IOLTA Compliance and Letting Solo Attorneys Focus on Their Clients

Law Firm Growth Podcast Episode 62: Using Nota to Automate your "Defense" with Paul Garibian

Narrator: [00:00:00] Welcome to The Law Firm Growth podcast, where we share the latest tips, tactics, and strategies for scaling your practice from the top experts in the world of growing law firms. Are you ready to take your practice to the next level? Let's get started.

Jan Roos: Hey everybody, welcome back to The Law Firm Growth podcast. I am here today with a very interesting episode. So we have Paul Grubin, who is the. President of Noda to talk about a subject that we have not covered previously on the podcast. So I know we talk about growth a lot here, and I tend to think of myself as more of an offense minded guy, but this is a very important piece of defense because all of the marketing and the intake and the hiring doesn't matter if you get disbarred.

Jan Roos: So I wanted to talk about how this is going to connect, but thank you so much for coming on the show, Paul.

Paul Garibian: Thank you so much for having me.

Jan Roos: All right. Awesome. Okay. So you guys might be curious about how I meant that specifically, but I'm basically Paul is the president of Noda, [00:01:00] which deals with helping with your trust accounts.

Jan Roos: So you have money from clients. A lot of people aren't doing a super good job of tracking it, but he's come up with a solution. That's pretty interesting. Basically to kick things off, you have a background as a technologist and this is a very specific challenge, but I was wondering how you arrived at this and what kind of inspired this as something that was a challenge that you wanted to solve.

Paul Garibian: Thank you so much. That's a really good question. My background, as you said, is really, technology and software. And I, spend majority of my career in FinTech, working with financial institutions to deliver, products for their clients. And at some point I had a, conversation with M& T Bank and they identified, used to be a client of mine in my past.

Paul Garibian: They identified a very specific pain point for their customers, which are small and solo attorneys. That don't have large back offices to deal with their compliance matters. And one of the key ones being the IOTA account. And before hearing about this, I was not familiar with [00:02:00] IOTA account, like probably most of us don't.

Paul Garibian: And basically the fundamental idea there is. Managing IOTA accounts, have some regulatory scrutiny that most people don't want to deal with. And I love the analogy that you had around the fact that, offense versus defense. So one of the things that, we are building with Noda is actually being able to provide IOTA as a service, right?

Paul Garibian: So I'm used to building software as a service. So the closest way I've come to describe what we're doing is actually that, right? We want to make sure that we are providing iota as a service and worry about iota account regulatory issues on behalf of our clients on behalf of our users so they don't have to and they can actually focus on offense and grow their business and help their clients.

Jan Roos: And as far as the definition for I know we do have, I've actually, every once in a while we'll have somebody reaches out to the show, proper first year attorney to just hanging up their shingle. But for people who might not be super familiar with the regulations, [00:03:00] what's the definition of Iolta and, in layman's terms, what does this mean for the average law firm?

Paul Garibian: Yeah, it basically means that for certain practice types more than others, and this is what we're coming across is that, for example, if you're Iolta is created. To clients funds, right? Most attorneys, every attorney has to have an operating account, right? You start a business, you do an LLC or an LLP.

Paul Garibian: You basically create a bank account to have an iota account. Those are basically, it's a trust account where you put the. Funds that haven't been earned by you, and those, that's a separate account where a client's funds or some transaction funds that haven't been recognized by your law firms get placed into.

Paul Garibian: And then there are some mechanisms to draw those funds, and, it can get fairly complicated, right? And this is where we come in to try to solve that problem, and we're doing it directly within your bank account. And [00:04:00] being able to distinguish the funds between various clients within that one iota account, for example, with real estate transactions, personal injury transactions, as well as kind of estate planning transactions.

Paul Garibian: This is very common. So those are the type of cases you're planning to take on as a new solo or a small law firm. You absolutely will have to have an iota account. And you will find out fairly quickly that this is a very hairy process that can very quickly get you in trouble. And our job is to keep you out of trouble and help you do things in the best practices directly within your bank account.

Paul Garibian: And in case an ethics committee ever you'll have the appropriate reporting to be well prepared for those conversations. If they ever take place.

Jan Roos: Yeah. So basically at a high level, I know actually probably the closest analogy to the stuff that we do is a lot of times we're actually billing upfront for ad spend.

Jan Roos: So if we have 50 clients and there's some sort of a pool for the ads, man, [00:05:00] that they've paid us for, again, we don't have the scrutiny of a state bar organization, but we have to pull out one specific. Account for the ad spend that they'd contributed that month. It would be a huge pain in the butt to reconcile that, to put it in there, that kind of thing.

Paul Garibian: That's right. And you have to do it to the penny. And that's where it gets complicated. Hey, a lot of the times, one of the things that we use here from our users is that exactly that, you have a remainder of, 10 and you have no idea what it belongs to, which is, stresses a lot of our users out and that's where our job is to try to make sure that we reconcile things to the pain.

Jan Roos: Yeah, I was going to say, because most of the people that get into the law definitely won't. I'm probably saying we have seen a couple CPA just state attorneys and business attorneys for sure. But most of the other ones aren't getting into this to to do accounting.

Paul Garibian: And frankly, you shouldn't have to, right?

Paul Garibian: You went to law school. Kind of headlines is that you went to law school to be a lawyer and not an accountant. And we want to make sure that we're promoting social justice and making the sole and small [00:06:00] attorneys more efficient so they can more focused on practicing law and, fighting for their clients cases instead of trying to spend hours and hours, reconciling their IOTA account to the penny.

Jan Roos: Yeah. And I would say too, that's the thing too, like the situation of being a solo attorney is one of, the very, Limited resource of time. And I would imagine keeping extremely good records and detailed records on this stuff is probably one of the first things that will go by the wayside.

Jan Roos: If you're staying up until nine or 10 and your partner's yelling at you, why you haven't been to dinner this week and that kind of thing. So I can imagine that the time savings are pretty crazy, but just to also connect this. And I know you guys have worked in a lot of different States across the country, But as far as the consequences to not having this done, what is a nightmare situation look like for somebody when they have a situation where they, they haven't been keeping good records of this stuff, and I guess that could be in terms of time, in terms of consequences of the bar what are the, how bad can this really get?

Jan Roos: If you don't have it solved?

Paul Garibian: You get this part, right? [00:07:00] Embezzlement of funds, it's real, right? By the while it doesn't happen every day, but it's certainly. We have users that experience that, and by using Noda, they were able to get in front of ethics committees and get back in good standing. We also have, users that were audited before, and that was a very difficult process.

Paul Garibian: And then they got audited again, but then they have NODA, and that was a very simple process. To give you an example, we have one of our personal injury attorneys in Maryland, and she got called to an ethics committee, and she was able to basically print a report from NODA, send that in, and basically get them, offer back.

Paul Garibian: So to speak, so that's one element of it. And the second element of it is time. That's the most precious resource and I come from a family of small business owners and a small law practice, as you always talk about this is a small business and your personal finances. As well as your business finances are one of the same for most of, small business owners.

Paul Garibian: So I have a ton of empathy for that. [00:08:00] And, one of the things we're trying to do is actually. Make something that's supposed to be regulated somewhat ambiguous because there was a difference between those iota accounts per state, the regulations per state and, try to simplify for the user so they can spend less time on it.

Paul Garibian: We also have. You mentioned partners. We have a number of our users that their spouses or their parents, some family members are helping them manage the iota account because it's a such a important and sensitive topic that they trust only their closest people, their family members to help them with it because it's so complicated.

Jan Roos: Yeah. It's almost like the cash register and a brick and mortar business. You don't want to have anyone off the

Narrator: street.

Jan Roos: I definitely think I'm in New York. Are you going to think a lot of the, you have a lot of children and grandparents running the cash registers at the bodegas around here.

Jan Roos: Okay. Yeah. Definitely seems like the importance is there. And I'm like, also just one thing as far as the time situation no one likes to hear the word audit for sure, but I'm sure that you guys were doing the research [00:09:00] when you decided to go into this. What? Kind of nightmare situations.

Jan Roos: Have you seen in terms of, the time commitments to avoid getting disbarred when these things are happening? Because I can imagine it could be really hard to undo this. I

Paul Garibian: wouldn't be able to tell you what the process is to if you get this board, what's the process. I think you were going to have to hire a lawyer's lawyer.

Paul Garibian: We actually familiar with some of those guys, we've spoken with them. So I wouldn't be able to comment on a time commitment. I would assume that depends on case by case basis, but certainly that's a position. My job and my team's job is to worry about this. So our users don't have to.

Jan Roos: So switching gears a little bit, Paul.

Jan Roos: So this actually sounds really good. I can definitely see in, one of the ways I always. Like to frame things and anything that we're doing is to show people what they're trying to avoid here. It sounds like this is a solution that people absolutely need, but I'm connecting it back to technology.

Jan Roos: Like in order to get these sort of benefits, what does the process look like to somebody who's signing up with Noda?

Paul Garibian: Yeah, so it's, we try to make it super straightforward at the moment. Noda is only available [00:10:00] to, you would have to have an IOTA account with M& P Bank. Currently it's limited to them in the future.

Paul Garibian: We might expand it, but for now, you have to have an iota account empty bank, which is fairly simple. If you're not an empty bank customer, then we'll have to create an iota account. We'll do this completely online. So you don't have to go to a branch or, whatever that is. So we do it online and then you basically you're up and running, you've got a bank account that's fully connected to this innovative software that we've built, and it allows you to keep track of your funds between various clients.

Paul Garibian: And at the end of the day, have that three way account reconciliation. That basically allows you to attract the funds and reconcile them to the penny in your bank account. And the difference between, so it's a really, a one step process. You open an account and with it, You get a Noda at no additional charge with no charge for Noda.

Paul Garibian: And a lot of the things that our users ask us is that how do you monetize it? We monetize things based on the [00:11:00] financial services, you comment on as a client. From a banking standpoint. So there was no additional charge.

Jan Roos: No kidding. So basically all of this entire software to that platform and all the consequences and the horrible time investment that you have to exchanges is basically free of charge.

Paul Garibian: That's right. As long as you open up a, an iota account with M and T bank.

Jan Roos: Okay. Yeah, that's super cool. And then yeah, it sounds like almost like a no brainer too. So as far as like the deployments too do you ever have any when you have somebody that's onboarded, that's new is there any sort of like a onboarding situation or do you ever have to untangle a poorly managed IO to account for somebody who's come on or what does that usually look like?

Paul Garibian: Absolutely, we try to do things in two steps. Step one is that listen, any new transactions you got going on, we'll get those covered. But then also some users, it depends, right? If you're a new practice, that's fairly easy. But if you've been in business for, several years, We'll have to spend some time with you to try to untangle some of the transactions if they're not reconciled.

Paul Garibian: And so we'll do the work with you. You get really one of the benefits of Noda. It's not only [00:12:00] getting the technology side of things, which is we're constantly building new features and working with our users to add more features to the product. But also you get a wide globe service with our customer success and customer support team that will work with you.

Paul Garibian: And they're intimately familiar with Noda. I also found transactions because we're specialists, right? If you were to go to any other bank or even other CPA, those guys try and to work with various other businesses where my team's exclusive focus is sold on small attorney firms and exclusive focused on IOTA issues.

Paul Garibian: So when you talk to our guys you'll find out that our team numbers, I should say. You'll get a specialist and a wide blob service. And like we've talked about it, which doesn't really cost

Jan Roos: you anything. Yeah, no, that's fantastic. And then like for people that are considering this, I know that you guys aren't everywhere in the country right now, but what did we know it's in certain States, right?

Jan Roos: So we're currently in

Paul Garibian: nine States, but we're thinking [00:13:00] about extension. So those States are. New York, New Jersey, Maryland, Pennsylvania, Delaware, Connecticut, Virginia, D. C. and Florida. But certainly, if you're not in those states, we still want to hear from you. We're still happy to talk to you. And, because at the end of the day, we know we'll be expanding.

Paul Garibian: So we're happy to add you to our list. And once, your state comes online, we'll be more than happy to add you as a user.

Jan Roos: Yeah. And just curious too, as far as like, when you guys ended up starting this, like how far along in the journey are you?

Paul Garibian: About a year and a half in, I personally joined 13 months ago, but Noda was incubated and built a year and a half ago.

Paul Garibian: And it's been hell of a journey, to be honest with you, because our mission is to learn from our users and keep being enriched the product. And I'm just so proud of. The team and the things that we're continuing to build and enrich the product really on a monthly basis.

Jan Roos: Yeah. I wish I asked that earlier because that's extremely impressive.

Jan Roos: Like I was I had [00:14:00] the impression this has been going for five or like 10 years. As far as timelines too, so if you didn't hear your state just called when Paul was naming him just now, that's probably something that's I'm assuming that the pace is accelerating as well too.

Jan Roos: So it might not be long before that happens. It's not the. Put you in any hot water as far as people's expectations. But that's the other thing too. It's I think, one of the things you keep hearing is it really is special to have something, building things to the rules of the bar in different States is not an easy feat to have and to have the focus.

Jan Roos: And be reinvesting in that process too. And I know as somebody who's coming from tech this is something that you probably think of in a bit of more deliberate way than the average show off the street. It's fantastic that you guys have been investing time into doing this and just, I guess have you found any sort of like surprising changes that ended up happening to the platform as a result of user feedback?

Paul Garibian: Yeah. One of the things that we have. Monthly meetings with our user advisory console, right? Which is, seven attorneys that we work with very closely. They're our power users. At this point, [00:15:00] we have 400 plus users on a platform and growing exponentially month over month. And so basically, one of the things that was interesting is that we were going to build in a feature for time span on a specific client matter.

Paul Garibian: And our users told us that's not helpful, and we thought that's gonna be a really cool feature to add, but they call us. It's not helpful because that doesn't fully capture the time that they spent on a particular case, and it can be misleading. So that's an example of like we meant well, but we don't build it until we check with our community with our user base.

Paul Garibian: And this was a really good example of saying, listen don't just build it and thinking that for you creating value, be obsessed and have that customer obsession and work with your user to make sure that anything you're doing, even though you think it's well intentioned. Is

Jan Roos: actually adding that.

Jan Roos: Yeah, that's super smart. And also just FYI, that approach works for law firms as well. So keep that one in mind for the Lister, but that's super [00:16:00] impressive. And yeah, as far as like the growth path for you guys, do you guys integrate with any other sort of solutions and like, when you mentioned the time tracking thing that just made me think of some of the practice management solutions in there.

Jan Roos: So like, how do you guys see the development path as far as stuff that's existing, like integrations, that kind of thing,

Paul Garibian: Yeah, I'm glad you asked. I come from the fintech world and everything is just becoming very API driven integration driven. So we currently integrate with low pay. We integrate with QuickBooks.

Paul Garibian: And for 2021, we've got a long list of practice management solutions that we will be integrating with. Because again, this is one of the things that our users had asked for. Yeah. Absolutely. Practice management integrations is the most important thing for us to be working

Jan Roos: on in 2021. Yeah, that's awesome.

Jan Roos: And yeah, honestly, like I'm excited and I don't even know in a law firm. So you've been doing a pretty good job, Paul. If anyone's is. Thank you. This is a great thing. And honestly, just [00:17:00] me stepping aside for the price tag. I think it's an absolutely fantastic value for sure.

Jan Roos: And what's there to lose. Honestly, it's if you have a situation where you might not be doing this, make it easy on your partner or your grandma or your accountant, who's overcharging you for taking care of this stuff and get it handled for you, but what would be the next step for somebody who's thinking it's a good move to move forward with you guys?

Paul Garibian: And I'll tell you, we want to make sure that it's a happy marriage or a partnership on both sides. And so the way we're doing this, we're not just opening up Noda to anyone, the best way to do that, we've got a session with our Iota guru which is, about 15 to 30 minutes. And you go to trustnoda.

Paul Garibian: com schedule a 15 to 30 minute session with Iota guru. My team will try to understand your needs, where you are and assuming that. We feel that we can add value to your practice, we will certainly, enable you and make you a user help you become a user. So that's a path there.

Paul Garibian: And at the downside, if that ends up being not [00:18:00] a good fit for you today, and we say, listen, we're still building certain things that, probably will benefit you in the future. We'll absolutely tell you that because at the end of the day, like we're not going to be successful if you're successful.

Paul Garibian: So then interests are absolutely aligned. So at the minimum, I think it's a win, schedule 15 to 30 minutes with my team. We'll talk, we'll educate you about the IOTA accounts. And we feel like the solution we have today will benefit you. We'll let you know.

Jan Roos: Okay. Awesome. And then, yeah, no, I think that's a fantastic approach as well.

Jan Roos: I think it's a really good, super interesting product and yeah, no I've definitely learned a lot about I also accounts myself, just the last 30, 30 minutes here, Paul. So super appreciate you coming on the podcast.

Paul Garibian: Thank you so much. And if the listeners have any questions, I'm delighted to hear from them.

Paul Garibian: My email is super easy, [email protected], please feel free to email me with any questions. I'll be more than happy to answer them all at trustnota.

Jan Roos: com. Okay. Fantastic. [00:19:00] And then we'll have basically the links to the site itself and your email as well, Paul, and the show notes for anyone who wants it.

Jan Roos: Yeah, again, thanks again, Paul. And for everybody else, we'll see you next week, Tuesday at 8 AM on another episode of The Law Firm Growth podcast.

Narrator: Thank you for listening to The Law Firm Growth podcast for show notes, free resources, and more head on over to case fuel. com slash podcast. Looking forward to catching up on the next episode.