The Devil is in the Details

7 min read

Our guest writer, #apparapartner, and retired lawyer, Murray Gottheil, takes on legal tech in a Zoom meeting with Doug Mordy – one of the founders of Appara. 

Imagine that you were a thriving blacksmith back in the day, with people standing in line to have you make horseshoes for them and a team of associates working away at keeping the fires burning and the metal in stock.  You are one lucky fellow, which only makes sense with all of those horseshoes around.  

Then one day you find out that someone has invented the automobile.  It won’t catch on, you think, and keep hammering away. But surely the Devil is real, because soon everyone wants one of those blasted car thingies, and you are out of business. 

Or maybe you were a real estate conveyancer who heard a rumour that your career would be wiped out by a new online service. Not possible, you might think. But the Devil lives forever and strikes again.  

Or, and more to the point, perhaps you are a corporate commercial lawyer or law clerk spending countless hours drafting documents to incorporate companies and implement corporate reorganizations.  

Microsoft Word is your best friend (as unbearably annoying as it can be, but then again, many best friends are) and your second-best friend is an early generation corporate database product. You spend countless hours working with them both to produce, organize and manage documents. Then you use other products to arrange for the documents to be signed. Finally, they all come back, and you review them to be sure that everything has been signed properly and nothing has been lost, and you manually file them in the minute books.  

But the Devil, long since bored with ruining the lives of blacksmiths and real estate conveyancers (and wanting to branch out from mucking with our political system and arranging for interesting  and unusual folks to be elected to high office) decides to disrupt the legal industry. You ignore it for quite a while, but ultimately recognize that the Devil is indeed in the details and that maybe you should look into things before you go the way of the blacksmith.  

All of this occurred to me recently as I was reminiscing about my days practicing law and how incredibly light-hearted and amusing it was to spend hours turning complicated tax memos into boring legal documents, usually before some absolutely crucial deadline set by an accountant who had waited until the last bloody minute to provide their instructions and then told the client that all would be lost if the lawyer could not ‘turn it around’ in a week, over Christmas no less. “December 31st is a perfectly reasonable deadline,” they would tell the client when they delivered their long-awaited tax memo on December 23rd, just before leaving for the airport. 

So, I decided to find out whether the tech industry has made any inroads into this particular corner of the legal business and scheduled a Zoom meeting with Doug Mordy who is one of the founders of Appara. I described the process that I used in my past life to complete corporate reorganizations and asked him to tell me how modern legal technology might improve things.  

As an example, we spoke about a reorganization to: (i) add a jointly owned holding company to an operating company for creditor protection purposes; (ii) insert two more holding companies for the principals; (iii) dividend up retained earnings from the operating company to the new jointly owned holding company; and (iv) throw in some family trusts to multiply capital gains exemptions for good measure.  

During my meeting with Doug, he presented a few impressive product features. Here are the points that really made an impression on me: 

1. Since it was developed by tax lawyers, Appara strives to have the software explain the tax consequences of each step of the corporate reorganization. Doug told me that even a corporate lawyer like me with zero tax expertise can compare Appara’s report to the tax memo provided by the Accountant and identify discrepancies.
2. Doug explained that the time to complete a moderately sized corporate reorganization is drastically reduced. Think about your law clerk spending 80% less time than they would otherwise spend to produce documents with zero typos (or the same typo appearing a thousand times which can be fixed across a hundred documents in a single step.)
3. Doug regaled me with stories about how the documents are all inter-related. Let’s say that you put in the quorum requirement and the names of the directors and officers into the shareholders agreement and provide for the share certificates to have a legend on them. When you are done, the software knows that it has to produce the amending by-law to change the quorum requirement as well as the required resignations, elections, and appointments, and puts the legend on the share certificates. How cool is that?
4. And how do you draft that shareholders agreement? By answering a bunch of questions, such as, “Would you like to include a shot-gun provision? How many days to accept the offer? How many days to close?  Should there be a purchase on death?  The software produces the agreement. On your form, no less (after you pay for the coding).
5. Incorporating a company?  Tell the program what Bank you are using and who is to sign documents and an email goes out to the Bank with the information that they require to open the account. 
6. Ready to have everything signed? Everything goes out automatically using DocuSign or Adobe Sign. When the documents are signed and returned electronically, they are automatically filed correctly in the virtual minute book (for each entity involved). 
7. Time required to incorporate, organize, and report an incorporation? Doug says it is minutes, not hours. 
8. The software warns you when you are making certain types of mistakes and reminds you, for example, that a director cannot vote on a certain matter without complying with the conflict-of-interest provisions of the governing statute.  

There is more of course, but you get the idea. The world is changing. It may be time to get on board.  

My most embarrassing moment?  I asked Doug if the software would warn me that I was trying to do a long-form amalgamation when it could be done as a short-form. He replied that it really would not matter much most of the time, since the software was going to do either in just a few minutes. I learned that I still think like an old guy.   

Of course, as it always does when lawyers talk about legal tech, the conversation turned to fees. I ask you to simply imagine this. Most of the legal world is doing things the hard way and will continue to do that for some period of time. The clients expect the fees to be in a certain range. You may now be able to do the work in a fraction of the time. Are you going to be stupid enough to keep charging on an hourly basis, or quote a fixed fee that is downright reasonable compared to your competition and would result in an equivalent hourly rate that is way beyond anything that you are now earning? 

Now, I like Doug and I was impressed with what he told me about what his software can do. But in the real world, we worry about whether the software will perform as the vendor has promised, and whether it will work as represented with our system. We also worry about things such as data conversion, implementation, training, and support.  

And of course software such as this has to communicate with the government portals, and for Appara which operates across Canada, this can present challenges such as those which have of late been caused by changes in the system operated by the Province of Ontario.  

And anyone who has been through it knows that every software implementation requires a commitment of time from you and your staff. Nothing is ever going to be as easy as simply calling a legal tech company and having them solve all of your problems without any effort on your part. But sticking your head in the sand is not much of an option either.  

The bottom line – there are opportunities out there which would make the Devil blush and which can be had without selling your soul. Investigate them!