Category: News Feeds

It’s possible that the whole point of the bar exam as a project is to keep people from having anything that the bar examiners might consider an unfair advantage on the test. Of course, bar examiners would recoil at phrasing it this way, but if the goal was to test minimum competency to be an attorney, the exam would reflect the skills attorneys actually employ, like conducting research to find answers. However, this isn’t at all what it tests and everything about the pandemic experience with bar exams confirms this with bar examiners oscillating between forcing people to subject themselves to COVID in order to ensure the integrity of the exam and pushing ahead with glitchy and racist tech solutions in a death drive to get something that ostensibly robs anyone of the sort of advantage they don’t want.

With a slew of ExamSoft online exams happening across the country next week, at least there’s no cause for alarm that someone out there might be undermining the integrity of the exam that the examiners seem to care so much about…

Oh dear.

To understand what these ads are talking about, you need to know how the online bar exam works. The testing platform doesn’t actually blast the exam to everyone on Monday morning. Much like the in-person proctors who hand out sealed booklets and instruct everyone to break them open at once, ExamSoft sends the exam to the applicant’s computer days in advance and decrypts it at the appointed time. And what these ads propose is that hackers are selling the decryption key to allow people to get started on the test early.

Assuming ExamSoft is on top of things, they’re changing around how they encrypt files with every administration to ensure that they stay ahead of these hackers. And if bar examiners have faith that the vendor has done this diligently then there’s nothing to worry about. Except….

In the immediate aftermath of Desktopgate — where multiple ExamSoft jurisdictions unexpectedly banned desktop computers days before the exam — a Redditor offered some thoughts as a computer expert on why this might be happening. While this was mostly an issue with external monitors, the author took some time to talk about security too and it wasn’t encouraging. In a nutshell, the update schedule suggests that the decryption code is already present on the computer — or will be at some point in advance of the exam — and given that ExamSoft historically uses hexadecimal codes, it could be cracked remarkably quickly.

The takeaway here is that a motivated reverse engineer will have a cracker ready to run as soon as the exam files are downloaded to our machines. From there, it’s only a matter of time before the exam files are decrypted and distributable. If this happens before the exam starts, it will be fatally compromised. Worse, because this can all be done offline and the exam files extracted and distributed separately, it is literally impossible to know if somebody has succeeded in doing this.

Running a bar exam is as much about perception as anything else. If the public believes the exam is compromised, it loses all credibility whether or not it’s actually true. Right now, bar examiners across the country are on notice that someone might be able to distribute the test materials before it begins.

So far, the only bar examiner response we’ve seen to these sorts of issues is to stress that the code of conduct bans cheating like this. Fair enough. Though if the code of conduct is strong enough to overlook decryption keys, one wonders why they need to have draconian bathroom and food rules at all. Let alone why diabetics should have to skip their insulin. Either the honor system is good enough and we can dispense with all these rules or hackers sending around the test is a serious problem. It’s almost as if enforcing rules that treat applicants like children is more important than a severe risk of a hacked exam.

This is, to put it mildly, the wrong response to this claim. This is the sort of story that needs to be swiftly shut down with an emphatic statement that the exam really doesn’t work this way and that prior decryption keys won’t work with this year’s edition of the test. If that’s true, we should see statements within minutes.

But if that statement isn’t true… you’ve really got to wonder how bar examiners can close their eyes and go forward with this under these circumstances. After public health warnings, the mental fatigue of having the date jerked around, worries about crashing prior tests, racial bias in facial recognition tech, constant glitches, no technical support, now — finally — the vaunted “integrity” of the exam is in question. Now the examiners have a problem they actually care about.

Unless we’ve got this wrong and they don’t even care about that. Maybe it’s really just sufficient if there’s something written that lets them yell at applicants about eating a bag of chips while declaring that 20 percent of people have failed, thus justifying the organization’s existence as the sentinal of public protection for another year. If that’s the case, the public really should be a lot more worried about the profession.

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Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

The Tice family reached out to the Pentagon press corps and asked us to help get the word out and see if something can be done to help get Austin Tice back home from Syria. The piece speaks for itself. Read on! The Editor.

I was at the beach with my family when my brother Austin called. His schedule at Georgetown Law School had prevented him from joining us. I slipped into an empty room at the little house we were renting and listened, astonished, as he told me he was planning a trip to Syria that summer of 2012, and he was asking me to come with him.

To this day, I’m not sure why he asked me. We had been on some adventures together, to Glacier National Park and in the beautiful Pacific Northwest where I have made my home, but nothing approaching these stakes. Maybe he believed I was up for it, that I had the same adventurous spirit burning in him and that I would leap at the chance, fresh out of college with vague plans for the future, to help him change the world.

I turned him down. I couldn’t imagine myself in those circumstances, untrained, lacking the war zone experience he had as a Marine Corps veteran with three tours behind him. I encouraged him to follow his heart, to bear witness to the escalating conflict in Syria. I believed in his vision, admired his grit and was behind him completely. He left in May.

On August 14, 2012, at a checkpoint outside Damascus, he disappeared.

That was 2,965 days ago as of this writing. I have not heard from my brother since. No one has claimed responsibility for his detention. Every single one of those days, and every day, my family wakes up hoping, praying, that this will be the last day of his captivity.

I think of that call when I read about Austin now, and how easily my name could have been next to his. I think of what he has endured in captivity and of what he has missed — all the birthdays, weddings, births, Thanksgivings and Christmases that my family and I have celebrated without him. In dark moments, I wonder if maybe, maybe, I could have been the difference. Maybe I would’ve said, “We shouldn’t get into this car.” Maybe the hairs on the back of my neck would’ve stood up at the offer, and we would have gone another way. Maybe he wouldn’t have stayed so long had he felt responsible for keeping me, his scrawny, inexperienced, intellectualized little brother, safe.

I don’t dwell on those thoughts, but they have persisted. They grew beneath the slow realization that this would not be resolved quickly, that he wouldn’t be home in days, or weeks. Beneath the pride of every award he has received and every column calling for his return, they persist. The thought of what he has endured in eight years is made fresh in each one; I cannot avoid it. I could have been there.

No president in our history has been more personally committed than President Donald Trump to bringing home American citizens held abroad. Our president has made it clear, time and again: The return of Americans is a deeply personal priority for him. It was from him, this March, that America first heard Austin’s name said aloud by a president. My heart leapt that day. My family appreciates the powerful effort this administration is exerting to bring him home. We have felt the progress, centimeter by excruciating centimeter.

Now, as we approach a ninth holiday season with an empty seat at our family’s Thanksgiving, a ninth Christmas spent wondering if Austin can see the stars, my brothers and sisters and I implore you from the depths of our hearts: Please help.

We beg you to reach out to your representatives in Congress. Tell them the story of the brother we love. Tell them it is a priority to see Austin’s safest and soonest return. Tell them to use their power to urge the president to restore Austin to our Thanksgiving table. Every second he stays in captivity cuts a deeper wound in the hearts of my family, and we can wait no longer. Help us make this summer the last he spends alone, and give 2020 a spark of brightness we so desperately need.

Join the campaign. Ask about Austin Tice. Bring him home.

Jacob Tice is the middle son of seven siblings and lives in Tacoma, Washington. You can learn more about Austin at AustinTiceFamily.com.

Bonus season came early this year. We usually don’t get any bonus information in mid-September, but, well, 2020 is a strange year.

Cooley started the COVID appreciation bonus game, offering associates between $2,500 and $7,500 as a special thank you from the firm for their hard work during the pandemic. But then Davis Polk got involved with a new standard, and it just blew away the Cooley scale. Their bonuses started at $7,500 and went all the way up to $40,000. And firms quickly started piling on this new bonus scale. Weil offered a seemingly unpopular hours-based bonus, but, thus far, no one has jumped on board with that. And then there was the notable outlier: Kirkland — the world’s richest law firm — begged off fall special bonuses, and seemed to be asking the market not to follow the trend.

But with matches taking a bit longer than we’ve seen in recent years (seriously, we’ve heard nothing from Cravath, what is going on at the perpetual compensation leader??), it can be challenging to remember just which firms have stepped up. So, here you go, a handy-dandy chart to reference.

As always, we depend on you when it comes to bonus news at other firms. As soon as your firm’s bonus memo comes out, please email it to us (subject line: “[Firm Name] Bonus”) or text us (646-820-8477). Please include the memo if available. You can take a photo of the memo and send it via text or email if you don’t want to forward the original PDF or Word file.

Firm	Date	Bonus Scale
Cooley LLP  All offices	Announced 9/14; Distributed 9/30	Range of  $2,500 – $7,500, depending on experience. Those on-track to bill 1,950+ “materially higher” bonuses.
Davis Polk All U.S. offices	Announced 9/15; Payable 9/30	Between $7,500 and $40,000, depending on class year.
Milbank All global offices	Announced 9/16; Payable 10/30	Between $7,500 and $40,000, depending on class year. Associates at less than 80% utilization will receive 50% of the bonus for their class year. Associates at 110% utilization will receive an extra 50% of their class rate.
Hueston Hennigan	Announced 9/16	Between $7,500 and $40,000, depending on class year.
Irell	Announced 9/17; Payable 9/30	Between $7,500 and $40,000, depending on class year.
Sullivan & Cromwell	Announced 9/21; Payable 10/15	Between $7,500 and $40,000, depending on class year.
Debevoise	Announced 9/21; Payable last week of October	Between $7,500 and $40,000, depending on class year.
Simpson Thacher All offices	Announced 9/22; Payable 10/15	Between $7,500 and $40,000, depending on class year.
Freshfields All U.S. offices	Announced 9/22; Payable 10/15	Between $7,500 and $40,000, depending on class year.
Weil Gotshal & Manges All U.S. offices	Announced 9/24; Payable end of October	Based on annualized hours worked during this calendar year (January 1 – August 31) as follows: Below 1800 hours – $10,000 1800-1999 hours – $20,000 2000-2299 hours – $30,000 2300-2599 hours – $40,000 More than 2600 hours – $50,000
Shearman & Sterling All U.S. offices	Announced 9/28; Payable 10/30	Between $7,500 and $40,000, depending on class year.

And if you’d like to sign up for ATL’s Bonus Alerts, please scroll down and enter your email address in the box below this post. If you previously signed up for the bonus alerts, you don’t need to do anything. You’ll receive an email notification within minutes of each bonus announcement that we publish.

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Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

That Dan Kamensky fucked up spectacularly and disastrously is at this point fairly well-attested. His bank thought his demand that they not drive up the price of an asset he hoped to buy from a bankrupt company on whose creditors committee he served was bad enough to turn him in. The U.S. bankruptcy and the judge overseeing the case were certainly not amused; neither were the Justice Department or Securities and Exchange Commission. Even Kamensky himself has acknowledged how deeply he stepped in it, calling his instruction to Jefferies to “STAND DOWN” a “grave mistake” likely to send him to prison, and certainly serious enough to shut down his Marble Ridge Capital hedge fund.

* Looks like Netflix will be picking up the upcoming Lincoln Lawyer series. Not too newsworthy, but very excited about this! [What’s on Netflix]

* A federal judge may soon rule if Apple’s App Store runs afoul of antitrust rules. [Wall Street Journal]

* A Georgia court is allowing a couple to sue a sperm bank for allegedly misrepresenting the background of a sperm donor. [ABC News]

* A Massachusetts law firm is being sued for allegedly accepting money from a pharmacy in exchange for referring personal injury clients to the business. [Insurance Journal]

* A lawyer for President Trump’s campaign previously worked for Al Gore. Maybe this attorney can double as a climate change advisor… [NPR]

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Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.

Ed. Note: Welcome to our daily feature Trivia Question of the Day!

Which Biglaw firm was ranked #1 in Vault’s 2021 practice area rankings in bankruptcy and restructuring?

Hint: This was the top bankruptcy firm even before the economic turmoil (and accompanying need for restructuring) caused by COVID-19.

See the answer on the next page.

As a teenager, Sam Isaly lost the use of his legs and the partial use of his upper body to a wrestling injury. This did not stop him from getting to Princeton and graduating with honors, nor from studying at the London School of Economics. It did not keep him from founding and running his own hedge fund for three decades, nor from becoming the most successful investor ever in the life sciences space.

Indeed, Isaly’s is the sort of overcoming-of-adversity stories that keeps the American Dream alive, and with it the belief that anyone can do anything if they just set their minds to it. But, according to Isaly, that’s not entirely true: For instance, he says his paralysis prevents him from, say, embedding pornographic material in routine e-mails to his assistant, or creating a hostile work environment for the tiny handful of women working at his OrbiMed Advisors through verbal abuse and sexually explicit japery. At the very least, he says the Boston Globe didn’t do enough reporting on whether his condition might have prevented him from doing any or all of the gross things it reported he did and which led to his departure from OrbiMed—whatever that reporting might be, with what we’re sure would have been Isaly’s and OrbiMed’s full cooperation—and so: Money, please.

Access to justice has become a buzzword. While it sounds noble, many struggle to define it. Others use it synonymously with technology. So, I have been on a mission asking lawyers from all over the world what it means to them and how we collectively get there. For my interviewee, access to justice is the manifestation of the constitutional guarantee of equal access under the law and equal treatment for all of humanity no matter their walk of life.

Winter Wheeler, Esq. is an Atlanta-based mediator and arbitrator at Miles Mediation & Arbitration. She specializes in wrongful death, catastrophic injury, legal and medical malpractice, automotive and trucking liability, § 1983 actions, and entertainment. Most recently, Winter was a senior attorney at a prominent midtown Atlanta law firm. To say that Winter is skilled is an understatement. She handles complex matters involving a diverse range of cultures, including Spanish-speaking clients.

Winter’s view about access to justice and specifically the role of language is even more remarkable and rich. She is particularly attuned to accents and dialects and seeks to shed light on the stereotyped reactions to them as they affect litigants’ access to equal justice. She believes that by simply making people aware of these issues she can help to eradicate them and ensure that witness credibility is evaluated on an individual basis absent bias against the words used and how those words may sound as they are spoken.

OM: I know you are working on several issues related to access to justice and that language is one of the issues you address frequently. Why is discussing language access so important to you?

WW: If history is written by the victors, then one might say that justice is determined by the speakers. Or perhaps more accurately, the speakers and the listeners. In the law, oral testimony makes up a great deal of the evidence used to make binding decisions. So, it should follow that spoken evidence should be understood by the listeners if a fair outcome is to be reached — and that when speakers go misunderstood this presents a clear barrier to justice. This is, of course, why language interpreters are commonly used in legal proceedings, both in and outside of the courtroom.

OM: You speak specifically about the importance of African-American Vernacular English. Why is that aspect of language access so crucial?

WW: If I were to ask you what the most spoken second languages are in metro Atlanta — and therefore the languages in most need of these interpreters — you might say Spanish or perhaps Korean. However, there is one that you would most likely not even think of but should add to the list: African American Vernacular English (AAVE). Given the demographic makeup of the city, AAVE may very well be the language in the most need.

OM: Why do you think AAVE is overlooked?

WW: Unfortunately, the mostly negative attitudes toward AAVE held by the general public helps to prevent confirmation and the addressing of that need.

Language discrimination is rooted, in part, in the notion that there is only one correct dialect of American English, whose name betrays its elevated, privileged status: Standard English (SE). This widely held notion almost always dismisses AAVE as a bastardized version of SE. At best, many consider AAVE to be the grammatically incorrect daily speak of an uneducated underclass — though the truth is much more complex. Indeed, AAVE is not slang but a proven language dialect with clearly established grammatical rules and norms formed over the course of centuries. While it shares a lexicon with SE — just like other American English dialects, including Appalachian—it is quite linguistically distinct in several verified ways. Yet, its classification as a true American English dialect has not stopped the public from associating it with commonly held negative and demonstrably false stereotypes about Black Americans, such as laziness and a lack of intelligence. Notably, when AAVE-speaking children are offered learning support in AAVE, their test scores are much higher than native-AAVE speakers who only receive support in SE.

OM: What impact does this have on the legal system?

WW: We know that these stereotypical views have real consequences in our legal system. A 2019 study published in Language Magazine showed that key listeners in American courtrooms — including judges, lawyers, jurors, and court reporters — often assumed criminality on the parts of AAVE speakers. This held true no matter the ethnicity or race of the listener. The study also showed that the majority of court reporters were woefully incapable of understanding, paraphrasing, or accurately transcribing the testimonies of AAVE speakers. Think of the far-reaching ramifications this could have on litigants of every shade of the rainbow when the key witness happens to speak AAVE. Suddenly, not only have a litany of negative attributes been ascribed to a witness who likely does not deserve them, but any attempt by that witness to establish their credibility may be met with a severe lack of understanding. These eventualities have unfortunate effects on litigants’ ability to participate in and receive equal justice under the law.

Consider the 2013 trial of George Zimmerman, who was accused by the state of Florida of having murdered teenager Trayvon Martin. Now, recall if you can the racialized backlash against the state’s star witness, Rachel Jenteal, whose Creole background and AAVE-delivered testimony resulted in her carrying the double hurdle of having her credibility openly dismissed (by at least one juror after the trial) and having her character publicly questioned. News reports from that period show that Jenteal’s speech and delivery were described as “ghetto trash.” In the days and weeks following her court appearance, social media and blogs covered her lack of a high school diploma — as if that had anything to do with what she witnessed — instead of the actual murder of her friend. Keep in mind that the harsh criticism against Jenteal came from both Black and white Americans.

OM: What can mediators and arbitrators such as yourself do to eliminate this type of discrimination? 

WW: There are deep socioeconomic problems undergirding this somewhat hidden form of legal discrimination — and remedies will not be found until we develop and adhere to tactics that address and mitigate these effects within our professional legal circles. There are several practices that can be utilized to ensure a fair and just mediation.

Because AAVE shares the same lexicon as SE, many non-AAVE speakers genuinely believe they can fully understand the dialect. That is likely not the case. Remember, AAVE has a distinct grammatical structure that can fundamentally change the tense, and therefore the meaning of verbs. For example, AAVE speakers can swap the words have not, does not, and is not with just one word representing all three tenses: ain’t. So, despite the familiarity, I would not recommend guessing your way through someone giving testimony in AAVE.

Do not assume that because a lawyer is Black that they speak or understand AAVE. It is not fair, nor practical, to do so. Usage and fluency in AAVE vary wildly from person to person for any number of reasons, with one documented cause of variation being socioeconomic class. The wealthier a person is, the more likely they are to speak SE with more regularity than they speak AAVE. Members of higher socioeconomic classes are also more likely to “code switch,” which is to speak AAVE amongst peers while switching to SE with non-AAVE speakers.

It is fair to assume that a native AAVE speaker understands SE — do not worry about speaking to someone in SE even if they prefer to respond in AAVE. During mediation, you should do your best to make the parties feel comfortable enough that they are willing to speak to you in their native AAVE if they cannot or will not code switch — but I would not recommend trying to speak AAVE if you are not a native speaker. You do not want to sound as though you are mocking the dialect.

Repeat back what you heard. If a party speaks to you in AAVE, you can be sure you have interpreted their words correctly simply by doing what you would normally do as a good mediator. Summarize their points back to them and then ask for confirmation that you are correct in your summation and that you captured accurately what they are conveying.

Pay careful attention to determine whether the attorney is aware of any potential language barrier with their AAVE-speaking client, because the attorney very well may not be. As any mediator knows, there is always the chance of a rift between the attorney and their client. Since you should already be attuned to this issue, a natural next step is for you to note any linguistic gaps. A misinterpreted double negative or tense could have devastating consequences to a lawsuit if it goes unnoticed.

OM: What should the ultimate takeaway be for attorneys from all of this information?

WW: Ultimately, be respectful of those who choose to speak AAVE in your presence. The dialect is an important and often unifying cultural marker. It is not slang, it is not a trend, nor is it to be mocked. Because we know that AAVE is subject to negative stereotypes and discriminatory actions and attitudes, mediators and arbitrators can alter our own behavior and mindset to ensure equal access to justice.

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Olga V. Mack is the CEO of Parley Pro, a next-generation contract management company that has pioneered online negotiation technology. Olga embraces legal innovation and had dedicated her career to improving and shaping the future of law. She is convinced that the legal profession will emerge even stronger, more resilient, and more inclusive than before by embracing technology. Olga is also an award-winning general counsel, operations professional, startup advisor, public speaker, adjunct professor, and entrepreneur. She founded the Women Serve on Boards movement that advocates for women to participate on corporate boards of Fortune 500 companies. She authored Get on Board: Earning Your Ticket to a Corporate Board Seat and Fundamentals of Smart Contract Security. You can follow Olga on Twitter @olgavmack.

 

 

September brought a spate of three major acquisitions by private equity firms of companies with technology related to the management of smaller law firms. Was this coincidence or was the pandemic a factor?

The trend started Sept. 8, when news broke that the practice management platform MyCase has been sold by its owner, AppFolio, to the private equity firm Apax Partners for a whopping $193 million in cash.

Founded in 2010, MyCase had been acquired in 2012 by AppFolio, a company then new to the legal industry whose primary product was and remains a cloud-based property management platform for residential and commercial property managers. In 2015, AppFolio completed an initial public offering, raising some $74 million — one of the few-ever IPOs related to the legal industry.

The other two acquisitions both came to light last week (although both had privately closed at least several weeks earlier).

On Sept. 22, I reported on my LawSites blog that ASG LegalTech, the company that owns cloud practice management platforms PracticePanther, Bill4Time, and MerusCase, had acquired Headnote, the online payments platform that provides e-payments and accounts-receivable management for law firms.

ASG LegalTech is a relatively new company. Its parent, Alpine SG (ASG), is a portfolio company of the San Francisco private equity firm Alpine Investors. After ASG acquired Bill4Time in 2017 and PracticePanther in March 2018, it merged the two companies in February 2019 to create the unified legal technology business, ASG LegalTech. A month later, it acquired another practice management company, Merus Inc., developer of MerusCase.

The company it acquired, Headnote, was founded in 2016 by Sarah Schaaf, a lawyer who had formerly worked at Google, together with Thornton Schaaf, who was head of product at Headnote, and Matt Crampton, who was Headnote’s chief technology officer.

They created Headnote at a time when the payments business in legal was largely dominated by one company, LawPay, founded in 2005. They sought to distinguish Headnote through a mix of features that made it easy to use and ensured compliance with bar and IOLTA requirements, while charging the lowest fees in the legal industry.

The final acquisition, revealed Sept. 24, was of the practice management company Rocket Matter, which was acquired by the private equity firm Lightyear Capital LLC, which will make it part of a new company, ProfitSolv, that also includes two other recently acquired companies, TimeSolv, a provider of cloud-based legal billing and timekeeping software, and ImagineTime, a practice management and payments company serving accounting and other professional services firms.

Along with Clio, Rocket Matter was the first of the new breed of cloud-based practice management platforms, launching its commercial product on Jan. 6, 2009, just months after Clio’s launch on Oct. 1, 2008. As I wrote in 2018, the two companies “ignited a revolution in law practice management by bringing to the cloud what had always been a desktop technology.”

Is The Pandemic A Factor?

All of which begs the question: Were these three acquisitions, all within two weeks of each other, sheer coincidence, or was the pandemic a factor that led to this alignment of investments? I believe it was very much a factor, and that three pandemic-related reasons drove these acquisitions.

The first reason is also the most obvious. Not only has the pandemic accelerated the adoption of cloud technologies among legal professionals, it has also made it essential. I wrote here back in April:

In a matter of a month, any lawyers who still harbored fears of technology have of necessity come to see it as a lifeline to the survival of their practices and their continuing ability to serve their clients. Going forward, that will fundamentally reshape the legal profession’s use and adoption of technology.

While this is true of technology broadly, it is most true of cloud technology, as we have all adapted to working from home and where no clear end is in sight. Cloud companies tell me that their subscriptions have been soaring during the pandemic, and companies that have offered both on-premises and cloud software tell me they can barely keep up with converting their customers to the cloud.

In short, cloud practice management is a very good business to be in these days, and as so many lawyers adopt or convert to the cloud, there will be no going back. The pandemic has been a pivotal period, changing what had been gradual adoption of the cloud to a mass movement.

For private equity firms, this has created an appealing investment opportunity. Cloud legal tech is strong right now, and there is significant potential to grow these businesses much more over the next few years.

The E-Payments Factor

A second pandemic-related factor that has driven these investments is the need for electronic payments.

Before the pandemic, many law firms, especially smaller firms, clung to the old-fashioned method of getting paid, in which they sent out paper invoices and waited for their clients’ paper checks to arrive back in the mail.

But paper payments do not work in a pandemic. Clients do not want to deal with paper invoices and writing and mailing checks. Firms likewise do not want to deal with printing and mailing invoices, and may not even have easy access to mail delivery.

In all three of the acquisitions described above, e-payments is a significant part of their technology — and, no doubt, of their plans going forward.

The ASG LegalTech acquisition of Headnote is the most direct example of this. By acquiring Headnote, ASG LegalTech gets a modern and proven payments platform. On my LawNext podcast, ASG LegalTech’s CEO Soumya Nettimi told me that one of the aspects of this deal that she is most excited about is that they will use Headnote’s technology to build something their customers have been asking for — a fully native payment solution within each of their practice management platforms.

“So what this means is customers will have a seamless experience already built into their current workflows, so they never have to leave their practice management system in order to manage their payments,” Nettimi said.

They have already done this for PracticePanther, building a fully integrated, all-in-one payment system within the platform called PantherPayments. They will also keep Headnote as a standalone product.

MyCase had long ago offered integrated electronic payments options, starting with e-checks in 2015 and adding credit card payments in 2016.

Meanwhile, Rocket Matter earlier this year acquired LexCharge LLC, a payment processing company that specialized in handling payments for legal professionals. While it already had an integrated payments option, the LexCharge technology allowed it to create a more truly consolidated streamlined payments experience within its platform.

So not only has the pandemic made cloud technology in general more essential, it has made the specific category of payments technology more essential. As ASG LegalTech’s Nettimi said to me, in this year of the pandemic, “getting paid is synonymous with staying in business for many of our firms.”

On top of that, payments technology can be a very good business for an investor. For every payment processed, the company gets a percentage. While the amount in any single transaction is relatively small, all those legal bills getting paid by all those clients of all those firms add up.

Given this, I think it is no coincidence that all three of these acquisitions involved companies with payments technology.

“Trillion-Dollar Piggy Bank”

The third factor that has contributed to this alignment of investments, I suspect, is that private equity is sitting on what The Wall Street Journal described as a “trillion-dollar piggy bank” — a $1.45 trillion build-up of so-called dry powder, which is money that investors have committed to private equity funds but which has not yet been spent.

With all this cash at hand, private equity firms may be looking for opportunities in industries they previously paid little attention to. The pandemic presents an opportunity for new growth and even transformation among legal technology companies, and nowhere is that more so than in cloud-based legal technology.

The Impact On Customers

The combination of these factors — all exacerbated by the pandemic — have driven private equity firms to invest in cloud practice management technology. But the question I have received the most in the past two weeks is not why this has occurred, but whether this private equity ownership will be good for the customers of these companies.

With regard to both the MyCase and Rocket Matter acquisitions, the new owners have largely been mum, so we know little about their plans. However, Rocket Matter founder Larry Port described the investment as “superhero potion.”

“Rocket Matter still has the same team, the same quirky and caring company personality, and are still committed to our core purpose: ‘to make the lives of attorneys a whole lot better,’” he wrote. “And with our new superpowers, we’ll be able to do a whole lot more of that.”

The principals of ASG LegalTech have been far more transparent about their plans, and they seem fully committed to making their suite of products even better through continuing development, stronger customer service, and even more product launches or acquisitions down the road. Don’t take my word for it – I encourage you to listen to my interview with Nettimi and Schaaf and judge for yourself.

The fact of the matter is that the legal industry has changed dramatically since Clio and Rocket Matter rolled out their first cloud products a dozen years ago, and the pandemic has accelerated that change even more dramatically. For these companies to continue to develop and scale in keeping with these changes, they need money. I am optimistic that all of these acquisitions will prove to be good news for their customers.

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Robert Ambrogi is a Massachusetts lawyer and journalist who has been covering legal technology and the web for more than 20 years, primarily through his blog LawSites.com. Former editor-in-chief of several legal newspapers, he is a fellow of the College of Law Practice Management and an inaugural Fastcase 50 honoree. He can be reached by email at ambrogi@gmail.com, and you can follow him on Twitter (@BobAmbrogi).