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Christopher T. Anderson has authored numerous articles and speaks on a wide range of topics, including law...
| Published: | May 10, 2022 |
| Podcast: | Un-Billable Hour |
| Category: | Career , Hiring & Firing , Practice Management , Solo & Small Practices |
This episode’s discussion around the Community Table:
Special thanks to our sponsors LawClerk, Alert Communications, LawYaw, and Scorpion.
Christopher T. Anderson: Before we start the show, I would like to say thank you to our sponsors Alert Communications, LaWClerk, LawYaw and Scorpion.
[Music]
Intro: 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 its scripted. The real conversations happen here. Our first question covers a concern a lawyer has about promoting an employee into a part time drag-in position without upsetting the current drag-in.
Female 1: Good problems. First, we’re problems to have. We are growing rapidly, and we increased our marketing, which has increased our leads. To give context, we went from about an average of 100 leads a month to now averaging about 350 leads a month. So, when we had 100 leads, I just had a drag-in who also did intake. So, he sold his own consults, and then did all of the consults.
Christopher T. Anderson: Right.
Female 1: So, as we increase leads, we added another intake and then now we’re up to three intake specialists, one drag-in. My drag-in is at capacity, and I need to now figure out as far as how to structure a bonus plan to move my most senior intake into a part time drag-in role without my original drag-in who’s been with me three years, feeling as if he’s losing out on opportunities.
Christopher T. Anderson: All right. Well, first of all, let me get some facts straight, because there’s an easy way to talk to your drag-in about this.
Female 1: And he also supervises and trains all of the intake.
Christopher T. Anderson: Specifically, you said you want to talk about bonus structure for whom?
Female 1: I feel like the bonus structure we had for my original drag-in is not going to grow with us. And essentially, he gets paid $125 for fully onboarding a client which he has certain benchmark she has to meet, making sure they have the strategy sessions, making sure that the legal assistant opens up their file, that we have their sign retainer, sign credit card authorizations.
Christopher T. Anderson: What’s your average case value?
Female 1: About 9,000.
Christopher T. Anderson: Yeah. I think you need to update your bonus structure. So, your average case value is 9,000. When you say in that capacity, what do you think capacity is?
Female 1: He’s doing four to five, one hour consult five days a week.
Christopher T. Anderson: Yeah, that’s capacity. Yeah.
Female 1: I mean, I can’t find time to book on his calendar.
Christopher T. Anderson: Yeah. The most important question, which is if I called today and went through and take today, when would I be able to get an appointment for the drag-in?
Female 1: Late next week.
Christopher T. Anderson: Yeah.
Female 1: It’s a problem.
Christopher T. Anderson: Seven to ten days?
Female 1: Yeah.
Christopher T. Anderson: So, here’s the deal. You’re going to find that the conversion rate for the drag-in in both your show-up rate and the conversion rate is going to be depressed at that time frame. There’s a lot of people who will not wait that long. They’ll continue looking for lawyers.
Female 1: Yeah. And they prepay. So, our show-up rate, well, we have had people who pay, and then when they realize they can’t get in, ask for a refund of the consult fee.
Christopher T. Anderson: Yeah, that’s what you’re seeing. So, I think the message too and then I promise you, even though when they show up, their conversion rate is lower. So, the message for the drag-in first off is this is not going to hurt you. If we can get people that you’re talking to who had their intake 2 days ago or 3 days ago, 48 to 72 hours rather than 7 to 10 days, your conversion rate is going to go up. You’re going to earn, because you’re at capacity. You’re doing four to five a day. If you continue to do four to five a day, your pay is just going to go up just because your conversion rate is going to go up. So that’s one. Two, your business is your business. I think personally that for the drag-in, where do you pay your intake people?
Female 1: One is in-house and his base is 40, and then he gets $25 per consult. I think until we sell 50, and then he gets $50 per consult over that in a month.
Christopher T. Anderson: How often does he exceed 50?
Female 1: Every single month. He got up to speed on exceeding 50 by month two.
Christopher T. Anderson: Okay.
Female 1: We didn’t change a whole lot other than adding to our marketing budget kind of consistently. But yeah, our leads just really kind of exploded overnight.
(00:05:02)
Christopher T. Anderson: So, 25 per consult and what is your conversion rate?
Female 1: From lead to retain client, we’re converting about 12% to 15% of leads to clients.
Christopher T. Anderson: Yeah. That’s not bad, but I want to know what your drag-ins conversion rate is.
Female 1: It has dropped. It used to be — when he was selling his own consults, he was converting at about 60%. Now, he’s converting right at about 45.
Christopher T. Anderson: Not bad, but 60% better. So, let’s just for ease of math, we’ll say he’s converting one or two. So, you’re paying a maximum. If the consults being set are being paid at $50, that’s your max and he’s converting half of them, that means you’re paying $100 for intake per client because it takes two consults to get a client and you’re paying him, what did you say when he’s done all his tasks, $125?
Female 1: Yeah, 125.
Christopher T. Anderson: So, you’re paying $100 and $125. You’re paying 225 for your whole sales motion. I’d give him a raise that a $9,000 average case value, you should encourage your sales. What do you pay your drag-in as a base?
Female 1: 55.
Christopher T. Anderson: Okay. Yeah, that’s too high.
Female 1: He started it. We started with me three years ago at 35,000. I mean, in Chris, he’s selling — we’re going to do at least two-four this year.
Christopher T. Anderson: Yeah, that’s great. And then let’s just say you’re doing two million. Now, what’s your run rate right now?
Female 1: Three. Just under three.
Christopher T. Anderson: Three million? And he’s still the only drag-in.
Female 1: He’s still the only drag-in.
Christopher T. Anderson: So, divided by 3 million divided by 9,000 per clients, 333 clients per year. At 125, he should be earning $42,000 in spiff in his variable pay. On top of his 55, means he’s earning $97,000, and I’m sorry, I promise you, I promise you, you will not keep him selling $3 million for $92,000 and you want to know the main reason why? Because I’m going to hire him. I’m going to steal him from you.
Female 1: I know. I just need to figure out he’s worth. This is new. This is new money. We barely crossed a million dollars last year. But I just don’t know what it should look like.
Christopher T. Anderson: What’s the most money he’s ever made in his life?
Female 1: What he makes a year.
Christopher T. Anderson: That’s the other danger is you don’t want to make him fat and happy. This guy should be making $200,000.
Female 1: I think so.
Christopher T. Anderson: Yeah. But if you pay him $200,000, you’ll break him.
Female 1: Well, and just to give you some insight on he’s worked in jewelry sales before. So, he’s used to quoting big numbers. He likes, money drives him and every time he hits a new benchmark, he goes out and finds something else to spend money on. Those are the things that drive him. Like he’s like I’m going to renovate my whole basement. So, now I need to go make the money to renovate my whole basement.
Christopher T. Anderson: That’s great, that’s great. But I’m seriously like do not double his income, you will break him. Been there, done that, watch that movie. What I would probably do here, I think your intake structure is fine. It’s not the one that I would build, but I think it’s absolutely fine. I wouldn’t mess with it. I would just bring the per client number to 200, for both, for him and for the new guy. That way his worries about getting maybe some fewer leads will be okay. Let him know that his conversion rate is going to go up and that if there’s a transition period where he has a few fewer consults per week, this will cover that. In the long run, he’ll make a lot more money. You’ve told me that his capacity is you at $3 million. I need to test that. Okay. So, you said he’s doing four to five a day. I’m going to call it 4.5 a day times 5 a week is 22 and a half a week times I’m going to say he’s working for 46 weeks doing that, that’s 1,035 leads having consults and he’s doing half, which is 517 clients times $9,000 to 4.7. He’s close to capacity and you’re right. And he’s able to do that. As you bring this next one on, if you do this increase, he won’t suffer and of course, the new person, you can ramp them up slowly since they’ll only be half time in the role.
Female 1: Okay.
Christopher T. Anderson: And yeah, you are in capacity, but you’re not like drastically over capacity, though I would try. Seriously, I also bet if you could do the analysis that you’ll find that the days he does five, his conversion rate on the fifth one sucks. Keep him at four, tell him don’t do more than four.
(00:10:01)
If you are still busy, clean up all the ones that have come in that your other tasks on them. Make sure you’re doing them amazingly well, but for new intakes a day.
Female 1: Okay.
Christopher T. Anderson: Because he’s wasted after that, everybody is. Nobody can bring the energy.
Female 1: Right. I think when he’s usually late in the day. So yeah, that was helpful.
Christopher T. Anderson: Good. I think it’s a simple change. The number I have in mind just will break him. So, I could even say it. 200 will do for now.
Female 1: Okay. The number you have in mind will break him?
Christopher T. Anderson: Yeah, and you should be paying him 450 and you should be breaking it up, but it doesn’t matter. If you pay him 450, you will break him and his performance will go down and eventually he’ll quit because he’ll realize that you’re making a bunch of money and you’re not sharing enough with him and he’s going to resent you. Like I said, seeing the movie doesn’t end well.
Female 1: Right. I guess knowing that at least gives me some room to grow.
Christopher T. Anderson: Yeah.
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Male: This next question centers around a lawyer who fears they may have made a mistake hiring a friend.
Female 2: I think I made a mistake in my question, in hiring somebody, bringing somebody part time for kind of paralegal/legal assistant position, and I’m not sure if it’s a go no go or should we give it a little bit more time or just kind of cut losses before we spend too much time? Basically, we use somebody as a witness during the pandemic on few occasions. Very nice person, recently retired. And now she emailed us and said, “Look, I’m looking for part time job.” We had a part time paralegal position open. So, we just kind of say, “Okay, yeah, why don’t you start on Monday?”
We can teach the person like different programs and tricks. But she doesn’t know how to use a computer, like Apple computer and that. I’m just really afraid that there’s always going to be something. She doesn’t know how to search email, for example. She’s definitely not going to be able to troubleshoot a computer should something happen. Should like printer disconnect or something. How quickly do we just going to continue training and hopes that there’s going to be a turning point?
Christopher T. Anderson: Listen, I don’t want to be, you know shut someone out. What did you retire from? How do you reach 2021 without the things that you just said?
Female 2: She retired a couple of years ago. So, in her initial career, she was a market in person and then she — if it was 16 or 17 years, she used to have a very popular, I have no idea if it was successful or not, very popular second hand furniture store. So that was kind of like fancy in a way, and people really liked it. So, she runs that.
Christopher T. Anderson: Apparently didn’t run the books or the technology with her, which is certainly possible. So, listen, what do you love about this person? Why do you want this person on your team?
Female 2: She’s just a nice person and we just gave her an offer and — I just feel horrible even having a conversation about this. But at the same time, fire —
Christopher T. Anderson: Why did you avoid my question?
Female 2: Okay. She’s just a nice person. I don’t have any specific.
Christopher T. Anderson: Okay. My question was what do you love about this person? Not like apparently nothing.
Female 2: No.
Christopher T. Anderson: Yeah, then you may have just made a mistake. Here’s what I was going to say. If you told me some things that you actually love about her and why she would be great for the business, because I don’t want to turn someone away just because they’re kind of backwards on technology. What I would do for that person that is backwards on technology, say, “I’d love for you to start. Here’s what we’re going to do.”
(00:15:02)
I’m going to find you a course that will get you up to speed on the technology that you need to use in this business, and there are courses out there at community colleges and a variety of other places to get people the basic computer skills, the things that you just talked about, and then maybe a course on any specific applications that you need them to run. And I’m going to pay for it, but here’s how I’m going to pay for it. I’m going to reimburse you at the end of your first year for the course, 100%.
Female 2: If you’re still working.
Christopher T. Anderson: Right. At the end of your first year of employment, if you love the person, if this is just was sort of like a person that you kind of like because she’s a nice person, but you don’t think that there’s anything particularly about her that you love in a way that she’ll interact with your clients, with your team, it will be an asset to your team and we’ll help you fills a role in the business that you need filled in a way that you think will be more awesome if she just had some technology skills, then I would do this. But if there’s nothing about like that in particular, you just sort of did it because you felt a twang of personal compassion, I think I would be very careful about that, because you’re sending a message to your team about the type of people that you’re willing to accept in your business and you’re sending a message to your clients about the type of people that work in your business and you’re certainly sending a message to her that you’re willing to hire someone without the skills that are needed in the business. And so, the next hire that doesn’t have them, it’s just a self-worsening activity. I think the only way to recover it is to do the training thing, but only then if it’s a person that otherwise I think would fit really well in the business.
I’ve made that kind of hire before where someone doesn’t have the skills. A lawyer who’s not barred in the state where I need them, a paralegal who doesn’t know the area of practice, people like that because I do believe — in the hiring process, I found that their people skills were extraordinary or that their case management skills were extraordinary, or that they were a great lawyer or whatever and I’m willing to take the hit to get them the training that they need because I hire the person, not the skill. I always hire the person, not the skill, because the skills are trainable. But I have to love the person in order to hire the person and not the skill. So, if you don’t love her, say you’re sorry, buy her something nice.
Female 2: Like what?
Christopher T. Anderson: Has she even started?
Female 2: She works for three days. No, that was three half days.
Christopher T. Anderson: I don’t know this person, so it has to be something that would fit her personality. But if she’s a person that would like a spa, maybe like a full day, like top notch spa treatment at a local place that’s known to be top notch — is she married? Do you know?
Female 2: No, not married. No, children.
Christopher T. Anderson: A night at a swanky hotel with full pay dinner, something like that. Just something that’s really going to cost you because you did something not smart, but yet says, “I’m sorry and I mean it and hopefully preserves the relationship.”
Female 2: Okay. So next time she’s coming on Friday morning, would I let her come in on Friday and then talk?
Christopher T. Anderson: Yeah, I’d probably meet with her Friday morning.
Female 2: And send home with a present.
Christopher T. Anderson: Yeah. “Christina, today is your last day. I’m sorry. I thought this would work out, and it’s not working out and I really feel like it’s my fault, not yours and because of that, I would like to give you a party gift for taking a chance on us and this is what it is, and I really wish you all the best.”
Female 2: Okay. This is so hard. I mean, if it’s somebody else’s employee, no problem. Just let them go. But it’s so hard when you actually know the person. How to wrench him.
Christopher T. Anderson: Yeah. I remember in 2007, whatever the financial crisis was in our real estate closing business went from doing 20 closings a week to two and we had to let some people go. One person was sick and I went to her home, which was, she lived in a double wide trailer and had to let her go in person while her husband sat with his back to me in a swivel recliner cleaning his Glock. So yeah, it can be hard, but it builds character.
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(00:19:59)
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[Music]
Male: Our last question is from a lawyer who is unsure about handing off more responsibility to a new hire.
Female 3: I want to have a drag-in, but I don’t want to have a drag-in. I can’t be the drag-in forever. It stops me from doing bigger and better things, but I can’t quite get over the idea that someone would do it as well as I would or I can compartmentalize when I have probate cases. I think a drag-in is totally fine, but I can’t click something in my head that will say, “Yes, your drag-in will sell people on these big, expensive elder law planning packages or big expensive estate planning packages.
Christopher T. Anderson: So, one, the right one will do it better than you.
Female 3: Yes, I’ve heard this.
Christopher T. Anderson: Okay. I appreciate that you’ve heard it, but it’s actually true.
Female 3: Okay.
Christopher T. Anderson: The right one. Second, you don’t have to believe that. I have a set rule in my business. If I could find someone to do anything that I do at any time, including right now, 80% as good as I do it, I hand it all. Because I know this one thing, as long as I do it, I can’t do the next highest thing and better use of my time. I can’t grow. I can’t improve. There’s so many things that I can’t do when I’m doing sales. What’s your current run rate?
Female 3: Around 800.
Christopher T. Anderson: And what percent of your time in a given week do you spend doing drag-in work consults onboarding?
Female 3: Between 30% and 50%.
Christopher T. Anderson: I was going to say it’s probably half, and I think if you’re honest, it’s probably half. Okay. How many hours a week are you working in the business?
Female 3: Less and less.
Christopher T. Anderson: In the past four weeks?
Female 3: I worked 50 hours a week.
Christopher T. Anderson: 50. All right. There we go. So do you wish to expand those hours?
Female 3: No.
Christopher T. Anderson: Okay. Do you wish your firm to be bigger than $800,000?
Female 3: Yes.
Christopher T. Anderson: You can’t expand the number of — if you want to grow, then you all got to improve your ticket value, improve your conversion rate, those will get you somewhere not very far, because I bet your conversion rate is pretty good. Even if you double your ticket value, that will take some time and then you’ll be stuck at $1.6 million and you won’t get to $1.6 million because you are tapped out. So you don’t have time to hire. You don’t have time to advertise. You don’t have time to market. You don’t have time to improve all those other aspects of the business because you are tapped out. You’ve got this one big chunk drag-in that’s taking up 20 plus hours a week that you cannot expand for yourself. So your business is stuck. So it doesn’t matter if they’re not as good as you. They have 40 hours a week to apply to it, and with the revenues they generate, you can hire two, and you will grow your business. It doesn’t matter if they do it 80% as well as you do. It’s just math. You are stuck and the only path to unstuck is delegating that part of your role. You’re not scalable.
I am right now training five drag-ins in my business. I believe two to three will make it, and then I’ll train five more. Because if sales hits capacity, then sales hit capacity. That’s it. That is the end.
Female 3: I have hired people in the past with the idea of having them be a drag-in, and one of them I even took to how to manage drag-in training.
Christopher T. Anderson: How to train your drag-in, yeah.
Female 3: And it just hasn’t happened.
Christopher T. Anderson: Why are you suddenly using passive tense?
Female 3: I wonder if part of it is or I’m sure part of it is my reluctance to hand it over, because I haven’t just said, “Now you are a drag-in and all new prospective clients come to you.” I set it up in a way of okay. Once intake, make sure they’re in the right place. They have their free call with you and you sell them a paid strategy session with me, or if you can close them on your own, good for you. That’s not a very good setup.
(00:25:08)
Christopher T. Anderson: No. So, what you’re — to translate just so you can hear yourself clearly. I identified a person that I thought might work as a drag-in, and I brought them to a drag-in training to try to persuade myself that I’ve gave them some training and then I half ass implemented it and hoped it would work out and it didn’t. Therefore, it’s a bad idea. And I say that’s your subconscious, but that’s where you are. The new way to do this is I am going to turn over 50% of my consults by September 15 and 100% of them by November 1. What do I need to do? Because that’s happened. So, what do I need to do? Well, first of all, I need to go and hire not someone who would work out as a drag-in, I need to go hire a salesperson for my business. I will have that person hired by this date, and I will use recruiter if I have to. I’ll go out on the deed or whatever, I will look for a salesperson and I would probably advertise for a salesperson for a personal services business, not a law firm, because people don’t get it and they won’t apply. I would then have a plan for how they’re going to get trained, and I’m not going to recommend or not recommend whether you do how to train your drag-in. I’m not entirely clear. I’ve been in it for so long that I don’t know how good it is for people that have never sold in a law firm before. It may be great. I just don’t know. So, ask around.
I’ve been training my people using S3 training. Basically, I hired S3 to work with me to build a bespoke training for my business. So, we’ve created an entire training program, videos, workbook, et cetera, specifically for my business that I run people through. And then I still do after every one-hour session that they do of that; I do a one hour debrief and role play with them. That’s my training commitment to them. So that’s six hours of their time, six hours of my time. To me, that’s not a very big commitment to get them trained up on my way of selling.
And then I make them go to the dojo. So, in other words, I make them role play on their own. I get feedback from others, and then I go to give them low risk clients. So, I start them on some ammunition for two weeks, and I watch their calls and I debrief with them, then I give them medium risk clients, and I’d debrief for another two weeks and debrief with them and then I give them unfettered access to the lead list or to the consults that are set up. That’s a plan, right? And that’s a place where you start. That plan doesn’t start as you don’t make it up as you go, it starts with I will turn over 50% of my consults by September and these are my dates. You can choose your own. So, by September 15, you turn over 100% by November 1. That gives you and the drag-in time to ramp up and to get productive and for you to correct them along the way. But it’s the commitment to turning over the consults that is the key here, and that’s what you have never done and they don’t have to be as good as you.
Female 3: I have a mental block because I don’t think I would want to buy legal services from a non-attorney salesperson.
Female 1: You are not your client.
Christopher T. Anderson: Yeah. When I first learned about product marketing and product management, first thing that I had to learn is that in designing products and bringing them to market, I have to get over the fact that I am not the customer and I can pretend to know the customer because I’ve worked with them, but I don’t know what they think. Let me tell you this, for everybody on this call, our clients don’t know the first thing about how to buy legal services. They don’t know. They only know what we teach them. And so, what you can do with this extra time that you’ve gotten is you can create videos so that when the consult is booked, they get a video with the founder and owner of the law firm. You’re about to speak to a member of my, whatever you want to call, I call a new client specialist team and they’re going to help you to decide what the best thing for you to do with us might be including possibly not working with us at all. This is an integral part of becoming a new client with us and the clients that have gone through this have really appreciated the care that we’re able to take by having our new client specialist work with you to help tailor your choices to your needs. “At any time of course, if you have any questions or concerns, feel free to reach out to me. I’m always here for you, and I really am looking forward to welcoming you to the firm.” Boom. Now you’ve just taught them how to buy legal services from you.
Female 3: I understand it intellectually.
Christopher T. Anderson: I’ll edit the video for you. I mean, not like Jimbo(ph), like I won’t cut. I don’t do that.
Female 3: You’ll critique it for me.
Christopher T. Anderson: I will critique. If you send me a script, I’ll critique the script so you don’t have to record it. If you want to send me a recording, I’ll critique it.
(00:30:01)
But that’s it. Just remember, you’re teaching them how to buy legal service. They have no idea. Your marketing got them to call you. Great. Now they have no idea what to expect. Tell them. And the whole they expect to talk to a lawyer is your ego and a lot of other lawyers. You’re not alone, but it’s not true. It’s not false. There’s no there, there until you teach it.
Female 3: My hands are getting sweaty just talking about this.
Christopher T. Anderson: Just like anything else. Just take the first step. Make the decision, then take the next step. You don’t have to believe it. You don’t have to believe in it. You just take the steps that have the inevitable result of you giving up your consults and notice how make, you give up 100% all at once, right? You get to see how it’s working and adjust it so it doesn’t bring your business down.
[Music]
Male: Thank you for listening. This has been the Un-Billable Hour Community Table on the Legal Talk Network.
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