Hello and welcome back to First Principles. This is the 47th episode since we started, or the 6th episode of season 3.

In this episode, I sit down with Rahul Matthan, a co-founder of Trilegal, one of India’s largest and most successful full-service law firms. While Rahul starts by questioning if a lawyer can be an entrepreneur, the conversation unfolds into a masterclass on the patient, principled art of building a lasting institution.

Rahul provides a rare, inside look into the unique challenges of building a professional services firm—a business where the people are the product. He breaks down the counterintuitive models Trilegal adopted to foster a culture of collaboration over individual stardom. We explore their radical “all-equity partnership” and the “lockstep” compensation model, designed to de-risk the firm from becoming dependent on individual “rainmakers” and to align everyone’s incentives towards collective success.

A key theme is the power of compounding principles. Rahul explains how foundational decisions made 25 years ago, such as not naming the firm after its founders and instilling a “firm before self” ethos, were critical for long-term, sustainable growth. He also shares the story behind Trilegal’s exponential 3X growth during the COVID period, attributing it not just to market demand but to a crucial, planned transition from a founder-led management to a new leadership team built for scale.

Finally, Rahul offers a nuanced and critical perspective on the impact of AI on the legal profession. He argues that the real disruption won’t be in replacing senior experts, but in hollowing out the training ground for junior associates, posing a fundamental challenge to the apprenticeship model that professions rely on.

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Sections 

[02:50] – Is a lawyer an entrepreneur?
[11:07] – The founding story of Trilegal
[25:27] – The all-equity partnership model
[44:43] –  Scaling Trilegal during the pandemic
[01:19:00] – AI’s impact on the legal profession
[01:41:50] – Rahul Matthan: The person beyond the profession
[02:01:34] – A passion for coffee

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This episode was mixed and mastered by Rajiv CN.

Write to us at [email protected] with your feedback, suggestions, and guests you would want to see on First Principles.

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Full transcript:

(The transcript is auto-generated and there may be occasional errors. Please cross-check.)

Is a lawyer an entrepreneur?

Rohin Dharmakumar: [02:50] Welcome to First Principles, Rahul.

[02:51] I’m going to start with the email exchange we had before we decided to meet today. I wrote to you, I invited you to First Principles, you agreed, but you said I’m not sure I qualify.

[03:05] Why did you say that?

Rahul Matthan: [03:07] Um.

[03:08] I mean, uh, lawyers are not entrepreneurs, you know, I mean we’re the…

Rohin Dharmakumar: [03:13] Why do you say that? Aren’t you one?

Rahul Matthan: [03:15] It’s what it’s… I don’t, I don’t want to say we’re the oldest profession because that’s reserved for something else. But we’re probably the second oldest profession. Um, and, uh, we’re just a profession. Um, and, uh, you know, so I, I agree that, uh, the, the firm that we’ve built is perhaps entrepreneurial, um, but…

Rohin Dharmakumar: [03:37] Sorry, the firm that you built.

Rahul Matthan: [03:39] Yeah.

Rohin Dharmakumar: [03:40] Isn’t that what entrepreneurship is? You built a firm where there was non-existing…

Rahul Matthan: [03:44] Lots of people have built firms.

Rohin Dharmakumar: [03:46] But that’s all right. This podcast is about entrepreneurs and their entrepreneurial ventures.

Rahul Matthan: [03:51] Yeah, well maybe, maybe I’m being excessively defensive, but, uh, building a professional services firm is not for everyone. Uh, the challenges of a professional services organization is uniquely understood by people who are providing professional services, which is, you know, the consultants, the chartered accountants, uh, the lawyers, and now increasingly as I speak to people, uh, you know, perhaps architects and doctors, but you know, the point with a profession is that, uh, you know, you’re constrained by many things that aren’t really translatable to other businesses. And I’m sure we’ll get into some of them, but I’ll just give you one example, which is you can’t have a set of marketing professionals in a firm because you’re marketing yourself. You’re marketing your own skill set. So a lawyer has to deliver the work product for the client, he also has to market what he can deliver to a client. And we in our profession we…

Rohin Dharmakumar: [04:58] Through the work.

Rahul Matthan: [04:59] Through the work, uh, and through other things because, you know, the work will only get you as far as word of mouth will. And if you want to really build a business, you need to have other ways to do it and you can’t hire someone to do it.

Rohin Dharmakumar: [05:11] Got it. Sorry, Rahul, I do want to interrupt here because this, there’s a certain reticence that I detect. It’s not just you, but generally, um, among law firms to think of themselves as entrepreneurial ventures. I’m sure no one, I mean, if you ask me, is, or if you ask anyone, is McKinsey an entrepreneurial venture or is the Boston Consulting Group or is Infosys. All of these are great entrepreneurial ventures. So, and now the second part of it is, of course, and it’s something, um, lawyers aren’t allowed to market themselves in many ways.

Rahul Matthan: [05:51] No, look, I mean not…

Rohin Dharmakumar: [05:52] Is that it?

Rahul Matthan: [05:53] We’re not allowed to advertise. Right?

Rohin Dharmakumar: [05:55] That’s right. Why is that?

Rahul Matthan: [05:56] So that you go back many years, uh, centuries, maybe. Um, there are many things about the profession of law that, uh, we have a code of conduct, as it were, among the, the profession, uh, where we constrain ourselves by doing certain things because it, you know, in the old days, it was believed to diminish the profession, um, if you were doing crash, mercantile things like putting out advertisements. And now, to be clear, this is true of the profession anywhere in the world, but in other parts of the world, uh, in the US for example, advertising is perfectly okay. And many lawyers actually advertise. Um, they’ve got the pejorative, they’ve earned the pejorative of ambulance chaser because that’s what they do. And so, um, the, the more, uh, you know, uh, white collar, white shoe as they say, uh, firms don’t advertise for that same reason because it has a pejorative connotation. You know, if you’re good, your work speaks for yourself. There are other ways, more classy ways to let people know that you’re good. Uh, and you don’t have to do ambulance chasing and, you know, uh, cut out ads and stuff like that. So just to answer that specific question, but your first question on reticence, don’t get me wrong. Uh, I’m very proud of the firm we’ve built, right? So it’s, I, I have no… otherwise I wouldn’t have come and, you know, given you half my whole morning, uh, to have this conversation. Um, I don’t think it’s fungible in the same way as other businesses, uh, and uh, conversations around entrepreneurship for other businesses are because it is a, it we work under a unique set of constraints. And these are not constraints that are imposed on us by the Bar Council, though there are some of those. It is constraints that are, uh, that are the nature of what it is that we do. Uh, it’s hard to scale. And in the same way that other businesses are easier to scale. I mean, if you make a widget, then you’re just doing industrial engineering to scale your efficiency in making that widget. We are not making widgets. Each piece of advice that I give is utterly bespoke. So this is much more artisanal than most other businesses that appear on this podcast because it’s, it’s very easy, I would imagine for someone to take a look at something that a widget manufacturer is doing and, you know, put very precise calculations to it to try and figure out where in the manufacturing chain, you can just put another machine such that you can unblock uh, the, the bottleneck in the production cycle. And it’s similar to doing it, you can do something like this for certain types of services, um, you know, e-commerce services, it’s easy to figure out where the bottleneck is in the e-commerce service…

Rohin Dharmakumar: [08:38] I get that. Again, I mean, I’ve I’ve no arguments that you do operate under constraints, but then for that matter, so could, let’s say for example, someone running a hospital group operates under constraints, someone running a school group operates under constraints, someone running a consulting group or wherever people are the core product in a way, do operate under constraints. So we’ll come back to this, but I do want to give context on what it is that we seem to be talking about Trilegal without actually having delved into Trilegal. So you co-founded Trilegal what, over two decades ago? How many years?

Rahul Matthan: [09:14] 25 years ago. We’re celebrating our 25th anniversary this year.

Rohin Dharmakumar: [09:17] Oh, wow, great. 2025. And so you started in 2000 with five other co-founders. Yeah. Right? And today, you’re what, 1,100… roughly around that. My research seems to point out, but every…

Rahul Matthan: [09:32] Of course, your research might be wrong. We’re over 1,000 lawyers.

Rohin Dharmakumar: [09:34] Over 1,000 lawyers, right?

Rahul Matthan: [09:35] Um, and we’re about 140 plus partners.

Rohin Dharmakumar: [09:38] 140 plus partners. You are either, again, you know, uh, the largest or the second largest law firm in India. Would that be broadly accurate?

Rahul Matthan: [09:48] We’re, we’re one of the largest law firms in India. There’s no doubt about that. You are a lawyer. I’m only saying because I know what my numbers are. It’s, we, we don’t have, uh, we’re not publicly listed and so it’s hard to figure out who… and I don’t want to misstate my competition. So, yeah, we’re a large firm.

Rohin Dharmakumar: [10:04] Got that. So, and, and of course, then there’s the fact that of the top five law firms in India, which is Trilegal, Cyril Amarchand Mangaldas, um, Shardul Amarchand Mangaldas, Khaitan & Co, and AZB. You’re the only one which doesn’t have a person’s name as a law firm. And is not in some senses, uh, owes its existence to a person or a family, etc. Which again is very interesting and it goes back to 25 years ago, six of you decided to start a law firm. Why? What made you decide that you wanted to start a law firm of your own and why was it not called any of your names? I know six people may be too many to have those, um, all six people in a name, but still, why was it called Trilegal and why did you folks decide to start a law firm?

The founding story of Trilegal 

Rahul Matthan: [11:07] Yeah, so, look, um, I think the thing is that at that point in time, uh, there were probably no law firms, um, that did not have, uh, at least the name of the founder in the name of the firm. That was just the way you named firms and you look, uh, uh, to the US and you look to the UK, which is we have a much older tradition. Uh, even today, almost all the firms are named, uh, something and something. Um. Now we, uh, uh, took a conscious decision, um, to try and make a firm that was neutral, uh, to names. I think, you know, one of the reasons was there were six of us and it would have been a very long name and we would have put it alphabetically and very selfishly, Matthan would have been, you know, maybe the fourth or the fifth and everything gets truncated to a two word name and then, you know, my legacy would have gone. But, you know, very selfishly that maybe one of the reasons that I pushed for that, but I think, honestly, all of us just decided that we were going to make this not about, uh, individuals and try and build an institution. Uh, and one of the first steps to doing that was, uh, to come up with a name that, um…

Rohin Dharmakumar: [12:19] In 2000, where were all of you? You had practiced, you were working at what, Dua & Associates?

Rahul Matthan: [12:24] I was working at Dua & Associates. Um…

Rohin Dharmakumar: [12:25] How many years out of college were you? I mean, how many years have you been a professional?

Rahul Matthan: [12:29] So when I, um, when I graduated from college, it was, uh, 1994. Uh, so I was a class of ’94 from the National Law School, the second batch of National Law School. And, uh, I left Dua & Associates in 1998. So I was four years qualified out of law school. Um, and, uh, I left not really planning to set up Trilegal. I left because I felt that it would be better for me to set up my own practice than to work for, um, for, uh, Ranjit Dua in Dua & Associates. And, you know, some of the reasons for that probably will answer all the other questions that you’ve asked because, uh, all five of us, the rest of us, uh, all six of us, the other five, uh, had similar motivations in that, uh, they were working in different places, uh, working for traditional Indian law firm operations. And they felt, and we all felt that there was a need for something different.

Rohin Dharmakumar: [13:24] Were you all classmates or did you know each other professionally as friends?

Rahul Matthan: [13:29] So, um, uh, uh, four of us, including me, were from National Law School. Um, uh, two were one year junior to me, but we knew each other, uh, in that sense. And then, um, so, so that was, uh, me and, and Prem who were in Bangalore, um, uh, Sridhar and Karan who were my co-founders in Bombay, uh, were all in National Law school. And so we knew each other over school, over law school. And, uh, Anand and Akshay, uh, who were the, who were our co-founders in Delhi, uh, Anand worked in Dua & Associates while I was there. So I got to know him over the Dua & Associates period. And Akshay was working in a UK law firm called Ashurst, and, um, we had close relations with Ashurst and I had done many deals with them and he also was seconded for a year to Dua & Associates. So really, uh, it’s that sort of an association. We knew each other through, uh, college and through work. Um, we were all working in the traditional Indian at that time, uh, law firm setup and we all rebelled against the way in which that, uh, those operations were set up.

Rohin Dharmakumar: [14:37] What was that? What were you rebelling against?

Rahul Matthan: [14:39] Well, largely… I don’t think we were consciously setting up to build Trilegal at that point in time, but what we were clear about was that we wanted to, uh, perform the law firm function in a different context from, uh, the way in which it was being performed in the firms that we were. Um, we all had exposure to the way international firms operated. And international firms, um, were much more professional we felt in the way in which they were providing their services. I’ll give you one example. You know, when, when, um, I was given work by my, um, senior in Dua & Associates, very often, I got work that was already two weeks late. Uh, and I was told to turn it round. Of course, I turned it around within 24 hours, but I was like, look, if you’d given it to me two weeks ago at least, I could have done a much better job of it. It would have gotten to them on time. Right? I mean, even if you, if it was a day late, uh, it’s better than getting to them a day late than getting to them two weeks late. And we felt that there was a certain professionalism that Indian firms lacked. Now, this is 25 years ago and this is not to say that any of the Indian firms are like this right now. Uh, but in those days, there was a lack of professionalism that, uh, we knew, uh, clients expected, but for some reason, um, we were not, you know, Indian firms were not providing. I think the second thing was that we all struggled with the lack of clarity, uh, in terms of what our career progression was. Now, if you’re, if you’re two or three years qualified, it doesn’t matter that much. I would argue that if you’re four years qualified, it shouldn’t have mattered, but it was irking me that, um, there was no clear path, uh, to becoming a partner in this firm. Uh, it was for or five or, you know, even six years away at that point in time, but I had no clarity as to what it was that I had to do to qualify. Um, maybe, you know, the all the other lawyers who joined the firm at the same time as me, uh, what do I have to do to differentiate myself from them such that the partners of the firm could say, okay, this is a bright guy, we can, we can give it to him. And I, you know, it was clear to me that I was getting signals, uh, from the management that I was good because every now and then, yeah, the magic partner would say, look, I’m going to second you to England for six months so that you can get an experience and then nothing would happen. And then next year we’ll be taking you to Paris and then when he said he would second me to Tokyo, I said, okay, it’s not going to happen. Uh, if I have to do these things, I have to do it myself. And so I, uh, said, I’m going to set up a firm. Uh, and, uh, it was these two things, quite frankly, it was the need…

Rohin Dharmakumar: [17:15] Was it something similar for your other co-founders as well?

Rahul Matthan: [17:17] All, all of them. All of them were in the same, um, setup, the same framework. Partners, uh, operated, um, with a sort of a glass ceiling. I don’t think it was a glass ceiling, it was probably a steel ceiling. There was no, you couldn’t even see through it. It was just not possible to breach that, um, founder space as it were. And for ambitious, um, capable young lawyers, uh, at some point in time, this was galing, um, that, uh, so the, so the only path was really to wait a really long time, uh, to become a partner in one of these firms or, uh, to take courage into your own hands and try and do it yourself. But in doing that, I think we were very clear that we didn’t want to create something that was a copy of what all of these other things were. And the first step to doing that was taking our name out of it. Because once your name is in the title of the firm, then your children, um, just have, uh, an edge over everyone else because they, are, are share the name, uh, that’s on the door. And we wanted to take that out. And that’s the reason why Trilegal. Um, you know, as much as I sort of said that, uh, I’m going to be fourth on the line and, uh, all that vanity. Really, the reason why we did that was to, was to just take it off the table that at, you know, as we grow older, our choices will change, we may think differently, we may have children and we may feel differently at a later point of. So let’s take it all off the table. And, um, we’re not going to have our names and our children are not going to get, uh, preference or priority. And that’s the rule that holds today. All the founders have children, um, who, you know, are in college or, uh, getting to the point where they could now start to say that, look, uh, I want, uh, some preferential, uh, treatment here and that’s just not possible. Uh, they, they don’t have a name, they can’t claim anything. The way the equity is set up, they have no rights over the equity, um, and we can get into the structure and stuff like that.

Rohin Dharmakumar: [19:17] But I just want to reflect that both of the reasons why all of you decided to start a new law firm together seem to be related to professionalism because the first point that you mentioned about how work was assigned and how it could be done better so that it’s more efficient and gets done on time, is again related to professionalism. And like you also pointed out 25 years ago, it was a very different era, perhaps firms were not as professional. And the second point also related to career progression, etcetera, comes back to again professionally managing careers and ambitions of people. I mean, you would expect, you don’t expect, for example, either a McKinsey or any other world leading organization to not offer this kind of clarity. So, one part of why you decided to set up Trilegal was to make things more professional. Right? Uh, but at the same time, all six of you were also turning entrepreneurs when I mean, I, I keep coming back to this, in spite of the fact that you keep saying we are just professionals, but you are launching a new business together. What was that like? Because when you’re part of a law firm, you’re getting a salary, you’re getting work assigned. Now suddenly all of you are on your own, you are Trilegal, no one’s heard of Trilegal. What does the business or the entrepreneurial side of starting a law firm look like in the first year or two?

Rahul Matthan: [20:42] Yeah, look, once again, I’m going to push back on entrepreneurial, uh, uh, entrepreneurism again, um, because it was not that. I mean, it evolves into that because, uh, to me at this stage when there’s the six of us, uh, what are we thinking about? We’re thinking about getting new clients, right? Because we’ve got to get revenue…

Rohin Dharmakumar: [20:58] Which is entrepreneurship.

Rahul Matthan: [21:00] Which is entrepreneurship, but it’s also what any lawyer does, right? So anyone who hangs out his shingle, uh, wants to, wants to say, look, I, I’ll whatever, do your case for you or I’ll advise you on something. And it’s as simple as that.

Rohin Dharmakumar: [21:12] We wouldn’t have this discussion if we were talking about, let’s say, a bunch of software founders who came along and decided to offer IT services. They do virtually the same thing. They go and say, we’ll code for you, we’ll charge you this by the hour. Heck, most of the origin stories of Indian IT services firms would go back to that as well. So it’s no different what you’re doing.

Rahul Matthan: [21:32] No, I look, once again, I’m, I’m, and I’ll make the, I’ll make the point. I think, uh, for me, the work that we did, uh, in the early years, of course, it’s entrepreneurial, it’s, it’s like, you know, you can call it entrepreneurship. Um, uh, you just any business is entrepreneurship if you think about that. Uh, for me, the real entrepreneurial leap that we did, and I’m not shying away from the fact that we did it, was scaling this business, right? Scaling a professional services firm is non-trivial. And that’s what I think perhaps we should spend more time on. But the early days, uh, you know, what we did was…

Rohin Dharmakumar: [22:06] The first couple of years, so you’re saying was it easy?

Rahul Matthan: [22:09] It was not easy at all. It was extraordinarily difficult because as I said, when I, when I set up on my own, I was four years qualified. It’s daft to think that in a profession, I’m going back to profession because this is really what we’re selling. We’re selling the fact that we are legal professionals. This is a profession defined by experience. You go to people who can explain to you that they have a career as long as your arm doing this thing, you know, a 100, 200, 1000 times. And that’s the reason why you go to them because if you’ve done this particular piece of advice 1000 times, chances are you’ve gone through all variations, modification, you know, combinations and you’ve learned on the job with a particular client. You’ve experienced what it takes. And that’s why they’re coming to you. And I’m here is this little kid, you know, four years out of law school, trying to…

Rohin Dharmakumar: [23:00] Four years because you spent about roughly two years on your own before you started Trilegal?

Rahul Matthan: [23:03] Two years on my own, uh, but really those two years was the time that the rest of us spent trying to put this together. But we signed the partnership deed in the year 2000, but, uh, we spent the two years, you know, one setting up the operations. So we set up three separate law firms. Um, we then sort of got the law firms connected because, you know, uh, we were called Matthan and Iyappa in Bangalore, and then we call ourselves Matthan and Iyappa Trilegal to sort of indicate that this is part of a, uh, group of firms. And then we just dropped the Matthan and Iyappa and we called it Trilegal. Uh, and so that whole process took two years. But I think, uh, it was maybe six months that I was working entirely on my own trying to, uh, figure out what I was going to do. And that entire period of time was trying to convince people that even though I had not a single grey hair and I only had four years, uh, that it was worth entrusting their business, you know, legal advice to me.

Rohin Dharmakumar: [23:58] What was that argument?

Rahul Matthan: [23:59] Efficiency. I mean, one, uh, you know, uh, clearly, I, um, knew what I was doing, um, and I didn’t sort of try and say I could do everything. Uh, but I would give them a service really quickly, really efficiently, and, uh, try and understand what it is that they wanted and give them exactly that. Um. And, uh, I mean, quite frankly, I think it’s quite miraculous that so many people, uh, and so many sort of big clients, uh, gave me their trust. I think the four years before that, while I was working in Dua & Associates, um, so when I left Dua & Associates, I took 10 clients, uh, with me from Dua & Associates, people who, uh, and these are the, these are the clients that gave me the seed capital.

Rohin Dharmakumar: [24:42] This is one of the, this is one of the quirks of the legal profession, right? Essentially, the business belongs to, not belongs, but draws from people. So when a partner or a lawyer goes from one firm to the other, their clients often move with them.

Rahul Matthan: [24:58] This is the old, this is the old way, right? The old way, that’s the way it works, because that one partner does everything for the, for the client. In a good, institutionally, uh, organized firm, um, our firm, for example, right now, uh, I think, uh, some of our clients use 50 of our partners. And so if one partner goes, it’s a lot harder for the client to go. And this is really the benefit of institutionalization. This is the benefit of scaling the professional services firm.

The all-equity partnership model

Rahul Matthan: [25:27] And I think we can get into all of these things, which I think is really the entrepreneurial shift that we take.

Rohin Dharmakumar: [25:32] Sure, before we get into that, I do want to ask you about an important decision. When did you make that decision? Which is to go and you talked earlier about one of the reasons why all of you were moving on is career progressions, uh, and not knowing when you make partner. Now, the pinnacle of the profession in the legal space, and of course, in many other professional services, um, organizations, is becoming a partner, which essentially means then you get a share of the equity of, you know, the firm, right? And which is why people spend a decade or more, etcetera, becoming a partner at a McKinsey or a BCG or even in law firms, etcetera. You decided at Trilegal to opt for something called the all equity partnership. Right? When did that come about and what is an all equity partnership and why was it different?

Rahul Matthan: [26:22] So this, um, comes about much later. Um, I mean, uh, when we started, what we’ve been discussing so far…

Rohin Dharmakumar: [26:28] There’s a traditional partnership.

Rahul Matthan: [26:30] Well, there were, the only partners were the founders. And in order for someone to become a partner, there are only two ways that you can become a partner. One, we will hire someone else who is a partner elsewhere, and we’ll say, look, you bring your practice and come join us and we will, you know, value the practice that you’re bringing and we will give you equity in relation to that. At that point in time…

Rohin Dharmakumar: [26:51] But in some relation it’s like the amount of money and clients that you bring in, you get recognized for loosely in, uh, correlation with that.

Rahul Matthan: [26:59] But you, you know, you think about us as a bunch of young kids, you know, maybe four, five years out of law school, no one’s going to come and join us. No one’s going to sort of, uh, you know, leave their traditional firms and come and join us. So that was out of the question. The only other type of partners are those that you grow organically from within. And as you said, it takes about a decade for people, uh, to get the experience and maturity to become a partner. And so, at that point in time, it was only us founders who had the equity and anyone else who’s going to become a partner was 10 years away. So that’s where we are, uh, you know, in terms of, um, when, when the, the point we were discussing. So fast forward to 10 years or so thereafter.

Rohin Dharmakumar: [27:39] Did you start thinking about this 10 year journey back in 2000?

Rahul Matthan: [27:43] No. I mean, we sort of…

Rohin Dharmakumar: [27:46] At some point we will have partners.

Rahul Matthan: [27:47] Yeah, but we were very clear about the principles.

Rohin Dharmakumar: [27:50] What were those?

Rahul Matthan: [27:50] The principle was that we’re going to allow, uh, people to sit on the same table as us and be equal to us as founders. It was very, very clear that we were not going to have a steel ceiling or a glass ceiling or any sort of a ceiling. Um, and that’s the principle that operates, that Trilegal operates on today. Um, it’s been, uh, and I think the proof of that really is in the name. And that’s why I’m glad you asked that first question because it was a very momentous thing for us to do to sacrifice our surnames, uh, in the name of the firm with a, with a long-term ambition of that not coming in the way when we were to deliver a law firm that operated on the principle that everyone would be equal in the partnership. And I think, we, uh, so the all equity is the, uh, uh, the ultimate manifestation of that. Um, uh, you know, you usually have two classes of partners in most firms. You have what you call a salaried partner and then you have an equity partner. Uh, Trilegal only has equity partners. So if you become a partner in the firm…

Rohin Dharmakumar: [28:52] What’s the difference between a salaried partner and an equity partner?

Rahul Matthan: [28:55] To put it crudely, a salaried partner, uh, because they don’t share, um, in the profits of the firm, uh, they get a salary…

Rohin Dharmakumar: [29:02] Is it a title only?

Rahul Matthan: [29:03] It’s a title, firstly, uh, and, uh, they just get a salary and they get, uh, a bonus. Now, that’s no different from quite frankly, any other associate in my firm because you get the title of senior associate and you get a bonus. You get the title of an associate and you get a bonus. So regardless of who you are, you will get a salary and you’ll get a bonus. Now, uh, you could be called a partner, uh, and if, but if you’re called, if you’re, if you just given the title, but you’re still getting a salary and a bonus, of course, a much higher salary and a much bigger bonus, but you’re still, you know, uh, not participating in the directly in the profits, uh, we felt that that is, uh, not a partner. And so we don’t give anyone the title of partner unless they’re actually a partner in the profit and the loss of the firm. And so that’s the, uh, philosophy behind all equity. But I think that’s not the important part. It is also possible to have an equity partnership where you reserve a portion of the profits for a certain class of more privileged people. That class of privileged people could be all sorts of things, but in the law firm business in particular, that class tends to be the founders. And we, uh, not only did away with the salary versus equity distinction…

Rohin Dharmakumar: [30:21] The two tier equity sharing, you’re saying?

Rahul Matthan: [30:23] You, you often have a two tiered equity sharing. Most international firms do not have this because most of the founders are long dead. Um, but, uh, we decided that we’re not going to have any, uh, profit pool that is reserved for the founders. Which essentially means that, um, uh, anyone in the firm, any equity part, anyone in the firm can become an equity partner. Any equity partner can have equity which is equal to the founders. And eventually greater than the founders.

Rohin Dharmakumar: [30:57] So when you say it’s an equity, again, like this is a, um, sector we’ve never, uh, discussed on this podcast and I don’t think a lot of people understand how law firms work. What is an equity partnership and what is profit sharing? Does it really mean that at the end of a year, you look at all the money that the firm has built and you look at all the costs and everything that is a surplus is distributed among equity partners? Would that be the simplest way to look at equity partnership?

Rahul Matthan: [31:26] That’s exactly it.

Rohin Dharmakumar: [31:28] All right. Okay. So you’re saying, again, this too is not the most important thing. And yet, many, you also said that most other firms do not have this. Again, why do you say that? Because if the objective was to professionalize and do away with names and titles and do away with multi-tier, um, uh, structures, and and there’s been enough coverage of many professional services organizations, but one of the constant, I think gripes of people is that there is opacity around what percentage of the profit is distributed among certain class of people versus another class. So I do think this was for you, all of you to have said that, look, we will not have these multiple classes and it will just be one class and we will not do title inflation and just give someone the title of partner if they’re truly not an equity partner. It does look like something that you did, which you didn’t need to, but again, it’s, it’s, it’s significant, right? Why?

Rahul Matthan: [32:26] No doubt, I’m not, I’m not reticent about any of this. Once again, all of this stuff, uh, the proof of the pudding, we may have had these ideas when we set up the firm, but the proof of the pudding is 10 years later when we actually do make a partner.

Rohin Dharmakumar: [32:37] What happened 10 years later?

Rahul Matthan: [32:38] 10 years later, we made partners. We made them, we made equity partners. Today, the only class of partnership in Trilegal is equity partnership. If you’re a lateral that comes in, you will get an equity, you’ll get a share of the equity. If you are growing from within, um, you know, once, so the class is, you start as an associate, you become a senior associate, and then if we think that you are good enough to become partner, we put you on, we call you council, which is essentially in two or three years, uh, or this person will become, uh, will have an opportunity to, to apply for partnership. And, uh, then you just get, if you go through the partner selection process, you, uh, will then get equity in the firm. Um. Now, all, the proof of the pudding is as much as we may have the theory of doing all of this, no one believes this until you actually do it. And now we’ve done this consistently for pretty much our entire life of the firm. Uh, and I think, um, I’m very proud of this, uh, because, you know, I keep talking about compounding. Um, there is a compounding that really kicks in after, after a particular point in time, uh, in the journey of a, of a firm, but it doesn’t kick in if you don’t do that one thing consistently. Um, and, uh, you know, it’s hard to imagine the 25 years from when you first thought about it that it will have value, but 25 years later, you realize that, look, you did this consistently and so this is what…

Rohin Dharmakumar: [34:05] And because you stuck to it, you stuck to that simple principle.

Rahul Matthan: [34:08] Despite the fact that many people will say you’re daft. I mean, we know all of our competitors in the firm, we’ve met all the managing partners. Um, many of them along the way, you know, very kindly advised to, uh, people who are also building practices said, you guys are daft, you can’t, you know, you can’t be just throwing your equity away in this manner. And, you know…

Rohin Dharmakumar: [34:28] What does that mean? Sorry, when you say throwing your equity away, I want to again, like, you know, try and clarify my own understanding. Let’s say, when you folks started, let’s say the size of the profit pool was 100 and you were dividing between the six of you. As you add more partners, obviously, your relative percentage is coming down, but the size of the pie is growing. So everyone hopefully makes more as long as the pie keeps growing. Is that loosely how the equity model works?

Rahul Matthan: [34:57] That is how it works. But you know, you can start to now shave things slightly differently. The pie can grow, but you can give less and less away. And so you reserve a pool of profit for the people who took all the early risk, which quite frankly we did. Right?

Rohin Dharmakumar: [35:12] Oh, this is the second tier…

Rahul Matthan: [35:13] The two tiered equity structure is the way most firms operate in India. Uh, and…

Rohin Dharmakumar: [35:19] This is like the golden uh class of shares that in in the US, etcetera, founders have where, let’s say a Mark Zuckerberg or someone else may have a particular set of shares which entitles them to… again, you are a lawyer.

Rahul Matthan: [35:32] It’s very different. It’s very different. So, so there, their golden shares and, you know, a lot of that gives them management rights. Right? And, uh, that’s very precious to them. But, you know, the amount of shares that they have, uh, doesn’t, uh, change. And so, you know, uh, they will keep diluting, uh, such that, uh, you know, each new shareholder that comes in, comes in at a much higher valuation. And so the amount of dilution of their founder shares is much less. And that’s not the way law firms work, because as you described, uh, earlier, all the profits that you make in the year are then split among everyone else.

Rohin Dharmakumar: [36:09] So it’s fairly simple from a cap table point of view.

Rahul Matthan: [36:11] It’s very simple from a cap table point of view. Right? Um, and, uh, we have a lockstep structure which, which we can explain, um, in some detail. It’s very different from the way in which other shares, uh, you know, uh, shareholding, uh, typically works. And that lockstep structure is also, I think, a, it’s once again, we didn’t invent it. This is the way many international firms operate, a lot of European firms, a lot of UK firms.

Rohin Dharmakumar: [36:33] What is it, if I may ask?

Rahul Matthan: [36:34] So the lockstep is, uh, essentially, uh, a way in which the, uh, shares and the profits are distributed. Um, so when we talk about equity, uh, we say that every partner who joins the equity, let’s say someone who organically joins, is entitled to let’s say five points. Um, and they can get more and more points, um, every year, uh, until they hit a maximum of 40 points. Uh, and then you cap out at 40 points. Uh, so the highest level of equity in the firm is 40 points. But now just think that we’ve got 140 partners. Uh, out of them, maybe 10% are capped out at 40. Everyone else, every year, is getting slightly more, uh, uh, a slightly higher number of points. The total denominator, of course, is increasing by the number of points that the entire partnership is making, but it’s kept by the fact that after a level, you don’t get more points. Um, and each person, individually, is getting a larger share of the profits every year.

Rohin Dharmakumar: [37:44] I got it. The pie is growing, but not everybody is growing in the same relation. Some people get tapped out. So therefore, it’s leading to a slightly more equitable distribution within the pie.

Rahul Matthan: [37:55] Correct. And this is also a big signal because the founders are capped out at 40. They’re at the top of the lockstep. So, uh, 40 is a nice place to be. Let’s be completely clear. Uh, it’s a, it’s, as far as actual, uh, uh, cash that you take out, it’s a nice place to be. Not everyone gets to 40, right? So, you know, you obviously progress on the lockstep, depending on how you’re performing. You have certain targets, you have to be good with the business of the firm. So all these things we’ve evolved, um, and we can talk about various aspects of remuneration, incentivization, particularly in a partnership structure and how we did it using the lockstep. But the, the most important thing about the lockstep is that it, it makes sure, the, the alternative model to the lockstep, maybe that’s a good way to compare, is what we call the eat what you kill model. That is you partner A, uh, you have brought in, you know, whatever, 25 crores worth of revenue this year. So you will get compensated as a proportion, you know, what that 25 crores is a proportion of in relation to the whole, uh, uh, revenue, income of the firm.

Rohin Dharmakumar: [39:02] I got that. So the larger your personal contribution within the pie, the larger your equity share within that pie.

Rahul Matthan: [39:08] Now that’s a perfectly reasonable way to compensate people, uh, except that what that does is it incentivizes people to do more work or to, uh, uh, aggregate more of the revenue to themselves. Sometimes in a way that gets them to do things that they’re not technically the best person at the job. And what the lockstep model does is I’m not going to get any more money if I do more of that work. But the client is going to be much happier that I actually pointed him in the direction of a true expert in that area. And so remember I said earlier that there are some clients that do that 50 partners of the firm service. Now this is only possible in this kind of a model. Because if that client is giving us so much work that 50 partners are getting revenue out of it, one partner who has that entire relationship would be doing pretty good in an eat what you kill model. And that would be the incentive in an eat what you kill model to keep 50 partners worth of work to yourself. Now no single partner can do 50 partners worth of work. And so if you set up your incentive system such that you are incentivizing people to keep the work to themselves, you’re reducing the revenue for the firm. How do you set up an incentive structure that allows that one partner who has this relationship with the client to actually freely and in a sense, prefer, uh, you know, it’s, it’s a preference to actually share it with 49 other people, that’s what this lockstep model does. It says that, look, no matter how much, uh, uh, your, how good your relationship is with this person, your relationship can only get better if you share it with other people. And in that way, the entire, uh, revenue that the firm earns is going to be greater. And therefore, the revenue that you earn because now your point is more valuable, is going to be greater. And that is the essence of this lockstep structure.

Rohin Dharmakumar: [40:59] I got that. From an organizational design point of view, what you’re trying to do simultaneously is dissuade people from, uh, cornering more of the revenue under their own name. And at the same time incentivize it to others within the firm. Which is rare because usually if you dissuade people, I mean, the logical thing would be, all right, why should I do it? What’s in it for me? But simultaneously you’re also trying to incentivize them to share it with the firm because then the size of the pie goes up and your share within that pie goes up.

Rahul Matthan: [41:38] Correct. Which is a constant thing with Indian law firms because we keep hearing, by the way, I mean, I’m not going to take names, but it’s also happened with you, where a really experienced partner, for instance, has left. And this constantly happens between firms where when they leave, they take their team with them, they take their clients with them, etcetera and all that. So I suppose that risk exists in all firms, but I’m assuming in Trilegal you’ve reduced it to some extent.

Rahul Matthan: [42:15] Yeah, I mean, uh, you know, look, there, there are always people who will leave. Of the firms in India, we have lost a very, very small percentage of people who have left. And very often the people who’ve left, you know, we, there’s one partner who’s fairly senior left, uh, to go to London, because he wanted to operate in an international law firm environment, we were very clear, we’re not going to do an international law firm environment. Um, but in general, uh, the people who leave are people who, um, you know, the, the real reason why they left is perhaps deeper than, uh, what plays out, uh, in the press. And, uh, very often that departure doesn’t affect us because it opens the way for two or three others, uh, to come in. Uh, I think in the law firm moves, uh, which have been happening for maybe a decade or so now, uh, without a doubt, we are net positive. Uh, the amount of people who have come, and this is largely to do with this model. Once again, I’m not, you know, I’m not talking about individuals, but in terms of the model, this model where you’re not, uh, incentivizing an individual to be larger than everyone else, um, is actually remarkably freeing, uh, to people who are constantly under that pressure to, to stay at that, you know, that top rainmaker level, it’s remarkably freeing to actually now have the ability to retain the status of being a rainmaker, but, uh, getting the internal, uh, credibility of actually supporting 20, 30, 40, 50 partners and helping them grow their business. And, you know, a lot of these are very niche practices that one partner could not do. We have a partner who specializes in airport disputes. So the airport operator has a dispute with the airport authority. He does all those disputes around the country. Now we’ve got so many private airports that it is a big enough practice for a partner to actually run. I’d never do something like that. It’s highly specialized. But my, now if someone says, you know, do you, I, I have a, there’s a new airport coming and I have a dispute on some aero bridge tariff, do you have someone to… I said, yeah, absolutely, I have someone who does it. I have someone who is a specialist at doing this and he’s done this for the last eight years. This really helps putting together a credential statement for just about anyone who wants to do any sort of commercial work in the country.

Scaling Trilegal during the pandemic

Rohin Dharmakumar: [44:43] All right. Uh, I think the thread that’s of course playing out again and again throughout our conversation is professionalism. And I, I’d like to go back to, uh, this thing where Trilegal’s culture is something that you talked about in earlier times when we’ve talked about, you’ve always hinted at it has to be professional, knowledge has to be, uh, important, systems have to be important, career progressions have to be important, etcetera. And you also have this thing of no superstar culture. Which I suppose relates to this entire thing of no rainmakers, no person is bigger than the law firms, etcetera, which seems to kind of tie back with everything that you’ve said, right?

Rahul Matthan: [45:25] One of our values is, the hardest value to explain is, uh, we call it firm before self. And all the other values have one name things, like, you know, professionalism and integrity and stuff. But this is firm before self and that sort of embodies this, um, that you, in all the things that you do, you have to think about what is in the interest of the firm before what is in the interest of yourself. Which is a really counterintuitive thing for a professional because a professional is all about self. And, uh, what we’re trying to capture in this really unwieldy…

Rohin Dharmakumar: [45:56] It’s a tough thing. It’s like thinking like, I mean if I take a different profession, let’s say for example, a doctor. A doctor, again, I’m not equating, but I’m trying to imagine a doctor having, uh, saying that firm before self. It’s hard for many of us to imagine because the profession of doctor is so individualistic and in some senses what you’re also saying is very similar because you have relationships. So therefore the lawyer and their self comes first and you’re essentially saying, no, it’s firm before self.

Rahul Matthan: [46:27] So to be clear, it’s not like we don’t want the individual lawyer to shine as a professional. Like, I mean, I would really, I’m pointing to various people partners in the firm who are shining as professionals in their niche area. Um, but you always do it in the context of the firm. Now…

Rohin Dharmakumar: [46:47] What does the firm provide? Let’s say the same situation. There’s this person who’s uh, let’s say a specialist in um, private airport dispute resolutions, etcetera. Them operating by themselves as a rainmaker within their own firm or another firm versus working in a more professionalized, um, organization like Trilegal. What’s the difference? Why should any lawyer put firm before self in a Trilegal?

Rahul Matthan: [47:15] Because most, uh, businesses that seek legal advice, um, they, you know, most people like to go and get all sorts of legal advice from the one firm that they engage and trust. Uh, most people can’t because there are some niche areas that they have to go elsewhere, uh, to get. Uh, but if we can in one, uh, under one, uh, roof, provide you with pretty much anything, once again going back to that one client that uses 50 of our partners. Uh, that client, um, essentially could go to 50 other firms or could go to this one firm and get advice from this one firm on 50 different, uh, aspects of what they want to do. Uh, clients generally prefer that. Now there are different types of clients. There are some clients who are like, look, I want to have 20 lawyers because I want to keep one against the other. I want my options, all of those sorts. So that’s fine, you know, clients have their choice. But the advantage that a, uh, individual practitioner has who, uh, um, in an organization like this is that individual can go deep in that one area that they’re very good at, uh, without having to actually worry about having a broad set of, uh, experience and knowledge that a client demands. And I think that is very, very important. Uh, particularly in the, uh, age of hyper specialization that we have right now. You know, when we, when we, so I, I do tech law. And when we do tech law, uh, me, all the partners in my practice, all the lawyers in my team, we have maybe 50 lawyers on the team, we can speak directly to the engineers. We actually take the in-house legal people out of the equation because sometimes the in-house lawyers don’t translate the advice that we’re providing directly to the engineers in the way that we need to. Now this is the level of expertise that is non-trivial. Because we, as lawyers, have learned the way technology works. And when we give telecom advice, we know exactly how towers are set up, we know exactly what that different bands of bandwidth do, what the back haul does, what different types of radio equipment does, we know all of this stuff, in a way that sometimes the in-house lawyers don’t know because they’re only dealing with contracts. And sometimes the advice that we’re providing is, you know, we’ve been asked for an opinion, and the opinion is, can we do such and such? And the straight answer is no, you can’t. But our answer is very often, we know what you want to do. You’ve asked a question and my answer to that is no. But if you can readjust your technology, and I know you can readjust your technology because I understand how technology works, you can achieve what you want to do and then you will ask me a very different question. Now this sort of advice is not possible for me and my team to give if I didn’t have the ability to super specialize in understanding how telecom networks work. I can do that because I don’t have to worry about corporate law. I have a huge corporate department that does all the M&A stuff. I don’t have to worry about intellectual property, there’s someone else doing intellectual property. I don’t have to worry about, uh, funding because I’ve got a banking finance team that does all of this. So I have a bunch of people who have my back on all the other things that that client needs, to give me the space to go deep on this one thing that is also super important to them. And that client is really happy because I have no equity incentive to keep all the work to myself. In fact, I have the equity incentive to actually give this to as many people as possible so that he can get the same level of deep advice that he gets from me on Telecom in financing, in, uh, structuring of an M&A and all of these sorts of things. And I think that is the real reason why this model works.

Rohin Dharmakumar: [51:00] Got it.

Rohin Dharmakumar: [51:01] Early on in the conversation, you had said the real interesting part is not the setting up of the firm, it’s not even the all equity structure, it was a scaling. What was that? When you set up, of course, we knew that there were six of you. How many did you become, say at the end of the first two years?

Rahul Matthan: [51:18] Gosh, I don’t have these numbers. We’re small…

Rohin Dharmakumar: [51:20] Maybe 20, 30 people? Or more?

Rahul Matthan: [51:25] Yeah, I mean, in two years time…

Rohin Dharmakumar: [51:26] How do you look at it? Let me ask a question differently. How do you look at the stages of your scaling? Six to 50, to 100, to 1000? What were the, mentally when you look back at the stages that Trilegal has come and you think of, I mean, typically all organizations have this, you know, there is a certain ceiling and there is an unlock at you get sort of at a particular number, maybe it’s 200, maybe it’s 500, and you break past it and then you hit, you grow very fast and then you hit another ceiling, etcetera. So if you have to divide Trilegal’s scaling into chapters, how would you, uh, divide those chapters in terms of headcount?

Rahul Matthan: [52:04] So for me, the scaling moment happened at COVID. Uh, and I think this number is really going to, uh, uh, you know, help you understand why, you know, COVID is 2020, right? So that’s 20 years after the firm. I think we’re pretty linear, we grew, but we grew pretty linear all the way till, uh, COVID. We tripled over COVID.

Rohin Dharmakumar: [52:26] So you were roughly what, 300 odd people? 300 odd people.

Rahul Matthan: [52:29] Yeah. And over the span of COVID, while we were locked down, we must have, close to tripled. We would have doubled certainly. Uh, not just in lawyer head count…

Rohin Dharmakumar: [52:43] Correlation is not causation. I’m assuming, it’s not that people weren’t, didn’t have to work out of office so that…

Rahul Matthan: [52:49] No well… so, so I mean, there’s certainly some, um, impact because you ask law firms anywhere in the world, they were at their busiest during lockdown. We were certainly flat out busy during lockdown. I mean, it was a very difficult time. Uh, there was a lot that, uh, companies needed to reorganize internally, because, you know, COVID was just very, very challenging for people. And so lawyers really had to, uh, work out of their skin to solve many, many complex problems. Um…

Rohin Dharmakumar: [53:21] So help me understand this because this is new. Like within COVID if you tripled, like for the, like you said for 20 years, you grew linearly. And then within two years or three years, you tripled…

Rahul Matthan: [53:32] Compounding. Look, it’s, you know, once you, once you go to the second half of the chessboard, you are, uh, really doing very, very exponential growth.

Rohin Dharmakumar: [53:40] No, I get that. I want to understand that from two points of view. Firstly, what changed so dramatically from a demand point of view for companies? And second, how did you essentially scale up 3x from a supply point of view because it’s not that there is an infinite talent of lawyers coming up, right? So you are, I’m assuming hiring from other firms, experienced people, etcetera. So both of them, the demand part of it and the supply part of it. What happened?

Rahul Matthan: [54:07] Yeah, so, so I, I, let me, let me, uh, do the other correlation and causation, which I think is more closely, uh, aligned. Um, in 2020, so up until, uh, 2019, um, I was on the management of the firm. As in, I was on the management committee, uh, of the firm. Uh, uh, and, uh, so, you know, me and our founder, Karan and then before that Karan and Anand and so it was very much founder driven up until, uh, 2018, 2019. And then we’ve always believed as part of the larger ethos of everything that we’ve spoke about professionalism and things like that, that we can’t, you know, we have to put our money where our mouth is and if we want to truly be a professional firm, we’ve done all of these nice things and equity and stuff like that. What does it matter if there’s a founder running it? Right? So it’s not like we have any separate equity, but the founders are still calling the shots and it’s not ever going to be a professional firm unless we actually cede management. Right? So this is nothing to do with equity, nothing to do with any of that.

Rohin Dharmakumar: [55:06] Also, this is more interesting because now you’re, the first thing was you’re starting in 2000 and you’re thinking 10 years from now, we’ll have the first partners. Now, you’re essentially saying roughly 10 years from then, the first set of partners or maybe others are now breaking through the next thing into management. There are two different things.

Rahul Matthan: [55:28] Yeah, look, I mean it’s not, it’s, it’s, life is never so cut and dry. It’s very messy. I’m just trying to like…

Rahul Matthan: [55:34] So I don’t know, I’m, I’m just objecting to the 10 years, it’s not that simple.

Rohin Dharmakumar: [55:38] No, no, I’m simplifying it because like I said, in my mind as…

Rahul Matthan: [55:40] You’re right, this is the next stage. You know, you need to sort out different things at different times. So when you start the firm, you need to clear the way for 10 years from now. One way to do that is basically to take the names out. So that you just got this thing called Trilegal, it doesn’t mean Rahul, it doesn’t mean, so you just, you almost vanished the founders. Then you bring people into the equity, uh, you build a big firm, which is now 300 lawyers, it’s big, it has a fair number of practices, but nothing like the types of practices we have. But every other firm is looking at this and saying, okay, look, these guys are 300, okay, they’re not a small firm, so they’ve managed to survive for 20 years. But what is it that gets them to leave their existing firms and come and join us? Because you asked the question, how did we, where did the supply come from? I said the supply came from the other firms that were moving here. I would not have approached some of these partners because I would have felt that their culture was not a fit.

Rohin Dharmakumar: [56:32] Was not a fit.

Rahul Matthan: [56:33] What I didn’t realize was that we had such a strong culture that it was actually people who were drawn to this culture. And they were like, I don’t want the culture that I have, I really like your culture. And I know my culture is not the same and maybe I have to learn and then we have to do some work, but I will come because I want this culture more than that. And so I’m willing to change my culture to this.

Rohin Dharmakumar: [56:55] What was that, if you have to describe that? What was that pull?

Rahul Matthan: [56:55] This whole, um, you know, giving work to other people. I mean, a lot of the laterals when they come, the, the first question is they come and ask, you know, so can I do this? And I’m like, you can do whatever you want. Can I, can I do business to… I said you can do whatever you want. You want to go business development to New York, just a travel desk is there, they’ll give you a ticket, you go there, do what you want and you come back. No one’s questioning you. Because the culture in many other firms is…

Rohin Dharmakumar: [57:19] There’s a lot of turf.

Rahul Matthan: [57:19] There’s turf, there’s no person who is now signing off, you’re a partner, you’re equal.

Rohin Dharmakumar: [57:25] There are no sirs, I read that in the research as well. No one gets called sir. Is it a big thing in law firms, people getting called sir?

Rahul Matthan: [57:33] I mean, I didn’t even think about it. Now, I don’t know where this research is coming from, but I, you know, quite frankly…

Rohin Dharmakumar: [57:37] No superstars, no one gets called sir in the firm, everyone gets called by their first names, etcetera.

Rahul Matthan: [57:44] Yeah, what a silly question. I mean, we’re there’s no…

Rohin Dharmakumar: [57:47] Sometimes from the outside because you’ve been in the profession for so long…

Rahul Matthan: [57:51] No one has ever called me sir. I call some judges sir, only those that I really respect. Um, but other than that we just don’t have the sir culture. But I mean it’s…

Rohin Dharmakumar: [58:02] All right.

Rahul Matthan: [58:02] I, I think the, I think the point really is that, um, the, it took the new management, which is a fresh pair of eyes, which, uh, essentially saw what the firm has. And, you know, you speak to them and they say, look, the platform was great, but, uh, we would have just continued in a linear progression. We needed an exponential, we needed some sort of a hockey stick. And I don’t think I would have been able to do that. I think the baggage of having run the firm for 20 years in that particular way, and of course, we’ve been through a lot. We went through cultural challenges and for me, I would do anything to protect the firm from that bad culture to the point where I would not take the risk that we needed to take, the risks that we needed to take, which in hindsight was not a risk at all. And so I think the real reason why we, uh, did this exponential growth ever since 2020 is because it’s not just COVID, it’s all the way until now. And we constantly get more, uh, partners internally as well as, uh, laterals, uh, the reason why we are capable of doing that is because the next management team was, uh, very, uh, scale oriented, uh, and, uh, they’ve done these sorts of things that I think I would have been, uh, too cautious, uh, to do.

Rohin Dharmakumar: [59:16] Who were they?

Rahul Matthan: [59:17] Nishant and Sridhar on the firm right now.

Rohin Dharmakumar: [59:19] All right. So, it was not what COVID did to the world and to client demand that pulled you up 3x. It was essentially the internal restructuring that…

Rahul Matthan: [59:31] Well, so I don’t think, uh, we can say that COVID didn’t help, uh, because of exactly how busy we were.

Rohin Dharmakumar: [59:38] But it wasn’t the primary reason.

Rahul Matthan: [59:39] To me it was not the primary reason. To me it was not the primary reason. To me we, um, in 2020, we entered scale mode. And that sort of scale thinking, uh, uh, really catapulted us to where we were.

Rohin Dharmakumar: [59:55] And, and what are the learnings from running a thousand plus organization versus running a 300 plus organization? How’s your, um, I mean, you of course as a founder and entrepreneur and you also as a practicing partner, what’s the difference between the organization, the Trilegal of 300 people and the Trilegal of a thousand plus people?

Rahul Matthan: [1:06:16] One is the super specialization that we have, right? The super specialization is just remarkably, uh, powerful as a value proposition, um, to clients. There is not, um, there is not a question that I get asked, uh, by someone I know, who I meet, you know, just anywhere, that I can’t point them to a particular partner who has deep expertise in answering that particular question. And that’s very, very useful. And I have no and no partner has any, um, hesitation in doing this because it is one of those things that is part of the way we’re built, part of the way we’re set up and, uh, so it’s easy to do. Uh, and, you know, when we, when you’re 300 lawyers and maybe 50 partners, you still have to think twice, uh, because, you know, there will be one partner who does this particular thing among the five other things that they do. Now I have one partner who does that one thing and that’s the only thing that they do. I have a partner who only does family trusts. So for high net worth individuals, if you want to set up a family trust to deal with your, uh, you know, your investments or stuff like that, there’s one partner, that’s all he does day in and day out. We have partners who set up funds for, uh, you know, the VCs, etcetera. Not the investment of the VCs, the setting up of the fund of the VC. And so we have these levels of specialization, uh, that we can point to, which is, uh, very, very, uh, empowering, uh, as we’re going out to do business development, as we’re going out to, um, you know, introduce clients to what we have to offer.

Rohin Dharmakumar: [1:07:52] Got it. I’d like to go back to culture and, you know, the first 20 years like, you know, you’ve said like, you know, you’ve, you worked very hard to build and preserve a culture. And then one of your apprehensions, rightly as a founder, was that if you scale dramatically, like 3x this thing and you bring in a lot of people from the outside, the culture might suffer. That said, I’m sure there were, I mean, learnings to put it mildly, when you go from 300 to 1,000 plus people, because suddenly you have this, so if you were to just look at it from like, uh, numerical point of view, you have 300 people who have a certain culture and of course, institutionally more two decades of it, but suddenly you have 600 more people who are a different culture. And if you see them, if you visualize them as the mixing of 300 people with 600 people, I’m sure it must have led to either tensions or diffusing because these are all people at the end of the day and you are a fundamentally people oriented business. What happened to the culture when 300 people who were there, suddenly got introduced over time with another 600, 700 people and what, and what happened?

Rahul Matthan: [1:09:01] So look, uh, I mean, I think the, um, the people who really get introduced are the 140 partners, right? So the rest are associates. And, uh, these associates, there’s a small percentage of them, say 10% maybe, 5%, that can actually graduate into partner. But the others are associates and the associates, some of them last for two years, some of them last for seven years. A small percentage of them will last for 10 years and then become partners. But then the rest is, I wouldn’t say a floating population, but some of them go out and do, uh, further studies, some of them just don’t make it. They’re not as good as it’s required and they move to other firms. And that population, which is, uh, you know, 1,100 minus the 140, that population is much easier to manage as far as culture is concerned because they’re much younger. And a lot of them we hire from, you know, we hire straight from law school. Others we hire because we have a requirement. But they are subject to all the cultural, um, you know, legal process, uh, requirements that any organization has. What’s harder to manage is partner culture because the partner comes in, the partner is a revenue center, the partner also has a team.

Rohin Dharmakumar: [1:10:16] So it’s also like a subculture.

Rahul Matthan: [1:10:18] It could become a subculture. But I’m very happy to say that that’s not the case in Trilegal. So the 140, soon to become 150 because we’re in the middle of our partner selection process right now. Um, that group of people, um, are, uh, so, so let me, let me back up. I think it’s important to clearly identify what your culture is. And for the first 10 years, I never wrote it down. Uh, we then did an exercise, I think, 15 years on to get a consultant as you do and you know, you do all this mission, vision, all this stuff. We came up with our values, uh, statement. And, um, it was a remarkably simple thing to do because we all just agreed. I mean, we knew this was and so, uh, the management did this exercise with the consultant and then when we took it to the partners, once again, no one disagreed. They were like, yes, this is exactly what our values are. So there was no debate around the…

Rohin Dharmakumar: [1:11:15] There’s a joke about the professional consultants who sell you a watch to tell you the time or something like that.

Rahul Matthan: [1:11:19] No, but we needed that. You know, because we didn’t know this, this process. So as much as I…

Rohin Dharmakumar: [1:11:22] No, no, I get it. It’s a good consultant if at the end of the day there is no dissonance between what they tell you and what you’ve already felt as part of your culture.

Rahul Matthan: [1:11:31] Correct. And actually, you know, the value that they added was to say that you need to write it down. And that’s extraordinarily important. So it was unwritten for the founders. I think we just, the founders, came together because we shared these values. It then was unwritten for, for a, for all the partners up until that time that we did it because when we wrote it down and announced it at a partner meeting, there was absolutely no disagreement, not a single, uh, breath of disagreement because they’re like, look, this all makes a lot of sense. The firm before itself had a disagreement in that, surely you could have found one word to say this, but you know, but it was just that kind of stuff. It was not that anyone disagreed with that, but it was, um, uh, complete endorsement. And having written that down, um, I think that’s the first important thing as far as culture is concerned. I think, um, very often, we just let culture, uh, uh, be this unsaid thing in the air and that’s not useful. You have to write it down. And once you’ve written it down, you sort of have to enforce it because every now and then there are variations that may be okay, and then they cross the line. And then once it’s written down, you can then call that person, whoever that person is, and say, look, respect is a part of our culture. And, uh, you’ve got to respect the doorman, just making a sort of an example out of my hat. But the guy in the lift who’s coming up, you’re very disrespectful to him. I’m sorry, but that’s not part of our culture. And then you make, you set a boundary and everyone knows that that’s the boundary. You’re not punishing anyone, you’re not doing anything like that, but you’re just now reinforcing that.

Rohin Dharmakumar: [1:13:08] It’s an organization of lawyers. So I guess writing it down helps because otherwise lawyers always say…

Rahul Matthan: [1:13:14] But I think any organization. I mean if there’s a, as I said, a lot of what we do is not perhaps fungible as you can see our equity structure is not fungible, but culture, I think is fungible in any organization. And I think, um, having spoken to many founders, many people, uh, also very experienced professionals, this is the one thing they say that, look, write down this, write down this culture thing because it is, um, it, it gets life once it’s written. Uh, up until then it’s sort of there in the miasma, it’s just there, you know, floating around. But once you write it down, and then you start interrogating it against different activities that happen, you can then figure out, look, this is aligned with the culture, this is not. And people change their behavior because no one wants to behave in a way which is outside of the culture. If they did, then they can, they leave the firm and do whatever they want to do. Uh, and you know, some people, perhaps believe that, uh, I don’t need to respect people. I’m the boss. I don’t need to respect people. They need to respect me and I don’t need to respect them. Well, you can do all of that stuff somewhere else because this place is a place where you have to respect people. And, and it’s two ways, right? The associate has to respect you, you have to respect the associate, you just have to be respectful. And I think that’s that point of, uh, uh, writing it down, interrogating it, and then, uh, drawing clear lines, this is okay, this is not okay. That’s very much part of, I think, building the ecosystem.

Rohin Dharmakumar: [1:14:46] You used a word just now, I mean, just a couple of sentences ago, the firm, right? It’s a, it’s a word which is uniquely associated with professional services firms, right? And yet in some ways, like, you know, I mean when you, in most of the conversations that I’ve had with founders, you’re always referring to it as the company or the organization. What’s the difference in your mind between how a firm operates in terms of culture and people versus how a company or organization operates?

Rahul Matthan: [1:15:18] So, one, there’s a technical reason, and that is, um, we as lawyers are not allowed to set up, uh, corporate, incorporate, uh, corporate entities. We are required to set up a partnership firm. That’s just the nature of it. You can have a partnership of professionals, and then you can incorporate, um, an entity which does a business. Once again, coming back to business versus profession. I mean, it’s a hard thing to explain, but this is one of the, uh, the sort of the legal requirements. I think, um, the, uh, the point behind an association of, uh, of professionals that is then called a firm, uh, is that, you know, we are individual profit centers in a way that a company is not. A company, you can fund the company, the person who brings the capital into the company, just by virtue of bringing the capital in has some say. Uh, we fund our, uh, our operations by the revenue we earn. We’ve never raised any, uh, equity. We’ve never taken any loan. We may have a working capital facility just for, you know, new office fit outs or something like that, but we’re completely run on the income that every one of the 140 plus partners generates in the course of the year. This is not the same as companies, uh, where you can have a financial investor who puts a large amount of money in with the sole intention of making an upside on that investment, uh, and, uh, he, that investor will incentivize the management to do certain things to achieve that objective with no actual say in the delivery of the work or anything like that. So there’s a bit of a mismatch in that structure between the capital and the management of the organization. There is not that with us. We are ourselves responsible for generating the revenue, which is doing the business development, uh, getting a client to sign on to us, actually delivering the work to the client, actually collecting the fees once we’ve presented the bill. I mean, that’s a big problem in the firm. Partners, of course, we got a finance department that will chase up on the bills, but at the end of the day, the partner has to pick up the phone and say, look, I, I did this deal for you. I mean, we closed it successfully, why have you delayed the bill? And very often, that’s all it takes. The client will say, no, no, absolutely, I’m sorry, I don’t know why my internal department has done it. So, all I’m trying to say is that that partner who is, in a sense, the software developer, the, uh, project manager, the managing director, all rolled into one, and the business development team, and the finance department, all rolled into one, is how the firm works. Whereas in, uh, a company, uh, all of this can be disaggregated. Now, the success of our firm to operate at a scale of 1000 lawyers is somehow finding the best of both. So we’ve got very strongly identified, um, functional heads. We’ve got a business development department, we’ve got a finance department, we’ve got a HR department, we’ve got, you know, finance department, uh, IT, all the various, uh, you know, uh, functions that an organization requires, but they are all, uh, in support of the partner and that unit that the partner manages, the partner, his team of associates and, uh, etcetera, uh, is largely supported by this. And I think, and since I’ve never worked in a company, I can’t say other than anecdotally, that this is a fundamental difference between the way the organization works, the, the, the corporate organization works, and the way a partnership organization works.

AI’s impact on the legal profession

Rohin Dharmakumar: [1:19:00] Got it. We haven’t, I, I’d like to switch over to a different topic now, which I’m sure you’ve been resting with, um, for a while, which is AI. Wrestling with, sorry, my bad. Um, one of the professions where the impact of AI is sought to be or at least assumed to be fairly significant is the legal profession because at the end of the day, if I were to kind of stupidly reduce it to its elements, it is interpreting text and generating text. I’ve reduced it to a dramatic, I mean, there is a world of complexity that lies between this. It’s like saying programming is just, um, you know, generating characters or this thing, right? Obviously there’s complexity. But that said, um, if you look at the promise of AI, um, increasingly for the last many months now, especially post, uh, ChatGPT, um, five’s launch, uh, GPT-5’s launch, which was very lackluster, people have been saying that, look, I think the promise has been overstated except for a couple of areas. One is of course coding, right, where, uh, action continues to be very hot and the other area is the legal profession where there are lots of legal AI startups globally, which have just been incredibly, um, you know, raising money and growing, um, their services and scale. So from the outside, it does look like AI is a fairly significant threat slash opportunity to, um, legal firms. Um, again, from the same point of view you’re fundamentally a people driven business. You grew, like you said, all of our conversation up till now has been around the number of people who are there, the number of partners who are there. In many ways, it’s similar to how IT services is where the number of people you hire, employ, deploy, etcetera, determines your… And AI comes in and says, it’s no longer about people, but it’s really about the advice or it’s really about interpretation, etcetera, and all that. You don’t need, is there a world where you suddenly think that, look, we’re like 1,000 plus people and AI could potentially make it back to 300 plus people operating with AI at the same level of efficiency? How do you look at AI? What have you been, I mean, as Trilegal, um, what’s your view on it?

Rahul Matthan: [1:21:31] Yeah, so, look, I am both a Trilegal and also I’m a tech lawyer. So I’ve been using, uh, AI since before ChatGPT. Um. The simple answer is yes and no. When the World Economic Forum did a survey, they said, um, that the profession least likely, uh, to be disrupted by AI was nursing, and the profession second least likely to be disrupted by AI was lawyers. But if you go down that list and the, the, uh, profession, professionals second most likely to be disrupted were paralegals and first year associates. So this is the critical thing. Uh, AI, um, and of course AI is going to get better, but at this current point in time, uh, you said AI is about, uh, text and interpreting. And certainly at the low level, at least the LLM version of AI that we are currently discussing. Correct. So is, at the low level, absolutely, there’s a lot of stuff that AI can displace. So if you think about paralegals, uh, what is a paralegal supposed to do? A paralegal in many ways actually does a whole bunch of research and summarizes and AI is way better than a paralegal at doing the research and summarizing. What do I do every day? I take these summaries and apply my experience, sometimes very orthogonally in a way that I’m, I have used AI for, as I said, longer than ChatGPT. So I’ve been using it, uh, while it was still a command line interface, um, and not in a chat interface. And ever since then, all the way to now ChatGPT 5, I use ChatGPT 5 every single day. I use Claude, I use, uh, perplexity. I use all the AI including we’ve got our bespoke AI for, uh, Trilegal called Lucio. In all of that, the AI is nowhere close to replacing me. Because I have a wealth of experience and I also have a human brain that thinks differently from a large language model where I can create associations, uh, and provide answers in a way that the AI is not able to do. If you think that…

Rohin Dharmakumar: [1:23:51] I get that. Sorry to interrupt you, Rahul, I, I go back to something that you said earlier, which I think is a perfect example of that. You said, talked about a client who comes to you and says that, can you do this? And your answer to the client is no, but if you redesign your network in this way and come back to me and ask me a different question, then my answer will be different. I’m saying that’s the stuff that AI can’t do because in some ways when you’re looking at this information, let’s say summaries which are generated and you’re going on a tangent, you’re essentially answering questions which have not been asked of you.

Rahul Matthan: [1:24:26] Exactly. Had never been asked in many instances. So let me give you one example. You know, uh, the 2G scam, right? And, uh, in the 2G scam, essentially the Supreme Court cancelled a whole bunch of licenses because they said spectrum is a scarce natural resource. Now, where are they getting this analogy from? From mining, because the earth contains scarce natural resources. Now, the question of whether the spectrum is like gold is not something that has ever been asked before. Is it truly scarce? How can it be scarce because it’s not, you know, what is this concept of finiteness? I mean, there’s a certain amount of gold in the earth and once you’ve mined all that gold, then that’s it, it’s over. Now, is the spectrum the same way? Now, to be able to take a look at spectrum and say that, look, for 2G spectrum, there’s only so much bandwidth that’s available. And in a sense, even though this is not even air, this is just some electromagnetic frequency, there is a similar scarcity to gold. When you’re, when you’re using it because if you have two telcos operating on the same frequency, you will not be able to hear anything because the calls are going to interfere. Now, that is not anywhere close to the fact that I’ve mined all the gold in the earth. But a lawyer at the level of someone who is arguing in the Supreme Court can make this analogy. And an LLM cannot make this analogy. This is a, uh, the, you know, the way the LLM works really is taking a very, very large amount of information, finding correlations between all of that information. And the reason why it is good is because it can hold in its context window or in its neural network such a vast amount of information that no human brain can hold that amount of information. And so it magically appears intelligent because it has the ability to, uh, draw connections between things that can’t fit in our minds. We have the ability to imagine these connections. Even if I can’t retain this information in my head, I have the ability to sort of get the shape. And I can say, look, this shape is similar, which is why I can draw an analogy between gold in the earth and, uh, electromagnetic spectrum, uh, which is now a scarce resource. There is a whole raft of things that, uh, professional experienced lawyers do like this on a daily basis. And this is what, in my view, the current generation of AI is not going to replace.

Rohin Dharmakumar: [1:27:03] I get that. All right. But there’s a lot of stuff…

Rohin Dharmakumar: [1:27:04] What happens below? If you look at the organization…

Rahul Matthan: [1:27:06] That is exactly where the problem is. So there’s a lot of stuff below. And to me, look, I think the question of whether we will be, uh, you know, from 1000 lawyers moving down to 300, is the, the issue is not whether AI will replace… Do you even worry about that? Personally, I don’t worry about it. And I’ll tell you why. I think our problem really, uh, and that’s not just the law. I wrote an article very, very early on, uh, uh, in my Mint column, which I called The Last Artisanal Lawyer. And going back to the point that law is an artisanal profession. And all professionals and so are… In that way, the way in which you become a lawyer is by training on the job. And so, a good part of the way law firms are set up is by allowing people for the first two years of their professional life to just learn. I get very little value out of lawyers who are very, who have just joined, uh, the profession, other than the fact that I’m investing in the bright ones, actually sticking on with us and becoming good and productive. You know, so after the, in their third year, they start being productive because they’ve got two years worth of experience. I mean, they’ve done five years in law school, but five years in law school just gives them, uh, an understanding of all various, you know, a wide range of different laws, and also very importantly, an understanding of how to do research and how to think. But when you come out into the real world and you are actually facing a client and a question the client has, that first year associate has no way to answer that question because it involves a lot of understanding of how business works, understanding how people work, all these dynamics, you learn over time. What’s my real worry? My real worry is that AI will replace the jobs of the first and second year associates. And not just my firm, but every firm on the planet is designed around giving the third year two years worth of training on the job. And now when AI comes and takes all those jobs away, we have somehow to miraculously catapult ourselves into functioning third year associates who have not had the benefit of working and learning on the job for those first two years. So the real threat of AI to me is we are going to have to very quickly restructure the way we train people, restructure the way we get experience. The only way now we get someone who has that experience that you need to become a partner is by training on the job. If training on the job goes away, we still have to make people, get people that expertise and I don’t know if anyone is thinking about how to get there.

Rohin Dharmakumar: [1:29:45] I read a very fascinating paper on this recently, which talked about exactly this organizational challenge that if AI essentially disrupts entry level hiring, then how are firms going to build the pipeline for future talent? Because if you’re not training people on the job, and if you’re hiring laterally, let’s say, for example, your example, at the third year level, if all firms are hiring at the third year level, where are they hiring from? And that pool is essentially… And that’s one. Second is, you cannot expect that AI will get stuck at the zero one to two years, at some point it will move up to the three to four year level. Then what are you going to do? If you move up and say we will constantly…

Rahul Matthan: [1:30:24] I’m less worried. So what, what I’m worried about is that, look, we categorize first and second year lawyers as doing, what I explained, summarization and providing summary, but that’s not all they’re doing. They’re actually also sitting, they’re doing the summarization and they’re sitting with the partner and listening on the call to understand how the partner has taken that summarization and translating that into advice. Now, you’ve taken away the summarization and so you think that that associate has no reason to exist. But actually, the real reason to exist is to sit in, in that client call. Now, are you going to then say that we’re going to have, uh, AI do this stuff and we’re going to have associates just sit in and not doing the hard work of doing the summarization, just sit in and listen to the calls because really what you want them to, the, the value that you’re building in them is that experience they get listening to the partner negotiate a transaction. The reason why they’re sitting there is because they did the hard work and put that summary together. But that AI is doing and so are you going to have AI sit in there and listen to it? Because AI doesn’t get experience the same way a human being gets experience. And I think this is really the shift that we got to figure out. We think that the job of an entry level person can be taken by AI. But the purpose of the job is for higher level experience. Which you’re, AI is not going to get, but in replacing that lower level, uh, uh, employee with AI, you’re denying both AI, which would never get that experience in this way, the experience that you require to actually become a third and a fourth year. And you’re also denying the person that experience because that person would get the experience, uh, uh, you know, by doing the summary and then listening. And this, I think, is a fundamental conundrum. And I think the other thing to to really understand as a distinction because you made it, um, between coding and, uh, what lawyering requires is that in coding, you have direct feedback. And LLMs work perfectly with feedback, right? Essentially, LLM wants to make you happy. And so it gives you code that works. And if the code doesn’t work, it immediately says, okay, now I get the feedback that it doesn’t work. And so I’m going to change the code and give you something else. You don’t get instant feedback with the law. I put a transaction together, I won’t know that it fails until five years from now when the parties have a dispute and then they look at the contract and they say, oh, this clause is not there. So you can’t get the kind of instant feedback, um, in an, in a transaction in the way that you will get, uh, when you’re a human being sitting in and listening on the negotiation and that other person says, look, I don’t want this particular clause because whatever, this, uh, affects my ability to do certain things that I need as a founder. And then the investor will say, look, I don’t want you to have those freedoms because the last founder I gave those freedoms to then went and ripped me off. Now this sort of stuff is not, is not the kind of feedback that an LLM can take in and usefully change the, uh, output of what it is doing, at least not the LLMs that I know. Uh, and I’ve seen, I’ve so we’ve, we’re very, very bullish on AI, uh, in the firm. And we use, uh, we’ve got a bespoke AI solution.

Rohin Dharmakumar: [1:33:37] Yeah, you mentioned Lucio.

Rahul Matthan: [1:33:39] We’ve got, it’s called Lucio.

Rohin Dharmakumar: [1:33:41] What is it? What does it do?

Rahul Matthan: [1:33:42] So it does a whole range of things. I mean, uh…

Rohin Dharmakumar: [1:33:44] Oh, so Lucio is not an LLM.

Rahul Matthan: [1:33:45] Look, AI is extraordinarily useful in cutting down time, uh, in things that quite frankly, no lawyers should be doing now that we’ve got AI. So I’ll just give you one example. Um, when you’re doing a dispute, uh, one of the things that you need to prepare for court is a timeline of the documents. And sometimes there are hundreds of documents and the way you do it is there’s some poor soul who will be sitting there and organizing the documents chronologically so that they can then present the timeline. AI does that in maybe two or three minutes, whereas this person would have taken two or three days when there’s a large volume of documents. This is just one example of the many, many things that AI can actually do, which makes our life much easier. I would love for AI to do this kind of stuff because I don’t really want that poor kid to get any experience out of wasting two days of his or her life organizing documents in chronological order. That kid, now that this is done, can now look at that chronology and draw all sorts of useful references to say that, look, the allegation was such and such, but they’ve made the allegation on such and such day. Actually, the incident occurred two days later. So the, so it’s wrong and now I’ve figured out that there’s a way we can argue back against them. This is the sort of stuff that we really want, um, the lawyers to do, not organizing the documents. And so you take a lot of the drudgery out of the legal profession. Um, unnecessary drudgery and, uh, uh, AI can do that and do that really well and free people up, uh, to do stuff which they’re, uh, better aligned to do. Now, because I had one person and that one person had to dedicate two days to doing something chronologically, I perhaps don’t need to hire more people. So, uh, will the number of people that I have in the firm go down? Yeah, it may go down.

Rohin Dharmakumar: [1:35:29] But has it already started happening? Have you started relooking at associate hiring?

Rahul Matthan: [1:35:33] Not at all. It’s not, it’s unlikely to happen, uh, for us, uh, in the profession because I think that…

Rohin Dharmakumar: [1:35:41] So then where is your, I’m trying to reconcile your bullishness on AI. So if, I mean, again, like, you know, speaking from the outside, if you’re not planning to reduce your headcount, you’re continuing to hire and you’re also bullish. So what is that investment of AI leading to then?

Rahul Matthan: [1:35:58] We do more work. We are highly efficient. See the whole, everything that…

Rohin Dharmakumar: [1:36:03] So productivity will increase.

Rahul Matthan: [1:36:04] Absolutely. The whole thing that Trilegal is, see, when I, when I gave you the World Economic Forum analogy, the point I was trying to make was that any profession, any human endeavor that is at the top end of the value chain will never be disintermediated by AI. The challenge is remaining there. What does that mean when you say top end of the value chain? There’s a lot of the work that we do that we do because we don’t have automation to do it for us. If we continue to do that work when automation comes, then we will be disintermediated, at least at that end of the operation. So there are, I give you, I give you one example. We used to do a lot of venture capital work. Uh, and, you know, in those days, maybe I charged, uh, 15 lakhs for a document. And then one day, one of my VC clients came up to me and said, look, there’s another firm that’s doing it for three lakhs. That was the last venture capital deal I did, because I’d been disintermediated. I mean, I added value, uh, enough for a bunch of VCs to come to me and say, look, I want you to do my VC documentation because this is the first time, you know, VCs are coming into the country. We’ve got a Silicon Valley model. I don’t know what the Indian model is. We need someone who is an expert to do it. And after we did that for about three or four or five years, it became cookie cutter. And so another law firm could just put all this together without any of the overheads and the VCs were okay with it because for five years, they’d used this model, nothing had gone wrong. Why should they still be paying this year, you know, five X amount of fees for something that someone else would do, you know, at a fifth of the price. And so, I think it’s hard to internally realize that something that you’ve been working on and has earned you a lot of money for five years is something that you should stop doing. But we, that’s very early on in my, in my profession, but ever since then, I’ve been constantly looking at, uh, you know, you are the only person who can disrupt yourself. Otherwise, you will be disrupted and you will no longer be operating this year. So constantly looking to see, uh, where you are being disintermediated and moving higher up the value chain is the only way you will be able to stay ahead of the disruption that AI is causing. And I think that you can do that in a profession like this.

Rohin Dharmakumar: [1:38:33] Got it. What’s behind then the dramatic growth in, um, fundraising, valuations, etcetera, of so many legal AI startups globally? What is the market that they’re addressing in your opinion?

Rahul Matthan: [1:38:47] So there are lots of, uh, inefficiencies in law. There’s no doubt about that. And you’ve got to understand that legal startups, um, serve two distinctly different markets. The vast majority of legal work that a company does, they will do in-house. So they have internal legal teams, and it’s only when they don’t have, that internal legal team does not have the scale or the expertise that they will go to law firms. And so law firms, in my estimation, you can ask the in-house counsel, um, in any of the companies that you speak to, but my estimation is we get no more than 5% of the total legal work that a company does. So in that 95% there is a lot of optimization that can happen. So, you know, if you’re looking to do an acquisition of a company, you’ll get an AI startup to do the diligence. If it’s a very significant acquisition where you really want to make sure that there’s no liability, you’ll get an external law firm to do it. We’re much more expensive because we will eyeball all those contracts. And, you know, I think what, what you expect is that the AI will miss maybe 10%, but I can live with that, right? 10% risk I can live with. And if you’re that kind of a firm, you just use AI to do your diligence and you will accept that AI will miss 10%. Now, at the same time, a lot of people say, but, you know, you’ve got a bunch of sleepy associates who are looking at this particular document at 3 in the morning after having done two night outs, they’re likely to miss it as well. So, look, I’d much rather an AI that’s never sleepy, but that has an error rate of 10% over an associate who God knows whether he walked out of the right side of the bed and is not looking at things okay, and which is the risk that I’m willing to take. But each organization will do this differently. So to answer your question, I think a lot of where, um, these, this disruption is going to happen would first be in-house. I think the in-house legal departments of organizations will just not hire anymore. Uh, they will hire people who know how to use AI to do the things that they were previously hiring for. And that will be the first place to disrupt because that’s an, that’s a much easier thing to do. When these organizations are, uh, looking outside for external help, of course, they will want the cost savings, and so they will insist on all of us as, uh, law firms, uh, using as much, uh, tech optimization that we can and a good part of that is really AI. But they will not dilute one iota of the liability. Uh, so if I give a legal opinion, they will expect me to stand by that legal opinion and they will sue me for not having, uh, uh, delivered on that legal opinion. And I don’t really care if you use AI or not. That’s not my headache. You’ve got to give me the cheapest, uh, the legal advice for the cheapest price that’s possible, but at the same high quality. And so every law firm takes a call as to what it can optimize, how it can optimize. And if you’re smart, you’ll optimize with AI and you’ll optimize with AI in a way that, um, you’re not sacrificing on your liability, which is really for us, the bottom line.

Rahul Matthan: The person beyond the profession

Rohin Dharmakumar: [1:41:50] Got it. I’d like to switch to you, Rahul. And I like to keep the topic on AI itself. You said you’ve been using AI even before ChatGPT, which makes you very rare, uh, even among tech founders, etcetera, right? Uh, and you’re not a tech founder, you’re a lawyer, as, um, even though you specialize in tech. You said, perplexity, ChatGPT and Claude are the three and a bunch of others that you use as well. What are your use cases? What do you use them every day for?

Rahul Matthan: [1:42:21] So I, as you know, I have, uh, written an article in the Mint every week since 2016. Uh, and…

Rohin Dharmakumar: [1:42:28] That’s Ex Machina, the column.

Rahul Matthan: [1:42:29] Ex Machina the column. And, um, it’s got to the point where you’ll never know how much of the article, uh, was, I wouldn’t say written by AI, but how much of the article is due to AI? Um. I chat with AI. Uh, I mean, the workflow for my article now is I’ve got a, you know, long script that strangely works better in Claude than, uh, in ChatGPT. And, uh, I, you know…

Rohin Dharmakumar: [1:42:55] Why do you say “strange”? Because most of the people I know seem to swear more by Claude than ChatGPT, especially for the last six months.

Rahul Matthan: [1:43:02] Because it’s only good for this one thing for me. Uh, which is this chatting that I do. So I say, look, I’ve got an idea for this for an article and such and such. Now, of course, Claude already knows that I write Ex Machina, so it has a good sense of what I write about and stuff like that. So it has a very nice conversation with me. It asks me, okay, now what’s the argument that you’re making? And I’ll write it back to them. And then and then I say, okay, now, are there any incidents? I said, no, I don’t have any incidents. Can you search for me? Okay, there are these three incidents I’ve given you. I said, okay, not this, something like this. And so I have a long conversation, not that long, maybe it’s an hour. Uh, and at the end of that, I’ve got a pretty fleshed out outline. Uh, I won’t use all of it, but a good portion of it I would not have got if it wasn’t this conversation that I had with ChatGPT, with Claude. And then I write the article down, and then I open OpenAI, and I tell OpenAI, look, uh, this is the article that I’ve written. Can you improve it for me? What’s good? What’s bad? This is what OpenAI is better at doing than ChatGPT, than Claude. And what OpenAI then does is, okay, this is a great article, this is the hook, etcetera, but look, you are rambling here. Um, I think you should connect this a little bit better and it gives me a very nice copy edited article back. So then I go back and forth with, uh, uh, OpenAI for a bit, and, um, you know, I’m going to say in maybe three or four hours, start to finish, I’ve got an article which usually would take me the weekend to write. And so it’s highly productive, uh, for me. I use it for all sorts of fact checking. I use it, you know, to learn. Um, every now and then there are new things that, uh, I, I need to, I mean, learn as in really learn as…

Rohin Dharmakumar: [1:44:46] What’s the last thing that you used to learn?

Rahul Matthan: [1:44:49] Last thing that I really went deep on is, uh, for some strange reason, I’ve decided to move to Linux. Um.

Rohin Dharmakumar: [1:44:56] Which one? Ubuntu?

Rahul Matthan: [1:45:00] No, I, so, uh, there’s this new craze around Omachi, which is this opinionated distro built on Arch Linux. Um, and, uh, this is by DHH, who is the, um, founder of Ruby on Rails, right? So he’s just gone all out on building this, um, it’s a developer interface called Omachi.

Rohin Dharmakumar: [1:45:23] But DHH is opinionated, but what does an opinionated Linux uh distro mean? What does it mean for a…

Rahul Matthan: [1:45:29] So Linux is and Ubuntu is what I used, uh, you know, maybe 20 years ago is what I was using. So that was my Linux distro when I was still playing around with Linux in those days. And it’s pretty plain vanilla. You know, it’s got a whole bunch of stuff. But what DHH has done is he has given you an operating system, which he says it’s going to be like Mac, right? So when you open it, it will have everything set up. It’ll have your email set up, it’ll have, uh, you know, Ruby on Rails, Docker, all those things will be there. Plus, you’ve got signal built in, you can download WhatsApp, it’ll be, so everything is…

Rohin Dharmakumar: [1:46:03] So it’s solving the use case for how do you make Linux more usable for the average person so that they don’t have to spend a week…

Rahul Matthan: [1:46:09] So it’s the coder.

Rohin Dharmakumar: [1:46:09] I’m not saying you’re average, again, I’m not implying that because you’ve been using it for many years, but I’m just saying that that’s been one of Linux’s biggest issues, right? Like…

Rahul Matthan: [1:46:18] So what, DHH has gone and done is he’s built this thing called Omachi, it’s just the rage everywhere. And people, and so the, the challenge for me, and this is the reason why I couldn’t do it. First of all, I have not used Linux last, I’m going to say 20 years ago, um, the very first, uh, email system of Trilegal was set up on Linux. We used to use Thunderbird in those days and then you know we went into Microsoft because clients demanded and we’re all very much a Microsoft shop right now.

Rohin Dharmakumar: [1:46:44] So your team’s collaboration etcetera happens on Teams?

Rahul Matthan: [1:46:46] All sorts of things. I mean, we use Slack, we use Teams, um, all, whole, so, so it’s quite diverse, but we’re a, you know, very simple exchange setup, Microsoft office 365, etcetera. So I haven’t used Linux for a really long time. And I’ve never used Arch Linux.

Rohin Dharmakumar: [1:47:02] And where are you setting this up?

Rahul Matthan: [1:47:04] So I, the challenge that I set myself out after seeing DHH was I’ve got an old Mac, um, uh, MacBook, very old, I think a 2012 MacBook. And he says you can just, um, uh, load it up on this and it’ll work. And of course I said, I thought I’d do that. So I got a USB and I stuck the USB in and then of course the, it didn’t recognize the wifi, uh, router. So I didn’t have the drivers for the Broadcom router for this particular version…

Rohin Dharmakumar: [1:47:31] Which is again a very common Linux issue, which is drivers, specific drivers, old drivers.

Rahul Matthan: [1:47:35] Yeah. And he was supposed to do everything in this ISO that you just flash onto a pen drive and you do. So I did all of that stuff. And then of course, if you don’t have the wifi router, you can’t do anything else after that. So then I opened, uh, ChatGPT, and I spent half a day with ChatGPT, literally, uh, going through shell commands, uh, downloading stuff, tethering my phone, uh, thoroughly enjoyable. I’ve not had so much fun for 20 years. But, uh, at the end of it, I’ve got a running Omachi, I’ve got Omachi running on my MacBook, resurrected the MacBook. It’s super fast. Uh, it’s great fun. Uh, later on today, I’m trying to flash this onto a Mac Mini in the office and see how, see how life works. But this is one of those things where I really had to use, uh, uh, some helper. And the other way to have done it would be to go on Discord and then go through all of Discord and try and figure it out. It’s too much of a pain, but this was so good because ChatGPT really took me through it and then something wouldn’t work and then say, okay, can you just type this out and tell me what the answer is? And then I tell them the answer is, ah, okay, so now this is your problem. And so now you have to do this and bit by bit, it took me half a day, but I installed Omachi. And I’m very proud of myself for doing that because, um, you know, I’m very rusty in this kind of stuff.

Rohin Dharmakumar: [1:48:54] What triggered this? Like, you know, what what, I mean, after 20 years, why did you want to do this? Why, what gives you the joy in this?

Rahul Matthan: [1:49:02] Well, one is it felt easy, uh, to do because he just hyped it up saying all you have to do is put your flash drive in…

Rohin Dharmakumar: [1:49:08] But what, it turned out to be tough. But you enjoyed that toughness. That’s what I’m trying to understand. It was tough, but you still enjoyed it. Why?

Rahul Matthan: [1:49:14] Yeah, I mean, I sort of understood, um, the commands that, uh, I was being asked to do, um, you know, in…

Rohin Dharmakumar: [1:49:23] So it’s learning in that sense. It’s like, yeah. Hands on learning.

Rahul Matthan: [1:49:25] And I’ve always, look, I’ve, I’ve always, and this is sort of part of what the tech practice does is we’re like, look, don’t be afraid of tech. Uh, you’ll only learn tech if you sort of get in and sort of figure out how tech works and I can’t be talking about, uh, you know, so for me, I can’t be providing advice to a tech company if I don’t understand the underpinnings of the way the tech works. I don’t need to really code in Linux to be able to advise most of my clients, but it’s nice to be able to understand the way these things work because you have a greater nuance, uh, in the way in which you’ll advise people.

Rohin Dharmakumar: [1:49:58] Are there any other non-standard LLM tools that you use? Like, these are fairly common, ChatGPT, Claude, perplexity. Is there anything specialized…

Rahul Matthan: [1:50:05] I mean, I use, I use, uh, so, uh, so of course, there’s Lucio, which is for a whole bunch of very specialized, only lawyer type things. Um, I whisper a lot, um…

Rohin Dharmakumar: [1:50:15] For transcription.

Rahul Matthan: [1:50:16] For transcription.

Rohin Dharmakumar: [1:50:17] For, in what context?

Rahul Matthan: [1:50:19] Um, just about so even a lot of this chat with ChatGPT. Uh, of course, I can use ChatGPT’s native, uh, voice, but…

Rohin Dharmakumar: [1:50:26] So you talk to, uh, the…

Rahul Matthan: [1:50:27] So Whisper is, whisper is actually very good with I mean, there’s a whole bunch of these, um, uh, transcribing, um, software, but any text box or any place where you can type, uh, you can set up whisper, uh, to dictate into that. And, uh, it’s really helped, uh, me dictate things out in a stream of consciousness kind of way because, in a sense, what it does is it takes a look at that and cleans it up. In a sense, takes the ums and ahs out, sometimes if you repeat yourself or you say, oh, I made a mistake, it takes all of that out and it does a little bit more than just the transcription, um, and it presents, presents it usually in your own voice in a sense, and, uh, it’s very useful. It’s made me more efficient in, uh, a lot of the things that I do.

Rohin Dharmakumar: [1:51:11] Got it.

Rohin Dharmakumar: [1:51:13] Who are you outside of Trilegal and work? Who are you, Rahul Matthan.

Rahul Matthan: [1:51:26] Yeah, so, um, my wife and son…

Rohin Dharmakumar: [1:51:28] Wife and son.

Rahul Matthan: [1:51:29] Alia and Dhruv.

Rohin Dharmakumar: [1:51:33] Alia and Dhruv.

Rahul Matthan: [1:51:34] Physically speaking, uh, only wife because we just dropped son off in college. Um, so we’re empty nesters, uh, as of a month.

Rohin Dharmakumar: [1:51:42] What is he going to study?

Rahul Matthan: [1:51:43] So he, uh, well, you know, he’s in the US. So, uh, he’s a freshman, uh, and I think, uh, you declare your major only in a couple of years, but he’s very interested in, uh, computational biology and, um, um, systems biology and stuff like that. I don’t think he wants to be a doctor, but he’s very interested in sort of the CRISPR side of stuff, um, and, uh, so that’s what, that’s what he’s doing in, uh, in college. And of course, we’ll need to figure out where he eventually ends up. Um, and, um, yeah, so look, I mean, obviously, we’re going to have to readjust to, uh, to, to life in a sense, uh, as empty nesters. That’s a, that’s a bit of an adjustment. But, um, I mean, I, I, uh, read a lot. Uh, that’s one of the things that I, I think, uh, I’ve always done and, uh, I do a lot of, um…

Rohin Dharmakumar: [1:52:37] Physical books or Kindle?

Rahul Matthan: [1:52:39] Now, physical books. I mean, I’m not, I’m not agnostic to…

Rohin Dharmakumar: [1:52:44] Fiction, non-fiction, both?

Rahul Matthan: [1:52:46] Uh, if it’s fiction, it’s almost only science fiction. Um, very rarely read anything else. Uh, if it’s, uh, non-fiction, it’s very eclectic. I read a whole range of things.

Rohin Dharmakumar: [1:52:57] Got it. What’s the most interesting science fiction, uh, that you can recommend?

Rahul Matthan: [1:53:02] I mean…

Rohin Dharmakumar: [1:53:03] Or any which you’d recommend?

Rahul Matthan: [1:53:05] There are a bunch of, look, Adrian Tchaikovsky is one of the finest science fiction writers right now. Um, so he’s very good. Uh, Cixin Liu, of course, um, Chinese science fiction is just outstandingly good. Um, so, so those are the two really good ones. Right now, the book that I’m reading is, um, Gautam Bhatia’s got a, uh, compilation of, uh, Indian science fiction, which I’ve just started reading, uh, Between Worlds. That’s the anthology. So that’s a, uh, another, um…

Rohin Dharmakumar: [1:53:35] When is your time to read?

Rahul Matthan: [1:53:36] All the time. I mean, whenever, if I’m on a flight, I’ll be reading. Uh, I spend maybe three hours in the morning reading. Uh, so, reading is very, very important to me. Um, particularly the non-fiction reading. So, you know, I don’t read as much fiction as I read non-fiction, but I read a lot of non-fiction. I think…

Rohin Dharmakumar: [1:53:59] And what’s your non-fiction, uh, reading preferences like?

Rahul Matthan: [1:54:02] I read a lot in my area, which is, um, in the tech area. So a lot of the AI, um, non-fiction writing I’ve read. Uh, I’m also on the, um, New India Foundation, so we do a lot of work on, uh, uh, modern Indian history. So as in, you know, post 1947 kind of history. I read a lot of those kinds of books. But, you know, very eclectic. I read, uh, I mean I’ve read, there’s a really interesting book called The Truffle Hound, which is about just the history of truffles all over the world. You think it’s like in Alba, but Alba is the first chapter of the book and then they go all over the world, uh, how do you get truffles and, um, so just like interesting books, you know, the The Creative Act by, uh, Rick Rubin…

Rohin Dharmakumar: [1:49:49] How do you reconcile there is of course, there is growing evidence over the years exacerbated by AI that reading and a reading comprehension is falling in adults, especially among younger adults as like, especially longer novels, longer articles, etcetera, and stuff like that. Is that something that you ever thought about, you know, I mean what happens to reading?

Rahul Matthan: [1:55:13] Well, look, it’s, uh, it’s, it’s hard to say what will happen generationally. Um…

Rohin Dharmakumar: [1:55:20] Did you observe that with your son as well? I mean, change of reading habits?

Rahul Matthan: [1:55:25] Yes, of course. Uh, without a doubt. I think the younger generation consumes, um, uh, knowledge in a different way. But that’s not, uh, it’s not a generalization. Um. And I’m not, I don’t want to say that one is better than the other. I didn’t have YouTube when I was growing up and so there are certain things that…

Rohin Dharmakumar: [1:55:43] Our brains just got wired differently.

Rahul Matthan: [1:55:44] Our brains just got wired differently. Personally, I think that, uh, and I’ll speak personally for myself, I don’t think, once again, it’s what I said about the firm as well, there is a compounding value that kicks in at some point in time. And for me, the compounding in reading kicked in after a very long period of time. It’s at that point in time when you’ve just read so much that you start to then connect the things that different people across different genres of writing are saying, you know, a philosopher says something which aligns with an economist which says something that aligns with a biography of a scientist. And then you start to see the world emerge. Yeah, it’s, but it’s almost emerging, I mean, the knowledge is emergent. Um, you know, each book has got nothing to do with the other. But because you’ve read it and of course we have a tiny context window on our brain, right? So to even make the connection is very ephemeral. It’s not like I’m actually connecting to a book that I read 20 years ago, but that knowledge is somehow stuck in my head and it becomes sharper in the context of something that I read yesterday. I think, um, I don’t know if that can come in another way. I know that that can come with my practice, which is the practice of reading. Um, I, you know, for maybe a decade, I use the Kindle. I’ve gone back to physical books, not for any other reason, but because I, you know, it was harder to carry the books around in those days. I don’t have to carry the books around that much. I just put like a book in my bag and then I, you know, so it’s, it’s life has changed. And so I’m back to physical books.

Rohin Dharmakumar: [1:57:19] Do you typically read one book at a time or multiple books at a time?

Rahul Matthan: [1:57:22] Uh, yeah, I mean I typically read one book at a time, um…

Rohin Dharmakumar: [1:57:27] And are you the person who finishes all books if you start them or do you feel comfortable just giving them up?

Rahul Matthan: [1:57:32] I have more books, uh, in my library than I will ever read right now. Uh, so there’s a large pile of unfinished books.

Rohin Dharmakumar: [1:57:39] Once you start, do you tend to finish?

Rahul Matthan: [1:57:41] I will try my best, uh, to finish, uh, but I have no problems dropping a book that’s not, uh, that’s not useful. I mean, you know, um, I, I’m very careful about the books that I pick up. Usually, it’s not from an algorithm, it’s usually from an actual recommendation, typically from someone who I trust. And usually on the basis of what that person wrote about the book. Um, so I’ve stopped using the algorithm to suggest things.

Rohin Dharmakumar: [1:58:08] Got it. Uh, your son Dhruv’s already, I mean, left for college, in some senses. But looking back at, you know, let’s say, you know, class 10th, 9th, 10th, 11th, 12th, during that phase, what were the values you as a parent were most hoping, um, to inculcate, strengthen in him?

Rahul Matthan: [1:58:29] Well, I, you know, I mean, I think 10th is already too late quite frankly. Um, you’ve got to inculcate values in kids, uh, much earlier. I think you know, by the time you get to 11th and 12th, I don’t think they really, uh, they, they have other inputs, uh, that will shape their values more than just the parents. I think you’ve got to do it much earlier. And you know, one of the, uh, inputs that I hope I have shaped from of course, only time will tell these things is, um, you know, to be self-reliant. I think that’s super important. I think, um, uh, he, he is certainly more privileged than I was, uh, in the same way as my parents were more privileged than their parents were and, um, that sense of privilege or that, that comfort that comes from this increasing generational prosperity is something that perhaps could, um, lull you into a false sense of security or comfort, which I don’t think is healthy. Uh, and so, the idea that he has to make of his life, um, what he can make of it, independent of, you know, what, of course, we will offer him our social capital, we will put him through a, as good a college as we can, uh, put him through. But beyond that, everything he has to make on his own, um, and he has to make it. Uh, you know, he’s not going to inherit the firm. As I told you, there’s no way you can inherit this firm. Uh, we’ve built it such that it cannot transfer generationally. Um, and I think that’s sort of the, that would be the, the, the one thing that I think he, uh, um, knows very clearly that he has to do. I’m quite confident even with the way he’s gone about the selection of the college that he wants and the thing that he wants to do and watching the things that he’s doing there, trying to figure out, um, you know, he wants to get into a frat, but why does he want to get into a frat? Because that allows him to, um, sit with people who are senior to him who can actually help him figure out, you know, some internship opportunities that he has. I’m very glad to hear all these things because he’s already started to think of…

Rohin Dharmakumar: [2:00:41] Resourcefulness.

Rahul Matthan: [2:00:41] Well also to think beyond the four years that he has in college. It’ll be nice to actually figure out what happens after that. And so at least that value seems to have, uh, uh, fallen on him. Um, and then of course, just integrity and stuff like that, right? You know, I mean, you have to be, uh, you have to be respectful. Um, you have to grow up in society. Uh, he calls my mother even though he’s there, uh, he doesn’t have to because, you know, it’s his grandmother, but he’ll still spend the time calling his two grandparents. Um, so those sorts of things, uh, you know, um, staying in touch and doing these things on your own without really being asked to, uh, do it is the sort of stuff that I’m, I’m glad that he’s doing because you can only hope, uh, that you’ve imparted the values. It’s, you’ll have to see whether it actually works.

A passion for coffee

Rohin Dharmakumar: [2:01:34] All right. My last question to you is, um, you’re into coffee, right? What’s your current coffee setup and what’s your current coffee recommendation?

Rohin Dharmakumar: [2:01:38] Oh God. Are you an espresso drinker or are you, I mean, what’s your preferred method of coffee?

Rahul Matthan: [2:01:43] So, I am recently the owner of, um, a Flair 58 2 plus.

Rohin Dharmakumar: [2:01:56] What is that?

Rahul Matthan: [2:01:57] So the Flair is a very manual espresso machine. It’s got a long…

Rohin Dharmakumar: [2:02:01] Is it one of those, those pump action ones, which gradually extracts espresso without any kind of electrical…

Rahul Matthan: [2:02:08] So we have electrical because you got a chamber which you heat. So as you know, since you’re also a coffee person, uh, there’s a, there’s a trio that you have to think about, um, the grind size of the coffee, the actual pressure that you put, and the temperature. And all these three variables, because they’re highly variable, uh, will determine the quality of the extraction of the espresso that you have. Uh, and in a traditional, uh, espresso machine, which I know you have, I don’t know which one you have, but, uh, uh, you probably have a double boiler setup. And if it’s a double boiler setup, the pressure is taken out of the equation. Because you set that pressure and then whatever the pressure is and you can in the more complicated ones, you can actually set a profile for the pressure to do a pre-infusion, the actual pressure for the extraction, and then you can taper it off towards the end. But most of them, you just have a set 12 bar pressure and you can pull it out. And then everything depends really on the grind size, because you have to get the right grind size such that if you put 18 grams of coffee beans, uh, you extract, um, 36 grams worth of espresso out of this setup in 30 minutes. And that’s sort of…

Rohin Dharmakumar: [2:03:19] 30 seconds.

Rahul Matthan: [2:03:20] 30 seconds. That’s sort of the gold standard for everyone. But, um, in the Flair, actually, pressure is also a variable because the pressure is manual. Uh, you push down on a lever with your hand, and you’ve got a pressure gauge, um, which basically you should get above nine bar and not more than 12 bar. But the beautiful thing about this is if you’ve messed up on your grind size, which is the variable, if you’re too fine, then it’s going to take longer…

Rohin Dharmakumar: [2:03:47] You can just control the pressure that…

Rahul Matthan: [2:03:49] You control the pressure with the hand. Uh, and it’s all very tactile. It’s great fun. I’m thoroughly enjoying it. I know I’ll probably get better if I get a proper espresso machine where I’ve got standard pressure coming out. But it’s just a slippery slope from there.

Rohin Dharmakumar: [2:04:03] It’s just a slippery slope. From there it goes on to then why not just get a fully automatic where you press a button and the machine does all the work as well, right?

Rahul Matthan: [2:04:10] So that’s what I did actually. I went and got a Bodum fully automatic and I just hated the coffee that was coming out. It was not… And so now, you know, we have a common friend, Gautam John, who’s sort of our drug dealer. Uh, he’s constantly supplying me with new coffees that he’s got from wherever. And so now as a result, I feel that I must repay it. So whenever I go, I pick up coffee for him. And, um, I’m sure you will get some coffees around the way. So there’s this whole subculture that’s happening here where we’re all, uh, getting coffees. Um, so look, I, I mean, I’m still experimenting with my exact things.

Rohin Dharmakumar: [2:04:44] What’s your coffee recommendation then? Which is your current favorite coffee blend from India?

Rahul Matthan: [2:04:48] So for a long time I’ve been using Marc’s coffee, uh, from Auroville. Um, and I, you know, almost he must be wondering where I’ve gone because, uh, now that Gautam’s introduced me to a whole range of other stuff, I haven’t been, you know, buying from him as often as I did. But, um, I can’t remember what the name is. Gautam sent me something from Bombay, um, Bhuji. Which is what’s currently, so because I’ve got, um, I, I don’t have a hopper, so I can change my coffees around, uh, each shot. Um, so I, uh, am a single doser. I’ve got a D64, so it’s a proper single doser. And it’s one of the three in my rotation right now. And of the three, I really like it. Uh, so that’s a really nice one. Um, and, uh, you know, it might stick, but Marc’s coffee has always done, has always been good, uh, for me. I think, see, when you get into this, you start getting the light roasts and the medium roasts and I’ve got one now in my rotation which tastes too much of strawberry. You can taste all these other things.

Rohin Dharmakumar: [2:05:52] And I’m realizing that, you know, I like my coffee to taste like coffee.

Rohin Dharmakumar: [2:05:55] So you don’t like the fruity coffees.

Rahul Matthan: [2:05:57] I, I don’t mind it at all to be quite honest. But, uh, it can’t stop being coffee. Right now this is smelling like fruit juice. So I, you know, that’s not my… So now I’m starting to realize what I don’t like. So certainly this one and this is one of those that I bought and shared with Gautam. So it’s not his fault at all. I want to be completely clear. This is something I picked up in Cleveland, uh, when I dropped my son off actually. And, um, so, you know, uh, I, I, I think I, I like medium to dark roast. I like it to taste like coffee, but I do like it. A good espresso has a nice range of different things, but don’t forget that you’re a coffee at the end of the day. You know, don’t try to sell yourself like a fruit juice. That’s the, I think that’s where I would draw the line.

Rohin Dharmakumar: [2:06:39] Thank you so much, Rahul. It’s been such a wonderful chat. Thank you for your time.

Rahul Matthan: [2:06:43] My pleasure. Thanks for taking all this time.

Rohin Dharmakumar: [2:06:46] If you’ve been a long-time listener of the podcast and are glad we are back, do tell the world that by sharing this episode with everyone you think will find it valuable. Mixing and mastering for the episode was done by the wonderful Rajiv C and our resident sound engineer. This is me, Rohin Dharmakumar, signing off. We’ll be back soon with another episode.