Bill Bice: This is Bill Bice, and I’m here with Michael Kraft. It’s one of the pleasures of getting back in the legal market, is I get to reconnect with old friends in this market. Hey Michael.
Michael Kraft: How are you doing Bill? Good to see you again.
Bill Bice: It is great to see you. And just as we were talking about what we’re doing here, we were starting to lead from how you got into the legal market. So let’s hear that story. How did you end up here?
Michael Kraft: Well, what do you mean in the technology legal market?
Bill Bice: Yes.
Michael Kraft: Because I am a lawyer, I was practicing law for a number of years. And then I wound up in the financial printing business. A friend of mine from law school had started one and I thought it was pretty interesting. So I went off and did that for a while. And then had gone to another company that filed bankruptcy. So I lost my job and I needed to do something. So I called up Pete Kennedy, who was a neighbor in the town I live in. We talked about out a couple of things, I had a certain idea. She said, “No, no, no, no, no it’s networks, It’s this technology.” I didn’t know what he was talking about. I was a litigator, we basically… In those days, Shepherds, we used books for Shepherds. Anyway, it was 1988 and I will tell you, it was not the optimum time to start a technology company, but there we were. And we partnered. Pete had been with IBM and we partnered with IBM. So our cards said Kraft Kennedy with an IBM logo. And it taught me how powerful and appropriate logo can be.
Bill Bice: Absolutely.
Michael Kraft: Because they did not realize, they didn’t even care that we were two guys, and we were out talking to people. It was an interesting time because you may remember that there was a computer store almost on every block and everybody was… It was a new thing, people selling computers. But it was fascinating because we wound up with a potential client, he became a client later, but a potential client and they wanted to put a network in. But they wanted a reference and we could find a reference or a firm that had a network.
Bill Bice: No law firm had implemented a network yet.
Michael Kraft: Not even close. In those days, most law firms were either in the Wang camp or perhaps in an IBM camp. But System/36 mainframe, bigger stuff. And then of course there was the word processing things that started to evolve, Linear, the no problem Linear.
Bill Bice: Was this in Manhattan, Michael?
Michael Kraft: Yeah, this was in Manhattan.
Bill Bice: So you’re in the center of legal and nobody has installed a network yet.
Michael Kraft: Not only that, but we couldn’t even get a reference, IBM couldn’t find this one. And the firm that was starting was a group of people that was a spinoff from Cravath. And that’s how we got involved because IBM used them as outside counsel. Anyway, they finally said, okay, and off we went. We put in a Novell network and it was one of the earliest of Novell networks.
Bill Bice: This is the day when you had to spend the whole weekend computer surfing the hard drive-in order to get the thing set up.
Michael Kraft: Well, it is interesting that you used whatever terms you just did. I am not technical, all I know is that yeah, we do networks, and somebody told me that it was called Novell. Hold on, sorry. Somebody told me it was called Novell. I didn’t really understand a lot of the technology. So it was challenging for me because I was interested in working a certain way and technology was not accommodating the way I wanted to work. So it was a constant battle for me. And poor Pete Kennedy because he has the patience of the Saint. He was very patient, “No, Michael, it has to be this. No, Michael.” And I’m saying, “Yeah, but how come I have to push all the buttons?” It’s really pain, type A. I’m getting in an elevator and pushing that button, why aren’t the doors closed?
Bill Bice: So you were injecting that attorney’s perspective from day one of how do you actually use this technology?
Michael Kraft: That was really the contribution I had. As I was representative of our user community, I had no interest in technology per se. Hold on. I didn’t understand the power of it, I didn’t understand the constraints, and I was really interested in something happening quickly without me having to push too many buttons and without me having to relearn something new. However, now that you bring that up, I was very excited about WordPerfect, particularly with Reveal Codes. So remember I had a lunchbox kind of it almost looked like a sewing machine, I guess, portable sewing machine, portable computer. I would go on the train, I commuted back and forth to the office. And on the commute, I would go through this training manual for WordPerfect. I really got to know it and I really understood the Reveal Code stuff. It made me feel better, at least I could communicate via a computer. But that was only in terms of whatever I was typing, email or something like that. There still was a lack of deep understanding that fortunately the people around me had.
Bill Bice: But Reveal Codes is really what made it possible for WordPerfect to be so appropriate in legal. Because you could actually get under the hood and do what was necessary to build legal documents.
Michael Kraft: Yeah, that’s true. But I thought that Gates was a genius. Because what he did was he would come along and say, “Why do you need all this? You type letters, you don’t need all this stuff.” He delivered Excel as a package with word processing. And you may remember that there was a significant amount of time, as computers evolved, where corporations were using Word and law firms were using WordPerfect. And there was a whole conversion routine that either happened at the law firm or happened at the corporate client.
Bill Bice: It was just ridiculous.
Michael Kraft: It was crazy. And then eventually the law firms had to switch to Word and there were some early adopters that did. It was really something in those days because in a lot of ways it was also very simplistic. Nothing compared to what is going on today. We as an organization pride ourselves on being generalists, and you can’t do that anymore. The depth and breadth of what technology has, requires specialties, you can’t exist without them. I often say to people, you hear people talk about computer gurus, “That’s my computer guru,” they point to somebody. But I never hear them say, that’s my medical guru. And I use this analogy because people understand that you would go to a family doctor or an internist who would then turn you to a specialist. They don’t appreciate that need in technology.
Bill Bice: And yet our industry is full of those specialists now because it is very necessary.
Michael Kraft: Yeah, you have to. Even to the extent of understanding infrastructure and messaging versus desktop versus the Citrix world. And now we have to deal with security on top of everything else because it’s such a major issue throughout the industry. Early on, a number of folks would say, “I don’t know how I’m going to keep up because the advances are happening so quickly that I’m losing time on a year-by-year basis. Maybe I’m keeping half of what I should be.” And that happened. So now have specialists. And I think of us as being the Mayo Clinic of technology because we have some extraordinary specialists in unique areas that are then able to dig down and find either better ways of doing something or the challenges that the combination of products coming together poses to the law firm community. The law firm community if you know I think is unique. Because you’re dealing with hundreds of applications, whereas in a corporation maybe you’re dealing with 25.
Michael Kraft: Although the banks will say that, “No, we deal with a whole bunch of applications.” But they do it from a web-base, they do it by building the client. There’s an art form to building an appropriate client, putting the applications in a certain order so that you can get the best performance from each application that you’re dealing with. In some cases, with one law firm, they have 400 applications. I can’t even fathom that. Now, of course, that’s high-end, but go ahead.
Bill Bice: Well, it’s such a unique market because you have so many practice area-specific solutions that really create exactly the problem that you’re talking about. The history of where you started was… That was really taking me back because we started ProLaw in that same time period. We did it to leverage this new angled thing that was a network. So I very much remember living through that and those very early days of firms putting in networks for the first time. And that had a lot to do with our success because it was brand new technology and we were lucky enough to be at the forefront of it, and so were you.
Bill Bice: Now when we look at where we’re going, I think what you were just talking about with the proliferation of applications, it’s a really interesting and unique challenge to legal. So back in the ProLaw days, our solution was, let’s build one thing that pulls a bunch of pieces together. And the problem is, I don’t think that’s really realistic moving forward because we have so much innovation that it’s occurring in legal now and so many practice specific solutions. Now, the challenge is, how do you stitch those pieces together in a way that makes it reasonable to manage it and to use it?
Michael Kraft: I agree with you. However, the number of similar applications that get created, look at ProLaw, a matter management system. A whole proliferation of those kinds of things happened because a particular lawyer thought that he or she had a better idea of how to create the matter management product. I was always interested in why they didn’t look at what was already out in the field as opposed to trying to create the new thing. And you know the same thing happened in the litigation field with respect to… Well, I’m now going to have a discovery product, now I have this. One year, almost every other booth in legal tech was litigation support. So I decided what I was going to do is I was going to go and interview as many as I could because I wanted to understand what they perceived to be the differences.
Bill Bice: Didn’t find much, did you?
Michael Kraft: Well, I have what I thought was, well, you judge, I thought it was pretty humorous. I went up to firm and I said, “Okay, so there’s a whole bunch of people competing in your space. Why do I want to choose you?” “Well, we’re the oldest in the business.” “Okay. But why does that make you the go-to place? Tell me what it is that I get with you that I won’t get with the 10 or other people that are right on this floor.” “Well, we’ve got more experience.” I said, “You just told me that because you said you were the oldest.” He could not give me a differentiator. And what had happened was I wasn’t talking to the creator, I was talking to a salesperson. Unfortunately, because things were going so quickly, generally speaking, a lot of the salespeople were not as well trained. They didn’t understand it enough to really get their arms around what was going on and what was the differentiator for their particular offering.
Michael Kraft: And I always found that to be amusing because that was what I used the legal tech for actually to go learn what was new, what people were talking about, and what seemed to be of interest. Then as you well know, and you were part of the early group at ILTA back when it was called LawNet, we did the same thing there. There would be people coming in with new products to introduce them to the legal marketplace. And it was a wonderful way of going to a particular place and learning about all the offerings, meeting all the people that were involved. It was exciting times, it’s not like that anymore. Now you just go to the web and pull up whatever it is.
Bill Bice: And the pandemic, of course, has accelerated that trend. But I went to LegalTech New York for, I don’t know, 15, 16 years in a row, took a few years off. And then when I came back, it was exactly what you were talking about. I walked in and it was all e-discovery all the time. We’re seeing a change there that I think the reason that that happened in legal tech vendors is that prior to six years ago, we didn’t have the kind of outside money in this market that really prevented that kind of proliferation in any other market. Because what would happen is somebody would do well enough to become the leader and attract capital and start to roll up the other players. And there was just enough money to be made in e-discovery that that didn’t happen. And it’s only started to happen fairly recently.
Michael Kraft: Well, now the focus seems to be on the MSP world. Everybody is out trying to buy MSPs because I guess the idea of recurring revenue, et cetera, et cetera. I must get five, 10 calls a week on that particular thing. It’s all very interesting to me because it’s like everything else, where people see some level of revenue stream, they build a case around their competency, which is mostly financially based, it’s not running one of these kinds of companies. So my impression, and it is purely my impression, is that there’s five years and out kind of approach. And it’s just a matter of trying to multiply whatever investment that one is making. It’s not of interest to me.
Michael Kraft: I really like this idea of having built an organization and we’re really like a family. It’s quite amazing to watch people come in first jobs, get married, have children. And here we are, this community now, I’m very fortunate to be part of it, to be frank with you, and to have been able to be in this marketplace for this many years. It’s really remarkable for me. I used to sit and look at some of the other players that were there and you would see their client lists. I would go, “Oh my goodness, how did they do this?” And you have to just show up and be consistent and do the right thing, it happens. It’s not easy and it probably continues to become more complicated, but it’s very rewarding when you can really do it.
Bill Bice: There’s a real deep expertise that’s required in this market, which is why I think it’s so challenging for companies outside legal to come in and why those that have succeeded, it tends to take a long time. And most of them frankly give up and move on before that ever kicks in.
Michael Kraft: Because it’s a very challenging road. If you think about the legal marketplace, lawyers have never been the first to do anything. The whole idea of lawyering is built on precedent or stare decisions. It’s looking at historical happenings and making judgments based upon that. People have constantly said it would be really nice if lawyers could start looking out of the windshield instead of the rear-view mirror. Which I find amusing because I’m probably like that too. Look, I was a litigator so there’s a snake under every rock and you have to be very, very careful.
Michael Kraft: Also technology has not been something that most lawyers have embraced right out of the box. It takes a while for the law community to get comfortable. It’s not like a corporation where they just say, okay, here it is, this is what you’re using, that’s it. Lawyers have a voice, in essence, they’re running their own little business even within a firm because they have their set of clients, they have to service those clients, they need an infrastructure around them to be able to do it, and it has to be consistent, it has to be safe, and it has to be quick.
Michael Kraft: There was one little firm that we’ve been working with for almost the full 33 years, one of our first clients. One of the things that their executive director said to me early on, was they were small, “We’re really happy to have these computers because it allows us to outperform the big boys. We can do it faster, we can do this, we can do it.” And that firm has always been at the forefront of what we were suggesting they do. It’s clear that the level of service they’ve been able to deliver to their clients stacked up very nicely against the big boys that took more time, more layers, et cetera, et cetera. Anyway.
Bill Bice: Technology properly applied can be absolutely amazing in the firm.
Michael Kraft: Absolutely. Now, the big deal from my point of view is, I think it’s time for lawyers to start thinking about fixed fees. They don’t like it because they think they’re leaving something, but it’s the next step and its time. It’s not that difficult other than the emotional change that it’s going to take. There are a number of firms that have started doing that recently, some have done it historically. But it’s becoming more important for firms to start to look at this from a holistic point of view.
Bill Bice: And we have the analytics to drive the decision-making now. And honestly, we never get the focus on productivity that we need without going to AFAs. And it reminds me one of the very first projects I did in legal was at Sandia National Laboratories, which had and I’m sure today has a huge stable of outside counsel. And it was one of the early versions of doing exactly that, let’s analyze all the legal bills, understand what we’re paying for every case of each type, and whether the firm considered it a fixed fee or not, let’s negotiate that. So it’s been happening forever. It would really benefit firms to truly embrace it because then it gives you a whole different perspective on how you invest and manage the firm.
Michael Kraft: Well, instead of the client imposing whatever number the client imposes on the firm with no real understanding of what it takes to get that job done, I think it would be the firm to be proactive and present the client with what I call a wonderful carrot opportunity, and everybody wins. Ralph Baxter was talking at, you know Ralph Baxter, he was the chair of Orrick, he was talking at a clock meeting and he was saying, “The problem with going by the hour is you have a brief.” And he said, “Is it good enough to win? Well, yeah. But is it good enough?” I’m going by the hour, is it good enough? Well, no, let’s do some more work. You wouldn’t do that. What you would wind up doing is not to squeak by, but you would do it efficiently. What’s substantively required, I want to win, but here.
Bill Bice: You would do it to be successful. But you would define success both as winning from a case standpoint in doing it cost-effectively.
Michael Kraft: Absolutely. And that’s how the client would start to define it. I think you would wind up with some significantly richer relationships. I have a very close friend that uses a very well-known firm of the AMLO 100 and is pulling business, or had been, and is pulling business away from that firm because the firm continues to deliver billing approaches that outdistance what he believes the benefit of their offerings to be. It’s unfortunate, it truly is because the lawyers are very good and they could probably make a lot more money actually. I know they can make more money.
Bill Bice: Well, there are two trends here that I think come together. One is exactly what you’ve been talking about with fixed fees, the other is the current generation of associates who are accustomed to applying technology in everything they’re doing. They’re not using staff to get work products created, they want to use the tools directly because it’s more efficient. The end result of that, those two things are going to come together. This next generation of attorneys is really going to force this issue. And those associates are now becoming partners, are starting to have a more dramatic effect in the industry.
Michael Kraft: Well, if you’ve seen that, I haven’t yet, but if you hear about it, introduce me, I’d like to talk to them.
Bill Bice: Well, that’s what I see when you’re down in the details of working with a firm. There’s a pretty big difference between what it’s like to work with that associate who’s in their 30s and the partner who’s in their 50s or 60s.
Michael Kraft: Oh, absolutely. Absolutely. But they’re still billing by the hour.
Bill Bice: Well, they are. But they’re the efficiency of how that younger associate’s tackling the problem.
Michael Kraft: Yes, absolutely.
Bill Bice: We need that married with fixed fees in order to truly get to the right end result.
Michael Kraft: Well, ask yourself this question. I’m going to continue to bill by the hour and have this third party analyze every bill I put in, thereby slowing down the payment and crossing off things that they decide should not be billed. So it makes no sense to me, I don’t get it. But this is the world that is tolerated. Doesn’t make sense.
Bill Bice: You made the analogy to medical earlier, and that’s what’s happened to billing. The billing and insurance defense is becoming the same kind of overview. They do it on the medical side, now they’re applying it to their firms. It’s really the last place you want to end up. If you’ve ever experienced anything with billing on the medical side, you’d run the other direction as fast as you could.
Michael Kraft: That’s for sure. That is for sure. That’s a whole other bag of worms that you don’t want to get me started on that one.
Bill Bice: So there’s a really interesting thing that I thought you hit on earlier about which I really see is the opportunity for integration, that proliferation of apps, getting rid of the duplication. We certainly feel that terms of firms wanting to reduce the number of vendors that they’re working with, which I think comes from that problem. It’s difficult to manage many different applications and vendors and relationships and support issues. So there’s an opportunity to bring simplification to that, which I think is important. But it has an even more important point behind it, which is that you get much better adoption if your approach to technology is simpler. And it’s easier for your attorneys and staff to get in and get results more quickly because the pieces tie together and they make more sense.
Michael Kraft: You’re not going to get an argument on that from me. The hard part is to wrest whatever that particular piece of software is from the attorney that feels comfortable with it and will not look at the next thing. Look at Teams and Zoom, you’re using Zoom here. Teams is so rich in what it is offering and has the ability to actually even operate as a deal room. And yet, because I push a button and here I am on Zoom, it became a juggernaut in terms of usage. It’s a challenge to move firms to Teams. But once they do, if they understand the various offering or parts of the offering of Teams, it’s pretty extraordinary.
Michael Kraft: We have a couple of folks that have taken deep, deep dives, they really do understand it. And now I have certain concerns about Teams, but this is back to the push the elevator button. For instance, it used to be in Skype that if I typed somebody’s name in, I would hit a key and it would show me their phone numbers and I could just click one and dial it. You can’t do that in Teams. You have to go to contacts, type their name in, even if you’re on the phone thing, it’s one or two extra steps. Now, in the scheme of things, is that a big deal? Perhaps not. But that’s my craziness. So I keep writing to Microsoft.
Bill Bice: I can fully attest to the complaint behind every click and the benefit. Because every time you take a click away, we see better usage.
Michael Kraft: Absolutely. People just want to do things efficiently. And if you could create the product with the basic user in mind, it’s a home run.
Bill Bice: Well, I think that’s the new ideal in legal tech. The example I always use is you, you don’t download an app to your phone and then go to a training session to figure out how to use it.
Michael Kraft: Right.
Bill Bice: And the technology we deploy in law firms needs to be the same way, and training no longer becomes the gateway to how you get started, it becomes how you add depth to something that you’re already using. Which you’re much more likely to be interested in because you’re already getting value out of it.
Michael Kraft: The app world has been major education. Hold on, I’m sorry. It’s probably one of those robocalls. I’ve got too many phones that it is a problem. The simpler you can a product, the better it is. That was a complaint with Documentum. You remember Documentum the…
Bill Bice: Absolutely.
Michael Kraft: Brilliant, brilliant product because what it did was, for those who may not know it, it’s an early document management offering, but what it did was it time and date stamped the piece of work that you were doing. And that was very important in the drug business because you were dealing with patents and what was the first thing. So you’re always looking for proof. But their interface was such a challenge people didn’t want to use it. They had a wonderful opportunity selling it across corporate America, but people wouldn’t use it. We got called in to review document management for a major firm. And one of the products the firm wanted to look at was Documentum. I said to the person, “Is there anything you can do with the interface?” Because if you do that in those days, this is way back, you’ve got the strongest engine out there. You got really high-performance capability but people don’t want to do it. Oh yeah. Well, that’s easy. I said, “Okay, well, why don’t you just do it?” Never happened and the firm said no because of that.
Bill Bice: It’s a good reason. Your founding principle for what you brought to the table when you got into the technology side of legal, that’s still ever-present today. It’s the attorney’s perspective, is how many clicks it takes, how easy is it to use? How’s it tied together? We still need to be focusing on exactly those basics.
Michael Kraft: I think it’s difficult for the engineers to think that way. Because is the engineers generally think about the whiz Wang tool they’ve just created as opposed to, what does it take to use it as a non-technical user. Marrying those two camps is what’s really important I think in the technology business per se. If you think about that, what did Apple do? They made it so easy. And look what we’re walking around within our pocket. I used to have a lot of quarters because I was using payphones. People, there are probably youngsters today that don’t even know what that is.
Bill Bice: People complain about Apple because they’re just coming out with something that somebody else already did. The difference is that they have a holistic user experience around the thing they come out with. And so it gets more widely adopted more quickly. And so what they’re doing is really innovative. It may not be brand new core technology, but they take something and turn it into something for the rest of us.
Michael Kraft: Yeah, I agree. I agree.
Bill Bice: And frankly, it’s exactly what we need to be doing in legal technology. We’ve had way too long of products that are way too technical. And we need to get our users out of all of that depth and be able to operate at that app-level, at the top level. It’s great if you have more depth underneath that, that’s awesome. But you should be able to jump in and get things done right away.
Michael Kraft: You’re not going to get an argument on that one from me. I am a very simplistic user. It’s really also interesting to see how many new products are coming out on a constant basis, it’s cool. Even what Rezi and Doug Diller have put together, an app TVOS, a database of where do I go to find what’s happening in legal, what products there are, who’s out there. Brilliant, absolutely brilliant.
Bill Bice: Rezi just gave me a walk through it this morning. And it’s because of exactly that problem, there’s a lot out there to take in and understand.
Michael Kraft: What they did was they made it very easy to use you. You don’t need a science degree to use it. You click a button, boom. Then you ask, it’s like the web. When you ask Google for something, it goes out and finds it. That’s really what’s important from my point of view.
Bill Bice: So let’s finish Michael on what do you see as the lasting impact of the pandemic on legal tech and what happens next?
Michael Kraft: I think what we’ve done is seen a paradigm shift for working at home or working remotely, let’s not say home. But no longer a need to be in a particular place. It doesn’t mean that people won’t want to congregate for a variety of reasons, not the least of which is comradery, sharing, blah, blah, blah. But it’s been established that people can work, get their work done, and do it efficiently. I used to commute two and a half hours a day round trip, I don’t do that anymore. Innovation came out of this. Because of this, we learned how to image computers remotely. You don’t have to bring a computer to us anymore for imaging, and there was a reason for it. What we didn’t want to have to have to happen is somebody their computer breaks or something like that so they go get another one. By the time either they get it or their office gets it, sets it up, and it back and forth costs a lot of money and a lot of time.
Michael Kraft: If you could just say to somebody, go get a computer and boom, we image it in a couple of hours, everybody’s really happy. So I think what we’re going to start to see is even more innovation. I think people are going to come back together because there’s a camaraderie issue that people are going to want, but it’s not going to be the same. I don’t think we’re going to see the same need for real estate. My sense is that many meetings that happen anyway happen in conference rooms as opposed to partner offices. So I think there’s going to be a different size, a different decor. There’ll be more hotelling as people were predicting, but here it is. The pandemic just did it, it just forced everybody to realize there’s a different way of working. Because you would have heard people screaming if people were trying to do this before somebody to do it. But there was no alternative.
Bill Bice: This has really been the silver lining of the pandemic. It has created this change that you could really argue needed to happen anyway. The trend was there, it’s just now been accelerated tremendously.
Michael Kraft: I think that’s very, very true. And technology is getting faster, better, taking over more and more mundane things so as to allow a thinking group to have more time to strategize, et cetera, et cetera. I don’t know if that’s what you wanted, but that’s how I see it.
Bill Bice: No, I think that was awesome. I was on a webinar with Caroline Hill on the Orange Rag this morning. And we asked firms, what are they doing with their office space? And 70%, 80% of it was, we’re reconfiguring, reducing, changing. That change is happening, it’s occurring right now.
Michael Kraft: I have a very close friend that moved firms just before the pandemic says, “Wow I need to have an office because you got to take the clients.” I said, “I don’t think you do.” “No, no, you have to, you have to.” And the secretary said, “Yeah, but he hasn’t been to an office for a year and a half.” He is a very, very successful, very high-level practitioner in a very significant area. And it’s wonderful to see actually because you’re not tethered to someplace that you have to be. And it’s because of what can happen in a small little box.
Michael Kraft: I’m talking to you right now from a laptop. And it just so happens that I’m a Verizon Fios customer. So my Wi-Fi is quite strong. And while I’m using the laptop screen, I have two other screens. So I have three screens that I have stuff on, I don’t even have a docking station, I’m using the keyboard and the laptop itself. And it’s easy, there’s really nothing to it. It has to be nothing to it otherwise I couldn’t do it. But it’s just easy. You know that cereal thing if Mikey liked it? That’s me and computers.
Bill Bice: I’m sitting here in the mountains in New Mexico between Albuquerque and Santa Fe running an international company. And I can do that because of this technology, which is awesome.
Michael Kraft: It’s amazing, quite amazing. Anyway, thanks for inviting me. I appreciate having an opportunity to chat with you.
Bill Bice: It was a lot of fun, really enjoyable. Great to catch up and have this conversation. I appreciate it.
Michael Kraft: It is my pleasure. Thanks again.