ASG LegalTech CEO Soumya Nettimi Talks Covid, Racial Injustice and The Future of Legal Payments
In this episode of On Record PR, Gina Rubel goes on record with Soumya Nettimi, the CEO of ASG LegalTech, a legal technology business that includes three leading software solutions – PracticePanther, Bill4Time, and MerusCase. Soumya started as CEO of PracticePanther in September 2018 and in early 2019 formed ASG LegalTech with the addition of Bill4Time and MerusCase. These platforms help lawyers and law firms manage and grow their businesses. They automate and streamline many aspects of running a law firm, including time tracking, workflow management, invoicing, and billing, so lawyers can spend less time managing their firms and more time practicing law. In addition, because all their software is cloud-based, they have allowed firms to seamlessly transition from working in offices to working remotely during COVID-19.
Soumya began her career as an investor at Blackstone, where she evaluated new investment opportunities and oversaw portfolio companies in the consumer and technology industries. After Blackstone, she helped launch a new investment fund called Protea Investments and then served in a management role at Serena & Lily, Protea’s first portfolio company based in the Bay Area. She also spent short stints in product management at Amazon Web Services and at Bridge International Academies, a network of schools in Kenya.
Soumya is from the suburbs of Washington, D.C., and recently moved back to New York after many years in the Bay Area. She lives with her fiancée and spends a lot of her free time with her newborn nephew. She received an MBA from Stanford Graduate School of Business and an undergraduate degree in Applied Mathematics from Harvard University.
How did you become the CEO of ASG LegalTech?
My journey began at the place that you and I originally met — at ABA Techshow.
I had been introduced to the founders of PracticePanther by Alpine Software Group, the firm that had just invested in them. Up until then, I had spent the majority of my career in investing, mostly at Blackstone in New York, and also in operating roles at companies such as Serena & Lily and Amazon. The founders of PracticePanther were looking for a CEO to help them scale the business, and I was being vetted for the role.
I attended ABA Techshow, and for listeners who might not know, ABA Techshow is the largest and most relevant tech conference for small and medium-sized law firms. I spent three days there, and over that time I must have spoken to hundreds of people… a concept that feels foreign in today’s COVID-19 world. There were three things that stood out to me from my conversations at the conference.
The first thing was that the legal industry is at an exciting inflection point and software is driving a transformation in how lawyers work.
Second, PracticePanther stood out as a leading player and disruptor in the market. I had the opportunity to talk to a number of customers at Techshow, and they were all raving about how intuitive it was, how feature-rich it was, and how ultimately it allowed them to save time and focus on what really matters to them.
And finally (and most importantly), the team was amazing. They were incredibly passionate about what they were building and their impact on both customers and the industry. I’ve realized it’s a good sign when people are still talking about their product and its benefits at happy hour!
Unsurprisingly, I said yes to the role on the spot. Six months later we decided we wanted to bolster our suite of products, and we brought Bill4Time and MerusCase into the fold to officially form ASG LegalTech. We also more recently acquired a fourth business, which I’ll save to discuss later in our conversation.
It’s been an amazing few years of growth, and while it feels like my job changes every few months, I am constantly humbled by the opportunity to lead this team. We’ve nearly 10x-ed revenue since I started, and we are now a team of 80 people across four offices that proudly serves over 30,000 lawyers at law firms across the world.
How has ASG LegalTech been touched by the myriad events of 2020 such as coronavirus and social justice issues?
The Impact of COVID-19
I could talk for days on this topic, as I know we both could. My own personal experience of COVID-19 is that I was on a plane headed back from Charleston from a conference in early March. I was aware of COVID-19 and we were already navigating through it as a company due to an outbreak near our Bellevue, Washington office. But honestly, I had no idea how humbled I would be in the following hours. I still remember the day and will likely remember it for a long time Wednesday, March 9th. Three things happened in very quick succession on my flight home: the NBA and the NCAA shut down the rest of their seasons; COVID-19 hit 1,000 cases, which is a number that sadly seems so small now; and the World Health Organization officially declared a global pandemic.
I landed, got off the plane, and immediately called my executive team, something I hate doing after hours. We all agreed that we had to figure something out and figure it out quickly. I’ve honestly never been prouder of my team and how quickly they moved to make sure everyone had the equipment and set up to work from home. Obviously, we’re a software business, so we were lucky enough to make work from home work. Within 48 hours, our entire team was working from home. Following that, I think what really mattered for us was a couple of things. One was communication. We went into hyper-communication mode with the team – that looked like daily updates directly for me, setting up weekly town halls across all 80 employees and just being more available and more responsive than ever. The second was helping our customers stay afloat. As we all know, the legal industry has suffered during this period, and we wanted to do anything we could to get our customers through this time. So, we provided short term relief where our customers needed it. We tried to help folks adapt and transition to work from home. And we provided resource centers and other content to help them make that transition and make it as seamless as possible. Finally, the most important piece was focusing on the health of our team, both physical and mental health. In addition to making work from home mandatory to protect everyone’s physical health, we provided as much flexibility as possible. We encouraged folks to take PTO to take mental breaks from work. And the last thing we did was just try to make work a little bit more fun. We tried to add humor to our Slack channels, increase virtual happy hours, games and basically anything to just make things a little lighter.
We’ve been lucky to continue growing through COVID, both due to the resiliency of the legal industry overall and the nature of our software, which allows firms to be run from home. I’m incredibly grateful that we haven’t had to downsize at all and have been able to remain flexible with our employees and our customers. The motto our leadership team lives by is “People First,” and that’s the mentality that we’ve continued to embody as we navigate COVID-19.
The Impact of Black Lives Matter
The second thing I would like to talk about is what I would say is the re-rising of the Black Lives Matter and the anti-racism movements.
I should start this discussion by sharing a bit more about myself. I am a female CEO. I am a person of color. My parents are immigrants from India. With that said, I am not a Black American, and I do not have that lived experience. In the past, I’ve approached the conversation of racial injustice privately with friends and family. Sometimes I’ve been a pessimist; it often felt like we were in a world where racism was a fact and things never really got better. That being said, this time feels different. When George Floyd was murdered, many of us, myself included, felt like we needed to act. I remember thinking that first weekend of June that we needed to respond. I wrote a personal email to the entire team that was unlike anything I had previously written to our organization, taking a stance against the murderers of George Floyd and countless others and vowing to stand in solidarity with the Black community. However, expressing solidarity was just a start.
The following day, I met with our executive team, all of whom agreed that we needed to take some concrete action. The first modest step we took was to create a space to bring the team together and create a forum for open conversation. We hosted a company-wide town hall. I did my best to foster an open conversation with our 80 employees. I believe it was the first time that we had every single person show up to a town hall. It was hard. It was very messy. We were discussing topics that some folks had never talked about in their personal lives, let alone at work. But I believe it was exactly what everyone needed.
Our team’s consensus coming out of that town hall was that we needed to take concrete action. We have done a few things since then. First, we immediately chose to match all employee donations in support of racial justice and anti-racism. We also formed a task force, which a third of our company joined, and I think is still the most active, engaged Slack channel across our entire company, where we try to take on topics from diversity and inclusion at ASG LegalTech to police brutality and anti-racism. The third thing that I’m personally most excited about, and that I’m probably not supposed to talk about on a podcast quite yet, is we’re now partnering with a few other organizations in the space to help launch brand new Black-owned law firms, where we’re going to offer our software free of charge for these firms to get off the ground. This is something that we’re going to announce more publicly in the next few months, but in the background have been laying the groundwork with a few key partners in the legal industry.
Both of these topics are incredibly important to me. It has been a journey in 2020, and we’re at an unprecedented time caught between COVID-19, racial injustice, mental health, and now an economic downturn. And while this has been one of the hardest years many of us have endured, I also feel extremely privileged to lead and be part of a team that just so badly wants to do the right thing by our customers and our larger community.
Zooming out now, how has the legal technology industry evolved over the last 5 to 10 years?
I see three major trends in legal technology over the last decade, all of which have been just intensified and sped up by COVID-19.
The first major trend is a widespread acceptance of legal practice management software, which was barely a concept a decade ago. The first one came to market in 2006, and now they’re considered table stakes to running a successful and profitable law firm. Lawyers and paralegals who used to spend multiple days a month doing things like invoicing and billing and managing workflows now use practice management software to automate these things. I think the statistic is that 80% of law firms now have some form of legal practice management software. The next step is for law firms to ensure that they have the software that is the right fit for their needs, which is a good segue to my second point.
The second major trend in legal tech is a rapid shift from on-premise software to cloud based solutions. A lot of firms early on adopted “on prem technology,” and many have now realized the benefits and feasibility of shifting to cloud-based solutions for significantly better flexibility, security, cost benefits – all benefits that the cloud provides. If there’s one thing that I’m seeing an increase with COVID-19, it is this trend because the ability to work from any location is now essential. You can only do that with a cloud-based solution.
The third major legal tech trend is the adoption of online payments. Getting paid is what keeps law firms in business. While over two-thirds of consumer payments in the U.S. are made electronically, most payments in the legal industry are still made via cash and physical checks. Law firms historically have avoided online payments for a variety of reasons, including compliance and security, but technological developments in the last decade have made it possible for law firms to get paid online in a compliant, streamlined, and inexpensive way.
There’s now an abundance of data that demonstrates how adopting an online payment solution allows firms to get paid in one-third of the time and significantly increases collection rates. Similar to how practice management software is the bare minimum for running a law firm, I believe that online payments will be the next table stakes technology that law firms need to adopt.
Your last point is a great segue to news your company just announced. Can you tell us more about ASG LegalTech’s acquisition of Headnote?
>>>Bob Ambrogi of LegalSites broke the story in his exclusive: ASG LegalTech Acquires Payments Platform Headnote; We Interview the Two Companies’ CEOs
Yes. We’re excited to announce our acquisition of Headnote, a fully compliant online payments platform for law firms. Headnote is the latest addition to our platform of SaaS products.
Headnote was founded by Sarah Schaaf, Thornton Schaaf, and Matt Crampton, all of whom are incredibly talented and we are so excited they have joined our team. They have built what we believe is the industry’s most modern and secure payment technology coupled with a world-class user experience. Headnote helps law firms reduce payment processing fees by 35% and get paid 70% faster than the industry average.
What we are most excited about is that we plan to use Headnote’s payment technology to build a fully native payment solution within each of our practice management platforms, PracticePanther, Bill4Time, and MerusCase. What this means is that customers will have a seamless experience already built into their current workflows, so they’ll never have to leave their practice management system in order to manage their payments. This is revolutionary because every other practice management software that offers payments does that via integration, where you need two separate software platforms to invoice vs. process payments. We’re really excited about this and we’re kicking off by launching Panther Payments, an all-in-one solution with PracticePanther, and we’ll quickly follow with Bill4Time and MerusCase later this year.
Gina Rubel: To know that law firms can have this one end-to-end solution is revolutionary.
Soumya Nettimi: That’s why we’re really excited. If you can do everything for your law practice in one place, the improved efficiency and the amount of time you get back to practice law rather than manage your law firm is going to be incredible. It’s a game changer.
Why did you originally seek to acquire a payment solution?
There are two things that are core to what we do at ASG LegalTech. The first is that our best product ideas always come from our customers. We listen carefully and make sure that we’re addressing their needs. And then the second is related to what we were just talking about – we want to serve as a one-stop shop for our customers so they don’t have to use 10 different types of software to manage their law firms.
We had heard over and over from our customers that payments were a huge pain point. While there were standalone offerings on the payment side, the integrations often weren’t smooth because you still had to jump between two different platforms to do different things. Our customers wanted that one-stop shop, one place where you could do everything from client intake to getting paid. So, we sought to build or buy the best payments platform. And that’s how we found Headnote.
In addition to the client needs, were there other trends or data that led to the decision?
We have over 30,000 customers across our three platforms, so we have a lot of data. We also have a lot of data within the Headnote customer base. I would say the two biggest data points were that our customers see collection rates of only 70-80% of total invoiced volume. And then they also see payment times on average greater than 90 days. While that’s average for the legal industry, those are terrible stats relative to many other professional service industries.
The reason this is the case is because most law firms have not adopted any sort of online payment solutions, for a variety of reasons. First off, lawyers can’t use the same plug and play solutions like PayPal and Stripe that other professional services can use because of very stringent trust accounting and compliance rules. There is also a fear of expensive credit card processing fees by some payments companies in the market, and a basic lack of education around the benefits of online payments.
The one crazy statistic out there is that 80% of law firms have adopted a practice management system, but only 20% have adopted an online payment system. So, our view on this is that by 2030, we believe that close to 100% of law firms will have a practice management solution and not only any solution but the right one for their practice area and their firm size. We also believe that that practice management system will contain native payments acceptance capabilities. We’re really proud to be the first to market with this offering, but we do think that it’s going to be the direction the entire industry moves in the next decade.
What excited you about Headnote in particular?
There were two simple driving factors here – the technology and the team.
On the technology side, Headnote is an exceptional payments solution with the most modern and compliant technology available. They were a disruptor in the market and have features that no one else has, like cutting edge analytics, instant eCheck and a seamless onboarding experience. One thing that might or might not be obvious is the fact that they have the best and most modern tech is what allowed us to create this first-of-its-kind, fully native payments solution, which was our vision from the start. In addition to all of that, Headnote already provided industry low prices, stress-free compliance, and the fastest payment times that we’ve seen in the industry – so in addition to their tech, there were these other benefits that made it a no brainer.
Secondly, and most importantly, the team. When you acquire a company, people often think you’re mostly acquiring just the technology. But what people forget is great technology would not exist without a great team. We think Headnote is most differentiated by its leadership team, Sarah, Thornton, and Matt, who combined, have deep experience in payments, legal (Sarah was a lawyer herself), and technology. The payments industry in general, and the legal payments industry in particular, is complex and always changing. We feel confident that with this team on board we’ll be able to continue providing our customers with the most innovative and forward-thinking product offering for decades to come.
What is the future of payments in the legal technology industry? What does this mean for your customers, law firms?
COVID-19 has and will continue to accelerate the adoption of online payments. As we know, getting paid through physical check or cash is not safe or even possible for many during this pandemic. We believe that compliant online payments are likely the only way for a firm to manage their accounts receivable and survive through this time. We saw some interesting data on this in both our LPM platforms and the Headnote customer base during the first few months of COVID-19. Luckily, these were temporary data points on the cases side, but we saw cases and matters temporarily drop almost 40% across our customer base. At the same time, we saw new sales increase almost 10% as folks were looking for a solution that would allow them to work from home. And finally, we’ve seen a steady increase in online payments since March. When you put all of that together with the macro landscape, you can see that the industry is hurting, but at the same time, law firms are coming to the realization that technology, and particularly payments technology, is crucial for getting them through this time.
Gina Rubel: I can’t stress it enough to our listeners and especially if anyone’s not in a law firm: the industry has been revolutionized over the last 10 years. Those that continue to adopt legal technology are going to be more profitable, more productive, happier, those things that lead to both happy clients and happy practitioners.
What’s next for ASG LegalTech?
We believe that native payments technology is the future of software. So first off, we’re excited about this opportunity to create that first-of-its-kind software-led payments platform within each of our three products.
That said, while payments furthers our mission, our broader mission stays the same – to help lawyers automate and streamline the management aspects of their firms so they can focus on what they do best and what they want to do – practice law. We plan to continue to do that by expanding on our payment capabilities, expanding on our practice management features, and continuing to provide the best service we can to our customer base. We’ll also continue to build or buy new products that can make life easier for our customers like we’ve done over the past two years.
Ultimately, we’re proud to serve our customers and look forward to doing so for decades to come.
Do you have one or two personal or business books you would like to share with us?
Through 2020, I have been oscillating between the light, get your mind off everything reads, and more timely reads which are more relevant to the world today.
On the lighter side, but you might laugh at me for saying this is on the lighter side, I recently read Educated which is a memoir by Tara Westover. In it, Westover recounts overcoming her survivalist upbringing to go to college. The story emphasizes the importance of education in expanding her worldview. She details her journey from her isolated life in the mountains of Idaho to completing a PhD program in history at Cambridge University. While I said it’s the lighter read, it’s also a super meaningful view on just how important education is. I enjoyed reading that a few months ago.
The more timely book I just re-read is Between the World and Me by Ta-Nehisi Coates, which is just a super powerful book about the realities of being Black in the U.S. It is not an uplifting read, but is a really important perspective on the entrenchment of racial injustice in our country’s history.
Gina Rubel: I am almost finished with How To Be an Antiracist by Ibram X. Kendi. I’ve been taking it very slow, one chapter at a time. It’s an incredible book. I do recommend it. It’s making a difference in me understanding what it means to be truly privileged and what I can do about being a better ally and am anti-racist. I’m adding Educated and Between the World and Me to my list. And this is one of the things I love about podcasting and having this time to interview people because you and I are both CEOs, we’re both trying to do our best at our jobs, make a difference in the world, and to have the empathy we need to really support our teams and our customers and clients. So I appreciate those two resources and look forward to digging in with that. Do you have any questions for me?
Soumya Nettimi: How have you navigated 2020, and how are you feeling at the stage that we’re in right now?
Gina Rubel: That’s a great question. I want to be optimistic. I am optimistic by nature. And one of the things that I love that you said is that with the rise of social justice and activism, it feels different this time. And one of the ways I’ve navigated the anti-racism discussion is similar to what you’re doing at ASG LegalTech. We are actively engaging. It’s not just to make a statement and say, we support this, but it’s to interview through our podcast, people of color and, anyone who considers themselves diverse. It’s to be a part of the conversation, a part of the solution. We have a Slack channel that is very active daily, adding resources to it, and we update our resource guide weekly on our website for diversity, inclusion, equity, and anti-racism resources. It’s one of the most highly read resources on our website right now –
that tells me our audience is listening. We’re making a difference and we’re helping each other. And that’s as a white woman who is privileged by definition of privilege, that’s a way that I can truly give back and not just give it lip service.
Another thing we have done is to go fully virtual. We’re located in a more rural area between Philadelphia and New York, which has worked very well for us in the past. The pool of talent has also typically been from the same area and it’s predominantly white. By going virtual, it’s not just as a result of COVID-19, we’re staying virtual so that as we recruit additional talent over the years, we can bring in people that are more diverse with great experience, who can add to our team and the value we bring to our clients.
Another big change this year is our mix of services. In order to serve the predominantly Am Law 200 law firms, legal tech, and other professional service clients, where we were doing 80% marketing and PR early on, and maybe 20% crisis for existing clients. I’d say it’s more like 80% crisis communications since January. We don’t want to be only a crisis agency because we don’t want to see our clients in crisis. We’d like to get back to the more proactive, fun work but there’s a real value proposition to being able to help senior executives make decisions in tough times. Having a seat at those tables when a managing partner of a 400-lawyer law firm calls you and says, “What should we do?” It’s validating. That’s been a lot of what we’ve been doing, and it’s our honor to be able to support our clients through these times and help them not only stay above the water, but to really survive and thrive in the future.
We’ve been talking with Soumya Nettimi, the CEO of ASG LegalTech.