Capital + Counsel

Most law firms buy their AI. A licence, a pilot, a line in the technology budget. Thomsons built its own, and now runs a separate law firm on it. Ben Lehman, Chief Innovation Officer of award winning law firm Faculti and the creator of its platform Fai, explains why.Ben started out writing computer games until his parents told him to do something more serious with his life, so he became a lawyer. He went on to build a legal automation company, and today he runs the software development team behind Australia's latest AI native law firm platform.Faculti started life around four years ago as a spin-out from Thomsons, built around the firm's high volume, repeatable practice groups and rewarded on delivery at scale rather than hours spent. It now has just over 120 people across offices around the country. Fai, the platform underneath it, has been rolled out to 1,000 staff across Thomsons and Faculti and deployed directly to clients.In this conversation Ben covers why Thomsons chose to build rather than buy and why he calls the workflow layer a firm's crown jewels, the difference between tech-enabled and AI native, why he wants a lawyer in the loop and not just a human, what ClearSpire and Atrium got wrong, the platform metrics Faculti runs on, how market rate fixed fees hold up when clients expect AI savings, and why he thinks graduates will soon start out producing the work of a third or fourth year lawyer.For managing partners weighing whether to build, buy or restructure around AI, this is a look inside a firm that has already made the call.Connect with Ben on LinkedIn: https://www.linkedin.com/in/benlehmanprofile/Connect with Kim on LinkedIn: https://www.linkedin.com/in/kimwiegand/Chapters00:00 Intro01:06 From writing computer games to becoming a lawyer03:51 What drafting and software development have in common05:26 How Faculti started inside Thomsons08:56 Tech-enabled vs AI native11:09 Why they built Fai instead of buying16:09 What it cost, and why capital wasn't the driver21:33 What Fai actually does27:05 Lawyer in the loop30:59 Training an AI native team39:00 How long the competitive advantage lasts45:33 Clients, AI savings and fixed fees51:50 Why ClearSpire and Atrium failed, and the metrics that matter59:27 Graduates and the raised floor68:20 Where legal services will be in five years70:31 Will other big firms spin off an AI native firm?71:22 The cost of change73:03 Who is Faculti, and what is FaiCapital + Counsel is about capital, governance and technology reshaping the business of law. Season 1 is The Cost of Change.

80% of legal work is still billed by the hour, and Ben Deverson thinks that ends within three years. How to grow a law firm when the pricing model underneath it changes.Ben isn't a lawyer, and he says that's the point. He spent 30-plus years across professional services, including a stint as managing director and equity principal of a boutique law firm in Brisbane, and now runs Law Organised, a consultancy that only supports the legal profession. He sits across the table from firm owners every week.His view on what separates the good firms from the rest: the best ones are boring. Systemised, documented, with every matter flowing through the firm the same way. Like a marching band, in his words.We also get into the shape of the Australian market. Around 80% of firms are owned by a solo principal. The top 50 employ 21% of all private practice solicitors but make up 1% of the market. A quarter of women in partnership hold actual equity. And a large cohort of owners over 65 will exit the profession in the next five to ten years with nobody obvious to sell to.What we cover:● Why the best law firms are boring, and the marching band analogy● The difference between owning a firm and buying yourself a salary● The real shape of the market: 80% solo principals, 1% big law● Partner in name only, and the 31% equity gap● The rise of the female-led microfirm● Succession, and the owners over 65 heading for the door● Why 80% of services are still hourly, and why he says that becomes a minority within three yearsGuest: Ben Deverson, Law OrganisedLinkedIn: https://www.linkedin.com/in/bendeverson/Connect with Kim on LinkedIn: https://www.linkedin.com/in/kimwiegand/Capital + Counsel is about capital, governance and technology reshaping the business of law.-------0:00 Intro1:44 He's not a lawyer, and he says that's the point1:59 Why the best law firms are boring3:03 Legal operations matter more than technical skill4:52 From boutique law firm CEO to Law Organised5:40 Why the top 50 sucks up all the oxygen6:35 The real shape of the market: 80% owned by a solo principal7:52 The rise of the micro practice8:55 How to grow a law firm deliberately10:23 Growing in spite of yourself, and becoming the bottleneck11:40 Why 95% of new firms set up as an ILP14:26 Moving between structures, and how easy it actually is15:06 A record number of women in partnership15:52 Partner in name only: the 31% equity gap17:42 Removing yourself from your own firm18:11 Documenting every function, down to how mail is sorted20:32 People buy people, not lawyers26:14 Flexibility, and what it actually means30:10 Remote staff for regional firms, and why it isn't offshore35:01 The mammal problem in legal35:27 Succession and the partnership model38:39 What a law firm is actually worth40:09 Advising firms through succession44:07 Systems, processes and the marching band49:55 Why 80% of legal work is still billed by the hour50:18 The three year prediction56:31 Why the mindset shift takes longer than three years57:10 Law firm owners and outside investment60:56 Backing smaller firms with capital and know-how64:16 The rise of AI-native law firms

How does an Australian law firm go from six lawyers to six hundred, stop being a partnership, take private equity, and triple in size? David Kearney, co-founder of Wotton Kearney, explains.David co-founded Wotton Kearney in 2002 with Phil Wotton: two partners and four other lawyers, focused on insurance law. Today the firm has 14 offices across four countries, around 100 partners, 600 lawyers and a team of more than a thousand.The structural change underneath that growth is the part most firms are still circling. Wotton Kearney is not a partnership. The people called partners internally are shareholders, and the firm took a minority private equity investment roughly four years ago. It has tripled in size since.In this conversation David covers what corporatising actually changed day to day, why he draws a hard line between traditional private equity on a three to five year flip and the patient capital they took, how partner remuneration and ownership work under a company structure, and what he says is the one thing he is proudest of across 24 years, which is that the message never changed.For managing partners weighing external capital, a merger, or a move away from the lockstep partnership model, this is a rare look inside a firm that has already done it.Connect with David on LinkedIn: https://www.linkedin.com/in/djkearney/Connect with Kim on LinkedIn: https://www.linkedin.com/in/kimwiegand/Chapters00:00 Intro01:16 2002: two partners, four lawyers, one message02:20 Building the culture early04:17 Why they corporatised05:37 Partners became shareholders08:30 How remuneration works under a company structure09:13 The decision to look at private equity10:44 Tax and distribution in a partnership vs a company12:08 The Slater and Gordon comparison, and why it's different13:09 Ten or twelve conversations with PE firms15:14 Other models emerging in the market16:48 Bringing the partnership along: the Q&A with the PE firm18:11 The structure, and why it wasn't just selling a percentage20:18 Funding technology investment21:49 Attracting laterals without a lockstep package25:04 Explaining "business of value" to partners26:38 Partners investing their own profits back in28:11 Four years in: what has actually changed30:33 Buying shares instead of a remuneration increase31:29 The board, governance and finding a new chair36:03 What corporatising means for clients39:15 Technology, AI and the leverage model41:17 46 graduates, their biggest intake42:25 Pricing pressure in the insurance market46:48 Where the mid tier goes from here49:58 The redundant metrics traditional partnerships still use51:05 Share price as a metric54:24 Engaging senior lawyers on the path to partner57:07 Taking a different structure to market58:08 How partners work together on client growthCapital + Counsel is about capital, governance and technology reshaping the business of law.

Most firms hear "capital coming into legal" and think private equity. Courtney Worrall has spent nearly 20 years banking law firms, and she says that is one option on a much longer menu.Connect with Courtney on LinkedIn: https://www.linkedin.com/in/courtney-worrall-2b635a40/Connect with Kim on LinkedIn: https://www.linkedin.com/in/kimwiegand/In this episode Courtney walks through what is actually available to firms funding transformation: traditional term debt for premises and infrastructure, partner capital contribution loans that most firms put in place 10 to 20 years ago and have never right sized, and working capital facilities. She explains why debt preserves partner autonomy and is usually a great deal cheaper than equity, and when private equity genuinely is the right call.We also get into lock up, which Courtney calls the number that should keep managing partners up at night. Every 10 days of lock up ties up around $30,000 of cash for every $1 million of revenue. For a $20 million firm that is roughly $600,000 sitting with clients instead of in the business. Her question: why are firms acting as an interest free lender to their own clients at the expense of their own profitability?The conversation covers the reluctance of younger lawyers to take up equity partnership, the financial literacy gap among incoming partners, what banks actually look at beyond top line growth, the squeeze on the mid-tier, and why choosing and paying for an AI platform is only 20 percent of the job.Chapters00:00 Trailer00:50 The cost of change01:48 Meet Courtney Worrall02:27 What firms are struggling with right now05:17 The full funding menu, not just PE09:03 Partner capital and the equity partnership problem11:23 Lock up and what it really costs14:40 The financial literacy gap19:50 What banks look at beyond top line growth24:02 What scale looks like now25:41 Laterals, exits and the first $10M partner28:29 The squeeze on the mid-tier30:46 How AI is changing the funding conversation38:15 When giving up equity is right, and when it isn't47:07 The biggest cost of changeCapital + Counsel is about capital, governance and technology reshaping the business of law. Season 1 is The Cost of Change.