Technology for Real Estate Transactions Newsletter: #14
MBA San Diego, moving to fixed fees to create the motivation to adopt tech and go fast, some solid article links and Jimmy the 80's Lawyer!
Hope you are off to a great start to the year!
I will be in San Diego for MBA in a few weeks, so please drop me a line if you would like to catch up in person and discuss tech in CRE lending. I would be happy to meet you and brainstorm ideas!
In this edition I discuss why lawyers and clients should experiment with fixed fee models and include number of related article links.
Hopefully you find it useful and fun. Please feel free to share with anyone that may be interested and have a great weekend!
Matt Basile
If you find this content valuable, please connect with me on LinkedIn.
🚅 Create the Motivation to Go Fast with Fixed Fees
There is a lot of uncertainty in the legal industry about how the availability of new AI powered technology is going to impact the delivery of services and the pricing model. 💲
On the client side there is always the pressure to do more with less and keep legal fees in line with the expectations from the business team. On the law firm side, there is a focus on creating a competitive advantage and not getting left behind in the tech race. Some folks on both sides are probably worried in the back of their mind that the robots are going to take their job, but that probably isn't reality.
So where do you begin? Both sides can just jump right in by changing the pricing model to a fixed fee (with caveats for special circumstances and heavy negotiation). On most commercial real estate transactions, there is a price range that the business folks are underwriting that is appropriate. At the beginning of the deal clients and attorneys should come up with a fair number and then check in throughout the deal to see if it needs to change and communicate any updates with the business team as necessary.
Once this is in place, everyone should become super motivated to deliver as fast as possible and the following should happen:
✈ Everyone will want to use new technology and find ways to go as fast as possible while maintaining accuracy. If you save time on the legal side you make more profits.
💲 Less sticker shock at the end of the deal and business teams will not complain (as much) about legal fees because they don't think they are based on a clock behind the scenes and they are kept apprised of changes to the number.
✔ Accuracy should improve with AI tools to augment legal work.
⏳ Deals will get done faster as tech apps can often speed up lawyer turnaround times (and lawyers don't need to stay up all night working as often).
💪 Law firms that adopt will get more new clients. Lenders that adopt will attract more good borrower clients that want better fee structures.
The technology is coming and will only keep improving. Don't wait for it arrive before you experiment with changing the business model and you will be ready as the tech gets better and better. Some good articles on this topic below.
Articles and News
🙇 Reward Lawyers for Speed
This article by the Artificial Lawyer provides excellent details about how the legal fee model can be changed to motivate efficiency and dives deep into why lawyers need to explore a fixed fee model with incentives for faster closings. There are a lot of factors out of the legal team control on most real estate transactions (third party reports, business timing, etc.) but sometimes transaction closing schedules slip because slow turn around time on legal items or excessive document negotiation. Motivating speed can only help with adoption of technology and is good for the business of law and clients.
⏳ The Impact of AI on the Future of Legal Work
Solid article by Stephen Embry on how AI will impact legal work and what we need to do to be ready for the future. Standing by an doing nothing is not really and option as core changes to business models will need to be made to keep up with competitors.
🚀 Law Firm of the Future Will Be an AI Company
Totally agree that law firms need to jump fully into using AI and take an approach similar to a technology company. This article explores why this approach would create a competitive advantage for law firms.
🏗 KPMG Launch in Arizona
KPMG has jumped into the legal market by leveraging the Arizona regulatory sandbox. There are challenges underway, but if they are successful it will open a path for firms owned by non-lawyers (PE or tech firms) to jump into the legal market and start to offer clients better creative fee models and possibly change the economic delivery model for legal services.
🤘🍿 Jimmy the 80's Lawyer
I finally decided to start getting into some video content. Look out for more videos featuring Jimmy the 80's Lawyer discussing topics relating to real estate transactions and law firm life. Jimmy is a lawyer that is change averse and his practice is stuck in the 80's and needs some tech to adopt to the future. Enjoy!