At the time of the Great Recession, Julia Shapiro, now the CEO of Hire an Esquire, was then just beginning her legal career in private practice as tremendous changes were happening all around her — the shift to contract attorneys, the growth of alternative legal service providers (ALSPs), and the leap in number of years needed to earn a promotion to partner.
Her employer at that time was already using contract attorneys as part of the firm’s litigation workflow, but after noticing how much time the staffing process consumed by relying on traditional agencies, Shapiro went searching for a company that specialized in legal staffing services for attorneys. Not finding any solutions, she got an idea. “I started forming the idea for Hire an Esquire with a few people in my network from the tech world who agreed to come onboard for equity, and basically, we started a minimum-viable-product (MVP) bootstrap,” working on evenings and weekends, she explains.
From Bootstrap to External Funding
After the launch of the MVP in 2011, it was another three years until Hire an Esquire received its first round of funding from the venture capital community and a full-time team was onboard. The first couple of years were foundational and hard because the “investment community was not very interested in investing in legal tech companies,” Shapiro adds. “There are also systemic barriers and serious challenges to women and minorities trying to get funding.” In fact, it took two major AmLaw 100 firms to sign on as customers in 2013 before the start-up was able to secure angel and seed investments in 2014.
“Study after study has proven that a lot of the reasons for the lack of advancement of women and minorities and women of color are based on bias.”
Upon receiving its first initial small rounds of funding, Hire an Esquire has continued to grow steadily without additional significant capital infusions. Currently, around 1,000 law firms, legal service companies, and in-house legal departments are customers, and the company made more than 1,000 placements of legal professionals in 2018. In addition, 2% of the active US attorney population is registered on the Hire an Esquire platform.
“Moneyball” Puts Success on Steroids
In 2016, Hire an Esquire made a fortuitous technology investment that would set it apart from other legal staffing firms. Moneyball for Legal Hiring, which in turn enabled Hire an Esquire’s exponential growth. Moneyball using psychometrics — a process of measuring mental traits, abilities and other “soft” skills to make better candidate assessments and placements. The process builds upon almost a century of research in industrial-organizational psychology on predicting workplace performance using soft skills. Moneyball was conceived in 2016 out of need because Hire an Esquire won a big contract, and teamed with Eric Fox, who had worked with the professors who created the NFL player assessment (what’s known as “Moneyball for football”). Fox was finishing up his graduate work research in industrial organizational psychology, and he and Hire an Esquire’s recruiting team re-innovated the company’s assessment process on candidates’ soft-skills and saw good success rates.
“We created our own proprietary process based on this established body of industrial-organizational psychology research as well as predicting performance in law to come up with our light-weight version of the screening process,” Shapiro explains. For example, when a client posts a job on its platform, the Moneyball technology makes automatic recommendations — and the company has seen a steady increase in the selection of these auto recommendations by clients.
After the full implementation of the psychometrics into its platform in the first quarter of this year, Hire an Esquire had 75% of hires result from instant recommendations, a jump from the previous level of around 30% from these recommendations. “The jump from the beginning implementation tells us that this technology is really doing a good job of capturing those intangibles, those soft skills, and some of the intangible things that make people know that a person will succeed at a job,” says Shapiro.
The Moneyball concept has generated remarkable results in other areas, she adds. “Before we started using psychometrics, Hire an Esquire had a 17% call-back rate on its temporary positions, but after implementing Moneyball, we had a 40% call-back rate.” Likewise, positive results have emerged in temporary-to-permanent conversations. “Pre-Moneyball, we were at 4% temp-to-perm conversion, which, again, is pretty healthy,” she says. “Post-psychometrics, we were at 18%.”
The final metric Hire an Esquire tracks is the “incident rate,” which means anything client-facing that happens with the candidate. Before 2016, its incident rate was at 4%, which is healthy for the temporary staffing business; and after, it has been below 1% with the first quarter of 2019 being at zero.
A New Frame for Progress on Diversity
One of the more surprising results from Moneyball has been the 15% increase in placement for diverse lawyers. The team did not expect this, but Shapiro says she was not surprised after becoming very familiar with the systemic bias a woman seeking funding from the investment community faces. By comparison, she says she finds the legal industry very receptive to psychometrics and other ways of using data to predict and de-risk hiring.
While using psychometrics to get the best talent is the primary driver of interest in the legal industry, she appreciates the industry’s acknowledgment of unconscious bias. “People from economically or racially privileged backgrounds in Silicon Valley and who are male claim to worship at the “alter of data” until it comes to their own performance,” Shapiro notes. “For their decisions they still celebrate ‘pattern recognition’ and their ‘gut’. But when confronted with data and studies showing their own biases, suddenly it’s just one small factor or there’s another explanation and the data is wrong.” The mindsets of ‘women don’t lean in’ or ‘women don’t work enough hours’ are pervasive, she adds.
“Study after study has proven that a lot of the reasons for the lack of advancement of women and minorities and women of color are based on bias,” Shapiro says, adding that she has experienced a lot of resistance to this finding in the venture world — despite it being backed by significant research — as many VCs cling to the myth of meritocracy within the investment world.
Indeed, Shapiro sits at the intersection of the legal industry and the investor community with three sales meetings and two to three investor contacts every day. “The legal world is really gaining a lead, and the data proves it out when you look at numbers of partners and other metrics on hiring,” she says. “Again, law firms aren’t great, but they look like puppies and rainbows compared to the VC world.”