Westaway provides legal services to startups for fixed fees

Kyle Westaway of Westaway - Podcast Transcript

Scott:	Welcome to Founders and Friends podcast with Scott Orn at Kruze Consulting. And today my very special guest is Kyle Westaway of Westaway, the law firm for startups. Welcome, Kyle.
Kyle:	Hey, Scott. It’s good to be here, man.
Scott:	You too. Good to see you. Well, maybe we start off just by retracing your career and tell us how you had the idea for Westaway Law.
Kyle:	Sure. So, there’s kind of, you got the long, short, middle version. I’ll give you the middle version. We can dig deeper in if we want to. Before I was a lawyer, I was a founder myself and loved the process, the startup journey. And I found that through that process, there’s a… that journey is really hard and there are a lot of things that can add a little bit more friction. One of them is that it’s actually hard to work with lawyers. Generally speaking, there’s a number of different pain points that early stage startups feel, and we felt those. And so, whenever a number of years later when I was launching the law firm, I said, “Wouldn’t it be cool if we could create a firm that was designed specifically for early-stage founders?” And that kind of alleviated some of those pain points, which are kind of like opacity and pricing. It’s slow corporate inhuman. And oftentimes as a smaller startup, early-stage startup, you kind of get, you’re a little bit on the back burner. You’re not on the top of that list as far as responsiveness goes. So, the goal was 16 years ago when we created the firm was to create a firm that was designed from the bottom up to serve that segment of startups.
Scott:	And along the way, you’ve had some pretty cool, and first of all, you’re really good at, I don’t even know how many clients you have, but I get the sense it’s like in the hundreds or even more than that probably. But when we first met, you had this, a couple different things that you approached the startup market with, one of which was fixed fee pricing, which then also translated to… We’ll get to, well, the connection to continuous innovation, continually making things better, continually making things more efficient. And I feltlike when we first met, we were like blood brothers or something like that because a lot of the things you had done, we had done simultaneously and we’re both kind in professional services. So maybe talk about, was it chicken before the egg? Was it fixed fee pricing that came first or was your innovation that allowed you to do fixed fee pricing?
Kyle:	Yeah. I mean, I’d love to hear your take on this too. My experience is that we… okay, I guess for the first maybe year, we’ve been around for 16 years. I guess in January it’ll be 17 years. And at the beginning we’re just trying to figure out anything that would work. And what I kind of realized really quickly was clarity on pricing is really, really helpful. That one of the biggest things that’ll put like a knot in your stomach as a startup founder is the legal bill hitting your desk. And you open it up, you don’t know is it going to be $2,000, is it going to be $20,000 or $200,000. Yeah. That variability kind of makes you queasy and makes you not want to engage, just disengage. So, because we really believe in the founder, we want to honor their journey, and then part of that is being honest and upfront about what it’s going cost to get a thing done, and then honoring them enough to say, “You can make your own decisions whether it’s worth that money for you or it’s not.” So, we landed on that really early is the answer. And maybe year two, so 15 years ago. And then that was the one, I don’t know if you’ve, have you read Essentialism?
Scott:	No, I haven’t heard that one.
Kyle:	Oh man, you got to read it. It’s one of my favorite-
Scott:	Essentialism.
Kyle:	… favorite books. It’s about doing less better. And one of the core thesis there is, there are often one decision that makes a thousand other decisions. If you make one decision in a certain way, it will take you to a whole other branch of decisions that you otherwise wouldn’t be making. Most law firms do what most law firms have always done, which is just have a billable hour system, put more butts in seats and bill more hours. And that’s the way you kind of grow your firm, right? And that’s the way you deliver client services.
Scott:	Also charge really high prices with the knowledge that you’ll probably write off a bunch of stuff.
Kyle:	Totally.
Scott:	Or get negotiated down or whatever, right?
Kyle:	Yep.
Scott:	And so it’s this self-fulfilling prophecy. You have to charge more to the clients that pay because you’re writing off so much or negotiating a lot of bills. And so, it’s like this lose-lose for everybody.
Kyle:	I think so, and we could definitely go down that rabbit hole. Just to complete the thought though, this one decision of flat fees then made us act like most other startups, which is just like, how do I build a product that people love, in our case, founders love, and how can we innovate to make that more efficient, more frictionless, more seamless, more human, more enjoyable? And for us, more on our end operationally, more efficient. And what that led to is a really 15 years ago thinking about how do we automate a lot of this work that’s very repeatable. A lot of the work we do is repeatable. And there is certainly the beautiful thing about working with a good lawyer, us or somebody else, is that you do want somebody that has a lot of judgment and has seen a lot of edge cases and understands what to do in the, we’ll say the shots that go off the fairway, but most of the shots should be on the fairway if you’re doing things right. And most of that stuff should be very, very repeatable. So, we early days started getting into automation and that gave us a lot of kind of bang for our buck and it gave, the more important thing is it did a couple things for founders. It Increased the speed, it increased reliability, consistency. So that was kind of early days. And then since then we’ve added a few more kind of innovations beyond that.
Scott:	Well, and there’s another thing, there’s another constituency which you referenced, which was the human aspect. And I think what you’re probably talking about is your team at Westaway.
Kyle:	Yes.
Scott:	And what I found or Vanessa and I found at Kruze was the more we automated a lot of that crummy work, the happier our team was and the better people we would recruit. And then that translated to more customer satisfaction with our clients. And it was this really positive cycle. And so, a lot of times, we’re the same way. We think about like, “Oh, we can automate something and save a lot of time and money and yada, yada, yada.” But you forget about that, the people part of it and how happy it makes the team and how that translates to great things all around. So, it’s really cool.
Kyle:	Yeah. And I think it allows you also, or I’d love to hear your experience, but for me it’s allowed us to engage in a more human way. Right? So, if the automation is handling all this stuff, there’s a little bit more bandwidth for me to… The real value that I add, and I would imagine that you add, is actually listening, understanding and making sure that we’re on the right path or we need to kind of veer off this path and go into another path. And that judgment level is really the beautiful thing. Once you start to offload some of the more mundane work, then you get to use the higher-level judgment. And I find that really fulfilling. I don’t know about you.
Scott:	I’m the same way and I’m in this business because I love solving problems for founders and I love developing our people. And I’ve been very fortunate that there’s been a lot of people who developed me. And so, I feel like I’m returning the favor. And I still have things to learn. I’m constantly learning and learning new things at Kruze, especially on the tax side. But yeah, it’s magical. Right? You made a great point about creating space in your brain or you can think. You’re not just grinding through reconciliations or supporting schedules or things like that in the accounting world, you’re actually looking and seeing what the numbers really look like, how to talk to the clients about it, how to answer their flaming hot issues. So, it’s really nice. It’s very, very, very rewarding. So, was there a moment where you were like, it sounds like did you do flat fee first or you were just innovative people?
Kyle:	Yes.
Scott:	And then you went to fund? Okay. Yeah. Yeah. Yeah.
Kyle:	Flat fee first and then the question becomes how can we deliver this more efficiently and at a higher consistent quality? So, automation was the next answer. And then I would say eight years ago now, almost nine years ago, we started to ask the question. What we noticed is that we’re doing a lot of the same work for most of our startups most of the time. And the kind of SaaS was taking off at that point in time. And the question a lot of our clients were SaaS companies. The question I had is there not a way to kind of create a SaaS-like version of legal, a flat monthly fee version of legal? And so, we kind of threw it out there, I guess almost nine years ago now and have been tweaking it since then. And what we found is that for the right type of startup, it’s such a huge kind of burden off their shoulders and it is a huge win for them in terms of probably three things I would say. One is cost certainty. The thing that I realize is that once you get, and you’re looking at startups numbers every day, so you understand this, once you get to a certain stage, you’re going to survive. And now you’re growing, now you’re growing. But one of the things you’re trying to do is grow as efficiently as you can. Right? And one of the detriments or one of the hard things for somebody that’s sitting in a COO or CFO’s position is, I don’t know what my legal, I can’t plan on legal because it could be… it’s like a factor of 10 what it could be this year. Right?
Scott:	Yeah.
Kyle:	And we-
Scott:	And we build the financial models, we’re the ones telling them how to project it and how difficult it is and it’s spiky-
Kyle:	It’s so spiky.
Scott:	… and all over the place and…
Kyle:	Totally.
Scott:	Yeah. Oh my God.
Kyle:	In some years it could be pretty low, in some years it could be pretty high. And for random reasons, for really random reasons. And so, the goal for us on general, we call that product general counsel, the goal for us is to give cost certainty across the board so that there’s… What we find is that there are every once in a while things that fall outside of what’s in that scope of service, but that’s going to be more in the 10% of your legal spends and you’ll have kind of cost certainty on around 90%, which is pretty nice. And so that’s one thing, cost certainty, cost savings, it tends to be less expensive than just doing the hourly model. And then third, you build this kind of really symbiotic relationship, which is kind of my favorite part of the practice of law where we get to understand what’s in the founder’s head, where they’re going, and be a real partner in thinking around the corner and how we can set them up for the next raise or the next big jump that they’re going for. So, it’s a pretty cool.
Scott:	It’s amazing.
Kyle:	Sets up a cool dynamic. You guys do similar things. Yeah?
Scott:	We do. And again, we’re doing a lot of that. I totally empathize with the bounciness and there’s times where I’m sure they run into an emergency and really need your help or maybe, I don’t know how you do overage pricing or things like that. We have some mechanisms for that that we innovated on over the years. But yeah, just being there, being… I also think that thing we haven’t talked about is just that clarity of what you’re going to pay and everyone’s aligned build a lot of trust. And you taked about being a SaaS company, and one of the powerful things about being a SaaS company or SaaS economics is that you retain your customers over a really long period of time. And we’re very fortunate, I’m sure you are too, where we’re four years, five years, that kind of stuff. And so, in our business, and I think it’s similar for you, we’re in the business of helping two person companies grow into 200 person companies.
Kyle:	Yeah, sure.
Scott:	And so that’s where the economics really pay off for us. And when you’ve got that trust, when you’ve got a great solution, when you’re there for them in emergencies, that’s how you stay with them for a really long time. So, and I think law is probably maybe even more sticky. I don’t know. Is it more sticky? Are you five, six years on your clients?
Kyle:	Yeah, yeah, totally. For some of our oldest general counsel clients, I think we were just, I was looking at this recently and I think six years is our longest running.
Scott:	Oh my God, amazing.
Kyle:	And yeah, the goal is we’d love to be with them for the life of their company, and ideally delivering enough value to them for that check every month or that credit card swipe every month to be a no-brainer, total no-brainer.
Scott:	Yeah.
Kyle:	Yeah.
Scott:	Yeah, I love it. The other thing we’ve kind of found is as these companies get really big, we can still stay with them as long as we’re defining the work we’re going to be doing and partitioning.
Kyle:	Totally.
Scott:	And a lot of times, I think it’s probably for you too, we’re actually cheaper, significantly cheaper usually than a couple fully loaded people at their company. And so, it just kind of works out. Real quick, I want to switch gears because when we also talked, you were building some awesome AI tools for law.
Kyle:	Oh yeah.
Scott:	And you gave me a exciting, I’ll let you share it with everybody before we turn on the mics you were like, “Hey, guess what?” So, what’s going on at AI at Westaway?
Kyle:	Yeah. We are an increasingly AI enabled firm, and what that looks like is it’s really powerful for our general counsel clients. So those folks that are with us on an ongoing basis, everybody has their own dashboard. So, the way that you, a general counsel client says that we need something done is they submit a project through this dashboard. We just did an overhaul literally today, we will announce this to our clients in the next hour or two that we’ve done this kind of huge overhaul on our dashboard, which includes a lot of AI enabled features. It’s kind of fun and geeky to talk about what AI can do, but the more important thing is why does it matter for the founder? And for us, why it matters for the founder is what it does is it allows them to submit a project in a way that gives us all the context, really rich context we need to get to work. So instead of just filling out a form or typing an email, you’re chatting with Ace, is the name of our AI, you’re chatting with Ace and he’s following up with questions that are relevant based on the information that you’ve given to get the exact right information. Ace then passes that along to us. And the goal is that we get you a first draft a lot quicker because of that, and there’s way less back and forth. So we’ll say an average pre-Ace, project would be you send us something in and we get a first draft in a few days to you, and then there’s three back and forth. And so now we’re at a week before we’re okay, we feel like this is good. And that’s fine and that’s a good time, that’s fine timing. In general, that’s not horrible. But we’ll be able to cut those cycles down probably in half at least, if not quicker. So that’s one piece of it.
Scott:	Wow.
Kyle:	And then there’s a lot of other stuff coming down the pipeline that is, it will know your company, everything that you’ve ever documented about your company, Ace will know in a private siloed way so that you can then-
Scott:	Oh, nice.
Kyle:	You can then ask, “When is Johnny’s vesting schedule up?” Or, “What was the price per share in our last round?” Or whatever. It will be the knowledge base for your company, and it’ll be added in a split second to give a highly accurate answer.
Scott:	That’s so cool. Because I can appreciate, because we have, we’ve built a bunch of stuff where we kind of indexed Vanessa and I’s and Healy’s content in a lot of our answers and things like that. So, we have something that will answer the questions like us, how we would answer it. And even kind of, I’m sure you’re like this too, you recognize your little writing tics or vocal tics in-
Kyle:	Totally.
Scott:	… in the answer. And so, you know it’s really indexing you. What I never thought about, and maybe this is my, it wasn’t that smart, how do you customize it for specific clients? Ours were very general, but that’s really, really cool. Your example about the vesting schedule, that’s really valuable. Because that’s the kind of question that I think more founders or the CEO of a startup would ask their lawyers if it wasn’t so expensive to ask.
Kyle:	Totally.
Scott:	Send that email. Right?
Kyle:	Yeah. Yeah.
Scott:	And so right now they probably limp along or they don’t do it, or they… and so.
Kyle:	Or spend 15 minutes or 20 minutes trying to find the answer and then get frustrated. Right?
Scott:	Exactly. Exactly.
Kyle:	If you could come to this one place-
Scott:	That’s really smart.
Kyle:	… one place of truth where everything lives. In addition to that, we’re also tracking your projects and your kind of transparency on where everything is. So, there’s a lot of cool stuff happening there. To your point on the way that you guys are using this, we also have an external free-based tool for anybody that comes on our site, whether you’re a client or not, so and that’s doing what you’re talking about, which is taking all of our content. You can ask itwhat is an83(b) and what’s the window look like or what is QSBS and why does that matter to me as a founder? And you can just have a good chat interaction based on kind of trusted content. So that’s a free tool that’s available for everybody.
Scott:	That’s amazing.
Kyle:	Yeah.
Scott:	The only thing I want to talk to you about is just your newsletters because you’ve been doing this incredible, I think of it as like you’re doing a service for the startup community and you’re kind of educating everyone for free, being nice. And I know, you know and I know has these positive feedback loops into the business. But you have two newsletters. Can you kind of talk about them and how people can sign up for them?
Kyle:	Totally. Weekend Briefing is a fun weekend read that is touching on anything innovation in society. So, this week we’re talking about whether GLP-1s are a miracle drug and how AI chatbots can lead to teen suicide kind of all over the place. So interesting topics just about how all this innovation is actually impacting people basically. So that’s the Weekend Briefing that comes on Saturday mornings at eight AM, and that is at Weekendbriefing.com. So that’s a fun one, just general interest kind of read with your coffee on Saturday morning.
Scott:	Yes.
Kyle:	And maybe-
Scott:	Is it Saturday or Sunday? I forget. Is it Saturday morning?
Kyle:	Which day is it? Saturday morning. Yeah.
Scott:	Yeah. And I really do read it with my coffee.
Kyle:	And then if you’re going out to brunch, maybe you sound a little bit smarter at brunch than you otherwise would have. And then the other one that is more founder and operator-focused is called Founder Fridays. As the name would suggest, it’s on Friday. Comes out at 8 AM on Fridays, and it’s three stories. So, both of three are, I’m scouring the internet for interesting articles that would matter to, in this case a founder, blurb it out in four sentences. Here’s the summary of the idea. So, you can just get a quick skimmable version of the idea and then a link if you want to click through and understand it better. So that one has three stories, then it has some deeper guides around funding and different stuff to it too.
Scott:	Yeah. And on the Founder one, I’d recommend both of you, but the Founder one actually has some cool video links that you can click through. And I think it’s like how to raise a seed round or how to do the series A or things like that, which I highly recommend as well. And I mean, people are watching this, they get a feel for you. Your video guides are very kind of, “Here’s how you do it,” kind of thing.
Kyle:	Try to be as practical as possible. The idea is to demystify and say, “This is what’s normal.” I feel like this may be true for you. I don’t know, but I feel like a good portion of my job is to tell founders they’re not crazy. Or yes, this is actually a little bit off normal and maybe that’s an okay thing. But so, it at least gives you a general guide on how it normally works, how it should work, what’s the standard way of doing things.
Scott:	And I think the other thing about video, which is really nice is you can watch it a couple times.
Kyle:	Totally.
Scott:	So like the Founder, I mean, these are really, if you kind of think about it, if we sat had questions for how to engineer AI stuff, we’d have to watch a software developer explain it to us three times. Right?
Kyle:	Totally.
Scott:	And it’s the same for them when we’re explaining a really hard concept in finance or law. And so, for them to be able to sit there and watch it twice or watch it once and then come back to it in a month when they’re really starting to ramp up, I think is really powerful. So, they’re really good. I highly recommend people check those out.
Kyle:	Yeah, what he’s talking about, what Scott’s talking about is a section in the Founder Fridays called Funding Guides. And we have a written version and a video version. The written version is even deeper if you want to. And it goes essentially term by term on the term sheet. So, both are really fun to dig into.
Scott:	Yep. I’m a total talker person. That’s why I’m… maybe that’s I’m doing a podcast.
Kyle:	I’m like an audiobooks guy, so I prefer video or audio myself, but realize that not all of law can be done in video or audio. Spend a lot of my time with words.
Scott:	Yeah. And this has been awesome. Is there anything, so you’ve got the AI stuff going live. We’re recording this actually in early November, so it’d probably take a week for us to get out, but that’ll be live for people once for clients. Is there anything else that you want to plug that like, “Hey, this might change things a little bit or make your life 10% better,” besides the newsletters?
Kyle:	The book that I mentioned earlier, Essentialism is a, I think every founder should read it because my biggest struggle being a founder myself has always been where do I put my energy? What’s the best use of my energy? And I think that you could be doing a thousand good things, right? And there’s probably three that matter. And it’s like, how do you decide that this book is really helpful in trying to nail that down? And what I find is whenever I hone in and say no to a lot of things, it allows me to step into my power and be the best I can be on the few things that I decided to kind of really commit to. So that’s my biggest plug. And I’m a huge fan of the author name is Greg McKeown, a huge fan of his work. So I would say-
Scott:	Awesome.
Kyle:	… that’s my little plug.
Scott:	I’ll check it out. And I think that is a secret to being a great founder and building great businesses, lean into your superpowers. There’re some things that I do better than many, many people. And Vanessa, same way, and you the same way. And just lean into those. Those can be really, really powerful. Well, Kyle, thank you so much. Thanks for coming by. It’s awesome to just talk to you and thank you for everything you’ve done for the community over the last 16 years. It’s insane. I’ve been reading the newsletter for a very long time. It’s really, really neat, so.
Kyle:	Very cool. Well, Scott, I really appreciate it.
Scott:	Thank you.
Kyle:	I love what you’re doing too, and we’ll talk soon.
Scott:	Awesome. Thanks, buddy.

Westaway provides legal services to startups for fixed fees

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