Friendly NewLaw world domination

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Peter Aprile: [00:06] Hi, and welcome to Building NewLaw. It’s a podcast hosted by me, Peter Aprile, and my colleague, Natalie Worsfold.

[00:13] In each episode, we interview lawyers, legal technologists, and other like minded people at the forefront of NewLaw. We hope that the podcast connects to NewLaw community and helps us all learn more about the approaches that are changing the way that we practice law. Enjoy the show.

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Sponsor: [00:32] The Building NewLaw podcast is supported by Counter Tax Lawyers, a new type of tax controversy and litigation law firm. To learn more about Counter, go to countertax.ca.

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Peter Aprile: [00:43] On this episode, we’re talking to Peter Carayiannis, who’s the managing partner of Deloitte Conduit LLP.

Natalie Worsfold: [00:53] There’s no doubt that Peter is a change maker. Well known as the founder of Conduit Law and for his StandIn app, Peter is a shining example of somebody blazing the NewLaw trail.

Peter Aprile: [01:03] Peter started Conduit in 2012. Unbelievably, in four very short years, his team has established Conduit as a market leader in providing embedded legal counsel. Conduit has helped change the perception of on demand law firms and on demand counsel.

Natalie: [01:19] It’s fair to say that Conduit’s success caught the attention of many people in the legal world, and even in the accounting world. Back in March, Conduit announced an affiliation with Deloitte. Deloitte’s continued expansion into the legal world, particularly in the non tax sector, is causing a great deal of excitement and chatter.

Peter Aprile: [01:35] We are really happy to chat to Peter today about his worldview, as well as the growth of Conduit, and the new Deloitte affiliation. Here’s our interview with Peter.

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Natalie: [01:43] Hi, Peter. It’s wonderful to have you with us.

Peter Carayiannis: [01:46] Thanks very much. It’s really a pleasure to be here. I’ve been listening to the podcast since it started. They are fantastic. It’s an honor to be invited.

Peter Aprile: [01:57] Tell us a little bit about how Conduit Law started and why.

Peter Carayiannis: [02:02] There’s probably several versions of this story...

[02:03] [laughter]

Peter Carayiannis: [02:03] but for the purpose of the podcast and this is the factual one I left a law firm many years ago. I thought that there was maybe an opening in the market for particularly small to mid size enterprises, and entrepreneurs who didn’t want to deal with the billable hour. They needed sophisticated legal advice, but they maybe didn’t need a full time, in-house lawyer.

[02:26] In fact, I was inspired to do this at the time, when someone told me about CAs who are acting as on demand CFOs for junior mining companies. I thought, “Wow. If a CA could be a part time CFO, then why couldn’t a lawyer apply the same idea or thinking to the general counsel role?”

[02:44] And so, I set out in Toronto, trying to figure out a way to make that work. I had one client and I remember saying to my then girlfriend, my now wife, “You know, it’d be fantastic if we could have three of these by next year.”

[02:58] In fact within six months, we had about six clients that each wanted me on a fractional basis one day a week. I was developing the idea of being the embedded on demand general counsel for the small to mid sized enterprises.

[03:11] What I learnt over time, though, is that more and more clients were interested. When they would find out about my arrangement, they’d ask if they could retain me as well, but for conflicts purposes or timing purposes or scheduling purposes, I wasn’t able to accept it.

[03:25] The other thing happened over time is that the lawyers started to be open to working in a different way. So, in 2004 when people would talk to us about it, when I’d walk away from the conversation, friends would casually whisper in my wife’s ear and say, “Peter should call a head hunter and get his career back on track.”

[03:45] [laughter]

Peter Carayiannis: [03:45] They would slide the business card of the local head hunters to her. Luckily, she never passed those on because I had a lot of passion for what I was doing. I wanted to do it, but more importantly, I’d found a market.

Peter Aprile: [03:55] What was it about you that saw this opportunity and saw this opportunity as being attractive?

Peter Carayiannis: [04:02] I don’t know that there’s anything unique about me. What it was was that I dealt with a number of entrepreneurial clients. I was trying to give them value. The billable hour was always an impediment. I thought, “A real easy way to get this out of the way would be fixed fee.”

Peter Aprile: [04:19] You were getting push back from clients and that’s how that seed was initially planted?

Peter Carayiannis: [04:23] I don’t know if “push back” is the right word, but I’d say that the conventional thinking is we are a billable hours environment. We sell billable hours. There’s no client in the history of clients who’ve walked into an office and said, “Hey counselor, I’d like to buy some of your time.”

[04:39] Every client comes in with a problem and they’re looking for a solution. It seemed to me like the billable hour was always causing friction. If we could get the friction out of the system, then we can move on to value.

Peter Aprile: [04:51] Do you think that model, do you think it’s appropriate for all types of matters or certain types of matters?

Peter Carayiannis: [04:58] We’re an alternative fee shop. About 90 percent of our revenue falls under the category of alternative fee arrangements, and there’s a variety of different fee arrangements that we would look at with clients. But that still means 10 percent is billable hour work.

[05:11] Let’s be clear here. Time is not irrelevant. We have to know how to budget our time. We have to know how to budget our resources. We have to know what kind of work we’re going to be doing, but the time multiplied by dollars doesn’t really accurately convey the value that we provide to clients.

[05:32] Is the billable hour entirely irrelevant? No, I wouldn’t say that. In fact, there are times where a time and material’s basis quote is maybe the only thing that can be done. Is the billable hour the only way to construct this? Most, certainly, it’s not. It’s probably not the most desirable way to do it.

Peter Aprile: [05:50] What was the response that you were getting from early days client?

Peter Carayiannis: [05:54] There’s interesting technological piece that goes to this. In 2004, we had this ability with a laptop and some kind of an Internet connection and a Blackberry to go from client to client. The entrepreneurial clients, they thought it was the greatest thing ever.

[06:10] All of a sudden, they had their lawyer on site, on demand, in the office, by the water cooler, coming to management meetings, showing up at the staff picnic. That integration into the business really helped in the delivery of the service. That’s what they liked.

Natalie: [06:26] Isn’t that building of trust, is that what you’re looking at?

Peter Carayiannis: [06:30] There’s a lot of ways to build trust. Any good lawyer, regardless of what model they’re using, will find a way to build trust with their clients, but proximity helps develop trust. Proximity helps develop an understanding of one another. Proximity allows for the lawyer to get a better understanding of risk and risk appetite.

[06:49] There’s also a level of accountability. It’s pretty easy to tap off an email from your office. It’s less easy to do that if the sales person or the HR professional or the founder of the company can just walk down the hall and say, “What’d you mean by this?” In-house lawyers understand that their advice, it must be accurate. It must be correct, but it’s also got to be sensible, and actionable and reasonable.

Peter Aprile: [07:14] It’s obvious to see why clients would like that and frankly, I’m sure you as counsel enjoy that as well. If we’re here to help people, if the reason why we all went into this was we want to solve problems, then drop me in the middle of the problem and I can be an active participant in fixing it from soup to nut.

Peter Carayiannis: [07:30] That’s right. You also have an opportunity to be in at the front end of the problem, or maybe to prevent it. A lot of the traditional law firms, because of the nature of the business, they’re really optimized for that 911 phone call. That’s not what we’re doing.

[07:45] We want to provide a host of services and advice and solution about making the house safe. If the traditional law firm is who you call when the house is on fire, Conduit’s who you call when you want to have your systems inspected and batteries replaced for your fire detection system. That means we get to be there on a regular basis. We come in, we inspect, we advice, we look, we talk.

Peter Aprile: [08:10] In terms of Conduit’s innovation and its evolution, do you think it is more tech innovation using that mobility in the early days, or do you think it’s more a philosophical client-centric innovation?

Peter Carayiannis: [08:24] It’s a little bit of both. Anybody who knows me who’s listening to this right now, if they hear me talking about tech, they’ll probably be rolling their eyes because I’m probably the least technologically proficient person in most conversations.

Peter Aprile: [08:35] [laughs] But you did get an award...Conduit won Innovative Law Firm of the Year Award...

[08:41] [crosstalk]

Peter Carayiannis: [08:41] Yeah, we did. [laughs] But my technological background is more like rebooting the computer or calling for help.

Peter Aprile: [08:50] “I’ve restarted. What do you mean that didn’t work?”

Peter Carayiannis: [08:51] Exactly. I look at the technology purely as a way to enable the service. We need to be responsive to what the clients want, be client centric and then just figure out what kind of tools we can put around that. The mobility tools, laptops and Blackberries and iPhones and Cloud services allow us to be more on the go and not necessarily tether to one location.

Peter Aprile: [09:14] If you don’t view yourself as a tech guy, then how do you know what tools are available to you to better deliver services to the clients?

Peter Carayiannis: [09:23] I have a pretty good sense of knowing what I know and also knowing what I don’t know. I know about interface. I know about tools. I know about how to get to where I want to be. I have no problem working collaboratively with the tech guys and gals who can actually solve the problem.

Peter Aprile: [09:39] That’s the innovation or the change in mindset I think about when I see you. You’re constantly driving to the solution. I think that that’s what people are really responding to in you and really responding to in Conduit.

Peter Carayiannis: [09:52] It’s remarkable that you’d say that and I’m really pleased to hear it. For this reason, this is not pre-prepared and you don’t know this, but I have a trick question that I often have for candidates that I’m interviewing. Of course now that I’m going to talk about on the podcast, the tricks question’s not going to work anymore.

[10:08] [laughter]

Peter Aprile: [10:10] Nobody listens to this, don’t worry.

[10:13] [laughter]

Peter Carayiannis: [10:15] The question I asked them, though, is: “What kind of lawyer are you?” The answer, inevitably, is technical. “I’m an IP lawyer. I’m a trademark lawyer.” Then I tell them they’re not, and I say, “What you are is a problem solver. You solve problems. You might solve trademark problems and not family law problems, but you solve problems.”

[10:35] I stole a line from Disney, which is, “It’s not my fault, but it is my problem.” It’s not about blame, it’s not about finger pointing, but it is about embracing a problem and finding the solution. Because we’re not on a billable hour model and we’re on a fixed fee model, naturally, we drive to the most effective and efficient solution. Naturally, when we find business problems that are recurring, we will look for a solution that we can replicate.

Peter Aprile: [11:00] When I think about fixed fees, you’re actually hitting on it. To me, it’s about the people that you’re hiring. It’s about the people that are doing the work. Guys like you are never going to sit there, turn on the clock and twiddle their thumbs because of how you’re constructed. What you’re saying is, “I’m looking for people who are constructed in a similar vein.” Then, to me the idea of what billing model you use fades away.

Peter Carayiannis: [11:25] Absolutely. The challenge, though, is that the billable hours is so fully established. Here’s another bit of heresy. When I talk to the lawyers that will work with Conduit Law, clearly we look at resumes, clearly we look at backgrounds. Absolutely, that’s part of it.

[11:44] I’m not as concerned about technical competence as I am about other competencies. You got to be a good lawyer. You got to know your stuff, and you got to be able to convey proper legal advice. But I need to know that you can get close to a client. I need to know that you can work in the client’s setting.

[12:02] What informs that for me was a lesson that I learnt in one of my jobs as a university student. It has nothing to do with law. One of the most powerful lessons I ever learnt. By way of background. I was a tour guide.

Peter Aprile: [12:13] In Toronto?

Peter Carayiannis: [12:14] No, no. Company’s based in Toronto, but I would take school groups to Montreal, Quebec, Ottawa, New York, Washington, Boston, all these school trips, the end of year school trip. Anybody who’s listening to this who grew up in southwest of Ontario might have done the trip to Ottawa.

Peter Aprile: [12:28] Anything in the area? Pippi’s nodding. Our producer’s nodding. We’re dying to know whether you took Pippi on a tour at one point in her life. What school did you do to?

[12:37] [off mic comment]

PeterCarayiannis: [12:37] Was it grade eight?

Pippi: [12:38] Yes.

Peter Carayiannis: [12:43] Was the company Keating Educational Tour?

Pippi: [12:45] Yes it was.

Peter Aprile: [12:46] This is awesome.

Peter Carayiannis: [12:47] Pippi, good to see you again.

[12:52] [laughter]

Peter Aprile: [12:52] Pippi, go dig through your old pictures immediately.

Peter Carayiannis: I had this phenomenal job. It was a life changing job. It was a fantastic job. I really, really enjoyed it. It’s a bit of digression. I’m sure, you didn’t think we’re going to talk about this, but...

Peter Aprile: [13:02] No.

Peter Carayiannis: [13:03] it’s part of how, it’s part of me. I started this job. I thought it was going to be a technical job. I thought the job was about picking up people, getting them to Quebec City, touring them around making sure that we made certain restaurant stops, and hotel stops, and museum stops, imparting certain technical knowledge, and then returning them back because...

Peter Aprile: [13:24] Logistical, this wasn’t a difficult job.

Peter Carayiannis: [13:27] Logistical, this is easy, right? All I got to do is they give me a map, I got to get these people from Toronto to Quebec and back. How hard can this be. They gave us these big binders, which we had to learn, which was the educational component of the tour.

[13:37] After we had developed a certain amount of technical competence, they took the binders away from us. I had to say, “What are you doing? I thought this was a job about taking this binder and putting it in the heads of our traveling students?” No, it’s not that.

[13:52] What they said was, “Nobody cares how much you know until they know how much you care.” That hit me like a punch in the face. It doesn’t really matter how much technical knowledge you have about whatever your subject is. If you can’t create a human connection with your client in whatever field, no one’s going to care.

Peter Aprile: [14:14] Yeah. I feel like there should be a banner as you walk into law schools. That’s not a great discussion that anybody’s having.

Peter Carayiannis: [14:19] They think it’s about technical knowledge and you have senior partners. On their resume will still tell you that they got the gold medal in contracts.

[14:26] [laughter]

Natalie: [14:26] Law school teaches you to be dispassionate. You’re meant to give an objective view of the law, so that’s what you learn in school.

Peter Carayiannis: [14:34] But that doesn’t mean you have to, you disassociate yourself from people. Although you’re disassociating yourself or coming up with a more objective opinion.

Peter Aprile: [14:42] It’s funny. You were saying earlier how you take things from other businesses or other industries. That’s what you’re doing with this golden rule. I think to myself, “Why haven’t more lawyers figured this out?”

Peter Carayiannis: [14:54] That’s such a great question. I don’t know. It’s as though there is an element of our training that has us shut down that piece. The curious thing is though is that we might be a lawyer from Monday to Friday, 9:00 to 5:00 and maybe have really onboarded this dispassionate distance from the problem. But once we leave the office, we turn into clients and consumers ourselves. We don’t like it when other people are distant or dispassionate with us.

[15:21] The other thing I learnt, and I actually learnt this from a lawyer as an articling student, this is a piece of advice that went really well with the tour guiding advice which is, “very few people know whether or not they received good advice.” Really, the value of the advice is only determined retrospectively.

Peter Aprile: [15:36] With the result?

Peter Carayiannis: [15:37] With the result. Everybody knows if they got good service. Everybody knows if their problem was taken seriously. Everybody knows if effort was put into a solution. You combine the two, “Nobody cares how much you know until they know how much your care,” with, “Nobody knows what’s good advice, but they know what’s good service.”

[15:56] For me, this was a very, very powerful combination in my life. It was a very, very powerful combination that I think I used to create the bedrock of what would ultimately grow up to be Conduit Law.

Peter Aprile: [16:06] It’s amazing.

Peter Carayiannis: [16:07] It has nothing to do with law.

Peter Aprile: [16:09] Yeah, and so simple, yet...

Peter Carayiannis: [16:11] Apparently, not.

[16:12] [laughter]

Peter Carayiannis: [16:14] Good for you.

[16:15] [laughter]

Peter Carayiannis: [16:16] Everything I learnt about law, I learnt in a tour company taking school groups to Quebec City.

Natalie: [16:21] Including Pippi.

Peter Carayiannis: [16:22] Thank you, Pippi.

Peter Aprile: [16:26] How long did Conduit Law last before it became affiliated with Deloitte?

Peter Carayiannis: [16:31] Just under four years.

Peter Aprile: [16:32] High level, what did you accomplish in those four years?

Peter Carayiannis: [16:35] It was a busy period of time. We established a functioning and sustainable business focusing on a B2B service solution for our business clients. Our business clients ranged from startups to national and multi-national brands that everybody would recognize.

[16:53] We articulated a value proposition around our fixed fee solution, and we consistently hammered home that value proposition to the point where that value proposition and Conduit Law became interchangeable.

Peter Aprile: [17:06] How many people, when you say “we”?

Peter Carayiannis: [17:09] At our peak last year, we had 20 lawyers engaged and working, some of them very close to full time like four or five days a week with a few different clients, and some other lawyers working on projects. We were continuing to grow. The path was on an upward trajectory.

Peter Aprile: [17:27] Without getting into the details, how did the discussions about affiliation start with Deloitte? How did that arise?

Peter Carayiannis: [17:35] There are people at Deloitte who knew of me professionally, and there are people at Deloitte that I also knew professionally. We tracked one another and we kept in touch with one another. There was a point in late 2015 when I got a phone call about having a conversation. That was the unofficial starters gun for what ultimately would be the affiliation between Deloitte and Conduit Law.

Peter Aprile: [17:56] Just to be clear, this wasn’t your master plan from the beginning?

Peter Carayiannis: [17:59] I can actually reliably tell you there is no master plan.

[18:01] [laughter]

Peter Carayiannis: [18:03] Unless, you’d like to collect all the napkins under my desk that I use to write it all down. No, there was no master plan. I’m a keen observer of the legal market and a keen observer of professional services, generally. I say that to say as much as I pay very, very close attention to all of that, this was not my plan. This was not in the cards. This was a wonderful opportunity.

Natalie: [18:25] Why was it an attractive opportunity for Conduit?

Peter Carayiannis: [18:28] I think, at its base, it’s the people. Through the process of the due diligence, discussions and negotiations with them, I had an opportunity to meet with a lot of people. I realized, throughout those discussions. I say this uniformly, I consistently met people that I felt were like minded. They were people who were interested and engaged in the broader themes of Conduit Law. All of them wanted to help.

[19:02] I could sit here and talk to you about scale. That’s important. There were engagements with national clients that we were not getting or losing, because we couldn’t offer the solution nationally. I could talk about opportunities for cross selling. I could talk about opportunities to leverage greater technology. I could talk about all of those things. They’d all be valid, they’d all be important.

[19:22] Actually, I found people who cared. I found people who really seemed engaged in what we were trying to accomplish, and who wanted to help. From an entrepreneur’s point of view, when you’re making decisions on investments, you’re really betting on the team, not the platform. I was really, really impressed with the team.

Peter Aprile: [19:43] My reaction to that process, as naive as this may be is I would be anxious about how much information is being exchanged. I understand its part of the process, or how much is being revealed and where the process is going. Did you have any of those concerns while you were going through it?

Peter Carayiannis: [19:57] Zero. This isn’t the Colonel’s secret recipe. It’s not the 19 herbs and spices. There’s nothing patentable about what we’re doing. This is about lawyers looking to create a connection with their clients to solve problems. I had no issue telling them whatever they asked.

Natalie: [20:15] How did your team react?

Peter Carayiannis: [20:18] They reacted really, really well. I didn’t tell them all about it at the beginning of the process. I didn’t think was necessary, mostly from a containment point of view, because it was early. We didn’t know where it would end up, but for all the natural reasons people would expect.

[20:31] Several weeks prior to the anticipated closing, once it looked like we had figured out exactly the direction we would go. I called them in for the monthly meeting. I just didn’t tell them what the agenda would be. When they came in, I shared it with them. I was able to share all the details with them in terms of where we started and how we got to that point, and explained to them the next steps.

[20:54] They were intrigued, they were interested, they were engaged, they had questions, but no reservations, or at least no real reservations. They were all on board.

Natalie: [21:02] And your clients?

Peter Carayiannis: [21:03] 100 percent followed. We did that piece not until after we announced the deal. Of course, we had to then advise our clients what had happened, and ask them if they wished to join us in the newly affiliated Deloitte Conduit Law. We sent out the notice. The phone started ringing off the hook, and they had questions. They said, “What does this mean? How is this going to work?” But inevitably, the clients said, “Well, this is fantastic. Now, we can talk about more things.”

Peter Aprile: [21:32] Has anything changed for the people that you work with as well as your clients?

Peter Carayiannis: [21:37] Not really. There are new procedures and processes in place. We’re having to technically map out some new ways of doing things, but fundamentally, they’ve been the same. Fundamentally, my lawyers are still in the field working on site with clients. All of those other processes are working in the same way, same lawyers, same clients, same fee structure.

Peter Aprile: [21:57] That’s one of the things I wondered. If you were merging with another law firm, I have seen and heard of circumstances in which the larger law firm will insist on an increase in fees, or something like that. It’s interesting that, in the affiliation, that wasn’t required, and probably something that was very, very well received by clients.

Peter Carayiannis: [22:13] It was one of the questions clients had. It was one of my first questions when I first started to talk to Deloitte. They gave me a great answer, which is they said, “You’re here today to talk to us because of the way you’re running your business. We’re not going to make changes to that.”

Peter Aprile: [22:27] What about you, your autonomy? You’re a startup, essentially, right? Building this thing one client at a time, four years fly by where you have no processes and procedures when you start to developing those as you went through your entrepreneur’s journey, and now you find yourself smack dab in the middle of this Deloitte affiliation where there’s a very different set of processes and procedures. How has that impacted you?

Peter Carayiannis: [22:51] That’s probably one of the most rewarding parts. Any entrepreneur will be familiar with the idea of working on the business versus working in the business. I always had a really good team in terms of the working in the business. As we grew, it became evident to me that having some people to help me work on the business was important.

[23:14] Now, I have this huge team of people who are invested in the success of the enterprise. They bring all these skills and abilities, and they can help us to work on the business at the same time.

Peter Aprile: [23:26] You talked about some of the advantages to the affiliation for you and your clients, and for Deloitte. What do you think are some of the constraints?

Peter Carayiannis: [23:34] There was obviously the possibility of losing some clients through the conflicts process. Unfortunately and serendipitously, we didn’t lose any. There was one client out of our entire book of business where there was an issue about Deloitte already servicing that client as an audit client. We just stopped delivering legal services.

[23:55] One of the constraints would be to say that we don’t provide legal services to clients that Deloitte audits. Theoretically, Conduit Law, outside of law society regulations, had no constraints. We could do whatever we want. We could wake up in the morning and decide to run off in that direction, or wake up the next morning and run off in a different direction. That’s just theoretical freedom. That’s not actual freedom.

[24:17] To the extent that any constraints come with being part of the broader Deloitte family as this affiliate law firm, we counterbalance by the opportunities. Yes, we aren’t able to act for those types of clients that are on the other side of the audit line. That just tells us where we can direct our energies for the other clients.

Natalie: [24:37] I know you mentioned you worked with some startups and things like that, and I’m looking at your client base. Do you think your client base will change?

Peter Carayiannis: [24:43] Probably, over time, the client base will change. We’re probably going to be able to deliver broader services to more mid market clients than we currently were able to deliver. That was a function of our own resources, just how many lawyers we had and the capabilities.

[25:01] Now we have more resources, more capabilities to bring in more lawyers to the platform. We have, at the same time, more exposure to mid market clients who could use that embedded GC on demand kind of solution.

Peter Aprile: [25:14] How was Deloitte putting you in a position to become service providers for those mid market clients?

Peter Carayiannis: [25:21] We’re starting with just working with our own stable of clients that we’ve brought over. What we’re trying to do is, incrementally and systematically, add more opportunities to those clients as they come up. At the same time, we’re starting our integration within the broader Deloitte family.

[25:39] Speaking to partners in other areas, who are, they themselves, interested in figuring out what it is that we can do and what it is that we can offer. We also are trying to learn what elements of Deloitte would be very complementary to what we’re doing.

Peter Aprile: [25:55] Would it be fair to say it’s more like an educational feeling outstage between the two entities right now, as you feel out what each other can do and what each other can leverage for their clients?

Peter Carayiannis: [26:05] In many respects, it is that. We’re three months into it. We definitely have a plan and a path forward as we concluded the deal. Now, what we’re doing is we’re implementing it. That’s a lot about education, that’s a lot about getting to know the new partners, and similarly, would have the opportunity to get to know us. That lets us know what the capabilities are internally.

Peter Aprile: [26:25] It’s interesting, and again, this discussion is not going in a direction that we planned, but so be it. Do you think that’s more difficult to do, seeing as many of the Conduit lawyers are not on site with the Deloitte people?

Peter Carayiannis: [26:37] That hasn’t been a challenge so far. Not at all. Remember, there’s a big consulting business at Deloitte. They similarly would have a comparable type of business model where the consultants work in the field and then come back in. In many respects, the embedded council solution that we offer is not unlike the consulting solutions.

Natalie: [26:59] You guys must be hiring too, right?

Peter Carayiannis: [27:01] Yeah, we’re going to be. As a great example, now we have an HR group that we can talk to, the talent team. They can help us understand what our needs are. We can map our current abilities and resources, our projected needs, we can start to talk about the types of clients we want to go to. I have talent professionals now with whom I can work, and who want to work with us.

Peter Aprile: [27:21] That’s amazing.

Natalie: [27:24] In terms of Conduit’s evolution, do you think that small, innovative firms should be trying to follow Conduit’s lead?

Peter Carayiannis: [27:30] Oh, that’s very kind of you to put it in those terms.

[27:33] [laughter]

Peter Carayiannis: [27:33] I’ve never been asked a question like that. You’ve actually caught me a little bit flat footed. I would say the only element that they should follow is our willingness to question the status quo. Try to build out a solution and a service that works for your clients and your lawyers, and the business we’re trying to build.

[27:56] Should they try to replicate what we’re doing? I would never say edit, copy, paste. This is not a franchise type of replicable solution. Within their own businesses, to take that same sort of attitude and say, “Why do we do this and how are we doing it? What’s the best way to do this? What’s the most effective way to do this?”

[28:15] Are the processes that we have in place just there because we came out of law school and someone told us, “This is how we do it, and this is how we’ve always been doing it.”? Well, don’t do that. We didn’t do that, and I think it benefited in our work.

Natalie: [28:28] I really like the idea of Conduit using Deloitte as an opportunity to grow, and things like that. Do you see that happening more and more where it’s sort of a smaller firm partnering, in some way, with a larger entity?

Peter Carayiannis: [28:40] We’ll probably see the answer in the fullness in time as to how that’s going to play out. The way I’d come at that is to say that, fundamentally, this is about the client. It’s about client buying patterns. It’s about client needs. The professional advisers who are able to craft a solution that responds to what the clients want will ultimately be successful. They’ll be able to continue on.

[29:10] Whether or not that’s about entity “X” aligning with entity “Y”, I think that’s not the issue. The issue is about whether or not entity “X” can make sure that they have all the right people, processes, and stakeholders in place to deliver the service that their clients want.

Peter Aprile: [29:27] It is really a client first, you second, attitude. There is a bit of a tension there. We have seen, in the past, law firms, and even individual lawyers within law firms, trying to put themselves first. To ask a law firm and a lawyer to say, “You need to outsource this, or find a different solution that might not be you.” Is it a tall order?

Peter Carayiannis: [29:51] Fundamentally, nobody went to law school to sell billable hours. People go to law school, become lawyers because of their desire for service. It has to be about the client. I’m not Pollyanna on this. I recognize we’re operating businesses. They are for-profit businesses. There is no problem with operating a for profit business that is also a service business. If you put the client first, that becomes the lens through which everything else is refracted. With the client first, you make the right decisions all the time.

Peter Aprile: [30:24] What do you think is going to shift other lawyers or other law firms to start practicing with the same mentality?

Peter Carayiannis: [30:31] I don’t know if there’s going to be any one thing that’s going to make the shift. I do honestly believe that we probably are living through the most creatively optimistic era for lawyers and other professions. There’s so much pressure in the economy that I think that this is a real opportunity for creative disruption.

[30:51] And this is nothing to do with law. This is socio economic. This is demographic. This is the millennials coming into play. This is the advent of digital and then digital to mobile. All of these things becomes tools. We can take inspiration from other industries and then find ways to better service our clients.

Natalie: [31:09] So there’s one thing that you could recommend that a small firm right now does. What would you recommend they start doing?

Peter Aprile: [31:16] The first thing would be to put the client at the beginning of their discussions. If you put the problem the clients have in the middle, then the process will start to build up around it. The next thing I would say is pay attention to what’s happening in the broader economy and broader society, because those things are going to ripple through lawyer’s work.

[31:33] So, if you want to talk about actionable things that small law firms could do, look at your assets. Number one assets is people. Look at your cost. Look at the real estate that you’re using. Do you need the offices in the way you’re using those offices? Look at technology, are there cloud based solutions that could be used?

[31:54] Does everything you do have to be done by a lawyer in a location at a certain price point or can things be taken apart? Can you unbundle the service and move it around? If you ask yourself what does the client need then those follow on questions always come up.

Peter Aprile: [32:14] That’s not something that’s going to be unique to small firms. That runs a game. Doesn’t it?

Peter Carayiannis: [32:19] It would apply to anybody.

Peter Aprile: [32:20] If I put you at head of a small law firm, and medium law firm, and a big firm right now, its day one, a small law firm X just hired Peter Carayiannis to run the show what’s the plan?

Peter Carayiannis: Where is the coffee?

[32:34] [laughter]

Peter Carayiannis: [32:34] I’d say the plan if I was walking in to some environment like that I’d say, what do we want to be excellent at? Don’t try to be all things to all people. Find what you want to be excellent at and then move forward. And then around that, get the right tools and place that answer the client’s needs.

Peter Aprile: [32:56] And mid size firms is the next. Again, you’re popped into a mid size law firm. We’ve decided what the focus of the business is and we’re preparing for the next five years or the next 10 years. What do we do?

Natalie: [33:08] The next one has to be hiring. You know where business is and you know what you’re doing. Hasn’t the next thing you want to focus on is making sure you’ve got the right team there. If you’re walking into mid size business, there’s going to be people there who don’t have that mindset, who aren’t problem solvers and who are just sitting there twittling their thumbs.

[33:24] My first thought is gut the people in your organization that aren’t helping.

Peter Aprile: [33:30] Or retrain them?

[33:32] [laughter]

Peter Carayiannis: [33:32] Because so many people would like to be liberated to be problem solvers but they feel like they’re time keepers. And even the software calls them time keepers not problem solvers.

Peter Aprile: [33:44] Other lawyers call other lawyers time keepers.

Peter Carayiannis: [33:47] I’m not a time keeper, I’m a problem solver. Mid size firm, large firm, small firm, find the right people, you’vre got to find the right people. That doesn’t mean you don’t have the right people right now.

Peter Aprile: [33:58] You think you can retrain. You think that this mindset is something that can be developed and not something that needs to be innate?

Peter Carayiannis: [34:04] Absolutely. There may be some people who are more innately tuned in, they’re more empathetic, they have the IQ and they’re better at getting to the problem solving, but they themselves may not be part of the business solution. You might need some people with some pattern skills to counter balance that.

[34:20] Business development goes along this line where the people are the rainmakers. They have the secret rainmaking approach...

Peter Aprile: [34:27] Power.

Peter Carayiannis: [34:27] There’s power. Nonsense. If you want to develop business you need to have a process. If you have a process, you’ll figure out what works well in your industry. In terms of identifying prospective clients, how many law firms have a sales funnel?

Peter Aprile: [34:44] I have no idea.

Peter Carayiannis: [34:45] Exactly. Probably none. Almost none. This is not, “Oh, I went to law school with so and so and if I take him to lunch they’re going to send me a file.” That’s not what this is about. We’re trying to professionalize the operation.

[34:56] You may or may not have the right people, but before you make any decisions about that I’d say, are they trainable? Are they coachable? Do they understand this? Would they accept this shift in mindset?

Peter Aprile: [35:05] How do you identify that?

Peter Carayiannis: [35:07] I don’t know.

Peter Aprile: [35:08] I don’t know either. That’s why you have Deloitte HR.

[35:09] [laughter]

Peter Carayiannis: [35:09] I don’t know. I don’t know exactly how you identify it. It’s a little bit of I know it when I see it. I say that candidly with the fact that even when I see it, I’m not always correct. That’s a tough one.

Peter Aprile: [35:25] Just rounding it up, if I pop you in the middle of a large law firm put you at the head what do you do and for the sake of time zero in on it. Is the partnership model the biggest problem with Big Law right now?

Peter Carayiannis: [35:38] They’re probably in a better position to answer what that is, I would only offer around that is there’s probably a number of factors.

[35:47] Historically, let’s say for the last 60 or 70 years, the conventional model of a traditional law firm with a law firm partnership, with some form of contest model to the partnership based on leverage bringing in a number of associates at the bottom and moving to a smaller group of partners at the top that has been the single paradigm that we’ve accepted in the industry.

[36:13] And that’s what worked very well for a long time. That single paradigm no longer works all the time in all cases. So be very clear on this. There are law firms and law firm partnerships in a traditional model that will continue to work and they will continue to excel.

[36:28] My thesis is that they continue to work and they continue to excel, because they have put their clients first and they are excellent at what they do. But a large partnership that doesn’t have a clear vision of strategy, that doesn’t have an understanding of where it’s going to go, and that that understanding can be disseminated and permeated throughout the partnership, that’s a problem.

Peter Aprile: [36:52] So what’s Conduit’s model?

Peter Carayiannis: [36:56] We’re going to work as hubs of activity stationed in various areas to serve different economies and different industries, and we’ll probably have little points on the map at different spots servicing those industries. Right now, the one point is Toronto, but you could easily see a situation where perhaps, we want to get into the high tech area in Kitchener Waterloo and we could possibly move there or similarly, the technology space in Ottawa as opposed to trying to grow in one place, one large monolithic pyramid. That’s not what we’re going to do.

[37:34] Ours will be discreet, agile, and nimble points on a map that are specifically designed to service clients. And now I will let out a secret it will be client led.

Peter Aprile: [37:47] And what about the people that work within Conduit? You said you guys are hiring right now. I have this image of a young lawyer sitting in front of you asking you about partnership tracks and things like this. Talk to us a little bit about Conduit structure in that respect.

Peter Carayiannis: [38:03] That part of the structure is under construction and yet to be built. What I can say is we’re not building a traditional law firm. We are going to build a professional services provider organization that is designed for the future, it’s going to be designed to be adaptable and flexible.

[38:19] Right now, principally our lawyers are independent contractors, but for the foreseeable future that’s going to be the path. I can easily foresee a situation where down the road, it’s not just independent contractors where it’s people in a variety of different roles and positions. I can also see it not just being lawyers servicing clients in different ways.

Natalie: [38:38] So could you give us an idea of who else in the NewLaw space is doing something interesting right now?

Peter Carayiannis: [38:44] That’s a pretty long list.

Peter Aprile: [38:46] Who do we not know about? I suspect who you’re going to say, because I’ve seen you on panels with all these people before.

[38:51] [laughter]

Peter Aprile: [38:53] So who don’t we know about?

Peter Carayiannis: [38:56] You probably know the usual suspects in the Toronto scene, and there is a lot of great people working here. For legal innovation we need a “We the North”.

[39:04] [laughter]

Peter Carayiannis: [39:06] On a broader basis, on an international basis, there’s lot of interesting people doing a lot of interesting things. You’re probably familiar with what’s happened with Lawyers On Demand under the UK and how they aligned with AdventBalance. So now they’re providing a service globally.

[39:21] There’s a group called Ignition Law, but they’re really designed to serve the start up community. I would say that they’re a group to watch. This NewLaw on movement that’s what we’re going to call it or this approach to legal services is really sprouted outposts all over the world of like minded people which has been pretty encouraging.

Peter Aprile: [39:43] Everybody shares the same sense of energy which seems like now it’s propelling us all forward and encouraging us to great things.

Peter Carayiannis: [39:50] All of us believe on whether or not we would articulate on these terms, but all of us believe we’re in a blue ocean of opportunity that none of our successes in the work that we’re doing actually comes at the expense of anybody else. That we’re able to blaze a fresh trail, deliver new services, deliver services in a different way and that has combined to a very strong sense of camaraderie.

Peter Aprile: [40:17] I will say that’s really one of the things that I really respond to in you is that when I see you out at these events, you are very generous and have a really great ability to encourage people and connect people. Thank you for that and thank you for being part of the podcast.

Peter Carayiannis: [40:33] Thank you very much for the compliment that you just paid me. Thank you for inviting me to be part of this, but even this podcast is a great way of helping to unite the community. You guys are doing great work.

[music]

Natalie: [40:43] Everything Peter said seems to lead to the thought that it’s all about people especially even your affiliation with Deloitte, it’s all about the people.

Peter Aprile: [40:56] He goes back to the story about his tour guide days, all the way to what was the driving force or philosophy behind Conduit, and then it even leads into the reason for Conduit’s affiliation with Deloitte.

Natalie: [41:14] I was pretty surprised to hear him say that. I wasn’t expecting him to say the success of it is coming from the people that he’s dealing with there.

Peter Aprile: [41:20] What he was saying was that solidifying it has been the right decision in his mind were the people that he found when he was there.

Natalie: [41:28] Yeah. It’s not what you picture. I pictured that the accounting firms and what it would be like to work in that environment and the idea of the client centric, innovative, focused and very warm, and friendly environment isn’t what really springs to mind.

Peter Aprile: [41:42] It’s really unique to hear that when he walked in that’s the sense that he got. And obviously, the affiliation is very new in its early days, but everything that he’s seen at Deloitte continues to support that idea. That wind behind your sales is obviously a really attractive proposition for any small law firm to have those resources available to you, to have that access.

[42:07] That’s a really powerful force and I would imagine that that is going to be a very powerful force in our legal market.

Natalie: [42:15] I don’t have any issue seeing the benefits from the Conduit side, where my brain was stuck is what’s Deloitte doing? What’s the end goal there? What are they trying to do? And I know they’ve been branching out into particularly innovative stuff. So I know they’re working with Kira which is wonderful. Deloitte acquired ADT. I just didn’t really understand why Conduit.

Peter Aprile: [42:35] World domination too answer your initial question. Very friendly world domination it sounds like. Peter had a proven law firm. Although Conduit was four years old, Peter isn’t. Peter is a good counsel from a good law firm who had a philosophy, and a mindset, and built a law firm very quickly with that mindset and with a roster of independent contractor lawyers.

[43:02] For an organization like Deloitte or anybody, who can see a successful enterprise that is driven in the right direction, and can expand and contract as its clients’ needs or as it needs, that is a direct preposition.

[43:15] As the legal industry continues to shift and we get into an alternative business structures and things of that nature, I wouldn’t be surprised if this affiliation morphs into something different.

Natalie: [43:28] I’m sitting their saying, these people coming in, they’re giving him all of the resources he needs to build the company and things like that. I’m just looking to see what’s the down side. What are they after and what is Peter losing from taking this road.

Peter Aprile: [43:42] It’s under the Deloitte brand now, so he’s giving up his brand. I don’t know what the value in that is or was, but that is what he’s giving up.

Natalie: [43:51] I guess what you gain is larger.

Peter Aprile: [43:54] Yeah, you gain everything. You gain exposure to client base that you did not have.

Natalie: [43:59] It’s a very different client base though, like you heard Peter talk about how he was working with some start up and things like that. Is he going to lose that opportunity?

Peter Aprile: [44:07] I don’t think he’s going to lose that opportunity, but the volume that Conduit is now exposed to is something that I would argue Conduit probably couldn’t access.

Natalie: [44:16] Yeah, that’s far. My gut instinct is still rooted in the aspect this idea and it should not be and I should get over it and just start seeing this as an opportunity for everybody particularly, if one is going to benefit the clients.

Peter Aprile: [44:30] Yeah, get over yourself. So if you believe what Peter is saying when he says it’s all about the client then that means that Peter’s clients gain too, because they have greater access. So long as the organization doesn’t lose the spirit in which Peter built Conduit and has brought to the Deloitte affiliation.

[44:52] So what Peter was smart enough to realize and the reason why Conduit was a success, was because Peter was smart enough to know that embedding part time in-house counsel would foster relationships and a bond between lawyer and client that might not be possible in a different type of setting.

Natalie: [45:13] By embedding that lawyer with the client there’s a passion there and there’s a sense of team. Even though I know that Peter used, the fixed fees is a way to say there’s transparency here, more of that came from a client really trusting their lawyer.

Peter Aprile: [45:30] We see it any time we have a case and we go to a client’s facility, we see what’s going on in the shop floor and you actually get an idea and a sense of how amazing your clients actually are.

[45:43] And when you are in two separate spaces, it doesn’t smack you in the face in the same way that it does when you’re standing next to an entrepreneur who’s actually building something or a business who’s actually building something. It impacts both people. When you break that barrier, when the client sees you’re willing to go to them that speaks to this idea that we’re partners in this.

Natalie: [46:06] We’re on the same team. What was the most striking thing that you think Peter said?

Peter Aprile: [46:11] When Peter talks about what Deloitte Conduit is optimized to do and what he says is that they’re not the 911 calling, what they’re optimized for is to make the house safe and he says that part of that means that Conduit gets to be there on a regular basis.

[46:29] What I continue to think about following the interview is Conduit and Peter are going to continue to generate a close knit relationships with their clients, because they are embedded and Deloitte has the ability to do a lot of the other work.

[46:44] Then what that means is that these two entities and these philosophies will offer service these offerings that they now have together is going to really allow them to close the circle around a lot of these clients that they now have.

Natalie: [46:57] What do you mean by “close this circle”?

Peter Aprile: [46:58] The question is why would a client ever need to leave Conduit or Deloitte around the consulting side, accounting side, or legal side. The subtext is the only reason why a client would ever look to go outside of that sphere is that 911 call or let the company work.

[47:17] And then I think to myself, if Conduit, Peter, and Deloitte control that entire relationship then there’s going to be fewer and fewer matters that leave that relationship. And frankly, they’re going to be in a position to direct what law firm receives that 911 call.

[47:32] And when you control the relationship and you have such a wide breath of service offerings, the question becomes how do competitors compete with that?

Natalie: [47:42] You’re saying that Deloitte Conduit has essentially plucked people out of the sales funnel for Big Law. They just won’t be going into that funnel any more they have their own separate path?

Peter Aprile: [47:53] Yeah. It’s making themselves part of the business and they’re securing that relationship. And so if Big Law or other competitors don’t have that relationship with the client because they don’t work in the same structure then how could they possibly compete for the work?

[48:10] And what that also means is again, they will get the direct where that 911 work goes. And so the question is what is going to be more powerful than the relationship that’s going to allow outside firms pass the gate?

[48:27] And sitting here now, I don’t know what the answer to that is. And this is the first time that I thought I don’t know how the competition is currently configured and structured jumps that hurdle and that’s going to be really interesting.

[48:40] Do you want to talk two minutes about, “there’s no secret sauce”? What do you think about the secret that fact that Peter was pretty candid in saying, “There’s no secret sauce here,” which is funny, because Sam Witherspoon said the same thing about this too? We’re not advancing the state of the art is something that he said.

Natalie: [48:58] Yep.

Peter Aprile: [48:59] If you go back to Morgan Borins, they went to existing contract management software providers they didn’t create anything new. In a really inspiring way, none of these people created anything new and have opened up opportunities that nobody realized were there.

Natalie: [49:18] Right. It’s reinforcing that you don’t need to do something new to be...

Peter Aprile: [49:21] NewLaw.

Natalie: [49:22] to be NewLaw.

[49:22] [laughter]

Peter Aprile: [49:22] See you next time on the Building NewLaw Podcast.

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Natalie: [49:34] For this episode shown into transcript, please visit our website at buildingnewlaw.ca. We’d love to hear from you, and if you have any feedback feel free to send an email to info@buildingnewlaw.ca, or come and find us on Twitter @buildingnewlaw.

[49:50] Don’t forget to subscribe on iTunes, our website, or whatever else you get your podcasts. This has been Building NewLaw. Join us again for another episode exploring the approaches, processes, and tools that are redefining how we practice law.

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Sponsor: [50:03] Thanks for listening to the Building NewLaw Podcast brought to you Counter Tax Lawyers. To learn more about Counter, go to countertax.ca.

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