187 - The Future of Legal AI: Responsible Implementation and Legislative Challenges with MeridianLink's Kayla Dailey

Welcome to Listening with Leaders. I'm Doug Noll, lawyer turned peacemaker. I teach executive leaders how to listen to emotions rather than words so that they can become the leaders everyone wants to follow. And I teach those same leaders how to be authentically present, available, and connected to their families despite being insanely busy. I have learned that we are 98% emotional and only 2% rational. Learning how to listen to emotions is, in my experience, the foundational skill of life. Stick around to the end of the show and I'll reveal how you can be on our next guest in 15 to 20 minutes. So let's get started. Hello, Daley. Welcome to Listening with Leaders. You are general counsel for MeridianLink, found at meridianlink.com. Welcome to the show.

Thank you for having me. Excited to be chatting today.

Yeah, it's not often that I talk to fellow lawyers. We're both lawyers on this show, but I was so— I was really struck by your— the interview we did on Authority Magazine, and so I made an exception because I really wanted to meet you.

Well, I appreciate that. I, I hope I can bring value.

Absolutely. So let's start, let's start with a little bit about your backstory. Um, I think you were working before you went to— or you were working during college and law school. That was the story. Yeah. Tell us about that.

Yeah. So I went to the University of South Carolina. I was studying business. I was a finance and accounting, uh, major, and I worked at a mortgage loan origination software company. So it's very similar to what my company does now at a much smaller scale. And then I made the decision to go to law school and continued to kind of work with that founder-driven business while I was in law school until ultimately they sold the company. So I got to be around for that journey, which was exciting. And I used that experience in the industry to get my first role at a company called CRIF that did mortgage loans and other consumer loans in the space. Loan origination software. And then that company was also acquired by my current employer, MeridianLink. So we do decision analytics, data verification solutions, and loan origination solutions, all cloud-based for community financial institutions and consumer reporting agencies.

So your, your customers would be what, credit unions, community banks, banks, credit unions, smaller consumer reporting agencies are kind of our, our customers.

A lot of people that have consumer exposure in their communities who are very focused on creating exceptional kind of consumer experiences. So while we're a B2B company, we have to always be thinking about that B2B2C connection because that's what matters to our customers.

And, and your customers will license software from you and implement it in their systems.

That's right. For things like opening accounts in a digital channel or loan origination in a digital channel, confirming background screenings. So pulling, providing kind of the pipes to pull that data or credit screenings, all of kind of the touch points or a lot of the touch points in consumers getting loans or some type of liquidity that they need.

Right. And tell me about your journey to general counsel. When I started in the law, that, I mean, people didn't think much about working in-house, you know, typically work for a firm. I mean, I worked— I was a partner in a firm for 22 years, but longer than that before I left.

Yeah, I get that question a lot, um, because I have a really unusual kind of path. So I luckily came to it from the business side, um. I would say I got that first kind of start at CRIF because I knew the business well. Um, I'd also focused on what I know, frankly, in law school. And so I studied some banking regulation, that kind of thing. So I started as a compliance officer with CRIF, um, and then I think worked my way through the ranks there, um, so that I was reporting to kind of our global general counsel. Um, so he sat in Italy— we were an Italian company— um, and I was responsible for the U.S. Legal operations. And, and then when we were acquired, I kind of got a shot from the CFO at the time, uh, to see if I could run the team, uh, and demonstrated that for a couple of years, uh, and then they gave me the general counsel role, uh, shortly thereafter. It was kind of one of those Congratulations and moments. So, uh, congratulations, and now we're going to either sell the company or go public, um, in a really consolidated timeline. And, you know, this is your job. So, uh, it was fun and exciting and, uh, fast-paced, uh, and so that was in 2020 is when we started preparations and we ended up going public in July of '21.

Right during the pandemic.

Right during the pandemic. That's right. Also happened to be while I was pregnant with my, my second child. So it was a very exciting time around our house.

So you took, you helped take the company public as general counsel. That had to be a really interesting learning experience.

It was so great in so many ways. I couldn't have anticipated how much work it would be, um, but also the breadth of experience that that opportunity would give me. Um, I've kind of always worked in a private setting, from a very tiny, scrappy mortgage loan origination company to a privately held Italian company, which has its own kind of interesting characteristics. So it was my first foray. A lot of humility had to go into it and knowing when to reach out for the lifelines, when to engage advisors, and really building a support system around being a public company.

So now you're, now you're general counsel of a publicly held company, which has its own set of responsibilities and compliance and regulatory things you've got to be looking out for. I imagine you have a pretty good-sized team that's working for you in order to keep on top of everything.

Yes, we've built out the team kind of contemporaneous with going public. So we've got a compliance function. I was lucky enough to be able to hire an associate general counsel who works on our reporting side. Now we're kind of building out the commercial team as well. So we've got a great team. And honestly, it's kind of a cross-functional effort across our executive team. So I have great partners throughout the organization and getting us where we need to be.

So what kind of— how much do you participate in the general executive functioning of the company where you're called in for meetings or, you know, the top people, you're one of the top people in the company.

So Yeah, we, we have a pretty close drumbeat across our executive team. I would say it's one of the things that kind of makes us unique is we're a pretty tight-knit group in, in running the organization. Actually, right before this call, I was on with our executive team. We meet at least weekly for a standup, and then monthly we have pretty long format sessions a lot of which are in person together to kind of grapple with the bigger challenges of the business. So we are pretty intentional around making sure we have the space as a team to communicate openly and kind of grapple with the big things.

Are you working— are you guys remote, hybrid, or in person, or a little bit of everything?

Yeah, so this was a fun one. We started as a very campus-oriented culture. So when I joined in 2018, there was an office in Costa Mesa, California that had kind of that tech startup vibe, right? Candy wall, you know, everyone kind of had their own space. There was lunch brought in during the day. They also had desktops, which I found interesting. Like they were very much set up to be working in an office. And my company's culture coming from CRIF was very different from that. It was more global people. It was kind of a put the person where they need to be and that could move around frequently mindset. So everyone had laptops, we had a lot of infrastructure. The combining of those two companies was kind of moving a little bit slower. The mindset was pretty ingrained that we needed to be in an office. Um, and then COVID happened and that all changed really quickly. Luckily our IT team scrambled hard, got laptops all out that weren't out yet. Um, and we've been remote ever since.

Wow.

Um, yeah, it's one of those things where we are constantly checking in with employees about like what's working and what's not. We spent a little bit of time thinking that we would return to a hybrid model, but we— that's not what we were told people wanted, or they wanted the optionality, but they weren't going to the office. So we, we cut that cord.

It is just amazing how the pandemic completely turned everything upside down. I mean, as a mediator and an arbitrator, which I do a lot of today, right? I had a mediation last year where I had a lawyer in Paris a lawyer in Boca Raton, Florida, a client in Toronto, another client in Temecula, California, and me here in Central California arguing over Peruvian avocados.

I mean, but you were all comfortable and at home, and you didn't spend a bunch of money on getting everyone together.

And we got the case settled, and I mean, we really got it settled in about 4 hours. I mean, it's kind of mind-blowing to think about that.

Yeah, I mean, there are a lot of things that I think it works well for. We're still— whatever, how far are we out of COVID We're still trying to figure out what the right balance is, like how much time do we really need together to kind of form those connective bonds and make sure that we have that. But I think our focus right now is on continuing to listen to our employees. And using them as our kind of meter for what they need long term.

I want to come back to that listening part because that's what this is all about. But first of all, what is it— you've been in this role for quite a while, went public in 2021. What is it that gets you up in the morning and gets you excited and motivated to go to work?

Yeah, I love how dynamic my job is. I can neither anticipate, and even if I tried, I would fail, um, what my days are going to look like day to day. And, and that, that's exciting for me. I like that I get to interact across our executive team, but also across the company at every level. And, and I feel like this job gives me a unique view into the company that other executives don't, don't get necessarily. And I love that about my job.

I think that's because just because as a lawyer and general counsel, you've got to look at, you've got to look at the whole company and see the total picture, not only—

Yeah, totally.

—perspective, but from all the other different— you've got HR, compliance, you know, regulatory, securities and exchange stuff. I mean, it's a broad portfolio of stuff you got to look at.

Absolutely. And, you know, hopefully if I'm doing my job right, a lot of my team are able to kind of assist and, you know, help us scale that up. But I feel like it's important that I am— remain kind of aware, as you mentioned, globally of what's bubbling up in my team, even if I'm not ultimately going to be the one sending the email or on the call.

Right. And then when you're sitting in your executive meetings, you're thinking about all the decisional processes that are going on and thinking, all right, what sort of the ramifications of this? And are there things here that people aren't talking about that maybe we should be talking about? Totally. The other directors don't see the problems the same way you do.

Yeah, my team and I talk about this a lot. Um, it won't surprise you to hear that Most everyone, well, actually the entirety of my team, we've done some tests on this, are very analytical in how they approach problems, right? So they're trying to put things into a framework, right? For decisions. And, and there are lots of teams that are not really like that, right? That the more creative. High-functioning, uh, people that just approach things differently. Um, so something me and my team have been trying to focus on and be intentional about is not getting frustrated in those scenarios.

I was just gonna say, that sounds like a very, uh, a recipe for deep frustration.

Yeah, not getting frustrated in those scenarios and instead kind of approaching it from a coaching mindset, right? Because you're not gonna change how people approach a problem fundamentally.

And most people don't have, unless you're a lawyer, you don't have that kind of rigorous analytical training.

Exactly. So how can you bring that to the conversation in a way that's not going to leave everyone walking away feeling frustrated? We've been working on that.

Well, this cycles back to the listening part. I'm kind of coming around to where I'm teaching, when I teach listening, deep listening skills, and I'm telling people abandon reason, which, you know, for lawyers, us lawyers, abandon reason, what? But yeah, you know, the reason when you're communicating, don't abandon reason when you're thinking and problem solving and learning and doing strategic thinking and stuff like that. That's important.

That's when it's pretty critical. Yeah, I'm trying to find that balance. I'll say that the thing that I struggle with most in listening is not immediately solutioning, like not skipping the listening and moving to the problem solving. Exactly right.

Um, and that's, that's the whole reason why I, I advocate abandon reason. Don't try to problem solve right away because the deepest need that human beings have is the need to be heard, the need to be listened to. And it only takes you 2 or 3 minutes to do that. You can satisfy, you can scratch that itch. In, in literally 2 minutes or 3 minutes if you have the skill set. And then after that, you've built the trust, loyalty, and connection and rapport, and they will listen to you. Yeah, I believe it.

If you don't do that, you're absolutely hitting your head against the wall. Yeah. One of the things that I had the chance to do when I had a little bit more capacity, and honestly before I had children, was I volunteered with an organization called Crisis Text Line. Are you I don't know if you're familiar. It's a text kind of alternative to a suicide prevention hotline, but basically the idea is you can text into these crisis counselors and get immediate text-based messaging, hopefully help. Right. Right. And so I was trained to be a crisis counselor for that. And I did it for a while. And one of the biggest things that they kind of ingrain in you in the training, because your job is not the solution, right? I'm not a therapist. I'm not a psychologist. I shouldn't be trying to solve these really hard, difficult problems on a call. But my job is de-escalation. So getting them to a place where this very acute, high emotional thing can feel like they can carry on until they're able to actually get the help they need. And so we practiced reflective listening a lot.

There you go. Good. I like that. Not active listening, reflective listening. Reflective listening.

So basically saying back to a person or trying your best to say back to a person what you hear that they're feeling. And I found that to be really impactful in de-escalating. More than probably anything. I mean, we had a lot of kind of tools in the tool bag that we drug out if necessary, but that was the one where people seemed to immediately, um, and, and get to a better place.

I'm— I don't know exactly what your training is, but there is a skill called affect labeling. I don't know if they taught that. You should— were you actually—

I don't know if they use that terminology, but that's a technical term.

But what the brain scanning studies show is when you tell somebody what they're feeling, or I'd say, Caleb, you are really frustrated. You don't feel heard. You don't feel listened to. You feel completely unsupported and unappreciated. You're really pissed off. And you're anxious and worried and concerned and feeling a little embarrassed. So I teach this in a very methodical way. But what the brain scanning studies show is that when you label emotions in that way, the emotional centers of the brain are de-escalated and the prefrontal cortex comes back online. And it, and it takes about 90 seconds. Wow. And literally what you're doing is lending your prefrontal cortex to this other person for the time it takes their prefrontal cortex to get back online and start rethinking. So the training, it sounds like you got was, is close to, probably not quite as precise as that.

But the idea— and for a different purpose. But yes, obviously. But it's collective listening.

And it works in text. And it works in email. So that's really cool that you got that. So I want to cycle back to thinking about— now thinking about how you guys are— the executive team is obviously being remote, is focused on taking the temperature of the employees, of the team members all the time, making sure that everything's working. How do you— what, what are the sort of the listening skills that you use when you're remote to check in on people and see how things are going and really get the truth of the matter, not, not the happy face that people put on?

Yeah, I, I think part of that is in making sure that we're doing frequent one-on-ones both with our team and then kind of skip-level cross-functional check-ins so that people feel an open window, not just in their vertical chain within the company, but kind of with others within the executive team or otherwise. We also do quarterly company updates kind of following earnings, which has some type of, you know, hopefully thought-through content that people will find helpful. But also we do open Q&A and then we have a separate kind of, if you don't want to ask on this call, here's how you can otherwise ask. And We as executives take on making sure that those get responses and that we've appropriately heard and considered feedback. We also have some groups within the company that were started by our employees. So employee resource groups that are focused on topics that are important, important to our team that they've thought up for themselves and they kind of self-select into groups that are important for them. So I'm in the Women in Technology resource group on our team, and just finding other ways to engage, even though we're not necessarily having those water cooler conversations or in-person all-hands.

And you're finding that using this kind of engagement is keeping some coherence and cohesion in the organization. That's—

I think we are finding that, like I said, we're, we're always trying to figure out what are the things that people care about. They might say that they care about like events, but then they're not actually engaging in them. So trying to receive that feedback and actually process it and do something different is something that we're constantly reevaluating. Our HR team does a really good job at kind of being the the gatherer of a lot of that input and then making sure too that we're doing our jobs in other groups of having those conversations with our own teams.

So do you guys, do you guys organize situations where people can come together to meet?

Yeah. So our executive team definitely does at least quarterly in-person sessions. And then we also have functional groups that will get together, um, for strategic planning, obviously, and then other, you know, resource initiatives that we as a company need to get behind, sometimes cross-functionally, sometimes within a functional group. Um, but we try and provide budget and capacity for teams to do what they need to do there. There's some, just some things that I, I do feel like are better resolved in person, right?

It's— I'm just curious, because, because we are, we are all working so much more remote now than we used to, have you— how have you seen the social skill level when people— it's an interesting question. Yeah, I mean, I, I have a— I'm not sure, I don't— I'm not sure that I have an opinion on it, but I suspect that because people are not seeing each other in person on a day-to-day basis, that everything is screen time, that there might be, there might be a shift in interpersonal social skills. I'm curious about what you're— yeah, witnessed on that.

I think it's a really interesting question, and I'll honestly be curious to see where the research goes in like the next 10 years when we see like what happened with these kids that went through a pandemic and they're, you know, at their kitchen tables learning, or the class of people that actually started working during the pandemic. So never had those in-person interactions, have only ever teleworked. And it's hard for me to say, like you said, I'm not sure I have an opinion yet. Either on how that's going to play out. But I will say something we try and be mindful of is meeting bloat, not having meetings for the sake of meeting. That's right. Not taking a meeting to the end of the time because we're all on this Zoom call.

Clear agendas, clear time and action plan, clear start time, clear end time. Right. We have people in the meeting that need to be there and nobody else.

Don't carbon copy everybody in the world on what's going on. Absolutely. That kind of hygiene, I feel like, what enables the company to continue to operate in a teleworking environment. Otherwise, I could see, you know, long-term struggles on that side.

It's a lot of discipline to do that where you've got to be really laser-focused and lean in the way that you think about taking people's time in meetings. Completely agree. You can't— it's not like you can call people to a conference room and let's chat. You've got to be very thoughtful about this. And that takes effort and discipline on the part of the people who are convening meetings to do.

Absolutely. I can— I'll make an admission. I can tend to multitask if I feel like meetings are not high value.

I get bored on a Zoom call and I'm looking at my phone or I'm looking around. I can't— I'm working on my, you know, working on this project or that project. It's too easy to get distracted and just sort of send, you know, half an ear to what's going on. Right.

So I will— I try and use that as a, okay, is this because the meeting is not valuable or because I'm too used to letting my mind wander in these scenarios? Good question. So for Yeah. So for certain, certain meetings, I'll, I have a walking treadmill. I'll walk on the treadmill just to, because I am not a typer while walking. So that's helpful in keeping me focused on the task at hand. Or yeah, do I need this meeting is another valuable question.

Right. And are you able to excuse yourself out of meetings that you don't think it'll be valuable? Some of them.

I try. You don't have to. I try. Guarding your time, I think, is a huge skill for leaders. Making sure that you're giving yourself the time that you need to not just be moving from Zoom meeting to Zoom meeting, but time to focus and consider and distill and learn. From those meetings is, I, I think, really important.

Well, I guess one of the things, the benefits of remote work is that you can turn off Zoom and take time to reflect. I mean, I live south of Yosemite National Park in Central California on 10 acres, and when we're done with this conversation, I'm going to go out and take a walk around my property, walk my dog, walk a mile or two. That's how I get, you know, you get your head clear.

Uh, oh yeah, I will be, uh, very candid. Remote work works well for me. I have small children. The ability to work hard, um, and then walk away and immediately be with my family is really nice for me. So, um, yeah, there's, there's a ton of benefits to it. And like I said, we ask employees constantly how they're feeling about it, particularly as we onboard new people. I'm always surprised. I'm like, is this your first time working in a remote environment? And almost always now the answer is no. They're used to it. I mean, we have— they're used to it. Yeah.

And as long as they've got the tools and the interaction and the support and the leadership, most people I think thrive pretty well in this environment.

That's right. And I think the onus is on us, on our executive team, to make sure that we're keeping that pulse. And then, you know, the world is changing, so it's always figuring out what's the new the new tool that we need. What's the— we're looking at AI tools now for collaboration.

How do you see AI changing the environment over the next 4 or 5 years?

Oh gosh. It is, it's a hot topic. It's important to our customers. So it's important to us. We've been thinking about it for a while and we're starting to now think about how we implement it within our internal business in a responsible manner, which is kind of a constantly metered approach, right? And then how we can use AI to better enable our, our customers to succeed in their goals. And we're already partnering with some AI firms on some interesting kind of products for our customers, but what can we add? Is something that we're working through now.

It's an interesting time to be working, isn't it? Especially lawyers.

Yeah, there are new issues that come up all the time and novel, right? An issue of first impression in the legal field used to be something that people were like, oh, these come up once in a lifetime, once in a decade. I don't think that that's the case anymore.

Look at this report and what it has to deal with, right?

Everything is moving at a lightning pace, right? And frankly, a lot of the model in business has become like, do it aggressively before there's legislation on it and, you know, hope it doesn't fall.

It gets regulated. Yeah, I can see that. I mean, but as a lawyer, I get a little concerned about that because—

oh, sure. Well, that's, that's why we always have an interesting kind of role to play in ensuring, like I said, sure, we're looking at AI, we're looking at collaboration tools that use AI, but we have to do it in a thoughtful, risk-based way.

And that drives the creative people crazy. Always, right? There's a—

but that, that gets back to the analytical— party killer.

Kayla the party killer, right? Kill 'em with joy.

Yeah, absolutely. Absolutely. We're, we're, um, I've tried pretty hard with my colleagues to remind them that bringing me in early on things is a good idea, as opposed to waiting until it's half-baked. Um, so I think that's something that we've worked on.

Not the kind of thing where you want to ask for forgiveness rather than for permission.

Certainly not. And I would say I think we've taken a pretty intentional approach on AI and, and thinking through where we want to be and how we can be helpful to our customers in getting there.

Neat. Well, let me ask you one more question and I'll let you go. This has been a great conversation, by the way. Thanks so much. Of course. What's one thing about yourself that we would never know about unless you revealed it to us?

So it's kind of a past tense one, um, but I used to be an adrenaline junkie, like, like jumping out of airplanes, hang gliding, any kind of crazy thing like that. Pre-kids, um, that's completely changed my my approach to risk from a personal way. But, uh, I think it's something that probably even some of my colleagues would be surprised to learn because I am not, um, you don't come across that way. I'm a little bit of a control freak. So being able to kind of, um, yeah, relinquish control would be something that would surprise them about.

Well, we have a lot in common. I used to be a class 4 whitewater kayaker and a rock climber. And I'm a level 3 ski instructor. Used to do a lot of mountaineering. Okay. That's why I live where I live, right?

Right. Yeah, you're, you're right in the best place for it. I made my family do a white— oh, excuse me. Made my family do a whitewater rafting experience, uh, once, and our raft, uh, capsized.

So went for a swim, huh? Yeah, I can say that I've only flipped 3 times in whitewater rafting for 40, 50 years.

So yeah, well, I don't get to plan the family vacations anymore. So I think that might have been my last. All right.

Well, Kayla, this has been a great conversation. Thank you so much for your time.

Thank you for having me. It's, uh, it's been fun. Absolutely.

Doug Noll here. Thank you so much for listening to Listening with Leaders. If you are a successful executive leader who would like to be on this program, please visit podcast.dougnull.com/podcast. If you got something out of this interview, would you please share this episode on social media? Just do a quick screenshot with your phone and text it to a friend or post it on the socials. If you know someone that would be a great guest, tag them on the social media to let them know about the show and include the hashtag #ListeningWithLeaders. I love seeing your posts and guest suggestions. We are regularly putting out new episodes and content. To make sure you don't miss any episodes, go ahead and subscribe. Your thumbs up ratings and reviews go a long way to help promote the show and mean a lot to me and my your team. Want to know more? Go to my website, DougNoll.com, or follow me on LinkedIn, Facebook, and Instagram. That's @DouglasEnoll. Thanks for listening, and we'll see you on the next show.