by Anthony F. Geraci, Esq.
Geraci LLP

The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption.

-Clayton Christensen

Look around the room at the next conference you attend. It’s likely filled with people just like you, your tribe, people who lend in the private money and non-conventional world. What do you see when you look around? Are they friends or competitors? If they’re competitors, why? Is it because they’re in the same business as you, or doing the same product types as you? I think what you’ll find by the end of this article is they’re not your true competitors. In fact, your true competitors aren’t the guys and girls in the room; it’s the disruption outside of the entire arena. More on that at the end.

Geraci Law Firm Walking Away From Traditional Law As a Model

You may be wondering why a lawyer is writing an article on disruption and technology. Because like you, I’m an entrepreneur first, and law is the business I am currently doing. Also, I am just as nervous and afraid of being disrupted and obsolete as any other business, yours included. Just like you, lawyers are heavily regulated. But also just like you, that won’t save us.

Five years ago I saw the need to go down our current path. I was talking with Nema Daghbandan and one of our other partners about the need to automate and get lean and efficient because technology is coming. Both of them looked at me like I was Henny Penny and “The Sky is Falling.” I started to design up plans for us to get leaner, meaner and more nimble as time went on. Four years ago Nema walked into my office and said, “You know, I thought you were crazy, but …” as LegalZoom took off and others took off, we all saw the writing on the wall.

To give you the right frame of mind, around this time, IBM Watson was gaining steam in the AI realm. Two years ago, Google’s AlphaGo beat the then world’s Go champion, a human, 4 games to 1, and just last year, Google’s Deepmind learned Go from scratch, playing itself over and over again for 3 days straight and then beat AlphaGo 100 games to 0. For those who don’t know, Go is one of the most complex games and 5 years ago it was said that it was impossible for a computer to learn the game. What else is impossible, then?

To address this ever moving target, three years ago we formed a management team and started grappling with these issues. After discussing around the table, we realized we needed to be more than just a law firm. We needed to truly grasp our client’s pain points and not just solve them from a legal standpoint, but solve them from a value standpoint. Why? Because we’re betting that no matter what technology you have, we’re still human beings at the end of the day, and no matter what you’re doing, relationships matter. And we’ve been doing that ever since.

Globalization’s Impact Across All Industries

Never before has it been easier to place a phone call and someone 12,000 miles away answers and picks up the phone. In fact, entire businesses are being built around the outsourcing model. Take, for instance, Upwork. Upwork.com is a website that promises freelancers for whatever job you are looking for. They are not just an “offshore” outsourcing model, but rather an entire outsourcing model. If you want someone in the United States with several years’ experience or if you want someone answering your phones from India or Philippines, Upwork has it all. More importantly, it has it all at your fingertips.

What that means is that while the United States’ labor market demands $15 an hour for minimum wage (i.e., non-skilled non-experienced position), our options as employers have gone up exponentially. We no longer must have an employee on-site, in our offices to do minimum wage jobs.1 For instance, several of my clients have set up call centers in the Philippines to augment their on-shore lead generation activities. They pay these people $6 an hour. Yes. $6 an hour. Factor in health insurance costs, payroll taxes and the loads of other costs into having an employee in the United States, that $15 an hour minimum wage is closer to $20 an hour. And for less than 33% of the cost, I get the same skillset overseas.

Technology Investment Breeds Efficiency

Disclosure: Outside of Lighting Docs below, I do not own any interest or have any interest in any of the other tools we use or suggest. Feel free to research and use whatever you’re comfortable with!

If you’re not thinking about technology and things like the above, then you’ve got 2 choices: (1) keep making money the way you are doing and you’ll do fine for a finite period; or (2) start thinking about how to harness technology to leverage your time and relationships to stay in business in the next wave. If you’re still reading this, I hope you chose #2. Because I want you to be in business for a long time, but that will require you to think outside of the box, or, in this case, think inside the box … the computer box. What things should you think about? Let me pull some topics from the Benchmarking Report several of you filled out and have a copy of in your hands.

CRM Systems to Organize Your Information

There are several CRM systems that organize your information. We use Salesforce (www.salesforce.com) at Geraci, which is robust enough across all of our platforms for us to share, use and add value to our clients at every turn. It is a pricey solution and may be out of the possibility for many of you. We have also used Zoho (www.zoho.com), which is an all-inclusive CRM as well as an excel-like program that will allow you to do a LOT of robust things for free.

Automation Tools

How can you continue to automate your back-end while growing your deal pipeline and investor pipeline? Start harnessing tools. We use custom software for flat-fee and other billing, but you may want to look at Trello (www.trello.com) for workflow management (think Scrum methodology). We’ve used it for years for project-based management. There are several other great tools out there: Airtable, Asana, and many others. Do your research and select what’s right for you.

Remote Communication Tools

If you are going to embrace what we’re speaking about with remote workers, you will need technological tools to connect with them! We use Zoom (www.zoom.us)

Mortgage-Specific Tools

When you attend your next CMA conference, speak with the exhibitors there. There are mortgage software providers, loan servicers and many platforms available for your use. We’re excited that by the time this is article is published, we have either launched or are near launching our loan document creation module, Lighting Docs (www.lightningdocs.com). In it you will be able to order a set of private money and non-conventional lending loan documents in all 50 states at the push of a button! What other technology is out there that can make your jobs easier? Use it!

Your Competition Isn’t Who You Think It Is

Back to the conference. Looking around the room, do you see your competition? Because they’re likely not there. I look around in a room full of lawyers, and I don’t see any competition. They’re not my competition. They’re still thinking about the same ways to practice law, and if we’re all doing things the same way, I know how to easily compete in that marketplace.

My competition are the ones who are trying to revolutionize the legal space – to make lawyers themselves irrelevant. Instead of asking for advice from us, they will create a Google search engine for you to ask your question and it will give you better advice than any human can. That’s my competition. For you, your competition could be someone asking Alexa for a mortgage and, after accessing that person’s information, connects them directly with the non-conventional lender who built the Alexa app.

Yes, both dangers are probably 10 years away. The problem with 10 years away, however, is how quickly it comes. My son turns 10 this year, and it is never more obvious to me how quickly time goes. So if you’re worried about it like I am, the time to act is NOW. And even if you can’t build another Google Deepmind or IBM Watson, you CAN take steps to cut out inefficiencies in your operations by harnessing current technology, outsourcing as much as you can, and doing what YOU do best: get awesome deals and pair them with great investors.

Endnotes

1 While I see this as a negative thing for the US as a whole, I’ll save that for another article….

Anthony Geraci is managing shareholder of Geraci LLP, a SuperLawyer and a two-time Inc. 5000 honoree. He represents the Who’s Who in the Private Lending and Non-Conventional Lending, runs a popular conference line, publishes Originate Report and looks to add more companies that add value to you each and every way possible. Feel free to reach out to him at a.geraci@geracillp.com or (949) 379-2600.