Ep: 31 Jay Angelo on Becoming the Head of Legal Technology and Innovation
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Here are some highlights of my interview with Jay Angelo:
We could create a competitive advantage within our legal team by being innovative whether through buying software, building software, changing our people, and changing our processes.
We thought “Isn’t there a third option?” aside from our in-house team or outside counsel.
One problem was we often used outside counsel in areas where we didn’t need the sophistication nor the cost.
It’s important to spend time with the people who are rebuilding the legal industry and many aren’t lawyers.
For legal department innovation, the last five years were defined by the technologists.
Chief of Staff is a specific and powerful role because they form this interface between the entire organization, including the in-house team and the general counsel.
Once the cost of VR comes down, maybe 80% of the meetings you get on the plane for, you won’t need to anymore.
If I could do it again, I would have put a lot more effort into creativity, innovation, design, and doing things that were a bit riskier for me.
Young lawyers should be a little more adventurous and take some risks. I think it will benefit them increasingly in their careers.
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Greetings friends, this is Chris Batz, your host of the Law Firm Leadership podcast. Kicking off season two, in today’s episode, I spoke with and learned about a corporate attorney who is inspired by his father’s work in Houston with NASA putting the first humans on the moon. Like NASA, doing something never done before, my guest is interested in seeing the same innovation applied to the corporate legal department.
Just a reminder, the PDF transcript of this audio is available to download. Go to LionGroupRecruiting.com/podcast.
As many of you know, we interview corporate defense, law firm leaders, partners, general counsel, legal consultants. You are listening to episode thirty-one of the Law Firm Leadership podcast.
Chris: Welcome to the Law Firm Leadership podcast. I’m your host, Chris Batz with The Lion Group. Today I have the pleasure of speaking with Jay Angelo, former head of Legal Technology and Innovation at Smiths Group PLC and general counsel of the largest operating division John Crane. Since 2009 at Smiths Group, Jay has served in several roles, including general counsel for three of the five divisions and global head of litigation, all the while taking on an emerging role within the legal department called the Head of Legal Technology and Innovation. Prior he worked for several publicly traded companies including Move, Inc., AMS, Inc., and j2 Global Communications. He began his legal career at the DC office of Willkie Farr & Gallagher. Mr. Angelo received his JD from George Washington University School of Law and undergrad from Georgetown University. Welcome, Jay to the Law Firm Leadership podcast. It’s great to have you on the show.
Jay: Thank you, Chris. Happy to be here.
Becoming Head of Legal Technology & Innovation
Chris: How did you become the head of Legal Technology and Innovation within a huge, publicly-traded, multinational? Describe the role and some of the successes or discoveries in the role.
Jay: It started in 2016 when I was heading up global litigation. We got a new CEO at that time. He had a software background and he looked at Smiths Group and said, “Really your five divisions, need to be infused with software and digital advance materials.” Smiths Group had to innovate and become more modern. At about the same time, I had wanted to get more involved in software. Smiths saw an opportunity for me to head up a new legal function within the larger department, which is Legal Tech and Innovation. My focus for the last few years was helping Smiths Group develop their digital function, which consisted of a new business head of digital and pulling together 300 or so software engineers.
Chris: So, this was a function of supporting the lines of business?
Jay: Correct. Smiths Group already had plenty of software engineers, but they had not centralized the function under a specific leader, so as they were doing that the global general counsel tapped me to be his counterpart to help him develop the digital and software function for the entire team. Then the innovation piece was something that I had been doing on my own and it became part of the role as well.
Chris: Was it still a traditional role with just a cool title or what was involved?
Jay: It was really two things. One part of the role was very traditional. We had six or seven patent lawyers across the globe and they were embedded in the five divisions. We said, “Let’s take those professionals and put them with one manager,” which was me, “and start to create common processes and principals across all of Smiths Group for the patent lawyers and the trademark lawyers.”
The other piece was helping the head of digital set up his organization. That was a bit nontraditional. The third piece was trying to figure out how we could create competitive advantage within the legal team. We were innovative through buying software, building software, changing our people, and changing our processes.
Chris: Would you mind describing the size of the legal department at Smiths Group and why there was space for you?
Jay: Smiths Group has about 60 attorneys across the world. When I joined, my background was high tech, media, internet, telecom and software. Smiths Group in some ways came back to what was more natural for me. It gave me a chance to have a second act at Smiths Group. First act was general counsel of my industrial division, but the second act was very exciting. It was going back to my roots as a software lawyer and getting into the modernization of the practice of law.
“Isn’t There a Third Option?”
Chris: Jay, share with the audience what you guys did on the innovation side
Jay: I didn’t understand four or five years ago how we would use AI at Smiths Group in the legal team, but we wanted to innovate. I thought, “Let’s go to the core practice of law, which is still the people and find one big problem we had.”
One of the problems is that we often used outside counsel in areas where we didn’t need the sophistication and the cost of outside counsel. To give an example, when you have a volume problem, you can either take longer to do the work or, traditionally, you would send it to outside counsel and pay that premium to get the work done. We thought isn’t there at least a third option. Let’s create our own captive legal consultancy. Let’s try to find the best lawyers we can. If we can find them; we can train them and they won’t be employees, but they’re also not a law firm. Let’s make them loyal to Smiths, understand Smiths, and whenever we need them, they’re available at a fraction of the cost of a big firm.
Over a three-year period, we found about 20 of them. We found them one by one, former Gibson Dunn, former Skadden, and former Morgan Lewis. We brought them on and they supported Smiths Group across the globe when employees either didn’t have the technical expertise to do something or didn’t have the time but we didn’t want to go to an expensive law firm.
They weren’t employees. That was an important distinction both for the consultants as well as for our employees because our employees are uniquely valuable because they know the business and they have an institutional knowledge that you can’t beat. This was a group of consultants. The consultants could do work for anyone. We didn’t restrict them, but we typically found them when they weren’t working. We brought them back into their practice of law. They had very high loyalty to us and frequently didn’t do work for anyone else.
Chris: Was it an actual entity or were they all independent consultants?
Jay: They were all independent.
Developing a Legal Tech App
Chris: Was there a software component as well?
Jay: The first answer is that building the captive consultancy, which we called Project Indio, was so much harder than we thought because you don’t just need the consultants, you needed everything else along the way. We needed marketing. We needed financial help. We needed website development.
Once the consultancy took off, we were looking for something else to do to improve the department. The second problem we identified was in simple contracts. Are we dealing with simple contracts in too complicated a way? We developed our own piece of software that would handle short simple contracts in a very fast, elegant way. You can’t do this with all contracts, but we built an app and a portal solution that was also mobile that commercial teams could quickly send in contracts to the legal team who could then view them and maybe 80% of the time dispense with them with the click of a button. The goal was to identify a second area where we could make improvements and see if we could develop our own software.
Chris: For Project Indio and the app, what were your motivations?
Jay: If you can do it yourself rather than buy it off the shelf, where you end up paying license fees typically in perpetuity, you save a lot of money. I try not to innovate to save money. It can take you down the wrong road. Your creativity dwindles and you end up focusing on the cash. We did it to find the best fit for Smiths Group and for my division, John Crane. If you build it for yourself, probably have a lower chance of success, but if you succeed, it’s a much tighter fit.
Chris: Was there resistance to this approach within Smiths Group?
Jay: There wasn’t active resistance, but there is the common wisdom, which is often right, that we’re a legal team so why would we bother becoming a development team as well. I think it’s a valid critique. The reason we started with a very small app is for that reason. If we had tried to build a contract lifecycle management system, that criticism would have been dead on accurate. But if you build small things and you do it for different reasons. One is to solve a problem, but we also did it to wake ourselves up to the idea of law tech.
Chris: Smiths Group is a software innovation company, so you are already in the mode of innovating at Smiths Group, correct?
Jay: In 2016, we became very focused on software innovation as opposed to general industrial innovation, which Smiths has always been focused on. We had a new management team that gave us clear and slightly different direction that we were going to be both a hardware innovator and a software innovator. For me it was a way to fit in with the new Smiths.
Advice for In-House Attorneys Interested in Innovation
Chris: Jay, what advice would you give in-house attorneys and corporate legal departments interested in innovation?
Jay: It’s really important to put yourself in the community you want to be in. The law tech community is very different. It’s not just the legal operations community which tends to be focused on efficiency. But I would say don’t focus only on legal operations, billing systems and efficiency, but put yourself in an innovation community. There are many of them out there. This podcast is part of it, listening to speakers on these topics. It’s really important to spend time with the people who are rebuilding the legal industry and many aren’t lawyers. They’re software engineers or creative designers.
Chris: What communities do you recommend?
Jay: My favorite one is Legal Geek. It’s an organization started by Jimmy Vestbirk and based in London. He does a number of things throughout the year, but one is an annual conference in London. They’re increasingly big, popular and a lot of fun. He just had his first conference State-side in New York City. The other one that is a completely different format is called SOLID. That’s a great conference. They are on the West Coast, East Coast and recently in Canada and Shanghai. That’s a great one.
Chris: That’s David Cowen I believe.
The Future of Legal Innovation
Chris: Where is in-house corporate legal department innovation headed, Jay?
Jay: From my experience, the last five years were really defined by the technologists. The technologists, who were generally not lawyers, were moving out of FinTech on to the next vertical which was law. You had a lot of software development in the last five years focused on artificial intelligence, blockchain, smart contracts. But corporate legal teams weren’t buying that software. It was pretty cutting edge stuff. It’s very hard to implement. It’s not very mature. The software has been developed, but it hasn’t been adopted. That’s changing for sure. The next five to twenty years will really be about adopting this software, figuring out what works and changing the way your legal team is run in corporate enterprises.
Chris: Legal tech is continuously, in some ways, taking away from law firms. What do you see evolving in the future within corporate legal departments?
Jay: I hadn’t really thought of it as the taking away from big law, but that is what’s starting to happen. I’m not, as a general counsel, looking to stop using law firms. They will have a place for a long time. I am very focused on using the right resource. Historically general counsels often don’t use the best resource. We make this binary choice between our staff because they know the business best, if they’re available and have time, and law firms that are also available, but don’t know your business very well, but have other advantages of being a law firm. You choose between those.
Project Indio was a chance to say, “Shouldn’t there be a third choice?” It opened my mind to this idea that it’s not three choices. It might be 20 different choices of lawyers. That sounds very complicated because you don’t want to continuously be calling 20 different people to see if they’re available. But the combination of software with that choice creates the possibility of a really dynamic ecosystem, where you can easily via software have a task come in the door, decide the right provider of service on that task, get it back out the door and get somebody working on it. It could change how you define team. Instead of team just being your team plus your trusted law firm, it could have a much broader definition. It could work seamlessly with the right people and software.
Chris: What innovative things are happening with alternative service providers?
Jay: Ten years ago, Axiom was incredibly cutting edge and compelling. They were offering an alternative to the in-house lawyer. It was an external alternative. I think Axiom started the trend in a very big way and has been very successful. Many companies have followed in their footsteps, so you have lots of these smaller alternative providers across the globe. The other thing you have is the law firms recognizing that they cannot just be a single and monolithic option. Many big law firms have created their own captive consultancy or captive law firm that is quite a bit cheaper, does more routine work and supports the law firm. Some of them also have a team that’s similar to Axiom and designed to support the in-house team.
In answer to your question, the business of law is splintering in a good way. It’s splintering into the exact type of ecosystem we’re going to see in the future, where instead of having this binary choice between two things that are very different, your staff and your law firm; we’re going to have this whole spectrum of providers. If you can get to know them and get to trust them, which I think is a big part of it, you can have a really dynamic team that serves your enterprise.
The Big Four Difference
Chris: What are you seeing, from a consumer perspective, with accounting and its effect on the legal industry?
Jay: Law firms are organized centrally, so you have a big IP team and a big litigation team and they work together, training each other while focusing on client needs. The big four have a lot of lawyers but tend to have lawyers in very small pockets around the world. They’re not set up in practice groups, but geographically. If you have 1,000 accountants in Asia-Pac, you might only have 50 lawyers in Asia-Pac. They’re set up as two over here in this office and five in this office. They fill an in-house role vs a practice group role. That is the difference between the law firms and the big four today.
Another difference, they weren’t a law firm before so they don’t have to continue being a law firm tomorrow – their vision of the future is much more dynamic. They plan to buy software companies and use that in the practice of law. They’re unencumbered by many of the things the law firms are. You’ll see them be more innovative.
Chris: I heard a rumor that Wal-Mart is having sweeping changes in reorganization and massive layoffs, of which they’ve denied, but there are lots of people finding new jobs, including their corporate legal department. A number of the corporate legal department are being assigned to Deloitte. I believe that Deloitte is taking on a large part of their corporate legal department in sort of an insourced/outsourced function contract role.
Jay: I’ve heard about it in conferences and it’s definitely happening and potentially in a big way over the next 24 months is corporates are deciding there’s a piece of work that’s routine legal work. Rather than going to a law firm because it’s routine or keep it with our staff, who understand the business in a unique way, let’s take this third piece of work and move the whole business outside.
You see it with UnitedLex, which is not one of the big four, but they are sort of an Axiom-like independent. They’ve been doing this with corporates. They take many of the staff, move them onto their payroll, and continue to provide the services back to the corporate, but they also have this incentive which is rigorously introducing software, efficiency, and rigorously training. Corporates sometimes do less of a good job of continually training their professionals, but if you’re UnitedLex, KPMG or Deloitte, you now have these professionals. You can constantly imbue them with software and training. You can also move them onto other client work, so not only are they continuing to do the outsourced work from their original employer, but they can do a variety of things, which makes them more dynamic and is better for their career.
Addition of the Chief of Staff Role
Chris: What do you see coming forward for the chief of staff role within the corporate legal department?
Jay: Starting about five years ago, I realized depending on the size of your job and the size of your corporate, there really is a role for a chief of staff. That person has a very different job from you. As General Counsel, you’re caught up in a variety of different things. You need somebody at home driving your agenda. If you can afford to have a chief of staff, they pay for themselves because they can work within your legal department team, your counterparts, and make sure things progress in a very steady way while continuing to innovate.
Now, there are a variety of these roles out there. You have deputy general counsels. They do a lot of this. You have this new emerging role, head of legal operations. They do quite a bit of this. I’m not suggesting it’s a totally new role, but I do think increasingly you’ll see the new title, chief of staff, at very big organizations. It’s a specific and powerful role because they form this interface between the entire organization, including your own in-house team and the general counsel. It’s a way to replicate the General Counsel if he or she doesn’t have enough time.
Family Life and Books
Chris: Can you share where you call home and tell us a bit about how you and your family are enjoying summer right now?
Jay: California is home. I grew up outside of Washington DC. I did a bike trip down the West Coast after law school and found it fascinating. In particular, I found Los Angeles so different to me than anything I had ever seen. My wife and I spent nine years there. We had our two girls there. Now we’re in San Francisco.
We decided this summer was going to be about staying local. We went down to Ventura, which is north of LA, spent some time on the beach. We went up to Mendocino, which is very different. It’s cool up there and it’s quiet and we spent some time on the coast there. Our house is a couple of miles from Muir Woods. We spend a lot of time in the woods hiking.
Chris: What books are on your nightstand these days?
Jay: I like reading about a variety of things so for that I go to a website called Medium.com. It’s a creative, design, technology website. They have articles by all sorts of different contributors on a variety of topics. That’s what I go to every day and try to stay current with new and emerging trends.
Something I had avoided for the last five years because I didn’t quite see how it fit into my world was blockchain, but that is consuming most of my specific reading. I’m reading a number of books and right now one is called How Money Got Free. It’s entertaining because it tells the story of blockchain and bitcoin where people created this cryptocurrency and then were getting thrown in jail for doing illegal things. It takes you through the entire arc of the Wild West of cryptocurrency to where it is today. It’s going to be a huge part, not only of the financial services industry, where I think it has its most specific application, but it’s going to be a big part of law as well.
Chris: Do you get into fiction much?
Jay: The more you can read kind of outside your day-to-day, I think it helps you as a professional, so I do.
Speculation about Future Technology
Chris: Have you read Ready Player One by Ernest Cline?
Jay: No, I think I’ve seen my girls talking about the movie and their friends have seen it, but I have not.
Chris: I’ve been told that it is considered one of the top read books by tech CEOs because of how near term it’s kind of predicting the future of technology, what’s happening there around VR and maybe the future of the internet.
Jay: The future of the internet I think is really fascinating because I sort of see blockchain as being potentially the rebirth or the rebuild of the internet on a completely different protocol.
Chris: What’s interesting about Ready Player One is it’s bringing up many near term predictions like using VR to create a new form of public school that protects students from violence because you could go to public school within your home. It also talks about the lifestyle of vending. It alludes to the future operating systems. I just can’t help but notice, Facebook buying Oculus and kind of going after VR themselves. They could be the next Microsoft is my prediction. I’d love to hear your thoughts.
Jay: You mentioned Facebook. Their announcement of a cryptocurrency, not only that they were going to introduce one, but that they have a panel of some of the biggest financial and business institutions in the world that are joining them to do this, has really changed my outlook on Facebook. Then what you just said about AR and VR. Its applications are so broad, not only training and education, but think about all the times we fly across the world for meetings, which are admittedly much better in person, but the impact that has on the environment and just cost impact. Once the cost comes down, maybe 80% of the meetings you get on the plane for, you won’t need to anymore.
Dad’s Inspiration and Taking Risks
Chris: Please share your story about your dad and how he inspired you.
Jay: I was born in New Jersey, but when I was about five years old he was working with IBM, so this would have been 1975 in the early days of programming. IBM was one of the leaders, if not the leader globally in software development and in hardware. He was relocated to Clear Lake City, Houston in Texas in order to help with the launch of the first space shuttle. He was a software engineer for IBM, but he was working on the NASA client and the NASA project. He taught me some coding early on. He bought me an Apple IIE, which is the computer I loved even though he worked at IBM.
I did a lot of coding growing up and wanted to program video games. That was my real passion, but then you grow up. Software kind of fell into the rearview for me. Then fast forward to five years ago and the world is changing and all of the sudden I made the connection between what I used to love, software, and what was happening in law and it was really the same thing. I think it relit a fire for me. I’m sure it will be a part of the rest of our careers.
Chris: Knowing what you know now, would you have done anything differently?
Jay: I wouldn’t have dropped the creative side as much as I did. I was focused on becoming a good lawyer and having a good career. If I could do it again, I would have put a lot more effort into creativity, innovation, design, and doing things that were a bit riskier, not for my clients, but for me. The risk for me, even if I fail 80% of the time, it’s okay. That 20% of the time it works, really improves you as a person. Even young lawyers should be a little more adventurous and take some risks. I think it will benefit them increasingly in their careers.
Chris: Jay, it’s been an honor and a pleasure. Thank you for your time today.
Jay: Thank you, Chris. Really appreciate it.
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