With the use of artificial intelligence on the rise we are seeing it get integrated into many different businesses. One of which is the legal profession, which most of our audience works with.
Our guest today is Brooke Lively, and she shares with us how she has seen law firms appropriately and inappropriately using AI with their client work. And how to protect your business.
TODAY’S WIN-WIN:
Be aware and ask questions about AI use.
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- instagram.com/CathdralCapital
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ABOUT OUR GUEST:
Brooke discovered her passion for helping entrepreneurs by working with her father. After getting her MBA in corporate finance and investments at Texas Christian University and a quick stint at a hedge fund, she found herself helping her family establish a new firm, which hit the seven-figure mark within eighteen months. Soon thereafter, she started talking to other small business owners who asked, “Can you do for us what you do for your family?” This is when Brooke realized that most owners don’t run their companies by the numbers. They are making decisions based on their gut, and that causes a lot of anxiety — not to mention a loss of profitability. With that insight, Brooke started Cathcap, a fractional CFO company designed to maximize profitability. Since 2013, Brooke and her team have helped hundreds of firms make data-driven decisions to drive faster growth and more predictability in their businesses. As a CFO, Brooke looks at every part of a business that touches the money — and that’s the whole thing. This eventually led her to become an EOS Implementer®. Through EOS, Brooke helps firms gain clarity on their vision, discipline, and accountability to increase traction and develop a healthy, functional leadership team.
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TRANSCRIPTION:
Dr. Tom DuFore, Big Sky Franchise Team (00:01):
Welcome to the Multiply Your Success podcast, where each week we help growth-minded entrepreneurs and franchise leaders take the next step in their expansion journey. I’m your host, Tom DuFore, CEO of Big Sky Franchise Team. With the use of artificial intelligence on the rise, we are seeing it get integrated into many different businesses. One of those industries and businesses getting integrated in as well is in the legal profession, which most of you probably work with various attorneys and law firms for various reasons.
Part of the question is, should law firms be doing that? How does it work? Is it accurate? These are things that come across my mind. Well, our guest today is Brooke Lively, and she shares with us how she has seen law firms appropriately and in some cases inappropriately used AI with their client work, and how you can protect your business.
Now, Brooke has started the company called Cathcap, a fractional CFO company designed to maximize profitability. Since 2013, she and her team have helped hundreds of firms make data-driven decisions to drive faster growth and more predictability in their businesses. You’re going to love my interview with Brooke. So let’s go ahead and jump right into it.
Brooke Lively, Cathcap (01:20):
Brooke Lively, I’m founder and president of Cathcap.
Dr. Tom DuFore, Big Sky Franchise Team (01:24):
Well, Brooke, thank you so much for being here. One of the drivers for wanting to have you on as a guest was this little nugget of information that came through on one of your forms that came over, that talked about the use of artificial intelligence, and specifically how you work with clients and have seen people in the legal profession using AI as part of their practice. So I’m just curious, because that made me think twice about it why I hadn’t really thought, “Well, if everyone else is using AI, maybe law firms and legal professionals are doing that.”
So I guess in your experience of what you’re seeing, what are you seeing out there for the use of AI with law firms and legal practitioners?
Brooke Lively, Cathcap (02:08):
The first thing really that comes to mind is, “Why do I need an attorney? Can I just have AI draft this for me?” You told me a story where we were chatting right before we hit record about one of your clients who went online, “ChatGPT, give me the franchise agreement,” and it wrote a 12-page franchise agreement. I told you the last one I signed was 150 pages.
Dr. Tom DuFore, Big Sky Franchise Team (02:37):
That’s exactly right. I had run into a gentleman at a trade show who said, “Oh no, I’m already franchising. I’ve already got my contract. I had AI do that for me.” He described that it was this 12-page thing, and I thought, wow. I encouraged him strongly to contract with a franchise attorney. Anyway, so to your point.
Brooke Lively, Cathcap (02:58):
And that’s the thing, we all start from the default that AI is right, and that should not be our default position. There was an attorney in New York who thought, “I can use AI.” Goes on ChatGPT, figures it out, uses it to help him write a brief, turns it into the court. The judge is like, “I can’t find any of these cases that you’ve cited.” The other side’s like, “I can’t find any of these cases that you’ve cited.” So he’s like, hold cases and said, “This is the case law on which you need to decide this matter.” No one can find the cases.
These are cases that are a matter of public record. So when they can’t find them, they get a little suspicious. The judge went to them and said, “Did you check these cases because we’re having a hard time?” He’s like, “Oh, yeah, yeah, yeah. I checked them. Cases are good.” Judge’s like, “Okay.” Go back, search, search, search. Still can’t find them. Goes back to the attorney and says, “Really can’t find these cases. Where did you get these cases?” The guy finally said, “Oh, well, I use ChatGPT.” So, ChatGPT does multiple things. One, it pulls from the entire internet, which means it could be pulling case law from… and this is probably going to date me. Do you remember that movie My Cousin Vinny?
Dr. Tom DuFore, Big Sky Franchise Team (04:30):
That’s a classic. I love that movie. That’s a great one.
Brooke Lively, Cathcap (04:33):
So for all we know, the cases that he had cited were from the movie My Cousin Vinny. They could have been from a movie, from a book. The second thing that AI does is it hallucinates. Really, it just makes stuff up. So when you’re in the legal world, when you have something that can use a book that… I mean, Tom, I’m sorry, but if you’re writing a book and you say in Smith versus Abbott, this happened. For example, in my fictional case, Smith versus Abbott, AI can go back and quote that as a legitimate case later on. So it’s a little dangerous. Tom, you don’t have a law degree. I don’t think you have a law degree.
Dr. Tom DuFore, Big Sky Franchise Team (05:18):
Nope, I do not. That case you shared in New York is really, certainly eye-opening, to say the least. It’s very interesting with instances like you described and the one I shared about that gentleman I met at a trade show that’s trying to maybe cut corners or take some path that they think is easier or cost-effective, or whatever reasoning they might have. Are there instances where law firms can use AI, or are they avoiding it, or what do you see out there?
Brooke Lively, Cathcap (05:50):
So it’s funny. Yes, there are absolutely instances where law firms can and should use AI. I’m going to give the lawyer answer really to your question of it depends, because that is what a lawyer says to any question that’s asked. The answer is always, it depends. Here’s the thing: Yes, they should be using AI. Yes, they can use AI, but they need to use very specific AI. So ChatGPT Hallucinates. It’s not actually up to date. So it doesn’t have recent case law, because it only goes up to what? ’22, I think. There are problems with it.
That being said, there are companies, Thomson Reuters is one of them, that have built AI specific programs that will sit on top of ChatGPT, and they put a ring around the information that ChatGPT can access. So Thomson Reuters has a research product that is how all attorneys, LexisNexis is the other one, that’s how attorneys research case law, and they have a record of all case law, and so they can say Stay within this database. So that makes it really effective and absolutely fabulous.
Yes, in that case, your attorney should use it. It speeds it up. It will lower the cost for you. It will lower the cost for the law firm. It will speed the process, because one of those legal specific AI programs can do work in three minutes that it would take a young associate to do the research in two days. So that is fabulous. Downside of it is some attorneys are still using ChatGPT, and we know what that does. The other problem with ChatGPT is it doesn’t maintain your confidentiality. So when they go put your contract into ChatGPT or ChatGPT to review it, instead of doing it themselves, they have now put that contract out on the internet. If they use a legal specific program, that legal specific program will make sure none of your sensitive information is shared. So that’s huge.
Dr. Tom DuFore, Big Sky Franchise Team (08:27):
Yeah, very interesting. That leads me in the direction where I was thinking for a question. Maybe most of the people that tune into our podcast are successful entrepreneurs, leaders, or running businesses. They might be thinking, “Well, how would I know if my law firm is using it appropriately, I guess, or with some best practices?” I don’t know the right terminology there, or if they’re using it to cut corners. Are there any signs or things that you might be able to see or ask your people you’re working with?
Brooke Lively, Cathcap (09:03):
Yeah, it’s a discussion, and it is, “Do you use AI?” There are firms that are going to say, no. Is that bad? They’re not using all the technology that’s available to them, and they’re just a little slow on the adoption. So not the end of the world, but they’re not cutting-edge firms. If they say, yes, you want to really drill down and ask them what AI they’re using. Now, there is AI everywhere, so I mean there’s AI in your phone. There’s probably AI in your copier, for all I know.
AI has been around for years, but in this case, when we’re talking about AI, we’re talking about ChatGPT and things like that. So ask them, “Are you using a legal specific one? And if so, which one?” If they’re like, “Oh yeah, we use ChatGPT all the time.” That’s a big red flag for you. If they come back and they say, “Oh, we use…” This just happens to be one that I can think of at the moment, “We use Spellbook to review our contracts.” Spellbook is one of those ones that is specifically for law firms. It is made to do nothing but review contracts, and yes, it will protect your confidential information. So you just have to ask, “What are you using?”
Dr. Tom DuFore, Big Sky Franchise Team (10:29):
Great feedback, and that’s helpful. It is one of those hard things where just the amateur or novice or just business leader out there may be familiar with contracts. Certainly, they’re reading them, but they’re not drafting contracts. That’s why they hire, and we all hire an attorney to help us support with that. Where do you see this going with AI and the legal profession, because you’ve got a lot of experience working with law firms and attorneys? How do you see this impacting that space for the business community, just to be aware of?
Brooke Lively, Cathcap (10:59):
I think it’s fascinating. When AI first started, I had a conversation with my brother, who is a litigator. He is exactly the type of attorney that your clients hire, that your listeners hire, a lot of corporate counsel. He works with small to medium-sized businesses to keep them out of trouble and get them out of trouble. He would like to prevent them going into the courtroom, rather than deal with it there. But he’s pretty darn good at courtroom. So when it first came out, my brother was a little torn. He’s like, “Wait, wait, wait, wait! This will do research in five minutes that I used to have an associate bill out for two or three days worth. That’s a lot of lost revenue to us.” So he was like, “I’m not so sure I want to do that.”
I was like, “You know what? It’s a discussion with your client. Here’s what’s going to happen. We’re going to do some stuff with AI, which is going to be done faster, and it’s going to bring your legal bill down. However, we have to continue to offset some of the fixed costs in our firm, so we’re going to have to raise our hourly rates a little bit. Ultimately, you’re going to come out better, because I won’t have to have as many attorneys on staff. So your bill’s going to come out a little lower but if you look at your hourly rate, it might be a little higher. If you’re working with a firm that does flat fees. There are some firms out there. We’ve always charged $2,000 to do this. We’re going to continue to charge $2,000 to do this, even though, we’re doing it now in five minutes using AI.”
Okay. My suggestion is much more talk to your clients. If you’re a law firm, talk to your clients and say, “We’re going to start using some AI, and I’m actually going to pass some of that savings through to you.” The law firm may not necessarily pass all of it through. The biggest thing that I see coming is AI does research. AI does initial drafting. AI does the grunt work right now of the legal field. That’s also how we train our attorneys. So we’re going to have to figure out a new way to train our attorneys, because they got to learn how to do it somehow.
Dr. Tom DuFore, Big Sky Franchise Team (13:25):
Yeah, that was one of my thoughts for some of the younger, junior attorneys come in. They’re new, and part of how they learn is through this research. It’s really still an apprenticeship type of system to learn and get skilled. So interesting. Well, very, very interesting. Thank you for sharing your thoughts on that. I think it’s really valuable. Well, Brooke, this is a great time in the show. We make a transition. We ask every guest the same four questions before they go. Before we jump into that, though, I’d love for you to share how someone can learn a little bit more about you, and what you’re doing, and your business, and how you might be able to help them.
Brooke Lively, Cathcap (14:02):
So yeah, thanks. Cathcap is a fractional CFO company, so we give strategic advice that drives profit. As CFOs, we look at everything, every part of your business that touches the money, which is every part of your business. We help you get more of what you want out of your company. The best way to reach me is through our website, Cathcap.com, C-A-T-H-C-A-P.com.
Dr. Tom DuFore, Big Sky Franchise Team (14:31):
Excellent. Well, thank you, Brooke. Well, the first question we ask here on our four questions is have you had a miss or two on your journey and something you learned from it?
Brooke Lively, Cathcap (14:43):
Oh, a miss. Gosh, I had a lot of misses. I’m a big believer in the fail fast, fail forward, let’s do it. Pick yourselves up, dust yourself off, and move on. I think my biggest failure has been in hiring. It took us a really long time to find the right for us way to hire, and it was a very iterative process. It took years. We made a whole lot of mistakes. There was a year where we turned over more than 100% of our team, which is not fabulous.
Dr. Tom DuFore, Big Sky Franchise Team (15:26):
Certainly, I would think is a younger or newer company, you generally don’t have as much staff. You’re not either hiring, or replacing, or adding as often. You don’t have as many shots at the basket.
Brooke Lively, Cathcap (15:39):
We’re only 20 people. So when you talk about the fact that in one year we hired 20 people for a firm of 20, that’s kind of mind-boggling. But we had a core, and then we would add new positions, new jobs, new roles, and we wouldn’t fully understand what that role required. It would take us one, two, three hires to finally figure out who the right person was. We learned some things. We learned we weren’t using our core values enough when we were hiring, and we started really doing that.
We’re a big believer in testing. We want to know what your aptitude is, how you like to function, because we have had people in roles that have demanded that they act one way, which is completely against the way they normally operate. That’s not fair to them. They could be miserable. They’re not going to stay. So now we build a profile for every job and make sure that we’re hiring the right person in the right seat. That’s a big thing that comes from Jim Collins in Good to Great, right person, right seat, and I’m an EOS implementer, and you run your company on EOS, and you hear that all the time. If we don’t have the right people on the bus, we don’t have the people that are a good core value match that fit our culture like a glove, and they’re not sitting in the right seat, that seat that they’re genetically encoded to have the skill set to do and want to do, then we’re not going to win.
Dr. Tom DuFore, Big Sky Franchise Team (17:25):
Oh, that’s great. Thank you for sharing. Well, let’s look at the opposite side. Let’s talk about a highlight or a win or two.
Brooke Lively, Cathcap (17:32):
So this is going to sound funny. I think our biggest win was when we fired our biggest client. Actually, we didn’t fire him. We declined to renew the contract, and he was 94.7% of our business.
Dr. Tom DuFore, Big Sky Franchise Team (17:49):
Wow. That’s a bold decision to make. What was it that made it a make or a win for you?
Brooke Lively, Cathcap (17:56):
He was not a core value match. I spent a lot of time standing between my team and him and his team, and it wasn’t worth it. It was not worth the money. Doing that showed my team that I do believe in our core values, that I do walk the talk, that I’m going to support them. The funny thing was is he tried to hire basically everybody on my team, which was fine. They had non-competes, and there was a non-solicitation in there. But I’m like, “I will waive all of that because I wanted what was best for my team.” I just fired 94.7% of my business, so I didn’t know how I was going to support them.
So he went to everybody on my team tried to hire them, and they would say no, and he would offer them more money, and they said no again. He offered more and more and more, and could not understand why they weren’t saying yes. I think they say people… What is it? They quit because of their boss, and they stay because of the culture. They stayed because of me and the culture we had created in the company, and money didn’t matter.
Dr. Tom DuFore, Big Sky Franchise Team (19:15):
What a great story and a testament to you, because when you’re in that situation, it’s easy to say yes to a renewal when you know with the renewal financially, you’re going to be able to make payroll and pay other commitments and things that you’ve decided to move forward with. So that’s a bold move. I completely understand. I saw a transformation in our business, the same that you described when we locked in on running our core values, using that as a lens for clients to come on board and bringing staff in. That rings very true. It really resonates deeply with me.
Brooke Lively, Cathcap (19:54):
We still use it for all of our clients. In fact, I had a sales call with somebody not too long ago. I wasn’t sure if they were a core value match. So we did a short-term project with them, which we don’t normally do, and my team handled it. Then I had to go back afterwards and basically finish up the sales call. I asked the team, I’m like, “Are they a core value match?” And they said, “One partner is and one partner isn’t, and the only way we’ll work with them is if the partner who isn’t a core value match is not involved.” I went back and I told the potential client that.
Dr. Tom DuFore, Big Sky Franchise Team (20:33):
So what happened? Did they sign up, or did they say, “No, thank you”?
Brooke Lively, Cathcap (20:37):
We’re waiting to see.
Dr. Tom DuFore, Big Sky Franchise Team (20:38):
Oh, you’re in the midst of it. Okay.
Brooke Lively, Cathcap (20:40):
Just happened, though. We’re in the middle of it, but my team knows that I’m not going to make them work with someone that makes them miserable, and that doesn’t live our core values. When we start with a client, we usually send out an email that says, “These are our core values, and we believe that they go both ways. So not only will we exhibit this towards you, we expect the same in return.”
Dr. Tom DuFore, Big Sky Franchise Team (21:06):
I love that. That’s a great nugget for sure. Great. Well, Brooke, the next question we ask is have you used a multiplier to grow yourself personally, professionally, or any of the businesses you’ve run?
Brooke Lively, Cathcap (21:17):
Yeah, I am a big believer in a couple of things. I think the biggest one is… Well, I mean it’s one of our core values, is continual learning. I have done that a few different ways. I’ve done it through coaches. So I’ve had business coaches. It used to be that a business coach was something to be embarrassed about, and now everyone’s like, “Yes, I’ve got a business coach.” If you’re in a big company and someone gets you a business coach, that means you’re on your way up. So that.
The other way I’ve continued my learning is through an organization called EO, Entrepreneurs Organization. That has been amazing, because it puts me in a group of people who are experiencing the same things I am, who they are also the owner. They also understand the responsibility, the stress. Very often, they’ve had the problem that I’m trying to solve, so I don’t necessarily have to solve it from scratch. EO brings in incredible speakers to help us continue to learn. So for example, I’m going to see Jim Collins. I’m doing a four-hour workshop with Jim Collins at the end of the month.
Dr. Tom DuFore, Big Sky Franchise Team (22:40):
Fantastic. Well, Brooke, the final question we ask every guest is what does success mean to you?
Brooke Lively, Cathcap (22:46):
That’s so interesting. I have a saying that everybody defines profit differently. Some people define profit as money and dollar signs. Some people define it based on their reputation, like they want to have the fastest growing company, or they want to be a $50 million company. Some define profit as having the ability to spend their time the way they want to, whether that means at home with their family, or just doing the work they love to do at the office.
I think success for me is defining and achieving your own definition of profit. So for me, one of our core values is living the integrated life. So we believe in work hard, play hard, and I travel a ton. So I want to be able to have a company that will financially support me, will financially support my team, but will also enable us to travel. I have a mostly female team. They need to be able to go to that Valentine’s Day party at school, and not miss a school play or be able to coach baseball. That’s what success is for me, and then being able to give that also to our clients is just huge.
Dr. Tom DuFore, Big Sky Franchise Team (24:19):
Wonderful. Well, Brooke, as we bring this to a close, is there anything you were hoping to share or get across that you haven’t had a chance to yet?
Brooke Lively, Cathcap (24:25):
Well, going back to AI, I think it’s just being aware and asking questions. ChatGPT is not your legal friend. Don’t use it. Don’t use it yourself, and if your attorney is using it, that should be a big red flag.
Dr. Tom DuFore, Big Sky Franchise Team (24:41):
Brooke, thank you so much for a fantastic interview, and let’s go ahead and jump into today’s three key takeaways. Takeaway number one is when Brooke said it’s common for most people to start with the default that AI is correct. When she said, we should actually be taking the default position that AI is incorrect. I thought that was interesting, and she gave that example of an instance where a lawyer actually used this, and the AI produced, or hallucinated, or created these fake cases. She said, remember, AI pulls from the entire internet, and therefore it could be pulling a case from some fictional book, or a movie, or something else out there that’s just made up or pretend.
Takeaway number two is you should ask your attorney, “Do you use AI?” If they don’t, well, then the law firm just may be slow to adopt new technologies and systems. If they do, ask them how they use it, and ask, “Are you using a legal specific one? If so, which one are you using?”
Takeaway number three was when she talked about how every person defines profit in their business differently. I loved this little nugget, and maybe this describes you in a different way too, or helps you define your own version of profit out of your business. She said some owners or founders take their profit as money or income earned. It could be as recognition or freedom of time. So everyone needs to start there.
Now, it’s time for today’s win-win. So today’s win-win came at the very end of the episode when she was closing. I thought this was a great nugget. She said, with artificial intelligence, you need to be aware and ask questions. Be aware and ask questions, especially it sounds like to these legal professionals and how they’re using it, and I think just being aware for your own use of artificial intelligence.
So that’s the episode today, folks. Please make sure you subscribe to the podcast and give us a review. Remember, if you or anyone might be ready to franchise their business or take their franchise company to the next level, please connect with us at bigskyfranchiseteam.com. Thanks for tuning in, and we look forward to having you back next week.
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