The New Frontier of Legal Tech With Dan O’Day, Startup CEO and Co-Founder of ECFX

Bill Bice: Hi, this is Bill Bice. I’m here with Dan O’Day. Dan? 

Dan O’Day: Well, Bill, it’s good to see you.  

Bill Bice: So we first met when Thomson acquired Elite, but I don’t really know your history before that. So, how’d you get into legal tech? How did you end up being at Elite?  

Dan O’Day: Oh, Bill, that’s true. So yeah, I’ll give you a little bit of background. So I started in the legal industry at the age of 16. I could drive a car and therefore was qualified to be a court runner for my uncle’s law firm, and had various roles there, including IT manager and receptionist at lunchtime. So I did a lot of things at that firm before going off to college, then I was a paralegal at Paul Weiss in New York.  

Dan O’Day:  I decided I’d actually go out and get my law license and went to school at Pepperdine, and practiced complex civil litigation for a while, actually, almost exactly a year before realizing it was a little too adversarial for my nature and decided to go into programming. I did tech consulting for a while, and then I found the job opportunity at Elite at that time to write their conflict-of-interest systems. 

Dan O’Day : So I joined the team relatively early on, wrote the conflict system and then wrote a case management system and went on to have various roles after we were acquired by Thomson Reuters where we met. And yeah, it’s been a fun experience. The whole time has been enjoyable. 

Bill Bice: So it started as a family business, that’s an interesting way to get engaged. 

Dan O’Day: True. True. It is an interesting way, but at the end of the day, I thought I wanted to practice law. But actually, I like the combination of law and technology. 

Bill Bice: Well, it’s a good way to get there, right? It’s interesting, because I’ve always argued that I have a unique perspective, because I don’t have a JD and I have to actually listen to attorneys. But there’s a real perspective that you get from having actually practiced law and understanding what you’re creating technology around. 

Dan O’Day: Agreed. I think if you’re too mired in one area or the other, you can get skewed results. Having known you Bill and having seen you interact with clients, I know that you’re a good listener, which is a key element. And an understanding of what they’re asking versus what technology is capable of and trying to marry those two. And that’s always our challenge in people tech. People who don’t understand technology are both frustrated by it and then have sometimes really unreasonable expectations of what it is capable of doing without really understanding. 

Bill Bice: Yeah, and I didn’t get the full parallels there either because I started on the programming side, writing prologue when I was 18, so got into legal early also. So how long were you with Thomson after the acquisition?  

Dan O’Day: My total career at Elite with Thomson was 20 years, I guess the acquisition was ’05 for Elite, if I recall correctly. Don’t quote me on the year, someone can look that up in the fact check portion. But the-  

Bill Bice: I remember, I was on the team. It was ’03. 

Dan O’Day: Okay. All right, so there you go. So there you’ve already corrected that. So I was there until ’17 I think, 2017, something like that, ’16 maybe. And then went on to work at a company called American LegalNet, and then kept hearing about this problem people were having with court notices, and no one was solving it and figured I could create a company around that. 

Bill Bice: So you’re kind of in the middle of that with American LegalNet, but why did you go off and start your own company? 

Dan O’Day: I did it because I have been in legal tech my whole career, and it’s rare when you hear a problem over and over again, it hasn’t been solved by somebody. And by the fifth or sixth time I had heard the problem. I’m like, “Well, someone’s got to build a solution for that.” And the team at American LegalNet wasn’t interested in building that solution, so I figured, go out and start a company and build that solution. 

Bill Bice: And it’s a great example of proving people wrong, right, for why they haven’t chosen to tackle it. 

Dan O’Day: Right. It is a hard problem, and I cannot say it’s not a hard problem. Each quarter has its own format, and there are hundreds of different providers. And so I don’t want to trivialize the problem, but it is an addressable problem, right?  

Bill Bice: Give us the 60 seconds on what you’re doing now? What is the problem that ECFX solves?  

Dan O’Day: Sure. So today, people get court notices from different courts. They have pacer notices, they got state court notices, File & ServeXpress or maybe they have to go out and get information like from the ITC and other places about hearings and filings and stuff. And so there’s a common element here. One is we’ve got a case identifier, we’ve got a jurisdiction or court that it’s for. And we have something that is triggering us to do some work. And so today, it’s mostly email.  

Dan O’Day: So the email comes into somebody’s inbox. And usually an admin has to go in, log into that site and download the various documents, put them in a document management system. Could be I manage documents in Worldox, what have you, and distribute a notification to the team.: “Hey, this came in. Here it is attached or here you can find it in the document management system.” And that takes five to 10 minutes, it can take half an hour if there’s lot of exhibits. And we simply automate that and do that in seconds. 

Bill Bice: Because it just happens over and over and over again.  

Dan O’Day: Right. It’s repetitive work. No one enjoys the work. It is mundane, sometimes it’s someone’s full-time or several people’s full-time jobs to do this work. And we simply automate it, and I got to tell you, people are really, really happy. No one has lost a job yet, and everyone’s who’s used it, has been very happy. So it’s worked out very well for everyone. 

Bill Bice: And if you miss one, you’ve got a real problem too. 

Dan O’Day: Very true. So the other thing we do is because we can take everything globally that comes into the Exchange Server, as opposed to adding an email address to everything. We just take a look, “Hey, it comes into Exchange, we’re going to look for it, and we find it, we’re going to process it.”  

Bill Bice: Yeah, that’s awesome. And you’ve gotten a lot of great clients signed up that are excited about what you’re doing. So congrats to you. That’s the goal, right?  

Dan O’Day: That’s the goal for both of us. And I think you’ve done a fantastic job as well. And we’re a relatively young company, we just celebrated our third birthday as a company and our second anniversary as a product in the market. So two years on and to have the client base we do feels really good, feels nice. 

Bill Bice: Yeah. Are you still writing code? 

Dan O’Day: 

No, they don’t let me do that anymore. People have told me that that may not be my best skill set anymore. Even though we do have some Java code, and I did write Java back in 1999 or 2000 when it first came out, they’ve explained that things have changed a lot, and so I let people who really understand it do that now. 

Bill Bice: Nobody wants me to write code anymore either. Sometimes I wish that I could still do that, because there’s a certain joy in the actual creation. 

Dan O’Day: There is absolutely Bill. I think that’s something you and I have in common. And one of the reasons I was attracted to programming over the practice of law is you feel like you are building something, right? And then the product gets used by hundreds or in your case, thousands of firms. And you really realize you did something to automate something, make people’s lives easier. It feels good. 

Bill Bice: Yeah, it’s very rewarding. So what happens next? You got the core product out there, you’re getting good results, where are you going?  

Dan O’Day: Our clients are asking us to do some interesting things. I mentioned the International Trade Commission, so the ITC. They don’t send out notices, right? So now you have someone whose job it is to log in every day and see if we’ve done anything new for any of our cases with the ITC, and that’s a lot of work, right? And we’re able to automate things like that. There are just really interesting areas, because these things called administrative protective orders, which are super secure and have a bunch of requirements around them. And since we have a very secure solution, everything’s encrypted end to end, encrypted at rest, separate encryption keys for all the documents. We’ve been through a lot of security audits. People say, “Hey, maybe you guys can help us with this.” 

Bill Bice: That’s awesome. You’ve long been an area that I really love and you’re solving a very specific niche that’s tied to that which is really getting technology truly applied in a law firm. That’s how I see the practice management side of the industry. And we had this outside shock that’s occurred with the pandemic. What have you seen that’s changed because of that? Has that sped up what you’re doing? Has it caused other changes to happen? 

Dan O’Day: Excellent question, Bill. We launched our product in early February of 2020 and by March 15, people just stopped answering phone calls for a while. It was a little tough as a new business and not a big existing client base to sit there. But by the time July and August started to come around, and firms realized they were going to be fine and they got their Zoom calls working, they got people working remotely, they took care of those initial problems which were all the pressure was.  

Dan O’Day: They started opening up and saying, “You know what, we need to automate more of what we do because this has really taught us a lesson.” Which is a lot staff quit, there’s a lot of turnover, a lot of other issues. And by automating something, especially something that is so required, every firm involved in litigation has to deal with this. They start to see the benefits. And really I would say, while 2020 was a challenging year, 2021 was a fantastic year for us. 

Bill Bice: Yeah, so it’s good to hear. And it feels like you fit into this larger trend of attorneys that really want to put technology to work. And it really feels like the pandemic helped cause all attorneys to get closer to the technology they use just because you had to. 

Dan O’Day: Absolutely true I think while we all laughed at the I’m not a cat video, we understand now that attorneys have had to deal with technology in a way they never were forced to before. And now I think many embrace it in a way they didn’t earlier.  

Bill Bice: And a lot of firms’ IT departments are changing how they do things, because they really expect attorneys to keep doing that even with coming back into the office.  

Dan O’Day: Exactly. I think that you’re going to find the what’s expected out of IT and the level of IT support people need is going to change, right? The questions I think are going to be more advanced is my theory. I don’t work at a help desk anymore, but I imagine that people are going to be a little more able to hook up their own AV systems for example, in a conference room rather than every time they go and have to do a presentation, they have to have someone from the IT department come in and set it up for them. 

Bill Bice: Yeah, exactly. And I think this has been true for younger associates for a long time, that they’ve wanted direct access to the technology. They require that tools like what you do and what we do are in place and available. Do you do you think that finally gets us over some of the humps that we’ve long talked about in legal technology? 

Dan O’Day: I think it’s over some of the humps we’ve talked about. I think there are different humps, right? There are certain things that you and I have both seen, where they have to adapt a solution or they have to do this anyway, and you automate it and it makes it better. And then there are completely new technologies that people try to introduce into the law firm that they have different challenges. So I think it gets us over the hump of you saying I’ve got a solution for this and involves technology, people are going to be like, “Great.” 

Dan O’Day: But if I’m trying to solve something that’s not necessarily something they already identified as a problem, but it might be let’s say, it’s some sort of AI that’s supposed to do something fantastic. I think those challenges for those AI companies that are doing, whether it’s contract analysis or it’s some other type of interesting thing that’s supposed to replace the attorney time. I think they’re going to still continue to face the classic challenges of, “I can do a better job than that,” or that sort of stuff. Or when you build products like we build, which are more very practical things that people have to do that, that gosh, if you just make these three steps go away, I’d be really happy. I think they’re definitely on board for that. 

Bill Bice: Yeah. And you have this massive evolution from centralized word processing department to attorneys using the tools themselves to craft documents directly, that’s a pretty significant sea change. 

Dan O’Day: And has been. Yeah, I do remember that the the steno pools. I remember when I was an associate being told that it is more efficient to dictate than it is to type up your documents. “Please don’t type your documents, please be sure to dictate everything and send it off to the pool.” It was actually tough for me to learn to do that. And then of course, I only practiced for so long and then learned to undo it pretty quickly.  

Bill Bice: Right. And you can’t imagine saying that to an associate today. They’d just leave and go to a different firm that actually let them do the work. 

Dan O’Day: I don’t know that there are dictation, there might be software for dictation out there still. And there’s definitely a lot of text to speech out there, so maybe some people are using those tools. If you were to do it today, I think you would try to use those tools. But yeah, it is interesting how things have changed in the past few years. Well, 20 years to be fair. 

Bill Bice: Yeah, what I’m really thinking about is the attorneys direct access to the tools and the information, the day of needing to call up accounting to get information or call administration in order to find what you need in order to talk to a client or to be able to manipulate a document. We’re in a new era now where it’s a much more direct tactile experience for attorneys. 

Dan O’Day: I completely agree with that, Bill. We’re in the age of the dashboards and BI tools and other things that partners when they’re on the phone and they get a question, and it’s related to that client relationship, they want to have the answer at their fingertips. 

Bill Bice: Do you see anything coming down the pike in the next five to 10 years that you see really changing what’s happening in legal? 

Dan O’Day: Oh, well, there’s a lot of different things. Legal tech is undergoing its, I guess, a renaissance in the sense of there is a huge amount of legal tech companies. I heard there are over 3,000 companies now that qualify in the legal tech space. You remember when there was 20, maybe, right? Is crazy. There’s a lot of innovation going out there, a lot of stuff in various spaces that are interesting. I do think that I am hopeful and cautiously optimistic that someone will make some breakthroughs around some of these fundamental access to justice issues that we still suffer. But I don’t know that I would bet on that. I can certainly say we’re going to see, obviously contract automation, we’re going to see a lot of things that are done manually. New business intake be automated more, right? And we’re starting to see that on smaller firms, I think you’ll see that in the larger firms. So various classic client lifecycle management stuff being automated. Those are some pretty obvious predictions. I’d be interested in Bill your take, you’ve always got some insight into the future. And I’ve always been been interested in your thoughts on where the industry is going. 

Bill Bice: Well, I think it’s really interesting that in large law it’s been very challenging to get some of the same tools that the small midsize firms have long adopted to have any real penetration. I’ve spent a ton of time in workflow, it’s what I’m doing now. And you see a lot of adoption around core processes that just always have to happen. It’s similar to exactly the problem that you solve that’s very real and time consuming. But it doesn’t really get to the core of the lawyering part, of the actual practice of law. And that’s the frontier that I think is really interesting is when you get technology applied to that, and we’ve always had this core issue of, well, anything that saves time isn’t necessarily great for the business model. 

Dan O’Day: Yes.  

Bill Bice: We’ve had some changes in pressure there that I think change that equations sometimes.  

Dan O’Day: Bill, you have an excellent insight. And you’re right, I do think there is some opportunity there, but it’s going to really depend on the firm. I have found that trying to fight the billable hour with technology solutions and offering them say, “Oh, you just bill a fixed fee for this.” It has been not a great product proposition. I personally don’t bet on products that have modeled themselves off of reducing billable hours. I do think that checking things, risk management, elements, making sure that the attorney hasn’t made a mistake. Those are things that attorneys are always worried about. And I think you’ll see more and more of those tools be successful. 

Dan O’Day: The true real efficiency tools will only be successful in a sense of let’s say that you’re a large firm, and you do a lot of employment law. I’ve seen some of them automate some aspects of that employment where they can move to the fixed fee model for that work. So if this work can be done on fixed fee basis, automation is perfect for it. If it’s something that we would never consider doing fixed fee on, you’re better off with risk tools and checking tools and things to make sure that that hourly work is done really well and has no mistakes in it. 

Bill Bice: Yeah, it’s interesting. Do you think that… So it’s been such a movement to outsourcing over the last 20 years and a lot of business that was law firms that now isn’t, that associates were charging out at $400 an hour 10, 15 years ago hour after hour, and that business doesn’t really exist anymore. So has there been any learning that’s occurred from that shift that says, “We don’t want to lose any more of that business?” 

Dan O’Day: Well, I think if you look at the look at the Am Law 200 or certainly the Am Law 100, they have all made conscious decisions to stick to the more profitable work and they go and they just find and try to grab more of that higher profit margin work. And that is an interesting thing. The reality is that law firms at all sizes have margins that are often in the 30 or 48th percentile in terms of the revenue, right? So it’s a huge amount of margin. 

Dan O’Day: And the businesses that are eating their lunches are used to smaller, more manageable 10, 20% margins. And lower paying employees, lower skilled employees, all these other elements which the large firms are usually not in a position to try to replicate. And when they do look at the model and they replicate it and they say, “Okay, we’re going to have this business here at a 10 or 20% margin with the majority.” And the rest of the business is at a 40 or 50% margin, “And that means this to you Mr. Partner.” They often go, “Okay, that’s not so interesting anymore.” 

Bill Bice: I think that’s a great insight. And you can’t argue with the results from… Last year is the most profitable year for law firms, large law and record law in general. And so the result of the pandemic was to reduce expenses, increase work and therefore drive just an incredible explosion in profits. 

Dan O’Day: Yeah, absolutely. And you see an explosion then the compensation to lower end of the in terms of the associates, in terms of the staff, all of whom have become more expensive and harder to find which makes tools that automate some of the more mundane stuff very attractive, right? Because they want to focus on these high valuable billable work. There’s a ton of M&A work out there, litigations making a comeback. They’re all very busy. So here you are really, really busy doing something really, really profitable. And if someone tries to come in and tell you, “Well, here’s something that will make you less busy and less profitable.” That’s a tough sell.  

Bill Bice: Yeah, and I agree completely with that. It’s never been attractive. And it’s not going to be, but I think you just hit on the point I wanted to get to which is that more mundane work. But that that occurs in the actual practice of law also, and if you can take that out of the picture so that the time is focused on the strategic high value, high profit work, that’s… 

Dan O’Day: Bill, look at look at Westlaw Legal Researcher or whatever, that was automation of a mundane thing. Going through books in trying to find case law was about one of the most mundane things I had to learn. Westlaw was relatively new, in fact, I remember Lexis was around a couple years before Westlaw, and I was familiar with both products and bringing that in. Things that took hours or even days, you could do in minutes. It was hugely successful, right? There was no arguing with it, and fundamentally changed. So that kind of work, if you can figure out how to automate it and do exactly that similar type of savings for those new associates and people who have to do super mundane tasks, I agree, those products would do well.  

Bill Bice: And that’s why we’re so successful with West km, right? Because we just extended that model to the firm’s own repository. 

 Dan O’Day: Yeah, exactly. And km initiatives in general. The results have been mixed, depending on how they were implemented, but the tools themselves it was clear they could provide that. 

Bill Bice: And no better research than what your firm’s already done. But finding it, that’s a different problem entirely. 

Dan O’Day: That is a great example. Yeah, exactly. And solving this kind of like, oh, this associate is looking at this and being like, “Oh my god, I can’t believe I have to spend all this time doing something repetitive and mundane like this,” and being able to automate that makes their life more enjoyable, makes them stay in the practice of law, because retention is also a huge issue for these firms. And if they could say, “Oh, we’re going to get your retention rate up from 30% to 40%, to 50% to 60%,” a lot of firms will be very happy with that.  

Bill Bice: Yeah. And I’m seeing a lot more in terms of the demands that associates are putting on the technology that’s available to them. It’s actually part of the evaluation process of what firm you’re going to go to. And so we have this new list that suddenly comes up, like what technology is available to me, how do you support hybrid operations, can I work from home some of the time? It’s conversations we weren’t having five years ago, ten years ago. 

Dan O’Day: Good example, Bill. You’re right. The associates coming in and are almost demanding that the firm that they’re at have a certain level of technology.  

Bill Bice: Yeah. So Dan, this has been a really fun conversation. Appreciate you joining me. 

 Dan O’Day: Bill, I really appreciate you hosting this. I’ve listened to other episodes, it’s a fantastic podcast. Good value for the legal tech community, so keep up the great work and look forward to talking again soon. 

Bill Bice: Awesome. Thanks, Dan.