Episode 01 | Starting A Law Firm: The Why, The How and The Reality

Dicky Abraham (00:00)

Everyone and welcome to the first episode of Spurling Insights. My name is Dicky Abraham, Principal Lawyer and Director of Spurling Legal. Spurling Legal is a boutique commercial disputes firm specializing in all manner of commercial disputes ranging from debt recovery to more complex things like shareholder oppression, insolvency, regulatory proceedings, employment disputes and so on. With me today I’ve got my lovely co-host but I let her introduce herself.

Dania Foo (00:31)

Hi everyone, my name is Dania Foo. I’m a lawyer at Munro Doig Lawyers. I practice mostly in succession planning, commercial law, and I’m starting to dip my toe into tax law.

Dicky Abraham (00:44)

Awesome. Are you forgetting something?

Dania Foo (00:47)

Right, you mean like we’re married and have a two year old.

Dicky Abraham (00:51)

Yes, yes.

So we are a husband and wife duo. Everything we say here is ⁓ simply a conversation. It’s not legal advice. So please don’t take it as such. Spurling Insights will delve into the business of law, not necessarily the practice of law, although we will touch on it. We will touch on the practice of law. We’ll discuss some of the novel concepts in law.

And we will of course have a segment potentially where we answer some of the most frequent questions that we face in our careers. Things like, when can I record a telephone conversation or something along those lines. So that’s essentially the gist of Spurling Insights. It’s grounded, it’s practical. There’s not going to be much legalese or complex language trying to tailor it for.

Everyone so there might be something in for everyone from referrers to accountants to members of the general public.

Dania Foo (01:46)

And in today’s episode, we’re going to be covering why Dickie started Spurling Legal, the challenges that we faced, the spelling model of cost.

Dicky Abraham (01:55)

Yes? Yes, that’s something I’m very much looking forward to discussing.

Dania Foo (02:02)

Yeah, as well as the technology that Spurling Legal uses in practicing. So, Dicky, why don’t you start off by telling us why you started Spurling Legal?

Dicky Abraham (02:13)

Few reasons, but first and foremost, I wanted to open my own practice. I wanted to be my own boss. I think deep down, most lawyers aspire to do that, but often it’s quite difficult to take that jump. Secondly, I think I’ve identified a niche in the market which I can address through Spurling Legal. If I was to stay at a traditional law firm, I would have had to make a partner or something along those lines before I could try and address that gap.

And even then, the bureaucracies of partnership, you’re working with other people, you might not be able to do it exactly the way you want. So essentially, I wanted to be my own boss, and I wanted to create a practice ⁓ whereby I can do it the way I want it to be.

Dania Foo (02:58)

And what’s the gap or the niche that you’ve identified?

Dicky Abraham (03:03)

So nowadays, at least in the commercial dispute space, small to medium enterprises struggle to run matters to trial just because the amount of cost they incur in running a matter to trial is exorbitant. Often you find that if the claim itself is worth, say, $50,000, running it all the way to a trial might cost $50,000 in cost. So then if you’re a small medium enterprise and you’ve just started out, you’re thinking, what’s the point? I might as well settle.

Dania Foo (03:32)

Very commercial, is it?

Dicky Abraham (03:33)

No, no, and there might be great merit to their claim or defense, but they’re forced to settle because the lawyers costs are exorbitant. I’m trying to address that niche through Spurling Legal. I’m hoping that the use of technology and AI at Spurling Legal can reduce costs for clients, and the Spelling Model of costs will provide some sort of cost certainty for clients, at least better than what they might get at the traditional law.

Dania Foo (03:58)

Yeah, and I suppose before we delve into those things, we might want to talk about what some of the challenges are.

Dicky Abraham (04:06)

Yeah, look, I suppose it’s just like starting any other business. Capital is very important.  We’ve had to commit funds from our savings. We’re lucky that law is a service-based industry and you could start a practice on a shoestring budget. I wouldn’t recommend it because if you want to maintain the same professionalism you maintained during your employment.

And you wanted to transfer over, then there is some money you have to spend. So capital is very important. We were quite lucky in the sense that we had quite a bit of savings, so we were able to commit that. And also, we have my parents who’ve provided us with some funds as well. I’m not ashamed to say, they’ve been very supportive. ⁓ So capital is important. Compliance. Just getting your principal practising certificate.

Making sure you have your ducks in a row in terms of your GSD, tax, pagey. That is a challenge as well. Most lawyers know how to practice law, but they don’t know the business of law. So getting your head around your tax obligations is very important. And it starts straight away. There’s no real sort of time to really get into it and learn it. You need to sort of know the bits and pieces or at least have a rudimentary understanding of how it works before you start practice.

Just by way of example, I had to lodge my first GST return by the end of the first month. I’ve never done it, so all of a sudden that was something that I had to really study and make sure that I’m on top of ⁓ in addition to everything else that comes with starting a practice. So compliance is very important. And then last but not least, developing a client base and revenue. I’m starting with no client base.

So I’m starting from scratch, so revenue will only come if you start building your client base and you’ve got to have a marketing plan there and make sure you follow through with it. And again, there’s a lot of trust in the process at the beginning, because you’re hoping that everything you do will have a flow and effect and later on the work is coming. So there were days where I was sitting by the phone and it wasn’t ringing. So I’d be drafting an article hoping that in the future, something will come from that article. Someone will view the article or something along those lines. So those are the challenges initially, and I’m sure there will be more moving forward.

Dania Foo (06:27)

Absolutely and obviously too, know, you didn’t, I know this because I know what the process was that you went through. But obviously it wasn’t something that you just decided you’re going to do and you go, okay, well, I’m just going to start my firm tomorrow with my laptop and off you go. There was a lot of planning. Yeah, that went into it.

Dicky Abraham (06:50)

And that actually, that did surprise me a bit to a certain extent, the amount of planning I had to do. Not necessarily when I was doing it, but on reflection now, I look at it and go, wow, there was an enormous amount of planning that went into it. Just for our viewers, I left my private employment at the end of Feb, and for the next three months, I spent my time planning how exactly I want the business to be implemented, how exactly the practice is going to be set up.

Things like the Spurling Model of Cost, the tech I’m going to use, how AI is going to be used in the firm, not just as a tool to support admin, but embedding it as the DNA of the firm. So I’m glad to say that I did it because now I can see the fruits of my labor, so to speak. It is a requirement, I think, certainly, to conduct some extensive planning before you go out and practice. So yeah, look, there was a lot of planning involved, but I’m glad I did it.

Dania Foo (07:45)

Would you say, know, of course, with us and cash flow is a big challenge when you start off, right? We’re going from a two income household down to a one income household and you’ve got a budget for your household expenses, but then not just that, the expenses of running a business. in saying all of that, do you think, I know you mentioned that you’re able to start a law firm on a shoestring budget.

It’s not necessarily something you’d recommend. How important do you think it is to have all of your systems in place and commit those funds, obviously, where possible, to have all of the, I don’t know, I don’t want to say bells and whistles, but almost all of the bells and whistles, ⁓ straight off the bat.

Dicky Abraham (08:35)

I suppose that’s where the research and preparation comes in. You probably need to identify what you need and what you want and what the budget is. And it depends on how you want to practice. So for Spurling Legal, I was heavily invested in tech and AI. So I wanted to make sure that those are the things that I want in place before I start practicing. the tech defines the way Spurling Legal goes about its business. So that was very important to me.

Dania Foo (08:42)

And what the budget is.

Dicky Abraham (09:05)

So yeah, look, it depends on, as I said, what your practice is gonna look like. So the preparation is the key there. So you won’t have all the bells and whistles. You’re gonna have to make some compromises. Otherwise, it will cost you in excess of probably 20 or 30K. And that’s, know, some people might be able to commit those funds. We certainly couldn’t. But it was about 15,000, I think, startup capital is the cost that you incur every month. yeah, look, it’s…

Having all the bells and whistles is great, but it’s just not feasible. You’ve got to make a play there. You’ve got to make a decision as to what’s important for you in your practice, and then control cash flow that way. And as you said, cash flow is important. You’re going essentially from potentially a two-income household to a one-income household, and your expenses are increasing as well. it’s not just your income is dropping. So it’s a double whammy. Yeah, it’s…

It’s tough, but if you plan properly and you get things in place, it’s definitely possible.

Dania Foo (10:08)

Yes, now we’ve talked about our costs, now let’s talk about the Spurling model of cost.

Dicky Abraham (10:15)

Look, I’m very excited to talk about it. As you probably know, I spend an enormous amount of time researching this Spurling Model of Costs.  It’s essentially a cost model whereby matters are broken down into stages, or in the litigation sense, each segment is broken into stages. And then each stage is capped. So the professional fees, or my fees, are capped. I spend some time scoping out the work in each stage and work out how much it’s going to cost.

And I cap that. And then when I undertake the work, if it exceeds that stage, I wear it. So there’s a bit of buy-in from me as well. So I buy into the risk. Clients buy into us. I buy into a bit of the risk. hopefully, will recognize that it’s not necessarily like the traditional model where we’re just billing by the hourly rate. There’s a bit of give and take there. And the spelling model of cost is there to provide certainty for clients.

Compared to traditional models, it provides a bit more certainty. It also allows clients to see what work has been done. So unlike the fixed fee model, if I do $3,000 worth of work and the stage is capped at $5,000, I’m only going to bill you for $3,000. Under a fixed fee model, I think most lawyers will bill the $5,000 because that’s what their scope is at. That’s the advantage of a fixed fee model. You get absolute certainty.

But in saying that, you know, if the work is less, you still get billed that amount.

Dania Foo (11:48)

So can you explain to everyone what, when you talk about stages in litigation, what do you mean by that?

Dicky Abraham (11:54)

So litigation is litigation can run for usually one or two years if it goes all the way to a hearing and there’s various different things that can happen. But you can break that down into various different stages. let’s say if you receive your small or medium enterprise and you receive a letter of demand, then you need to address. Correct for a debt or. Yes or for any other anything else if there’s something…

Dania Foo (12:15)

Debt that you owe.

Dicky Abraham (12:22)

…faulty with one of the products you’ve sold or something along those lines. You get a letter of demand, you need to respond to that. So that, that I would classify that as the pre-litigation stage because no proceedings have been issued. then I would scope it out. I would look at how much, how much work is involved. Yes. In responding to it, I would try and provide a very detailed scope. I’ll try and anticipate the other side’s response. What is involved in potentially considering the other side’s response and the next steps.

Dania Foo (12:39)

…in responding to. Yes.

Dicky Abraham (12:51)

And then scope that all out to try and provide a real accurate estimate of what it might cost. So it’s breaking into stages. And then obviously there’s litigation stage, then pleadings, discovery. So we break it into stages and each stage will have their professional fees, my fees have been capped. So clients know exactly what they need to budget for, at least in terms of my fees.

We can’t cap the disbursements or third party fees because I have no control over it. So things like court fees, transcript fees, barristers fees, expert fees, we can’t cap that. But it is better than the traditional model and the fixed fee model because I think it embodies the best of both worlds.

Dania Foo (13:34)

Yes. So can you explain what the traditional model is and what the fixed fee model is?

Dicky Abraham (13:39)

Yeah, well, traditional model is very, I suppose it’s an hourly billing rate. It’s six minute  billables.

Dania Foo (13:45)

Usually six minute, you’re charged in six minute increments usually, not always.

Dicky Abraham (13:49)

Yes, six minute increments and then there’s an estimate provided to you. The estimate is not really scoped out properly because as you know under the legal profession uniform law you can’t charge for scoping out a cost agreement. So lawyers and firms don’t spend a lot of time doing it because they can’t charge for it.

Dania Foo (14:07)

And to think the big difference between the traditional model and what you’re doing with Spurling Legal is that in the traditional model, while you give a cost estimate, that’s something that can always be updated. You’re not bound, as in the lawyers are not bound by it. So if more work needs to be done, more hours go into it than you initially thought, you would simply just update the cost estimate.

Find that in litigation you were having to update your costs quite a lot.

Dicky Abraham (14:46)

It’s very difficult and that comes down to again, as I said, not scoping it out properly. If you spend the time, you can accurately scope out the litigation process. It’s just spending that time ⁓ requires, means that you can’t charge for it. And lawyers are always aware of doing that because as you said, they’re charged by the hourly rate. So yeah, look, what do you think? Do you think the Spurling Model of Cost will work in a transactional sense because

This is, I work in litigation, you work in more transactional areas. Do you think it will operate well in that space?

Dania Foo (15:19)

I suppose from the client’s point of view, will certainly, there will certainly be a lot of buy-in from clients, right? Because as you say, you get that certainty that your costs are never going to exceed that amount. And if it’s less than what was capped, great, because you just get charged for that. So there will certainly be a lot of buy-in from clients. That’s, you know, a given, but I suppose from the lawyer’s point of view, as you say, I think it is possible to do. It is just a question of whether or not firms are willing to do it. And I would say that probably most lawyers are not because we don’t ever like to be boxed in and bound to something, especially when, in our opinion, there’s so many uncertainties and the uncertainties could come from how much negotiation there might be with the other party on the other side of the transaction, how much pushback you’re gonna get.

How your client likes to communicate. And you know, I know that with the spelling model of cost, that’s something that you’ve factored in to the model, but it does take a lot of time doing it as you say. So I think maybe until more firms start to do it and the traditional model becomes less competitive, until that happens.

We’re probably not going to see a lot of firms do a CAPT fee. You know, I think this is something a bit different.

Dicky Abraham (17:01)

Yeah, and I suppose the Spurling model of cost is premised on the ability to scope out within a reasonable time. And again, that’s where the tech comes in. And it’s a great segue into the tech we use at Spurling Legal. So at Spurling Legal, we use AI pretty much in everything we do. So it’s embedded into the DNA of the firm. So we have an AI receptionist. Yes.

Dania Foo (17:07)

Exactly.

Dicky Abraham (17:28)

We have an AI legal assistant who’s, look, legal assistant is probably misleading. It’s quite capable. It’s probably on par with a two or three year lawyer. So using those tools, I’m able to scope out a cost agreement in 10 minutes as opposed to two hours because I’ve trained the model with a few examples of the cost agreements that I’ve scoped out. So now I’m able to plug in the facts, the instructions that the client give me, any relevant documents.

and it will scope out the agreement or the proposal and the different stages. And it will probably scope out also any anticipated interlocutory applications you might face, any hurdles you might face in litigation.

Dania Foo (18:12)

And so could you just explain to everyone what an interlocutory…

Dicky Abraham (18:16)

Yes, I know. Sorry, I said we won’t use legally, sir. But there’s no other way to describe an interlocutory application other than interlocutory application. It’s just a dispute within a dispute. So if, for example, you ⁓ issue a proceeding and you ⁓ want a specific document and the other side doesn’t produce that document, there’s a dispute about that particular issue. So then you go back to court and try and resolve it. And if you can’t resolve it, the judge will make a decision.

So you ask the judge to make the decision. That’s essentially it. And in the litigation process, you face a number of these. And that’s partly why in litigation, there’s often the adage that you hear, how long is a piece of string when it comes to the question of how much is it going to cost?

Dania Foo (19:02)

I suppose because you don’t know what the other, the party on the other side is going to take issue.

Dicky Abraham (19:07)

That’s right, but you can anticipate it. can make a reasonable inference as to what sort of applications you might face. And that’s where the AI comes in. So having the legal AI assistant allows me to scope out these potential hurdles that we might face in litigation. If I was doing it myself, I would have to spend probably two hours, two and a half, three hours properly scoping it out.

Whereas with the AI, I can get it done in 10 minutes and then I have to go through and settle it. So I might take 20 minutes settling it altogether half an hour. I’m happy to spend that if that makes giving the client certainty. yeah, look, AI is a big part of Spurling Legal. It’s embedded in its DNA, but I’m interested to hear what your thoughts are. What are your impressions of the AI and its capabilities?

Dania Foo (19:59)

It’s incredible. It really is. I in the firm that I work at, we don’t use AI, no one to the extent that you do. So I wouldn’t say, you know, it’s a tool that we may use now and then to assist us with what we’re doing, but it’s not embedded into the way we practise. That’s for sure. But the AI tool that I’ve used because of Spurling Legal was incredible. you know, something that would have taken me probably two to three hours to put together, did.

I think it was within 10 minutes or so and with great accuracy. And, you know, of course I then had to spend the time to check everything was accurate and so on. But, you know, it cut down the time that I would have spent on working on this by at least half.

Dicky Abraham (20:59)

And what was the task if you don’t mind me asking? Yes, so don’t quite remember

Dania Foo (21:03)

It was just preparing a chronology based on the findings of fact that were made by a tribunal. So, you know, it really was very impressive. The capabilities, the accuracy, just how efficiently you can use.

AI as a tool to assist you with just getting through the work. And obviously that has benefits for both the firm as well as the client. As far as the firm’s concerned, you know, the quicker your turnover time with your work, the quicker you can get more work in. And from a client’s point of view, it means that you’re spending less time working on their matter, which means less costs, but you’re not compromising on quality at all. So, you know, it’s greatly beneficial, I think, for both sides.

Dicky Abraham (21:55)

Can I ask, how long, if you were to undertake that task manually, how long do you think it would have taken you?

Dania Foo (22:02)

I’d say probably about three hours.

Dicky Abraham (22:04)

And with the AI you were able to probably get it down to an hour, is that right?

Dania Foo (22:09)

Yeah, I’d say so. mean the AI churned it out in about 10 minutes or so and then I make sure it was accurate. Yes, you know making sure I didn’t need to add anything else and so on and so forth Formatting the document usually takes me quite some time

Dicky Abraham (22:28)

It’s part of the law. is. Clients don’t see it, actually formatting documents and making sure they line up. And there are rules regarding it as well. it’s not something we do because we want to do it. Exactly. are particular rules about it. So yeah, look, I’m very excited about the use of AI. I think it’s

Dania Foo (22:36)

Because it was for, you know, was a court document, not just to look pretty.

Dicky Abraham (22:54)

I think it’s a way to, pioneering way to use AI, at least it’s Spurling Legal, at least I consider it to be. I’m interested to see how it will function when I have a full caseload because at the moment I’m not at capacity. So that is something that I will probably look at later on and see whether it’s still functioning as well as I think it should. I suspect I might face some teething issues, but that’s something obviously we can discuss in another episode. But I think, look, we’ve covered quite a bit today in terms of

Future episodes, I think we will probably release one episode per month. We might have some guests over, some people who have assisted me on this journey and various businesses that I’ve engaged.

Dania Foo (23:36)

And with a two year old, I may not always be on Spurling Insights.

Dicky Abraham (23:40)

Yes, and Dania obviously has her own employment and her own commitments, so it’s not always possible for you to appear, but I think you will try to appear as much as you can. Obviously, you can get in touch with me on LinkedIn. You can go to our website, spurlinglegal.com.au. My details are there. My contact number is there. So by all means, we’re not hard to find.

Dania Foo (23:51)

Yes, certainly. And if you’ve got any suggestions for future topics, any questions you wanted to ask us, please feel free to do so.

Dicky Abraham (24:12)

Yes. Thank you for watching the first episode of Spurling Insights. My name is Dicky Abraham. I am the Principal Lawyer and Director of Spurling Legal. And if you have any questions or queries, please feel free to reach out. Otherwise, we look forward to seeing you next time.

Dania Foo (24:29)

See you then!