David Ryan

David Ryan (00:00)
I talk to law students quite a bit and they generally express major concerns about their own future in a legal world where AI technology is going to be playing a very significant part. They wonder, well, what is the lawyer's job going to be? What is the lawyer going to do?

Kevin Daisey (00:18)
Hey, what's up everyone? Kevin Daisy here. Managing Partners podcast. Welcome to another episode. Today I got a really cool guest who I met through a previous guest. So I always like to reach out to my guests and, you know, ask for referrals, great guests to have on the show, new topics to cover. And so I appreciate Mark Weber actually connecting me with David Ryan here. And we'll be talking about.

some cool stuff, future of law firms, in-house apartments. And this guy is just connected. He's, in Silicon Valley area, breadth of experience. And so just excited to dive into what he's got to say today. and, yeah. So David, welcome to the show.

David Ryan (01:01)
Yeah, thanks.

Thanks very much indeed, Kevin. And hi, everyone listening. Don't be fooled by the accent. I am actually in Silicon Valley right now in Mountain View, a few hundred yards from Google's HQ. This is where my firm is based. I've been in the US for, living in the US for 13 years, 14 years now, but the accent persists. So I'm, you know.

very interested in having this opportunity to talk about my views on how the legal industry is likely to develop over the next five to 10 years. It really starts with what's happening within house legal departments. But before I jump into that, let me give you a little bit more background on myself. I'm a relatively late comer to the practice of law.

I didn't start in my twenties. I didn't start until I was in my sort of mid thirties. I am a barrister of the Inner Temple of England and Wales. Barristers are those people who leap about wearing wigs and capes in courtrooms. Different system from the US of course. I started working for a number of big companies in the UK.

as an advisor and one of them offered me a job here in California. So I came here in 2011. I worked for that company, household name, Global Tech Company, for a number of years. But I realized that what I actually wanted was my own natural habitat and the natural habitat of a barrister is a very independent one indeed. leaving.

getting a California law license and starting a solo legal practice were all very natural steps for me to take. That solo practice has developed into a 35 person practice today. And during this conversation, I'm sure we'll touch on some of the trigger points that enable that to happen.

Kevin Daisey (03:05)
No, I appreciate that and interesting story, backgrounds and kind of where you've come from. so I guess the question would be, so your business law background and corporate, and I want to make sure everyone knows your firm now, your brand, and make sure they can connect with you. I want to check you out as they're listening along.

David Ryan (03:30)
Yeah, absolutely. I Providentia, first of all, the name, the name comes from the name of the Roman goddess of preparation for the future. So when I was scrambling around for a name for the firm, that seemed to me to be very apt that most of the time, if not all of the time, what we lawyers are doing is trying to prepare our clients for the future, whatever that may hold. We are...

not completely diverse in terms of our practice areas. We're very focused on IP. We're very focused on commercial and corporate law, and we're focused on compliance. Those are the sort of three central pillars of the practice today. And the biggest of those being our IP practice, which is largely focused on patent analysis, portfolio development, patent pre-litigation,

and patent transactions such as licensing deals. Our clients are typically fairly large companies. Although we do and we do encourage startups to engage with us and we have developed a subscription program for those startups. That's kind of how the term sits at moment. I see somebody knocking at the door. Give me one sec.

Kevin Daisey (04:41)
We have someone there.

you're fine, yeah.

David Ryan (04:47)
I did ask not to be disturbed for now, but never mind. That's life. That's life.

Kevin Daisey (04:49)
They can join the show. It's totally fun.

Well, also I saw, you know, checking your website, you know, have some interesting offerings, it seems like, that are different offerings and efficiency and cost saving options that I was seeing on your site.

David Ryan (05:11)
Yeah, I think that it's very difficult to take a solo practice and to scale it. Very difficult indeed. And I'm sure any of your listeners who've been in solo practice will recognize that fact. The advantage, if there is one, is the opportunity to kind of reinvent the wheel.

and to find a way of differentiating one's practice from those other practices out there that are competitive. The way that we've approached that is to have a sort of a multi-program model. And those programs effectively consist of a traditional outside council program, an ALSP type program.

which is the provision of secondies to client companies and a managed services program, which you won't see on the website, at least not yet, which again is aimed at solving particular problems that clients have which don't involve legal services necessarily. And I think that when we sort of get tuned in to how the practice of law and how the legal industry is going to develop in the short term.

you know, the conclusion I came to was that it's just not going to be enough to simply be a practitioner of a certain type of law, that in order to be really useful to clients, particularly the in-house departments of companies who are big enough to have in-house departments, that you need to be able to provide more than a sort of simple point-to-point legal service.

Kevin Daisey (06:49)
Yeah, interesting. So yeah, Wayne, me and you spoke a little bit about some of this when we chatted a couple weeks ago. And I've heard talks at legal conferences and the billable hour and all these different things about what law firms need to be looking at, especially your corporate firms, corporate attorneys, billable hour and how they're going to

look in the future and survive, right? And so I want to kind of dive right into that and your thoughts on what the future of in-house looks like and firms like yourself, how you can take advantage of that and grow yourselves.

David Ryan (07:29)
Yeah, absolutely. I mean, this may sound, you know, severe, but in our view, in-house legal department platform is starting to burn. And the reason for that is there are a number of reasons for that. The first is what we call the more for less problem. CLOs, GCs, every day now are being faced with

How do they deliver more legal services at less cost? And that's not new, but it's been a pressure that's been building for a number of years now, certainly for the last five years at least. That means that they need certainty and predictability around costs. The sort of open-ended traditional commitment of hourly billing really flies in the face of that. They need to find alternative ways of sourcing legal services.

If they are well developed and advanced in their thinking, they will have been through processes where they have driven down external law firm costs, where they've reshaped their in-house legal departments, where they've streamlined their internal and external capabilities, and they've undertaken needs analysis which showed them how to disaggregate work streams, for example. But even if they've done all of that, they're still left with the basic problem.

of how do they, there's work that needs to be done. There are in-house lawyers who need to be supported. And what is the most efficient way of doing that? Now, you know, in the, in what I would term the old days, that was kind of a one-to-one relationship between corporate legal departments and fairly big law firms. That's that, the market is shifting away from that.

Right now, we would see the supply side, yes, big law firms and middle sized and small law firms are still part of the supply side. But there are others in there now who provide services and products to legal departments. And those fall into two categories. One is legal technology. And the other is alternative lawyer supply services or staffing agencies for lawyers. And what that means is that

there's basically been a market shift from a seller's market where the only show in town were law firms selling their services to in-house teams. But that's shifted away into the opposite, into a buyer's market. That's a big change of thinking. It means that the internal corporate stakeholders are thinking

Kevin Daisey (09:57)
Hmm.

David Ryan (10:03)
more about providers of external legal services from a utilitarian point of view than from thinking of them as artisans. There's always going to be room for artisans, of course, narrow, deep experts in particular fields, and there are hundreds of those fields. But it doesn't mean that if ABC Company needs XYZ law firm,

to advise on a narrow or complex point of law or some new regulation, it doesn't necessarily mean that all the other work needs to go to that law firm as well. And that's really a big change. There are a lot of these things going on simultaneously, but they all point in the same direction.

Kevin Daisey (10:40)
Hmm.

That makes sense.

David Ryan (10:51)
You know, in-house legal departments. I'm very close to them because I've worked directly with them in my work within one and I've worked directly for them as outside counsel over the last 15 years that I've been here. And I've seen the same thing before in the UK, but there are lot of things driving this big change. And we've mentioned more for less. We've talked a bit about, right. Sourcing or outsourcing.

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David Ryan (12:34)
Technology is going to play a huge role here. Every time, yeah, sorry, Kevin, you were going to say?

Kevin Daisey (12:36)
AI, I assume.

I was going to AI and new technologies is playing a massive role in this shift.

David Ryan (12:48)
Yeah, it's going to be

absolutely, absolutely. The great problem with any new technologies is whether they can actually be trusted to do the job that they need to do in this environment, in the environment of a law firm providing legal services to a client. So for us, that means we spend a lot of time testing technologies that we might become interested in.

before we actually put them to work. When you look at that through the AI filter, there's a vast number of offerings out there right now. Which ones are actually any good? How do you narrow that down to a manageable number that you would have time to analyze through demos and testing? The way we do that is with the counsel of our peers.

by talking to our peers and other law firms, seeing what they're using, what they think about what they're using and shortlisting through that process. certainly the tech enablement for, particularly for smaller firms, for so-called boutique law firms, tech enablement, I believe, is going to be absolutely or is already crucial. It's not enough to be working the old ways. Clients kind of expect that at this point in time.

They're savvy, they're using technology themselves in their in-house legal work. And so they expect that if there is a technology available, which will significantly shorten the period of time that a lawyer needs to reviewing a contract, for example, that they're not going to build the number of hours it would have taken 10 years ago.

to review that contract, but they're being billed something akin to what it would take to do it, utilizing the best technology available. That's a really big change.

Kevin Daisey (14:39)
Yeah, that can massive. I think I saw, I can't quote this exactly, but something the bar associate put out, it's like literally says law firms or lawyers should be embracing technology and utilizing technology. you know, that's something that you should be investing in and leveraging for your clients. Of course, there's a lot of stuff, you know, with AI and things like that, that you got to be careful with and hallucinations and...

except for trials and stuff like that. you know, it's, there are products out there that are just for this kind of work and that have been proven and tested. And, you know, you can have it, you know, in-house versus, you know, like your own systems to learn from your contracts and from your documents and things like that. So there's some interesting stuff out there for sure. But, you know, the small firms these days too, like they came up with

They might've started doing COVID, so they're remote, their capabilities, their overhead. They might not have the big fancy office and they're using Zoom for everything. And so there's just so many advantages, I think, over some of the bigger firms that are still stuck in some of their ways. So I definitely see that across the board. What is your thoughts on like, I saw a talk at some bar event, but it was...

Talking about shifting for value pricing versus billable hour and what that would even look like.

David Ryan (16:00)
Yeah, think there are

lots of different pricing methodologies.

The billable hour has survived so many professional statements and so many commentator statements that it's going to disappear, which have been continuing for decades, but yet it's still there. It's still there. It hasn't gone anywhere yet. We do see AFAs as a common term now, alternative fee arrangements.

Kevin Daisey (16:10)
Yeah

David Ryan (16:28)
which can mean fixed fees or a range of different things that can be negotiated with the client on the other side. But essentially, even if a firm is being asked for a fixed fee, they're looking at what is it gonna take us to do that work in a number of hours? And then what is the margin that we need to apply to protect us from downside risk if we provide a fixed fee? So it's not really that big a deviation in that form at least.

Kevin Daisey (16:55)
Yeah, just a different way of putting

it.

David Ryan (16:57)
exactly it's a different way of putting it. Value-based pricing, I think, is an absolutely fascinating concept. It's akin to, we don't have a litigation practice, so we have little or nothing that would take us into this sort of contingency fee arena. But value, when you think about contingency fees where they do apply and the practices where they do apply, that's not very different from

value-based pricing, is it? Essentially, the lawyer's taking a share of the settlement, if it's a settlement, and they're risking their legal services in order to try and achieve that share. So they're essentially placing a value on what they're doing, which is paid out in that form. Other forms of value-based pricing, away from sort of contingency margins, I think are a little bit more difficult to...

define, then they would be in the accounting world, for example. If somebody solves a tax problem for you in the accounting world, it's very easy to see very directly what that value is. If you're faced with having, let's just use some numbers, but if you've got a tax bill for $100,000 and...

you hire an accountant and the accountant says I can make that $10,000 for you and because that's got a $90,000 of value, then I want X amount of that value. That's a very straightforward and direct proposition that's easy to measure. It's a little bit more difficult than that with the practice of the law. Because at the end of the day, we can give advice, but it doesn't necessarily mean the client's going to take the advice.

Kevin Daisey (18:26)
Thank

David Ryan (18:33)
And even if they do take the advice, how much of it is directly attributable to the lawyer's work compared to the negotiations that the client might have been conducting themselves, for example. But I do think you will see the term value-based pricing appearing more and more as we go forward.

Kevin Daisey (18:47)
Yeah.

That's a good point. mean, yeah, how do you put a value to it? Or, you know, say you're protecting someone's intellectual property or you're putting together some... How do you put a value to the work that was done and risk that was mitigated? How do you value that? I don't know. That's a good question. Not a model lawyer either.

David Ryan (19:12)
Yeah,

it's not an easy question. We do a lot of work which essentially is risk mitigation in the patents arena. Very hard to determine what the actual size of the risk could be that was being mitigated. I suppose you could use general rules of thumb about...

Kevin Daisey (19:32)
Yeah.

David Ryan (19:38)
how much companies spend on litigation and if that litigation becomes unnecessary because something has been resolved, therefore the value might relate to the litigation cost that weren't actually spent. But it's not straightforward and it's not direct. That's the kind key difference, I think, with tax advice, for example.

Kevin Daisey (19:55)
Move us.

Yeah, I mean, plus I think, know, if you're depending on the company and their size and the revenue and whatever you're mitigating against, I mean, could have a more value to a massive company than a small company. So I don't know. That sounds challenging. like I do marketing for law firms. We still break things down by cost and hours and man hours and people at the end of the day. So even if I put a package of a flat fee per month.

That's all calculated in there. And then in our P &L, all that's being broken down by, you know, man hours and all that stuff. it's, even though it might look like a flat rate type of price, it's still all figured out that way.

David Ryan (20:40)
Yeah,

yeah. Yeah, I think we'll see, I think we will see change there, as we're to see change in pretty much everything else too. You know, if I'm reading the market correctly, at the moment, we are kind of in mid cycle. You know, the big in-house legal departments have recognized that there are

that there are new sources of legal services and they're spreading their wings across those services. But you need to put that in context. mean, globally, the legal industry value is probably somewhere between a trillion dollars and $1.2 trillion. In terms of ALSP's, alternative legal service providers, their share is probably only something like maybe not even 5 % of that at this point in time.

you know, maybe $20 billion is probably, $20, $25 billion is probably about the right, probably about right for the entire alternative legal service provider marketplace, which embraces everything from, you know, flexible lawyer businesses to technology products to innovation hubs and so on. I think...

So that's, there are a lot of companies in that space. So individually, there's, there's nothing really, nobody really standing out from there. And it's the same with legal tech, which is at a much earlier stage. I ALSP's are about 20 years old. You know, legal tech is much newer than that. Maybe 10, 15 years. Where now we're seeing, you know, in my inbox, I'm seeing 10 or 20 offers every day.

But right now that's probably on its way to becoming, you know, a $10-20 billion market. So those aren't big slices out of a $1. something trillion industry. The area where I think, you know, all law firms need to watch out for is the other companies known as the big four, the big four accounting companies.

Kevin Daisey (22:37)
Hmm.

David Ryan (22:37)
They're often grouped together with ALSPs, but they're actually unique from that. They do provide legal advice, which ALSPs typically do not. They don't do it across a very wide range, but they are significant. Arthur Andersen, before it went sideways, was actually the ninth biggest law firm in the world.

PwC has already got three, 4,000 lawyers in over 100 countries around the world. We've been hearing more recently all about KPMG coming into this marketplace. So, you know, it's interesting to be in America now, looking at these things and working in this environment because 15 years ago I was in the UK. I mean, the UK introduced something called the Legal Services Act in 2007, which wasn't a deregulation of the legal industry, but

Kevin Daisey (23:13)
Mm-hmm.

David Ryan (23:30)
it effectively enabled a whole lot of new players to enter the market, which they duly did. So looking at the US now is a bit like looking at the UK in respects of the sort structural characteristics of the legal industry 20 years ago. Here, there's been very little deregulation compared to the UK. So...

in the US state by state want to practice in California, you need to be a California licensed attorney. Most other things are exactly the same. That's beginning to change. We've seen some beginning of change in Arizona. Yeah, right, right. I think we're going to see that in places like Nevada, too, if it's not already happening. So that's a significant change. You know, there's a lot of

Kevin Daisey (24:01)
Mm-hmm.

Yeah, you can own a law firm without being a lawyer.

David Ryan (24:24)
private equity money that's been flowing into the legal industry, usually to finance patent mitigations. But I think that's going to be another wholesale change as if, not as, if the pace of deregulation increases in the US.

Kevin Daisey (24:25)
about the soda.

No, that's a good point. Yeah. So that's, I know a gentleman I met, I was at a legal conference and well, yeah, you're a lawyer. And he's like, no, I'm a digital marketer. And I was like, oh, me too. He said, well, but I own a law firm in Phoenix and he markets for him. You know, that's how I got started, but I was like, oh, okay. So first time I had met someone it's like that. And then I know a private equity company. I know a private equity company that started their own law firm.

David Ryan (25:00)
Yeah, Yeah.

Kevin Daisey (25:07)
to not only handle their own legal needs, as an opportunity to build and grow as a separate company as well. they also own a bunch of companies that they need legal services for. So why not own their own law firm? So.

David Ryan (25:19)
Yeah,

yeah. And yeah, that's really very interesting, isn't it? A digital marketer who owns a law firm. And on the flip side of that, it seems that many of the bigger law firms are actually hiring more digital marketers and data scientists than they are lawyers these days.

Kevin Daisey (25:37)
Well, yeah, there you go. So, uh, yeah, interesting things happening for sure. And I, I thought I heard like Utah maybe is another place that I want to say, I thought Utah passed or is on the list of make being next on, um, you know, law firm ownership and not being a lawyer. And I think you have to reside in the state maybe, but you don't have to, you know, be a lawyer, which is interesting. Yeah. This does remark or had like 20 lawyers that worked for him, but he wasn't a lawyer himself. That's so, you know,

David Ryan (25:51)
Yeah.

Yeah, I believe you're right.

Hmm.

Kevin Daisey (26:05)
Yeah, interesting. It was a divorce firm. It was kind of random, but, you know, feed the lawyers with marketing and I guess you got something that's, scalable. So, but yeah, what if all the other states says that's a trend then private equity inners, they can start to buy up law firms and groups and pull them together, right? Personal injury, all of it, right?

David Ryan (26:27)
Yeah, absolutely. I think it would be very easy for lawyers or law firms or law students. I talk to law students quite a bit and they generally express major concerns about their own future in a legal world where AI technology is going to be playing a very significant part. They wonder, well, what is the lawyer's job going to be? What is the lawyer going to do?

But I think that there's a positive side to all of this. Whenever there is change, there's also opportunity. We have some very, very big changes going on in this industry, all being driven by the three things that we've covered, the more for less challenge, liberalization, which is my word for deregulation of technology being the other big one.

So those things are pushing change and they will mean that in 10 years from now or 15 years from now, many lawyers won't be doing what we would recognize today as a lawyer's job. They'll be doing things which are adjacent to that. And there are quite a lot of opportunities there. I would say areas like enterprise risk management.

governance risk compliance, environmental, social, and governance.

sustainability and the one which where we're very focused out of that list is the protection enforcement and commercialization of intellectual property. There's a lot beyond the actual legal practice around IP that would go to making that type of opportunity really fully mature. So I tell people not to quit.

Don't give up. If something's driving you towards a career in the law, and more often than not, that is a sort of inbuilt sense of social justice, then pursue it. Because as technology takes things away, it will also be opening up other avenues of opportunity.

Kevin Daisey (28:39)
Yeah, agreed. you said tech enablement, leveraging technology more, but not replacing the lawyer, right? There's going to be more opportunity, new opportunities. And I think...

you specializing, know, going deep into certain areas, niching down, and focusing and have expertise. but I see there's a, it'd be a long time before lawyers are replaced. And, you know, if so, anyone thinking that that's going to be some abrupt thing, I don't think that's a possibility.

David Ryan (29:11)
Well,

we've been around for a long time. You know, our laws, what we use, lot of it originally came down from ancient Rome, so that's 2,000 years. So I'm not sure we'll still be around 2,000 years from now, but I'm pretty certain we'll be around 100 years from now, and perhaps longer than that.

Kevin Daisey (29:28)
the

Yeah, well, know, there's even like technology and AI, there's new laws, new regulations, there's always something for lawyers to do. yeah, and then you go on the consumer side, there's so many nuances and there's still a personal side of things too on those sides, like that engagement and having a lawyer actually handle your stuff and...

so yeah, I don't see it going anywhere anytime soon. loss of opportunity, you know, lawyers are doing, embracing this stuff, growing, using the technology, understanding it, figuring out how to leverage it, to help their clients. And I think if you help your clients, then you're gonna, you'll prevail and you're gonna, you're gonna be successful. So, but interesting topics for sure. And I appreciate you sharing, you know, what you see and, as you grow in your firm and, and all that stuff out there.

David Ryan (30:15)
Yeah.

Kevin Daisey (30:22)
interested to see where it goes.

David Ryan (30:23)
Yeah, I agree. We should touch base five years down the road and see how much of what I've just said is correct and how much of it was nonsense.

Kevin Daisey (30:32)
Let's see

what's happening. Yeah, it's going to, it'll be interesting to see. mean, my, my market and industry is changing a lot too. So you gotta stay on your toes. You gotta be agile. You gotta be innovative. You gotta, you know, be ready to change, you know, so you can't, you can't be stagnant these days. That's for sure. So that's for sure. Um, well, David, I appreciate you coming in, sharing your perspective and, uh, coming from, you know, big law background and from the UK and, uh,

David Ryan (30:38)
See ya.

Kevin Daisey (30:57)
What's the best way for folks to connect with you and reach out to you?

David Ryan (31:01)
To me directly, they can email me if I'm david at ProLawPC.com or go on the website, Providentialaw.com and there's plenty of contact information there.

Kevin Daisey (31:13)
Excellent. Yeah. Cool site. like your, how you've done that there. And, yeah, if you want to connect with David, reach out to me, I'll make the connection. if you're interested to learn or pick his brain or, needed services. So David, appreciate it. Anything else you want to share before we go?

David Ryan (31:29)
No, I think that's more than enough, Kevin. Thank you very much indeed for the opportunity. I've enjoyed talking with you this afternoon. Take care.

Kevin Daisey (31:37)
I appreciate it and we'll see you soon everyone. Hey, thank you so much for tuning in. I hope you learned a lot from David and what's coming and connect with him and we'll see you soon.