Community Table: The Dos and Don’ts of Law Firm Resolutions For 2024

Episode Notes

Transcript

The Un-billable Hour Community Table where real lawyers from all around the country with real issues they’re 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 scripted. The real conversations happen here in our first segment. Christopher and Rob highlight the do’s and don’ts of New Year’s resolutions for law firm owners.

Christopher T. Anderson:

What I find with a lot of law firms is that the mistake that they make is they look at their prior year. So they’ll sit here in January and go like, okay, how did we do in the previous year? And then, alright, what do we want to do? We want to grow 10%, we want to grow 20%, we want to grow 50%, we want to grow a hundred percent from there. And then they’ll make a budget and they’ll take that budget and use the prior year and just sort of increment everything. And that’s not very motivating. So there’s nothing, doesn’t mean that you can’t hit that budget, but the problem is that there’s no why behind it. So, oh, we’re going to grow 50%. Why? I don’t know, sounded like somebody told me that was a good number or that’s what my friend did, or that’s what these advertisers say we can do or whatever.

And that’s just not the right place to start. So what is the right place to start? Is what do you want your business to do for you in the coming year? Now we’re going to have to test that, right? If you Gogo like, I want my business to send me a billion dollars, well, there’s nothing necessarily wrong with that. However, we’re going to then have to backfill that and say, are you willing to do the things? Are you able to do the things that would be needed to be done to reach that number? And with every wherever you are, with every growth increment, it gets more challenging to make the next growth increment depending on what it is you set. But you have to understand what the ramifications are. Some parts of your business will grow linearly with your growth. Some will grow more slowly with your growth and some will grow exponentially with your growth.

And so it is important to take those all into effect, but it really starts with what do I want my business to do for me? Because that’s the one factor that you can attach a why to. I want my business to, instead of sending home $200,000 with me, I want my business to send home $250,000 with me. Why? Well, my kids are four years away from college and I need to put $50,000 a year more away in order to be able to fund their college. Great. I want to be able to retire in seven years. Great, whatever the reason is by your own personal budget, your own personal goals, I want to buy a Audi GT Touring edition this year. Great. Whatever your personal goals are that feed what you want your total owner benefit to be should form the basis. And then you take that number and that’s the number that has to come to you as total owner benefit.

And that can come to you in three main ways. It’s actually four ways. The three main ways I always talk about are your salary. The business should be paying you a salary, your regular distributions, the business should pay you regular distributions and profit share. Your business should pay you a percentage of the profit that the business makes. Those are the three main ways actually. So actually there’s five now. I’m so sorry. The fourth way is perks things. The business pays for that. If you had a regular job, you’d have to pay for yourself. The business might pay for your vehicle. And there used to be jobs that did that. But very few jobs today do. So your cell phone, the business might pay for your cell phone. The business might pay for some travel because you connect some vacations to business travel in an IRS compliant way that I’m not going to advise you on because I’m not a tax advisor, but the perks that come to you.

So that’s the four ways of incoming. And then the fifth way is less anything you have to put into the business. So hopefully you don’t have to put anything in, but if you do, then that would be less that. So that all then goes into become the basic foundation for your budget, for your business for the coming year. And then based on that, you figure out how many, your total case, your average case value, a lot of things about your business for prior years. You then can figure out how many new cases you need, how much team you need to service that, et cetera, and what other expenses will be incurred because of that. Do you need to increase your rent? Do you need to increase your utilities? Do you need to increase your software expenses? Do you need to change other things about your business? And that all flows from the most important decision, which is how much money do I want to be able to take from the business this year? So that’s on the acquisition side as we’re planning for the business. Rob, let me turn it over to you. What other things should folks be thinking about as they really stack hands by the end of January on what the rest of the year is going to look like?

Robert Leitner:

Well, you had mentioned a lot of these things. Supporting the preparation of a budget, everyone should have a budget or proforma for 2024. If you don’t, it’s certainly not too late. And the foundation for that really is your 2023 p and l to have kind of a postmortem on the year. Analyze your p and l, how profitable were you? What percentage net profit are you? What type of ROI are you getting on your billable resources like your attorneys and your paralegals for every dollar you’re spending on marketing, how many dollars in revenue are you bringing in your marketing ratio? What are your largest expenses? How is your revenue broken down by skew? If you’re able to do that? Cost of goods, average case value, and some of the other things that Riz mentioned, you pull that out of the 2023 p and l and you use that as the basis for 2024 to make sure that whatever your revenue goal is, whatever your total loan or benefit goal is, it has to be supported by the numbers.

Okay? You could say you want 300,000 in regular distributions and that fine as long as the numbers support it. And you have to assume that a lot of these ratios and percents and whatnot from 2023 are going to persist for at least a month or two or three into 2024. And that is the sanity test or the reasonableness test. And then as your revenue goals are going up, do you have the capacity? Do you have the personnel to support it? Do you have utilization? Do you have the technology and systems in place? And I encourage everyone to just take a step back. Does it make sense if you have 20 people right now supporting 3 million of revenue and you’re going to $6 million, have you increased personnel? What type of personnel? What are your assumptions? And just kind of make sure that things pass the smells test. In other words, that’d be my recommendation. Get your data for 2023, extract, analyze then as you’re preparing your 2024 with your revenue goal and your total loan or benefit, does it make sense? Does it add up?

Christopher T. Anderson:

Yeah, I asked the primary question, which is why you ask the question. Is it pass a smell test? And for that, my biggest recommendation is that you have to, it is a best practice to then have that plan reviewed by somebody else who’s not emotionally and otherwise invested in your business, a third party that you trust. If you don’t have someone like that, of course you can reach out to us [email protected] and we will be glad to engage with you to take a look. It’ll be limited engagement. We’ll be glad to take a look, give you some pointers, sanity test it, ask you some very difficult questions to make sure you’re on the right track. So if you would like us to help you with that Christopher at sunnyside law.com and let us know and we will connect with you on that. If you want to boil down what you shouldn’t do at the new year with your business, the answer is engage in magical thinking.

There’s actually a fascinating article. I believe it’s in the Atlantic. The title of it I believe is something like you can’t just become a different person. The thrust of it isn’t that we can’t change, that we can’t make differences in our business, but that this whole notion of New Year’s resolutions is kind of premised on magical thinking. And the magical thinking is, if I just change, then I’ll change Starting today, I’m going to start running three miles a day starting today. I am going to be more profitable starting today. I’m not going to make higher C or lower grade people starting today. I’m not going to take any more of these kinds of cases. Now can you do all of those things? You bet you can. But it goes back to what we were talking about a minute ago, which is it’s not enough to just decide that you’re going to do it.

That is an important step. It’s a really important step. But then the minute you decide it, you got to go like, okay, that’s the what, first of all, why? Because if you can’t tie a why to it, you will fail. This is why New Year’s resolutions fail. People don’t tie a why. That means something to them, to their resolution. That failure would mean something painful to them. And then finally, you have to commit. The first step is not people say the first step step’s tying on your shoes. No, the first step is A, how am I going to do this? I am going to have to take time to run every day. I’m going to have to change my nutrition perhaps to run every day. I’m going to have to not get injured if I haven’t been running at all by starting to run three miles a day, maybe I should talk part of my how is I should talk to a coach about what I need to do to be able to run three miles a day without getting hurt?

If it’s your business, if you’re going to be more profitable, what do I need to do to be more profitable? Spend less money? Well, that could be good. That could be bad. If you cut marketing expenses, you’ll be more profitable for about a month and then bad things will happen. So how becomes the real deal? And it’s when you know that you are serious about your resolution. When you figure out the how. Listen, making the decision super important, but I don’t like there’s coaches in the world who engage in this sort of magical thinking with you, make the decision and then everything the universe will align to make it happen in sort of magical way. No, the universe will align to who support you in your decision as you take the steps necessary to implement it as you make it clear to the universe how you plan to do it. Because that clarity of thought and clarity of action is what aligns other forces behind you. So that’s what you shouldn’t do. Rob, do you want to augment that?

Robert Leitner:

Yes. So some of the lessons as you head into the new year, number one, I would say don’t recreate the wheel. You’ve been successful. You’ve had a lot of things that are working. They can be tweaked, but definitely continue to leverage what’s working and improve on it. Number two, as I was mentioning before, whatever your goals are for the year, make sure that they are supported by hard data and analysis, otherwise setting yourself up for failure. Third, I would highly recommend communicating with your team. A lot of firms have an annual kickoff meeting or something similar. Discuss your goals for the firm for the year, get buy-in, make sure everyone’s on the same page. Share your vision next. Anything new and exciting that you are trying in the new year, make sure that you manage it and monitor it religiously. Obtaining data and analysis on a daily, weekly, monthly rate, whatever is appropriate, but make sure that we are managing any type of new initiative. Well make sure it’s profitable and cut it off if it is not. Those would be the things I would add

Speaker 1:

In the next segment. Christopher works with an attorney to determine why her law firm’s sales percentages are down.

Speaker 4:

So I got back from my sabbatical, which went really well up until about the last week and a half of it when my sales team pretty much shit the bed and we’re in a complete sales slump

Christopher T. Anderson:

Oh dear. So they sold well until the last week.

Speaker 4:

Yeah.

Christopher T. Anderson:

Huh. What happened?

Speaker 4:

I’m trying to figure it out. I’ve been listening to calls and the calls are going well, I don’t know what else I should be doing other than, because typically if we’re in a sales slump, something’s going on, folks aren’t using a script or they aren’t really digging deep with people. We’re getting a lot more money objections than we have previously gotten. And I think some of that is them not really getting them as invested early on in the call and digging to find the money before you get to asking for the money. We’ve identified that and are working on that and things have turned around a bit, but I’m just trying to think through what else should I be doing with my sales team to get them back on track.

Christopher T. Anderson:

My first thought is one week, first thing I would do is say is just everybody breathe right? A week long slump is not that uncommon.

Speaker 4:

Well, it started about a week and a half before I came back. It lasted two and a half weeks.

Christopher T. Anderson:

Okay, that’s a little bit longer. And by slump down by what percent are we down from normal

Speaker 4:

Closing from 65 to 70% to now closing at about 40%. So a pretty big drop.

Christopher T. Anderson:

And what’s lead flow? So let’s walk through the process. We’ve got to figure out where it is. That number that you’re giving me is from person that’s made it to the sales appointment. Yeah,

Speaker 4:

Correct.

Christopher T. Anderson:

Okay. How’s the lead flow? Is the number of lead staying consistent?

Speaker 4:

The number of leads is consistent

Christopher T. Anderson:

And the number of appointments scheduled from those leads, has that been consistent,

Speaker 4:

Fairly consistent,

Christopher T. Anderson:

Up or down?

Speaker 4:

It’s down slightly because consults are still, his book is pretty full.

Christopher T. Anderson:

Okay. And how about showing up? Are people showing up?

Speaker 4:

They’re showing up.

Christopher T. Anderson:

Okay. So everything stayed consistent except the close rate went down?

Speaker 4:

Correct.

Christopher T. Anderson:

And how many people are on the We

Speaker 4:

Didn’t change anything in marketing.

Christopher T. Anderson:

Yeah. How many people are on your sales team

Speaker 4:

That are doing consults? One.

Christopher T. Anderson:

Okay. Did you simply ask what happened?

Speaker 4:

Yes, I did. His default is they don’t have any money.

Christopher T. Anderson:

Did you go deeper with him?

Speaker 4:

I did. And even today I went deeper with him. He came in, they were non-citizens. They didn’t have a social, so they couldn’t apply for financing. The party who needed representation was filing the action against the person who financially supports them. The first thing I asked him, because she came in with a whole, they came early, she had a whole family with her. They had the kids with her. The first thing I asked him, I was like, is there not anyone in that room who could find some resources, a credit card or someone to call? And he went back and it is also a case where fairly quickly we’ll be able to get the party support. And so I gave him that tip as well, and then he went back in the room and they retained. So I think it’s a lot of that not pre-judging for starters and not really going deep into helping them find the money.

Christopher T. Anderson:

So that means that from everything you’ve told me that he’s previously been better at helping them find the money and now he’s fallen off. So the question is, and what I meant by have you gone deeper with him is what’s happened in his life? He’s having a money problem, a personal money problem, and he’s feeling he’s dropped himself into a scarcity mindset and it’s showing up in his consults. So we need to figure out what’s going on. And this is just a love call or a love conversation. Hey man, I’ve been thinking about what we talked about and people aren’t able to find the money, and in my experience has been that you’ve been really good at that before and now you’re not. So let’s just talk about what’s going on. And by the way, I just want you to know if there’s ever anything that’s going on with you, I would do anything to help you. I don’t want you stressed out about your personal life or anything else because you do a great job here. So what’s going on, man? What do you think is really happening here that you’re having a harder time with this conversation, but it’s got to come from love. This conversation could go totally south if you don’t do this, right? Yeah, but that would be my instinct is that this guy’s having money problems

Somewhere. Maybe kids’ tuition went up or maybe a kid’s going to school or I don’t know. That’s my gut as to what’s going on here. That’s

Speaker 4:

Exactly what happens to me when I’m, I’m financially stressed.

Christopher T. Anderson:

Exactly. You either go one of two ways, you show desperation or you are afraid to ask for the money because you’re not in that. Your head’s not there and you forget as he did. I mean that was a perfect example. You gave that you’re there to help these people. How dare you let this whole family come in the office and then walk out without you helping them? That’s

Speaker 4:

When I walked through the lobby and I realized they had showed up 30 minutes or the whole family is here. I pretty much that.

Christopher T. Anderson:

Yeah. And I don’t know what community they come from, it doesn’t matter. But when people have that much family support, there are other people around them that will pull and come together. And particularly you’ve got to light at the end of the tunnel here. You get to the temporary hearing and you get some money coming.

Speaker 4:

Yeah, and it’s a TPL. So I mean the hearing’s in 10 days.

Christopher T. Anderson:

Yeah, I hope that helps. I mean, I hope that helps with the conversation.

Speaker 4:

Yeah, because I almost didn’t ask because I was like, I know what to do. But no, that was completely outside of what I thought to do.

Christopher T. Anderson:

Rob,

Robert Leitner:

I think your answer is spot on. There’s a lot of insight there. The only thing I would add would be it’s a fundamental strategy for any salesperson in this business to understand that when the family’s there, that’s who we would go for support, even financial support. So I think this is legal selling 1 0 1. Why didn’t your sales rep ask that question initially? Why isn’t that on? So your salesperson, any salesperson, they know the common objections and any practice like let’s say the top five objections and either off the top of their head or Vieth script or a knowledge management system, what are the two or three ways to overcome that Objection. So you nailed it. You said they came in 30 minutes early, the family was there and it seems like your salesperson didn’t say, well, can someone in your family help you? Can someone help financially someone with a credit card? What other family resources do you have? That’s fundamental to what they do. So I would just make sure that this knowledge is encapsulated either in your script, knowledge management system, whatever it should be on the top of their mind, and I would definitely be questioning, why wouldn’t they have exploited that strategy? You figured it out in one second, walking in the door. That should have been fundamental to their response.

Christopher T. Anderson:

So what you’re saying, Rob, is that there’s a process issue here that this should be from the cheat sheet or whatever, the system

Robert Leitner:

Process or training.

Speaker 4:

I spent a whole three days building an objections handling guide and I refer to it and I refer my sales team back to it at least weekly. They hear about this objection handling guide, and then I ask them, well, what does the guide say? I refer them to it all the time. So it’s built out, but they’re not using it and I need to figure out why he didn’t. That one was, so again, I was just running to the restroom and when I saw the whole family there, I asked the reception if it was a PNC waiting on our dragon, and she told me, yeah, they came early and she told me what time they had gotten there and what time their appointment was. I banked the revenue in my mind, the revenue was banked because how do you not close that?

Robert Leitner:

Your salesperson should have been thinking the same exact thing and you gave them the tools to knock, get out of the park. All they had to do was swing the bat. So it could be a little systemic, could be training, could be processed. It could just be that their head’s in another place, which gets to Christopher’s point before what’s going on. But I think this is all part and parcel

Speaker 4:

Of right, because he was doing exceptionally well up until that period of time.

Christopher T. Anderson:

I think what Rob’s saying is exactly right, but this is a conversation not of why didn’t you, but like, Hey man, how you doing? What’s going on? So cool. Very cool.

Speaker 1:

For our final segment, an attorney wants to know if flying a job candidate out to meet the team is appropriate.

Speaker 5:

I have a potential attorney candidate who lives out of state. She’s moving here for other reasons. It wouldn’t be because of the job, right? She’s moving here irrespective of the job. So we interviewed, had a great interview, kind of hit it off. We’re still in the process, but if I get to the point where it looks like all systems ago, I was thinking of doing something different than I normally do, which was flying her out for a weekend. She’s wrapping things up in her state, flying her out, or maybe not even a weekend flying her out for a day or two. Let her come see the office, hang out if she needs to work. She’s a practicing attorney in her jurisdiction, so she might need to work remotely for a little bit, take to lunch, get to know her, kind of do that whole schmoozing thing and literally see if we can work together and see what she’s like in real life and have her see what we’re like in real life. What am I missing? Or is that excessive?

Christopher T. Anderson:

I don’t think it’s excessive at all.

Speaker 5:

Do I put her up in a hotel? I guess,

Christopher T. Anderson:

Yeah. If the reasons she’s moving don’t exist yet, then yeah, as you know, I guess listeners don’t necessarily know. I strongly believe that recruiting is marketing and at the end of marketing comes a sale. And what’s the goal of a sale? Not to convince anybody of anything. The goal of a sale is to educate them sufficiently so they can make a proper decision. So it sounds to me, as part of this process, you’d like to inject education of come see for yourself what this really looks like so you can make a decision. I can’t find anything wrong with that. The only employer that should find something wrong with that is someone who thinks that nobody would come to their business because of how it really is. And so you want to fool them and that’s not a good way to start.

Speaker 5:

And I want to be able to confidently make a decision.

Christopher T. Anderson:

Absolutely. I think quite honestly, you’ll learn less than she will in this process, particularly if she’s going to work remotely. I mean you can maybe spy on her or

Speaker 5:

See. Well, I was going to, that was my next question. Maybe is there something I could give her? I mean, she’s not licensed yet. It’s a whole thing. Of course there is on motion for admission.

Christopher T. Anderson:

Yeah, of course there is. I mean obviously don’t give her something that tests her extensive knowledge of procedure, but something that tests her thinking. You can have her sit in on a call and then say, what are your initial thoughts? How is she thinking? How is she going to carve the problem out?

Speaker 5:

We could do a swamp out and let her chime.

Christopher T. Anderson:

Do a swamp. Yeah, absolutely. Exactly. Have her participate in a swamp out. That’s how you can get an idea of her thinking. Now the danger is some personalities will feel put on the spot and a little bit deer in headlights just because they’re new and they might’ve done better two weeks in, but you’ll get glimpses of whether this person can think their way out of a paper bag and some just can’t and some can.

Speaker 5:

I think that’s part of the test as well, to be honest, because we’re in a jurisdiction that’s kind of like, you got to make your way and speak up and be assertive and do your thing, or we’re going to roll over You

Christopher T. Anderson:

Like driving.

Speaker 5:

It’s like driving in Manhattan. Get out of my way. Come with me or get out of my fricking way. So I want to see if she’s got the chutzpah, we’ll call it, to kind of roll with the way that we are in this area. Can you be tough enough to tough it out?

Christopher T. Anderson:

Definitely culture. Yeah. So what you were talking about there is cultural fit, thought fit. I think it’s a great idea. Most people don’t have the time themselves to invest in it, but I can’t fault it not one little bit. I don’t want listeners to say, oh my God, I have to fly every candidate out to my firm. No, but it sure won’t hurt. I do this whenever possible. I invite candidates to our team meetings whenever possible and things like that for exactly this reason. I don’t want them to join us with some misapprehension about who we are. Right. Neither do you.

Speaker 5:

Yeah, and that reminds me of a different organization. Had their candidates come to a very popular event and a couple of them freaked. This is years ago. A couple of them freaked out because of what the event was and they’re like, thank you. Goodbye. It was all part of the process. The interview process.

Christopher T. Anderson:

Yeah, exactly. Very good. Alright, so on the third Thursday at three in February, we’re going to have our guest who was the guest on the available hour, and you can catch the show. His name is Joey Siber. Joey and I had a wonderful conversation on The Un-Billable Hour, which again you can listen to about his business, which is called Level Legal. But we talked about, well, that’s important and I think will be great to ask him questions about are how to have a human focused approach while using the most modern technologies in your marketing and other aspects of your business. So going to be a great guest. Rob will be here. I’ll be here and you can ask questions to Joey Seber on The Un-Billable Hour Community Table third Thursday at three in February. And of course you can catch this show as well as all The Un-Billable Hour episodes on legal talk network.com or on iTunes or wherever you get your podcasts. Take care.

Speaker 1:

Thank you for listening. This has been The Unbillable Hour Community table on the Legal Talk Network.

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