In this three part interview, Internet Law Attorney Enrico Schaefer discusses his journey from success to living in his car to recreating the practice of law. In this interview (note: there are three separate YouTube videos as you scroll down the transcript):
- How to create a startup law firm based on business principles which make sense.
- Following your passion rather than following the money.
- What it means to be an internet lawyer in a technology age.
- Common legal issues arising on the interent such as cybersquatting, trademark infringement and internet defamation.
- You can live anywhere and practice law everywhere.
- The business and practice of law can be as brilliantly creative as any other type of business once you stop focusing on billing hours.
Tara Kachaturoff: Hello, my name is Tara Kachaturoff, and I’m the host of Michigan Entrepreneur, where we feature businesses from startup to stellar. Today, we have a special guest, Enrico Schaefer, who is the managing partner from Traverse Legal all the way from Traverse City.
Enrico Schaefer: Good morning. All the way from Traverse City, Michigan.
Tara Kachaturoff: Welcome to the program. I’m really excited to have you on the program today because you are an attorney, you’re a managing partner at Traverse Legal, and we’re going to talk about what you do in your law firm and also talk about some specialty items that have to do with the law and the internet. But before we get started into that, why don’t you tell us a little bit about who you are and how you got from down here in Michigan, in southeastern Michigan, up to Traverse City?
Enrico Schaefer: Sure, it’s been a long road, I’ll tell you that, but I’m sure happy to be where I am today. I was born and raised in Detroit. My Father is an attorney. Older brother always knew he wanted to be an attorney. It’s the one thing I always knew from my earliest memory is that I did not want to be an attorney.
Tara Kachaturoff: Really!?, and somehow you made it there?
Enrico Schaefer: Somehow. That’s the gift that God gave me, and I ran with it. Nevertheless, I was down in Detroit, practiced in Detroit until I was 30 and met a girl who was heading up north after school was out in June, followed her up, and never came back. So, I’m very happy to be in Traverse City Michigan, and I have been up there now for about 12-13 years.
Tara Kachaturoff: I read a lot of people envy you. I kind of do. What a wonderful place to live and work. It’s so beautiful. It’s fantastic.
Enrico Schaefer: It is really special because when your friends and acquaintances come up to visit you, they do envy you. And it’s not because of the house you live in, or the money you make. It’s because of where you live.
Tara Kachaturoff: The water and the beauty and the thing is that you have global practice, yet you’re in Traverse City, which is wonderful.
Enrico Schaefer: It is and I always say I get to go home to paradise. If I was in New York or Detroit or anywhere else, I’d still have to come home when I was done in LA or Miami or where have you, but I get to take that little extra puddle jump up to Traverse City and up at paradise.
Tara Kachaturoff: And they probably have a pretty good airport. I’ve seen it. They have a lot of planes going in and out of there. It’s busy.
Enrico Schaefer: They do. And it’s a brand-new airport and Traverse City, through the entire economic downturn, has continued to grow and become more diverse but a lot of the automotive folks who were laid off all had cabins and cottages up north and a percentage of them decided, you know what? I’m just going to go up north. And there is a tremendous entrepreneurial spirit up there. No one wakes up in the morning to work for GM or Ford. They get up to think of something - an idea - and to run with it and to create it. And so, the entire town is really filled with entrepreneurs.
Tara Kachaturoff: That’s fantastic. I should have made the show up there.
Enrico Schaefer: Come on up anytime.
Tara Kachaturoff: I know. I know. Let’s take a step back. What did you study as an undergrad and what was it that made you go down this path of law? I always like to understand how people went there, because you said, you weren’t interested in law.
Enrico Schaefer: Sure. I went to Albion College, and I had way too much fun, as many people do in college. And so, as I got into my third senior semester, I called my dad. I said, I graduate this semester. And he said, well, you can go to grad school, you can get a job, or, then he introduced the concept of, or you could go to law school. I never had really thought about it, and I didn’t want to get a job. I knew that, so, law school it was, and as much as I struggled at Albion to focus, I excelled in law school, earned straight A’s and won every award there was to win.
Tara Kachaturoff: Fantastic.
Enrico Schaefer: Perhaps more awards than any single student had ever won in the 100 + year history of the school. So, for some reason, it’s the way I was raised, and it just came out of me at that point in my life, and I started into practicing law doing different things; automotive/product liability defense, mass tort class action in asbestos. And when I did the mass tort in asbestos at age 30, I hit a birthday that just made me rethink my entire life. How’d I get here, because I got good grades in law school? And so I quit everything and moved into my car and drifted around the country for awhile to kind of figure out what I wanted to do.
Tara Kachaturoff: And this was at 30.
Enrico Schaefer: This is at 30. And then by the age of, say, 38 or so, I had my second child, and my wife had a friend who said, hey!, I think he could get a job down in Traverse City practicing law, and I got back into the practice of law after doing some internet and technology startups. And then I blended those two things together…
Tara Kachaturoff: Interesting.
Enrico Schaefer: ….and worked for a traditional law firm for a few years up there and decided that there was a better way, a more innovative way to practice law, and really recreated the business of law from the ground up on the single premise of what makes sense? Not, how did they do it yesterday?
Tara Kachaturoff: For the past 200-300 thousand years.
Enrico Schaefer: Exactly.
Tara Kachaturoff: You know, what I find so interesting is that you took a break and you did some other things and really, you know, you just didn’t get caught up in the day-to-day and then just let another decade or two flow by.
Enrico Schaefer: Right.
Tara Kachaturoff: You stopped and reassessed yourself and got real in touch with yourself about what you wanted to do next.
Enrico Schaefer: Yeah, I followed my path. I mean, what we do in our law firm is idea protection. And they say we’re becoming an idea economy, and I see that every single day.
Tara Kachaturoff: Interesting, because I was going to say we’re information economy, but you took it, we’re an idea economy. How did you get into intellectual property law, by the way? Why did you go that route as opposed, you know, you started into some other areas, product liability and tort, how did you go down that path?
Enrico Schaefer: Sure. So, when I was living in Salt Lake City on my personal journey, I had a friend who somehow tracked me down and said, hey, I have a friend who owns a company that’s involved in a big intellectual property trademark dispute case in Boston in federal court. And the big law firm had basically bled them dry up through the preliminary injunction hearing, so they had no more money and they needed someone to represent them. And so, I said, sure, that sounds good. I came back to Michigan and met my, now, wife and did that case for five years and ended up loving intellectual property law, and loving the power of an idea and helping protect those ideas for companies.
Tara Kachaturoff: It’s such, I mean, that’s my favorite area of law that I’ve noticed for myself when I’m studying. It’s fascinating because ideas should be shared freely, but we also have the idea of commerce and the economy and value, and those have to be worked in it to, and the idea of fairness and for some people who believe everything should be free, it’s kind of a balancing act, because we have a whole part of society that thinks nothing should be protected, but they don’t understand the protection of ideas is what creates innovation, otherwise, nobody would innovate anything if they didn’t feel like it profit from it.
Enrico Schaefer: Absolutely, you hit the nail on the head. You’ve just described, in a nutshell, exactly what intellectual property law is and the tension between those two ideas of, there is no original idea, everything is shared. It’s derived from something that you saw before, and then innovated on top of, and if it’s unique enough of an innovation on something that already existed, then you potentially can protect that idea from others using it by patent. If it’s a brand, you’re going to protect the brand so that no one else can pawn off on your brand. If it’s a copyright and original work of authorship, whether it’s a book or a painting, you know, we have to protect these people because how else would an author ever get paid if they couldn’t protect their book from copying? Or, an artist, or what have you. So, there is this healthy tension between the fact that everything is borrowed, to some extent, and importance of sharing versus we have to be able to monetize our unique ideas in order for commerce to work.
Tara Kachaturoff: Now with the kind of work that you do, because it’s intellectual property and trademarks and patents and such, that type of litigation is going fall under the jurisdiction of the federal courts. So, you spend what? Ninety-five percent of your time dealing in the federal court structure?
Enrico Schaefer: Absolutely, so, almost everything that we do, there are some exceptions, domains…
Tara Kachaturoff: Do you miss the other stuff?
Enrico Schaefer: No, federal court is just such a nice place to be most the time. The judges are tough, but you know you’re going to get the attention of two well-paid law clerks that did well in law school. You’re going to get the attention of a judge whose docket is not so crazy that they’re dealing with 80 motions on a Friday morning, as happens in state courts. So, it’s really a pleasure to practice in federal court and it’s just one of the benefits of the business model that I chose is that that’s where I get to live most days.
Tara Kachaturoff: And you actually like getting up in the morning and going to work.
Enrico Schaefer: I love getting in my kneeling chair in the morning, in paradise.
Tara Kachaturoff: When we talk about your law firm, and the structure of your law firm, I know you have some very unique things that you’re doing that is not done like the traditional law firm that we think of. Why don’t we talk a little bit about what’s different at Traverse Legal, because that, to me, is fascinating, because I also have a radio show on law called Teach Me Law, and I love the whole, I love everything about law. I don’t even work in law, but I love it.
Enrico Schaefer: Sure.
Tara Kachaturoff: But the one thing I do see is it harkens back to the days of billing people, like in public accounting, I was a CPA. Well, we billed in 15-minute increments and attorneys bleed them by every six minutes. But you don’t do it that way at your firm, you’re different. Why?
Enrico Schaefer: Well, first off, we’re different from other law firms in most every way.
Tara Kachaturoff: That’s a great thing. That’s a beautiful thing.
Enrico Schaefer: It is.
Tara Kachaturoff: Let’s go over some of those ways that you’re different.
Enrico Schaefer: Sure...and so, one of the ways is that we have very innovative billing models. So, when I was doing internet and technology company – I was a general counsel of an internet and technology company in Boulder – we would project bid. And so, one of the thoughts I had this why can’t I project bid the law.
Tara Kachaturoff: Fixed price.
Enrico Schaefer: Fixed price. So I tell you exactly what your deliverables are going to be, I tell you exactly what your deliverables are going to be, I tell you exactly what it’s going to cost. And just that one little thing, is really interesting in many ways. Number one, it gives the business owner an exact list of the things that they’re going to get, and it allows them to make a business decision on return on investment. Does this make sense? Yes. Now, we always say we convert 5-10 times more people into clients because we give certainty to the business owner on what the deliverables are and what the cost is makes it real easy for them to say, yeah, that makes perfect sense, let’s do that. And so, we always take risk with the client. In litigation matters where there is an hourly billing component, we always blend that with a component that puts us in the same position of incentives as the client. So, that’s one way.
We use virtual law clerks. We are very high-tech. We’re one of the most high-tech law firms in the world. And so, we basically bring our clients into our entire case management system. They see everything that happening on their case every single day. We have virtual law clerks that work from around the country on these projects, but because it’s all extranet based, there’s no difference than if they were sitting in the office next door. So, we’re very customer service oriented. We’re very business oriented. We’re very solution oriented. We do litigation when we have to but we know that, typically, is not going to be in the best interest of a client if we can find another solution that gets them where they need to be more quickly and more cost-effectively. So, we’ve got the technology side of our business, and we’ve got the service of our business and both operate in a model that allows us to wake up in the morning and say, not, that I have to bill eight hours, but I’ve got to get these three things done for the client that I promised. And it’s amazing how much you can achieve if you’re shooting for that kind of target, as opposed to an hourly billing time sheet at the end of the day.
Tara Kachaturoff: Yeah, the whole perspective and focus is very, very different. When you talk about using some of the virtual folks that you use, do you have a flexible workforce, then, and can bring certain specialty people in to work on certain things and then, you find people like that within your system.
Enrico Schaefer: Exactly. Many law firms have a fixed staff of attorneys and paralegals, etc. And so, they have to keep those people busy, they have to. And if there is a lot of busy work that goes on at law firms that is unnecessary but keeps the law firms going. We are able to staff up and staff down as needed on a project basis. The virtual law clerks, for instance, who work for us, they love it because they can do that work from home or, god forbid, sitting in class at law school, and get things done and so, it really allows us a lot of flexibility in terms of customer service and deliverables.
Tara Kachaturoff: Now, do you ever bring interns in? Like physical interns?
Enrico Schaefer: We do. In fact, the very first virtual law clerk I had is Brian A. Hall. He became a summer law clerk and then became a partner at our firm right out of law school. He was that good. But he had proven himself as virtual over a three year period. I knew exactly what I was getting with him, and he’s really one of the best attorneys I’ve ever practiced with.
Tara Kachaturoff: Is he a virtual partner or is he physically in the office.
Enrico Schaefer: He is physically in the office. So, we have six attorneys in our office, we have offices in LA, in Austin and we continue to expand.
Tara Kachaturoff: that’s amazing. That’s amazing. Now, the work that you do many times involves something that of a global nature. You’d have to what, register trademarks in different countries and such and get be very big depending on what the business needs are. Do you have to travel a lot? Do you travel around the world? What’s your schedule like?
Enrico Schaefer: My schedule is that I protect my summers as much as I possibly can so I can continue to stay in paradise during the summer. Our six weeks of paradise up in Traverse City and Glen Arbor, but we do travel all over the world and we represent clients in almost all 50 states and 23 different countries. So, one of the largest 5-star resort hotel chains in Latin America, for instance, is a very good client of ours. So, we spend a lot of time in Latin America. We travel and we get it done virtually when we can, but there are certain things you really need to be there, and so, probably two out of every four weeks not in the summer and on the road. I should have anticipated that as part of my business plan, but I didn’t know it was going to work when we tried to be a global law firm out of little Traverse City, Michigan
Tara Kachaturoff: That’s amazing. But with the help of technology, it’s just like you can be anywhere, which is like I have with my business. I’m a completely virtual business.
Enrico Schaefer: Exactly. And the clients feel closer to us than they do their traditional law firm down the street because we use technology to collaborate, and share, and be transparent to them.
Tara Kachaturoff: So, you’re using some sort of a project management thing, kind of like a basecamp, but for law.
Enrico Schaefer: Sure. Exactly.
Tara Kachaturoff: Is it a custom package that you had designed for your firm?
Enrico Schaefer: It’s a customized package of basecamp.
Tara Kachaturoff: Oh, ok.
Enrico Schaefer: You know, basecamp’s beautiful because of its simplicity. And one of the things that was interesting back seven years ago was whether or not – you know, technology’s always been there – the issue is end-users. Are the ready to actually adopt and use technology. So, basecamp there’s nothing really too crazy, innovative about it, but what happened with basecamp is the end-users were all of a sudden, ready. It’s surprising. I think in all of our years – seven years – we’ve only had one client that didn’t use the case management system. Everyone else, they are in there just about every day. Uploading information, sharing ideas, most lawyers will sign up the client and you keep them at bay. And the client’s view is, I don’t want to call my lawyer because I don’t want to get a bill for $100 for a fifteen minute phone call, so, we never charge for communication between us and our clients. Never charge for phone calls, these types of things. And the reason why is, if I don’t know what my client’s problems are, how am I going to bid a project. And, yet, all the incentives, the entire business model of law, is so backwards, it’s so completely backwards when viewed against what would normally be a capitalistic standard. Capitalism. But lawyers aren’t supposed to advertise and it’s frowned upon to advertise. Well, the consequence of that is consumers have no idea that there’s something different than an hourly billing model out there. And as consumers start to become more aware and the internet allows them to research one firm against another. This awareness drives our business because all of a sudden you have consumer’s who are looking for a flat fee law firm who are going to tell them exactly what they’re going to get and exactly what it’s going to cost
Tara Kachaturoff: I love it. And I really, you know you have to wonder, and you know there’s lots of damage because of this, because people didn’t want to communicate with the attorney because of the fee. But things weren’t communicated, so, they missed out on opportunities, lost cases, whatever. Who knows what didn’t happen because they were thinking in the back of their head, oh, my gosh! I’m not going to be able to afford this. If I tell them or have a discussion about something or if they would have had the discussion, it would have come out in inquiring. I mean, it’s sad. It’s terrible.
Enrico Schaefer: Exactly. It comes out two ways. Quality and decision making. So, if you want the highest quality result on your project, then having continuous collaboration with your attorney is critical. And the other thing is that at some point, the client is going to have to make a decision. Well, how educated are they about the various legal points that are in play. And, as these emails come into their inbox every day on the research analysis, and the thought analysis that goes into their project, they’re learning. They’re learning about their problem. And then they can make that decision at the end of the day in an educated fashion.
Tara Kachaturoff: Ok. And there’s another big point that you’ve made. The thing with most law firms, they don’t want to educate you. They don’t want you to have any knowledge of the law because they want you to be completely dependent on them. And then, you’re completely controlled by them. It’s just so different. You’re building real relationships with your clients. You’re actually collaborative, and that word does not actual fit with law in the traditional sense.
Enrico Schaefer: We’re helping entrepreneurs and ideas grow. So we are in business…some days I don’t know if we’re a law firm, if we’re business consultants or a technology company. We’re all three of those things but what we do is we essentially partner up with our clients to help get them up the ladder to the next level. And that’s the best part of the job, being a part of a company that’s gone from an idea to seven figure revenue. That’s a great day.
Tara Kachaturoff: I think what, you know, putting all this together, and of course, I have never worked with your law firm, but you’re like a cool law firm. And nobody would ever put those words together. Cool law firm.
Enrico Schaefer: One of our marketing messages is that, and we’ve done this just for fun, but we’ll send out little placards to the other – we don’t do a lot of business in Traverse City, we don’t try – we’ll send out placards that say, Traverse City’s coolest lawyers. So when we do a big party or what have you, we’ll put up a banner Traverse City’s coolest lawyers. We think of ourselves as unique and out of the box.
Tara Kachaturoff: And see, I came up with that on my own. I didn’t know that. But see, just from understanding your firm and how you do things. Very, very unique, it’s almost like you should be in Silicon Valley. What are you doing in Traverse?
Enrico Schaefer: Well, we actually have been talking about our next office and Silicon Valley is on the list. We have clients in Silicon Valley.
Tara Kachaturoff: I’ll internship there. I want to do an Internship in IP anyway.
Enrico Schaefer: We’re fighting over who gets to go live in Silicon Valley, in San Fran Valley.
Tara Kachaturoff: That will be great. That’d be great. I know we only have a few minutes left, but I want to talk a little bit about intellectual property law, which is vast, but let’s talk a little bit about domain names because I know that’s really important to a lot of entrepreneurs, and gosh, we could do ten shows on that, but, you know, domain names are property to people. Can you talk about some of the risks or things that can come up with an entrepreneur as it pertains to their domain name? I know that’s pretty vast but can you talk a little bit about that?
Enrico Schaefer: Sure. The big risks are…the big risks are someone registers the domain. The registrant of that domain is the owner of the domain. If it’s a business partner and that business partner leaves, guess what? If your business is based on your website and you’re in a fight with that business partner, they’re going to take the domain. Secure your domain. The next thing you need to understand is that trademarks and domains go together. There is a special statute called the Anticybersquatting Consumer Protection Act that essentially says, under trademark law, domain names are typically marks that have special protection. So, you can’t just register any domain name, if you have to make sure that no one else is using something similar within your market segment, because we’ve had clients who’ve been in very successful businesses for a couple years and some mega-corporation swoops in and says, sorry, that’s too similar to what we’re already doing, you need to shut down. And the decision is to simply walk away from that successful business because the thought of having to start from scratch on a new domain name is very troubling. And the third is you really need to protect your rights. I f you get a domain name that’s got trademark value that is your brand, that is your company name or product name/service name, you need to protect it because if you don’t, you could lose your trademark rights, and in today’s world where every mom and pop shop on every corner has got a website and is therefore, global, there’s a shortage of words available for brands that don’t have some trademark issues. And this ACPA, This Anticybersquatting Consumer Protection Act says that if you infringe someone else’s trademark by registering a domain name that’s too similar, you could be liable for up to $100, 000 plus attorney’s fees. It’s a big number.
Tara Kachaturoff: That is a big number
Enrico Schaefer: So, you’ve got to be very careful about which brand you pick and what domain name you register and build your business upon.
Tara Kachaturoff: But people really don’t have the capacity, the resources to figure out if they’re doing something wrong, they’re just registering them like mad. My girlfriend owns almost 580 domains.
Enrico Schaefer: Godaddy let me register it, what do you mean there is a problem?
Tara Kachaturoff: Right.
Enrico Schaefer: Well, when you registered it, you said in your user agreement and terms of service, you said you were not infringing anyone else’s trademark. Of course, no one reads those clickwrap agreements, but…
Tara Kachaturoff: Yeah, just click the box. If somebody has a domain name that’s similar to yours and you’ve been using yours for a while in commerce, what rights do you have?
Enrico Schaefer: First, the trademark law is first to use in commerce. So, the moment you begin using your mark, which may be reflected in your domain name, in commerce, visible to consumers, you have common law trademark rights. Ok. And whoever’s first to use that brand in commerce within a market segment, typically wins any trademark dispute. Now, you should always think about registering your trademarks because that gives you additional leverage against infringers but you don’t have to. The moment you start in business under a brand that identifies you as the source of goods or services, you have common law trademark rights. First one wins.
Tara Kachaturoff: So, if they’re using a lot of your domain name that’s similar, you can ask them to cease and desist?
Enrico Schaefer: Yes.
Tara Kachaturoff: Send them a letter…
Enrico Schaefer: Ask them to transfer the domain and if they’re amenable, you could give them a transition period to get into a different domain and in protecting your domain is really critical. ICANN, who controls all of the domain names, is about to roll out unlimited TLDs, which is the .com, .net, .org, so that it could really be .dot anything, .car, .weather, .birmingham, .bloomfield, etc. anyone who wants to be a registry, they can and pick their own extension. Well, that means that there is going to be an even bigger traffic jam on the web on trademark issues.
Tara Kachaturoff: Because, you know, we were just looking at the domain name piece and not the ending and so that’s going to become even more complex, correct?
Enrico Schaefer: It is because if it’s Microsoft.com but all of a sudden there are 100-200 more extensions, someone could say I’m going to register micro-soft.software., if that extension gets rolled out. So, protecting your intellectual property, protecting your ideas in the internet space is extremely challenging, and that’s been the growth of our business is we specialize in internet company and technology company representation and online brand protection, licensing of intellectual property, online defamation is huge reputation on the internet is crazy and so these are all boom areas and we’re in the middle of all of it.
Tara Kachaturoff: And you know one thing you know because I publish articles online as do many of my colleagues, the stealing online was just scraping of our content and putting it on other sites, no attribution, there’s really nothing we can do, correct? I mean, there’s nothing you can do to track down all these places, I mean, it’s just, it’s….
Enrico Schaefer: The scraping issue is tough. But, yes, you can send letters. There are companies that’ll send, en masse, letters on all scraping, fully automated, and asking them to take down the content. You can go to host, the company that’s actually hosting the website and they will oftentimes respect copyrights and take down websites that infringe. The real question is whether it is worth spending the money to do that.
Tara Kachaturoff: And it never is. But protecting your domain name would be important, to spend the money there.
Enrico Schaefer: Yes.
Tara Kachaturoff: So, we only have a minute left. This has gone by so quickly and I could talk to you for days on these various topics because they’re such interesting to me, but what’s your advice to entrepreneurs? You’ve done it all. You’ve been the entrepreneur on the corporate side, your own business, you’ve got the attorney thing going, and you got Traverse Legal, the coolest lawyers in Traverse City, maybe in America.
Enrico Schaefer: Maybe in America.
Tara Kachaturoff: What’s your advice to entrepreneurs?
Enrico Schaefer: Since we represent entrepreneurs, it is always the same answer for me on that question, which is, the number one differentiator for success is perseverance. The ideas that come into my office are very difficult to sort out by, oh yeah, that one’s going to hit, and that one’s not. Because the real factor is who’s bringing that idea into my office, and how hard are they going to work at it, and when those first ten hurdles hit them, are they going to have the perseverance to get over those hurdles?
Tara Kachaturoff: Well, that’s great advice, perseverance. Thank you so much Enrico Schaefer, managing partner at Traverse Legal. I hope we could talk to you again in the future.
Enrico Schaefer: I hope so too. Thank you.
Tara Kachaturoff: If you’d like more information about our program, please visit us at www.michiganentrepreneurtv.com. Please join me again in the future when I interview another enterprising entrepreneur. Until then, wishing you the best of business.