14. Inside the Law Firm of the Future: A Conversation with Scale Founder Adam Forest
The the practice of law is gonna change dramatically in the next five years, and I'm just excited to be sort of in the thick of that.
Speaker 2:The Scale LLP Yall Street Law podcast is intended to be your go to podcast for legal and business developments in the state of Texas. This episode of Y'all Street Law podcast is brought to you by Scale LLP, the agile law firm built for modern clients and entrepreneurial attorneys. Learn more at scalefirm.com.
Speaker 3:Hello. Welcome to another episode of the Yall Street Law podcast. I'm Brian Elliott. My cohost, Chuck Krause, is here, and, we've got a very special episode in store.
Speaker 4:We're at the, we're at the annual retreat of the, of the firm, Scale, and we've got a special guest here in Adam Forrest, the founder of Scale, to to talk a bit about about the vision behind Scale, the market, and where we see things going.
Speaker 3:Let's talk about, Texas first, grounded with in where we are. We're although we're sitting physically in Denver, Colorado today, there's a lot that's happening in Texas where where we are. I'm in in Austin and Chuck, you're up by by Fort Worth, and, there the legal market in Texas is really just booming.
Speaker 4:It is. There's all sorts of, all sorts of firms, you know, rushing to open offices, in the state, I think, driven by a bunch of the company locations, driven by all the activity there. You've got large financial institutions, you know, moving thousands of people. I read a read an article that JPMorgan actually has more people working in Texas than in New York now. Wow.
Speaker 4:It's a staggering statistic. And you're seeing a lot of a lot of secondary businesses come as a result of that. There's a lot of capital flowing in. And just as a as a result of that, service providers, including the law firms, are all clamoring in as well.
Speaker 3:Yeah. We certainly see that with, yeah, the law firm expansions. It's, if if you don't already have an office in in Texas, they're moving aggressively. Right? Taking up real estate, you know, leasing out, you know, major floors of class a office office buildings and and really, like, aggressively recruiting not just individual lawyers but entire teams into Texas.
Speaker 3:So that's a it's a, you know, clearly an aggressive expansion market for a lot of the MLM 100, and, and we're seeing more and more activity all the time.
Speaker 4:I think one of the things we wanna speak about is is the profile of the firm of the future. You know, we're gonna talk about AI. I think we talk about AI in every every podcast and just how how, Adam, you think about how we're gonna be able to leverage those technology tools. What practice is gonna look like in the future? There's also massive data centers that we built in Texas.
Speaker 4:They're able to power a lot of nuclear in in Texas already. There's, lots of natural gas, which is an efficient way to power data centers as well. So
Speaker 3:Let's, let's send it over to Adam. Let's introduce Adam. I would like to introduce yourself, founder of Scale LLP, and, welcome to the podcast.
Speaker 1:Thanks for having me. Yeah. I mean, I so I'm the founder of the law firm Scale LLP. Started the firm about eight years ago. Before that, I was a tech lawyer in San Francisco and before that, was a regular big law lawyer.
Speaker 1:I practiced there in commercial litigation and and the pellet work. The idea behind scale really is to build the first top tier remote law firm. And we're, I'd say, a fair ways into that project. We have 80 lawyers today in about 20 states. We are a full service firm.
Speaker 1:Most of our lawyers come from big law or, interesting, you know, public companies, tech companies that you've heard of. So we compete with sort of ordinary law firms every day for, you know, for work from sort of blue chip clients, but we deliver it in a slightly different way. And the the principal difference is that we don't have office space. We don't have dedicated office space in any of our markets. And so we have to leverage technology, and it also allows us to think about just how you build how you build a firm sort of differently and and what that gets you in the edge.
Speaker 1:Right? There's obvious things and points, you know, there about cost structures, etcetera, we could talk about. But, you know, committing to a remote first platform was a key sort of tenet of the business, and it's unlocked a whole bunch of different things that that we could talk about. But I like you, I've seen a lot of of what's happening in Texas and sort of it's interesting to say the least how much is being invested in brick and mortar down there, not just in law firms but in other businesses. So I think it's an interesting topic.
Speaker 3:Yeah. For sure. I mean, the the the idea of, you know, getting a foothold in the Texas market by leasing space is sort of you know, it it's incongruent with what we're building at scale. Right? And it it's a little bit incongruent with the direction that the that the overall, you know, tech development is taking where you don't need to be have all the people in the same place anymore.
Speaker 3:And that's really what we've built the the firm on is the idea of finding the best lawyers anywhere and then, practicing, you know, across the country. So maybe, Adam, you can speak to that a little bit. Like, what's what's driving the the the need for office space in in key markets, and why do you what what do you think is driving, you know, firms, you know, expansion by getting you know, by acquiring leases first and then Yeah. Adding partners?
Speaker 1:That's a good question. I don't think it's being driven by the sort of demand for workers. That's for from workers. That's for sure. I don't think lawyers and other professionals are clamoring for office space.
Speaker 1:Even before the pandemic, that was true. I mean, one of the reasons I started Scale was, I read a study before the pandemic about the way that knowledge workers like lawyers want to work and the way they actually work. And even then, pre pandemic, most knowledge workers wanted to work remotely at least some of the time, a couple days a week, but less than 10% of them actually did. So even before the pandemic, there was this huge gap between the way that people sort of, you know, want to to be in a physical space for work and their their everyday reality. And then, of course, the pandemic hit and and accelerated sort of an existing trend of sort of more Zoom calls, you know, more remote interactions professionally with your colleagues, with your clients.
Speaker 1:But it's interesting to see that some of that is now sort of ebbing backwards. I saw a study from Cushman and Wakefield this year, the commercial real estate brokerage, that said that in 2025, law firms in The United States leased more office space than they had ever done in history, which is a pretty staggering statistic when you think about that. You know, higher than pre pandemic levels, higher than any levels ever. And you have to wonder why. There's 1,300,000 lawyers in The United States.
Speaker 1:That number isn't growing. It's not that there's, like, a demand for an extra million lawyers. It's that law firms largely are doubling down on this strategy of of brick and mortar. I think in the case of Texas, you know, the idea is that this is a fresh market. There's a ton of movement there.
Speaker 1:They wanna be, you know, part of that party. And I think that there's there's logic to that for sure. You get things from having real estate in a particular place. You know, you get the camaraderie of being around, you know, your colleagues. Proximity to clients makes it easier to have a lunch meeting or, you know, to establish those relationships.
Speaker 1:But it also comes with a cost. Right? It comes with the cost of the lease, and it has implications for your culture and sort of how you build out your your firm. But it's, you know, to answer your question more directly, Brian, I don't think that what's driving it is that lawyers in Texas wanna work in an office five days a week because if you look at the data, you know, it's become even more true since the pandemic that people want to work remotely some of the time. But I think the idea is that you sort of need to have an office and a presence, you know, a physical presence in a new market to be relevant in that market.
Speaker 1:And that, you know, I'm not sure I agree with that thesis, but certainly a lot of people do.
Speaker 4:Let's pivot it back to, you know, your vision for one of the key tenets of scale being we're gonna be fully distributed. How do you how do you think about that in terms of a competitive advantage? Not just a difference like, hey, we're different, that's unique, but how do you view it as an advantage?
Speaker 1:Well law firms are, you know, a recruiting and retention business, right? That's what we do out at the business side of law firms. It's about talent. How do you get the best people here who do the best client work? And how do you keep them here?
Speaker 1:And when you commit to a remote first structure, it unlocks a whole bunch of things. You know, for one thing, we're able to deliver like double the value to our attorneys economically that they would get from a salary at a traditional firm. We can pay them twice as much because our cost structure is so much lower. We can pass on some of those savings to our clients. That makes us very competitive both in attracting talent and also in attracting work for that talent.
Speaker 1:So, you know, that's one piece of it. The other piece is that, you know, when you commit to a physical space, you have a very significant limitation, which is a commute in terms of who you can who you can recruit. Right? You can if you wanna open an office in Dallas and you're trying to fill it with great lawyers, the universal lawyers who can meet that need are the universal lawyers who are willing to commute to Dallas, and that's actually a very significant limiting factor. If you're a remote business or a remote firm, you can recruit the best people anywhere, and that's a hugely freeing concept.
Speaker 1:And so we've been, you know, on this mission to build the best remote firm in The United States, to build, you know, a remote firm that competes with the Amlaw one hundred. We've been, you know, we've been able to leverage that advantage to put together a really interesting team. And we've said no actually to a lot of of people. We've got over 10,000 lawyers apply to the firm since the pandemic, and we're still, you know, a little less than a 100 lawyers today. So we've we've certainly seen that, you know, this model affords a sort of a different approach to to building a law firm that I think is a bit apples and oranges when you think about, you know, the legal market generally.
Speaker 1:It's hard to distinguish big firm a from big firm b often besides the name on the door. We actually are trying to do something different here that unlocks very significant economics and a different kind of culture.
Speaker 4:And it resonates with with me and my practice. I I say Fort Worth, I'm I'm actually outside by about by about thirty minutes. There's there's lots of businesses that are located similarly. I think previously, the option was if you needed sophisticated legal advice, you were you were driving in or you were trying to contact, you know, a lawyer in Dallas. I can think of at least four conversations in the last few months where people are shocked, surprised.
Speaker 4:I had no idea that lawyers who do that that type that type of work were actually in my neighbor. Finding finding them to be really successful. So it's advertising. We are a national offer, but I'm right here in the neighborhood. So
Speaker 2:This podcast is brought to you by Scale LLP, a distributed national law firm that's been called the wave of the future by Reuters. Scale is a revolutionary distributed law firm that offers a fresh alternative to traditional practices. By leveraging cutting edge technology and a flexible structure, Scale empowers attorneys with a more satisfying and lucrative career and delivers efficient, connected legal solutions for clients. To keep up with how Scale LLP supports clients with its tech driven approach, check out the website linked in our podcast bio.
Speaker 3:Let let me offer this observation. Right? So funny thing. Right? Some of my clients find out that I'm in Austin.
Speaker 3:That's not what I lead with. Right? I I don't I don't advertise myself as an Austin based lawyer, but they find out that I'm in Austin, and they love it because they're they're local and they want a local lawyer. But then I never meet them. Right?
Speaker 4:You're right.
Speaker 3:But then it's all remote anyway, and we're doing everything over Zoom and and and that so it's a, it's it's a funny dynamic, but, you know, our our structure allows us to, you know, practice anywhere and we take full advantage of that.
Speaker 1:Yeah. I would say that my clients who are primarily startups never cared where I was. You know, they did not wanna see me in their office. They definitely didn't wanna come to my office. And I think, you know, I think the the more sort of technologically savvy your client base is, the more you see a willingness to work remotely.
Speaker 1:I mean, Slack, which changed the way people work, famously came out of it was just a side hustle of, you know, a couple of engineers who wanted a better way to work with each other remotely even though they were in the same building. Right. That's what Slack was. It was just this chat engine where you had engineers working in rows who didn't wanna keep sort of shouting over each other. They needed a way to organize their communications and their work and to do that sort of in a, you know, on a a cloud even though they could have walked, you know, five desks down and had the same conversations.
Speaker 1:And so, you know, the sort of cutting edge companies who are, you know, are are sort of leading the way on some of the stuff, you don't see them leaning into to brick and mortar by and large. You know? Lots of great startups have been built on entirely distributed platforms. Zapier, Shopify, these are companies that you've heard of that don't have office space. One of my observations early on being a startup lawyer was just watching these companies build this stuff and think to myself, like, wait a minute.
Speaker 1:Like, if they can build an amazing business and culture on a completely distributed platform, why can't we do that? The, you know, the practice of law is very complicated. Business of law is pretty simple. We have one product and it's time. In order to sell that, you need a computer and a phone and a desk somewhere.
Speaker 1:It doesn't really matter where you are. So it's I, you know, I I don't think that there are no benefits to being in person. We're sitting here at our retreat, you know, our annual firm wide retreat because there are huge benefits to being in person. Yeah. I'm just not sure that those benefits are enough to justify class a office space at the levels that firms are committing to today, which I I bet my house are by and large empty.
Speaker 1:Most big firm lawyers are not in the office five days a week. And so they're, you know, they have they've spent all this money on presence. They're actually not utilizing that, and you gotta wonder when that waste catches up to them.
Speaker 4:Let's talk about the technology a little bit. I know I know one of us at the table would would take and debate the the other side of of what you just said. We're not selling an hour. We're selling we're selling an understanding of the law with someone in compliance. We're selling a solution regardless of how long it takes.
Speaker 4:So let let's take that nugget and and talk about, AI. Let's talk about technology and sort of how how you're thinking about that with with scale and how you're thinking about it impacting traditional firms.
Speaker 1:Yeah. And I I I know exactly who you're talking about, the person who would who would disagree with that statement. So let me revise. I mean, it's it's true. We're not just selling an hour.
Speaker 1:We're we're selling a service, but that service can be sold really from anywhere. And, you know, the way that we deliver those services is being massively disrupted now. It's interesting because, you know, there are lawyers who really get that and then there are lawyers who either don't wanna get that or are afraid by that. I think a lot of people and a lot of sort of white collar jobs are not used to having their jobs threatened. Right?
Speaker 1:Like, that's that sort of happens to blue collar workers when, you know, the washing machine makes the washer women irrelevant. Right? Like, well, it's it's coming for us too. I think there's going to be, you know, writ large, I think there's absolutely gonna be contraction in the legal services market that's gonna be replaced by automation. But within that overall contraction, there will be individual winners, and I think those winners are the firms and the attorneys who understand the technology, who understand the value that it can deliver to clients, and who, importantly, figure out how to deploy that technology for clients and to be the mechanics that sort of assist the deployment of of, you know, AI through legal services.
Speaker 1:And there will be firms just like there are lawyers who will be late to that party, and there will be firms who are cutting edge. And I think you guys know where I want us to be on this. And so we spend a lot of time thinking about it. In fact, we're developing some of our own AI tools in partnership with some very early stage tech companies that that wanna work with us. So I'm I'm a big proponent as well.
Speaker 3:So let let me let me, you know, frame it this way. Right? What what I see is, you know, AI is is, you know, lifting the curtain a little bit on the idea of lawyers selling hours as the primary economic driver of a law firm. Right? And it's it's saying that if we can do something more efficiently and it what used to take us four hours now takes us, you know, forty minutes.
Speaker 3:Right? What does that what does that how does that change how we interact with our clients and what the billing statement looks like at the end of the month? Right? And where you see you you used the term earlier, Adam, ordinary law firm. Right?
Speaker 3:What what you see in an ordinary law firm is that they're set up really on a model that that survives based on leveraging human hours and selling those hours. Right? And with the more the more technology advances, we're we're seeing that, like, it the the out what we should be selling is not the hour that it takes us to produce the product, but the outcome that we produce. Right? So the the shift toward value based billing or outcome based billing, I think, is is one of the, one of the key, you know, results of what we're seeing in the technology.
Speaker 3:So, yeah, the tools make lawyers more efficient or may even make us faster, but that's not the real revolution. The real revolution is the is gonna be the this this shift to outcome based billing.
Speaker 1:Oh, yeah. I I agree with that a 100%. And I would, I guess, go even a step further to that, you know, So we're shifting to outcome. We're going to have to shift to outcome based billing because it would be hard to justify saying, oh, you reviewed your commercial agreement eight hours. You know?
Speaker 1:Like, that's just not gonna be happening, you know, a year from now. It shouldn't be. But I think there's there's yet another step beyond that, which is what happens when the clients can access this themselves sufficiently well where they don't actually need us. And I think that's I think that's coming sooner than people think. But let me say, I I don't think that that's gonna happen across all practice areas, you know, in the next twelve months.
Speaker 1:But I do think I like this analogy of lawyers going becoming blue collar workers in a way, like mechanics whose jobs are to train intelligently train and implement AI systems that clients then can access themselves, and then they're paying the lawyers a fee to do that because that's they're delivering a real value. Let's say you have a commercial agreement that you need reviewed. Maybe your business that needs to do that on repeat, today you send that to your lawyer who understands your business and they bill you two, three, four, five hours to negotiate that agreement with your counterparty. And the the actual practice of that is reviewing it, thinking about, you know, for the lawyer, thinking about the client's particular playbook, what they're comfortable with, what their risk tolerance is, and then conforming the agreement to that playbook by redlining it. We don't like this provision, we're gonna add in some, you know, different language here.
Speaker 1:And then that goes back and forth, of course, between the counterparties, and eventually, there's a meeting of the minds. That's all very automatable. And in fact, we've developed a tool where we can codify a playbook in an AI engine that can then take in a contract and produce a red line, and that playbook can be customizable. So you can imagine a world where you have different clients who have different types of commercial contracts and have different types of risk tolerances. And my job becomes instead of redlining each one of these myself and, you know, reading the whole contract and thinking about their risk tolerance, I've actually codified that with different playbooks for each client for the right contract, and then you're just feeding these things into the system and coming out quick review back over to the client.
Speaker 1:It's gonna have a lot faster and allow you to do the work of 10 attorneys, you know, in a shorter period of time.
Speaker 4:You're watching watching the output Yeah. Making sure the output is correct and making tweaks along the way.
Speaker 1:Right.
Speaker 4:Probably totally totally different situation in litigation.
Speaker 1:Absolutely. We're, you know, we're gonna need to stand up in court for a while and argue our client's position and appeal to, you know, the equities or the fairness of, you know, particular motion on calendar that day. I I agree. That stuff is not gonna go away for a long time, but there are areas of the law that are are susceptible to automation where we actually haven't really seen the disruption you know, the tools at their most disruptive yet. I mean, they're they haven't, I think, reached an inflection point yet where they've threatened the practice, but, you know, I would I would stand here today and say, you know, in the next twelve months, there will be a commercial tool like I've described that's gonna make it harder for people to justify, harder for lawyers to justify doing that work manually when there are systems that everybody knows can do it a lot faster and just as well.
Speaker 3:Well, what what I'd I'd like to do there is just focus for a minute, because you touched on this, Adam, on on the shift of of who does the work. Right? So one of the things that we see in in development of these new technologies is that the lawyers aren't or may not forever be the gatekeepers of legal information and knowledge and implementation. Right? And and we could we can we see a shift toward and we do see this in in other technologies for sure, right, where, you know, the we we it it the the person who does the work changes.
Speaker 3:Right? And we can see that the in the future, the client may be armed with this automated tool that can run a playbook against their own contracts and do 80% of what they would normally outsource to a law firm themselves, and then maybe only outsource that 20% that requires this, you know you know, bespoke, you know, higher level judgment call that doesn't get fully automated.
Speaker 1:I think that's right. I think that's happening. And if you'll let me, you know, nerd out about this for a second, I think there's this really interesting potential shift that we'll see in the next maybe not twelve months, but maybe the next twenty four, thirty six months where law firms for the first time realize that they're sitting on a ton of intellectual property. Yep. Law firms are not, by and large, you know, IP companies.
Speaker 1:We don't have, you know, a a self driving car, you know, algorithm that we've developed with hundreds of of engineers over the last decade that, you know, is worth billions of dollars. We have expertise, and we, you know, we deploy that expertise in service of a particular client goal. But, actually, if you think about, you know, sizable firms, they have, you know, decades, sometimes many decades of that knowledge instantiated in document systems that have, you know, all the motions and email systems that have all the emails, right, in in all the memos, all the research. It actually lives at the law firm, and nobody really has ever thought about that, I think, as an asset before. But in today's world where AI can use that data to improve the quality of the output, it's actually a huge asset.
Speaker 1:So one of the things that I've been thinking about is how do we deploy our firm's data to allow clients to get, say, better answers? Like, everybody knows. You can go to chat GPT and get some legal advice,
Speaker 4:but there are idea where
Speaker 1:it's coming from. You don't know where it's coming from. There's a bunch of hallucinations. It may not be, you know, it may not be high quality. If you could augment that with the knowledge, decades of knowledge of, you know, a of a law firm who has worked on basically any issue over the sun and and has thoughtful responses that can train an AI model, all of a sudden, have a a tool that is is gonna produce a way better outcome in a way.
Speaker 1:It's like not all lawyers are equal today, and not all sort of agentic lawyers are going to be equal tomorrow because they're gonna be trained on different data that's proprietary to those law firms. So I think there's this interesting shift coming to sort of, like, yeah, who's doing the who's doing the work? It's gonna be increasingly automated and less lawyers, but then also, like, those automated, you know, the systems, what have they been trained on? And I think that's a huge way that law firms can position themselves, you know, to extract value. I thought about not talking about this because there are firms who've been around for a lot longer than we have.
Speaker 1:Right? They'll have a competitive advantage, you know, against us for this. Actually, turns out you don't need, you know, 10,000,000 files to train a good algorithm. So I think there's this this interesting question of if you have a critical mass of data, how can you deploy that in a way as an intellectual property asset to produce a better, you know, service for your clients even if that service is automated? Does that make sense?
Speaker 3:Yes. It's fascinating. It's a, you know, unlocking the the intellectual, basis
Speaker 1:of
Speaker 3:what we do every day. Yeah. Right? And deploying it in in tool based formats that not only lawyers can use, but clients can access directly themselves.
Speaker 1:Right. And that's a way you could monetize it. Yep. Right? Like, if you and I aren't sitting around redlining contracts, but the last three decades of our work has trained our model to be really good at redlining contracts.
Speaker 1:What clients would be willing to pay for that? You know? And and there's, I think, huge opportunities for firms like ours to be the individual winners in an overall contraction because we figure out how to deploy those tools intelligently early.
Speaker 4:What are the what are the two or three things that I'm gonna get most excited about when we look the future? Practice, technology, our platform.
Speaker 1:Oh, man. That's a hard question. You know, I think it's just on a general level, I think it's a really interesting time to be alive. I think it's a really interesting time to be a lawyer. I mean, law firms have not changed that much in the last hundred years.
Speaker 1:They've grown a lot. They used to be smaller. Now they're huge. But, you know, lawyers by and large do the same job they've been doing, know, and law firms move, you know, very slowly. I mean, I'm I've only been practicing for fifteen years, but, like, I had a secretary when I started and he had a typewriter.
Speaker 1:You know? I mean, it's just crazy to think about that. In fifteen years, we've gone from that to where we are now, and I'm I hope to be around for the next fifteen years, and I think the changes we see during that time are gonna be, you know, even more acute, you know, even more extreme. And I just wanna be a part of that. I mean, I think I think it's fascinating.
Speaker 1:I think it's also a unique position to be in as a law firm. We're the right size to be innovative. We don't have a ton of red tape, but we're also, you know, large enough and we have the right people here that we could, you know, really make an impact by developing some new tools, by testing some of these ideas, by working with some of our, you know, close clients that are that think it's cool that we're, you know, iterating and innovating on this kind of stuff. So, you know, lawyers lawyers sit around a lot and sort of wish they were more innovative. You know?
Speaker 1:They see their friends building tech companies or, you know, we're the service provider. We're the cost center. We're the break in the system. You know? You can find ways to be creative as a lawyer, but it's it's often hard to do.
Speaker 1:You know, your job's often you're the advocate. You're in court. You're redlining the contract. You're closing the deal. But the deal terms and, you know, the the product that you're selling is often, you know, made by or negotiated by somebody else.
Speaker 1:But here we are at this intersection where you've got really, you know, things are changing incredibly quickly. All of a sudden, law firms are sitting on a mountain of intellectual property. Clients are very dissatisfied with the market and, you know, the rates they have to pay, the service that they get from lawyers, there's a huge opportunity to disrupt the way that legal services are provided. I don't know that we're gonna necessarily do that all by ourselves. I think we are, you know, we're taking steps in the right direction, but the the practice of law is gonna change dramatically in the next five years, and I'm just excited to be sort of in the thick of that.
Speaker 4:Particularly unshackled with a with a p and l that has large lease payments.
Speaker 1:That makes things easier. Yeah. Bring it at full full circle there.
Speaker 3:Yeah. Great conversation, Adam. Thanks for thanks for joining us. This is, it's it really is. I I, you know, agree with you a 100%.
Speaker 3:It's very exciting time to be in the practice of law, especially when we are in a position where we can be innovators and bring new solutions to our clients, test them out, see what works, but really be meeting our clients where they are. And with the demands that they have, it's, it's it's quite satisfying.
Speaker 4:Yep. We've got the whole team, behind us here. We're getting ready to kick off the, the day full of meetings and and plan the future. So let's go do that. Thanks for your time, Adam.
Speaker 1:Thanks for having me, guys. Great.
Speaker 3:Great. Thank you.
Speaker 2:Thanks for tuning in to the Scale LLP Yall Street Law podcast. We hope you enjoyed today's episode and found it valuable. If you like what you heard, don't forget to subscribe and leave us a review. For more insights and updates, visit www.scalefirm.com or follow us on LinkedIn. Until next time, we'll see y'all later.
