What happens when you try to fund and scale a legal tech company in one of the most rigidly regulated industries in the country? In this episode, Todd Richheimer shares how he grew Lawfty into a tech-powered personal injury platform that has generated over 55,000 cases and nearly a billion dollars in recoveries.
From taking his first client calls on his cell phone to surviving a last-minute funding failure, Todd speaks openly about scaling, leadership evolution, and what the legal world looks like as regulation and AI collide.
Takeaways:
Finding the Right Co-Founder in the Hamptons: Todd met his Co-Founder, a former MIT engineer, in the Hamptons. They spent a year working on ideas every Saturday before launching Lawfty, combining Todd’s legal background with Mike’s technical skills.
Building with Complementary Strengths: Todd surrounded himself with people who could help him see around corners. He emphasizes that knowing your weaknesses and recruiting to fill them is the most impactful thing he's done as a Founder.
The Power of Shameless Outreach: Todd started the company by emailing every contact in his Gmail account. With no product and no revenue, he relied on personal relationships and a willingness to ask for help to land early clients and supporters.
Leading with Empathy and Integrity: Todd acknowledges his struggle with letting underperforming team members go, especially when they're good people. Instead of defaulting to layoffs, he focuses on reshuffling and preserving relationships where possible.
From Answering Phones to Scaling Teams: For over a year, Todd personally fielded every intake call. That hands-on experience shaped how he hires and builds processes today, and made him intimately familiar with every part of the business.
Navigating Capital Constraints Without Venture Money: Due to legal restrictions, Lawfty couldn’t raise institutional equity. Todd had to get creative with structured finance, high-interest loans from individuals, and careful debt planning to scale the company.
Legal Tech’s Big Bang Moment: Todd sees the convergence of AI and regulatory change as a generational opportunity for the legal industry. With non-lawyers now allowed to own law firms in more jurisdictions, he believes the space is finally ripe for innovation and scale.
Quote of the Show:
"Standing up for individuals always felt right to me… so I didn’t necessarily care about the personal view that people had." - Todd Richheimer
Links:
Website: https://www.lawfty.com/
Ways to Tune In:
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Spotify:
Apple Podcasts:
Transistor: https://podcast.notanotherceo.com/
#NotAnotherCEO #BusinessSuccess #Lawfty
Chapters:
00:00 Intro
01:41 The Importance of Complementary Skill Sets
02:41 Finding a Co-Founder in an Unlikely Place
03:44 Building Lawfty: From Idea to Execution
06:19 Challenges and Strategies in Team Building
09:29 Navigating the Interview Process
12:47 Understanding Lawfty’s Business Model
16:26 Early Customer Acquisition Tactics
20:57 Fundraising Journey and Lessons Learned
26:38 Scaling as a CEO
29:31 The Legal Tech Revolution
32:09 Challenges in Legal Services
34:52 Building a Tech-Enabled Law Firm
37:14 Overcoming Industry Stigma
42:35 Fundraising Challenges and Solutions
47:01 Personal Journey and Entrepreneurial Drive
54:12 Advice for Aspiring Entrepreneurs
56:48 Outro
Transcript:
Todd: [00:00:00] Imagine starting a business, right, and I literally have nothing to show for it other than an idea. Showing up at these meetings and be like "Hi, I'm Todd. Will you lend me money?"
David: Today's guest. Is a creative problem solver who's found a way to bring modern technology and data science into one of the most traditional industries out there. Personal injury law. He's a fellow Emory alum. We met at Emory Event many years ago. Um, and after earning his undergrad degree from Emory, he went to Wash U for law school and then practiced law in New York, New Jersey, DC in [00:01:00] 2013.
He co-founded Lawfty. A tech powered legal platform that helps match personal injury clients with the right lawyers using realtime data and analytics. Under his leadership, the company has grown tremendously. They've handled over 55,000 cases and recovered almost a billion dollars for their clients. His innovative approach has transformed legal advertising into a science insurance, ensuring clients receive the care and compensation they deserve.
Please welcome co-founder and CEO of Lawfty, Todd Richheimer.
Todd: All right. Thanks for having me.
forward
to
this.
David: I'm excited. I'm excited. First question, right outta the gate. Um, what's the one thing you've done at Lawfty, big or small that's had the biggest impact and you'd absolutely do. Again, if you're CEO of another company in the future?
Todd: All right. Uh, by far. Surrounding myself with people with complimentary skill sets. Uh, and so it started with my co-founder, uh, so I'm not [00:02:00] technical, right? My background's in business and law. Uh, and so it started with finding a technical co-founder. Uh, and there's a cool story behind that if, if you want to talk through that. Um, and then rounding it out with, I was very fortunate. My father-in-law is a successful entrepreneur. Uh, and so he's been pivotable pivotal in helping me see around corners, uh, and then. I also have a, it was our second investor, longtime board member, uh, good buddy of mine from memory actually, uh, who a private equity professional.
So he helped with all the finance stuff, but like invaluable, having people that could help you see around corners that you've never been around. Uh, and so that is by far and away the, the number one thing.
David: Hmm. Um, uh, let's talk about actually the co-founder, uh, journey. How, how did you find your co-founder?
Todd: In a pool at a share house in the Hamptons.
David: Oh my God.
Todd: Yeah. It, it was, it was really cool is we were, um, my wife and I rented a room at a share house in the Hamptons. and I met Mike. I'd [00:03:00] never met anybody with his skillset. Really interesting guy. Uh, MIT undergrad and Postgrad, uh, computer science, electrical engineering, just left his job at Raytheon.
Uh, and he was looking to do different things and we just hit it off. Um, you know, uh, the way I describe him, uh, to people, he doesn't take offense to this. He's the coolest tech guy I've ever met. Uh, and, uh, yeah, so we hit it off, um, and I put his number on my phone. Fast forward like four months and I'm at my job.
I'm working on, uh, the defense side, rep court representing corporations. I was trying to book a deposition that involved like 15 different parties and it was taking weeks to align schedules. And I was like, there's gotta be an easier way to do this. Uh, and so I shot him a text. I was like, Hey man, would you mind grabbing a cup of coffee?
I. Uh, and so we met for coffee. Uh, and it just led to this like brainstorming, right? No. The app for scheduling depositions didn't go anywhere, but we ended up getting together. [00:04:00] This is why we both had jobs. Uh, we got together every Saturday at, uh, the WeWork in Tribeca, um, for a year just brainstorming and prototyping different ideas. and it just led to this relationship that has been, uh, tremendous.
David: Wow. What a, and so you, so you were both employed for that whole year. Like you didn't, you didn't say, we are going to build a company, you, or did you know like, we're gonna do this together. We're like, that's what we're, our aim is. is.
Todd: Had like, there was like three different ideas we were working on. Uh, and I had a, a job at a big law firm sort of partnership track type gig. Uh, and he, he actually had another startup at the time. I. Uh, and no, it was, it wasn't clear that we had a business to start. Um, I'd say probably like six, seven months into it, it was clear we had something. Um, and that's when we, we decided to make the leap.
David: And you talk about your father-in-law. Uh, to me when you say that, it gives me anxiety to think of, you know, like, uh, I don't know [00:05:00] if I wanna mix that. Um, but how did that, how did that come about?
Todd: it's,
look, it's it. That's a fair anxiety, right? Uh, we just happen to hit it off personality wise. And I'm sure we'll get into this is because we, uh, are structured both as a law firm and a technology company, we're subject to regulations, right, that don't allow institutional equity
David: mm.
Todd: mm. I couldn't go to venture funds, I couldn't go to private equity funds, et cetera. and so I was running around New York City trying to find people that would lend me money. And you can imagine this. Imagine starting a business. right and I, literally have nothing to show for it other than an idea showing up at these meetings and be like, hi, I'm Todd.
Will you lend me money? Right. It's, it's a pretty hard selling point. Um, so anyway, I finally found a, a structured finance fund that would lend me money and I would just go to my father-in-law for advice. Uh, and he, I, I had a term sheet and he looked at this thing and he is like. [00:06:00] Shit, I, I take those terms, right?
I mean, they were, they were egregious, uh, to get somebody to lend me money early on, and it just led to this thing that's been been absolutely tremendous.
David: Wow. Um, so, so the company has scaled tremendously, you know, since, since you started it. Um, and you continue to build your team. Do you continue? Like is, as you're doing that, is it always trying to find those complimentary kind of skill sets? You know, what, what are you looking for in that team as you're, as you're bringing them on?
Todd: It is, you know, as you know, it's like, it's been like different phases, right? Of
David: Hmm.
Todd: Right. From like early on we, we've got about 110 employees now. Uh, and so, you know, it's different phases, but yeah, it's adding complimentary skillsets. I mean like, look, candidly something that like, I know I'm not good at, um. Is, well, let me, let me actually put it this way, right? I would say my greatest strength is also my greatest weakness. And so like,
David: Hmm.
Todd: To like find people that can [00:07:00] help me and surround me and, and really help me save myself from myself, right?
David: Hmm.
Todd: One of the things that I'm, I consider myself very good at is, um, relating to people. Right. I, I'm definitely high on like that empath scale, right? I, I'm good at connecting with people, building relationships, et cetera. The con of that is that it makes it really hard to get rid of people or fire people that aren't performing right? Because you establish these awesome relationships,
and I've
David: Hmm.
Todd: This quite a bit where you have really, truly wonderful people. Right. Good. Just good solid human beings that the needs of the business have just, you know, grown past them. Right. And that, that's hard. Uh, and so,
David: Hmm
Todd: know, surrounding myself with like people that maybe are a little bit more organizational, organizational mind framed,
David: Hmm
Todd: been helpful.
David: so,
Todd: I.
David: um. You know, I, I, I actually just had a conversation with another guest about similar topic, and um, and I don't think we've actually talked about it enough [00:08:00] on this show, is the, challenge around changing that team as time goes on. Have you found anything that helps you in that process?
Like have you found any, systems, processes, messaging to the team? Like is there anything that has helped you get better at that? Or is it really just getting those other people around you to help you do that?
Todd: Yeah. No, I think from my perspective, it's like just by nature. I'm not a cutthroat human being, right?
And I've gotta build this business with my character in mind, right? Otherwise, there's gonna be this giant mismatch. Of Who I am versus the culture we're building. And so what I found is that leaning into who I am and finding solutions that sort of take that into consideration that may actually not be conventional business advice, right.
Has worked pretty well. some examples that come to mind is [00:09:00] like, reshuffling people, right? maybe saying to somebody that you're not going to lead this department anymore, but you're a very valuable member of this team. Right. And, we're gonna layer in somebody with a bit more experience above you.
But that doesn't mean that you're any less valuable to what we're doing. If
anything, I, would say it, speaks volumes about who you are and what you're doing with the business. and so it's situations like that, I, think that have been, helpful in navigating this
David: Hmm. when you go through the interview process, what is your way of interviewing? You know, how, do you, I'm saying very tactically, what, do you look for when you interview and what is that process that you follow?
Todd: Yeah, so. My interview style is, I, love following the chronology of a resume, right? It is sort of like just going through the dates and having somebody explain to me their story.
And what I [00:10:00] found is you find both really good stories, right? And you also find inconsistencies. I mean, funny story, I had an interview the other day, I was going through the resume.
I was going through the chronology and It just didn't make sense, right? and, I just asked a couple soft questions and this person started talking. Turns out this person had two full-time jobs at once and neither employer knew about it. just totally taking advantage of like the remote work
world, which is, it's wild, the change in dynamics with like this remote culture, et cetera. but what I'll say about interviewing is I've always found interviewing hard. I, don't think I'm particularly good at it. and I think one of the things, and this is another Achilles heel of mine, right? Like being high on that, empath scale
is relating to people, talking to them. I find myself gravitating probably a little bit too much towards personality. and
this is where having people around me help, [00:11:00] right? And then pulling in subject matter experts to really dig in on what it is we're hiring them for,
has been very Helpful.
David: When you talk about going down kind of the chronology, one of the things, I got this advice, when I was like 23 CEO of some company that I just got thrown into. And, this recruiter said to me, how do you interview? And I was telling them the same thing. And they said, at each step of the way.
You have to ask the second why
The third, the what, the why. just going and kind of I'm assuming how you found out the person had two jobs at the same time. It's like going that next level, you know? And then even going a level deeper beneath that. And what I think is that a lot of people, when you start interviewing.
You just go through the canal. Hey, what school did you go to? Cool. Why did you go to, you know That's it. Okay, great. Why? You know this. Okay, great. Versus So why'd you go to that school? Oh, because of this. Well, why was that your major? 'cause the, well, [00:12:00] why is that something you're interested? You know?
And kind of going the like third, fourth level deep, that one piece of advice for me, I think changed my entire interviewing
style.
Todd: that piece of advice, like why followed by
silence. it really is amazing 'cause it's not my natural default. for better or worse, I like to talk. but it's like if you let silence sit and somebody's in a halfway nervous situation and you ask why, they'll just, they'll start talking. And I've, used that in negotiation too, and it's, really powerful.
David: when you think about. Uh, let, let's actually, I think for the audience, uh, uh, sometimes with some of the businesses, I feel like it makes sense. Maybe you could just give us like a couple steps back, like, what does Lawfty do? Not just what I did in the intro, like can you give a little bit more detail about what it does?
'cause I think that will then help us with a bunch of the questions that I have, you [00:13:00] you know?
Todd: absolutely. Uh, you know, it's a quirky business. Uh, and like I'll give you the backstory 'cause I think it'll make a lot of sense to folks as to how this came about. I graduated from law school, um, and I've always had an interest in helping people. Right. Uh, and so you think about law, like a lot of times it turns out like you have the individual versus the corporation.
Right? But as a practical matter, it's the representing corporations that pay enough to pay off your student loans, right? So I graduated law school with $150,000 in student debt, and I had to go work on the corporate side to pay that off. while I'm doing that, I'm, I'm in my first year practicing law and I find out this idea of the referral fee. So now keep in mind that corporate attorneys, as most of your listeners probably know, get paid, you know, by the hour. And the attorneys build their time in six tenths of an hour. So here I am as a junior associate, building my time in six tenths of an hour, I find out about the idea of the referral fee. And what this is, is it's an unwritten rule within the personal injury realm that if one [00:14:00] attorney refers a case to another attorney, attorney will pay them one third of their fee just for that referral. So remember thinking about, I'm sitting there, so like I'm telling, you're saying that if I refer a million dollar case to an attorney, that attorney does all the work.
They handle the matter, and that attorney gets paid a third, which is the traditional fee that a, a personal injury attorney will work on. They work on contingency, so they recover a million dollars. They get paid 333,000 for that representation. turn around and cut me $111,000 check just for that referral. And so I'm like, well, I wanna do that as much as humanly possible, right? Just like attracted to the sheer economics of it. Um, and so what that led to was like this like deep curiosity of like, who's deploying this business model? Are people doing this, et cetera. And, uh, it ended up being this sort of passion project that I looked at for like six, seven years before I actually launched the business. Uh, and we can get into that, uh, if you [00:15:00] want, but first I'll tell you what the, what the business does. And so what we did was. There was this deep of seated like distrust of marketing vendors within the personal injury realm. and a lot of it's because the interests aren't aligned, right? Marketing vendors will work, they'll charge you a percentage of ad spend, or they'll charge you on a per lead basis. And so these guys, the personal injury firms around the country were being, you know, um, promised the world and delivered very little.
David: Hmm.
Todd: So what we did Is we went into the market and we said, we'll put skin in the game. We'll match your advertising dollars. Dollar for dollar, right? You put in 20 grand a month, we'll match your 20 grand.
With our 20 grand, we'll take all $40,000, invest it into our proprietary solution, digital advertising solution. We will vet the cases, we'll field the intake, and if there's something there, we'll pass it along to you to sign up. And then when the case gets resolved, you pay us one third of your fee. and what we've effectively figured out how to do is, you know, what this has turned into is we've aggregated data in [00:16:00] a, in a. In a field where there is no data,
David: Hmm.
Todd: And we've mapped out, you know, what these inquiries cost all the way through what these cases settle for. 'cause these cases can take 1, 2, 3, 5 years to settle.
David: Hmm.
Todd: And then what
they're worth And what we figured out how to do was predictably turn $1 into three every two years. Um, and, uh, it, there's a whole host of implications for that, right? Figuring out how to better the industry, et cetera.
David: So how,
how, did you get your first, call it five 10 customers?
Todd: I, I, I mean, I, I was shameless, I think is, is is the right way to put it. Um, you know, it started with, I knew one personal injury attorney in Lower Manhattan, uh, shout out to, to Jason Cobin and Howard Esner. Um, and these guys were really cool. They, they gave me free office space. In exchange for getting the benefit of what we created.
Right. So we had our first sort of captive law firm to work with. Um,
David: they let you work outta their office.
Todd: yeah, so worked out of their office. We're at [00:17:00] 50 Broadway, uh, and working out of their office. And then I pretty much reached into my network and contacted everybody I knew and said, Hey, do you know any personal injury attorneys? And it was amazing. I literally, I didn't even know this was a feature at the time. You could literally email at the time, at least probably can still do it. every email you had ever sent in your Gmail account, you could email. Uh, and so I emailed everybody I had ever sent an email
David: Oh my God.
Todd: and it was amazing.
Like it was, it was really cool to know that people wanna help other people, right? Uh, and so whole bunch of my network reached out, said, oh yeah, my brother's a personal injury attorney, so and so is a personal injury attorney, and. all sort of started steamrolling from
David: Wow. Uh, shameless, though is a good, you know, I don't think people say it enough. I, I, I think shameless is a good, good word to describe what you have to do. I mean, you're starting with zero. Nothing,
Todd: that's
David: know.
Todd: exactly right.
David: And, and I, I, I spend time with [00:18:00] founders who are like, no, I don't wanna make that ask. I don't wanna, it's like, well, if not now, what?
I mean, this is basically the time to make the ask. You know? Um, and, and I think there's a lot of people have fear of, at least what I have found, even entrepreneurial. There's like some element of like, I mean, emailing everyone in my Gmail, you you know, to like.
Todd: totally. And that's uncomfortable for me. Right. That's not like, uh, that's not to your point. It is uncomfortable. Right. And it's, it's, what I found is like you have some Take the best sales person, you know? Right. And they're like high on that spectrum of they just don't
care. Right.
they can get the door slammed in their face 1000 times and it doesn't even impact them. Right. That's definitely not me. So it was a point of being uncomfortable, but I knew that if I was gonna build this business that it just, that's how it had happened.
David: And so, so you, it was just you and your co-founder at that, at that time in that [00:19:00] office and and the.
Todd: I mean, it's a cool, part of our founding story is, I mean, for the first year and a half, um, I fielded every single phone call, every single intake to my cell phone.
David: So you're advertising on behalf of another personal injury, a personal injury firm, and when the, when, when you're getting a lead for that firm, you're, you were picking up on your cell phone.
Todd: That's exactly, pick it on my cell phone saying, Hey, this is Todd from whatever firm, right? Uh, and let me talk to you about your case. And so I did that for a year and a half and yeah, I highly recommend with founders too. It's like being in the weeds of what you're building, right? Informs so much. Of what you're gonna do. Um, and so I'll never forget, it was, I was about a year and a half in and, um, my wife and I were out for dinner on a Friday night and I ended up standing outside this restaurant for like 45 minutes on a phone call and I came back in and she was like, I, I think it's time to hire somebody.
David: No, that, um, well, when you do that, like what you [00:20:00] just described,
Todd: I.
David: When you hire anyone else after you to do that job. They can't say, Todd, you don't know what I'm doing. Like they, like, you just innately know what that that job is.
Todd: totally. Which, which I think also raises like a, another piece of it that like, uh, founders and CEOs don't talk enough about is like the discomfort once you start hiring skill sets that you don't understand. Right.
And Like that, like that's been an interesting learning curve as well, is like managing talent where like, and there's a point of discomfort there right as you're scaling, where you don't necessarily have redundancy in every
David: Yeah.
Todd: Right. And it's like, what I found is like there were jobs here at Lawfty that like, I could do myself now most jobs here, I can't do myself.
David: Hmm.
Todd: Right. Which is, um, an interesting piece of the evolution.
David: Um. So you talked about fundraising in the beginning. [00:21:00] Talked about this is a hard kind of business to, to go the traditional fundraising route. Um, what path did you end up taking and how did you find, was that through your father-in-law, the private equity friend that you had from Emory? Like how, um, how did you end up funding this business?
Todd: Yeah, so when we first started, um. I didn't, you know, one of the things that I appreciate most about where I am in my career and we're, we're about similar ages, knowing what I don't know, right?
David: Hmm.
Todd: Then like, having the network to go and source that information. Um, at the time when I was starting, I. I didn't know what I didn't know.
And so like I was going to venture capital firms and private equity firms and structured finance firms and family offices like it was, it was, it was a very unorganized, originally it was a very org unorganized way of like looking for money. and ultimately backed into the fact that like, [00:22:00] okay, it had to be debt.
The people that provide debt could really be structured finance folks or family office folks, more flexible capital. Um, and so I was telling the story about my father-in-law. We got that term sheet from a structured finance firm, right? Uh, and then what we decided was. And this is advice to people that are looking at debt.
Like the number one biggest thing you have to look at with debt. People always go to the interest rate. The interest rate is secondary to what the covenants are, right?
David: Hmm.
Todd: Like when you looked at these covenants, like, we were going to breach one of these things, and you know, there was, there was no way, I just didn't know enough about the future to to know otherwise. and so what we decided to do was to raise money from wealthy individuals. Is to off them. first interest rate we offered people was 17%. It was expensive money. Um, and so we paid
David: Wow.
Todd: But. We did it without these like crazy strict covenants, which if you trip over, you're in a lot of trouble. Right. So [00:23:00] we basically did high net worth individuals. Then we did like, you know, more like mezzanine type fund money, uh, if you will. Uh, and then made our way down to, to regional banks. Uh, and so it's been an
David: Hmm.
Todd: And now, you know, the majority of our debt comes from banks now at, at normal interest rates. Um, but yeah, that was, that was the evolution.
David: Do you, um, I mean, you were. Pretty well connected. I mean, at that point, you know, Emory Undergrad, WashU Law School, had all these connections. Um, were you able to find resources to tell you where about fundraising? Did you like, was there, how did you learn? all over the place,
kind of, you know.
Todd: by fire. And I'll tell you what, to any, uh, aspiring entrepreneurs out there, I'll give good business idea from my perspective I really think the market needs [00:24:00] somebody to make sense of the capital that's available to entrepreneurs, right? Because like a lot of times, like entrepreneurs, you know, get rejected by a funding source. and They take it personally. They're like, oh, there's something wrong with my business. But what you don't realize when you're starting out is that fund or that funding source is looking for a very specific type of business. And so they might not be rejecting you
based on Your business. They might be rejecting on you, like that's not what this fund was set up to do. And
so Somebody making sense of the venture market, the private equity market, but then even more importantly, the structured finance market and the family office market. Where you had an understanding of like, okay, I've got this type of business, these are the people that I should go talk to. and that didn't exist. You know, I, I reached into my network, uh, and got certainly great intros, right? But even those people didn't know the layer down of like, [00:25:00] okay, this money source is gonna be interested. It's not. Um, and so I, think entrepreneurs would benefit from that greatly.
David: Yeah, I think, um, I think what you're saying makes complete sense. I actually think it goes like a level deeper into each one of the kind of groups. You know, just in venture there's so many subsegments underneath, you know, even in PE there's so, and if you don't understand as a. Founder, what the person on the other side of the table, like what, what is their mandate?
Where's their money coming from? What are they getting paid on? Like, you have no idea how to actually app appro. I mean, first of all, something you shouldn't even approach, but even if you do approach the right one, you, you don't even know how to speak to, to them, you know, and to, to their, to, to what they want.
Todd: No, that's exactly right. I mean, one of the crazier realizations I had that until you live through this process, I don't think a lot of people realize is, and it's counterintuitive. Sometimes it's harder to raise a [00:26:00] smaller amount of money than it is a larger amount of money.
David: Right.
Todd: Tell you how many meetings I've had, 'cause the economics, like the underlying unit economics of what we do are very, very attractive. I'd meet with these people that were like, oh, you know, we wanna write a gigantic check, a $50 million check, a hundred million dollars check, whatever that is. It's like, can't absorb that. Right? Like I like, there's like, I'm gonna choke on that money you give it to me. Now there's some entrepreneurs that may throw caution to the wind and.
David: Yeah, yeah, yeah. Many, many, many, many, yeah.
Todd: Um, but it's, uh, yeah, it's bite size is a big piece of it. Like what size check do you wanna write?
David: Hmm. What, as, as the company has grown, both the business, the number of people, um, how have you been able to keep up with that as the CEO, you know, how, how have you been able to scale yourself, um, and evolve yourself through that, through that growth?
Todd: Yeah. Uh. It's [00:27:00] hard. Right? And I, I don't, I don't like, one thing I really appreciate about what you're doing is like the very real conversations you're having with people. Uh, and in listening to, to prior podcasts, I love how people are being honest about their experience. Like, it drives me nuts when people are super successful and then they sort of like tell their story as if they were like fortune tellers, like on day one,
David: Yeah. Yeah.
Todd: Uh, and. hard. Um, the demands of my time are, are greater than I could have ever imagined. Um, and I think what has worked and, you know, peers headed in the right direction with this stuff is, um, I. It's getting comfortable. Delegation, right? It's hiring very capable people to pick up each one of these disciplines, right?
So I don't need to be in the weeds and worry about it. And like, it's a very uncomfortable thing, taking your hand off the wheel right? And giving that responsibility to somebody else. Um, and I think we've done a, we've done a nice job with that piece of it.
David: Where,
Where, would you say you spend the majority of your time [00:28:00] today? You know, versus where you were five years ago, seven years ago?
Todd: Yeah, it's um, it's a blessing and a curse. It's, uh, you know, it's. find myself, and this is something I'm trying to rectify right now, is I, I'm acting too much like a fireman, right? It's like, it's
David: Hmm.
Todd: Every day it's like I'm just dealing with the problems. Whereas like my happy place is in like the, the ideation and like the building, right?
So it's, um, I found that this stage of where we're at is like I'm, I'm dealing a lot of problem solving. Um, which is good, right? But like, I, I'd rather they be more longer term problems in the short term. Like, okay, this has gotta be addressed now.
David: Hmm. Someone, one advisor asked me one time, they said. Dave, what are your three biggest challenges at the company? Biggest fires, I told them and they said, how much time do you spend on it? I, and I was like, very proud. I was like, I think, [00:29:00] you know, 75% whatever I, I, whatever it was. And he, and he said, what are the three biggest opportunities I.
And I told him, and he said, how much time do you spend on them? And I said, I think like 10% of my, you know, if that. And he said, that's exactly the problem. And it's, but the thing is, even after he said, I mean, when he said that, it did definitely click in my head, but it's still hard to actually do that because, because the fires are the things right.
Kind of in front of you, you, you know.
Todd: And you know, it's interesting you bring up the opportunity piece because like, you know, it's sort of like the, I feel blessed to be in this position at this particular moment in time and mark my words on this, like legal tech the next thing. Um, it's like, it's this massive industry that is very antiquated.
Uh, it, it's backward in so many ways. Uh, and it, it's just [00:30:00] riddled with opportunity, right? And so, like, there's another piece of it. It's like staying focused on what you're building while also
David: Right.
Todd: different opportunities. Um, and so that's, that's another piece of where I'm spending my time. Um, that's the part that I find really exciting.
Right? I love that stuff.
David: So, so let's, let's talk about that. I mean, um, I think you, I think this is the first legal tech conversation that I've had on the podcast. And from what you and I have talked about recently in the last couple weeks, it definitely seems like this may be, I mean, this is like a once in a ever type of change.
Can you describe what is occurring in the field?
This is.
Todd: It's a,
it's a once in a generation type opportunity. So what you have, and I'll explain both of them, is everybody hears about ai, right? got like AI and this technology craze hitting a super antiquated. Talk about that in a second. Colliding with [00:31:00] regulatory change, right? And it's, it's really churning up the waters. So first lemme talk about the regulatory change. 'cause I think it, it sets the stage as to why this industry is so backward, forever non-lawyers have not been able to own law firms. Right? So an important piece of what I was saying earlier about being able to get paid a referral fee, right, for sending a case to somebody. The only reason I was able to do that is because I'm a lawyer. A non-lawyer
David: Hmm.
Todd: Case to somebody and get paid. Likewise, a non-lawyer can't own a piece of a law firm.
David: Even a piece, even any PE. PE.
Todd: a piece now that has changed a little bit, and I'll tell you this feeds into our founding story and, and, and where the industry's at. So the only jurisdiction in the US that allowed non-lawyers to own law firms when I started this business was Washington DC. But it was a very limited rule is it had to be an individual, they had to play an active role in the business. It couldn't be passive institutional investment. Not sure why the rule was passed, presumably for lobbyists. [00:32:00] Um, but that's been in place for 25, 30 years. Right. And they were at the forefront of this. People thought like the, the earth was gonna fall apart, et cetera. Nothing happened. Um, forward, the people in this industry have been talking about regulatory change for a while because we have a huge access to justice problem in this country.
85% of people that need legal services can't afford them. Right,
David: Hmm.
Todd: And they can't afford them because the price of legal services has gone through the roof, right? Think about how much it is to hire a lawyer on an hourly basis. Now, personal injury, I'm very lucky that I'm in a field that we represent people on contingency, so everybody could afford our services, but if you need a divorce attorney or an immigration attorney, or a criminal attorney or a contract attorney, like you're talking about hundreds of dollars an hour. I mean, like in New York City, you have attorneys right now, and granted their corporate attorneys, they're charging $2,500 an hour. Right. Look who in their right mind can afford that, right? So you have a huge access to justice problem, but what it's done by not allowing institutional capital [00:33:00] into this space, right?
If you think about the way that you bring down the cost of goods sold, it's technology, right? But if the venture firms couldn't own a piece of law firms, why are they gonna invest in legal? Right. So what's happened is now on the other side of the aisle, you have this highly fragmented space. It almost looks like, you know, the comparison I make, it looks like mom and pop video stores, you know, in the 1980s right before Blockbuster
David: Mm-hmm. Mm-hmm.
Todd: Corner's got a shingle. Uh, the average size, and you know, for the folks that live on the coast, the rest of the country doesn't look like that, right? Your average market, the average size of a law firm is like two attorneys.
David: Actual, a average, like that's.
Todd: Right? Most law firms are tiny, and so you have two things going against you, right?
There's been no institutional investment into technology in the space. then in addition to that, there's been no consolidation or economies of scale created. [00:34:00] Because nobody's put a wrapper around these things and said, okay, this is how you do it more efficiently. So what's fascinating about this is, so now you have ai and it's, it's the funniest thing to me, like looking at LinkedIn and how all of a sudden everybody's paying attention to
David: Yeah.
Todd: Right? Is like, oh my God, like AI is coming in and they're gonna replace lawyers. We have about 30 steps that need to happen before that happens in the legal market. Right. Um, and so yeah, the opportunity here is, and it's interesting, is you have the venture firms coming in from like a SaaS perspective, and then you have the private equity funds.
Looking at this from a consolidation perspective, think the actual solution is, is a hybrid type model. Um, but it'll be interesting to see the way that this all shakes out.
David: So, so one thing, um, how, how do you, because the space is so. Antiquated. I don't know. You know, like in terms of the technology and everything, how have you stayed on top of the technology that you [00:35:00] are using at Lawfty? You know, is that all your co-founder? Is that kind of, you know, or because 'cause from what you've told me, it feels like.
This is really a tech enabled kind of platform and the stuff you're starting to invest in is pretty cool. Like how do you stay on top and how do you make those investments? I, because when I think about this business, it seems like with the referral fees and the intake and everything, it's such a easy math kind of equation.
But then to go build software to go invest in technology is like a pretty, usually a pretty big chunk of money, time, energy. That's kind of, of course it makes a big difference, but it's. Kind of over tangential, you know,
um, to, does that make sense? What I'm, I'm trying to.
Todd: it does
and I'll, I'll tackle it from a bunch of different angles. So it's interesting. I, I think number one, I think that, um. Sort of my north star, if you will, for Lawfty, right? Uh, is I want to position us as the perfect conduit by which outsiders can access this [00:36:00] marketplace, right? Sort of like understanding how this market. Operates, uh, and we do that in a very tech enabled fashion, right? Effectively structuring ourselves as, uh, an entity that can capitalize on the economics of a law firm with the infrastructure of a technology company,
David: Hmm. Hmm.
Todd: Technology that we've. Built right. And like you could look at it, both the technology we built and the data points that we aggregate, um, it's really a full funnel solution, right?
That historically when we first built it was proprietary in that it was a piece of software that captured everything from like. somebody clicked on in Google all the way through what monetized for. Right.
David: Hmm.
Todd: But like my, my guiding light here is not necessarily to develop the technology as much as it is to pull in the perfect alchemy of technology related solutions.
David: Hmm.
Todd: Like
David: Hmm.
Todd: This next layer of like. Tech, if you will, is the integration of systems. And so [00:37:00] we'll build what we have to, right? Which is what we currently do. We build what we have to what's not on the market 'cause we're looking at this from a very unique perspective, we'll also purchase what's existing and then integrate systems as needed.
David: Hmm. Um, something, you know, you've chosen this personal injury space, um, you know, to, to go after. And I, I don't know very much about. The legal profession in general, but I would say it doesn't probably have the best reputation, you know, generically. Um, did that, was that any concern when you were building the business, starting the company?
Like did you think about that and if yes, then how did you overcome that?
Todd: I did, uh, what I'll say is standing up for individuals always felt right to me, right? So I didn't necessarily care about like the personal. You know, view that people had, like [00:38:00] people saying, oh, you're an ambulance chaser. Oh, you're doing something that's like slimy, or whatever that may be. Um, what I will say is that it does bother me that the industry has gotten a bad rap.
I. And insurance companies have been let off the hook. Right. And so, you know, the way that I view this industry, and I hope to be at the forefront of changing people's perception of this, is what's effectively happened in this country is that you have call it a dozen insurance companies. I. With billions upon billions upon billions of dollars that are able to influence legislation through lobbyists, chambers of commerce, and take this giant PR approach where they've made the public think that attorneys are bad, that their insurance premiums are going up.
Because of these like frivolous lawsuits. Right. Um, and it's just not the case. I mean, I see it every day and I think what we're up against right, is effectively what attorneys [00:39:00] do on a daily basis. A we talked about is highly fragmented, right? It's
David: Hmm.
Todd: These little firms around the country. Um, and two, what we do on behalf of our clients is protected by attorney-client privilege. So we can't be spouting out into the world that we have a case that's worth half a
David: Oh.
Todd: And the insurance company just offered us 20,000. Right. It, it's, and like that happens day in and day out, but then the
David: Wow.
Todd: Companies come in, right?
And you get one verdict. That doesn't make any sense, right? That the jury went wild and they awarded somebody a hundred million dollars and the case should have been worth two, and the insurance company grabs onto that. And with their billions upon billions of dollars, right? They go and then, you know, create this PR mentality that the attorneys are to blame. But here's the implication of this, and this is what really bothers me and what we're working on at Lawfty and what I wanna do with the brand that we're building, which is new for us, right? Um. Is effectively taking a position that shows [00:40:00] the world that like, this is wrong. So I'll, I'll give you an example. So everybody hears of tort reform, right? Insurance companies have made people believe lawyers are bad. We need tort reform. Fine, maybe we do. There are areas that you could have practical common sense tort reform, punishing the individual, the person who's injured in an accident for this is just straight up wrong.
And I'll give you an example, California. In California, uh, if somebody is the victim of medical malpractice, so I'll paint you a picture. Let's say, God forbid somebody goes in for surgery and they had to have their left arm amputated. They go in for surgery, the hospital screws up and they accidentally amputate the right arm. So now they've amputated the wrong arm, right? Well, they still need to amputate the left arm, so they amputate the left arm. Now this person's left with no arms. California, the pain and suffering that this person would be entitled to recover is capped at $250,000. How is [00:41:00] that? Right? Like, I, I just, it, it's so backward. Um, and, you know, it's, it's about, and I'm hoping, what I'm hoping, and I'm hoping Lawfty can play a role in this, is that like, as this industry matures and as you have more responsible, highbrow fit and finished, you know. Advertising that looks more like what a consumer's accustomed to seeing, that we can get that message out there.
David: Hmm. Do you, um, outta curiosity, we've never talked about this. Like, do you, do your clients, do you ever bring them together? You know, like the various clients that you. Have, um, do they, like, I, I'm, I don't know, is there like a community, uh, kind of dynamic of these? Because I know they're, I think they're in different states and different locations.
Like do, is there any dynamic where they can help each other? You know, I, I don't know if, um, I.
Todd: are trade organizations, right? Like the National Trial Lawyers [00:42:00] Association, right? Like there, there are the American Association of Justice, right? There are trade organizations that do very good work on this front,
David: Hmm.
Todd: It's still, they're tiny in comparison to the size of these insurance companies,
David: Right, right. That's, yeah.
Todd: Know, and I, I laugh, you know, every time I see these, these, these ads, you know, like a good neighbor, you
David: Hmm.
Todd: It's just like, I don't know, it's just not my experience.
David: Hmm. Um, what is the biggest challenge you've ever faced at Lawfty, and how have you overcome that?
Todd: Uh, it all comes down to fundraising. I, I still can't believe this happened. Uh, so I had. I had worked on a financing, so I, I said we raised money from high net worth individuals, right? Uh, and then we were moving down to institutional. So I was hoping to take the interest rate, call it from 17% to like 12 or 13%, right as the next step. And I had lined up capital, uh, got introduced to a guy who [00:43:00] had, you know, he was basically like a Fundless sponsor, which is another name in the. Finance world of like effectively private equity guys that don't have a fund, but put together deals, if you will.
David: Hmm.
Todd: Right? So it could
David: Hmm.
Todd: Because they have relationships with family offices and private equity funds, et cetera.
So could be a good outlet. We worked on a deal for eight months, which should have been Morningside number one, right? Like in this particular context, probably spent $150,000 papering this thing. And it was scheduled to close, uh, I think January 9th, 2020 18. Uh, and. Paperwork's done. Everything's heading in the right direction.
I'm away for the holiday break with my family, uh, and I get a text message on December 26th that says we hit a snag
David: By text.
Todd: by
David: By text. I like, yeah.
Todd: A phone
David: Yeah.
Todd: hit a snag. What snag did we hit? The investor? This person had no longer wanted to [00:44:00] invest money. or he never had this investor. I, I don't know what the outcome of that was, but this set off, you know, this is for alarm fire type stuff, right?
We're living off of debt, we're generating cases, so on a monthly basis we're generating a ton of value, but these cases don't settle for a very long time. So we have a real cash problem and I don't have access to institutional money like other businesses do. And so this set off a four alarm fire. Um, and you know, I describe it now in hindsight, I.
Uh, and I would encourage others that are going through like similar tumultuous times is like, I really do feel like I earned my entrepreneurial stripes, uh, if you will. You know, I put my head down, uh, and we crafted a whole bunch of different solutions, um, that ended up by May. We had closed. Uh, three different deals actually. Um, but the, the main one was, uh, we had raised institutional capital, right? Just debt that was collateralized by [00:45:00] our case pipeline, uh, at a much better interest rate.
David: Hmm. Did you think at any point in time there that you would go outta business?
Todd: You know what's odd? I didn't, and I don't, I don't know if that's like the, the like. Delusions of like an entrepreneur that my wife jokes that if I, if I ever read a memoir, it's gonna be called, maybe I'm delusional, but dot, dot, dot, you know, it's, um, I didn't, I, I had faith that we'd figure it out. and I think it's because the underlying business was working
David: Yeah, that makes sense. That make, that makes sense.
Todd: Yeah. So I, I think that's what, you know, gave me some comfort.
David: Hmm. You know, one of the things I always say to people is like, if there's one lesson, it's don't run outta money. Don't run outta money. Don't run outta money. You know, and it's the oxygen, you know? It's the oxygen for the, for the company. And whether you're bootstrapped or running on debt or venture capital, like at the end of the day, you need [00:46:00] money to, to run a business, you know?
And, uh. And I think so many of the stories that I've heard, when I ask people what's the biggest challenge, it, it, actually, not all of them, but the vast majority come down to something related to the money needed to run the business. And, um, but situations like what you just described, you can't really, I mean, I, you know, maybe now you know enough to know the red flags, the yellow flags, but, you know, but when you're fundraising early on, you don't know.
You have no idea.
Todd: No. And and I do think there's a degree of luck associated with that. 'cause I'm sure you'd agree with this. It's like who you get in bed with from a money perspective. Right. Matters. And like early on, I. know, it's, uh, early on, you, you take what you can get, right? It's like you, you don't have a ton of options when you're starting a business unless you're, you know, you found a whole bunch of companies, et cetera. Um, and, you know, it really could make or break you, right? Having a good financial partner, uh, by [00:47:00] your side,
David: Yeah. So in terms of your background, you know, you, so you went to Emory undergrad, you actually didn't go straight to law school. You, you worked in between. Um, so can you tell me, just tell me a little bit more of that journey and, and, uh, maybe even before, like where, where are you from originally?
Todd: yeah, yeah, yeah. yeah. Uh, so I grew up on Long Island. grew up on Long Island and then went to Emory. Um, I think a cool part of story is, is both my brother are, are entrepreneurs as well, uh, which is, which is pretty interesting. Um.
David: does that come? Does that come from your parents or from.
Todd: You know, I, I think I had a great childhood. Um, but you know, I think that like this, and it's funny, it's almost cliche. It sounds like a common story. I think there were two things. I think it was, one is I, we always watch my parents worry about money, right? So I think that's, that's part of it. Um, but then the other piece of it was, uh, [00:48:00] unfortunately, uh, I lost my mom when I was 24.
So I was 24. My brother was, my middle brother was 22, and then my youngest brother was 18.
Um,
David: Hmm.
Todd: Think like those two things combined are, are obviously very formative. Um, and who knows what it is, but I think it's like this like. is short. I'm gonna go for it. You know, whatever those themes are, uh, I think
David: Hmm.
Todd: Are baked in there.
David: It's in because when you have three siblings, I just interviewed someone yesterday and she has two do, uh, two sisters, and all three of them are entrepreneurs. Same. You know, and it's something where, and she said, we never thought of doing anything else, actually. Kind of just, you know, um,
Todd: Yeah, I don't know.
David: So it's interesting.
Todd: know that I knew I wanted to be an entrepreneur as much as like I wanted to make money and I wanted autonomy, right? So like the natural extension of that is entrepreneur, but like, I don't know that I pieced it together. And so I went to Emory, um, I. really know what I wanted to [00:49:00] do, and I heard about, you know, seniors graduating and, and making $120,000 going into investment banking. So I was like, ah, that sounds good. Uh, and so I, I worked my tail off, uh, had my eyes set on getting an investment banking job, I ended up at Bear Stearns. Uh, and it was, it was such a weird experience, but it was something that I was so proud of. That I did this right? Like I didn't have the connections and whatnot, and I just, it was, I worked right?
And like I worked and I, you know, made inroads and I got this job, et cetera. Um, never hated something so much in my entire life, So it was, it was really strange. And, um, I remember talking to my parents about this, uh, and like, I really just set my eyes on, I'm gonna make it one year, right? I'm gonna, last year, one year, and, uh, no joke.
I quit 15 minutes after my bonus hit my account that first year.
David: Oh my God.
Todd: Uh, and it was, it was just, and I joke about it now, um, but I, I clearly knew I didn't wanna do that. Right? [00:50:00] Uh, and which I, I think is an important part of people's journey, right? Figuring out what you don't wanna do is, is almost as important as finding out what you do.
David: Especially early. I think. Especially early, you know?
Todd: totally. But I, I will say, as much as I hated it, am very thankful for that experience today. Like I got a first rate education in finance and as it worked out, my boss from Bear Stearns had left and I ended up working for him for another year before law school. And so I got a really solid finance foundation, um, you know, before law school, which has really helped me do what I do today.
David: Hmm. What is it that. Um, and, and you kind of touched on this maybe a little bit in, in your upbringing, like what is it that drives you, um, you know, to, to to, because this is a hard, you know, being a founder, being a CEO, building a business over a decade. Like it's hard. Um, why, what drives you?
Todd: [00:51:00] yeah. I was about to give a, a sort of a, uh, a crest. A crest isn't the right word. A um, funny response. I'm just saying money. Right. But like, it's, it's more than that. It's not, it's not money for the sake of buying things, right? It's, it's, it's comfort, it's sustainability, it's being, and I think that this is really the core of it. Um, it's being able to help those, I love when they need it. Right. So like,
David: Hmm.
Todd: To me, that like sits at the foundation of it, um, is knowing that I have the wherewithal to help if and when it's needed. Uh, and so like, yeah, and for whatever reason, like my mind goes to entrepreneurship as being the means to, to do that, but that
David: hmm
Todd: sets him at my core.
David: hmm. Have you had like a role model, a mentor, you know, one person that I know you mentioned before, the various people that you've surrounded yourself, but have you had like that. That one. Who's that one person [00:52:00] that's really kind of helped you on this journey?
Todd: You know, it's, it's, it's been great. I like, I feel very fortunate that, like I had two amazing parents that showed me sorta how to be a good human being.
David: Hmm.
Todd: feel very fortunate that like I found myself in this situation where my father-in-law, in a lot of ways has taught me how to be a good businessman. Right. And it's, uh, it's like those things combined have just been tremendous.
David: Hmm. Um, in terms of, um, Lawfty, you know, you look, you look out, uh, three years from now, it's 2028. Um, and, and, uh, where do you want, what, what do you think Lawfty looks like three years from today?
Todd: Yeah.
So, um, you know, since I was, I was thinking about this having listened to a number of, of your podcasts, um, I think different from a lot of people that you've interviewed. It's like I find myself three quarters of the way up the mountain.
David: Hmm.
Todd: Not reached the top. [00:53:00] Uh, and we have a number of challenges, right?
I was talking about like the fact that like AI and, you know, private equity or regulatory change are colliding. I think that presents a massive opportunity, but with it risks. Um, where I want Lawfty to be, uh, over the next couple years is I want us to be an industry leader in professionalizing this space. Right.
David: Hmm.
Todd: I want us to be in a conduit for outsiders that want to come into this space in a very responsible manner that, um, keeps the client in mind, right, and does what's good for the people that need legal services. Uh, and I think that can take a number of different forms, but like, I'm somebody, we talked earlier about like the reputation of personal injury attorneys. Like I think what personal injury attorneys do is noble, right? Like, I think standing up for an individual. That needs help. Right. That finds themself in a situation, um, that they didn't wanna [00:54:00] find themselves in is good work. Right. And I want to let the rest of the world know that,
David: Hmm.
Todd: it's, uh, yeah, it, that's, that's something that's really important to me.
Mm-hmm. Mm-hmm.
David: Hmm. Um, so last question, um, is knowing everything you know today and all the experience that you've had, what is the one piece of advice you would go back and give yourself before you started your first job at Bear Stearns?
Todd: That's a good question. Um, follow your curiosity. Uh, and the reason why I say that is I remember like graduating Emory. I. was super excited for this job at Bear Stearns, right? And then I, I really didn't like it. And like there's this, like, think most ambitious people probably go through this, like the, oh my God, what am I gonna do? Right? Like, I
David: Hmm.
Todd: The answer. Um, and I do think that the answer lies in your curiosity, right? It's like, I don't think [00:55:00] anybody knows exactly what it is they're gonna do, but if you start peeling back the layers of the things that interest you. You get, like, here's an example. I ended up at law school, so we didn't talk about this, but after Bear Stearns, I worked on the 2004 election cycle, uh, raising money
David: Hmm.
Todd: Candidate. it just so happened I needed a job, et cetera. Um, I. And when I ended up in law school, it was like, I don't really know what I want to do, but like that felt right, right? Like I liked this policy politics like, and start peeling back those layers. Right. And that's
how I Ended up here. And so, um, I dunno, I think there's comfort in it.
David: Yeah, I would actually probably take it. I would, I think that's good. No one's said that before. I would actually take that continued. I like that. It's like just even being curious on a day-to-day basis. You know, when I think about, I was, I was reflecting yesterday on like the best founders that I've currently [00:56:00] working with, and the best ones in some way, curiosity is like the word.
They're like, they never stop trying to like, un, un, you know, peel off that next layer. Like they're trying to understand and learn and, and like, curiosity is a good word to describe that actually. 'cause I, I was thinking like they want to learn, but it's more than they wanna learn. They're like actually want to like.
Discover new things and, and check this, you know, and they, those are the best people I think. You know that from a founder perspective. I, I think.
Todd: I totally agree. Uh, and I I, I, I totally agree. It's funny, I was, I was thinking back to our, that where we started the conversation about asking interviewees why
David: Yeah.
Todd: just keep Asking why.
David: Right, right. It's a good, it's a good, that's a good advice. Um. Todd, thank you very much for doing this. I'm happy we had a chance to do this and, um, happy we had a chance to tell this story. 'cause it's, it's definitely unique and it feels like a pivotal moment for you, but also for, for the industry, which [00:57:00] is, I don't know that that many people know about.
So, um, thank you for sharing and, and, uh, educating me and, and the audience.
Todd: No, and
I, I really appreciate you having me on and, um, I can't tell you how much I applaud what you're doing.
David: Thank you.
Todd: I really love the idea of CEOs giving it real to people. Uh,
Thank you.
people can benefit from it.
David: Thank you very much. Well, everyone I hope you enjoyed, um, hope you learned a lot from Todd, if you did, share this out with your networks. Um, and we'll see you for the next episode of not another co podcast.
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