Community Table: What Does Your Firm Really Do? Plus, Doing The Math, Adding Staff Can Boost Profits

Episode Notes

Transcript

The Un-Billable Hour Community Table where real lawyers from all around the country with real issues they are dealing with right now meet together virtually to present their questions to Christopher T. Anderson, lawyer and law firm management consultant, new questions every episode and none of it’s scripted.  The real conversations happen here.  In our first segment, an attorney is trying to determine what she wants to focus on as a solo attorney.

Female 1: I’ve had my own practice now since 2012, but I shifted from criminal defense, some more civil litigation.  I guess, I’m just trying to just spawned my firm culture and just find out more of what I want to do as far as helping clients out in everything because I’ve done a little bit of just a lot.  I have not done taxes, but I’ve done a lot of different cases and everything like that.  So, just trying to figure out just how to develop the culture, how to figure out what I want to do and how to make sure I stay on the path because, sometimes, I find myself getting a little distracted sometimes by taking on like just other different types of job sometimes.  So, that’s why I’m here.

Christopher T. Anderson: That’s great.  You said you were doing criminal then civil and you wanted to find out what you want to do and how to stay on track and not get distracted by, I take it as outside projects that ways of making money outside your firm to kind of make ends meet.  Am I getting it right?

Female 1:  That’s true, yes.

Christopher T. Anderson: Okay.  I can’t tell you what you want to do, but let me see if we can help find out.  Why did you — so, first of all, how did you get started in criminal?

Female 1: It gave me my first job.  They did.  I like I did not plan to do legal, I mean, criminal defense work.

Christopher T. Anderson: Okay.  So, you joined the firm that hired you. And so, you did it.

Female 1:  Yes, I did.

Christopher T. Anderson: Anyway, it was public defender’s office.  Okay.  And how long were you there?

Female 1: Three years.

Christopher T. Anderson: Okay.  Did you love it?

Female 1: Oh, yes, I did like it but I’m not —

Christopher T. Anderson: I didn’t ask you if like this.  Did you see what you just did?  You see what you did?  I said, did you love it?  You said, yeah, I liked it.  You know what happens when you tell that to your husband or your wife or whatever.  Do you love me?  Oh, I like you.

Female 1:  Well, I guess, I didn’t love it but I did like it, though.  I mean, I learned a lot.  So, —

Christopher T. Anderson: Okay.  And then, why did you make the shift to civil?

Female 1: Because I wanted to do something different.  I mean, that’s what I thought I was going to do when I initially came out of law school was a civil work.  And so, I never really plan to do criminal defense.

Christopher T. Anderson: Right.  Civil is not really a thing.  Civil is like saying I sell products.  When you say civil, what did you do or what have you been doing?

Female 1: Well, I’ve done some contract work, some landlord-tenant work.  I guess, most is like small claims cases in General Sessions Court, and I know that General Sessions takes all different types of cases, but most of it is small claims, some divorce work.

Christopher T. Anderson: Okay.  So, if I’m in Nashville and I get a client comes in my door and I can’t take the case, how do I know what to send to you?  What would you tell the world you do?  Because if Gina Crawley does civil work, I’m not sending you anything.

Female 1: I really don’t.  I mean, that’s absolutely most of my business comes by referrals, by word of mouth by other people I’ve done work for.

Christopher T. Anderson: What’s your favorite thing that you’ve done for them?  When a case comes in the door, what kind of case makes you go, “Yeah, I want to work on that.”?

Female 1: Gosh.  I don’t know if I can — I can’t say that I’ve really experienced that.  I don’t think that I have.

Christopher T. Anderson: Why did you go to law school?

Female 1:  Because I wanted to help people.

Christopher T. Anderson: Do what?  You can help people by doing their laundry.  Like, why did you go to law school?

Female 1: It’s true.  Okay.  I guess, to really balance out the playing field.  It’s kind of a personal story.  Just something my mom was going through.  She really didn’t have anyone else she could turn to and she had all these questions and there was lots situation going on.  She just to know where to go and she really needed a lawyer, couldn’t really get one.  A lot of them were really expensive, you know?  So, she was just didn’t know what to do really.

Christopher T. Anderson: What kind of situation?

Female 1: It was like a criminal situation or maybe not so involved criminal defense and I want to say that she had an attorney but she was just lost, like she couldn’t get any answers anywhere.  She just know how to navigate the system, really didn’t have anyone to really help her with that because, I mean, she’s never really had to use a lawyer before and prior to that, not really.  And so, it was just like — and it wasn’t even for her, it was for a family member and just trying to navigate the situation just to look on her face and the frustration that she experienced was part of the reason why I decided I wanted to go to law school and just kind of help out.

Christopher T. Anderson: Why did you not decide to go into private criminal practice?

Female 1: I did.  I did do that some, and I still do that sometimes, but I don’t know.  I just feel like this — maybe, it could just be me where I’m at in life.  I’m just walking just kind of all over the place, I think, —

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— and I’m thinking that I probably need to just — and this is probably we’re doing now.  It’s kind of sit down and just really just kind of narrowing down and just kind of think through what it is that I want to do.

Christopher T. Anderson: No, don’t think about what you want to do.  You’ll never figure out what you want to do.  Who do you want to help?

Female 1: I want to help people who usually do not have access to attorneys or —

Christopher T. Anderson: So, doing what?

Female 1: — there would be some sort of barrier in place to my — for whatever reason where there’s finances or one who —

Christopher T. Anderson: Oh, there’s enormous barriers to getting legal help.  You want to help them do what?  What people are having trouble accessing attorneys that could use your help today, right now, in Nashville?

Female 1: I think people that are facing — what I see a lot is people dealing with creditors, like I see that they need a lot of help and just navigating that and knowing what their rights are when a creditor calls them.  I think that’s the biggest is where I see right now.

Christopher T. Anderson: Good, do that.  Stop everything else immediately, and I don’t mean like if this Elle calls you up and says, “Hey, I’ve got this good landlord-tenant case, can you help me?”  Say yeah, that’s fine.  I’ll help you but do not market.  Do not tell the market.  Do not tell anybody that that’s what you’re doing.  You tell people I help people who are being abused by creditors to get their life back.  That’s what I do.  That’s all I do.  That’s what I do.  You got a creditor who’s being abused, send them my way.  I’ll help them to get a seven.  I’ll help them get a Chapter 13.  I’ll help them with Fair Credit Reporting Act claims.  That’s what I do because what you’re doing right now — so, well, first of all, how does that sit with you?

Female 1: This is okay.  I wouldn’t want to do bankruptcy, but I wouldn’t want to help them in small claims court.  No.

Christopher T. Anderson: Why wouldn’t you want to do bankruptcy?

Female 1: I guess, I could learn.

Christopher T. Anderson: It’s not hard.

Female 1: I don’t know.  I guess, I thought it would be challenging, not that I’m not up to a challenge, but I just — I know it’s a lot.  I just I don’t really have a good reason for why I wouldn’t want to do bankruptcy.

Christopher T. Anderson: You helped creditors.  Yeah, you helped creditors.  Like, I mean, I think that’s a great place to start.  I helped creditors.  I helped —

Female 1: Debtors.

Christopher T. Anderson: — debtors, sorry, stopped being abused by creditors.  I help people who are suffering under the heel of abusive creditors to get a fair shake in the system where they can’t.  That’s what I do.  I make sure that people who have incurred a debt, don’t let it rule the rest of their lives.  That’s what I do.  And, you know, if that involves understanding how to do some bankruptcy stuff, there’s software out there.  Bankruptcy is just helping people.  It’s a system.  It’s turned the handle.  It’s not that complicated.  With the complicated part is understanding their particular situation and seeing how you can help them.  A huge number of them will be able to help them without bankruptcy and, you know, if you really, really hate it, you can associate with someone who’ll do the bankruptcies.  I think you should do them because they’re not hard and you can make money, but if you narrow your focus to that, then people will know how to refer your business and you will get more business not less and, you know, there you’ll be able to afford to get some marketing.  And then, you know, what if that doesn’t sit well with you?  Just chew on that but rather than going to join what is going like, what do I want to do?  I don’t know what I want to do.  Like here’s the thing, you want to do that, sit with that, chew on that, feel that and like come back here next month and let me know how that feels or if you move forward.  Like don’t wait a month to move forward, start moving forward with it, start telling people that.  If it starts to feel wrong, shoot me an e-mail.  It’s [email protected].  I’ll talk to you or come back to this thing and, you know, we’ll figure — we can go deeper on that but, you know, that also will help you.  You asked about how to stay on track.  When you’ve got a focus, it’s much easier to stay on track because, you know, what do you do now?  How do you get new business?  My business is kind of low.  Can I do marketing?  I don’t know.  Can you?  I don’t know if I can do marketing.  Well, maybe not.  Maybe then, you can just go to whatever organizations you might belong to or organizations that might want to hear your message and go like, hey, there are things to do if you are being abused by a creditor.  I’m going to teach you a one-hour class on that free.  Everybody can come free.  And then, you know, you’ll get 20, you know, 12, 18, 20 names of people who come to listen to you and one of those will hire you and you just you do that.  You’re there if there are things you can do to get this business kicked off right away.  You call everybody who’s ever referred to your business and everybody you know from the public defender’s office who have a lot of people having creditors problems and say, listen, I just want to let you know you print out some really — go to Vistaprint for 999.

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You can put out 100 announcement cards saying, I’ve launched this kick creditor’s ass firm and I just wanted to let you know, you know, if you have anybody that I could help, I’d be glad to help them and talk to them and see what I can do.  You get that word out there and the world will lead a pathway to your door.

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Male: The remaining two segments focused on an attorney who’s considering the risks and rewards of hiring a second client intake manager.

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Female 2: So, my question is, I have a client intake manager, the person who answers the phone, does a lot of administrative stuff, all kinds of things.  Whenever a person comes on board and they’re successful and they know what they’re doing, they move really fast.  They have a lot of new clients and I think seems to be kind of in order but, inevitably, this people leave.  What can I do to — and especially in this market, I’m not going to hire just the first person who is going to apply but finds in somebody adequate, takes time and, in meanwhile, we do have answering service but it’s completely not enough and like, for example, in June, we had 28 new matters, still had a lot of new matters to work on.  And then, the person gave notice and since she left in July, we only have five new matters just because there was nobody — and it happens to be I was in Maine for the whole month of July and it was supposed to be mostly time off only doing whatever is minimally I’m required to do and accept it.  I doing a lot of things and we still — I didn’t answer the phone, but we only had five new clients for that month.  Money wise, I don’t really care but kind of predictably, it would be nice to have some kind of plan.  I thought about having two people doing the same job.  So, if one quits, there’s still somebody there, but the price point it just kind of doesn’t make sense.  So typically, a person would be making as a base something like $50,000.  The bonus compensation could be 2025 if they’re successful or even more so that would just doesn’t make any sense if one person can do the job independently.  I don’t really want to pay because it’s going to be —

Christopher T. Anderson: Are you sure?  Let’s do some numbers.

Female 2: Okay.

Christopher T. Anderson: How much is a matter?  What’s your average case value?

Female 2: I think last year it was $3,700.

Christopher T. Anderson: What’s your profit margin?

Female 2: I did not calculate my profit margin, but it’s —

Christopher T. Anderson: You’ve never calculated your profit margin?

Female 2: No, no, I did but not recently.

Christopher T. Anderson: Okay.  Well, what’s the best number you’ve got?

Female 2: That’s not going to be good number to rely on.

Christopher T. Anderson: What do you think it is?

Female 2: Fifty percent.

Christopher T. Anderson: Really?

Female 2: Is that not a good number to rely on?

Christopher T. Anderson: No, it’s not.

Female 2: No, I haven’t done it in probably a couple of years.

Christopher T. Anderson: Let’s just push it some grade since you don’t know what it is.  Let’s say you’re doing really well and it’s 35%.  Okay?  Twenty-eight cases in July, right, five in August.  The Delta is 23 cases.  Twenty-three cases times $3,700 is $85,000.  Eighty-five thousand dollars times 0.35 is $29,000 of profit.  Now, tell me again about how two people is not a good way to go to protect $29,000 of profit per month?  You’re paying them for $4,000 per month when all in $6,000 per month to protect.  You’ll be carrying an extra $6,000 a month to protect $30,000 per month.

Female 2: I don’t think they’re going to have that much because the firm is relatively small.  So, if it seems to be growing money buys, but we doubled in the last couple of years but we still only have three people at most not including myself.

Christopher T. Anderson: Because you do this.  I mean, the firm is small.  That is a result, not a cause and not a reason for anything, unless, you want it to stay that way.  In which case, you should never take 28 new cases.  You should have stopped halfway through the month.

Female 2:  Well, the systems we have, we could easily as long as I have somebody helping me use that.  We could easily do that.

Christopher T. Anderson: Okay.  So then, —

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— again, it could just goes back to what do you say it’s too much to carry two people.  I say they’re protecting $30,000 of profit.  You’re paying an extra $6,000 to keep $30,000.  It’s a no-brainer and imagine how much better your intakes would be if there were two people and they could take twice the time and twice the energy and twice the care and they could do twice the follow-ups and twice the lost calls and twice the win calls and twice the work on getting five-star reviews and all of this stuff, you could help them compete with each other and the whole customer experience would be improved and you would be completely immunized from one of the leaving because if one of them leaves, you know one can carry the load and then you hire a replacement for the one that left.  This revolutionizes the business.

Female 2: But there’s ways that they’re not going to be able to handle the workload.

Christopher T. Anderson: Why?

Female 2: All of this extra attention.

Christopher T. Anderson: I’m just talking about them doing the workload you can handle, the 28 new cases you can handle.  You told me you can handle it.  I mean, I’m not actually forcing you to hire more attorneys and earn more money and take home more profit.  I’m just talking about — hey, listen, if they hit your goal, you slow down and say, listen, let’s pay more attention to our current clients and former clients.  We’re going to slow down the new ones this month.  We’ll pick it back up next month.  That’s fine or you grow your business.

Female 2: But people don’t create every two months.  So, how does it work?

Christopher T. Anderson: That was easy.  You had 28 in July and 5 in August.  That’s it.  So, you lost $30,000 of profit in August because someone quit.  Now, what you’re saying is, yeah, this doesn’t happen all the time, but you told me inevitably people leave.  That inevitably sounds like it’s at least once a year.  So, you still in a year if you lose $30,000 of profit by having two, you can recapture that profit and then some by the much greater care that you can take with the clients you’ve got and the clients you have had before.  You can do referral program.  I mean, there’s so much more you can do with the two people, right?  You can open up a whole referral plan that they don’t have time to do right now, all the customer care.  You might end up growing and I’m sorry if that happens, but it will cover this real pain point that you’ve got.

Female 2: I was just fighting because their profit is based — basically, I’m paying $100 for each successful onboarded client for the month beyond the five clients in any given month.  How it would be fighting?  It would be fighting, okay, you take the call.  I’m taking the call next and some of it.

Christopher T. Anderson: Oh, I handle that by having team bonuses.  So, everybody gets their own bonus and like you can manage that.  It just like you get A, you get B, you get A, you get B, you get A, you get B.  You could do it that way or, you know, you can stagger their hours a little bit so that the people can reach them.  I mean, I let Calendly do all the heavy lifting for me, you know, because Calendly, I’ve got two people on the phones, three people.  I have five people on the phones, but I tell Calendly to route them based on availability first and then based on keeping the load even.

Female 2: I use Acuity and I don’t think they do.

Christopher T. Anderson: Yeah, I hate Acuity.  Acuity is like the Microsoft of scheduling programs.  It’s like it’s really powerful as long as you have a programmer on staff to build it.  And so, I don’t have the bandwidth to hire a full-time program or program my Acuity.  So, I just don’t and I love Calendly.  It’s just so easy and it’s so powerful and it’s not hugely customizable.  So, I like it.  But yeah, there’s other ones out there, too.  But yeah, that — and then, oh, and so then what I do, so I have that, like I have the balancing mechanisms in place and then I also have team goals.  So, you know, on a given month, I might say, all right, here’s the team goal for September.  We are going to have — I want 60 subscriptions this month.  If we hit 60, I will add 50% to everybody’s bonuses or I’ll just give everybody an extra $500 or whatever.  I do different contests every month to kind of change it up.  So, everybody, and man, my team on the first, there was like, what’s the game?  What’s the game this month?  What’s it going to be?  And so, I’ve gamed a fight at a little bit for them which keeps their job fun and it’s a friendly competition because there’s individual goals and team goals, and if the team falls down, everybody loses.  And so, they all work together because they all know that they lose each other’s profits by reaching the team goal.  So, that’s how I managed that problem because I keep everybody pulling for each other and, you know, you should see our sales Slack Channel.

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Every time someone close the sale, the other people on the team were like, go, you know, whoever it is and, you know, they’re like this gets amazing.  It’s your fifth one in the week.

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That’s unbelievable and then they really root each other on not because they’re great people because they’re all in it together based on the way I’ve structured it and you can do the same exact thing.  I can help you do that.

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Female 2: So, for example, if I have a new person she already committed, the reason she came onboard because I promised her this tributary.  Anytime, it could be changing enough.  There’s probably going to be some timeframe to make it work, but initially it’s not going to be as profitable.

Christopher T. Anderson: So, that’s one thing.  I change it all the time.

Female 2:  We cannot decide to bring in more people.  We cannot handle more cases.

Christopher T. Anderson: Like I said, this might accidentally cause you to have to grow business and make more money but, you know, if you really don’t want to, then you — again, you’re dealing with this lost profit that happens on an inevitable basis.  And so, we’re looking to protect the portfolio and these people can do other things that your business needs done in their additional time.  So, you can find a way that you don’t have to take anything away.

Female 2: What’s the compensation would be then, like let’s say if they have $50,000 base —

Christopher T. Anderson: That’s a good point.

Female 2: — that’s kind of almost guarantee to get $20,000 extra per year?

Christopher T. Anderson: I bet there’s a few things you’re not doing that you could add the bonuses for, like lost calls.  Are you doing lost calls?

Female 2: To call people who said no?

Christopher T. Anderson: Yeah.

Female 2: No.  So, I give my folks, they get $60 to do a lost call as long as they reach the person and get a response.  And so, I’d give them things that they can do.  If they’re slow then are hugely valuable for the business.  I give them $300 for a five-star review.  You know, hugely valuable for the business that they can go.  There’s lots of little places they can go to go earn money and it’s not money out of my pocket because each one of those things enhances my close rates, reduces my marketing spend, makes for happier clients.  You know, it all comes back and I have a happier sales team and I’ve protected myself.  I always hire ahead of my other curve on my sales team because also, you know, it takes time for them to get good.  And so, I like to keep that going.  But yeah, I mean, that was your question was how do I overcome this.  All right, and before I go into my question, you raised your hand a little bit.  What did you want to add?

Female 3: I have opted for this role and they do really well and I now have three people that can cover this and they all have other responsibilities as well.  If one of them has become a Medicaid Legal Assistant, one is sort of like both time intake.  The other one also does like bookkeeping and client’s happiness stuff.

Female 2: You get stuck tops that’s worked for you?

Female 3: Yeah.

Female 2: Oh.

Christopher T. Anderson: Yeah, but –

Female 1: But do you do have like see people who do that or some sort —

Female 3: Yeah, we’re actually hiring because like as they learn our business more and more, they start taking on more responsibility.  So now, I need to hire a fourth person who’s going to be like dedicated frontline receptionist and four people cost me $8,000 a month.

Female 2: A month?

Female 3: So, I’m happy to —

Christopher T. Anderson: So, two cost you about — well, actually, almost three cost you what Elena is paying now?

Female 2: Wow!

Female 3: Well, in New York City, I couldn’t find someone who had a good attitude and —

(00:25:00)

— a good work ethic and common sense for less than like, yeah, like $60,000, $70,000 a year.  Like, I don’t want someone who just files it in.  I want someone who — and like the fact that I do it this way where like you start doing this because that’s sort of like the least amount of stuff you need to learn.  And then, as we learn this, as you perfect this, I want you to grow, you know, professionally, et cetera.  Like, I’ll teach you new things and like — and people keep out of growing this receptionist role in a good way and because they’ve come up through the ranks.  They have a lot of like loyalty.

Christopher T. Anderson: And then coming back to the very important question is, you said that the inevitably leave.  That’s not true.  That’s a very interesting story.  So, why are they leaving inevitably?

Female 2: Well, most of the times they find something that pays a lot more, doing something different.

Christopher T. Anderson: So, they leave because you don’t give them a vision of what how they could grow with your business?

Female 2: Well, it would be hard to manage because the last person left because her base at the new job would be something like $80,000 plus very serious bonuses completely working from home.  There’s no way I’m going to be matching that for client intake manager.

Christopher T. Anderson: Again, to protect $30,000 of profit, maybe you would, but that’s okay.  They don’t have to be a client intake manager for the rest of their lives, right?  There’s probably things that they can grow into.  I think getting to is a great idea and, you know, but at some point, you have to look at the market.  If the market is paying the people you want $80,000.

Female 2: But it’s doing something completely different.  They’re doing sales for some tech company or another person left a year prior.  She wants to do mortgage foreclosure.  So, it was some kind of mortgage.

Christopher T. Anderson: Like I said, if the market is paying people with the skills you want more, you may have to face the fact that you’re underpaying for the role.  I’m not saying you are but, you know, if you’re finding that they’re leaving for better-paying jobs elsewhere, either you need to offshore which is a great idea, or you need to say, all right, that’s what these skills cost.

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The profit on these cases is enough that I just got to pay what it cost.  So, we’ve given you a lot to think about, but I think between the getting to in offshoring that might be a great solution for you.

Female 2:  Thank you.

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Male: Thank you for listening. This has been the Un-Billable Hour Community Table on the Legal Talk Network.

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