How a 15-Person Law Firm Actually Uses AI (And Where It Failed)

Collin McKee

Welcome back to the Endeavors AI Podcast. I'm your host, Collin McKee, founder of Endeavors AI, where we talk about the intersection of artificial intelligence, law, business, and the new economy being built around all of it. My guest today has been practicing law in Arizona since 1994. John Phebus is the founding attorney of The Law Offices of John Phebus in the metro Phoenix area. It's a personal injury and criminal defense law firm, about 15 people. He's the past chairman of the Criminal Justice Section of the State Bar of Arizona and past president of the West Maricopa County Bar Association. And here's why I wanted to have him on. A few years ago his law firm was three people, and today it's 15. He uses AI in the firm every single day. He's built real systems inside the practice. And he's going to tell you about a time when AI nearly cost him an expert report. That last part is the real reason the episode exists. Almost nobody tells the real story. John Phebus, welcome to the show, sir.

John Phebus

Good morning, Collin. Glad to be here. And welcome to the frontier — the new frontier of legal practice.

Collin McKee

Indeed. Indeed. So tell us a little bit about your firm. What does it do, and how big is it now?

John Phebus

We're a consumer law firm. We do personal injury and criminal defense cases. There are four lawyers total. Myself and one other lawyer handle the personal injury cases, and then I have two lawyers who handle the criminal defense cases, Devan Montgomery and Jason Wood. And then we have — gosh — 11 support staff. So we have two on intake, one on accounts, and then paralegals. Each criminal attorney has their own paralegal, and then on PI it's a little more labor intensive. So you've got a litigation paralegal, a pre-demand paralegal, a demand paralegal, and a case manager. And yeah, a few years ago, before COVID, it was three people. Two and a half people.

Collin McKee

So how fast did that actually grow up until now? What was the pace of your growth going from three to around fifteen — five times that?

John Phebus

In 2020 we went to four. And it's hard to believe — sometimes that seems much longer than six years ago, and sometimes it doesn't seem that long at all. Six years ago I hired another attorney to assist on the criminal side, and then I just started working full time on the PI. Because before that, like a lot of small firm attorneys, you try to do a little bit of this, a little of that. And I'm great at both. But once your practice gets to a certain point, you need to put in more resources. So in 2020 we added another attorney and paralegal — 2020 or 2021 would be my recollection. And then by 2024 we were up to probably 12. We started spending more money on advertising, which you kind of have to do. Phoenix is a hyper-competitive market, and when you're focused on things like criminal and personal injury, you certainly have to have advertising and SEO in that mix. So it was really huge growth between late 2022 and now — that's when you would have seen a pretty steady trajectory on that line. Our income, I think, has quadrupled, if I remember. But of course our expenses have quadrupled. So that's the problem. The bigger you get, the more you spend. It's like, wait a minute, I thought I could just make more but not spend more.

Collin McKee

Yep. It's a necessary evil, unfortunately. So you mentioned something on our first call that I kind of wanted to touch on. With that growth, you said your job as an owner really changed, because it went from you being more of a lawyer to more of a manager. What does that mean in real time? How did your job function change through that growth?

John Phebus

I'm navigating that transition right now. You reach a certain point where you realize — I realized I've spent most of the last five or six years acting as if I owned the dry cleaning business, but I'm also taking the clothes at the front counter, putting them in the washing machine, pressing them, giving them to the customers. And that just completely bottlenecks your growth, and you're not going to do a good job for your clients. So now I'm to the point where, with fifteen of us, I really just need to be full time focused on being the managing partner, which means sitting in a lot of marketing meetings, going to meet people, and then lots of team meetings. It's so critical. If you have three people, it's pretty easy to make sure your group dynamics are going well. But very quickly beyond that, you've got to be investing time in your people in terms of training, morale, just keeping an eye on things. And it's not about micromanaging. But if you're spending all of your time trying to be a line lawyer — a lawyer on the line practicing cases — you're just not going to know that your folks need help, that training needs to be done, that KPIs maybe aren't being tracked. So over the past year, that's really been where I've been trying to shift my focus. And I'm definitely not there yet. I'm still very, very involved in pre-litigation and really kind of case management, which I'll always be to some degree. But I'm just trying to make sure that everybody on the team knows they've got authority to step up, and that I'm stepping back from day-to-day case involvement — which means getting a case manager on board to make sure things are moving along properly on the personal injury side. We hired a business manager last year. That helped a whole heck of a lot, because now he could focus on some of the marketing stuff that I don't like — the SEO, the PPC, and the social media components — helping us to develop that strategy. But of course, when you add people to take some of the stuff off your shoulder, now you've got a new set of things you have to supervise. So you always have to think about it like chess. You do solve one set of problems, but you do create another set of burdens you have to focus on.

Collin McKee

Yeah, well said. So what were some of the things — you used the analogy of the dry cleaning business, but of course it's different tasks in law. What are some things that you actually found it kind of difficult to hand off, because you want to keep that control, but you noticed that you needed to, just for time management reasons, because you just don't have that many hours in a day? Were there things that were more difficult to hand off than others?

John Phebus

I would say onboarding I try to still kind of keep on my plate. It's really important to make sure — and that's still a work in progress — that when you onboard a personal injury case in particular, you're getting the right private investigators, accident reconstructionists, and doctors tasked to that client. Because that's a little difficult. There are a lot of judgment calls there, and that can be tricky for a paralegal or other team member. So that one takes more training. I've had a hard time stepping back from that. Also, I really enjoy keeping in touch with my clients. I'm a people person. And so it's hard for me, now that we've gotten bigger, to get to the point where I realize, well, I can't check in with every client every week. And I have to rely on my team — just like your doctor's not going to check in with you. I suppose in 1955 you might get a call from your doctor; he'd come to your house, check in with you. But the way law practices function now, that's not possible. So that's been hard. But most of the other things — the routine case flow, getting your letters of representation out — criminal is a lot easier for a variety of reasons. You're on the defensive, not the offensive, and that department is able to function. We have some amazing, amazing team members across the board. But criminal is just very, very quiet. My chief of the criminal department, Devan Montgomery — she's amazing. She runs her department. Everybody's happy, no drama. But with personal injury, there's no drama, but you do have to add those resources. And to answer your question, I still stay involved with onboarding. And then the other area that I've had a hard time getting out of is liens and then the final settlement. So at the end of the case you have to make sure all your medical bills are paid, whether it's health care bills or health insurance bills, get them reduced, and get a settlement breakdown to the client. That's still a work in progress. That's a bottleneck for me, and I suspect for a lot of folks.

Collin McKee

I think this is going to equate back to the increased headcount, but you said something in our first conversation that also stuck with me. You said be careful what you wish for, because then once you get the freedom, you get this whole new set of problems that you have to deal with. So touch a little bit more on that with your growth. Of course, you've got freedom in some sense; the other way, way more responsibilities. What did that mean for you?

John Phebus

Well, it's liberating to have good people around you doing great work for the clients. I like to work remotely in parts — it's really miserable here in the summer, I'm in Phoenix. So I like to head to Wisconsin, where my brother's a lawyer, for parts of the summer. I know my team, they've got it under control. I'm working remotely, I'm working, but that's liberating. And just knowing that you've got the freedom to onboard more cases. Because look, no matter how good you are, especially in personal injury, you are so limited in terms of how many cases and clients you can help if it's just you and one paralegal. It's just not like it was. My dad was a lawyer, my grandfather was a lawyer. If you want to get into the PI space, you need a lot of support. And a lot of people — we all now will use remote folks all over: Philippines, Mexico, Colombia tend to be the most common ones. But those folks too come with a set of challenges. Their written English is never as fluent as a native speaker's. Their work ethic is freaking amazing — there will be a hurricane over there in the Philippines and they're coming to work with water in their house. So it's liberating. And then of course the obvious thing is it costs more money. So yes, you have more people to take some of this off your plate, and then you tend to put more stuff on your plate, but you're also — now you're thinking, I have to bring in a hundred thousand dollars a month, or a hundred and fifty, or two hundred thousand dollars a month just to keep the whole mousetrap going. So trust me, friends — I love where I'm at. But sometimes you'll always look back and say, gee, it wasn't so bad when I was a little public defender and I didn't have any responsibilities like that.

Collin McKee

Yep. Bigger's not always better. So, getting to the topic of AI, because of course that's a part of my show — you told me that you're using Claude on a regular basis, which is encouraging. I think everyone is, but you're not so much experimenting with it, you've got a bit of a process set up. So what does AI inside your law firm look like on a regular Tuesday, as it might be each day?

John Phebus

I'll speak mostly to personal injury, but for me, everybody is required to know how to use and work with AI. And we use Claude Cowork. I emphasize it on the written tasks, on things that need a little more polish. The current highest-level model is Fable 5. Spend the money, use Fable 5. We switched over to Google Drive so that we would have a platform where Claude could natively interact with our file structure. We may go back to Dropbox — it's much better than Google Drive, folks. Do not switch to Google Drive if you're on Dropbox. At any rate. So I have it set up with a whole series of scheduled tasks. Now, sometimes that can get overwhelming — I need to prune those back. But at the end of every day it'll give me a rundown. It'll go through my whole email inbox; it's trained to go through there. And it will do a pretty good job of giving me the five or six emails that I really, really need to respond to the next morning. I've also got it trained to go through all my personal injury cases and give me a day-by-day rundown on what I'm saying is critical: do we have any deadlines coming up, has there been any activity in the file — mostly based on just looking at the file structure to see if there have been files saved, and emails, of course; it integrates with emails. It is to the point now, it's just exponentially better. And if you're looking at this video in a year or two, I can't even imagine — I'm sure very quickly you'll be able to run an entire PI practice from inside the AI. But right now, I get in, I'm using it to look at my emails, interact with my file folders, keep the file folders structured. We have an SOP that renames and organizes every new PI folder and keeps all of our incoming materials properly named. The lien tracker is critical. That is such a pain in PI. You're getting in medical bills, you're getting in healthcare liens, and trying to make sure you're keeping on top of that can be a challenge. With the AI, I created an event, a task, so that it will extract all of those, create a separate subfolder for each lien holder, and create a lien tracker showing what was billed, what was paid, what we may owe. That's been so awesome to help us streamline that choke point. It keeps track on a weekly basis. At the end of the week I get a report where it kind of outlines all the things I did over the week. I could go on and on. I love this stuff. Emails all the time. It will draft — especially with Fable 5 — the emails that it drafts. I got one yesterday. A client was looking for something. It was a case we'd resolved eight months ago. They didn't have a copy of a settlement funding document for an annuity. In the old days, I would have gone through, said okay, here they are, but I wouldn't have really had time to give them a whole lot more information. All I did was point Claude at the client folder and I said, hey, look through my emails, look at the Google Drive folder, here's the client's email, draft a response. It came up with a detailed response. Here's the information you're looking for, here's the annuity company, here's the agent, here's the number you can call. It attached copies of the funding, the annuities. It was so detailed. It would have taken me two or three hours to do that. It did it in two minutes. And it was so much better than I would have done, because of the time requirement. And we got an answer to the client within an hour, versus sitting there waiting for a week — or if I'm in depositions, maybe it's 10 days. So it's so much better for clients. It will draft now disclosure statements on our litigation cases. I'm trying to stay out of that. But my chief litigation paralegal — I'm not going to say how old she is, because she would get very mad at me, but she's been doing this since Ronald Reagan was president — she loves AI. Everybody from our 20-year-olds to our folks who are older than 20 love AI. I use it constantly. But I know we're going to get to the turn, which is you still have to be a little bit careful.

Collin McKee

Yeah, yeah. Perfect segue. So let's talk about it. The medical malpractice case and the lab report. Go ahead.

John Phebus

Okay. Now, we've got to be a little bit circumspect here, Collin, but — you have to know your file. And it was an issue that turned out not to be an issue that affected the case substantively, but it could have. The AI was preparing an expert report for me, a draft of an expert report. And at one point it had looked at all the medical records, did a wonderful job — I mean, just came up with boom, boom, boom, boom, boom. I sent it off to the expert, who's a professor at a university, really top-tier expert. He signed off on it: looks great. We send it over to the defense. They have two experts look at it. One expert looks at it, says yeah, I agree with pretty much what it says — disagreed on some of what it all meant, but agreed with all the fundamentals. Their second expert immediately said, well, wait a minute, this lab report that you're basing this whole section on actually is not correct. And I'm like, okay, well, that's odd, because my guy didn't say that. So I go back and I look through it. And on the actual lab report there were two values, and the way the report had been printed it was a little confusing — the columns just printed slightly incorrectly. A human would not have been confused by that and would have seen the number which was the right number. The AI didn't. And the AI came up with a whole bunch of conclusions about, oh my gosh, this number is so out of whack, it should have been caught — or it means that the client is in a really bad place because of what they had done. Client is in a really bad place. But there's a good example. Two out of three experts didn't catch it. The AI just did kind of a misread. So you do have to know your file. For me — again, it worked out fine. In that sort of situation you just say, yep, sorry, we're withdrawing that thing. But that's what that was all about. Does that make sense, Collin?

Collin McKee

Sure, sure. And so who was the person that actually found the error — the math that didn't math right?

John Phebus

Unfortunately, one of the other experts. There were three experts: two for them, one for me. My expert and one of their experts — looks good, just fine. But one of their other experts caught it, and they were right. It was just an error in looking at how the column printed out. And that's where — what you can't have is a lawyer, a paralegal, a team member who just doesn't look at the file, doesn't really take the time to learn the basics of the case, just plugs it into AI and then sends that out. You will 100% of the time get errors, mistakes. You have to know your file enough. Now, you don't have to know it where you have to know every single medical record and spend hours going through it to really get up to speed — it can do a better job at that than me — but you have to know it well enough that you're going to catch obvious things. And on something like that, where it's mission critical — my mistake was, it created a whole section around this number. It would have taken me 30 seconds to go in and take a look and verify. And I probably — I'm not the scientist — I probably would have looked at the number and I probably still would have said, well, it looks okay to me. I'm not sure I still would have caught that. But it's something where if it's mission critical, you should double check it. And same thing with — we all know about hallucinations with case law, which has gotten much better. I'll do the research on Westlaw, which supposedly is integrating with Claude, but as far as I can tell that's not functional yet. So I'll pull the download of the case research, then I'll upload it to Claude and say, all right, write the memo. Only use stuff in this download, do not make anything up. And still, every once in a while you'll get a case that's just so on point. And you're like, oh my gosh, how was I not aware that the Arizona Supreme Court or the US Supreme Court said this thing? It just gives me the case. I have won. Look at this perfect quote. It's always something like that. And you go — you would have known that that was out there. So it still hallucinates. But man, what a game changer. What a thing for delivering better results for clients. It allows my case manager — we use a program called MyCase, which is very simple but very good at just tasks. It has an AI function, but he can use AI along with MyCase and a spreadsheet, and he does an amazing job tracking where everything is at. And you can just see these systems coming together. I'm quite confident within a year, two years — whether it's Filevine, MyCase, Clio, one of these companies — they're going to have a truly robust AI-enabled ecosystem for personal injury lawyers where they're allowing this process to be much better. So, big firms — Morgan & Morgan; here in Phoenix we have Lerner and Rowe — they struggle with huge volume. Somebody told me, I think Morgan & Morgan, I don't know if it's true, they're spending like a hundred million dollars on trying to develop their own AI platform. Or they have investors doing it, who knows. With Morgan, I'm sure he's got somebody else paying for it. Those guys call me and they're like, hey, you want to invest in advertising in Cleveland and we'll share the money? I'm like, what the hell? Why do I want to give Morgan & Morgan money to put some poor guy like me out of business in Cleveland? So sorry to go off on that sidetrack.

Collin McKee

Right. No, that's fine. No, it's all good information. So are you finding that you're checking things more than you were before AI because of these little blips and partial hallucinations?

John Phebus

No, I would say I'm pretty good at knowing the things you need to look at. Like that lab number. If it's mission critical, or something where there are a lot of conclusions based on it, just double check the number. If it's a case quote and it's really right on point and you're not familiar with that case, and it's so helpful to me — how did I not know that? Check it out. It's gotten much, much better. Like six months or a year ago, that happened all the time. I mean, it was just not good for memos. But now it's great. Another good example that I love — the two things people should always be thinking. When you're using the AI, never forget it's not like a human. You would never sit down with a law clerk or a paralegal or another lawyer and say, okay, here's what I want, tell me how I should ask you this question. But with the AI, you will always get a better result if you kind of say, okay, here's what I want — and then you tell it, give me a prompt to do that. It will then come up with that question for you that you put back in, and you will get much better results. And once you've tried it once, you get it. Or use ChatGPT to come up with a prompt for Claude. The other thing that I find really, really helpful is exhibit preparation. So if we're getting ready to send out a disclosure statement or a demand, or getting ready for trial, you can actually sit there and say to the AI: okay, the demand package is ready to go, create a subfolder with all the exhibits for the demand. It will label them, pull all the exhibits that it thinks you need into that folder. You still have to check to make sure these are the exhibits and that it hasn't left anything out. But 98% of the time it's pulling all the right exhibits, puts them in a separate subfolder. That is such a huge time saver versus your paralegal having to go through — you know, they get interrupted on the phone and then they're like, what exhibits was I looking at? Stuff gets left off, it doesn't get numbered properly. The AI will do all of that for you. It will create a beautiful looking index. It can even do hot links for you, and then you just have one folder where it's all done, and you can share it on Dropbox or Google Drive or whatever.

Collin McKee

Yep. That could save plenty of time. The recurring theme here is there's time that needs to be invested into the tool for it to be able to save you that time. If not, you're going to wind up redoing things, and it's going to take up even more time. So take the time to learn it. Make sure that you know your files. That's great advice there. And then even when you get that product, take the time to review it. Trust but verify, because it'll save you in the end. And I really like the points that you have as far as letting it teach you. It's one of the few tools that we have where just a discussion with it will help you understand it more fully. It's just not an easy button. The temptation is for people just to slap that and let it go. And we've got plenty of horror stories. Thankfully yours is, at the end of the day, a good story — that you came out unscathed with. But it could have been a lot worse.

John Phebus

It could have been very significant. So it taught me a lesson again.

Collin McKee

Yep. Yep. So, excellent. Well, let's kind of bring it to a close. I think it's been a great conversation. So what's one thing, in your opinion, that you would recommend any small firm owner do this week if they're starting their journey into AI? What would be a good first place for them to look to become acclimated with the AI tools, if say they're under a rock and they haven't touched any of it?

John Phebus

I love YouTube. I'll just speak for myself. I got sensitized to this — I go to a legal training program in Atlanta, CRISP, C-R-I-S-P. They're really good at teaching guys like me who went straight to law school how to run a business. And they sensitized me to AI. So I started using it about two, two and a half years ago. And then there are tons of YouTube videos, guys. Just go there. Podcasts like yours, Collin. There are tons of resources. And once you find one, it gets to another. And spend the money. Just get a Claude Pro subscription. Spend the money. Try it. I'm telling you, it's just like — remember, for older folks, you're going to remember what it was like when the web came along and people would be like, W-W-W, what is this? People would be laughing at you. But once you try it once or twice, you get it. It's really easy. There's another company that I like, myaidrive.com. And that allows you to switch the brain. So on Claude, you're just using Claude, which to me, for what we do as lawyers, is superior by far to ChatGPT as of August 2026. Who knows what it'll be in September. MyAIDrive allows you to pick whether you want to use Gemini, Claude, ChatGPT. I don't know if they have Grok, but that's nice. Sometimes some of my team really like that. You upload stuff. I don't know if that one natively interacts with your file structure. Again, that's the great power. Just get on YouTube, try it, upload your documents or point it at your folder and say, do me a disclosure statement — or on a criminal case, create a one-page cheat sheet before my officer interview. It'll give you a one-page sheet of all the questions you need to ask. Trust me, if you're about to go into a deposition, it is so much better than you're ever going to be, when you just say, hey, here's the case file, prepare a deposition outline and give me my exhibits. It'll do that for you. Just think of the things you don't like doing, give it that task, and you will be amazed. Is it perfect the first time? No. And don't just let it spit something out and go file it in federal court, because then you're a dum-dum.

Collin McKee

Right, right. Yep. Good advice. And I think you kind of touched on this with Clio and where MyCase is going to be, but where do you think these AI tools get to? I mean, I say two years, but honestly we could probably call it six months. It's going to be progressing at such a clip. But where do you see this going, say in the next two years? Where will AI be in your practice in two years?

John Phebus

I think it's going to be a partner with my case manager. It's going to be something that truly automates a lot of this and helps each of the team to know, okay, here's what you need to be doing — instead of a human always judging it, like do I need an accident reconstructionist, do I need an accident investigator. It will be able to look at the intake notes, the Zoom recording with the client. All of that will be integrated. So when you're in Zoom — it already can pull the recording, but it doesn't put it into MyCase. It's all going to be pulling all of your data. Your phone calls — we're on VXT, which goes into MyCase — but all of it will be integrated constantly, and it will always be there as an adjunct, and can help draft letters of rep, retain people. It will automate lots of that process that is just extremely labor intensive. You're still going to need people. Now, if you're way overstaffed, you may be able to reduce your staffing levels. But it's just going to make you a better lawyer, because — the nature of my business, you won't get any calls for a month, and then you'll get six intakes in a week. It's just the craziest dang thing. And so AI is so much better than a human when you're in that situation, at making sure those cases, everything is getting done in a timely manner. Ultimately you're going to have AI agents. We're definitely not there yet, where they can do interviews. If you have witnesses, you could task your AI with getting them on the phone, getting a witness statement, interacting with clients. The AI will call you up like this, and you'll have a video chat with your AI agent. My clients would have a fit if I did that. It's not ready for that. But within five years, it will be there.

Collin McKee

Sure. Yeah. And I'd almost say, using your reference of the World Wide Web, in two years it's going to be table stakes. It'll be the expectation of a skill set for everyone everywhere, I would say, but especially in the law field — much like Word and Excel and that whole Office suite, it's going to be an expectation to be able to utilize these tools. So yeah, get after it, get involved with it.

John Phebus

Yeah. And guys my age — I'm fifty-seven. If you don't know how to do this, you think the twenty-five-year-olds coming out of law school don't know how to do it? They're going to eat your lunch. So don't be that old guy who, when you were a young lawyer, wanted to go look at Shepard's or physical books or whatever and didn't want to trust that Westlaw computer terminal down in the library on the green screen. I'm really dating myself, but I'm excited.

Collin McKee

Right. Awesome. And lastly, if you could — where can people find out more about you and your firm and follow your work?

John Phebus

We have a website, crimeandinjurylaw.com — the Law Offices of John Phebus. We're in the metro Phoenix area. And always happy — if anybody wants to share ideas, or somebody new to this wants to reach out and ask me questions about AI or how I do it, happy to chat. And my email is john@phebuslawaz.com.

Collin McKee

Awesome. We'll be sure to put all that information in our show notes. And yeah, if anyone here listening has questions — whether you're a firm owner or business owner — about where you stand today in AI readiness with your business, that's what we do at Endeavors AI. So feel free to reach out to us. Our website is endeavorsai.com. And I'm Collin McKee. This is John Phebus for the Endeavors AI Podcast. We thank you for listening, and we will see you on the next show.

John Phebus

Thanks, Collin.

Collin McKee

Thank you.