March 25, 2025 • 17 mins
I spoke with Adam Philipp, the founder of AEON Law, an intellectual property law firm. We discussed the benefits of fixed-price legal services, how a fixed-price model expedites the adoption of new technology, and best practices for law firms interested in pursuing and implementing innovation-focused initiatives.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to Reinventing Professionals, a podcast hosted by industry analyst Ari Kaplan,
(00:07):
which shares ideas, guidance and perspectives from market leaders shaping the next generation
of legal and professional services.
This is Ari Kaplan and I'm speaking today with Adam Philip, the founder of Aon Law, an
intellectual property law firm.
Hi Adam, how are you?
Doing great.
Thanks for having me.
(00:27):
I'm looking forward to our conversation.
So tell us about your background and the genesis of Aon Law.
I started off as one of the 80s computer geeks.
I actually walked into a computer lab in 1979 and back then they said, hey kid, have a password.
I want to play on the mainframe.
And so I've been working with technology and playing with technology and I love seeing
what the latest and greatest is.
(00:50):
And so computer science was too easy as an undergrad and so I got a philosophy degree
and then with the law school and did graduate work in computer science and got into intellectual
property in patent law and that's what I've been doing ever since.
What inspired you to start a firm that focuses uniquely in that area?
Well, when I founded the firm, we were interested in that creation point of companies and so
(01:17):
it started actually as a firm that was focused towards the startup community generally and
we had employment attorneys and litigation attorneys and business attorneys and intellectual
property attorneys.
But I was hanging out with a group of entrepreneurs in Barcelona at a big entrepreneurial conference
(01:39):
and there was a boring side talk by this guy who's the title of the talk was something like
how professional service companies don't understand cash flow.
I was like, all right, accounting is challenging.
I'll go and listen to this.
And this guy, Alan Meltz explained how professional service companies didn't understand their accounts
(02:04):
receivable and they always gotten the trouble as they tried to scale.
And he said the worst of the worst, the people who understand it, the least are lawyers.
Any lawyers in the room and I was the only one.
And he told me this story that sounded really familiar.
Players work on really specialized projects for a client, but because they're billing
(02:27):
by the hour, they will keep track of their hours and they can't send out a bill because
they don't know how many hours there are.
And then at the end of it, end of the month, they collect all their hours.
Hopefully they've recorded all of them and they send out the bill and they think that their
(02:48):
job is done.
And the client gets the bill and a long time has passed from when they started the project
to when they received the bill and they're shocked at the size of the bill.
And then they go through this mental process of, oh wait, this is from a lawyer.
They can afford to wait a little bit.
So they hit snooze on the bill.
(03:09):
The lawyer thinks everything's done and the only person that's paying attention is the
accounting department in the law firm and they're like, wait, we haven't been paid.
And so this accounts receivable cycle starts up and goes for a while.
And what this guy, Elimote, showed was that if you let your accounts receivable get too
long, any profit that you have will get eaten up by the cost of providing your services.
(03:36):
And so anyway, any time you try and grow your company, the costs of growth happen immediately,
but the benefits happen at the end of your accounts receivable cycle.
And you can actually end up running out of money even though you're highly profitable
and quote, successful lawyers.
(03:58):
So I thought, okay, how can I shorten it?
How can I shorten that accounts receivable cycle?
And I realized that the billable hours were the culprit.
So I said, okay, how can I get the accounts receivable down from my clients?
And I was like, well, there's these employment cases.
Well, I don't really know how to do that.
The litigation cases, that's the thing called the business cases.
(04:20):
But wait, the intellectual property ones, I really understand and I can scope those projects.
And I could put fixed prices on them and I could do even better than zero days accounts
receivable.
I could ask for money in advance because the other thing that Elim mentioned was that there's
no point in your relationship with your client that the client is more willing to pay for a
(04:42):
project than when they begin the process.
Every day after that, they become less willing to pay full price.
So I also had a realization that in my firm at the time, the areas where we were actually
profitable were with the intellectual property attorneys and we were breaking even with
(05:03):
the other businesses.
So after I came back from that conference, we had a conversation within the firm.
Conversation is a plightway of putting it.
There was a red wedding event if you've seen a game of thrones.
And I freed up all of my staff and all but one of my attorneys to pursue their bliss elsewhere
(05:28):
and I helped them get jobs with billable hour firms that were going to be a great fit for
their style.
And we revamped our whole offering to our intellectual property, prosecution clients on a fixed
price menu.
So if you have a project, we have a menu of services, just like you'd walk into a restaurant.
(05:51):
You're not negotiating with the chef over, you know, what your burger is going to cost.
It's like, is this a 15 minute burger?
Is this a 45 minute burger?
No, it's just a burger.
You don't expect.
And where are the experts?
Were the chefs that provide what our clients need?
We should know what it costs.
(06:12):
So now we operate off of a robust menu of services for most of our clients.
If they want one of the items off the menu, they pay for it.
And that's our signal to start the project.
And yeah.
And that was 15 years ago and we haven't looked back.
(06:37):
So sorry, I interrupted you.
What best practices has the firm applied to thrive under this fixed price model?
One of the things that we had to do was address the obvious concerns that clients are going
to have when you change up the conventional law firm business model.
(07:01):
They're used to dealing with the process of billable hours.
If you present a new business model, they're going to say, well, I'm worried that if you
do something fixed price, that you're not going to have any incentive to deliver if I
pay an advance.
(07:21):
And so one of the things I did is change the compensation model for all of my lawyers.
So my lawyers no longer work on a fixed salary.
Rather they get a percentage of every project they work on.
And the point where they get a percentage is when they deliver a first draft of the client.
So that way our clients know that if a client is working on one of their projects, the client
(07:45):
in one of our firms is working on the project, they haven't been paid until they get a first
draft.
And the reason it's the first draft is we don't want any of our attorneys waiting on the
clients turn around time to get paid.
It's they've done the bulk of the work.
But now the clients are worried, wait, this attorney may be rushing to deliver the work.
(08:07):
It's getting it to me too quickly, not many clients have complained about that, but they're
worried that it maybe it's been rushed off too quickly without enough review.
So we turn around and we say, okay, all of you clients, you get unlawful.
Unlimited revisions on your attorney work product for free.
Now this freaks out many firms because that's part of the billable hour model is you want
(08:30):
lots of revisions.
You intentionally build in revisions into the process because that's a way to get some more
hours and clients distrust that.
And so we wanted to remove that fear and distrust between our client's relationship.
So now they can see that we're incentivizing the attorneys in the firm to get them a draft
(08:52):
as quickly as possible.
And the highest quality draft the first time around because this is the other thing.
I don't pay my attorneys for the revisions.
So they want to get the client the best draft as quickly as possible.
And so it wasn't so much technology innovations, rather it was recognizing where people's
(09:14):
interests lie and realizing that there are three sets of primary interests.
The law firms interests, the lawyers interests and the clients interests.
And you can align all of those.
You can incentivize faster delivery.
Higher quality delivery.
And as an old saying, better, faster, cheaper, pick two.
(09:37):
Well we got better, faster, predictable.
And sometimes for many clients predictable is as good or better than cheaper because they
can plan for it and they can budget for it.
So our larger clients that are working with a fixed IP budget can plan out their whole
year using our menu as building blocks.
(09:59):
And they know exactly what their budget is going to be and what they're going to get for
that.
And for the smaller clients, it removes the fear of the unknown.
How does a fixed price model affect the adoption of new technology?
If you no longer have an incentive to bill as many hours, rather you have an incentive
(10:23):
to deliver quickly and at high quality, there are now technology tools that can help attorneys
reuse old material that they've used before in effective ways.
There are tools that will check for typos and grammar and structure and tone that will
(10:47):
reduce the number of rereadings and revision that attorneys will need to do.
And we've been trying for a long time to find AI tools that will help us really give
the lift in drafting.
Now with patents in particular though, AI is a really tough challenge because the way
(11:14):
the new generation of AI works with the generative AI, they're trained on old information, old
documents to generate new documents that match old patterns.
But patent documents have the requirement of having content that is new, useful and
not obvious, which is exactly the recipe for generating hallucinations in generative
(11:41):
AI documents.
So AI can't help us with the core of the patent where we're really describing the new invention,
but it can give about a 20% lift in helping our attorneys draft a well-structured document
with some good background material that reuses their documents from the past.
(12:07):
Has AI on law created any of its own proprietary tools?
We've looked at it, but there are so many brilliant developers out there that
we haven't felt the need.
What we have done instead is we've often picked the best of breed software as it's coming
(12:33):
out and gotten involved at the beta stage with those software providers and provided feedback
and helped craft the tool so that it meets our needs.
And so we did that early on with a trademark search tool that we an AI trademark search
tool that we use and we're doing it now with some of the AI patent drafting tools that
we use.
(12:55):
What do you recommend law firms do to pursue and implement innovation, focus initiatives
like that?
Well, don't cut off your nose despite your face.
So if you rely on the billable hour, don't choose a tool that's going to dramatically reduce
your billable hours for your projects and then leave you scrambling to figure out how to
(13:22):
make up all of that hourly income.
Instead, before you adopt it, find a business model that's going to be a win-win for you and
your clients.
And so often it's going to be some type of fixed price business modeling if you can do something
(13:43):
like that.
The other things though is there's some tools that won't necessarily take that much billable
time away, but will dramatically improve the quality of what you provide.
And so there are litigators, there's tools like ClearBreathe AI, which can really help people
(14:10):
optimize their language and their citations and case checking capabilities, particularly
for young lawyers that as they're, they may not have superpowers, but they can use tools
like Batman and they're more willing to use the newer technologies as a part of their
tool set as they're drafting.
(14:31):
What do you see law firm innovation headed?
The AI Genie is out of the bottle, it's not going back in.
I think there it's going to be interesting and I think there's going to be a real transition
period.
There's a lot of fear around adopting new technologies because the risks are so severe
(15:00):
for attorneys mismanaging their client, the attorney work product for their clients.
And so even I was part of a meeting this week with a room full of over a hundred patent
attorneys and there are many firms that were saying we're not using any any AI at all.
(15:24):
And these are the attorneys that have the engineering and science backgrounds and are
working on cutting edge technologies and they're saying they won't use it just because they're
so afraid of the risks.
And there were some early missteps such as the Avionca case that just made it attorneys
so gun shy about adopting this.
(15:47):
That said, it's a great sanity check tool where you can draft something and then run it
through a check that will help you spot issues or help you spot law changes that wouldn't
(16:08):
humanly be possible in other cases.
So I think there's going to be a instead of the future of AI is going to allow for much
higher quality work products to be delivered to clients.
And the likelihood of that is much higher than the chance that there's going to be well
(16:31):
and any poorly prompted AI is going to generate garbage so there's still going to be the
chance for that.
This is Ari Kaplan speaking with Adam fill up the founder of Aon Law and intellectual property
law firm.
Adam, thanks so very much.
Oh, absolutely.
(16:51):
My pleasure.
Thank you for having me.
Thank you for listening to the reinventing professionals podcast.
Visit reinventingprofessionals.com or Ari Kaplan advisors.com to learn more.
(upbeat music)
Welcome to Reinventing Professionals, a podcast hosted by industry analyst Ari Kaplan,
(00:07):
which shares ideas, guidance and perspectives from market leaders shaping the next generation
of legal and professional services.
This is Ari Kaplan and I'm speaking today with Adam Philip, the founder of Aon Law, an
intellectual property law firm.
Hi Adam, how are you?
Doing great.
Thanks for having me.
(00:27):
I'm looking forward to our conversation.
So tell us about your background and the genesis of Aon Law.
I started off as one of the 80s computer geeks.
I actually walked into a computer lab in 1979 and back then they said, hey kid, have a password.
I want to play on the mainframe.
And so I've been working with technology and playing with technology and I love seeing
what the latest and greatest is.
(00:50):
And so computer science was too easy as an undergrad and so I got a philosophy degree
and then with the law school and did graduate work in computer science and got into intellectual
property in patent law and that's what I've been doing ever since.
What inspired you to start a firm that focuses uniquely in that area?
Well, when I founded the firm, we were interested in that creation point of companies and so
(01:17):
it started actually as a firm that was focused towards the startup community generally and
we had employment attorneys and litigation attorneys and business attorneys and intellectual
property attorneys.
But I was hanging out with a group of entrepreneurs in Barcelona at a big entrepreneurial conference
(01:39):
and there was a boring side talk by this guy who's the title of the talk was something like
how professional service companies don't understand cash flow.
I was like, all right, accounting is challenging.
I'll go and listen to this.
And this guy, Alan Meltz explained how professional service companies didn't understand their accounts
(02:04):
receivable and they always gotten the trouble as they tried to scale.
And he said the worst of the worst, the people who understand it, the least are lawyers.
Any lawyers in the room and I was the only one.
And he told me this story that sounded really familiar.
Players work on really specialized projects for a client, but because they're billing
(02:27):
by the hour, they will keep track of their hours and they can't send out a bill because
they don't know how many hours there are.
And then at the end of it, end of the month, they collect all their hours.
Hopefully they've recorded all of them and they send out the bill and they think that their
(02:48):
job is done.
And the client gets the bill and a long time has passed from when they started the project
to when they received the bill and they're shocked at the size of the bill.
And then they go through this mental process of, oh wait, this is from a lawyer.
They can afford to wait a little bit.
So they hit snooze on the bill.
(03:09):
The lawyer thinks everything's done and the only person that's paying attention is the
accounting department in the law firm and they're like, wait, we haven't been paid.
And so this accounts receivable cycle starts up and goes for a while.
And what this guy, Elimote, showed was that if you let your accounts receivable get too
long, any profit that you have will get eaten up by the cost of providing your services.
(03:36):
And so anyway, any time you try and grow your company, the costs of growth happen immediately,
but the benefits happen at the end of your accounts receivable cycle.
And you can actually end up running out of money even though you're highly profitable
and quote, successful lawyers.
(03:58):
So I thought, okay, how can I shorten it?
How can I shorten that accounts receivable cycle?
And I realized that the billable hours were the culprit.
So I said, okay, how can I get the accounts receivable down from my clients?
And I was like, well, there's these employment cases.
Well, I don't really know how to do that.
The litigation cases, that's the thing called the business cases.
(04:20):
But wait, the intellectual property ones, I really understand and I can scope those projects.
And I could put fixed prices on them and I could do even better than zero days accounts
receivable.
I could ask for money in advance because the other thing that Elim mentioned was that there's
no point in your relationship with your client that the client is more willing to pay for a
(04:42):
project than when they begin the process.
Every day after that, they become less willing to pay full price.
So I also had a realization that in my firm at the time, the areas where we were actually
profitable were with the intellectual property attorneys and we were breaking even with
(05:03):
the other businesses.
So after I came back from that conference, we had a conversation within the firm.
Conversation is a plightway of putting it.
There was a red wedding event if you've seen a game of thrones.
And I freed up all of my staff and all but one of my attorneys to pursue their bliss elsewhere
(05:28):
and I helped them get jobs with billable hour firms that were going to be a great fit for
their style.
And we revamped our whole offering to our intellectual property, prosecution clients on a fixed
price menu.
So if you have a project, we have a menu of services, just like you'd walk into a restaurant.
(05:51):
You're not negotiating with the chef over, you know, what your burger is going to cost.
It's like, is this a 15 minute burger?
Is this a 45 minute burger?
No, it's just a burger.
You don't expect.
And where are the experts?
Were the chefs that provide what our clients need?
We should know what it costs.
(06:12):
So now we operate off of a robust menu of services for most of our clients.
If they want one of the items off the menu, they pay for it.
And that's our signal to start the project.
And yeah.
And that was 15 years ago and we haven't looked back.
(06:37):
So sorry, I interrupted you.
What best practices has the firm applied to thrive under this fixed price model?
One of the things that we had to do was address the obvious concerns that clients are going
to have when you change up the conventional law firm business model.
(07:01):
They're used to dealing with the process of billable hours.
If you present a new business model, they're going to say, well, I'm worried that if you
do something fixed price, that you're not going to have any incentive to deliver if I
pay an advance.
(07:21):
And so one of the things I did is change the compensation model for all of my lawyers.
So my lawyers no longer work on a fixed salary.
Rather they get a percentage of every project they work on.
And the point where they get a percentage is when they deliver a first draft of the client.
So that way our clients know that if a client is working on one of their projects, the client
(07:45):
in one of our firms is working on the project, they haven't been paid until they get a first
draft.
And the reason it's the first draft is we don't want any of our attorneys waiting on the
clients turn around time to get paid.
It's they've done the bulk of the work.
But now the clients are worried, wait, this attorney may be rushing to deliver the work.
(08:07):
It's getting it to me too quickly, not many clients have complained about that, but they're
worried that it maybe it's been rushed off too quickly without enough review.
So we turn around and we say, okay, all of you clients, you get unlawful.
Unlimited revisions on your attorney work product for free.
Now this freaks out many firms because that's part of the billable hour model is you want
(08:30):
lots of revisions.
You intentionally build in revisions into the process because that's a way to get some more
hours and clients distrust that.
And so we wanted to remove that fear and distrust between our client's relationship.
So now they can see that we're incentivizing the attorneys in the firm to get them a draft
(08:52):
as quickly as possible.
And the highest quality draft the first time around because this is the other thing.
I don't pay my attorneys for the revisions.
So they want to get the client the best draft as quickly as possible.
And so it wasn't so much technology innovations, rather it was recognizing where people's
(09:14):
interests lie and realizing that there are three sets of primary interests.
The law firms interests, the lawyers interests and the clients interests.
And you can align all of those.
You can incentivize faster delivery.
Higher quality delivery.
And as an old saying, better, faster, cheaper, pick two.
(09:37):
Well we got better, faster, predictable.
And sometimes for many clients predictable is as good or better than cheaper because they
can plan for it and they can budget for it.
So our larger clients that are working with a fixed IP budget can plan out their whole
year using our menu as building blocks.
(09:59):
And they know exactly what their budget is going to be and what they're going to get for
that.
And for the smaller clients, it removes the fear of the unknown.
How does a fixed price model affect the adoption of new technology?
If you no longer have an incentive to bill as many hours, rather you have an incentive
(10:23):
to deliver quickly and at high quality, there are now technology tools that can help attorneys
reuse old material that they've used before in effective ways.
There are tools that will check for typos and grammar and structure and tone that will
(10:47):
reduce the number of rereadings and revision that attorneys will need to do.
And we've been trying for a long time to find AI tools that will help us really give
the lift in drafting.
Now with patents in particular though, AI is a really tough challenge because the way
(11:14):
the new generation of AI works with the generative AI, they're trained on old information, old
documents to generate new documents that match old patterns.
But patent documents have the requirement of having content that is new, useful and
not obvious, which is exactly the recipe for generating hallucinations in generative
(11:41):
AI documents.
So AI can't help us with the core of the patent where we're really describing the new invention,
but it can give about a 20% lift in helping our attorneys draft a well-structured document
with some good background material that reuses their documents from the past.
(12:07):
Has AI on law created any of its own proprietary tools?
We've looked at it, but there are so many brilliant developers out there that
we haven't felt the need.
What we have done instead is we've often picked the best of breed software as it's coming
(12:33):
out and gotten involved at the beta stage with those software providers and provided feedback
and helped craft the tool so that it meets our needs.
And so we did that early on with a trademark search tool that we an AI trademark search
tool that we use and we're doing it now with some of the AI patent drafting tools that
we use.
(12:55):
What do you recommend law firms do to pursue and implement innovation, focus initiatives
like that?
Well, don't cut off your nose despite your face.
So if you rely on the billable hour, don't choose a tool that's going to dramatically reduce
your billable hours for your projects and then leave you scrambling to figure out how to
(13:22):
make up all of that hourly income.
Instead, before you adopt it, find a business model that's going to be a win-win for you and
your clients.
And so often it's going to be some type of fixed price business modeling if you can do something
(13:43):
like that.
The other things though is there's some tools that won't necessarily take that much billable
time away, but will dramatically improve the quality of what you provide.
And so there are litigators, there's tools like ClearBreathe AI, which can really help people
(14:10):
optimize their language and their citations and case checking capabilities, particularly
for young lawyers that as they're, they may not have superpowers, but they can use tools
like Batman and they're more willing to use the newer technologies as a part of their
tool set as they're drafting.
(14:31):
What do you see law firm innovation headed?
The AI Genie is out of the bottle, it's not going back in.
I think there it's going to be interesting and I think there's going to be a real transition
period.
There's a lot of fear around adopting new technologies because the risks are so severe
(15:00):
for attorneys mismanaging their client, the attorney work product for their clients.
And so even I was part of a meeting this week with a room full of over a hundred patent
attorneys and there are many firms that were saying we're not using any any AI at all.
(15:24):
And these are the attorneys that have the engineering and science backgrounds and are
working on cutting edge technologies and they're saying they won't use it just because they're
so afraid of the risks.
And there were some early missteps such as the Avionca case that just made it attorneys
so gun shy about adopting this.
(15:47):
That said, it's a great sanity check tool where you can draft something and then run it
through a check that will help you spot issues or help you spot law changes that wouldn't
(16:08):
humanly be possible in other cases.
So I think there's going to be a instead of the future of AI is going to allow for much
higher quality work products to be delivered to clients.
And the likelihood of that is much higher than the chance that there's going to be well
(16:31):
and any poorly prompted AI is going to generate garbage so there's still going to be the
chance for that.
This is Ari Kaplan speaking with Adam fill up the founder of Aon Law and intellectual property
law firm.
Adam, thanks so very much.
Oh, absolutely.
(16:51):
My pleasure.
Thank you for having me.
Thank you for listening to the reinventing professionals podcast.
Visit reinventingprofessionals.com or Ari Kaplan advisors.com to learn more.
(upbeat music)
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