We welcome back Brad Blickstein, CEO at Blickstein Group, to discuss how private equity principles may provide law firms with an alternative approach to profitability, governance, and even long-term growth. Blickstein’s new book, WWPED: What Would Private Equity Do? was written to walk firms through how treating topics like pricing, technology, talent, and client relationships as part of the enterprise value instead of overhead expenses after year-end partnership distributions.

Pulling from Jae Um’s topics of Cream, Core, and Commodity framework, Blickstein talks about the legal work as the primary competitive battleground. Much like businesses that provide baked goods, firms have to separate the customized legal judgment from the repeatable legal processes, technology, and what alternative legal services providers offer. Law firm leaders should understand what scalable work is, begin building consistent systems to deliver that work, and truly professionalize pricing over relying upon what a partner’s gut tells them.

We also cover the Blickstein Group’s 2026 Law Firm COO Survey where technology adoption and investment ranks as the leading strategic initiative with 38.1% identified practice silos as the largest structural issue and 27% of COOs listed lack of operational authority as another prime issue. COOs are struggling with being tasked with modernizing law firms, but not given the authority to actually overcome the base issues of decentralized partnerships, competing incentives, and overall firm political structures.

Add AI into the mix, and the pricing question becomes even more important. Some two-thirds of the COOs surveyed confessed that they were not formally measuring any return on investment (ROI) in which they could later measure any law productivity or direct revenue increases. Blickstein points out that faster work in a billable hour model is not the type of math that law firms want to calculate, and that firms have to address this directly and redesign their overall pricing model on value received by the client, not hours worked by the lawyers. We all discuss the issues of alternative fee arrangements (AFAs) have face in the more than 30 years since Blickstein originally published an article titled “Alternative Billing Making a Comeback.” AFAs bring with it issues of shadow billing, client trust factors, and the need to express value not tied to the amount to time spent on the work.

We also break down the corporate buyer side and address the Blickstein Group’s 18th Annual Law Department Operations Survey which identifies AI pilot projects in corporate legal departments, but very few operational deployments. These may be tied to the long running issue of poor data hygiene along with business objectives that are not clearly tied to overall corporate strategy.

Brad gets to be one of the first to answer our new question of “what’s true today that wasn’t true a year ago?” A nice lead in to our Crystal Ball question. We cover AI token pricing and having to compete with the new “AI native firms” that are spinning up from former BigLaw partners.

Listen on mobile platforms:  ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Apple Podcasts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ |  ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Spotify⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠Substack⁠

[Special Thanks to ⁠⁠Legal Technology Hub⁠⁠ for their sponsoring this episode.]

Email: geekinreviewpodcast@gmail.com

Music: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Jerry David DeCicca⁠⁠⁠⁠⁠⁠⁠⁠⁠

LINKS

Transcript:

Stephanie Wilkins (00:01)
The GenAI conversation has been advancing faster than a lot of people can keep up with lately, but some new developments have brought older concepts like prompting back into the spotlight, thanks to a trending new topic: token cost. Token cost moved into the spotlight recently as tools like Claude gained traction in legal because most plans come with token limits, as well as the ability to request limit increases, which has resulted in tales of astronomical bills for some users. Recently, Legora also announced that it’s moving its Agent Pro offering to consumption-based pricing, which means it’s billing by what the agent does rather than by a flat-seat license. And what agents do is consume tokens. Eventually, other providers are sure to follow suit. What many don’t fully understand is just how quickly token usage can add up. A few extra follow-up questions, a document pasted in twice, a chat continuing long after it should have been reset. If that sounds familiar, token consumption compounds faster than you might expect, and you might be looking at higher token usage than you think.

And you might not even realize it until you’ve hit your usage limit or, worse, seen the bill. This is a blind spot we’ve been unpacking in one of our latest article series on Legaltech Hub: how to get more out of tools like Claude without burning time, decreasing accuracy, or racking up unnecessary bills. We’ve covered topics like what tokens are and why they function as a hidden meter running behind every chat, when to reset a conversation versus continue in the same chat, and what everyday prompting habits, from repasting whole documents to burying five questions in one prompt, might be driving up both cost and inaccuracy without you knowing it. Head over to legaltechnologyhub.com to read the full series and learn more about how to get the most out of your token limits and your use of tools like Claude.

Marlene Gebauer (01:51)
Welcome to The Geek in Review, the podcast focused on innovative and creative ideas in the legal industry. I’m Marlene Gebauer.

Greg Lambert (01:57)
And I’m Greg Lambert. Today, we’re exploring the modern legal services market through a value-focused operational lens. We’re looking at what happens when you apply the strategic rigor of private equity to law firms, and how that intersects with the ground truth of legal operations on both the law firm and client sides.

Marlene Gebauer (02:24)
Yeah, we are absolutely thrilled to welcome back a frequent and favorite guest of the show, Brad Blickstein. Brad is the chief executive officer of Blickstein Group. He’s widely recognized in the legal industry as a futurist who’s spent nearly three decades analyzing how legal services are purchased and delivered.

Greg Lambert (02:42)
And, like us, he started when he was 12.

Marlene Gebauer (02:45)
That’s right.

Greg Lambert (02:46)
Brad, we’re going to talk about this, but you’ve been pretty busy lately. This past April, you published your new book, WWPED, which is What Would Private Equity Do?: Unlocking Value in the Law Firm You Already Own. Then, as if that wasn’t enough, you also released two massive benchmark studies: the 2026 Law Firm COO Survey Report in July and the 18th Annual Law Department Operations Survey. So you’ve been busy.

Marlene Gebauer (03:15)
Yeah, Brad the underachiever. Welcome back to The Geek in Review.

Greg Lambert (03:18)
[Laughs.]

Brad Blickstein (03:20)
I have been busy, and I do like to try new things, but I have to push back a little bit at the use of the second-person singular there. I have a great team at Blickstein Group, and they did most of the work that I get the credit for. So I’ve been busy, but they’ve been busy too, and it makes a big difference.

Greg Lambert (03:41)
That’s a good leader that gives credit where credit’s due.

Marlene Gebauer (03:44)
Absolutely.

Brad Blickstein (03:45)
Well, yeah. I mean, it is my name on the door, so…

Marlene Gebauer (03:48)
[Laughs.]

Brad Blickstein (03:48)
But we do what we can.

Marlene Gebauer (03:51)
So, Brad, in your new book, WWPED, you challenge law firm leaders to stop treating their firms purely as cash-flow vehicles for year-end partner distributions and start focusing on enterprise value. You use a great bakery analogy to explain Jae Um’s cream, core, and commodity market segmentation. Can you walk us through the difference between an artisanal legal bakery and a Crumbl Cookies-style system, and why the core segment, representing 70% of the market, is the ultimate battleground for law firms today?

Brad Blickstein (04:27)
Sure. Let’s start with cream, core, and commodity. The idea is that it’s a pyramid. The cream work is at the top. That’s what you think it is: the work where you need a seriously good lawyer to give you seriously good advice or provide seriously good work product. This is where we think about things artisanally. That work needs to be done artisanally. Then, at the bottom of the pyramid, skipping ahead a little bit, we have the commodity work.

Much of that is already not being done by law firms, or is in their captive ALSPs. That work has largely become systematized or scaled. But there’s tons of work in the middle. Jae calls it core work. Sometimes I prefer “run-the-company work.” The work, as you point out, Marlene, that we say is 70% of the market. To be honest with you, that’s a Fermi number, or really just a guess.

But it’s something like that. It’s a big chunk of the market. This is what law departments spend most of their money on and, frankly, where law firms earn most of their profits. This is where the leverage model plays in for law firms. Much of that work shouldn’t be done artisanally. It can be done differently than it is today, and it can be scaled. That’s where the bakery analysis comes in.

If you’re going to the bakery and it’s your 25th wedding anniversary, you’re throwing a big party, all your friends are going to be there, and you want the best cake you can find. You want something special for your spouse. You want to make it a big deal. You want to go to an artisanal bakery where an actual baker with skills is going to bake your cake because that’s appropriate for that situation.

On the other hand, your kid got a couple of B-pluses in school and you want to bring home some cookies to celebrate. That’s nice too, right? But you don’t need to go to that length for that. You can go to a more scaled bakery, something like Crumbl. And what’s the other one? The overnight cookie, the sleepy-time cookie. There’s something else like that. Insomnia Cookies, sorry. The opposite of sleepy time. You can go there and pick up a bundle. Think about how those different types of entities work.

At Crumbl Cookies, there’s likely not even a baker within 100 miles of the store. There’s a formula, a recipe, and technology that makes sure it goes right. They put out a fine product that works for most instances where you want cookies or a cake. I don’t think we always do a terribly good job in legal of differentiating between the two. There’s a lot of work that can be done with technology and different resources in a scaled way.

That work can be more profitable for firms if it’s done right, and it needs to be differentiated from the artisanal cream work, which shouldn’t be scaled. What we’re arguing for in the book, more than almost anything, is that you should figure out what that work is and scale appropriately for your firm.

Greg Lambert (07:26)
Yeah. I was afraid, Brad, that instead of saying the kid got a couple of B’s on the report card, you were going to say, “On your 24th wedding anniversary, you don’t go get a fancy cake,” and I was going to have to make sure

Marlene Gebauer (07:37)
[Laughs.]

Brad Blickstein (07:37)
Well

Greg Lambert (07:38)
my wife didn’t listen to this episode.

Brad Blickstein (07:40)
Well, I’ve been married more than 24 years, and I’ve learned a few things along the way, so you were at no risk of me stepping in that little pile.

Greg Lambert (07:50)
Well, I think that’s a pretty good argument. Part of the issue is firms trying to determine what falls into those categories. But one of the other issues we run into a lot, and we’re seeing it now around AI infrastructure, is the fact that, as partnerships, these firms are designed to distribute their profits at the end of the year and not have anything roll over. So when you see things like Kirkland announcing that they’re going to put $500 million into AI infrastructure over the next few years, one, not every firm can do that. And two, I laugh because I remember talking with a partner who said his wife remembers the one month he didn’t take a draw because they were putting some funds into the future. He said that was 10 years ago, and she still remembers it. It’s outside the norm. How do you convince firms that aren’t used to doing this to figure out a way to build for the future?

Brad Blickstein (09:08)
Yeah, that’s a great question. Not everything is for everyone, right? Not every strategy you might deploy here is for every firm. But it is one of the advantages of taking outside investment. That’s where you can smooth that over. You can use PE funds, or funds from whomever, for some original payout to your partners, to smooth that over time, or to make the investment. That’s one way to do it.

The other way, and I just alluded to it, is to pick your spots. Half a billion dollars is a lot of money for everybody. But over three years, which I believe is the period, it’s not that much money. I can’t believe I used those two things in the same sentence, but it’s not that much money for Kirkland partners, because they have

Marlene Gebauer (09:55)
[Laughs.]

Brad Blickstein (09:56)
enough partners to spread that out nicely, right? One thing I wonder about the partner you mentioned: did he tell his wife three years in advance that one month’s draw might not be coming? There are expectations that need to be set.

Greg Lambert (10:10)
No, I guarantee you he told her the month it happened.

Brad Blickstein (10:14)
Right. So there’s some of that too. But one of the book’s big arguments is that you don’t need to take outside investment to do some of the things a PE fund would say a firm should be doing. I list about 10 different things, but you don’t have to do them all at once. One thing I believe in is that law firms should professionalize pricing.

If I were a PE fund investing in law firms, one of the first things I would suggest is bringing on a serious, professional pricing operation to fix that. I’m not even talking about alternative fee arrangements or flat fees. That’s exactly what I mean by professionalizing.

Marlene Gebauer (10:50)
What does professionalizing pricing mean? Firms have pricing groups, so what are you saying that’s different?

Brad Blickstein (10:58)
Well, some firms have pricing groups. Some large firms have pricing groups. Most firms do not, and most midsized firms do not. In a lot of cases, those pricing groups have been neutered or aren’t listened to. At most firms, it’s still often a partner’s gut feeling about whether they have to discount or whether they can pass through a price increase. In many cases, the engagement partner feels they can’t get that across. They can’t sell that to clients right now without the right data to back it up.

Again, not everything is for every firm. But for many firms, it’s easy to see a couple, three, or five points across the board if you bring in the right type of pricing function. That goes right to the bottom line. Pick your spots. Don’t do everything we’re suggesting here at once. Where can some of this PE thinking truly affect value? Start there, with a bite your partners can digest.

Marlene Gebauer (12:03)
Let’s look at the findings from the July 2026 Law Firm COO Survey. A historic shift occurred this year. For the first time, technology investment and adoption surpassed talent acquisition as the top strategic initiative for law firms. Yet 38.1% of the COOs identified practice silos as the number-one structural issue they would fix, and 27% cited a lack of operational authority. Why is there such a persistent authority gap for professional managers tasked with executing these high-stakes technology strategies?

Brad Blickstein (12:39)
Yeah, I think there are two answers. One is the relative power of the people expected to do that work. At a midsized firm, the COO might have had a title like administrator a couple of years ago, perhaps even the same person. To what extent do the partners empower that person to run a firm the way a serious businessperson would be allowed to?

You hear a lot of this from COO-type folks: “This is what I’d like to do, but the partners won’t let me.” So there’s that. I guess there are three issues. There’s also a big delta between their opinion of leadership and their opinion of partners. Leadership is often more supportive of COOs’ business initiatives than the partners are. There’s that disconnect: “The managing partner is totally behind me, but then when I try to roll it out through the partnership…” You guys live and breathe this every day, right?

Greg Lambert (13:41)
No, I’ve never seen that. Never.

Brad Blickstein (13:44)
I do think, and this is evolved thinking for me, that practice silos are an underrated problem, especially at big firms. Different partners think differently, and different practice areas are built differently and designed to do different things. We understand why they’re put together in a firm, but in many ways they’re not alike enough for some of these systemic changes to be achieved entirely firmwide. The IP practice and the M&A practice, for example, are run and built quite differently.

Greg Lambert (14:23)
When Marlene was giving you that question, I was thinking that one of the worst things you can have in a position of authority is all the responsibility and none of the authority to do what you’re assigned to do. One thing you pointed out in the survey was a rise in COOs coming from outside legal to take over those roles, which makes sense. A lot of us want to run things more like a business, so we bring in businesspeople. But then we throw them into legacy law firm environments. How do you avoid bringing someone in and giving them all the responsibility and none of the authority?

Brad Blickstein (15:16)
That’s such a… Yeah, maybe.

Greg Lambert (15:18)
That’s another book, huh?

Marlene Gebauer (15:19)
Yeah.

Brad Blickstein (15:21)
That might be an encyclopedia. I think a lot of it comes down to where power is consolidated within the firm. If you’re talking about a small or midsized firm where leadership has consolidated a lot of the power, it’s easier. When the job becomes a consensus-building job, it’s difficult. Frankly, if you came from outside legal, that might be an impediment. If you come from corporate America, where it’s hierarchical, what the boss says goes, and people generally stay in line, working at a law firm where that’s inherently not the case is problematic.

One instructive example, and I’m oversimplifying, is that plaintiffs’ firms don’t have this problem as often. There’s usually one or two people’s names on the door. There’s a big boss who is the big boss of the firm, whether their name is on the door or it’s “Tiger Law” or something like that. They tend to row in the same direction, with fewer practice areas. They’ve been able to bring in a lot of talent and innovative business strategies that people on the corporate and defense side struggle to bring in. So it can be done. It takes a consolidation of power, or you need to be a world-class consensus builder, or there has to be some consolidation of power above you within the firm.

Greg Lambert (16:51)
Yeah.

I was going to ask: what advice would you give a COO coming in from outside legal?

Brad Blickstein (16:57)
A little patience, a little Zen. Make sure you re-up your blood pressure medication before you start. It takes the right kind of person.

Greg Lambert (17:09)
Enroll in some yoga and meditation.

Marlene Gebauer (17:11)
Breathing exercises.

Brad Blickstein (17:13)
And fight the battles you can win.

Greg Lambert (17:16)
Yeah.

Brad Blickstein (17:17)
But if you pick the battle, you have to win it. You can’t lose the ones you’ve decided to fight. That’s a good lesson for COOs too. Think carefully about how badly you need something to happen and how important it is. If you’re going to use a lot of political capital and possibly burn your reputation when you lose that battle, think about how badly you need to fight it.

Marlene Gebauer (17:44)
Makes sense.

One of the most striking statistics in the COO Survey is that 66% of COOs report their firms do not formally measure or document AI-related efficiency gains. And 39% of those same COOs expect AI to increase revenue through greater lawyer productivity. If firms are saving time but aren’t measuring it, are they actively devaluing their services? How can a firm defend pricing under a billable-hour model when AI is compressing those timelines and the firm has no baseline data for pricing alternative fee arrangements?

Brad Blickstein (18:33)
It’s a conundrum. It’s a problem. First, I think the number of people who are formally measuring or documenting is going to go up, right? There’s no way we’re going to continue

Marlene Gebauer (18:45)
Has to.

Brad Blickstein (18:46)
not documenting anything. And let’s be honest, while it can be hard to analyze and use, the data is there. These are people who measure everything they do in six-minute increments, right? We can talk about this later, but it’s going to be a much bigger problem in-house, where they don’t track what people do daily. At law firms, they do, so that number is going to change.

I’m fascinated by this AFA question because I’ve been tracking it for so long. You guys know I was one of the founders of Corporate Legal Times magazine, and in the fourth issue we published, in 1992, we ran an article with the headline, “Alternative Billing Making a Comeback.” So 30 years ago, Jesus, 35 years ago now, it was already making a comeback. This idea that…

Greg Lambert (19:36)
Any day now.

Brad Blickstein (19:37)
And we’re almost…

Marlene Gebauer (19:38)
Mm-hmm.

Brad Blickstein (19:38)
here. I think the idea that clients are going to make firms do this has largely been disproven. It’s true around the edges, and there’s 15% or whatever that do it, but the hypothesis that firms will adopt AFAs because clients will make them has been disproven over the last 30-plus years.

Now we’re getting to a point where it might be the firms that need to do this. It won’t be only for client satisfaction, because they think clients want it. It might become the only way to make money. So I’m not as concerned about the 66% that, in my mind, aren’t yet tracking. I’m much more concerned about the 39% who say they’re going to increase revenue through greater lawyer productivity. How? Under what model does that happen? Better productivity should decrease revenue. Perhaps it lets you bring on more clients and make enough of it back that way, but that’s a nuanced issue. I’m not sure the market sees it yet. People are starting to get their arms around it, but I don’t think anyone has solved it.

Firms are going to have to measure productivity better and understand it better. They’ll have to go to clients and say, “Look, these projects that used to take 10 hours, we can’t bill you for one hour. I guess we could bill you $7,000 for that hour, but that doesn’t work. How can we bill you in a way that gives you value and allows us to capture some of the efficiency gains?” To me, that’s

Greg Lambert (21:19)
Right.

Brad Blickstein (21:19)
the battleground. Like that’s what we’re looking at.

Greg Lambert (21:22)
Right. I’m going to switch up my question a little after hearing your answer. I heard this at a conference earlier this year: why would clients want AFAs now, when they think it takes only one hour instead of 10? Where’s the motivation? But my question is more about how we get past the trust factor and move to something beneficial for both sides. We tried this in 2008 and 2012. It was like, “Hey, we’re going to do alternative fees,” and clients responded, “Yeah, I don’t trust you. I want the alternative fee, but I also want you to tell me how many hours it took so you’re not getting one over on me,” to put it politely. How do we get past that?

Brad Blickstein (22:19)
That’s a great question, and it’s an underrated issue. People love to blame firms for the fact that AFAs largely haven’t been implemented, but clients don’t trust their own firms. That’s a big issue. The shadow-billing issue you mentioned is huge. If you’re a firm, you’re effectively putting a cap on the amount you can bill without putting a floor on the amount you could bill. It doesn’t work for firms. I think we’re approaching a crossroads.

The first thing to remember is that clients like sending work to their law firms. They like working with their firms. Despite all the talk about bringing work in-house, and I know that’s a giant trend, all things being equal, most general counsel would prefer to keep sending work to their firms. Now, all things aren’t equal, and they’re less equal than they used to be.

First, firms will have to be more transparent without going all the way to a specific number of hours. Firms have to do a better job, and this is hard, of articulating the value of their work in some way other than the number of hours it takes.

Frankly, I think firms need to stand up a little more. If you’re a firm and a client asks for shadow billing, the proper answer is no. “We won’t share the number of hours this work takes. Either you feel you’re getting a fair amount of value for the work we’re doing or you don’t. And if you don’t, we have a problem, and we’ll talk about that. But the hours we put in aren’t your business.” You have to say it much more nicely than I just did.

I don’t think firms push back enough when clients ask that. The whole point of an AFA is valuing the work rather than the time. And, by the way, the amount of time it takes to do the work is not the same as the value of the work. We have to figure out a way to work together to provide good work for good value, rather than go to work for a certain amount of time. I’m preaching at this point, though. I don’t know how to do that.

Marlene Gebauer (24:37)
It’s a good point, but it’s interesting because you’re getting that level of detail in pitches and RFPs. Clients want to know exactly how much time things take and how much time you’re saving. It’s difficult to respond the way you’re suggesting when they’re specifically asking for this information.

Brad Blickstein (25:08)
It’s hard to pivot that conversation. When they ask that question, the way to pivot is to say, “Let’s not talk about how much time we’re saving. Let’s talk about how much money we’re saving. Here’s what we used to bill you for this type of work, and here’s what we’ll bill you now.” You can ask how long it’s going to take, but what does it matter?

It’s easy for me to sit here on your podcast and say, “Go tell your clients we’re not going to answer your questions.” It’s hard to do, and it takes fortitude. But if you establish the value and build trust with clients over time, I think it works.

The other thing you might do, especially when talking about AI, is think about the other value propositions. Can you get the work done faster? I don’t mean in less time. I mean finished sooner. Can the deal close faster? Can the litigation be settled sooner? In due diligence, can you review more material than before? Classic due diligence used to mean, “Send us the contracts with your 25 biggest clients,” because that was all the due diligence team had time to review. Now you can use AI to look at all the contracts. What’s the value proposition around using AI that isn’t tied solely to efficiency?

Tie that to cost savings rather than time savings or hours saved. Stand up and say, “Look, we respect you, but we’ve thought a lot about this. We’ve spent a lot of energy on it, and we think you’re asking the wrong question. Let us answer the right one.” Some clients will say, “Well, they didn’t fill out our RFP properly.” Too bad. But I think many will respect that and want to work with a thoughtful firm.

Marlene Gebauer (26:54)
I’m going to shift to the buyer side. The 18th Annual Law Department Operations Survey, the LDO Survey, shows a corporate legal buyer that is stabilizing structurally while absorbing broader business mandates, including CFOs stepping directly into contracting. Meanwhile, corporate GenAI adoption is defined by piloting, at 52%, rather than fully operationalized systems, at 23%. Why are corporate legal departments stuck in pilot purgatory, and how does the middle-mile data hygiene problem play into this?

Brad Blickstein (27:34)
Yeah, that’s part of it. First, considering we’re only two or three years into the AI era, depending on how you count, I’m not sure it’s purgatory. In many ways, we’re working through this, and I expect that number to fall substantially over time.

Part of it is caused by all the noise. How do you determine whether a tool is worthwhile these days without giving it a shot? It’s hard. I think we’ll get there, but the data hygiene problem will grow. Whatever the old saying is, garbage in, garbage out. I think we’ll solve the data protection problem. People understand, and are starting to become more comfortable with, how their data is used.

The idea that we want our law firms to provide every possible ounce of efficiency through AI tools, but we won’t allow them to use our data as training data to help them do that, isn’t fair. I think we’ll get past many of those issues over time. But data in corporations is a mess. To get the full benefit from these tools, you’ll have to solve that in many cases. I wonder how many pilots will fail because the technology, adoption, and training are good, but the data isn’t there.

Marlene Gebauer (29:13)
It’s a big issue in terms

Brad Blickstein (29:16)
It’s a big issue.

Marlene Gebauer (29:16)
of getting this data usable, getting it where you need it to go, and making your technology useful. I mean, it’s

Brad Blickstein (29:23)
Yeah, my hope is…

Marlene Gebauer (29:26)
It’s not a new problem, but, yeah.

Greg Lambert (29:27)
Yeah, I was going to say this is a 25-year-old overnight problem.

Marlene Gebauer (29:30)
It’s not a new problem, but I don’t know whether it’s easier or harder. The technology is so much better, but the security issues are more difficult. I’m not sure.

Brad Blickstein (29:44)
What I’m hoping, I guess, is that if you look at e-discovery over the years, technology created the e-discovery problem, right? The ability to disperse data quickly, email everyone, and copy a million people created a data problem. Technology then largely solved it with tools such as auto review and platforms. I’m hoping AI will help solve the data hygiene problem itself, enabling AI to work better on the legal problems the data supports.

Greg Lambert (30:25)
I know this was the first time in the survey, and of course, AI has only been around for about three years, that usability received a higher score and beat out security as the top AI priority for legal operations teams.

I think this opens the door to unique opportunities for law firms to offer services to their clients. Are you seeing clients expect something they haven’t been offered before? Are they receptive to those services?

Brad Blickstein (31:10)
I think they’re absolutely receptive. If I ran a law firm, I’d try to get ahead of all this. I’d build things, find new use cases, and bring solutions to clients before someone else does or before the client tries to build something themselves.

For any work you’re concerned the client might bring in-house, think about what that work is and build a case for why they don’t need to bring it in-house. Explain why the firm can do it more efficiently, better, and at a better price than the law department going through the trouble of bringing it inside. I don’t think we see firms bringing that case to clients enough. When firms do, clients are extremely receptive.

ALSPs are starting to get involved too. If I were a firm or an ALSP, I would build offerings and bring them to the right clients before the client decides to find a solution.

Greg Lambert (32:11)
Yeah. Speaking of ALSPs, why haven’t they wiped the floor with BigLaw? Everyone seemed to expect that, because they have these repeatable processes. Why aren’t they kicking ass?

Brad Blickstein (32:34)
Well, first of all, I think some of them are kicking ass, right? When you look at them as a percentage of the legal market’s overall share, it seems somewhat stagnant. But many of these businesses are on big growth curves within the ALSP segment. There are many reasons, but the big one is that clients like working with law firms, and that’s their

Greg Lambert (32:59)
It’s what they know.

Brad Blickstein (33:00)
preference. If it isn’t working, or if it’s the kind of process or project that makes sense to take away from a firm, document review is a great example. Law firms largely proved they shouldn’t be in that business by throwing a million associates and no technology at document review 20 years ago. Legal service providers and e-discovery providers have thrived there.

For work that is clearly process-oriented, I think ALSPs are doing quite well. But much of what they have to do comes back to the artisanal argument we discussed. They have to convince clients that a large amount of legal work isn’t artisanal, that it benefits from process and technology, and that ALSPs are the people to deliver it.

Marlene Gebauer (33:48)
Okay, Brad, what’s true today that wasn’t true a year ago?

Brad Blickstein (33:55)
I think legal organizations, both in-house and outside, are starting to care about what AI costs. Legora, I believe, talked about moving to a consumption model. That’s a big issue. People are moving from, “Let’s get everyone to adopt whatever they can and use AI wherever they can,” to, “Hold on. What’s it going to cost when we start paying by the token? Does it make sense?”

The underlying assumption is that using AI to do this work is less expensive than using lawyers. At some point, if AI gets expensive enough, that might no longer be true. That wasn’t a concern a year ago. The gold rush was on, and now people are starting to wonder what stream they should mine. I think I mixed the metaphor. Where should we drill, look, or pan? Where should we pan for gold? That’s what I’m asking.

Will these price increases stick? Will open models become more valuable and viable? Those are good questions. I believe people are concerned about this today in a way they weren’t a year ago. I’m not sure how long the concern will last.

Greg Lambert (35:23)
Yeah, it’s going to be interesting to see, because six months ago it was, “Burn every token you can get your hands on,” and now it’s, “Whoa, wait a second.”

Marlene Gebauer (35:33)
Well, wait a minute. Hold on there.

Brad Blickstein (35:36)
I’ll also say, and it’s related, that we’re starting to see people distinguish between adoption and fluency. It felt like the standard was activation, and then adoption: “98% of our people have used the tool in the past month.” That’s a nice statistic, but it doesn’t say whether people have become AI-proficient or AI-fluent, whether they’re using it for the right things, or whether they’re using it enough.

Marlene Gebauer (36:01)
Is it useful for what they’re doing?

Brad Blickstein (36:04)
Yeah. As we start asking those questions, it’s going to affect where the value lies and what these tools are worth.

Greg Lambert (36:14)
Well, Brad, before we started recording, we looked back at your last prediction on the crystal ball question, and I think you did pretty well.

Marlene Gebauer (36:23)
Yeah, he did.

Greg Lambert (36:24)
Your prediction at the end of last year was that generative AI and LLMs would fundamentally accelerate how software and tools are built in the legal tech space, and that you thought there would be about an 80% improvement in turnaround speed from idea to product.

Brad Blickstein (36:47)
That does seem to be happening. Especially if you count the things being built within firms and law departments through vibe coding, Claude Code, or all those things, I think we can check that off as one I got right.

Greg Lambert (37:04)
All right. Now it’s time to ask you again. What kind of change or challenge do you see that law firms and law departments need to prepare for over the next few years?

Brad Blickstein (37:19)
I’ll answer two ways to double my shot at getting something right. Generally speaking, the issue of the business and billing model will have to come to a head at some point. Perhaps less so within the next two years, but eventually many law departments will put pressure on firms to reduce the number of hours they bill. I have some thoughts about how they’ll do that, but I don’t know.

If you’re a firm, that doesn’t work under the leverage model. At some point, many firms will have to come to terms with the issue. I also think about all these, and I’m not a big fan of the “AI-native” term, but these AI-native-type spin-offs from firms. Can partners leave a BigLaw firm, start a firm with no associates and use AI instead, then go to the same clients who trust them with that new model? External forces like that might push firms to make some of these changes more than their clients do.

Marlene Gebauer (38:25)
Well, that is food for thought. Brad Blickstein, thank you so much for joining us again and helping us cut through the noise and think like value-focused operators. And thanks to all of…

Greg Lambert (38:35)
Yeah. Thanks, Brad.

Marlene Gebauer (38:36)
you. Sorry, go ahead.

Greg Lambert (38:37)
Thanks, Brad.

Brad Blickstein (38:39)
Thanks, guys. I appreciate this. It’s always fun and thought-provoking talking to you. You ask questions that make me think hard about what the responses should be, which I don’t appreciate, but I do like talking to you guys.

Marlene Gebauer (38:50)
We appreciate it.

Greg Lambert (38:54)
Yep, he had a full set of hair before we started this.

Brad Blickstein (38:56)
It always reminds me of that scene in the movie Clueless where they think she has a concussion and say, “Ask her some questions.” They ask, “What’s seven times seven?” and someone says, “Stuff she knows.”

Greg Lambert (39:05)
[Laughs.]

Brad Blickstein (39:06)
I would prefer if you asked me stuff I know.

Marlene Gebauer (39:11)
And thanks to all of you, our listeners, for taking the time to listen to The Geek in Review. If you enjoyed the show, please share it with a colleague. We’d love to hear from you on LinkedIn and Substack.

Greg Lambert (39:21)
And Brad, what’s the best place for listeners to find and buy What Would Private Equity Do? and learn more about

Brad Blickstein (39:29)
Easy.

Greg Lambert (39:30)
Blickstein Group?

Brad Blickstein (39:31)
Yeah, you can go to our website, BlicksteinGroup.com, or for the book itself, BlicksteinGroup.com/WWPED. And I’ve always wanted to say this: it’s available wherever fine books are sold online. You can get it from Amazon or BN.com. It’s not hard to find, and we appreciate the support.

Marlene Gebauer (39:52)
Absolutely. And, as always, the music you hear is from Jerry David DeCicca. Thank you very much, Jerry, and goodbye, everybody.