Why Isn’t AI Making Your Firm Money? with Joshua Lenon

Joshua Lenon (00:05.012)
interrupted, I’m so sorry. We both play piano. Can we watch TV? Yeah, go ahead.

Karin (00:06.201)
That’s okay.

Karin (00:09.881)
Yeah. Exactly. As soon as it starts recording, I am gonna ask you for a million dollars. Yeah. she’s she’s a good one. We’ll just start over. Yeah, exactly. We can always edit. All right, here we go.

Joshua Lenon (00:12.494)
On camera. No. No.

Exactly. She knew right when to time it. but this will hopefully give us yeah. A lack of interruptions, yeah.

Karin (00:34.839)
71% of solo attorneys are using AI right now, but only a third of them are making any money, any more money than they were before. That is not a technology problem. Your tools are working, the time is real, the work is faster and is better, the money is just not showing up. So today we are finding out where it went. Welcome to Councilcast, the podcast that gives you a marketing co-counsel for your law firm.

And I am Karin Conroy, founder of Conroy Creative Council. And I sit down every week with the strategists, operators, and the researchers who understand what actually grows a law firm. No fluff, no hype, not all the trendy, like clickbaity stuff that you see everywhere else. Real strategy that you can use. So my guest today is Joshua Lennon, lawyer in residence at Cleo, and the person behind the legal trends report, along with a bunch of other people, I think.

Joshua Lenon (01:30.06)
Yeah, it’s definitely a team. You saw my face. Yeah, I was like, I have to give them credit. Yeah. No.

Karin (01:31.609)
Yeah, exactly. Yeah. so if you’ve ever seen a statistic quoted about law firm billing rates or utilization or AI adoption or any of the numbers that people feel like they can quote, it’s a good chance it was from the legal trends report. And Joshua was the first one who put it, who produced it. And we talked about it on the show last year, in the episode our legal trends tech report for 2026. And in that conversation

It was about kind of where the technology is headed. And now this one is about what happened next. So we all got it, we all tried it, we all think it’s kind of cool, but a lot of people don’t know what to do with it. And they’re not making any more money than they were. And that is just creating a lot of frustration, and people are kind of getting this effect that Cleo is calling the efficiency paradox. So we want to kind of dig in and figure out.

All of that good stuff, but then also how it relates to marketing more specifically. So thank you for coming and being back on the show. And I love digging into like the theory and the numbers and the data and all of that good stuff. And so let’s talk about this number that I quoted in the beginning that you know most people, I’d say most, it’s the majority, are using AI, but nobody’s making any more money. And can you tell me more about that and the

What is going on?

Joshua Lenon (02:58.035)
Yeah. And so it’s not that no one’s making more money. It’s I think that some people have figured out how to make money and the rest are still in the point where they’re like, okay, now what? Right? Yeah, I I’m leaning in, but now what? And so you quoted seventy-one percent of solos. it’s seventy-eight percent overall in the industry. Tell us that they’re using AI. and one of the

Karin (03:11.326)
Yeah, yeah.

Yeah.

Karin (03:22.199)
Okay.

Joshua Lenon (03:25.205)
interesting yet frustrating things about working on the Legal Trends Report for this is just how new everything is. So when we launched Legal Trends Report in 2016, CLI had been operating since 2008. So we had like eight years of data to look back on. Chat GPT launched in November of 2022. We started launching our own AI features in 2024. we’re still like right at the beginning.

Karin (03:31.595)
Yeah, yeah.

Karin (03:38.37)
Okay.

Karin (03:41.953)
Yeah.

Joshua Lenon (03:54.702)
of this entire change in the industry. and so we’re trying to find the signals, yeah, that are still emerging. So

Karin (04:02.474)
Yeah. And right. It do you think so what do you think is behind this idea of people are trying it because I I look at my numbers. I have a design and a marketing background, but I also have an MBA. So charts are like my my thing. And so I look at my profit numbers and it is like, you know, this is another moment for sure where it has like reduced my expenses by over half.

Joshua Lenon (04:21.025)
Yeah.

Karin (04:31.76)
And my profit is I’m I was on track to hit my profit numbers from last year, last month. So yeah, so it is it is not a minor change for me and it has definitely impacted my revenue numbers. Why do you think people are struggling with?

Joshua Lenon (04:38.881)
Wow. Yeah.

Joshua Lenon (04:47.36)
Yeah.

Joshua Lenon (04:51.863)
So I think part of it is people are expecting all AI to be the same. And and part that’s not the case. And so what we found that was interesting from the years before legal trends reports, we’ve been looking at AI for three years in a row now, is we saw most law firms were reporting that they were using legal specific AI. And that’s very task oriented. It’s a legal research tool, right? It’s a contract analysis tool.

Karin (04:57.675)
Yeah

Karin (05:13.334)
Okay.

Yeah.

Joshua Lenon (05:20.527)
and so it doesn’t have necessarily a broad impact on your organization. It has amazing boost of efficiency and accuracy in that one task. And then this this our latest legal trends report, it flipped. We saw more people were reporting that they’re using non-legal AI than they’re using legal AI. And that was interesting to us because that means that they’re not just using it for.

Karin (05:25.314)
Yeah.

Karin (05:39.628)
Okay.

Joshua Lenon (05:47.906)
The practice of law, the specific task, but are also starting to incorporate AI in the rest of their operations. And we published one stat that was really interesting. One in 10 law firms were telling us that they see improved revenue from using AI. But then when you look at firms that are telling us that they widely use AI throughout their firm, right? It’s not, we’ve got this one tool, it does this one thing, but instead we’re using.

Karin (05:55.51)
Yeah, yeah.

Karin (06:03.031)
Okay.

Karin (06:12.695)
Yes.

Joshua Lenon (06:15.597)
Claude here and Cleo work here, Chat GPT for another thing, right? firms that are describing themselves as widely using AI, 69% of them say they’re seeing significant positive revenue impact. Well, yeah. but that’s that’s like that’s like the tip of the the iceberg, right? And so they’re finding out that by improving their operations.

Karin (06:21.366)
Yeah.

Karin (06:29.962)
Okay. Okay.

Karin (06:36.951)
Yeah.

Karin (06:42.135)
Yeah.

Joshua Lenon (06:42.505)
Using AI, and that’s what 70 some odd percent tell us is where they’re seeing the most benefit. that’s where they’re seeing the revenue changes. And you mentioned it entirely, right? I’m able to cut my expenses, I’m able to be more efficient and more productive. one of the things that we’re seeing is a preview to our 2026 legal trends report that’ll be out in October at the at Cleocon is we’re trying to research is this like incredible boost in efficiency drawing revenue forward.

Karin (06:47.511)
Yeah.

Karin (06:52.022)
Yeah. Yeah.

Yeah.

Joshua Lenon (07:12.141)
We’re actually expanding revenue throughout the year. and that’s an interesting challenge to try and measure. are you mentioned you’ve hit your number now, like, yeah, seven months into the year, you’ve hit a 12 month target. Yeah. So what does the rest of the year look like now? does that continue? Yeah.

Karin (07:15.329)
Okay.

Yeah.

Yeah. Right. Yeah. Yeah.

Yeah, exactly. I just take off and go on vacation at this point. Yeah.

Joshua Lenon (07:34.158)
Well, there’s that. Or we want to make sure that we’re talking about access to affordable legal services as a part of this this new change in efficiency. and are we seeing firms lean into that? And is that like a bigger impact on their revenue now because they’ve opened up this capacity? Or are we seeing that there’s a fixed pool of business and now they’ve compressed the timeframe for it? And so it

Karin (07:41.015)
Right.

Yeah.

Karin (07:54.913)
Right.

Karin (08:01.976)
Well that’s yeah, that’s kind of where my next question

Joshua Lenon (08:03.723)
That’s it’s really interesting. And we only know the answer with time, unfortunately. Yeah. Yeah.

Karin (08:07.956)
Exactly. In retrospect, like looking back on what actually happened instead of guessing about what could happen in the future. so perfect. That’s perfect. What so what are they talking about? And so you talk about how they’re if making these efficiencies operationally. And that I feel like has been the place, the combination of the the first baby step of AI is to do some very basic kind of content things like.

Joshua Lenon (08:13.941)
Yeah. So we should meet again in January, is what I’m saying.

Joshua Lenon (08:24.365)
Mm-hmm.

Karin (08:34.42)
Emails, like just try write this or like you know, answer this quick question that my kid asked me. things like that are very basic and just transactional. and then operational type things where it’s like make this thing that is very well defined and clean cut faster. where are you seeing this start to expand? Or it was this part of your questions in terms of how does this start to drip into marketing? Because marketing can become more

Joshua Lenon (08:35.533)
Yeah.

Joshua Lenon (08:44.823)
Mm-hmm.

Karin (09:03.48)
kind of gray area theoretical. There’s kind of feelings and emotions there and trying to convince people of things. and it gets a little bit more complex.

Joshua Lenon (09:05.805)
Mm-hmm.

Joshua Lenon (09:13.975)
So I think one of the things that’s really interesting in terms of marketing and legal AI is we can start actually looking for signals and tailoring communications based on those signals in confidential information that we were never able to do before. We’re able to see that when these these people were divorced, their kids were minors and now they’re approaching the age of majority.

and that has tax implications that may have separation agreement requirements like you said you would pay for college. No, there could be things that we need to adjust in terms of support, alimony, insurance coverage, different types of contributions and expense coverage. And so if you weren’t specifically looking for okay, these birth dates like 10, 18 years later,

Karin (09:56.439)
Yeah.

Karin (10:09.015)
Right.

Joshua Lenon (10:09.399)
as a part of your your case management system, that’s just lost. Your ability to reach out to them and be like, okay, you’re reaching this next milestone, and here’s how I can help. and what we’re seeing is AI can suss out those details and bring it to your attention and make the the application of that marketing message not only consistent, but easy and timely. and that’s pretty amazing.

Karin (10:13.355)
Right.

Karin (10:16.906)
Yeah. Right.

Karin (10:31.254)
Yeah.

Karin (10:36.512)
Yeah, where it sounds like you’re reading their mind. And but at the same time, as a client, they’re thinking, you know, you did our divorce, you should know these things. Like there’s there’s a certain amount of work that I’ve come to realize that when you have a client, they assume that certain things are being handled. From our perspective, w if we are hosting a website, they think that you know X, Y, and Z are happening. And so we had to build that in.

Joshua Lenon (10:39.382)
Yeah.

Joshua Lenon (10:47.243)
I agree with you on that.

Karin (11:05.196)
To take care of that assumption. So that when I was, you know, younger and years ago, we would say, no, no, no, that’s extra. This is extra. And and then we realized, okay, if that’s an assumption, we’re gonna build that in, charge for that. And I’m thinking ahead. Yeah, exactly. And so this is a similar concept where you know, you did my divorce, you met my kids, maybe, you knew at the time exactly how old what they were, you did that paperwork. There is this assumption in their mind that you would probably know that they are.

Joshua Lenon (11:18.221)
Accordingly, yeah.

Karin (11:35.117)
Getting to, you know, an an adult age. But you know, over the course of all these years, that has for sure slipped people’s mind. And that’s just not necessarily happening. And you and there’s the number of times I’ve run into clients and I’m like, you know, how old are your kids? And it’s like, it’s been 10 years. It’s like, my gosh, how is that even possible? But meanwhile, AI is sitting there in the background making like making you a better memory, basically, and getting you one step ahead of

Joshua Lenon (11:38.317)
Mm-hmm.

Joshua Lenon (11:43.513)
yeah.

Joshua Lenon (11:53.677)
No.

Karin (12:05.067)
Where you probably could have humanly been.

Joshua Lenon (12:07.573)
Yeah. and it’s and it’s so much even I think forward looking than that, right? We can set not just these reminders, which we could set as a task that sits in the background for like 20 years and you hope that’s offered works twenty years from now. but it can also find context outside of those files, right? So emerging case law, and suddenly everything changes, right? Or hey, here’s a another chance to take a bite at that apple because there’s this new

Karin (12:13.314)
Yeah.

Karin (12:16.771)
Right.

Karin (12:23.884)
Right.

Karin (12:28.022)
Yeah.

Karin (12:31.723)
Yeah, yeah.

Joshua Lenon (12:37.367)
precedent or new statute or new opportunity that’s come up. and you can have almost a research librarian like finding these things and raising them to you over your morning coffee and building a whole marketing campaign around it. And I found so the anecdotes that we’re getting from the lawyers who are building this type of systems are just amazing results. one of my favorite is the lawyer who received like

Karin (12:45.678)
Yeah.

Karin (13:00.504)
Yeah.

Joshua Lenon (13:07.393)
an initial potential client call while he’s standing in line to go through security at the airport. and he goes, Great, let me let me take a look and I’ll get back to you in just a couple minutes. I’m at the airport. And he pulled up the Cleo Work mobile app. and Clio work is one of our AI tools. It it’s linked to our our legal library, but it also does drafting and all these things. and just uploaded the files that were already in Cleo

Karin (13:12.93)
Yeah.

Karin (13:22.712)
Yeah.

Joshua Lenon (13:35.596)
because of his intake system, said, take a look at these files, let me know what’s in them, give me a proposal of a strategy based on our templates. And by the time he got through the security line and was sitting down waiting for his plane, he had a proposal that he could send back to that client. And so in the space of like 35 minutes, he a new client like called, submitted information, and had a proposal and then ended up signing with that lawyer.

Karin (13:37.208)
Yeah.

Karin (13:54.776)
Yeah.

Karin (14:05.388)
Yeah.

Joshua Lenon (14:05.635)
and that’s the type of of just speed and efficiency that this enables once you have these signals coming into you at the right time.

Karin (14:15.831)
Yeah, that’s amazing. And while I’m thinking of that, I I can think of, you know, a handful of idea of moments when similar things happen. And then I was just thinking of in a previous episode where we were talking about AI and marketing. And the argument was if everyone has AI and these same tools, how do you then differentiate yourself? So let’s say this client calls five lawyers. And let’s just, for the s sake of the of argument, say they all have Clio and they all have Clio Growth.

And they all put in this same document into Clio. And so how do they then differentiate themselves in that same conversation back to the client if AI is if they’re all if we’re all using these AI tools?

Joshua Lenon (15:00.907)
Yeah, I think that’s a great question. And some of it comes down to just your own subjective goals, right? What type of lawyer do I want to be? What type of clients do I want to handle? Do I want to do this type of case? Right. and so it’s not just that your AI can give you an answer, but you also have to look at is this meeting my goals as a business, as a lawyer, as a partner? does it help with my work-life balance?

Karin (15:07.577)
Yeah.

Karin (15:15.309)
Right. Yeah.

Karin (15:23.992)
Right.

Joshua Lenon (15:29.229)
and that last one’s really interesting because as a part of our legal trends report, that’s one of the things we’ve been asking is how is it impacting your firm as a business? And we’re seeing firms telling us that they are finding that they’re more responsive to clients, that they’re able to see more revenue, they think they have a better client experience. And then when we ask their employees, their employees are saying it gets rid of the tedious stuff, and I have a better work life balance.

Karin (15:37.88)
Yeah.

Karin (15:48.302)
Yeah.

Karin (15:56.153)
Yeah.

Joshua Lenon (15:56.654)
And so I’m actually and this was the one that I I really love, I’m more likely to stay in this job because of it. Yeah. Over a third said that they’re gonna stay. and so if you’re looking to see how you can like better your revenue in your law firm, reducing employee turnover is like step one.

Karin (16:01.869)
Y yeah.

Yeah.

Karin (16:10.775)
Yeah, yeah.

Yeah, well, I mean, I think it goes back to, you know, I I purposely don’t do a lot of episodes where I have like coaches and mindset people and all of that, but it gets into that world. Like how what kind of a human do you want to be? And at the core, when you decided to go to law school, why? Why did you do that? And this brings you back to that instead of all of that junk that kind of gets laid on top of you you and your shoulders and gets in the way.

Joshua Lenon (16:25.74)
Yeah.

Karin (16:43.765)
And it kind of takes you away from that core you know, kind of thing that dri drove you to being a lawyer. And while you were describing that, I was thinking about how I always prep for meetings, and it’s a very rough outline. And I will say I tend to use Claude, that’s my AI of choice, and he is verbose. So he, I will regularly say, pair it back. I don’t, I don’t want you to script this.

Joshua Lenon (17:04.641)
Yeah.

Karin (17:10.797)
Because that is not at all what I’m looking for. I’m looking for core outline. Give me a few points, like, you know, if I’m meeting a client for the first time, tell me some things I wouldn’t have, you know, that would have taken me 15 or 20 minutes that I don’t have right now and pull all this information and then I’ll take it from there. And I think that’s the important part is the like the AI does this much and then making sure that you like keep the human in the loop piece of it. Yeah.

Joshua Lenon (17:36.918)
Absolutely. one of our most used feature is just tell me what happened last in this case. and we find it’s being paired with phone calls. Right. And so somebody comes in and they’re like, what’s going on with my case? and you you pull up the matter and it has like what just happened. and so that way you’re able to better answer their question and do so in a way that’s fast and seamless and builds confidence and trust between the lawyer and the client.

Karin (17:42.217)
Yes, yes, yeah, yeah.

Karin (17:58.776)
Yeah.

Karin (18:04.971)
Yeah. Yeah.

Joshua Lenon (18:06.791)
or you can read that summary and be like, No, let’s go back like two or three points and and make sure I’m covering all of these things. and so I no.

Karin (18:13.473)
Yeah. Well an ex example that I have is that I have clients that have come and I I think I’m in year going into year eighteen. So I’ve had clients who have, you know, started other firms, they’ve come back and whatever. And I had one last year that came back and we had gone through a bunch of different iterations of their life as a lawyer. And

This is one place where I as a human was more like AI. Like I ho hoard all of my notes digitally. So I could pull out all of our notes from originally, when we originally set up their brand like 10 years ago, pulled stuff up and I was like, okay, look at this. Are we keeping any of this? Is there anything here worthwhile? But it just kind of went to like building this relationship with that client because they knew,

Joshua Lenon (18:55.649)
Huh?

Karin (19:04.223)
She knows me, she knows my history, she knows where I started, and maybe that’s not where we’re going, but it gives us this talking point where this is a different conversation that if he cold called some other agency, they wouldn’t have that information. And so it just gives you this solid kind of conversation that creates this relationship better.

Joshua Lenon (19:17.269)
Yeah.

Joshua Lenon (19:26.357)
Yeah. And so the differentiator you talked about, if everybody’s using the same AI tools, i is not the tool, it’s the person, right? Yeah.

Karin (19:30.648)
Yeah.

Yes, a hundred percent. Yeah. Yeah. I’ve I had a guest mention this, so I have to give them credit for it. But the the difference between the Terminator and who’s the guy, the Iron Man who has the suit. So Terminator is full robot, like you know, there’s no human and Iron Man has the human still inside. And so the if you visualize, if you’re a visual person like I am, yeah.

Joshua Lenon (19:49.965)
Okay.

Yeah.

Joshua Lenon (19:58.402)
That’s a good analogy. Or metaphor? Metaphor. Yeah. Hm.

Karin (20:02.219)
And I need the visual. So I need to picture, okay, is there still a human in there somewhere that is actually just controlling like the tool or the robot or the whatever technology? or have you gone full terminator? Because if you went full terminator, that’s probably not gonna go so well. Like that’s not that doesn’t work out well for the world.

Joshua Lenon (20:07.533)
Mm-hmm.

Joshua Lenon (20:18.015)
It’s not gonna go well. Yeah. Yeah. efficiency just for efficiency’s sake is going to get you into trouble. Yeah. Yeah.

Karin (20:25.335)
Right. Yeah. Yeah. You kind of remove the the soul of your firm and kind of purpose and all the all the good stuff.

Joshua Lenon (20:32.619)
So I want to take the Iron Man metaphor just a little bit further. There are often points in those movies where the AI suggests something or brings something to Tony Stark’s attention. Right. I’m trying to think of a good example off the top of my head. in the original Avengers, where he’s like, I’ll sacrifice myself and save everybody. The AI is like, Do you want me to call your loved ones? Yeah. Right? Which is like poignant and

Karin (20:35.906)
Yeah.

Karin (20:43.682)
Yes.

Karin (20:52.824)
Yeah.

yeah Yeah.

Joshua Lenon (21:00.961)
But it’s also interesting that they presented his AI as being like contextually aware and helping this meaningful moment be more meaningful, more impactful. Yeah.

Karin (21:08.074)
Yes.

Karin (21:13.877)
Yeah. Yeah. Just thinking outside of where he is in that moment too. And kind of bringing in functionality, I guess, because I I I see where we’re kind of tying it all in. I feel like it is little more functional. Like, you know, if he if he does die in this moment, like at least he’s made those final calls and yeah.

Joshua Lenon (21:18.966)
Yeah.

Joshua Lenon (21:25.035)
Yeah.

Joshua Lenon (21:31.307)
Yeah, yeah. He’s he’s he’s taken advantage of every moment and every opportunity. And I think that kind of comes back to what we talked about where AI is keeping track of the details and bringing things to your attention, based on context of which you might not be aware. and so that helps you be just a better law firm, which I think is is the primary driver of business always.

Karin (21:36.118)
Yes.

Karin (21:43.789)
Yes.

Karin (21:49.611)
Yeah, yeah.

Karin (21:54.659)
Yeah.

Karin (21:58.915)
So I don’t have a smooth transition, but in the report, it also talks about pricing and kind of this hourly billing. And I feel like we’ve been talking about this for years and years, as long as I can remember. But it’s still a thing. And regardless of the numbers, people, I don’t know why it hasn’t become do you feel like it’s getting more accepted? And why are we still talking about it to begin with?

Joshua Lenon (22:09.494)
Yeah.

Joshua Lenon (22:25.577)
honestly, the hourly fee is never going to entirely go away. Right? It’s it’s a decent method for charging for expertise. but I want to go outside the legal trends report and and bring up this this actually great ethics opinion from the Virginia State Bar. And I think it’s off top of my head, it’s ten ninety nine. is is the the ethics opinion number.

Karin (22:30.465)
Where do you think that is? Yeah.

Okay.

Karin (22:46.988)
Okay.

Karin (22:55.458)
Okay.

Joshua Lenon (22:55.645)
Up and and what it says is time spent on a task is only one possible way of measuring value. And so we always always get people who are like, well, I charge this hourly fee. And if I reduce the amount of time I spend on something, then I’m actually making less money. and what this ethics report said or ethics meeting said is if you’re charging five thousand dollars for something because you spent

Karin (23:04.873)
Yes, yeah.

Karin (23:14.211)
Yeah.

Joshua Lenon (23:24.295)
X amount of hours on it. That doesn’t mean charging $5,000 for it when you don’t spend that amount of time isn’t unethical. You just have to show why it’s ethical, right? And one of the things they talked about is expertise in building systems and picking tools and applying them appropriately. And we’re not seeing a lot of guidance like that. There are only two places I’ve seen guidance. There’s the Virginia State Bar and California mentioned it.

Karin (23:33.815)
Right. Yeah.

Karin (23:43.512)
Yeah.

Joshua Lenon (23:52.418)
somewhat in their their most recent practical guidance for AI and law firms. And everybody else is, I think, kind of waiting for permission to shift to better pricing models. We know clients want fat fat fees. We know the majority of matters are still tracking hourly and billing hourly. And so at some point we’re gonna see this shift. And that’s the efficiency paradox that you mentioned before, right? Firms are getting much more efficient.

Karin (23:56.354)
Okay.

Karin (24:06.797)
Yeah.

Karin (24:17.239)
Okay, yes. Yeah.

Joshua Lenon (24:19.559)
and because of that they’re having trouble meeting their billable hourly targets, their like annual targets.

Karin (24:24.385)
Right. Well, this is this is the I years ago I was a travel agent and I they could of course, you know, measure every moment of our day, how many calls we took, well all that stuff. And I was typically two to three times faster than the other ladies I worked with. And the I was late one day and my manager was like, What are you doing? And I’m like, does it matter if I’m five minutes late if I’m making three more calls a person? Like, why what are you measuring? And you

Joshua Lenon (24:33.879)
Yeah.

Joshua Lenon (24:39.65)
Wow.

Joshua Lenon (24:50.261)
Yeah. Yeah. Am I making you more money or not? No.

Karin (24:53.611)
Yeah, do you want me to slow down? Because I can do that. so you are punishing the faster, more efficient person, is what it comes down to. And so other industries have figured this out. Why would you punish your best worker and encourage them to slow down and do less work so that they can make more money? This the logic makes no sense to me. And so, why do you need to get permission from your state bar to like

run a better business, really. Like it makes no sense to me.

Joshua Lenon (25:22.785)
Yeah. Well, and the state bar’s not saying anything new. They’re pointing at these rules and they’re being like, Look, we flat out say these rules that these are non-exclusive ways of measuring value. Time and effort is one of them. And they list like six or seven already, right? and so I think the state bar is kind of in the same position. They’re like, guys, it’s here, right? We already gave you this guidance. So I have to spell this out. but what we’ve seen is

Karin (25:26.786)
Yeah.

This is dumb. Yeah, right. Yeah.

Karin (25:37.699)
Yeah.

Karin (25:43.863)
What are you doing? Right. Yeah.

Joshua Lenon (25:52.758)
firms that are having this trouble, one of their earliest approaches is they just raise their hourly fees. now they’re still seeing revenue improvements, right? And so I I think there is an appetite for like fast, efficient, accurate legal services. And so that’s not a wrong approach. but I think we’re gonna see in a lot of other areas there are firms that are

Karin (25:57.357)
Yeah.

Karin (26:01.996)
Yeah.

Karin (26:11.17)
Yeah.

Yeah.

Joshua Lenon (26:19.351)
Figuring out ways to shift to a flat fee, whether it’s an unbundled legal service, whether it’s by case segment is what one of the things we’re seeing, really interesting. and part of that’s features we built out where we have like segments in matters now and you can like create and label them. So it’s kind of chicken and egg. like, are they getting it or are we pushing it? Yeah. but we’re seeing this come out.

Karin (26:21.665)
Yeah. Yep.

Mm-hmm.

Yeah.

Karin (26:35.299)
Yeah.

Yeah.

Karin (26:42.263)
Right. I’m seeing that more and more from like, especially when it’s kind of a younger group of lawyers that are leaving to set up a new thing. One of the first things they’ll say in our conversations is, we’re we’re gonna do a flat fee. We’re gonna do we’ve got these packages, we’ve got it all kind of ironed out. And that’s where it’s like, okay. I kind of shift the conversation into this other lane where it’s like, okay, they’re they’re probably AI focused. Like the it kind of has this profile.

Where if you’re going down the flat fee lane, it seems like, okay, you’re a little ahead. And it’s still I just scratch my head at it though, because it’s like, what why are these really experienced lawyers who know exactly their work and their worth? Why why is it not happening there? And is it just that it’s comfortable and they just kind of know how to do the billing? I just it just doesn’t make sense to me.

Joshua Lenon (27:10.413)
Mm-hmm.

Joshua Lenon (27:36.14)
Yeah, I agree with you. And one of the things we’re researching this year really is pricing around legal services and the impact and perception AI has on consumer sentiment. honestly, one of the things that we’re discovering is there is way more price elasticity than I think people realize. It’s not one of the first questions people ask. it’s

Karin (27:41.059)
Yeah.

Karin (27:48.886)
Yes.

Karin (27:57.337)
Yeah.

Joshua Lenon (28:02.813)
Well, when will you get back to me and have you handled this type of matter before? Right. and so I think part of the reason we’re not seeing like an overnight shift of Flat Fs is because there’s price elasticity out there still. and

Karin (28:06.978)
Yes.

Karin (28:16.247)
Right. And and they can kind of maneuver it. Where I where we see it and why I hear from my clients is that it’s not the first question, but it’s a hurdle. And so if you can overcome that hurdle, like before you even get on that call, you can filter out the wrong clients and now the question is already answered. And so now we’re just negotiating some of the terms and the details and whatever, but they already have this comfort level with knowing.

Joshua Lenon (28:19.671)
Yeah.

Karin (28:44.789)
At le or it maybe it’s a range, you know, if they have sort of a flat range or, you know, however they’re setting that up. But now that it’s more of a psychological decision process that you’ve now removed that hurdle and made the the decision and you’ve kind of greased the process to get those clients through your system more easily.

Joshua Lenon (28:48.427)
Yeah.

Joshua Lenon (29:06.249)
I I totally see a benefit in that. And that’s one of the things that clients are telling us, right? Is price predictability is a big thing. Right? They’re already having the worst day of their lives. Who wants a huge bill on top of that? but that doesn’t mean I think they undervalue legal services. And that’s that’s where we’re having this weird kind of this struggle. Yeah. Is they don’t want to pay a lot, but they also know it’s valuable. So

Karin (29:08.011)
Yeah, yeah, yes.

Karin (29:24.577)
Right, right.

Karin (29:29.431)
Yeah, of where to put it and not sh right. Right. Yeah. And so how do you sh not how do you put the number where you’re not gonna shortchange yourself and but you also kind of remove the kind of the the psychological piece of it?

Joshua Lenon (29:43.37)
Yeah, we’re appropriately sharing risk, we’re demonstrating value. and we turn from negotiating over an hourly fee to now let’s talk about what you need and what I can provide and and how those two overlap.

Karin (29:47.18)
Yeah.

Karin (29:57.377)
Yeah. Okay, so before we get into the book review, I want to just do one other brief discussion and it’s around AI policy. And the reason I bring this up related to marketing is because, and this may be surprising, but policies on your website especially are super important. And I’m seeing more and more clients who are getting having problems with this. So yeah, so you have to have your policies, especially your AI policy, your

Joshua Lenon (30:05.503)
Okay.

Joshua Lenon (30:21.707)
Karin (30:26.691)
Privacy policy, your terms, you know, all of that really dialed up and we have a process for that. And I’m this is not an advertisement. but it’s super important related to your marketing and also just your risk in general. So can you talk a little bit about? I know you have a section of the legal trends report about your AI policies and how I think in the report it said 57% of solos and 55% of small firms have no AI policy.

Joshua Lenon (30:31.019)
Mm-hmm. Yeah.

Joshua Lenon (30:51.797)
Yeah, they either have no AI policy or they aren’t aware of one, which is the same thing. Right? Yeah. and I and I want to give you another stat on that, and that’s over seventy percent of clients are telling us they want to know if their law firm is using AI. Now that could be good or bad, right? Like tell me you’re being efficient or make sure I know what you’re doing with my data when I give it to you. there’s there’s a whole host of reactions within that seventy percent, but it’s actually higher than the year before.

Karin (30:55.147)
Okay. Yeah, right. Exactly.

Karin (31:08.437)
Yeah right.

Karin (31:17.698)
Yes.

Karin (31:21.516)
Yeah, of course.

Joshua Lenon (31:22.101)
More more clients are saying, I want to know if my firm’s using AI. And so I think having a public AI policy is actually a really great idea. and on the Clio blog, we’ve written about this. We have a templated policy. I’ve actually worked and presented with the Virginia State Bar Association and the New Jersey.

Karin (31:26.19)
Yeah.

Karin (31:30.841)
Yeah.

Joshua Lenon (31:43.634)
State Bar Association on the moves there on AI policy. in fact the Supreme Court of New Jersey has actually published a model policy where they’re like, guys, this is a really good idea and you should have this. And so what the policy does is it lets your client know, quite frankly, how you’re using technology to enhance your services. And if you position it that way, I think it actually helps a lot.

Karin (31:54.839)
Yeah. Yeah.

Karin (32:13.047)
Yeah.

Joshua Lenon (32:13.083)
one of the things we are consistently hearing in in interviews we do with lawyers is they’re having to deal with clients who are turning to AI even when they have a lawyer, right? and there’s a whole host of problems with that. Right. and so you know AI is going to be a problem anyway. How can you reduce it and leverage it?

Karin (32:21.889)
Yeah. Right.

Karin (32:27.731)
Right. Yeah. Yeah.

Joshua Lenon (32:39.559)
Leverage that policy to help you with your clients. Like don’t turn to a free version of Chat GPT. Don’t upload our emails. Yeah. Yeah. Like all of these things that clients have a reason to do.

Karin (32:39.735)
Right.

Karin (32:45.591)
Right. Yeah, gosh, yeah. I mean, but I feel like at the same time, lawyers and law firms need to just kind of recognize it for what it is. Like if I go to my doctor and I d have some test done and then it comes back and it says XYZ, I’m gonna Google it. And I realize, you know, I am not getting a doctor’s report, but if it’s something that, you know, the Mayo Clinic is saying, you know, we all kind of r know how to

Joshua Lenon (32:55.927)
Yeah.

Joshua Lenon (33:05.078)
Yeah.

Karin (33:13.817)
Take what we read on the internet with a grain of salt, hopefully. You know, I’m sure some people don’t. Right. but I think what’s important and can my point is to not say you can’t use AI, you can’t use Google, because that’s just not realistic. Like it’s going to happen. And then have the policy and the disclaimer for, hey, if you use AI and Google and you rewrite our emails or you, you know, change this, this, or this, like here’s what’s gonna happen.

Joshua Lenon (33:18.057)
I I wish that were the case. Yeah.

Karin (33:42.809)
And recognize that that this is kind of where the world is now, and that’s a likely scenario, but we’re not gonna be responsible for what happens over there.

Joshua Lenon (33:46.594)
Yeah.

Joshua Lenon (33:53.336)
So as a tech vendor, like my first initial response is how can we use tech to solve this problem? and one of the things I’m actually advocating is we actually need to build AI into our Clio for clients service. So where they’re not going out to an outside AI, but instead asking questions and raising issues within their own matter in like a confidential shared chat with the attorney.

Karin (33:58.903)
Right. Exactly.

Karin (34:11.832)
Yeah.

Karin (34:17.464)
Yeah.

Joshua Lenon (34:21.387)
That might extend attorney client privilege, that might enable work product doctrine protection. and so I’m trying to think really practical about this problem. but yeah, but we’ll see. I’m I’m inter I’m like advocating for that internally, but there’s so many things to build right now. but when it comes to the policy, right? clients want to know. and it actually better focuses, I think, the law firm.

Karin (34:24.131)
Sure.

Karin (34:31.265)
Yeah, it’s like a safe space.

Karin (34:40.895)
Yeah, well exactly. Yeah. Yeah. Yes.

Karin (34:49.058)
Yes, yeah.

Joshua Lenon (34:49.441)
Because they do in in creating these policies ask questions about their tools that force them to recognize both the benefits and the limitations, right? What’s the appropriate use case and when isn’t it? and here’s yeah, yeah. And and I think it also sets up a system for how to evaluate and bring in new tools, which I think ties back to that that stat I said before, where sixty nine percent of law firms that were widely using AI were reporting.

Karin (34:58.179)
A hundred percent. Yeah. Mm-hmm. And when do we stop? Yes. Yeah. Yeah.

Karin (35:11.096)
Yes.

Karin (35:17.934)
Yeah.

Joshua Lenon (35:18.933)
positive significant financial benefits. if you have a policy that doesn’t account for change over time and adaptation, not only are you doing a disservice to your clients because you’re not you’re not telling them really what you’re working with, you you might be setting up your law firm for kind of a shadow IT system where your employees go out and are using the tool because it makes their life easy. And so yeah.

Karin (35:21.336)
Yes.

Karin (35:33.528)
Yeah.

Karin (35:37.837)
Yeah.

Karin (35:42.487)
And they don’t tell you about it, and it’s not, it doesn’t have any rules or parameters or safety nets around it, and that is so much more dangerous. And we do the same thing. we we write a lot of content for our clients, and that is the first place where people are very worried about it being AI created, and so we have very strict parameters around which how much is human, how much is AI, and we basically just use the tools to make it better, but it is human.

Joshua Lenon (35:49.261)
Mm-hmm.

Joshua Lenon (36:10.913)
Yeah.

Karin (36:12.441)
kind of like what I was talking about in terms of when I set up a meeting where it’s an outline and then I tell AI to stop at this certain point. Like I will take it from here. and then AI come in after I have done my part and refine. Look for typos, look for this, you know, make it better, look for how how is it gonna show up SEO wise and just make you know. Yes, exactly. A hundred percent. Exactly. Yeah.

Joshua Lenon (36:31.913)
Am I using jargon rather than lay vocabulary, right? All of these things that we need to keep in mind, right? When you think like a lawyer, you write like a lawyer. but our clients don’t aren’t lawyers and we need to make sure we’re communicating with them. Yeah. Yeah.

Karin (36:42.902)
No.

Exactly. So kind of putting setting those, putting the thought into it, first of all, and putting some rules and parameters and like you were saying, limitations, but also using it where it is also useful. Cause I think a lot of these conversations focus on the negative stuff and all the bad things that can happen. And there’s so much good stuff there. So like don’t throw the baby out with the bathwater, you know, like make sure that you also get the good stuff too. Yeah. Yeah.

Joshua Lenon (36:50.743)
Mm-hmm.

Joshua Lenon (37:03.148)
Yeah.

Joshua Lenon (37:11.295)
Yeah. Yeah, I agree with you. the the twenty twelve change to the model rules of professional conduct, rule one point one, competence, right? tells lawyers to look at the benefits and risk of technology and lawyers always focus on the risk, but the benefits need to be considered as well. And it’s becoming more and more apparent that there are a lot of benefits here. it’s a win for law firms and a win for the clients. Yeah.

Karin (37:27.437)
Yes.

Karin (37:34.113)
Yeah, it’s kind of sad you have to say that. Yeah. But it’s like, hey, let’s, you know, remember there was some good stuff here too. Like, yeah. okay, so it’s time for the book review. I know you had a lot of different options. There’s so much out there now about and we’ve covered a lot of different things, marketing, AI, all of this good stuff. So what’s the book that you are going to add to the library and recommend it?

Joshua Lenon (37:41.537)
Mm-hmm. Yeah.

Joshua Lenon (37:49.9)
Yeah.

Joshua Lenon (37:59.298)
So we had a couple of we we floated beforehand, right? And I was like, I can’t choose. But given this conversation, I’ve got to go with Cointelligence by Ethan Mo Mollock. So he’s a professor at Wharton University. He studies AI and its impact on law. I’m reading it because he’s speaking at Cleocon, but also because of the subject matter itself. And the book is really about not looking at AI as a tool to replace workers.

Karin (38:02.359)
Yeah.

Karin (38:09.176)
Okay.

Karin (38:12.686)
nice.

Karin (38:18.06)
Okay.

Karin (38:27.585)
Yes. Yeah. Yeah.

Joshua Lenon (38:27.743)
Or to replace judgment, but instead to enhance it. act as

Karin (38:36.505)
Sorry.

Joshua Lenon (38:38.315)
Thanks guys.

Joshua Lenon (38:44.141)
Okay. Thank you. I’ll be done in just a moment, okay? All right. Swim lessons. No. No. And and our my father-in-law’s been really kind and covering for me on a busy day. Yeah. So sorry for the interruption. I’ll just restart. so prior to recording this, we actually like talked about all the different books that I’m considering for this section and

Karin (38:50.349)
Yeah, that’s awesome.

Karin (38:56.685)
That’s amazing.

That’s okay, we’ll cut that out.

Karin (39:05.335)
Okay.

Joshua Lenon (39:12.893)
given our conversation, the one that really jumps out to me is Co-Intelligence by Ethan Mollock. He’s a professor at Wharton School of Business. He studies the impact of AI on work. And this book, I think, really frames how I’m approaching AI and how I think we’re building a philosophy of it, both internally in our work at Clio and in the features that we’re building. And the idea is that AI is not a replacement for people.

Karin (39:21.634)
Yeah.

Karin (39:32.161)
Yeah. cool.

Karin (39:41.143)
Yeah.

Joshua Lenon (39:41.378)
But instead an enhancement of people. So all the examples that we’ve brought, right? finding details in context and bringing them to your attention at the right time, being the aid to Iron Man inside the suit, right? This is exactly that approach that this book is talking about. And it’s giving real world examples of how people from every industry are using AI to extend themselves and their productivity and their efficiency and their impact.

Karin (39:46.136)
Yes.

Karin (39:51.17)
Yeah.

Karin (39:55.425)
Yes. Yes.

Karin (40:07.384)
Yeah.

Karin (40:11.341)
Yes.

Joshua Lenon (40:11.622)
and not just looking at it as how am I gonna compete with AI? Because that’s not the world we’re moving into.

Karin (40:17.751)
Yeah, I also feel like that’s such it’s it’s kind of beautiful because the it ties into or kind of resolves the fear part of it. And then that’s the fear part that everyone that I’m seeing, all these headlines that I’m seeing that are are leading with is your job is dead. Like you are this is such a problem. Like all these people are gonna lose these jobs, all of these, you know, there’s all this problem because AI is just coming for you and your job. and

Joshua Lenon (40:26.914)
Mm-hmm.

Karin (40:46.857)
that is saying the opposite. Like it is, it is definitely not there’s value in your humanness, which I’m not sure if that’s even a word, but the human part of that Iron Man analogy is the core of it. And AI is just, you know, kind of strengthening and kind of you know, adding a little extra expansion, like you’re saying. and it it kind of alleves that the issues and the fear and the and I think that’s where a lot of

Joshua Lenon (40:53.079)
Mm-hmm. Yeah.

Joshua Lenon (41:07.809)
Yeah.

Karin (41:14.253)
firms honestly are are stopping with it too. Cause they’re they’re kind of tied back to that risk that where it’s that inherent kind of lawyer behavior, like I am, I’m just gonna if it’s risky, it’s a no. and so by saying, okay, no, it’s it’s just gonna make you better, then you know, it’s it’s nicer.

Joshua Lenon (41:16.951)
Mm-hmm.

Joshua Lenon (41:30.955)
Yeah. And and honestly, it it’s in line with the lawyer law firm business model that’s existed for decades, right? Leverage employees in order to create work product that we then provide to clients. This is just another tool to leverage and get that work product out there. That’s part of why we named our AI tool Clio Work. Yeah. Yeah. Yeah.

Karin (41:36.363)
Yes, yes.

Yes.

Karin (41:47.863)
Yeah. Yeah.

Karin (41:53.429)
Nice. Well that makes sense. Bring it all full circle. All right, Joshua, what is the one takeaway that you would like after someone’s listening to this whole episode? We’ve covered a lot. and we’ve you know got the legal trends report and it’s coming out right before Clio this year, right? okay, so in October.

Joshua Lenon (42:10.015)
Right at ClioCon. So October twenty sixth will be the latest Clio legal trends report. honestly I’m more excited about this one than I’ve been for gosh. Well, I get more excited every year. So that’s probably the wrong framing. because we always have something new to discuss. But one of the things I mentioned before is is AI and legal is still so nascent, right? and what we have now is a body of usage of AI by Cleo customers.

Karin (42:16.088)
Okay.

Karin (42:22.398)
Okay. Yeah.

Karin (42:31.649)
Yeah, yeah.

Karin (42:37.717)
Yes. Yeah.

Joshua Lenon (42:39.691)
That we can analyze in the anonymous aggregated fashion, like we do in all of our legal trends reports. But now it’s AI specific and it’s it’s over a period of time. and so we’re really starting to suss out some big changes that we think are happening. Yeah. and so I cannot stress enough if you are a law firm that is interested in just adapting your law firm into the future, right? Just for sustainability, much less growth and improvement.

Karin (42:44.963)
Sure.

Yeah, yeah.

Karin (42:54.755)
What’s going on? Yeah, yeah.

Karin (43:07.746)
Yeah.

Joshua Lenon (43:09.417)
it’s gonna be a great legal trends report.

Karin (43:12.023)
And it’s free. Like I just wanna like underline that part. It’s like yes.

Joshua Lenon (43:14.005)
Yeah. It’s for everybody. We think we think it’s it’s for the good of the industry that we publish this type of information.

Karin (43:18.965)
Absolutely. It’s it’s just kind of this baseline that I really feel like everyone should be paying attention to every year. Because like I said in the intro, if you’re seeing numbers, everyone is basing these numbers off of this report because you guys have spent so much time and effort. And I can’t think of another organization that has the kind of data that you do and the resources to put something like this together. And so everyone just kind of references back to it because it’s like, well, I I’m not gonna do the report. I’m just gonna talk about it. I don’t have the I can’t do that.

Joshua Lenon (43:45.14)
It it’s honestly it’s a years long project at this point with a huge team. and so you you mentioned like Joshua, the guy who does legal transport. I am like a teammate working with experts in data analysis, in data modeling and graphic design, right? So we have like you talk about I love a chart. We have really cool charts. but I’m not making those charts. I’m helping interpret those charts and understand them. No.

Karin (43:48.641)
I believe it. Yeah.

Karin (43:56.75)
Yeah.

Yeah, that’s so cool.

Yeah. Yeah totally.

Karin (44:11.001)
Well, but that’s what a chart is for me. For people who are visual learners like me, I need to see it and then all of a sudden it’s like it’s just, you know, clicks. And it’s like, I see how this thing is moving over here, and then this is obviously different than that. okay, so what’s the big takeaway that you’d like someone who’s listening to the episode to get from everything that we’ve talked about?

Joshua Lenon (44:18.722)
Yeah.

Joshua Lenon (44:31.457)
I think there is a rising expectation by lawyers and clients that AI is going to be a part of legal services. And so the question is how do we approach that in a way that is transparent and mutually beneficial? And so AI policies, just being honest when they ask are using AI, is a great way for you to both show

Karin (44:40.525)
Yes.

Karin (44:49.293)
Yes.

Joshua Lenon (44:59.787)
that you are building your firm and your services and enhancing yourself to clients while also bringing them into a new type of legal services that can be mutually beneficial for clients and firms. So just lean in and be transparent. That’s what you got to do right now.

Karin (45:15.969)
I love that. I think that’s so helpful just to get over, you know, we were talking about the hurdles that the clients make. And these hurdles that lawyers make almost always start with that fear of the risk there. And so this is like just a little push. Like, let’s get over it. Let’s you can do it. Like I’m picturing a little kid on a tricycle, like, come on, you can you can do it. I love that encouragement though, because there is, like we said, like everybody talks about the risk benefits and they spend so much time over on the risk.

Joshua Lenon (45:30.387)
Yeah. Yeah.

Karin (45:45.507)
There’s so much for the benefit-wise. So just picture that, you know, sunny light at the end of the tunnel. There’s there’s good stuff there.

Joshua Lenon (45:48.493)
Yeah.

Joshua Lenon (45:53.217)
There it really is. Yeah, and I’m finding new ways to use it every day. It’s absolutely unbelievable. Yeah. I actually spend so much time in Cleo Work, I’m not I have to like play catch up to Claude with the rest of our organization. They’re like, Look at all these things I did in Claude. I’m like, Look at all these things I did in Clio work. And they’re like, What? Yeah. No.

Karin (45:56.661)
Same. Yeah, my kids are actually kind of tired of hearing about me and Claude. My best friend.

Karin (46:07.395)
Blow yourself up. Yeah. Ugh.

Karin (46:14.499)
Yeah. It’s it it is like finding that balance and figuring out where it works for you. That’s that’s an experiment as well. But thank you so much. Joshua Lennon is the lawyer in residence at Cleo and thank you so much for coming back again. It’s always such an interesting data filled conversation.

Joshua Lenon (46:21.527)
Yeah.

Joshua Lenon (46:29.314)
I love our chats. No. No. and honestly, it’s a re I think important that we do come back and look at how this year ended, right? So let’s let’s talk January. Let’s let’s do year end report. Where where did we end up and did our predic predictions align? Okay. Thank you. Take care.

Karin (46:38.035)
Yes. A hundred percent. A hundred percent. Let’s do it.

I love that. Okay, I’ll schedule it. All right, thank thanks again.