Jack Newton is a name familiar to many, especially those with an interest in legal technology. He is the forward-thinking CEO and founder of Clio. Clio is a legal technology company focused on making technologies to help lawyers manage legal matters and client relationships. Jack is the type of person much-needed in the legal industry – one with a keen focus on making the industry focused on clients and NOT on lawyers.
Tell me a little bit about your beginnings and how that led you to what you’re doing now.
I went to the University of Alberta and got a bachelor’s degree in computer science. I was pretty excited about the idea of startups over the course of getting my computer science degree. One of the really influential books that I read in the early days of my CS degree was Paul Graham’s Hackers and Painters, which really I think for a young computer programmer kind of inspired me to think about rather than going and working at a Microsoft or an IBM, which is kind of the traditional path, working at a startup or even starting my own company.
So in my first job out of school, I kind of followed that inspiration and joined a startup called Chenomx, And it was a University of Alberta spinoff company doing some very cool software for medical diagnostics and used what’s called nuclear magnetic resonance to create a very complex spectrum that you could basically analyze to understand what compounds are in the biofluid sample that you’re analyzing, and that could be blood or cerebral spinal fluid or urine or really any biofluid. And you would get an instant readout of all the compounds, all the metabolites in that compound. But the numerical optimization problem of trying to what was called de-convolve that spectrum was extremely complex.
So I was software developer number one at this four-person startup and really kind of fell in love with being in a startup. We went through the process of raising a million dollars, went through all those early struggles of finding product/market fit and eventually built out a really successful product that was adopted by many of the biggest pharmaceutical companies in the world. An interesting chapter kind of layered in through that growth story at Chenomx was at one point, I decided I really needed to beef up on my machine learning skills. And this was back in the early 2000s before machine learning was nearly as hot as space as it is now.
I went back to school to get my master’s degree in machine learning because I just saw the huge potential that was starting to percolate with machine learning tools and saw application to what we were doing at Chenomx. And I at Chenomx worked my way up to being eventually director of product development. I spent four or five years at Chenomx and eventually got that itch again – I love building startups. I love the work I’m doing in life sciences, but this was around at this 2000, 2007, started getting the itch to go out and do my own thing. And I connected with my lifelong friend, Rian Gauvreau, who at that point had actually moved out to Vancouver and was working on his MBA and said, Hey, we’ve talked about this for years. Let’s see if there’s an idea that energizes us, that we think we might be able to build a company around.
I described me and Rian in those days as being two hammers looking for a nail. Kind of looking for an industry that was ripe for transformation. And the ingredients we saw at play were on one hand this enormous wave of technological transformation that was cloud computing that was starting to come down the pike. It was really clear to me as a technologist, that cloud computing was going to be one of the most massive and transformative waves of technology to come along in a long time. And it’s one of those once in a lifetime technology waves where if you catch it, you’re going to be able to disrupt incumbents. You’re going to be able to drive new adoption in an industry.
So really with cloud computing as the thesis, we started looking at industries that we thought might be an especially good fit for cloud computing. And Rian coincidentally, or perhaps not coincidentally at the time was working as the IT manager at a law firm called, Gowlings, which is one of Canada’s largest law firms. It became international firm when they merged with GLG, I believe it is in the UK. And so over the course of his time as an IT manager at Gowlings, Rian saw how poorly utilized a lot of the internal systems at Gowlings were, saw how much opportunity there was for IT to be better adopted. And that was really the inspiration for us, identifying legal as the area we wanted to enter with a product.
I think the idea for Clio really crystallized around a lunch with a friend of ours who was the director of practice standards at the Law Society of British Columbia, which as you may know, is the Canadian analog of a bar association. And this director of practice standards, his job was to basically discipline lawyers when they’d gotten on the wrong side of the ethics rules or had complaints from clients, whatever the case might be. And one thing he relayed to us was that most of his work, most of the conversations he had to have around discipline were with solo and small firm lawyers. That the lawyers practicing at the big firms really didn’t have nearly as many issues as his small firm and solo membership.
We kind of pulled at that thread and asked “why is that the case?” And he commented on two levels of the problem. There’s the obvious, short-handedness that you have in most solos and small firms, where if you drop a ball, there’s no human infrastructure to catch that for you. You don’t have as many people as large firm lawyers do. You don’t have a small army of paralegals and support staff monitoring every key deadline and making sure that stuff gets filed on time and so on. On other side of the equation, you’d hope to see increased technology adoption, in those small firms and with solos, but they don’t actually adopt technology all that well either.
And when we continued pulling at that thread and ask “why don’t they adopt technology?”, the response to us was that they simply don’t have the time or the money to invest in these complicated on-premise systems. So that was the light bulb moment where we realized, “Hey, maybe a practice management system that is cloud-based, that is simple and easy to use and deployed over the cloud would actually be a perfect fit for what these solo small firm lawyers need.” When we started doing the market research, one of the things that really blew us away was that the vast majority of the legal market is made up of solos and small firms. I think despite the popular notion that most lawyers practice in these big fancy firms with fancy downtown office space and a thousand lawyers milling about, that’s actually the real minority of lawyers. As you know about 63% of lawyers practice in solo or small firms and 69& of those lawyers practice as solos.
It’s a real opportunity for us to think about the market in a completely different way. And frankly develop a product that really helped to meet the needs of a vastly underserved segment of the legal population. That was the initial vision for Clio and long answer to a short question, but that was kind of the Clio origin story in a nutshell. So we got to work and started coding Clio. We were both technology people so we were able to really roll up our sleeves and build the tool ourselves, so built out this tool over the course of a year and launched our beta at ABA TECHSHOW 2008. And the rest is history.
It’s kind of amazing how these kinds of seemingly inconsequential conversations and lessons that you learn early in life somehow can be translated into these business ideas that can really shape how things work in certain respects.
I think we had that classic story. There are so many startup origin stories that you can link back to some kind of serendipitous confluence of events and that lunch with the director of practice standards with the LSBC was definitely that confluence of events – and where I described this as two hammers looking for a nail, where we identified that nail. Ultimately we ended up realizing, I think a bit further into Clio’s journey that legal was and I think largely still is one of the last major industries to be fundamentally transformed by technology and transformed by the internet. And that’s really what we’re excited about. Driving almost a next chapter of Clio’s evolution is to drive that wholesale transformation of the industry to one that truly embraces the internet as a really foundational way of getting legal services delivered efficiently.
Looking back and now looking forward, what are your thoughts around how the legal profession has progressed from when you started to now and looking ahead over the next four or five years?
So I think it’s been a very steady progression of transformation over the decade+ that I’ve been in the legal industry. I’ve seen with the firms that we work with a real appetite for technology, especially an appetite for technology that really helps impact the client experience. And I think that’s where we’ve seen, even the way that we view the services we’re delivering at Clio, evolve from focusing on raw productivity enhancements – really thinking about the back office of the law firm and how do you do things slightly faster, slightly more efficiently and more competently, maybe with less risk – to really looking at that as almost table stake in terms of what technology can deliver. And I think that’s especially the table stakes around what the cloud can deliver so now we can start thinking about how can we more fundamentally transform everything about the way we deliver legal services, thanks to technology, and how can we do a ground up re-imagining of the way that consumers get connected with lawyers, the way they see their legal services delivered to them and the way that they build ongoing relationships with lawyers.
I think it’s been very exciting to see the progress we’ve been able to make over the last decade in helping drive that adoption of technologies that enable that transformation. And what I’m super excited about is that we’ve seen, I think, a decade+ of progress in the last six months of the pandemic in terms of accelerating that technology adoption cycle, accelerating some of the transformation that was already underway and many lawyers, I think waking up to the fact that the cloud is not a nice-to-have that some more forward-looking law firms are deploying, but that is actually instrumental and foundational to the way that lawyers need to deliver legal services to their clients now and in the future.
And one of the things I really believe is that we’ve helped pivot legal service delivery amidst COVID-19 not just to a new normal, but a better normal where we’ve got, I think, better adoption of technology and reduced emphasis on one of the huge pieces of overhead for law firms, which is physical offices and expensive offices and AAA office space in downtown locales to what we’ve discovered many clients actually prefer, which is legal services delivered over a Zoom call or delivered over the internet, supported by best-in-class technology to make that process more efficient.
Regarding technology adoption, I think we’re seeing something that would have played out over decade, again, compressed into a much smaller timeframe where the law firms that are embracing technology are pulling ahead and becoming the rightful winners of the market in the COVID-19 landscape and they’re rapidly outpacing law firms that are maybe stuck in their old ways. I think pre-COVID-19, those law firms probably could’ve coasted for another decade and done okay. And I think with the acceleration that we’ve seen due to COVID, those are the law firms that are very rapidly going to start struggling in a really profound way if they’re not already. And they’re going to see a market consumed by the innovative law firms in the market that are meeting consumers where consumers want to be.
What do you think about the notions of changing client’s circumstances and their desires to have more on the spot kind of mobile services and also lawyers having to change how they work because they can’t be in offices?
I think it’s a bit of both. And I think like most things that we’ve seen with COVID, I think it’s accelerated trends that were already underway and just made them more pronounced and more compressed into a smaller timeframe. I think too, the two things we see happening concurrently are number one and then I’d argue this has been happening for the better part of a decade, consumer expectations have been shifting around everything in terms of what I described as the consumerization of professional services and the consumerization of legal services in particular is that consumer expectations have shifted thanks to the apps they use on a daily basis, their daily experience with amazon.com, with Airbnb, with Uber, with every aspect of their life, there’s a constant demand for more effortless experiences and more technology-enabled experiences.
To give you an example in a different professional industry, a friend of mine recently went through the process of selecting a new dentist and his sole criteria for the new dentist he’s going to select was whether they accepted online bookings and did all of their appointments scheduling online versus having to make phone calls, just because he abhors making phone calls. And I think we’re seeing a flavor of that applied to the legal industry where consumers are biasing toward and selecting lawyers that are savvy with respect to technology that enable effortless experiences. And I think increasingly have a native cloud feel.
And what I mean by that is that when you visit the lawyer’s website, they’ve got chatbots or they’ve got online intake or something else that is indicating that the law firm knows how to transact on the internet. The new generation of consumer would rather if they’re having a will done, for example, they would rather quickly fill out the questionnaire of what their family details are and what their kids and spouses names are and so on and have that fed into a document automation program. Then they would drive to your office, sit down with you and go through an interview, giving you that same information.
So I think for lawyers that are, as I like to put it coining Wayne Gretzky’s famous phrase, skating to where the puck is going to be, which I think is a world where we’re acquiring clients online, delivering legal services to clients online and maintaining lifelong relationships with clients online, that’s going to pay huge dividends for them. And they’re going to end up being the winners, not just in the pandemic, but long-term.
Lawyers have traditionally been very lawyer-centric in terms of how they deliver legal services. Even the billable hour model is maybe the most intrinsic and most lawyer-centered thing about the legacy law firm model. The model I argue for is reflected in the title of my book, The Client-Centered Law Firm.
So, in the book I make a case for being client-centered in the way that we deliver legal services. And I think that unlocks a huge amount of opportunity, not just in the existing legal market and also makes you vastly more competitive in the existing legal market. But I think it truly opens up this latent legal market, which is the 77% of legal needs that do not currently get addressed by lawyers. And I think lawyers have a tendency to think in a very fixed mindset kind of way about the legal services market, and think about it as a zero sum game where they’re winning business from another law firm or another lawyer. And the reality is that there is actually almost unlimited demand for legal services if we can find ways of pricing and packaging and delivering our services in a client-centered way and the law firms that achieve that will unlock massive opportunity.
And I think, for a law firm that maybe is reading this or listening to this, that doesn’t put themselves in that category of innovation, I think the opportunity that COVID-19 is presenting every law firm is that whether it’s by choice or not, they’ve been pivoted and forced into a new business model and a new way of working. So lean into that, look at that as an opportunity to experiment, because I think we’ve really got an unprecedented opportunity right now to experiment with the way we’re delivering legal services, to test new ways of interacting with our clients.
And by the way, we also have permission from our clients more so than ever to experiment and try new things. We’ve seen this through our legal trends report data. We’ve seen this through the COVID-19 briefings we’ve been doing over the course of the pandemic where we’ve surveyed consumer preferences and consumer preferences are shifting rapidly. Consumers are increasingly facile around video conferencing, Zoom, etc. All these tools that are now just part of our day-to-day tool set have been adopted on the consumer side as well. So your clients and your prospective clients are more willing than ever to experiment and try new things.
How do we ensure that we’re graduating lawyers who can meet their client’s needs where they are?
I think right now law schools in general are not preparing lawyers for the world that will meet them at the other side of law school. Even the frame that law school’s job is to teach lawyers how to answer legal questions, I think is a very narrow frame on what a lawyer’s job, whether they’re at a big firm or a small firm or a solo. You’re going to be running a business. You’re going to be in the business I think of solving problems for your clients, building empathy for your clients, understanding maybe even the risks and the problems that they don’t even realize they have and being an advocate for them and helping them navigate their personal challenges or their business challenges in a really empathetic way.
And I think that’s where you see in my mind, the best performing law firms really differentiating themselves the most. Differentiated lawyers in my mind do an exceptionally good job of this, but most law schools and there’s exceptions to this rule, but at most law schools don’t do any training around any of that. There’s no training in preparing lawyers for everything from the economics of running a law firm to the key performance indicators of a law firm, to how to leverage technology to deliver better client experiences to your client, and even ways of thinking innovatively about the business model.
I also think that’s why you see so much inertia around legal service delivery, If there was a bit more taught around how to think innovatively, how to take a client-centered viewpoint on legal service delivery, how to think innovatively about delivering legal services we’d see much more rapid evolution in the market, but instead I think that the inertia comes out of lawyers; just learning how to do things from the lawyer that hired them into their firm. And essentially we see almost this more of an oral tradition in terms of how to run a law firm. We see it passed down from one generation to the next, unfortunately with the same kind of rigidity that you see in many, many family businesses almost. And there’s the idea that this is the only way to run a law firm because this is the way that it’s been run by your predecessors. And that’s where I think, there’s a lot about the legacy system of delivering legal services that rightfully deserves to get torn up and rethought and reinvented given the tools and technologies we have at our disposal in the 21st century.
What do you think is probably the most important lesson for say the new lawyer who just graduated from law school and is kind of entering the field for them to learn or know?
I think the most important frame of mind I would encourage is to challenge the status quo. Don’t accept the way that things are currently done as the right way or the best way. There’s an enormous opportunity for lawyers and law firms with innovative and differentiated business models to really stand apart from their crowd and look for those opportunities. Fight the enormous amount of inertia that exists around legal service delivery today and think about new and innovative ways where you’re fully leveraging the internet and technology to deliver your legal services. This will lead you down a very productive and very exciting path.