Interview With Steven Highfill, Founder and CEO of LawFi
In this edition of Founder Spotlight, we feature Steven Highfill, the founder of LawFi. LawFi is a platform that provides digital lending and payment services designed specifically for the legal profession. It can be accessed through mobile devices and emphasizes a mobile-first approach. We will explore LawFi’s inspiring story guided by Steven Highfill.
Hi, Steven Highfill, It’s Nice to have you on our list of noticeable founders. Can you provide an overview of LawFi’s mission and the unique value it brings to the legal and financial industries?
Hello, thank you for inviting me to an interview today.
Our mission is to bring more financial inclusion to the legal system to help fill the Access to Justice gap.
Unfortunately, the legal system doesn’t work for everyone in America. There is a pervasive Access to Justice Gap. More than 166 million Americans living paycheck-to-paycheck, 60 million low-income consumers, and 30 million small businesses have too much income to qualify for free legal aid but can’t afford to retain a lawyer. This creates a massive gap between those who can afford to retain the legal services they need and those who can’t.
LawFi aims to ensure everyone can access the legal system through affordable and accessible legal services, regardless of their situation or net worth. To solve this mass-market problem and help close the Access to Justice Gap, LawFi has invented the legal industry’s first “Legal Fee Loan” and decision engine capable of generating Legal Fee Loan products. Now, lawyers and law firms will be able to offer financing options to their clients at the point of need. LawFi will be financing any type of legal fee for most types of legal matters, anywhere, anytime. We will finance consultation fees, retainer fees, flat/fixed fees, hourly fees, current fees (legal invoices) and past due fees (aged legal invoices).LawFi financing options will help legal clients retain the legal services they need today while paying the cost over time. We like to say: “Retain Now, Pay Smarter™”. This should reduce payment friction and bring down the cost barrier for most people.
LawFi will benefit all parties in the legal service transaction. Financing will not only benefit the clients, but it will also benefit the lawyers and law firms as well. In fact, we believe financing will help to increase most legal practices and the overall legal market by more than 50%. It will also help law firms to reduce the number of write-offs.
In founding LawFi, what specific market gaps or challenges did you identify within the legal and financial sectors that motivated the creation of your platform?
I spent 30-years serving law firms as a trusted advisor and merger consultant. I have a unique understanding of law firm operations, firm structure and hierarchy, business processes, billings and collections, and pain points. My own personal and business experiences drove my desire to start LawFi. There were numerous instances during my life when I was unable to retain the legal representation I needed because I couldn’t afford the retainer fee to hire a lawyer. As a result, LawFi was born out of a burning desire to make the legal system more financially inclusive, fair, and accessible for all.
More importantly, I knew the $400 billion U.S. legal market is currently void of any meaningful legal fee financing options. Prior to the recent ABA rule 484, lawyers were prohibited from offering third-party financing to their clients. The finance industry has not yet developed a loan product to help people finance legal services. You won’t find a legal fee loan type anywhere in the banking, finance, or legal industries.
You can find a mortgage loan, auto loan, home improvement loan, and even a medical, dental, or veterinarian loan from many sources, but you won’t find a legal fee loan at your bank, credit union, finance company, or Buy-Now-Pay-Later lender. LawFi creates this new loan type and asset class of loans. We will underwrite and make the first-ever Legal Fee Loans and bring this new loan type to the lending market. We will distribute the loans through lawyers, law firms, banks, credit unions, and other financial institutions. Bringing legal fee loans to the lending market will fill this missing loan type for a large unserved market. This should benefit lawyers, law firms, legal clients, and our partners in the financial sector.
Success is often measured beyond financial metrics. In your view, what non- financial factors indicate success for LawFi, such as client satisfaction, industry recognition, or societal impact?
The Access to Justice gap in America is a pervasive societal problem. LawFi is on a mission to help close this gap. By providing a proprietary Legal Fee Lending platform, embedded finance tools, and funding capital; we can solve this problem! Solving the accessibility and affordability problem will transform the legal industry as we know it today. It will undoubtedly have a wide-reaching positive impact on our society. Closing this gap will be a good metric to gauge LawFi’s success. However, make no mistake, LawFi is built to be both a mission-and-profit based company.
Legal finance may involve complex ethical considerations. How does LawFi approach ethical decision-making, and what safeguards are in place to ensure ethical practices in the financial solutions provided?
Ethics and trust are paramount to any organization. However, it’s the lifeblood for any legal professional or financial institution to ensure success and sustainability. Without ethics and trust there wouldn’t be any lending. Lenders make decisions based on the ethics and trust that potential borrowers are providing accurate information when applying for loans. They represent that they are ethical borrowers when they sign loan documents and promise to repay the loan. Likewise, the lender is promising to evaluate them fairly, without discrimination, and to protect their personal information shared. Every loan transaction is filled with ethical considerations and trust.
At LawFi, we spent several years building one of the most current, fair, and ethical lending platforms and credit decision engines ever built. We have built it to meet the highest standards and practices in the industry.
We are building our organization’s code of ethics into critical touch points and workflows. We seek to put into place the highest level of ethics, trust, accountability, customer protection, including data protection and privacy practices, regulatory compliance, fairness and inclusion in everything we do.
LawFi operates at the intersection of legal and financial technology. How do you see technology continuing to disrupt and reshape the legal and financial industries, and how does LawFi position itself at this intersection?
LawFi is the first true Legal Fintech Lender inventing entirely new products that are highly regulated. We are introducing those products into a highly self-regulated legal profession. Building a simple digital lending and payments solution is very complex in its own right. Building financial products for the legal industry takes things to a much higher level of complexity. LawFi sits at the intersection of Fintech (which includes payments, digital lending, embedded finance, open banking, and open employment and income technologies); LegalTech wherein we help to automate and speed up the delivery, execution, and payment of retainers and invoices with our flow technology and its Text-to-Pay and Text-to-Sign solutions; and Financial Services, specifically lending products. All these sectors are regulated. You have federal and state lending laws, Fair Credit Act, privacy and data protection, cyber security, certifications, text-messaging laws, telecommunications regulations,and numerous integration partners, and credit and alternative data sources in your tech stack and workflows. After that, you must have enough legal industry domain knowledge to build a platform and products that are compliant with bar rules in various jurisdictions. It’s a very complex startup to launch.
In the context of legal and financial technology ecosystems, does LawFi actively engage in API integrations with other platforms or services to enhance connectivity and streamline processes for users?
LawFi is laser-focused on pioneering embedded finance technology and loan products purpose-built for the legal market. Currently, these solutions do not exist. LawFi is inventing the Legal Fee Loan and the decision engine capable of underwriting and making customized legal fee loans. Once built, we needed to find the best way to embed the financing options deep into any type of legal practice. We started with creating a simple branded link generator for any lawyer or law firm to use. Lawyers can quickly cut-and-paste our “Request-for-Loan” links into any email, retainer agreement, or invoice sent to a client. This connects their legal clients to LawFi’s loan application intake page. Law firms can also add a LawFi “Finance” button and finance check out page to their websites or layer our finance button onto their existing checkout or payments webpage where they process their credit card payments.
Then, we realized the best way to embed new financing options was to help solve the inefficient and manual delivery of legal retainer agreements and invoices. Law firms make substantial investments in their practice management systems, time and billing systems, and accounting systems. However, these systems generate two documents with financial arrangements and payment terms. The“retainer agreement” and the “legal invoice.” Once generated, the process of delivery, execution, and payment becomes very inefficient, time-consuming, and manual. Most law firms send retainer agreements and invoices to clients by manually preparing emails or stamped envelopes sent through the U.S. Mail. More importantly, retainer agreements and invoices are sent with few payment options, such as credit/debit card payment or ACH bank transfer. None include financing options because until LawFi, no meaningful financing options existed.
LawFi creates a first-of-kind “Flow” technology to automate and speed up the delivery, execution, and payment of legal retainer agreements and invoices. Our unique SaaS ‘Instant Retainer” and “Instant Invoice” product creates a better, faster, and easier way for clients to retainer and pay lawyers.LawFi’s flow technology streamlines and digitizes the delivery of lawyer retainer agreements and legal invoices. We convert them into interactive Text-to-Pay and Text-to-Sign Requests with more payment methods and NEW legal fee financing options. Requests are sent and completed in one seamless flow that clients and lawyers will love! So, we don’t have to integrate into a law firm’s existing systems. Instead, law firms simply replace the inefficient manual process of preparing and sending emails and stamped envelopes with our fast and easy upload or batch email solution. They send their retainer agreements and invoices to their clients through LawFi. LawFi handles the rest. We add more payment options and new financing options to the documents and act as extended billing, payments, and financing office of the law firms. We are creating an API-centric capability to interface with most practice management systems, time and billing systems, and accounting systems used by law firms. In addition, we are developing a unique Legal Fee Loan digital lending platform for integration with credit unions and community banks who wish to add LawFi’s new legal fee loans to their list of loan products.
Blockchain technology is gaining traction in various industries. Does LawFi explore or plan to integrate blockchain for enhanced security, transparency, or other purposes in its financial solutions?
No, we are not currently planning to use blockchain technology in our platform or products.
How does LawFi leverage artificial intelligence and automation in its platform to enhance efficiency, reduce manual processes, and provide more accurate financial insights for legal practitioners?
LawFi will leverage AI and ML in numerous ways throughout our platform. AI is built into several credit and data sources we use to help score our borrowers, legal case types, lawyers, and judges. Leveraging traditional and alternative data alongside powerful AI and machine learning models, ensures any or all components of our loan origination process are completed to the highest standards of efficiency and accuracy, in accordance with FCRA compliance. We will also aggregate data from our legal merchants to help determine local market-level loan amounts and terms based on real-time data. In addition, we are creating an AI negotiation engine and two-way communications platform that will allow legal clients to negotiate the terms of a guaranteed payment plan to pay past due balances owed to law firms. We call this a “Paygreement™”. It’s a fully automated and managed payment plan platform built specifically for legal invoice resolution.
Share with us your Pre-Seed funding experience. We know it has been a good start. How was the experience?
Launching a startup in any industry is not easy. Launching a startup like LawFi is extraordinarily challenging.
It also takes substantial capital to build a platform like LawFi. However, I knew I could structure a unique capitalization and funding plan for LawFi. Leveraging the new ABA rule, I knew lawyers could invest in LawFi and offer a great source of funding capital. Having our lawyer clients invest in their own industry, cases, and clients allow LawFi to raise friendly capital under reasonable terms.
At first, I funded the venture myself. However, it quickly outgrew my personal capabilities to fund its development. I reached out to “so-called” pre-seed venture funds, but I wasted a lot of time talking to funds that couldn’t invest in LawFi. We were too early. I opened a Founders, Friends, and Family round and was successful in raising the needed capital to get us where we are today.
I was fortunate enough to meet the great team at Capital Q Ventures. Its unique management structure and funds were a perfect fit for LawFi. They are capital partners. After I recruited an amazing executive launch team and found the right capital partner, things started to click. My experience with raising capital for LawFi is exactly what I expected. I had to take a lot of entrepreneurial risk. I was committed and determined to bring my idea and vision to life. I had to focus and narrow down what I was trying to do in the market and keep it simple. It took me over a year to get my business planning and messaging right.
I put in the hard work and hours. I suffered, sweated, and stressed out at times. However, I got it off the ground myself. It’s my passion, vision, and dream. I needed to make it happen to a point that others started to see it and want to become a part of it. I had to de-risk the LawFi opportunity before I could attract any meaningful investors.
I must build and prove the model, and product-market demand and fit. I must get it launched and start gaining traction before wasting time chasing venture investors. Any startup must reach a minimum sustainable MRR and ARR before most investors can deploy capital into the venture. That’s just the way it is.
What’s your take on cap table management post-funding and prior funding? Did does it impact any opinions of yours?
I was fortunate enough to retain one of the best law firms in the country, Morrison Foerster. They have incredible fintech and corporate securities lawyers. In fact, they were named Fintech Practice Group of the Year. They helped me launch LawFi in the correct way. From organizational advice, incorporation, and corporate securities planning, they helped me set the company up so we can scale and attract sophisticated investors. As my Palo Alto counsel said, “you can’t go back in a time machine to fix what you did wrong in the beginning”. So, I learned how important it is to properly set up a cap table and keep it up to date. Having an accurate and well-managed cap table makes it easy to know where you are as a company. It helps to always understand your equity and debt position. It is invaluable in planning and making good decisions. It helps you to understand your pre-and-post money valuations and the effect of a funding round on all your stakeholders. I can’t imagine anyone running a startup without a clean well-managed cap table.
Finally, looking ahead, are there specific emerging technologies that LawFi anticipates integrating into its platform to advance financial solutions for legal practitioners further?
Yes, that’s a great question. The proper use of Generative-AI will certainly impact all sectors and technology providers. We plan to help law firm merchants build LLLMs, “Large Legal Language Models”, by aggregating the firm’s data from all sources and systems. Then, we can create AI algorithms to help identify and predict issues leading to slow-or-no-paying clients. With AI, we can help our law firm merchants to head off invoice disputes, identify client concerns, detect changes in the tone or frequency of communications, or pinpoint changes in payment patterns. AI will help to identify and resolve issues before they result in non-payment of fees or write offs.
