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Today on the show we have Sarah Schaaf, lawyer and CEO of Headnote.
We’ll discuss Headnote, advice to lawyer parents, working in the legal field vs the tech field, and more.
Sarah has worked at a variety of firms and see the whole gamut of billing methods by law firms. What’s happening right now for most law firms is they send an invoice out and wait to see if they get a check a few weeks to months later. There’s a series of meetings and awkward collection calls, but in reality there is a lot of vagueness around the status of each funnel from collection to payment.
Headnote tracks all of these steps so your firm is wasting less time making collection calls and comparing notes and more time focusing on practicing the law.
Get $30 of free transaction fees from Headnote at: https://headnote.com/maxlawyer/
Reach out to Sarah at: https://www.linkedin.com/in/sarahkschaaf/
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Transcripts: Automating Your Billing Process with Sarah Schaaf
Unknown Speaker
I remember very clearly that before I would go ask my parents for anything, when I was growing up, I would sit in my room and I would map out the argument. And I would know exactly what points I was going to hit. If I really wanted a dog, I wouldn’t I didn’t get one. I was 12. So it wasn’t like that. But I would go and argue my case. And then they would somehow figure out how to overrule me, but in a way that was so polite, that I wouldn’t know. Like, I felt like I got something out of it. And so by the time I got back to my bedroom and realized I still wasn’t getting a dog.
Unknown Speaker
Well, I’m your law firm the right way. This is the maximum liar, podcast, podcast, your hosts, Jim hacking, and Tyson Meatrix. Let’s partner up and maximize your firm.
Jim Hacking
Welcome to the show. This is a special pop up edition of the maximum lawyer Podcast. I’m Jim hacking and Tyson is not here. And I’m excited to welcome to the show. Sarah shot, there was headnotes Welcome to the show.
Unknown Speaker
Hey, thanks for having me. This is so fun.
Jim Hacking
So I’m at my daughter’s soccer practice. And I’m stuck here for an hour and a half. So we have a little bit of time. I’m sure you don’t want to talk that long. But a great conversation, thanks to our friend Maddie Martin from Smith AI and I thought, Well, why are we just having this conversation? Why don’t we record it. And before we get too far into it, we decided to hang up and start back over again. I love the spontaneity. Yeah, that’s how I roll him and nine Quick Start on the Colby index. So alright. So there, we were talking about headnote. Why don’t you tell our listeners a little bit about what headnote is. And then I’ll tell you that story again about how our bill collecting was so jacked up before we switch over to Walker. So headnote
Sarah Schaaf
is the first and only company that is made specifically for law firms to get paid compliantly, but also to automate their accounts receivable and their collection process. So instead of sending out an invoice and waiting for 60 to 90 days, and wondering if a checks gonna come in the mail, we essentially give you visibility and insight into the funnel that takes place in between invoice and payment. And your firm doesn’t have to change any of their invoicing or billing habits. He picks up at invoicing and takes you to the next level.
Jim Hacking
Oh, tell me what it looks like when you get started with newer attorneys. Have you seen? I’m sure you’ve seen the gamut as far as lawyer books in the way they do their billing, what what? What is your general sense as to what’s going on in the industry? So
Unknown Speaker
yeah, that’s I mean, you’ve kind of nailed it like it is a wide and long spectrum. So part of you know what I know, you know, we talked about this a few moments ago when we were on the phone is that I am a lawyer and worked at a variety of firms. I worked at Google, which is where I left to start headnote. But I also grew up working at the law firms my family owned and so I’ve seen it all, like legacy, on premise, cloud based spreadsheets, word documents, hodgepodge, like, nothing, you name it. That’s what law firm views. And so one of the things I knew from all the time I’ve worked as a lawyer, and as an administrator, is that getting a law firm to switch some of their internal billing habits is like maybe the hardest thing to do on the planet. So we had no, we’re not actually concerned with helping you change those habits. I think most law firms will admit they have bad habits there. But the the opportunity cost of switching is too scary. We don’t want people to change anything they’re doing, they can just keep their same process and, and and start improving how they get paid, how they track it and the ROI that they’re getting from essentially payment efficiency.
Jim Hacking
All right, well, you just said a mouthful, and there’s a lot of things that I want to come back to hopefully I’ll remember them. But what what is it? What does it look like when people transition into using headnote? What sort of successes have you seen? What sort of transformation? Yeah, brought about?
Unknown Speaker
Well, so essentially, what’s happening right now for most law firms, large or small is that the invoice goes out. And then we kind of wait around and wonder, you know, if it’s gonna get paid, and we will come together at what we used to call when I was working at the lawyer AR meeting, and lawyers will sit there there’ll be at least one non billable staff. It’s not a few. And we kind of sit and compare notes on the spreadsheet and say like, Okay, Jim, what’s the status of these four clients? Looks like they’re late. Have you called them? Okay, great. Sarah, what about your clients, and then the lawyers would disperse and go and make those like awkward collection phone calls. And then we kind of do the same thing the next month at the next year meeting. And so what we essentially done is taking that process and replace it with the ability for your non billable staff or the lawyers that they’re using tool to see exactly where the client is in that funnel in between invoice and payment. So it’ll tell you if your client has received open responded to an invoice, you set up an automated collection funnel on the firm’s behalf that the firm men can say like, okay, they’ve received one, or they’ve received one email to email three males, it’s going to track that funnel from members to payment. And then nobody on your team has to be in charge of meeting that spreadsheet or keeping it updated. And the lawyers don’t have to make collection phone calls. And then you can get more profits out of your billable staff and more efficiency out of your non billable.
Jim Hacking
That’s awesome. That’s awesome. And I think you raised a good point. I mean, nobody likes being the lawyer who has to call their client to get money. One of the great things we’ve done is sort of separate that out, we have somebody in house who does that. Now if you can automate it, obviously, that’s better than having a live person having to monitor it. But being a lawyer and being the one to try to take down the client for overdue payment is not fun.
Unknown Speaker
So awkward. And it’s something that we kind of refer to internally at headnote as the handshake business of law. And and I think one of the big trends I’ve been, you know, as somebody who spent pretty much my entire life working in and around law firms is that is that probably sound as a kid in Arizona, there’s like the big I’ve seen more improvement in legal technology and more firms that want to make improvements in their tech that they’re using at their firm in the past two years. And I’ve seen in the past 20. Like, it’s kind of amazing, this transformation that we’re seeing right now. And so, you know, this is essentially one of the reasons that we do what we do, we want to help make the handshake business law a little bit more like the business of law, because it shouldn’t be your one of the only ones I’ve heard of that actually will have a dedicated person to say like, Oh, Mr. Client and his client, you’re overdue, we’ve got prompt payment, or here’s how you can make payment. So many firms are afraid to do that. Like, they feel like it’s gonna be offensive to the client, if anyone but the lawyer calls them and I find it the opposite, I find that it actually like putting that distance in that that impersonal. Like it’s too personal when you know your lawyer so well, right? Like, it’s awkward when it’s someone in a billing department, it feels a little bit more, you know, formal and a good way like they will actually pay you for the services you provided.
Jim Hacking
Yeah, and it’s less personal. And like you said, less awkward for us. You know, before we got on the call, I was telling you about how we did things at our firm, and we were using QuickBooks, and we had a bookkeeper upon whom we were very reliant. And she was basically the only one who really knew the numbers on a per case basis. And so if a client named Sally called the office, they would talk to the front desk and the front desk. They’d say, Hey, I know I have a balance. I don’t know how much it is, Can I come in and pay. And there’d be this whole complicated, convoluted conversation from the client to the front desk person to me to the bookkeeper, and then back from the bookkeeper, me to the front desk. I mean, it was as inefficient as could be. So just being able to step up to some level of automation has been great, and then bringing in someone, and that’s all that she does. But it’s I mean, the way that we’re doing it now, it’s a pretty complicated and labor intensive process. I think she works about 30 hours a week on collecting the bills and making sure that the manners are correctly with the proper bill. And I’m interested to see what you mean, when you say that you sort of automated that part of the process. How does that work?
Unknown Speaker
Yeah, I mean, essentially, you know, that some of the tech that we’ve, you know, built in house that we now use to create a payment link on headnotes that you add to whoever you’re currently sending our invoice? Or do you send it through Clio or via email or whoever you’re currently sending it. And when your client receives in clicks, that link is going to start, you know, tracking the lifecycle of that. And then depending on how you set it up ahead of time, the firm has complete control over you know, what they, if they want it to have any, you know, if they want the client to have any automated selections, or not exactly what it says, etc, when it’s received. You can decide if you want to do that or not at a matter client firm wide level, it’s kind of up to the firm. And then you know, the client is automatically going to be put into whatever collection funnel you’ve created. If you’re had no dashboards gonna tell you when you look at it for every single client or any payment or any outstanding invoice, where exactly is this in the lifecycle? Is it been three days is that was that hasn’t even been opened? Has it ever been clicked? Has anyone ever tried to submit a payment and it didn’t go through? Haven’t they been put into the collection funnel? Where are they in that they received 123 emails, you essentially you’re going to have this beautiful organized system of record that’s going to replace this like finding out you know, going back and double checking with your accountant. and dealing with anybody who’s actually in your back office who’s maybe controlling whether a matter has been properly shut down and closed out. The system now will tell you exactly where it is that you don’t have to take any time to do so.
Jim Hacking
Yeah, that’s really important. I told you before that we were having some matters where we finished all the work. And we looked around and we realized that the clients hadn’t paid us the second half of their legal fee. And they were like, What the heck?
Unknown Speaker
All right. And now it’s been like months.
Jim Hacking
Right? And yeah, right. That’s exactly right. We have those meetings. But we’re all like ours. Now. We’re having those meetings much more regularly. And the bookkeepers, the in house lady is really keeping us honest. So let me ask you this. If, if there’s some bizarre twist of fate, you were at a trade show, and your booth was put next to QuickBooks. I think QuickBooks claims that they can do some of that stuff. And I’ve received bills from vendors that I can pay with a click on QuickBooks. How has had no different than than that?
Unknown Speaker
Yeah, no, we play well, with QuickBooks, the we, we are not your accounting software, that is certainly something that you probably need, and your bookkeeper has their own ideas about what that platform should be, you know, if you’re going to use QuickBooks, you’re not going to be able to get the kind of specificity you need for your law firm, right, you’re obviously not going to be able to get compliant payments to trust, which we don’t mess around. Right away, you’re not gonna be able to use it to get paid, I don’t think you can actually use some of their follow up features on an invoice if they don’t actually know if you’re not actually going to be accepting payments, in conjunction. So right away, or like out of the running for a bunch of those features. Even if you could use some of those features, none of them are going to be customized to a lawyer or law firm allow you to kind of have that personalization. And while I say like, you know, it’s great to have someone in billing who can follow up on this stuff. That’s true, but there is still that personal relationship you want to maintain. So if you can make sure that it’s going to be a plate email, with the kind of vernacular that you want, that’s your voice and tone, and represents your firm. I mean, how it’s different to have something come from, you know, QuickBooks that this is overdue, then it comes from, you know, law offices, they’re shocked with a note from me or from somebody in my department. And it’s just not made for lawyers, I always tell lawyers, especially in law firm, you’re just gonna want to be really careful with how you either do something related to your rules like getting paid online, or how you communicate with your client on a platform that doesn’t know our industry the way that we do.
Jim Hacking
You talk a little bit about integrations, whether your API is open and working with Zapier, things like that.
Unknown Speaker
Absolutely. So we have a public API. And we do have that year also is an ongoing integration that’s nearly complete, we have multiple integrations with different partners. And for those that we don’t have or haven’t gotten to, yet, we are highly compatible. So if we have you use something that we’re not currently integrated with, you create your pet your headnote payment link, you copy and paste that into whatever system you’re using, that is going to you know, be trackable, and when it gets paid, and you actually get that payment into your bank account, that’s going to be automatically reconciled with your accounting software. So you can actually many, many firms are using headnote, even though there’s no formal integration with our system. And we’re working through that long list of integration partners. Now.
Jim Hacking
Most of our folks use either Clio or PracticePanther, you set up with either of those.
Unknown Speaker
No, but both of those, we have ongoing conversation for it. So that’s something that we’re that we’re working with. And, you know, we want to get more involved with with both of those. I know that, you know, I don’t know if this is something that many people will talk about, but lawpay has an exclusive with both of those companies. So they kind of create a nice moat for themselves that, you know, what effect that has on price? I don’t know, but I tend to think that, you know, options, and choice are always preferable over no choice.
Jim Hacking
Yeah, of course. And so actually, that brings up a good point, how does how does cost work? How’s your pricing model?
Unknown Speaker
Yeah, so we are, you know, we pride ourselves on being very transparent in our pricing. So we are 2.9% for all credit cards, it doesn’t matter if it’s, you know, Amex card present or not, you know exactly what you’re gonna pay. I know that, you know, there’s, you know, low pay, and some others will list their prices as like 1.95 with an asterix, and that asterik actually means we’re going to charge different fees based on different cards and different types of cards. So that 1.95%, for instance, is only true for a non reward, debit card, I believe that they use any kind of reward card, Visa, MasterCard, American Express, if a card is present versus not present, those are going to push the fees much higher. And then there’s all different kinds of potential, exchange and energy. entities that you might be charged. So I always tell people, they should take their statement, which, if you’re on headnote, you can actually get a report anytime you want from your dashboard that shows exactly what fees are taken out of what payment. But if you have a different processor, wait for your monthly statement, find it, it’ll be in tiny, tiny, like six point font, take that, over read it when I can’t read it, can’t read it. But um, if you can pull it anytime you want, and always read it, go to headnote.com/calculator, you can put in what you were charged on your last statement. And we’ll tell you, if we can save you anything. If we can’t, then you’ll know. And if we can run your mouth, or 2.9 on all credit cards, no matter what 1.9 For each check, we actually are the first company in legal that built the check. We built ours in house, it is instant echeck. So I don’t know if you remember, if you ever signed up for a PayPal account, you have to like link your bank and then wait for what they call them micro deposits for like three or four days. And then you go back to PayPal and enter like 13 cents and 15 cents, or they put to like really small deposits. And that’s how they’re verifying that you own that bank account. We knew that no client on Earth would want to pay like that, where traditional ECheck experience is painful for your client. Ours isn’t like that ours takes less than 10 seconds. Clients don’t have to verify any amounts in their bank account. They don’t even have to open a headnote account. By far the easiest and best client payment and user experience on the market.
Jim Hacking
This is gonna sound like a dumb question. But I don’t know what ECheck mean, I’ve seen ads. But I don’t know what it means.
Unknown Speaker
I’ll tell you all about it. You’ve seen ads for it, I’m sure because it’s something that we, you know, came out with over a year ago. And I know that it’s kind of rebranded as echeck. It’s actually built off of ACA trails, which is an automated clearing house, which is essentially a bank to bank transfer from one US bank account to another. It essentially is pushed by one bank to another and it goes through the automated clearing house, we actually created it as ECheck, because we knew that most of our customers and their clients are familiar with check this essentially a direct bank to bank transfer that can replace a wire transfer, or a bank to bank or traditional Ach, if it’s a headnote ECheck than it is, you know, under 10 seconds for the client make of human are really easy. If it’s a traditional ECheck it’s a little more painful for the client, and maybe not as user friendly. I forgot to also mentioned that we never have any monthly fees, we don’t have any fast fees or recurring fees, you only pay transaction
Jim Hacking
fees. If you get paid, or echeck, something that like companies use and paying for purchase orders and not so much individual. It’s not like people writing me a check. And I would run it through you
Unknown Speaker
know, you bet a lot of individuals or we see individual clients use it often as a replacement for writing a traditional check. So if your client does want to pay directly from their bank, and they don’t want to pay with credit cards, this is the easiest way for them to do so if they if they’re not using a debit card or for whatever reason. So that’s something that’s going to be less than a debit card would cost you and your client can click and pay instead of writing a check. Or if you have SMB clients, which many law firms do, who are doing a traditional wire transfer right now to pay you or writing a check, you know that wire transfer is costing them money, this is an easier and less expensive way for them to do it. So it can replace wire transfers are larger organizations.
Jim Hacking
headnote have any applicability to firms that work on contingency fee.
Unknown Speaker
You know, we have some that you’ve had note that are contingency firms solely so that they can do tracking of kind of where they are with different communication with their clients. And that kind of post case lifecycle. Because again, it is an operating it can it can be your system of record for everything going on in your firm kind of post case and post invoicing. We don’t obviously see them using it very often for for payments and let you know they’re getting paid for something outside of the contingency work.
Jim Hacking
So you said to me earlier before we got on the call that your ideal firm size are like 10 to 200 attorneys, but you do have firms that are smaller, but I guess this would be firms that are regular using getting paid by the client, whatever client it is, as opposed to like by an insurance company on contingency fee stuff.
Unknown Speaker
Right? Right. So we have a like really, really easy to use self serve platform to for anybody who’s like, you know, signed up for something online recently. And you can just like enter your info and then you’re in the platform and can start using it. That’s how it is to sign up for headnote. So there’s a lot a lot a lot of solo attorneys and small firms who sign up on their own and start using it same day. You don’t have to like sit on the phone for a long underwriting process. We do all of that. We just do it with a lot of technology in the background so that you don’t actually have to be put out or wake up arm, it’s incredibly easy to get up and running. There’s not like incredibly long forms to fill out like to get in there and up and running. It’s very simple. We’ve a lot of smaller firms that love that. And then we have, you know, larger firms that that would like to sign up. And we will do some kind of individual integrations with our system or do whatever we can to make sure that we’re set up to be helpful as we can to large or small customers.
Jim Hacking
All right, is there anything else that our listeners need to know about headnote headnote is
Unknown Speaker
something that everybody should check out and see if it’s the right fit for that. And I think that, you know, using something, you know, to, you know, Process payments is important that, you know, don’t settle for just that, but really look at, you know, the same way many of us are now using Clio grow, or LA Maddix, or something on the kind of front end of our process. To understand that marketing funnel, we should be using that same kind of thought process and technology to apply to our invoicing and payment funnels. That’s the most important part. It doesn’t matter how many clients you get, how quickly you track your billable hours, if you don’t get paid for them. And you don’t understand kind of really what’s happening in that process. And all that other work is for nothing. So it’s really about taking that black box and your post invoicing lifecycle and making vast improvements you can really easy to implement technology.
Jim Hacking
I don’t mean to put you on the spot. But is there any like website or code that we can give to the listeners so that you know where they came from? Or that you need them to, to log in
Unknown Speaker
somehow? Yeah, that’s great. I love this thought. So go to headnote.com/max lawyer. And we will give you an extra $30 in transaction fee. So that’s $50 total that you’ll get in transaction fee credit that’s up to I think a $2,600 payment you can run for free. And give it a try. And we’re always happy to have friends of of you guys and and happy to work with some of your some of your fans.
Jim Hacking
All right now, that’s all the boring stuff. Now I want to talk about the interesting stuff. Both of your parents were lawyers, right? That’s right. Yeah. So I have four kids, and both of their parents are lawyers. So what advice do you have for me being a lawyer parents and having four kids?
Unknown Speaker
Do you want them to be lawyers or not to be lawyers? I’m neutral. Yeah, okay. Well, um, gosh, that’s such a good question. So I remember really clearly, well, there’s going to be some really good things and some harder things, right. So like, I remember very clearly, that before I would go ask my parents for anything. When I was growing up, I would sit in my room and I would map out the argument and I would know exactly what points I was going to hit. Like, I really wanted a dog. I wouldn’t I didn’t get one till I was 12. So it wasn’t like that good. But I would go and argue my case. And then they would somehow figure out how to overrule me, but in a way that was so polite, that I wouldn’t know. Like, I felt like I got something out of it. And so by the time I got back to my bedroom and realized I still wasn’t getting a dog, I’d be like, Oh my god, they did it again. So you’re going to be raising like incredible negotiators. That’s a really good we are for sure. I know that already. Yep. And then good luck. Eventually, they’re gonna figure out how to out are you out? Are you you?
Jim Hacking
So just keep that in mind. And the gang up on? become lawyers?
Unknown Speaker
Yes, I do. I have a sibling. And he like, bought the lawyer tradition. He means he’s an MBA. He’s, he’s works in business. And it’s like, feels like the black sheep. Didn’t go into practicing law.
Jim Hacking
Tell me about law school and then about about working for Google and being in the tech world.
Unknown Speaker
Yeah, so I went to law school, Loyola, Chicago, which is the same place both my folks went to just kind of fun family tradition. And I love gospel. I thought it was the best thing ever. I was president of my students bar. I was an author and editor for The Law Review. I thought I wanted to work. I thought I wanted to be something called an art lawyer, which I thought kind of glamorous. And I made a club at school called Art law. And like, I really thought I wanted to do that. And it turned out like not as glamorous as one of the things I thought I would like, maybe work with, you know, it was kind of like an Indiana Jones feeling in my in my head, I think at the time, and that turned out not like that. And then I got out of law school. I always knew I wanted to litigate. I was positive. I wanted to litigate My dad’s a litigator. I loved like, you know, the drama of it. It’s kind of like a acting a little bit. And so I did that and gotten back to San Francisco after law school or had lived before and got a job as a litigator, right in 2008 when things were, you know, really bad in the industry, really done In early, early 2009, I got the job I got passed the bar in November. And luckily, they had, you know, there were so little staff, I kind of split my time between doing like the non billable stuff they were putting on the when else are the first years because like, there wasn’t a lot they’ve hired me to like, let go of a bunch of staff. And then I also did like work that was probably for somebody more senior in other regards, like I was like, literally doing depositions within my first couple of months. And like, you know, getting I think I’ve led my first deposition within a few months of starting. So I don’t know if there’s another time in place that that would have happened all at once. Kind of short staffed nature of the industry at that point. And I practiced as a litigator for about five years before I went in house at Google. And just kept thinking that, like, if I found the right combination of firm and practice area, or a corporation that I would really love working as a lawyer, and I just never was as happy as my parents. They’re like, the happiest lawyers I know. So I left Google to try to build something really great for lawyers to use that would help make their lives better and makes our jobs more enjoyable.
Jim Hacking
Have you read the email? Have I read white? This book called The E Myth Revisited by Michael Gerber?
Unknown Speaker
No, I haven’t. I’m looking it up right now.
Jim Hacking
Oh, it’s great. So in there, he talks about the entrepreneurial seizure, how sometimes you’re just sitting around at your job, and all of a sudden, you like have to go out and start your own thing. I’m wondering if you had an entrepreneurial seizure to start head? No,
Unknown Speaker
I absolutely. That it was like one of those moments of like, What in the world like, like, you wake up one day, and it’s like, oh, my gosh, like, life is too short. What am I doing? And I mean, that was really how headnote was born. I mean, I left the start. It was it was, it was definitely an entrepreneurial theatre, and I left to, to kind of follow that path and never looked back and had a really good inspiration. And my husband, who’s now my co founder of headnotes, who had always been an entrepreneur and kind of a different path than I had, and also grew up in a family of lawyers and actually ran the book that is dad law firm. And I remember he used to do it, we knew each other in college, and he would do it in college, and he could not understand why they were writing off, like, hundreds of 1000s of dollars. So he had this shared pain of working at the Family Law Firm and seeing this like outdated tech and outdated business practice. And so he was a big inspiration. And I kind of followed him into the entrepreneurial abyss and we decided to give up.
Jim Hacking
Wow, that’s like, that seems like you guys were destined for that both being the children of lawyers. Seeing the pain of loss. I mean, that’s a great story. I don’t know if that you and your husband on video telling that story on your website, isn’t it? Because we said it shouldn’t be a marvel. It’s like a Marvel origin story. What the heck, yeah. It’s like superheroes.
Unknown Speaker
And now we have two little kids. And we’ll see if they end up being obsessed with lawyers or payments. Or maybe they’ll just start companies unrelated either those things.
Jim Hacking
That’s awesome stare. Well, I think that we got to know a little bit about you and certainly want to know about that note, I’m gonna have to check it out. For sure. I’m on a Rick ban. I’m prohibited from changing our software until January 1 2020, because I’m a serial Hopper, and everyone in my office.
