#524: THE Key Step in Acquiring a Law Practice, with Jennifer Zahradnik

Episode Notes

Transcript

Jennifer Whigham (00:12): 

Hi, I’m Jennifer Whigham. 

  

Zack Glaser (00:13): 

And I’m Zack. And this is episode 524 of the Lawyerist Podcast, part of the Legal Talk Network. Today, Stephanie talks with Jennifer Zahradnik about lessons she learned in taking over another attorney’s law practice.. 

  

Jennifer Whigham (00:28): 

If you are watching on video or perhaps on audio, and if you use your ears as eyes, you will notice that Zach and I are together in the same airspace. There’s a tree behind us and that is because we are in person at Lab Con 2024. I was trying to show you my T-shirt. 

  

Zack Glaser (00:45): 

Yeah, if you go to the YouTubes you can. She didn’t do a really good job. But anyway, we’re here at Lab Con 2024 in beautiful, sunny St. Charles, Illinois. Yeah, it’s nice here, but more importantly, How is Lab Con going? 

  

Jennifer Whigham (01:02): 

Oh wow. You were about to do a leading question and then you didn’t give a leading question. I feel like that was a lawyer thing you just did, but Lab Con is going extremely well, which makes me very happy as I do a lot of the planning and when it goes well, I can sleep at night. But one thing actually that we did, I feel like that is relevant to the podcast we’re about to listen to, we had our lobsters do their emergency planning and succession planning this morning and we even had one lobster say, I hate that you made me do this, but then she actually whipped out her succession plan in one hour because we gave her the space 

  

Zack Glaser (01:40): 

One hour, one hour succession plan. So it can be done, but that’s what we do here at Lab is we kind of boots on the ground, get our heads down and get some things taken care of. So I really like that, but this is the succession planning, the taking over somebody’s law firm. It’s something that happens at times. I personally think that a lot of lawyers have gone through that. I’ve gone through it multiple times, taken over multiple practices, and generally you go and grab a paralegal that they have and hope that that paralegal knows everything, which yeah, they might, but it would be nice if you had an ops manual and then you could sell the practice rather than just saying, Hey, please handle these things for me. 

  

Jennifer Whigham (02:28): 

Yeah. Can you imagine the value of your practice if everything is laid out already? Because the idea of buying a practice that is a mess is chaos. That’s not actually a very valuable asset even if you have a lot of money coming in. But if you have it zipped up and ready to go and you’re ready to sell your practice, man, you have the world. 

  

Zack Glaser (02:49): 

Yeah, we very quickly went from succession planning to planning to what the value of your practice is, so I’m excited to hear what Stephanie and Jennifer about here. So yeah, without further ado, we’ll have them go. 

  

Jennifer Zahradnik (03:04): 

I’m Jennifer Zahradnik. I’m an attorney in Bell Plaine, Iowa with a practice that focuses primarily on agricultural law, real estate probate, estate planning, and farm transition and business transition planning. 

  

Stephanie Everett (03:17): 

Hi Jennifer, welcome to the show. 

  

Jennifer Zahradnik (03:21): 

Thank you for having me. 

  

Stephanie Everett (03:23): 

Yes, and you have the unfortunate mis pleasure of having to get the call probably nobody wants, which is that someone has died and you’ve been asked to come clean up their law firm mess. Is that right? 

  

Jennifer Zahradnik (03:39): 

Yes. It’s one of the local attorneys here in our town passed away unexpectedly in September. I was first approached shortly after his passing to acquire his firm really wasn’t interested at that point then had they reached back out to me in late October and we made the decision to go ahead and continue to help the people in our community and take over that practice, 

  

Stephanie Everett (04:10): 

Which I’m sure everybody was so grateful for you to doing. I know there’s even state bar programs now that they come in and try to match people up because unfortunately attorneys do pass away. None of us are going to live forever and some of us are more prepared for others. Is that fair to say? 

  

Jennifer Zahradnik (04:31): 

It is. And in the state of Iowa, when you file your annual report, you’re required to tell the court who your successor is or who you want the court to be dealing with, and hopefully you have talked to that person so they have an idea that you’re naming them to go ahead and take care of things. And in this case, there was a successor that was named, but he was in the process of retiring and did not want to take over the firm and his son that had taken over his firm was not interested in this area of practice and the offices are about 40 miles away and he didn’t figure that most of the clients would make that trip up there. So that’s how I got involved. 

  

Stephanie Everett (05:14): 

So obviously we’re going to cover some best practices because I think it’s fair to say you sort of inherited a little bit of a mess, and I’m sure there’s lots of things that you learned along the way. I guess I’m kind of curious to start though. Well maybe just start us off what happened? So you literally just get the keys to someone’s office and you had to go in and figure it out, or what does that look like? 

  

Jennifer Zahradnik (05:39): 

So he passed away the first part of September of 23. We did not take over until the 15th of November, and so the other attorney continued to kind of operate the practice. They had three full-time staff on staff until we took over. I took one of those staff with me and hired that person to come down to the new office. It was imperative that I get somebody that had the institutional knowledge about all the people and all the files and could give us some background when there became a question. So that would be one of my number one things is if you have the opportunity to acquire a practice, make sure you get somebody that has institutional knowledge or if you’re doing it as part of a transition for a retiring lawyer, make sure that the staff that’s there during your transition starts making notes in the file about the personalities of the clients. If Joe has a grandson that plays travel baseball and he’s super proud of that, put those notes in the file because it helps build that connection faster. It also helps with, oh, this person’s difficult to get along with, or this person doesn’t get along with their siblings or what it is. Just having that institutional knowledge is imperative. 

  

(06:57): 

So what happened was on the 15th of November, we went down to the office because we did not buy the building or anything. We took all of the original wills, we took all of the corporate books and we basically took all of the open files that were there, anything that had been closed. We did not take those files. We did not take any of the tax files. We also do a number of tax returns in our office as did that office, and we felt it was imperative for those tax people to pick their own documents and bring them down if they wanted us to do it, otherwise they could seek out another tax professional. And so we spent most of the day moving filing cabinets and moving files and those types of things down to our office and then trying to figure out where they all went once we got ’em here. 

  

Stephanie Everett (07:48): 

In addition to the actual client files, did you also have to shut down that person’s business or was that handled by somebody else? 

  

Jennifer Zahradnik (07:56): 

That was handled by the other attorney? That was the successor. 

  

Stephanie Everett (08:00): 

Got it. Yeah, so that’s good because I’m sitting here imagining for most of us if this situation happened to us, both issues have to be addressed. What are we going to do with the staff and the building and the leases and all those things, and then also handling the client files. 

  

Jennifer Zahradnik (08:21): 

In this case, I was just dealing with the files. Like I said, I did take one of the staff, but we didn’t take any computers or anything like that. We left everything there for the other attorney to take care of. I’m in the process of dealing with an attorney who wants to retire, and that presents its own set of challenges in regards to that takeover and some of the things I learned from this transition were applying to that transition, so it won’t be quite so overwhelming. 

  

Stephanie Everett (08:50): 

Yeah. What else? I mean, you make some good points about just even having notes in the file about the client, what’s going on, but what were some of the other challenges that you came up with as you start to dig into these files that you’re like, oh, if only they had just done this? 

  

Jennifer Zahradnik (09:08): 

So one of the big things was this attorney was very fond of paper. Our office, we try and eliminate as much paper as possible and we moved files that were 12 inches thick. We moved files for trusts where we had bank statements back to the 1970s when the trust first started, there was no reason for that information to be held onto those types of things. A lot of the files that we brought down had five and six and seven copies of the same document, and so those files became very overwhelming when you went to look at ’em because it was just the sheer volume. You’re like, oh, I don’t want to mess with this. 

  

(09:53): 

One of the things going forward as we look at expansion and acquiring and addressing the issue of the fact that we’re losing rural lawyers at a very fast pace is what systems do we put in place to make sure that we’re getting the information we need and we’re not being overwhelmed because of the sheer volume of paper? And I’ve talked to a couple of my other colleagues that have taken over firms and some of the big things we’ve learned and talked about is if there’s closed files, making sure that there’s a file destruction policy and having that office go ahead and destroy those files rather than us having to deal with them after the fact or making sure that those are digitized so that we can destroy the paper. But we still have the historic records, old computers, everybody has a basement full of old computers. You do not want to deal with somebody’s old computers. It’s best that they just go ahead and get rid of those types of things. 

  

Stephanie Everett (10:57): 

Yeah, I mean these points, they seem so obvious sometimes and yet to your point, I’m sure all of us have files that we can see that are still sitting around that we’re like, oh, I need to do something with that. I mean, there’s real cost to those files. I just met with one of our attorneys that we work with in our lab program and we were looking at her p and l and she was paying for storage, for file storage, and it turned out when we dug a little deeper, that was for files that her grandfather had had when he was in practice. And she was like, gosh, how long is, I mean, her father had passed, her grandfather had passed. She was like, wow, this was a significant cost that we were able to just eliminate luckily. But I think it sounds so obvious to everybody, but it’s a good reminder that there’s real cost to holding onto this stuff 

  

Jennifer Zahradnik (11:50): 

Well, and as digital becomes more available, it’s more cost effective to make it digital. The office that I’m currently in used to be full of files that were for people that had been dead longer than I had been alive. We had digitized all of those about seven years ago, and now I put in all my attorney’s fee agreements that 60 days after your file is closed, we will destroy the paper file and we will hang on to the digital file for a period of six years and we may dispose of it after that. I’ve yet to dispose of a digital file, but I have the option there if the cost of storage becomes too expensive. 

  

Stephanie Everett (12:29): 

Yeah, nice. So what were some of the other hard lessons that you had to learn in this process? 

  

Jennifer Zahradnik (12:41): 

How to deal with a new set of clients that weren’t used to our level of technology and our level of our fast paced environment. We are about three times as busy as his firm was getting in to see me, you’re not going to call up today and come see me. Managing the expectations of them and realizing and getting them to realize the advantage of using our client portal to communicate with us, to share documents with us that not everything needed to be done on paper. There was a number of files that we had that we took over where he was handling paying the property taxes and those types of things for a trust, and it made no sense to me why he was responsible for that and not the trustee. So getting those people on board to take over their own and be responsible for their own trust when they’re the trustee rather than making us do it because what he was charging for those services, I can’t do. We just can’t with the overhead do that. And so those people really need to take on their own responsibilities and it’s been an uphill battle getting them to understand that you guys are more than capable should be doing it rather than paying me. 

  

Stephanie Everett (14:00): 

Yeah, for sure. I would imagine, like you said, some people may be listening and thinking, okay, well I don’t think I’m going to, I hope I’m not going to take over another person’s practice after they’ve died that you never know what’s in your carts. But it also sounds like now that you’re thinking of acquiring new practices and having these opportunities, you’re sort of looking at it differently. You’re thinking about the business differently based on this experience, and I guess I’d be curious what that looks like and how you’re approaching it now. 

  

Jennifer Zahradnik (14:34): 

So thankfully I got involved with Lawyerist in October of 23, which has really allowed me to get systems and processes in place and pushed me outside of my comfort level Before I took over that practice last year, I had been in Lawyerist for about two months and they helped me make sure that I had my employee onboarding manual and those types of things, which when you’re bringing in new staff is important to have. We’ve worked a lot on setting our goals and our vision and that has helped really narrow down what things we want to be involved in and how finding practices that align with those types of things. And so the one that I’m working on right now, I’m looking at it different is how can we be in a partnership over the next two years to make the transition easy? That office is about an hour and 45 minutes from my current office, and so it’s not like I’m going to be in that office on a daily basis or even a weekly basis. 

  

(15:42): 

And so we’re dealing with some technology issues trying to find the correct platform to be able to meet with clients down there, to still have a physical presence down there with the staff, but me not be there all the time. How bring in my associate to meet those clients for the matters that I don’t handle anymore. And so that’s been a new strategy. Some of the things that have been brought to my attention by some of my colleagues that have done this is when you take over the practice of an attorney that is actively practicing, you have to look at their trust account and you have to draw a line in the sand and says, okay, as of this date, your trust account will no longer be used. We’ll be using my trust account. You want to make sure that they’ve complied with all the rules in regards to the trust account so that you’re not opening up a can of worms when you take that over. One of the horror stories I just heard from one of my colleagues was as he took over a firm and they had never closed or made a case in our electronic filing system with the court inactive and they had like 6,000 active cases that were showing up in the electronic filing system. And so he said that was probably one of the biggest struggles he had was trying to figure out what was actually pending in the courts and which cases were still open and which ones had been closed. 

  

Stephanie Everett (17:09): 

Yeah, wow. It’s such a simple thing that you kind of forget to even think. You just again, assume we know what that word means, but yeah, you’re going to close your files with the court and then they don’t and now you have a huge bus. 

  

Jennifer Zahradnik (17:23): 

Well, and that has led us to, because of that, we now have a system in place that says when we close the file and receive the final bill, we go into our electronic system and we close it and make it inactive. I mean, we can still find it, but it’s no longer showing up in our list. And so those lists are still manageable when you look at ’em and you’re not dealing with cases that there’s been no activity in 10 years. 

  

Stephanie Everett (17:49): 

Right. No, makes sense. Very cool. What else do you feel like people should, you’ve learned so many of these lessons the hard way, so I just want to pick your brain about what other things people aren’t thinking about, but you wish they were. 

  

Jennifer Zahradnik (18:05): 

Phone system and advertising with the phone, one of the things that we looked at was we wanted the phone number from the previous office to be rolled over to our office, and that was part of the arrangement. And then after the fact, we found out that they had 18 months left on their advertising contract and that we were going to have to assume that if we kept the phone number and I did not want things still advertised under his name and did not want to assume that contract because I could never really get the firm terms of what it was that we were paying for. And so we decided not to take the phone number, which then basically turned the phone off. I think it would’ve been much easier if we had assumed that number and just rolled it. But it’s important to know not only for your phone system and your advertising, but what other contracts they’re involved in. Do you have a copy machine? Do you use Pitney Bowes? Do you have an internet contract? What are the things you’re going to be dealing with or that you are going to be bound to until they expire and can you get out of them early? And if so, what’s it going to cost you? 

  

Stephanie Everett (19:18): 

Yeah, for sure. Yeah, you definitely want to know. You want to be able to do that due diligence and really understand what you’re getting into. 

  

Jennifer Zahradnik (19:27): 

And I think that’s one of the big things is the words due diligence. I’m involved in the purchase of a separate company that’s not related to law, and we did a letter of intent and we are currently in a due diligence period and having the ability to have access to information and then make the decision before final documents are signed and money changes hands I think is really important. And I would be something that I would going forward definitely be working in regards to if I was acquiring a firm, is I want everything to be an open before I commit to doing it just because there’s so many pitfalls that can come in and so many things that can happen. And just having that opportunity to get that information is tremendously helpful. 

  

Stephanie Everett (20:19): 

And I know it makes sense as lawyers, we focus on the contracts, what am I going to be obligated to do and how many case files and all of those very tactical things. But I think one of the other points you made that’s so important that probably is worth mentioning again, are you aligned at a higher level when you think about your values and the people, if you’re bringing people onto your team, where I’ve heard a lot of horror stories is the team just wasn’t aligned, right? They didn’t like the new way of doing things. They weren’t willing to learn a new way or adapt to a new system. And so it just continues to create friction. You’re trying to get this new business onboarded and up and running, and you’ve got a team, whether you realize it or not, at the beginning, they’re sort of working against you and maybe undermining you, if not intentionally, maybe unknowingly, just because they’re not willing to embrace the new things and change. 

  

Jennifer Zahradnik (21:21): 

Well, what I’ve seen when we brought over the new employee from the deceased lawyers firm, she felt like she had been held back and that they were doing everything in an archaic way. And so she was very excited to utilize some new things. She went from having a two foot wide by four foot wide desk where she had to complete all of her work to having her own office, lots of space to spread out. She’s got a lot more autonomy now, and she has ownership of files, which has really helped I think her with the transition because number one, she’s very, very busy and she says she’s more busy now than she could have ever imagined she was going to be. But also she was very embracing of the fact that we wanted to do things more efficiently, that we wanted to make her job easier. I asked her, what types of software have you been using? Would you like a different office chair? Would you like to pick out your desk? I got her a 49 inch curved monitor so she can see everything on her screen. She’s very spoiled now compared to where she was before. 

  

Stephanie Everett (22:37): 

These probably were earth shattering things for her. Like, wow, that’s pretty cool. Going from a bunch of paper to the curve monitor. It sounds silly to say now, but she’s probably like, whoa, this is exciting. 

  

Jennifer Zahradnik (22:49): 

And the firm that I’m looking to acquire, the attorney is almost 72 and his staff is significantly younger. And so I anticipate utilizing some of those same things with them. It is, okay, here’s a scanner for your desk so you can scan these things in. Here’s a nice big monitor so you can do that. Here’s the updated phone system, so you can hit the button. Then you can page me through our internal phone from the office so you don’t have to pick up the phone and dial my number, trying to include them in staff things and do staff outings with them and those types of things as well. And I think the fact that I would not be on site, we will give them a little bit more accountability and ownership in those files because people like to feel like they have a vested interest in what’s going on. And so them, that opportunity I think is really going to help bring them into, if we can start doing that transition before he retires and we get them, these are the systems processes, this is why we do it, and this is how it’s going to make your job easier and more efficient, I think we’re going to be eliminate some of those friction points where somebody may be working against us. 

  

Stephanie Everett (24:10): 

Yeah. I’m curious because now you took over this attorney’s practice who died, now you’re looking at another attorney who’s retiring. Was that originally part of your growth strategy for your firm, or did you luck into it and now because there might be some people listening that are thinking to themselves, I could do that. There’s people retiring, and that might make good sense For me, 

  

Jennifer Zahradnik (24:38): 

I lucked into it. If you had asked me a year ago sitting in there, if I was going to acquire one firm, let alone two firms, or even be thinking of that, I would’ve been laying a puddle underneath my desk because I didn’t feel like I had the systems and processes in place. But what I’ve learned from my coach and the different study sessions that I’ve done with Lawyerist, I’ve learned that scalability is important. I’ve learned that systems are important, and when you have those in place, it allows you that opportunity to breathe. And so having taken over the one for the attorney that died, that was horribly stressful, and I don’t ever want to do that again, but saying, I can do this. I did this one that was awful, and I can do this if I have another lawyer that I can keep in the loop for the next two years and we can make it very seamless, is pretty cool. 

  

(25:37): 

And the reason I got involved with this other gentleman was because of the other business that I’m acquiring. So it just worked and it was kind of a fluke thing. And now that I look at it and I hear the reports that are coming out from our bar association that we’re losing 400 of lawyers a year to death retirement in the state of Iowa, we’re only graduating 225 and we only had 189 take the bar. So there’s a need. And having gone through the process this last year, I want to figure out how to fill that need and I’m ready to conquer the world. 

  

Stephanie Everett (26:21): 

I love it. I love it. I know, I remember when you first started working with us, and I love seeing the transformation that you’ve gone through and the confidence that, yeah, you could do this. Why not? And of course you can. 

  

Jennifer Zahradnik (26:36): 

Yeah, it’s been a fun trip and I’m interested to see where I am in two years from now and how close I am to getting some of those goals accomplished that we set for three year and five year goals. 

  

Stephanie Everett (26:48): 

Oh, well you’re going to have those long before then. I know you’re going to blow it out. Alright, well as we wrap up here, I’ll just add, because I know we’ve talked about this on the show before, but your stories are such a good reminder that unfortunately we never know when sickness is going to strike or an accident that’s likely to happen. I mean, I hope that we all live a very long, healthy, happy life, but things happened and as a business owner, we need to be prepared. So at a minimum, you were very fortunate that you didn’t have to come in on that September the first day after the person died. And try to figure out, does anyone know the passwords? Does anyone know even where’s a spare key to get into the office and where are things located? And for some lawyers, we hear these stories that it is like you’ve just been dropped into the jungle and you’re trying to figure it out. 

  

(27:50): 

And so do your business a favor, your team maybe you don’t actually die, you just get hurt if you’re, I mean, this sounds so terrible to even say, but we think about this, right? What if you’re just in a bad car accident and you’re unconscious for a couple of days? You want a business to come back to. So do you have systems in place where somebody could pick that business up and keep it running? So you do have something to come back to when you’re better. In my scenario, I’m going to assume the person is alive and they get to come back. 

  

Jennifer Zahradnik (28:21): 

Well, that’s good. I’m fortunate. I have an associate in my office. And so one of the things that we’ve done since I’ve joined Lawyerist is get him more involved in the day-to-Day operations of the business. And so it doesn’t all fall on me. 

  

Stephanie Everett (28:37): 

And 

  

Jennifer Zahradnik (28:37): 

One of the great things we’ve started using is loom videos so that I can walk people through the step-by-step of the behind the scenes office administration things. So if I do fall in what we call the proverbial hole or I get hit by that bus, they at least have an idea of this is how to do it. And these are the step-by-step to get it done. And so that subscription is so cheap and it’s so easy to use. And I have started using it for darn near everything that I’m involved in just because there’s a record there and somebody can pick it up and go running with it as soon as they get access. 

  

Stephanie Everett (29:21): 

I know, I love it. I wish that they were one of our partners. I feel like I tell everybody about the tool and now they even have an AI component that will take your video and turn it into the operations manual process for you. So I’m like, it’s such a no brainer, but it’s a good reminder that it feels intimidating and hard to get started and it’s really not. So if you’re listening today and you’re like, ah, I’ve been thinking about that, I need to do that for a while, just go ahead, take an hour, get some stuff out of your head, get it down, get it in a place so that somebody’s not starting from scratch if they have to come in and run your business. 

  

Jennifer Zahradnik (29:59): 

Well, and the nice thing is their free trial includes the use of the AI feature, and as soon as our free trial was up, I paid for the AI feature because then I don’t have to think about writing the steps. I just need to review it. And everybody that I’ve shown it to and everybody that has used it since we started doing it is just in love with the fact that they can print that off and then they can follow along. 

  

Stephanie Everett (30:22): 

Absolutely. Alright, well, Jennifer, I am so grateful that you were able to come and share some of these war stories with us because they’re really great lessons and I have no doubt you will conquer the world and we’ll have you back on the show to tell us all about how you did it. 

 

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