Revolutionizing Legal Services - Todd Richheimer - Lawfty - Episode #52

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?

Welcome to Not Another CEO podcast. I'm your host, David Politis. Every week we talk to inspiring leaders and get the true stories, the ups and downs, the lessons learned, and come away with actionable advice for our own journeys. 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. And after earning his undergrad degree from Emory, he went to Wash U for for law school and then practiced law in New York, New Jersey, D.C. in 2013, he co founded Lofty, a tech powered legal platform that helps match personal injury clients with the right lawyers using real time 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 Lofty, Todd Richeimer.

All right, thanks for having me. Looking forward to this.

I'm excited, I'm excited. First question right out of the gate, what's the one thing you've done at Lofty, 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?

All right.

By far, surrounding myself with people with complimentary skill sets. And so it started with my co founder. So I'm not technical.

Right.

My background's in business and law. And so it started with finding a technical co founder and there's a cool story behind that if you want to talk through that. And then rounding it out with, I was very fortunate. My father in law is a successful entrepreneur and so he's been pivotal, pivotal in helping me see around corners. And then I also have a. It was our second investor, longtime board member, good buddy of mine from Emory actually, 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. And so that is by far and away the number one thing.

Let's talk about actually the co founder journey. How did you find your co founder?

In a pool at a sharehouse in the Hamptons. Yeah, it was, it was really Cool is we were. My wife and I rented a room at a sharehouse in the Hamptons and I met Mike. I'd never met anybody with his skill set. Really interesting guy. MIT undergrad and postgrad computer science, electrical engineering. Had just left his job at Raytheon and he was looking to do different things and we just hit it off. You know the way I describe him to people and he doesn't take offense to this. He's the coolest tech guy I've ever met. And yeah, so we hit it off and I put his number on my phone. Fast forward like four months and I'm at my job, I'm working on the defense side, representing corporations. And 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. And so I shot him a text. I was like, hey man, would you mind grabbing a cup of coffee? And so we met for coffee and it just led to this, like brainstorming, right? The app for scheduling depositions didn't go anywhere, but we ended up getting together. This is why we both had jobs. We got together every Saturday at the Wework in Trobeka for a year just brainstorming and prototyping different ideas and it just led to this relationship that has been tremendous.

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 or did, you know, like we're going to do this together. Like that's what we're. Our aim is.

We had like there was like three different ideas we were working on and I had a job at a big law firm, sort of partnership track type gig. And he actually had another startup at the time. And no, it wasn't clear that we had a business to start. I'd say probably like six, seven months into it, it was clear we had something and that's when we decided to make a leap.

And you talk about your father in law to me when you say that. It gives me anxiety to think of. I don't know if I want to mix that. But how did that come about?

No, it's. Look, that's a fair anxiety, right? We just happen to hit it off personality wise. And I'm sure we'll get into this is because we are structured both as a law firm and a technology company. We're subject to regulations that don't allow institutional equity capital to invest in. Right. So 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 a pretty hard selling point. So anyway, I finally found a structured finance fund that would lend me money and I would just go to my father in law for advice. And he, I had a term sheet and he looked at this thing and he's like, I take those terms, right? I mean, they were egregious to get somebody to lend me money early on. And it just led to this thing that's been. Been absolutely tremendous.

Wow. So. So the company has scaled tremendously, you know, since. Since you started it, and you continue to build your team, do you continue, like, is as you're doing that, is it always trying to find those complementary kind of skill sets? You know, what, what are you looking for in that team as you're, as you're bringing them on?

It is, you know, as, you know, it's like, it's been like different phases, right, of hiring people, right? From like, early on. We've got about 110 employees now. And so, you know, it's different phases, but yeah, it's adding complementary skill sets. I mean, like, look, candidly, something that, like, I know I'm not good at 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, I try to, like, find people that can help me and surround me and really help me save myself from myself, right? So, like, one of the things that I'm. I consider myself very good at is relating to people, right? I'm definitely high on like that empath scale, right? 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 come across 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 grown past them, right? And that. That's hard. And so, you know, surrounding myself with like, people that maybe are a little bit more organizational, Organizational mind frame has been helpful.

So, you know, I actually just had a conversation with another Guest about similar topic. And, and I don't think we've actually talked about it enough on the show is, is the, 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 to help you do that?

Yeah, no, I think from my perspective it's like just by nature, I'm not a cutthroat human being, right? And so like, and I've got to build this business with my character in mind, right? Otherwise there's going to be like this like giant mismatch of like who I am versus the culture we're building. And so what I found is that like leaning into who I am and finding solutions that sort of like take that into consideration, that may actually not be conventional business advice.

Right.

Has worked pretty well. You know, some examples that come to mind is like, you know, reshuffling people, right? Like maybe saying to somebody that like, you're not going to lead this department anymore, but you're a very valuable member of this team, right? And we're going to layer in somebody with a bit more experience above you, right? But like, that doesn't mean that you're any less valuable to what we're doing, right? If anything, you know, I would say it, 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.

When you, when you go through the interview process, do you. What is, what is your way of interviewing? You know, how, how do you. I'm saying very tactically, like what, what do you look for when you interview and what is that process that you follow?

Yeah, so my interview style is, I, I love following the chronology of a, of a resume, right. Is sort of like just going through the dates and having somebody explain to me their story, you know, and what I found is like you find both really good stories, right? 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 I was like, it just didn't make sense, right? Like, and, 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. Like, just totally taking advantage of like the remote work world, which is it's wild. Like, the change in, like, 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, like, empath scale is, like, relating to people, talking to them. Like, I find myself gravitating probably a little bit too much towards personality. And so. And this is where having people around me help, 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.

When you talk about going down kind of the chronology, you know, one of the things I got this advice when I was, like, 23 3, 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. Like, just going. And kind of probably, 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. 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? Because, well, 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.

That piece of advice, like, why followed by silence is like. I mean, it really is amazing because it's not my natural default. For better or worse, I like to talk, you know, but it's like, if you let silence sit and somebody's in, like, a halfway, like, 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 when you think about let's. Actually, I think for the audience, sometimes with some of the businesses, I feel like it makes sense. Maybe you could just give us, like, couple steps back. Like, what does Lofty do? Not just what I did in the intro. Like, can you give a little bit more detail about what it does? Because I think that will then help us With a bunch of the questions that I have.

Yeah, absolutely. You know, it's a quirky business and like, I'll give you the backstory because I think it'll make a lot of sense to folks as to how this came about. So I graduated from law school and I've always had an interest in helping people, right? 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. I graduated law school with $150,000 in student debt and I had to go work on the corporate side to pay that off. Well, while I'm doing that, I'm in my first year practicing law and I find out this idea of the referral fee, right? 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 bill their time in 6, 10 of an hour. So here I am as a junior associate billing my time in 6, 10 of an Hour and 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 attorney refers a case to another attorney, that 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 personal injury attorney will work on. They work on contingency, so they recover $1 million. They get paid 333,000 for that representation. They turn around and cut me $111,000 check just for that referral. And so I'm like, well, I want to do that as much as you can possible, right? Just like attracted to the sheer economics of it. And so what that led to was like this like deep curiosity of like, who's deploying this business model, are people doing this, etc. And it ended up being this sort of passion project that I looked at for like six, seven years before I actually launched the business. And we could get into that if you want. But first I'll tell you what the, what the business does. And so what we did was there was this deep sort of seated like distrust of marketing vendors within the personal injury realm. And a lot of it is 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, promised the world and delivered very little. 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 a, in a, in a field where there is no data, right? And we've mapped out, you know, what these inquiries cost all the way through what these cases settle for. Because these cases can take 1, 2, 3, 5 years to settle, right? And then what they're worth and what we figured out how to do was predictably turn $1 into three every two years. And there's a whole host of implications for that, right? Figuring out how to better the industry, etc.

So how, how did you get your first. Call it five, 10 customers.

I mean, how shameless. I think it is the right way to put it. You know, it started with I knew one personal injury attorney in lower Manhattan, shout out to. To Jason Coban and Howard Essner. 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 active law firm to work with.

And they let you work out of their office.

Yeah. So worked out of their office. We're at 50 Broadway 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 journeys? 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. Literally every email you had ever sent in your Gmail account, you could email. And so I emailed everybody I had ever sent an email to. And it was amazing. Like, it was, it was really cool to know that people want to help other people, right? And so a 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 it all sort of started steamrolling from there.

Shameless, though, is a good, you know, I don't think people say it enough. I, I think shameless is a good, good word to describe what you have to do. I mean, you're starting with zero, nothing.

That's. That's exactly right.

And, and I, I, I spend time with founders who are like, no, I don't want to make that ask. I don't want to. It's like, well, if not now, what? I mean, this is basically the time to make the ask, you know, 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.

Oh, totally. And that's uncomfortable for me.

Right.

That's not like, that's not to your point. It is uncomfortable.

Right.

And it's, it's what I found is like, you have some take, like, you're the best salesperson, you know.

Right.

And like, they're like, high on that spectrum of like, they just don't care.

Right.

Like, 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 point of being uncomfortable, but, like, I knew that if I was going to build this business, that just, that's how it had happened.

And so, so you, it was just you and your co founder at that, at that time?

Yeah.

In that office.

No, and it was, I mean, it's a cool part of our founding stories. I mean, for the first year and a half, I fielded every single phone call, every single intake to my cell phone.

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.

That's exactly picking on my cell phone, saying, hey, this is Todd from whatever firm.

Right.

And let me talk to you about your case. And so I did that for a year and a half, and 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 going to do. And so I'll never forget it. I was about a year and a half in, and 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 think it's time to hire somebody now.

That, well, when you do that, like what you just described, 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 totally.

Which, which I think also raises like another piece of it that like 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 single role.

Right.

And it's like what I found is like, there were jobs here at Lofty that like, I could do myself. Now most jobs here, I can't do myself.

Right.

Which is an interesting piece of the evolution.

So you talked about fundraising in the beginning, talked about this is a hard kind of business to go the traditional fundraising route. 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, how did you end up funding this business?

Yeah, so when we first started, I didn't. You know, one of the things that I appreciate most about where I am in my career and we're about similar ages is knowing what I don't know.

Right.

And then like having the network to go and source that information. At the time when I was starting, 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. And like, it was, it was, it was a very unorganized. Originally, it was a very unorganized way of like looking for money, Right. And ultimately backed into the fact that like, okay, it had to be debt. The people that provide debt could really be structured finance folks or family office folks, more flexible capital. And so I was telling the story about my father in law. We got that term sheet from a structured finance firm, right. 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. And like, when you looked at these covenants like we were going to breach one of these things. You know, there was, there was no way. I just didn't know enough about the future to know otherwise. And so what we decided to do was to raise money from wealthy individuals, right. Is to often the first interest rate we offer people was 17%, right. It was expensive money. And so we paid 17%, but we did it without these like crazy strict covenants which if you trip over, you're in a lot of trouble.

Right.

So we basically did high net worth individuals. Then we did like, you know, more like mezzanine type fund money, if you will, and then made our way down to, to regional banks. And so it's been an evolution and now, you know, the majority of our debt comes from banks now at normal interest rates. But yeah, that was, that was the evolution.

Do you, I mean you were pretty well connected. I mean that point, you know, Emory undergraduates, Washu law school had all these connections. Were you able to find resources to tell you where about fundraising? Did you? Yeah, like was there. How did you learn?

Yeah, no, it was trial by fire. And I'll tell you what, to any aspiring entrepreneurs out there, I'll, I'll give a business a good business idea from my perspective is I really think the market needs 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, right? 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 like you had a, like 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 to my network and got certainly great intros, right? But even those people didn't know the layer down of like, okay, this money source is going to be interested. It's not. And so I, I think entrepreneurs would benefit from that greatly.

Yeah, I think, 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 is their money coming from? What are they getting paid on? Like, you have no idea how to actually. I mean, first of all, some you shouldn't even approach. But even if you do approach the right one, you don't even know how to speak to. To them, you know, to their. To. To what they want.

No, that's exactly right. I mean, one of the crazier realizations I had that until you lived through this process, I don't think a lot of people realize is. And it's counterintuitive, sometimes it's harder to raise a smaller amount of money than it is a larger amount of money. I can't tell you how many meetings I've had, because the economics, like, the underlying unit economics of what we do are very, very attractive. And so I'd meet with these people that, like, you know, we want to write a gigantic check, a $50 million check, $100 million check, whatever that is. It's like, I can't absorb that, right? Like, I. Like, there's like, I'm gonna choke on that money if you give it to me. Now, there's some entrepreneurs that may throw caution to the wind and go with it. Like, many, many, many. That's not my personality, but it's. Yeah, it's bite. Size is a big piece of it. Like, what size check do you want to write?

What, as. As the company has grown, both the business, the number of people, how have you been able to keep up with that as the CEO, you know, how have you been able to scale yourself and evolve yourself through that, through that growth?

Yeah, it's hard, right? And I don't. I don't like. One thing I really appreciate about what you're doing is, like, the very real conversations you are having with people. And in listening 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.

Right.

And, yeah, it's hard. The demands on my time are greater than I could have ever imagined. And I think what has worked and, you know, peers headed in the right direction with this stuff is 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. And I think we've done a, we've done a nice job with that piece of it.

Where would you say you spend the majority of your time today, you know, look versus where you were five years ago, seven years ago?

Yeah, it's, it's a blessing and a curse. It's, you know, it's. I find myself, and this is something I'm trying to rectify right now is I'm acting too much like a fireman. Right. It's like, it's like 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, I found that this stage of where we're at is like, I'm, I'm dealing a lot of problem solving, which is good, right. But like, I'd rather they'd be more longer term problems in the short term, like, okay, this has got to be addressed.

Now.

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? And I was like, very proud. I was like, I think, you know, 75%. Whatever I, whatever it was. And he said, what are the three biggest opportunities? 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, 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.

They, they are. 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 is. And mark my words on this, like, legal tech is the next thing. It's like, it's this massive industry that is very antiquated, it's backward in so many ways and it's just 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 ingesting these different opportunities. And so that's, that's another piece of where I'm spending my time. That's the part that I find really exciting.

Right.

I love that stuff.

So, so let's, let's talk about that. I mean, 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 of weeks, it definitely seems like this may be, I mean, it's like a once in a ever type of change. Can you describe what is occurring in the field?

Yeah, 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? So you've got like AI and this technology craze hitting a super antiquated industry. Talk about that in a second. Colliding with regulatory change.

Right.

And it's, it's really churning up the waters. So first let me talk about the regulatory change because I think it's, it sets the stage as to why this industry is so backward. So 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.

Right.

A non lawyer can't send a case to somebody and get paid. Likewise, a non lawyer can't own a piece of a law firm.

Even a piece. Even any.

Even a piece. Now that has changed a little bit. And I'll tell you, this feeds into our founding story 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 D.C. 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, 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 going to fall apart, et cetera. Nothing happened. Fast 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.

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 that are charging $2,500 an hour, right? Look, who in their right mind could afford that, right? So you have a huge access to justice problem. But what it's done by not allowing institutional capital 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 going to 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 came, right? Every corner's got a shingle, 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, right? Actual average, yes. It's tiny, 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. And then in addition to that, there's been no consolidation or economies of scale created 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 the funniest thing to me, like looking at LinkedIn and how all of a sudden everybody's paying attention to this, right? Is like, oh my God, like AI is coming in and they're going to replace lawyers. We have about 30 steps that need to happen before that happens in the legal market, right? 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. I think the actual solution is, is a hybrid type model. But it'll be interesting to see the way that this all shakes out.

So. So one thing. 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're using at Lofty, you know, is that all your co founder is that kind of, you know or. Because, because 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 stand top and how do you make those investments? Because when I think about this business, it seems like with the referral fees and the intake and everything, it's such an 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, to. Does that make sense? What I'm trying.

No, it does and I'll tackle it from a bunch of different angles. So it's interesting. I, I think number one, I think that sort of my North Star, if you will, for Lofty, right, is I want to position us as the perfect conduit by which outsiders can access this marketplace. Right. Sort of like understanding how this market operates and we do that in a very tech enabled fashion. Right. Effectively structuring ourselves as an entity that can capitalize on the economics of a law firm with the infrastructure of a technology company. The 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, 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 what somebody clicked on in Google all the way through what a case monetized for.

Right.

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.

Right.

Like, I think this next layer of like tech, if you will, is the integration of systems. And so 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. Because we're looking at this from a very unique perspective. But we'll also purchase what's existing and then integrate systems as needed.

Something, you know, you've chosen this personal injury space, you know, to go after. And 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 did that. Was that any concern when you're building the business, starting the company. Like, did you think about that? And if yes, then how did you overcome that?

I did. 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, people saying, oh, you're an ambulance chaser. Oh, you're doing something that's like, slimy or whatever that may be. What I will say is that it does bother me that the industry has gotten a bad rap 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 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?

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 do on a daily basis. A we talked about is highly fragmented, right. It's happening in all these little firms around the country. 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 million dollars and the insurance company just offered us 20,000.

Right?

It's. And like, that happens day in and day out. But then the insurance 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 $100 million and the case should have been worth 2. 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 Lofty and what I want to do with the brand that we're building, which is new for us, right. Is effectively taking a position that shows the world that, like, this is wrong. So 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. But 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, 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. In California, the pain and suffering that this person would be entitled to recover is capped at $250,000. How is that? Right. Like I, I just, it, it's so backward and, you know, it's, it's about. And I'm hoping, what I'm hoping, and I'm hoping Lofty 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 is accustomed to seeing, that we can get that message out there.

Do you sort of 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, do they like. I, I don't know, is there like a community kind of dynamic of these? Because I know they're, I think they're in different states, different locations. Like, dude, is there any dynamic where they can help each other?

There are, I mean, there are trade organizations, right. Like the National Trial Lawyers Association.

Right.

Like there are the American association of Justice.

Right.

There are trade organizations that do very good work on this front, but it's still, they're tiny in comparison to the size of these insurance companies.

Right, right.

Yeah.

You know, and I laugh, you know, every time I see these, these, these ads, you know, like a good neighbor, you know, it's just like, I don't know, it's just not my experience.

What is the biggest challenge you've ever faced at Lofty and how have you overcome that?

It all comes down to fundraising. I still can't believe this happened. So I had, I had worked on a financing, so I said we raised money from high net worth individuals.

Right.

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 lined up capital, got introduced to a guy who 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. Right. So it could be flexible because they have relationships with family offices and private equity funds, etc. So could be a good outlet. We worked on a deal for eight months, which should have been warning sign number one.

Right.

Like in this particular context, probably spent $150,000 papering this thing. And it was scheduled to close, I think January 9th of 20, 2018. And paperwork's done, everything's heading the right direction. I'm away for the holiday break with my family and I get a text message on December 26th that says we hit a snag.

By text, by text, by text.

Not even a phone call. We hit a snag. What snag did we hit? The investor. This person had no longer wanted to invest money or, or he never had this investor. 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.

Right.

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. And you know, I describe it now in hindsight, 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, if you will. You know, I put my head down and we crafted a whole bunch of different solutions that ended up. By May, we had closed three different deals actually. But the, the main one was we had raised institutional capital.

Right.

Just debt that was collateralized by our case pipeline at a much better interest rate.

Did you think at any point in time there that you would go out of business?

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 going to be called maybe I'm Delusional, but you know, it's. I didn't, I had faith that we'd figure it out. And I think it's because the underlying business was working.

Yeah, that Makes sense. That makes sense.

Yeah. So I think that's what, you know, gave me some comfort.

You know, one of the things I always say to people is, like, if there's one lesson, it's don't run out of money. Don't run out of money. Don't run out of 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 money to run a business, you know, and. And I think so many of the stories that I've heard, when I ask people what's the biggest challenge, it actually, not all of them, but the vast majority come down to something related to the money needed to run the business. And, 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.

No. And. And I do think there's a degree of luck associated with that, because 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, you know, it's early on, you. You take what you can get.

Right.

It's like 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. And, you know, it really could make or break you. Right. Having a good financial partner by your side.

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. So can you tell me. Just tell me a little bit more of that journey and maybe even before, like, where. Where are you from originally?

Yeah. Yeah.

So I grew up on Long Island. Grew up on Long island and then went to Emory. I think a cool part of story is. Is both my brothers are entrepreneurs as well, which is. Which is pretty interesting.

Where does that come. Does that come from your parents or.

From, you know, I. I think I had a great childhood. 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. But then the other piece of it was, unfortunately, 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. And I think like, those two things combined are obviously very formative and who knows what it is, but I think it's like this, like, life is short. I'm going to go for it. You know, whatever those themes are, I think are baked in there.

Because when you have three siblings. I just interviewed someone yesterday and she has two dogs, 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. Yeah, you know.

Yeah. I don't know. I don't 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 when I went to Emory, I didn't really know what I wanted to do. And I heard about, you know, seniors graduating and making $120,000 going into investment banking. So I was like, that sounds good. And so I worked my tail off, had my eyes set on getting an investment banking job and I ended up at Bear Stearns. And it was, it was such a weird experience because it was something that I was so proud of, right? 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, etc. I've never hated something so much in my entire life, right? So it was, it was really. And I remember talking to my parents about this and like, I really just set my eyes on, I'm going to make it one year, right? I'm going to last year. One year. And no joke, I quit 15 minutes after my bonus hit my account that first year.

Oh my God.

And it was, it was just. And I joke about it now, but I, I clearly knew I didn't want to do that, right? And which I, I think is an important part of people's journey, right? Figuring out what you don't want to do is, is almost as important as finding out what you do.

Especially early, I think. Especially early, you know.

Totally. But I, I will say, as much as I hated it, I am very thankful for that experience today, right? 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, you know, before law school, which has really helped me do what I do today.

What is it that. And you kind of touched on this maybe a little bit in, in your upbringing. Like, what is it that drives you, 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. What, what drives you?

Yeah.

I was about to give a, A sort of a, A crest. Crest isn't the right word. A 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. It's being able to help those I love when they need it.

Right.

So like, I like, to me that like sits at the foundation of it is knowing that I have the wherewithal to help if and when it's needed. And so like, yeah, and for whatever reason, like, my mind goes to entrepreneurship as being the means to, to do that. But that I think sets him at my core.

Have you had like a role model, a mentor, you know, one person, and 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 that's really kind of helped you on this journey?

You know, it's, it's, it's been great. Like, I feel very fortunate that like, I had two amazing parents that showed me sort of how to be a good human being.

Right.

And then I 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, it's like those things combined have just been tremendous.

In terms of Lofty, you know, you look, you look out three years from now, it's 20, 28 and where do you want. What do you think Lofty looks like three years from today?

Yeah. So, you know, since I was, I was thinking about this, having listened to a number of your podcasts, I think different from a lot of people that you've interviewed. It's like I find myself 3/4 of the way up the mountain, right. But I have not reached the top. 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. And I think that presents a massive opportunity, but with it risks. But where I want Lofty to be over the next couple years is I want us to be an industry leader in professionalizing this space, right. I want us to be in a conduit for outsiders that want to come into this space in a very responsible manner that keeps the client in mind, right. And does what's good for the people that need legal services. 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 themselves in a situation that they didn't want to find themselves in is good work.

Right.

And I want to let the rest of the world know that it's. Yeah, that's. That's something that's really important to me.

So last question is, knowing everything you know today and all the experience that you've had, what is the one piece of advice you'd go back and give yourself before you started your first job at Bear Stearns?

That's a good question. Follow your curiosity. And the reason why I say that is I remember, like, graduating Emory, like, 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, I think most ambitious people probably go through this. Like, the, oh, my God, what am I gonna do?

Right?

Like, I need to have the answer. And I do think that the answer lies in your curiosity, right? It's like, I don't think anybody knows exactly what it is they're gonna do, but if you start peeling back the layers of the things that interest you, right? 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 raising money for a presidential candidate. Just so happened I needed a job, et cetera. 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 law, policy, politics, like, and start peeling back those layers, right? And that's how I ended up here. And so, I don't know. I think there's comfort in it.

Yeah. I would actually probably take it. I would. I think that's good. No, One 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. I'm like the best founders that I've currently working with and the best ones in some way. Curiosity is like the word they like, they never stop trying to like 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, because I, I was thinking like they want to learn, but it's more than they want to 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.

I totally agree. Yeah, I totally agree. It's funny, I was, I was thinking back to our. That where we started the conversation about asking interviewees why. He's like, just keep asking why.

Right. Right. It's a good, it's a, that's a good advice. Todd, thank you very much for doing this. I'm happy we had a chance to do this and happy we had a chance to tell this story because it's, it's definitely unique and it feels like a pivotal moment for you, but also for, for the industry, which is, I don't know, that many people know about. So thank you for sharing and, and educating me and the audience.

No, and I really appreciate you having me on and I can't tell you how much I applaud what you're doing.

Thank you.

I really love the idea of CEOs giving it real to people. I think people can benefit from it.

Thank you very much. Well, everyone, I hope you enjoyed. Hope you learned a lot from Todd if you did. Share this out with your networks and we'll see you for the next episode of Not Another CEO Podcast. That's a wrap for this week's episode of Not Another CEO Podcast. Thanks for joining. For show notes and more, please Visit not another CEOPodcast.com we'll see you next week.

Sam.