you do it right, you're so convinced that your subscription service is the best for the client that you'll want to move away from the old model. I find myself people ask me all the time, would you just look at my contracts and you know, let me know what you think of them.

And what I have to ask myself is am I doing the best job for the client? I know they're asking for that. I know I can take their money for that. But as over time, if you're doing it well, you'll you'll lean away from the traditional it's after you see the impact of the recurring revenue, once you start learning about the exit possibilities that are created by monetizing your IP and thinking of your legal service as a subscription service, not just hourly or fixed price, and over time, what you'll see as a transformative effect if you establish a product market fit for whatever your solution is and whatever the need is.

And what's beautiful about law being the second oldest profession known demand is product market fit for a lot of these services has long been established, right, It's not great for people who don't have an established niche already. So, as I mentioned, part of why we were successful is we had a base of hundreds of clients that when people called and said, hey, attorney Rob Scott wants to visit with you about this new solution we have for your industry, they almost all said, yes, I'll go to that call, and as long as you have something compelling to share with them during that call.

And that's what we help, you know, council with is it's not just it's not just about a technology platform. It's a called go to market strategy that goes along with migrating from a traditional legal service to as as enabled an AI powered service. And so that's why we don't that's why we think of it as a true partnership model where we will partner with each of the other firms that bring specific expertise and over time, the monitor platform will be a collection of various attorneys with different expertise, all contributing their content to the platform, where for example, over time, my current subscribers may want to subscribe to an other partner's service on the platform.

As we are running out of time here, i'd love to hear your opinion on where we're going, whether that's with your company, your technology, or other things you're seeing in the next five years. So I would say the biggest impact will be generative AI, and I also think that that you're going to see a lot of law firms looking to move to more of a cloud based offering. So think in terms of cloud based and AI powered are going to be the words that I think will fuel the subscription era for legal and what it means is rethinking the lawyer's role because the lawyer doesn't have to take a first stab at anything anymore.

From a drafting perspective, the AI tools are at a level or beyond what an associate could be expected to produce, and therefore associates are going to have to get very good at prompt engineering and leveraging AI solutions and knowing when to dig in and investigate and knowing when to rely on the output. But you know, think of associates roles as being more QA and prompt engineers for AI tools, and think of partners able to spend more time talking to clients. You know, if you're not balked down in the paperwork and the reviews, which is what AI really helps you with, you know, digesting tremendous amounts of information in a short period of time and then writing things very quickly.

Those are the two areas where traditionally lawyers are spending a lot of time. Well, now you're not doing as much of that because it's automated in some ways, and now you've got more time to ask those probing questions to clients, to reach out to a client and schedule a call. Maybe you've got a prepared set of PowerPoint slides to make sure that the client gets good value from the call. But the idea now is spending more time client interacting.

You know, how much of your day to day life is with clients, and you know on zooms with clients or in person with clients, and how much is with your team internally or with adversaries or others. And what technology should do if it's helping the industry is building a stronger personal relationship between the partners and the clients. And I think that that's what we're going to see. Lawyers are going to become more and more specialized, so the trend toward specialization will continue, and we're all going to be looking for ways to scale.

How do we bring on sixty new clients a month for a particular practice? Things you know are our growth goals with technology are going to require us to be come more of a sales led field and less of a services led field, and AI is going to give us the time to spend on client development, being with clients, going to conferences where clients go, organizing events for clients, participating in client charity events. Those things that are true relationship building activities will always be important and a SAS based approach is not going to make that different.

What it's going to do is give you more time to do those things. So, Rob, I can't thank you enough for joining me. If there's people listening to this that want to learn more, can you point them in a direction on how to reach you. One hundred percent.

We're on the web at m O n ju R dot com. You can find us there and all my contact information and a link to book a meeting or all right there on the site. You could also reach me at Rob Rob s is In, Sam at Mondra dot com, m O n jur dot com would love to hear your feedback and engage with you over email. We'll put all that information in the show notes to make it as easy as possible.

Thank you, Ron, appreciate your time. Thanks for listening to the Legal Mastermind podcast presented by market My market. If you can check out additional episodes and recaps at Legalmastermind podcast dot com.