Introducing Garfield AI

How is AI helping businesses get unpaid invoices paid?

Join Philip Young, CEO and Co-Founder of Garfield AI, as he explains how AI is transforming debt recovery for small businesses and sole traders across England & Wales. Philip shares early success stories from the platform, from finance teams recovering years-old debt to a sole trader getting £7,000 back after spending just four minutes on Garfield!

He also discusses how lawyers have reacted to Garfield, why pay-as-you-go pricing actually improves access to justice, and what these early outcomes on Garfield really suggest about the future direction of the company and legal technology generally.

Transcript

Welcome And Series Overview

Launch Results And Global Interest

Barry 0:10

Hello and welcome to the Garfield Podcast. I'm Barry Collins. In this new series of podcasts, we're going to examine how Garfield is transforming the way that clients and businesses are reclaiming debts with thousands of pounds worth of outstanding debts settled with only a few minutes effort. Later in the series, we'll also talk to real Garfield customers to find out how they're benefiting from the service. And we'll also talk to industry experts examining how technology is changing the legal profession. In this episode, I'm joined by Garfield CEO and co-founder Philip Young, who's going to reveal how the service has thrived in its first few months of operation and the amazing results it's achieving for clients. I started by asking Philip to sum up how the launch of Garfield has gone so far.

Philip 1:01

So it's been very hectic and very exciting. Since we publicly launched in May, there's been an incredible amount of interest from not just here domestically in England and Wales, but from all over the world. And we've had inquiries from America, Australia, Latin America, Taiwan, China, other parts of Asia, Australasia, and Europe. We've basically covered every continent except Antarctic. So they clearly got no small debt claims. The domestic interest has been really interesting as well. We've had a lot of businesses sign up all the way across the spectrum from sole traders, so plumbers and builders and electricians, people like that, all the way across to really big businesses with a full finance function led by a CFO.

Barry 1:48

Right.

Philip 1:48

As well as lots of other sorts of businesses. So quite a lot of professional businesses have signed up. We've got quite a lot of law firms who have signed up and accountancy firms, and also, interestingly, a lot of medical consultants and doctors, which leads me to the conclusion that not everyone pays their medical bills, which is um which is a surprise to me. So yes, it's been a very busy early period. And we've obviously also, during the same time, been doing a lot of refinement on the product and listening to our early users' feedback as they ask for more functionality or things to be altered because of the way that they want to use the product. And we've been taking that into account and adding more things and refining things. And there's also been a lot of engagement with stakeholders. So with the government, different government departments, the judiciary, regulators, a lot of those sort of stakeholders have been very interested in Garfield as to what it does, but also what it means for other services that might appear built on similar technology in the near future.

Barry 2:51

So for those who haven't used a service yet, just walk me step by step through how the service works.

Philip 2:56

So the system tries to duplicate what a good law firm does for a client pursuing a small debt claim, and it takes the user through the same stages. And that's unsurprising because, of course, the process is mandated by the court itself. So you have to follow the relevant process. The first stage, the triage stage, is where the user explains what their debt claim is about. And at that stage, the user will either bring his or her or its invoices onto the platform. By a number of different routes, we give the user a number of different ways to get their invoices conveniently onto the platform, including uploading them directly from their accounts platform, as well as just drag and drop.

Barry 3:39

Right.

Product Refinement And Stakeholders

Step‑By‑Step: How Garfield Works

Philip 3:39

And also, if they have a written contract, they can bring their written contract onto the platform as well. And there are advantages to them in doing that because then Garfield can read their contract and pull out relevant information from that. But Garfield at the triage stage checks whether or not the claim is a valid small debt claim, looks at some legal questions such as is a claim within the limitation period, i.e. the period in which you need to bring a claim or lose it, and also does useful things like work out what interest rate would be applicable to the claim if the user wants to seek interest. Assuming it's a valid small debt claim, then the user moves on to deciding what they want to do next. And the choices are either sending a polite chaser to the debtor or a formal court compliant letter for action. And depending on what the user chooses, Garford then helps them and drafts that letter and prepares it for them and shows it to them. Garford then sends the letter to the debtor, and the user here has choices. The user can choose for Garford to send it by email and or by hard copy post. The user doesn't have to ask Garfield to send it by hard copy post. The user's also got the ability to just download it after they paid for it and send it themselves. So that's really a convenience feature for whether or not users want to do the hard copy posting and printing themselves or not. Assuming that the initial letters don't receive a satisfactory response, i.e. payment, and it has to be said that so far a lot of Garfield's letters have received payment, so um we've had some good successes in that respect. Then the user can then move on to the court process, and the user can give Garfield the authority to draft the court proceedings. Garfield will draft that, draft the claim form, the particulars, all the relevant documents, and again present them to the user. If the user's happy with them, the user approves them and pays for them, and then Garfield sends them electronically to the court. And they're after the way the flow goes depends on what the debtor does. Because if the debtor plays a claim, um then of course the claim is over, the user's got paid, they're very happy, and there's no more work required.

Barry 5:39

Yeah.

Philip 5:39

Whereas the debtor could choose to ignore the claim, in which case Garfield then helps the user apply for default judgment and send that to the court. The debtor could admit the claim, in which case Garfield helps the user deal with the admission, and that might mean a debate around how much extra time the debtor might ask for to pay. And the final possibility is the debtor might defend the claim, in which case Garfield then holds the debtor's hand as the debtor goes to the trial. It's a very grandiose word for a one-hour small claims court hearing, that theoretically is a trial, even if it's only one hour informally in front of a district judge. But Garfield takes the user through each stage of that pathway, that journey, all the way to the doorstep of the court.

Barry 6:23

Nice.

Philip 6:24

And in due course, we are going to offer debtors the ability to send a junior barrister to represent them at trial if they get that far and if that's what they want to do.

Barry 6:34

And am I right in thinking the cost of Garfield depends on how far you go through the small claims process?

Philip 6:39

Yeah, so Garfield is an access to justice product, and that's very important to us, and therefore we wanted to ensure that there were no barriers to entry. And one of the big barriers to entry with legal services is a price, frankly, as legal services are traditionally expensive, and that's no criticism of my profession. It's um just a consequence of the fact that historically legal services had to be delivered by humans, and time is money, as we all know. Garfield takes a very different approach. Garfield is a pay-as-you-go solution. So, in other words, you only pay for the stages you use, and that saves users a lot of money. And because it is a technological solution rather than a human solution, it's also a lot less expensive than using a human lawyer solution.

Barry 7:27

Right.

Philip 7:27

Another very important point about Garfield is that wherever possible, we've ensured that the relevant Garfield fee for the relevant stage is at or below the fee the court allows recovery of. And what that means is for a user who is successful and obtains a judgment, they should be able to recover the majority of the fee they've paid Garfield from the debtor, assuming the debtor is solvent. Um, and that's that's a very important access to justice point as well, because it really helps to make this sort of claim, a small debt claim, economic to pursue. It's a lot less expensive, and also you should get, if you're successful, the majority of the money you've paid Garfield back.

Barry 8:06

Right.

Philip 8:06

And so um hopefully that will help small business people very much.

Barry 8:10

And the claimant keeps all the money, there's no percentage cut for Garfield.

Philip 8:13

No, we don't charge on any percentage basis. We don't ask for a cut of the claim. Uh, we don't have subscriptions because they're also a barrier to entry. And as I say, we're an access to justice product, so we don't want any barriers to entry. And I think users so far have reacted very positively to this charging model. I think it is relatively unusual in the legal profession. It's quite unusual for there to be essentially a unit cost type pricing model and a pay as you go pricing model like this, but it's it's received a lot of positive feedback so far, so we're very pleased with it.

Barry 8:44

So tell me more about that feedback. What have customers have been saying?

Philip 8:47

So the feedback has been very kind and positive. So users seem uniformly to like the product. I think they like the fact it's always available to them. And so we've seen some users logging on at some really unusual times of the night and early morning to um pursue their debt claims, which was not something I necessarily would have anticipated um before we launched. We've seen users sort of engaging with Garfield almost as though it's a fellow human. Um, some of the dialogues between users and and Garfield have been surprisingly warm and friendly, and a lot of hellos and thank yous and all the sort of minutiae that Greece the Wills of Human Interaction. I think a lot of users also like the fact that um it tries to take all the hassle out of their debt recovery lives, and it does a lot of the work that ordinarily would take time very, very swiftly.

Barry 9:38

Has anything surprised you about the way customers using Garfield?

Pricing Philosophy And Cost Recovery

Philip 9:42

The way customers have used Garfield has been interesting to watch and to get feedback on. So, for example, some customers have adapted their processes to build around Garfield to make Garfield just part of their standard business processes. And to give an example of that, some customers have created their own template letters that they load onto Garfield and they use their letterhead basically is their template, and they they've got special templates of letterhead just for Garfield. What we can see from that is that they are now using Garfield not just to collect some of the debts that have gone overdue or some historical debts, but they're using it as a sort of standard process. When any debt goes over a certain period of time overdue, it just automatically goes on to Garfield.

Barry 10:28

Right.

Philip 10:28

That's been very pleasing to see because obviously it's a very great validation of what Garfield has been doing for them. And and some customers have sort of jumped to the the view that if it can do small debt claims, it can do other things, and they've tried to put other types of claims onto Garfield. Unfortunately, that doesn't work for them because Garfield is very sure that it only does small debt claims. And so when someone does that, Garfield will explain, I'm sorry, I can't help you with that claim. I can only do small debt claims. But it's been interesting to watch as as people have thought, okay, if you can do one thing, then surely it can do something else.

Barry 10:59

So, how has Garfield helped real businesses with their legal problems? Give us some examples of results achieved.

Philip 11:05

The impact of Garfield on businesses is essentially to turn lots of uh invoices from just being a line item on an age debtors report into actual cash. And of course, that liberates a lot of businesses because suddenly a lot of the profit that they should have made is turned into profit and it's turned into money in their bank accounts, and they can do useful things with that. Uh, and so I've been giving the example of um my brother-in-law Andy, who was the inspiration for the product in a way because of the problems he had from time to time. He was a sole trader and a plumber, and the sorts of money that he was having to pursue was for him material because a couple of thousand pounds for him is a summer holiday. And so I think that um the ability to turn even relatively modest invoices into cash for small businesses is transformational, and for bigger businesses, of course, helps to do things like helps to fund growth and helps to ensure that they can employ more people and things of that nature. And it's also a very, very big problem. If you look at studies in this area, and there's many different studies, that across the economy, depending on which study you read, the problem is either six billion or the way up to 30 to 50 billion pounds a year of unpaid invoices, slow paid invoices, and debtors who are being unnecessarily difficult trying to get discounts. And so you could see from a micro level, it affects people's lives, and on a macro level, it significantly affects the economy because that's a a lot of money that's not gone into businesses that should be used for useful things like power and growth, but there's also a lot of tax that hasn't been paid that could fund better public services. So I think overall, uh Garfield and products like Garfield should have a significant effect both locally on people's lives and also across the economy as a whole. I mean, looking at a few examples of claims that Garfield's handled, we've seen some businesses collect tens of thousands of pounds already just in the last few months. And for those businesses, that's a that's a great deal of money.

Barry 13:06

Yeah.

User Behaviour And Process Integration

Philip 13:06

Um, and so you can imagine they're really pleased. And um it makes in turn myself and the whole of our team really pleased as well, because everyone involved in Garfield really does want to try and make a difference and very pleased to see that it's it's doing so so far.

Barry 13:21

Have you spotted any early trends in how clients are using the service?

Philip 13:25

I think we've so far seen what I would call an earlier adopter kind of mindset with the users that we've got. So the users that have come onto the platform have been the sorts of users who either can try new things and are willing to try things that are not necessarily conventional, or people that have had a significant problem and have thought this could be the solution to the problem. And the pattern of behavior that we've seen is that users come onto Garfield, they put on a few debts as a trial, they send off some letters and they're very pleased with the flow and the process and the fact it's hardly taken them any time at all. In some cases, they've been paid very quickly too, which made them even more pleased. But in either case, what's then happened is that having said done one or two or three debt claims, they then start to do a lot more. And so you can suddenly see the volume increase from those users when they've clearly thought in their own head, this is great, we're going to use it a lot more. And some users have gone one step further and they've decided they're not just going to pursue debts that are relatively recently overdue. But we've seen some users start to go through their older age debtors report and start putting debts on covering the last six years, which is a period of time the law allows you to recover debts if the contract isn't a contract by way of deed other than 12 years. But we've seen users put older debts on and they're clearly starting to go through the age debtors book, thinking to themselves, finally I've got a way of trying to turn some of all of these old invoices into cash, which is a great, again, it's a great um validation of the product because this is part of the reason we built the product to try and solve that particular problem. I should say, by the way, that Garfield isn't limited to debts that forward in the last six years. If you do have a contract that is by way of deed, then your limitation period is 12 years, and Garfield will understand that and allow those debts to be pursued as well. So some businesses, when they have that form of contract, will be able to go back a long way and really dig through their age debtors report.

Barry 15:24

Speaking as a small business owner myself, there have been plenty of times when I've been chasing unpaid invoices, and you think it's just not worth the hassle of chasing that money down. I could be earning more money in the hours it would take me to pursue that debt. I guess the advantage of Garfield is that it reduces the amount of time it takes to chase debtors.

Real‑World Impact And Scale Of The Problem

Philip 15:41

Yes, I think that's the the bigger benefit, even than the cost saving. If you look at uh the claims on Garfield, and we do we do look at the statistics, we've seen cases where the amount of time spent to collect a debt has been utterly trivial. We had one debt, this is presently our crown jewel in terms of sheer efficiency, where the user expected it to be a very difficult debt to collect. Um the user put it onto Garfield, generated letter for action, sent it, sent it out. And I'm not sure they had high expectations of getting paid quickly. I think they were expecting to have to litigate over this. But actually, the the letter from Garfield caused the debt to be paid in a matter of weeks. And in total, in total, the user had only spent four minutes of their time on Garfield from beginning to end, and the amount of money in question was about 7,000 pounds. So that's four minutes work for £7,000 collected. And you imagine the user's delighted. And I I was delighted, and so was the whole team because that was again, it was a sort of validation of the concept.

Barry 16:40

Yeah.

Philip 16:41

So I think if anything, the the time saving is even more important than the low cost. As it happens, that user only paid £7.50 plus VAT for the lead for action, so they also paid hardly anything, a tiny fraction of the £7,000. You can imagine the implications of this sort of thing across a bigger business and the implications across the wider economy. And changing topic slightly, I think we're therefore going to see AI in many different areas really revolutionize business processes in a good way.

Barry 17:14

So, how does Garfield's average debt recovery time compare to that of human lawyers?

Philip 17:19

It's far quicker so far. We will obviously know a lot more as more claims come onto the system and more claims go through all of the possible pathways of the product. But at the moment, the speed of using it and the speed of getting documents out the door is inevitably a lot quicker than using a human. And that's no disrespect to a human, of course, or any member of my profession. It's just that technology inevitably has some innate advantages. And one is the ability to digest documents quickly and to draw out the relevant information from them and generate new documents incredibly quickly. And one of the reasons that we thought relevant technological application was useful in a small claims field was because a lot of small claims work is very structured. So it's a structured series of steps. The inputs and outputs at each step are relatively well defined. So, in the words of my technical co-founder, Dan, um he talks about small debt claims as being a series of relatively closed problem spaces, which is a phrase I love. I think that's a brilliant phrase. And um, as a consequence, it's ideal for the technology that's applied to it to solve it. Because this form of technology is very much able to deal with all of that at a speed that is much quicker than a human reading a document, thinking about a document, drafting a new document. So, yes, the the long and the short of it is if you set up a a race between Garfield and somebody else who does this work who is a human, the human wouldn't unfortunately stand much of a chance of also how many lawyers do you know you can call up at 3 a.m. and say, I'm feeling quite not affordably.

Barry 19:00

Talking of lawyers. How's the service been received by the legal profession?

Time Savings And Standout Success

Philip 19:04

Well, that's been very interesting as well, because um the legal profession isn't necessarily known for being the most forward-thinking profession is. That's true, even though it's um might be thought to be a bit harsh. But lawyers tend to be small C conservative, and and I say that, of course, being a lawyer myself. And so we're sort of cautious about change. We embrace change when it's the right time, but we tend to be cautious about change. But those points said, actually, the legal profession has been very warm and encouraging towards Garfield. And if you look on social media and look in legal publications, it's been received very positively. And I think that's because lawyers have an innate understanding of the problem that Garfield's trying to fix. And in fact, many lawyers, of course, are in business themselves and understand the problem directly because they have the problem of recovering small debts themselves as a law firm.

Barry 19:53

Yeah.

Philip 19:54

And so I think they've understood why it is that a product like this is suitable for the business problem in question and its advantages. A lot of lawyers seem very excited about how AI technology is going to be adapted to different types of legal work to make the job of a lawyer in some ways more pleasant.

Barry 20:14

Are you able to learn from cases where debt has been settled quickly? And how will that help customers in the future?

Philip 20:20

We're always refining the product, and we will continue to do so. Um, and we will take all the benefits of everything we've learned and build it back into the product to make it better and better on a rolling basis. That inevitably will mean dealing with particular circumstances that particular users or debtors may have, and also where we see things that work really well, then we will make sure that the benefit of that is duplicated across the entire product for users. And we are also trying to guide users as well. So, for example, Garfield give users a choice of letterhead that they can use for sending out letters, and the choices are they can either put it on Garfield's letterhead itself, which is um, of course, an SRA-regulated law firm's letterhead, so it has, I think, some punch. And they could have it on their own letterhead or they could have it on a very simple letterhead, which is very basic, where their name is just on the top of the paper with their address.

Barry 21:17

Right.

Why Tech Beats Humans On Speed

Philip 21:17

And we've been guiding users, for example, to consider not using the simple letterhead, but to prefer their own letterhead or Garfield letterhead, because we think that has more impact. Similarly, we're going to roll out additional functionality over the next few months that will also help to engage debtors because sometimes the problem is not that the the debtor is refusing to pay, it's just that there's a psychological thing on their side where they're struggling to come to terms with the issue. And so we need to sort of encourage them to engage because the debt obviously doesn't go away, it has to be responded to.

Barry 22:00

Finally, Philip, how do you see the technology evolving? Could it branch into other areas of the law?

Legal Profession’s Reaction

Philip 22:05

Yes, it could. There's a caveat there, but certainly the way that we have designed the architecture for Garfield, it could be used to power other types of small claims. There would need to be adjustments made, and obviously additional functionality would have to be built. But yes, we built it in an intentionally modular way so that it could be rolled out to help other types of claimants pursue other types of claims. And I mentioned a caveat a few moments ago, and that's because the technology as it stands is, we think, more than capable of dealing with small claims, but we wouldn't go that far for claims of much greater value where the complexity is a lot more. And we think at the moment that LLM technology isn't able to deal with, for example, claims for hundreds of thousands of pounds, far less claims for millions. That said, the speed of technological development in this field is so quick and so much money is being invested in it, that were you to ask me that question again in a couple of years' time, I might have a different answer for you.

Barry 23:05

Right.

Philip 23:05

And in fact, um, only in the last couple of weeks, I saw a development that um seemed very interesting, and that was um a new business in America that is building a new architectural type of LLM that will help with scientific reasoning. And that's a very different type of LLM because that LLM understands when it doesn't know something and goes searching for the relevant facts. And that, although it's more built around the idea of scientific thought, that's more similar to the way a lawyer operates than, for example, present LLMs operate. So you could see that, for example, that technology uh has promise for the legal profession as well.

Barry 23:48

That's it for this episode. Keep an eye on the garfield.law website for future episodes. Until then, goodbye.