Community Table: How To Measure Your Hiring, Avoid The Bull$#!*.

Episode Notes

Transcript

Speaker 1:

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. Starting off the episode is an attorney who is trying to balance hiring and law firm growth.

Speaker 2:

I have a firm that’s growing, growing, growing. I’m delaying the track in front of my little tutu train as fast as I can. I hope my sound’s okay. I’ve got for some reason,

Christopher T. Anderson:

Your sound is great, you’re doing fine. Okay. I mean, other than there’s this little, I don’t know what it is with your microphone, but you’re coming through with a Texas accent. I don’t know if you can dial that back a little bit, but

Speaker 2:

Yeah, I’ll try real hard. But what I’m thinking about right now, sort of the journey, let’s see. It’s regarding hiring. Excess capacity is the topic I’m trying to balance having enough cases and enough work to do. My pendulum has swung both ways and I’m trying to level that out. And what I find the decision in front of me right now is I have one attorney due to start. I’ve identified another person that I would like. I think she wants to come here, and if I also hired her in addition to my team, I’m going to have some excess capacity. I’m just trying to, I guess my question is if there are any good rules of thumb that you or whomever does in terms of getting it right, of how many to bring on, and I know so many people struggle with hiring and I’ve been in that place I guess in the past. Right now I have, I guess there are five of us going to be six when she starts, and this other person would be the seventh. Some of the ones who work here, I’m not a hundred percent sure they’ll be here forever, right? So I’m just trying to get that balance right, of bringing people on before I’m in desperate need. Any thoughts? Oh yeah, I guess

Christopher T. Anderson:

There is no balance. That’s your thought. What you’ve described is what most people do, which is the seesaw, get some more team shit, need cases, get some more cases. Shit, I’m out of people. And then you get in the mud and people just go back and forth going like, oh, I got to fill that hole. I got to fill that hole. I got to fill that hole. I got to fill that hole. Right? So how do we not do that? We not do that. Really, Chris. We avoid doing that by having a business plan. We avoid doing that by declaring the one thing that you can control because you can’t control whether team member A or team member B meets their KPIs. You can control the consequences and you can control hiring better people, but that you can’t control. You can’t control. If the market becomes a harder to hire market or an easier to hire market, you can’t control that either.

The one thing that you really can control is how fast you grow the number of cases that come in the door because you can get your marketing dialed in and you can get your sales team dialed in, and so you can get to a point where if you increase your marketing by X percent, you have a pretty good idea that within two months your number of new clients coming in will increase by y percent. A good marketing and sales machine, which is your primary responsibility, becomes a st dial. You just turn it up and the first few times you adjust it, you don’t know what the output’s going to be because it’s very interesting. Sometimes a small move on the dial creates a big change in new clients and sometimes not so much and you have to fiddle with it a little bit to get there.

But then once you’ve fiddled with it a couple of times, so for 2024, how much are you going to grow? How many new cases are you going to get in January and February and March and April and May and June and July and August, September, October, November, December? How many cases are you going to close during that time because your average time on desk, therefore then what your total files in-house will be during that time. Once you know that you know how many people you need per file or how many files per person, and then you know what your hiring plan is, and it is perfectly acceptable to get out there and say, I’m hiring. And when people are interested, say, you’re great. I really like you. I’d like you to start in December. Would that work for you? That’s one of the things that we’ve been doing. It’s like we’re building out our hiring pipeline. Just like you build out a sales pipeline and just because you interviewed somebody, you like them and you think they’re a great match, doesn’t mean they have to start tomorrow. You’re not hiring people to some extent. I think it’s hard to hire a year out. They might go find another job in the meantime, but you can certainly get a couple months out

Speaker 2:

Probably, I want to say at least 60 days for people. The one I’m thinking of, she wants to come here. It’s different than like, oh my God, I need somebody come on. And my thinking was if I got it set up for, let’s say she would agree in December, and then something changes with the staffing, little things that make me uncomfortable, I could say, Hey, could you come sooner? Things have changed,

Christopher T. Anderson:

Right? Yeah. It’s easier to pull them in. You don’t want to ever delay it. Let’s face it, sometimes you’re going to eat a little bit of lack of productivity, but you can at least stagger it out so you’re taking one bite at a time. The cool thing is also where you are from this moment forward, you’re not at the worst part. One hire or go was the worst part, but from here out adding people to your team becomes less and less painful because let’s say when you only had one person, right? Well then when you add another person with your current number of cases, you’ve now gone to 50% productivity and then you fill everybody’s dockets and now you’ve got two people full and you add a third person. Well, now you’ve gone to 67% productivity. Now you’ve got three people full and then you add a fourth person. Now you’re at 75% productivity. The fifth person, 80%, the next person, 83%, the next person, you get to a point where you never, during those first few ones, you will actually dip into non profitability, right? You’ll dip into the red. But after about the seventh, sixth or seventh person, you just become slightly less profitable for a short period of time and then more profitable than ever afterwards.

Speaker 2:

It seems like I can get ’em because the marketing thing, I do feel like I’m at the point of the dial. And so it seems to me I don’t have the same kind of, I just don’t worry about I’m going to have enough for them to do.

Christopher T. Anderson:

Yeah, you tell me when you’ve reached 10% of your addressable market share, and then we’ll worry about you not being able to get significant new clients and then we’ll talk about geographical expansion. But I venture to say, because I know your economic area, you’re nowhere near 10% market share. And so you’ve got plenty of running room,

But so stop with the balance. You make a plan. This is how many new cases and this is how many people I need. And when in our business, we know exactly how many we’re going to hire all the way through December of 2024. Right now we know all this. We know which roles we’re going to hire. We know it’s going to go faster and faster and faster. So from about three months ago, we’re never stopping recruiting and we’re just going to start putting more and more dollars behind it. But it’s all driven by the revenue plan. That’s what we can control. And then we just hire a quarterly. What’s

Speaker 2:

Hard though is my business plan, whether they’re helping me do is sort of the team that I have now, plus just the thing I know I’m going to need in the first quarter, and that’s the goal number. But I guess for me, that’s hard to know where it ends because that plan is going to double me as it is. I should have ended higher than I am

Christopher T. Anderson:

Now. Why is it going to double you?

Speaker 2:

Because of the current team that’s in place now, they’ll be up to speed and adding the mentoring attorney and one other and everybody doing what they’re supposed to do, which was not the case. It’s going to make me double again.

Christopher T. Anderson:

Why is doubling what you want to do?

Speaker 2:

I dunno that

Christopher T. Anderson:

With all due respect, that’s a bullshit plan.

Speaker 2:

I felt that it baked in the cake. This is just sort of the yield of what I currently have

Christopher T. Anderson:

Is going to yield. Yeah. Don’t you let anybody tell you what your revenues are going to be at the end of next year. The only person who can define that is you because you’re the only person who knows what that means to you and whether it’s important, what that does for you, what that does for your life, what it does for your family,

Speaker 2:

Anybody. What’s hard is so far what it’s going to do is so far beyond my even comprehension at the moment that it’s hard to know. I really think because they tell me and I’m like, I really think we’re going to do a lot more than that, but I make everybody stressed out when I say that.

Christopher T. Anderson:

It’s just got to be what you want, not the owner of that future firm, whatever that number it is. And you’re going to need to do some things to become that owner. You’re going to need to get some skills. You’re going to need to hire some other people other than lawyers at some point.

Speaker 2:

Yeah, for sure. We got, there’s like 25 of us. We got a whole four other non-lawyer folks. The infrastructure, that’s the goal is to get a really solid infrastructure this year because whatever the amount of money, they’re talking about me bringing home seven figure money, okay, how much would you like to pay? Well, well, that sounds real good. Yeah,

Christopher T. Anderson:

Yeah. Bullshit. No, listen, what sounds really good, you will do what is convenient to get to the dollar amounts. That sound real good. The question is what will it take to do what it takes? And not everybody,

Speaker 2:

It’s not about money for me.

Christopher T. Anderson:

No, it’s never about money. It’s about what the money does for you and your family and your lifestyle and your savings and your future. And

Speaker 2:

It buys me creative freedom to do my other stuff. That’s what

Christopher T. Anderson:

I’m right. So we have to figure out how much does it cost to get that creative freedom to do your other stuff? How much time do you need? Because the more you need to be out of the business, then we need to backfill some more people, which is going to reduce profitability, which is fine. But then when we reduce profitability, we got to say, okay, when profitability is reduced, the revenue numbers got to go up in order to continue to fund what I want. It’s not hard. We just have to go through those steps and it takes a little bit of time and a little bit of pain.

Speaker 1:

Next up is an attorney who is looking for new marketing approaches to grow the business.

Speaker 4:

I think that my biggest issue this year is marketing. We’re late to the game because we haven’t finalized our 2024 marketing plan. And then we’ve got to figure out what new ways can we bring in business. We market to the probate world and we market to the family world, which means that we have to divide our marketing dollars too, but we’re trying to figure out new ways of bringing in business.

Christopher T. Anderson:

Let’s unpack a little bit. So first of all, congratulations on the firm.

Speaker 4:

Thank you.

Christopher T. Anderson:

First, I’m going to have to attack in a second actually. So second, I’m going to have to attack. Why the hell you don’t have your numbers from December? It’s January 18th. Cannot drive in our rear view mirror, but we’ll get there a second. The first thing I want to do is, before we decide on what you need to do, why don’t you tell me what you’ve been doing? What have you been doing for your firm over 2023 and how’s it been working for you?

Speaker 4:

So we spent about 9% of our gross revenues towards marketing last year. We have multiple vendors, so we have our SEO vendor, we have a backup SEO vendor, we have avo, we do a lot of community outreach in the Arab American community. So we did a bunch of different cultural events.

Christopher T. Anderson:

No paid search.

Speaker 4:

We do, yes, you’re right. We do PPC and we do LSAs. Okay. And PPC did not throughout the year. We used them for about 11 months. Last year we used Empirical, who we love, great people, great company. However, one client that retained in 11 months. So results were crappy.

Christopher T. Anderson:

Yeah, that is pretty crappy, but we got to figure out where that is in the funnel. Alright, why two SEO providers?

Speaker 4:

So we have Blue Shark as our main SEO provider. Our ops manager had a friend who was also providing supplemental SEO services. And so we tried him out last year. He’s phenomenal and that’s why we have two. Whatever our main SEO provider is lacking, he’s supplementing.

Christopher T. Anderson:

Okay. And just out of curiosity, do you ever take that back to Blue Shark and say, Hey, how come you guys aren’t doing this stuff?

Speaker 4:

A hundred percent. And their answer is, you got to spend more money for us to be providing X, Y, and Z. It just doesn’t make financial sense to me. I’m not going to spend an extra five to $10,000 a month when I can get somebody else to do it and probably do a better job.

Christopher T. Anderson:

Excellent. Good decision. Alright, final question. I think 9% gross revenue on marketing. What do you count towards that 9%?

Speaker 4:

Anything marketing related? So all the vendors I told you previously, everything we spent on them, any marketing materials that we had to buy for the different festivals, anything marketing related.

Christopher T. Anderson:

So you do include, let’s say with your paid search company, you do include their fee as well as the ad spend?

Speaker 4:

Correct.

Christopher T. Anderson:

Okay. I would challenge you to separate the two. It is good to track both, but you want to know what you’re spending down direct, what’s called map spend, marketing, advertising, promotion spend. So the material’s, great advertising to paid to advertisers, paid to digital search. SEO is kind of a muddy place for that. So I count what I’m paying for SEO, but not anybody internal to my business that’s doing copy. But these are discretionary calls. That’s not that important. But I do encourage you to separate them just so you can see. Because for instance, with advertising spend, you could often increase your advertising spend without increasing the overhead on it. And so it’s important to know which levers you have a total of 9%. Not bad. What is your revenue goal for 2024?

Speaker 4:

3.5.

Christopher T. Anderson:

Okay, and how much of an increase is that?

Speaker 4:

It’s going to be between six to 700,000 increase.

Christopher T. Anderson:

25%. Okay. Very reasonable growth. What’s your hypothesis for where are you’re going to get that growth from?

Speaker 4:

If we can fix the marketing issue in this first quarter, I actually think we’ll probably exceed our goal, but I need to figure out new ways of bringing in business. And if we’re able to do that, then that’s my guess. I need to see where we need to invest more money with which vendors depending on the numbers from 2023, which vendors we need to cut and which new vendors we need to be seeking out.

Christopher T. Anderson:

Okay, so what you’re saying is I don’t know where I’m going to need to grow this because I don’t know where my ROIs are.

Speaker 4:

Correct.

Christopher T. Anderson:

Okay, valid. But when are you going to get your numbers?

Speaker 4:

Before the end of this month.

Christopher T. Anderson:

All right. That’s two more weeks. Have you looked at that funnel to see were you not getting leads? Did the leads suck? Were they not showing up? Where was it falling down? And if you don’t have the numbers, just say anecdotally. I mean you run your business. What was going on with the paid search?

Speaker 4:

I don’t think that we had anybody on top of tweaking the language to be able to see on a month to month basis what was working on the pay-per-click campaigns and what weren’t. So we were just running the same campaign for months and I think there might’ve been a different outcome had we had somebody on top of that.

Christopher T. Anderson:

You gave me a diagnosis, but you haven’t told me the symptom yet. So okay, that’s why you think it failed. Fine, but what failed? And if you don’t know, that’s okay. But that’s the analysis we need to do. Whether the copy was good or bad or whatever, that might be true. But until you tell me where it fell down, let me give you an example. I had a client who was all flummoxed. They were doing an email campaign and they weren’t getting any leads from the email campaign. So they kept adjusting the email content, the copy to try to fix it, to try to make it better, to try to make it better, to try to make it better. And then finally I asked the same question, I’m asking you what’s the problem? And they said, well, the open rate sucks. The open rate’s way below what we were expecting.

I’m like, so why are you jerking around with a copy? No one’s seeing it. You’re working on the thing that doesn’t matter. So that’s why you have to do a funnel analysis, what they needed to work on with subject lines. That’s it. The copy didn’t matter until we get people opening the emails. It doesn’t matter if there was no copy. So we got to work our way down the funnel and fix it from the top down. So with your paid search, were you getting impressions? Were you getting clicks? Were those clicks converting? Where were they converting? Were they booking? Were they showing up? Were they closing? You say you only closed one, but so that means that somewhere up the funnel was your biggest leak. Do you know where it was?

Speaker 4:

I generally know from having the monthly phone calls that we were getting, the leads we had, the numbers that we wanted, those leads, once we tried to schedule them, were either looking for free services, so the wrong audience. So we were able to eliminate them and make them unqualified leads from the get go. And then from the ones that actually did schedule, we weren’t affordable.

Christopher T. Anderson:

Definitely that could be a copy problem, could be a targeting problem, and then we weren’t affordable, could be a truth or it could be a sales problem. Because that statement almost always to me means you haven’t convinced me of your value. You haven’t educated me sufficiently as to the value of your services. Because if you’ve let them get through to the call and then they found you too expensive, that might be a sales issue. Listen, I’m sitting here on a 20 minute or 10 minute conversation, I’m not going to be able to figure that out for you. But that’s easily enough figured out, so I’m glad to hear that you got the leads. So we have to look elsewhere in the funnel. Copy could improve the quality of leads and or targeting could improve the quality of the leads. So we look there and then I would look all the way back down to the sales motion. What’s the glide slope and how fast are we getting to them? Needs to be in family law, needs to be 45 minutes or less

Speaker 4:

Immediate.

Christopher T. Anderson:

And then when they get that price objection, what are we saying and how are we dealing with it before they say it? That’s the best time to deal with it before they say it out loud. So you don’t have to make them wrong. So I wouldn’t give up on paid search. If you’re getting the leads, we can fix the rest and it’s just, I think you put a figure on it. It might be copy and targeting and then sales. So if you fix that, that could be a long way towards helping you. 25% again is very reasonable. You then said, I wanted to have new ways to try. You are ready for a two point something million dollar business. Have a lot of ways. And LSA, how’s LSA been doing for you do you think? I know you don’t have the numbers.

Speaker 4:

It’s very similar to our PPC. It started off really strong when we were the first players in the game and then everybody heard about LSA and now it’s gone downhill. But then again, my marketing assistant slacks me today and says, we’ve gotten two people to retain this year from LSA. So then I’m like, what in the world is going on? So it’s like a rollercoaster.

Christopher T. Anderson:

You mean this year as in this month. Good. So the biggest takeaway for me would be, you’re right, you do need the numbers, but we need to make hypotheses now so that we can start to test them and move forward. We can’t stop because we don’t have the numbers. Secondly, I want to turn it over to Rob just a little bit because Rob said something really important that I think is applicable here, which is he talked about don’t throw it all out, you adjust and move forward. So Rob, do you want to just elaborate a little bit on where you would be if you were advising her on the marketing effort here?

Robert Leitner:

Well, from the revenue numbers you’re describing year over year, you had a pretty good year. So whatever you’re doing is working it work better. Do we need better data? Yes, but in general, you’re doing the right things, I’m sure the number one and number two sources of most of your leads. So while we’re waiting for the data to come in and make some additional decisions, nurture those sources, take care of those sources, expand those sources. Obviously once the data comes in, we need to make sure 2024 is a different year that we have total marketing data by channel, the cost per lead, your conversions, the cost per client, and we know the quality of the leads coming in. So that’s the good news. That sounds like at the end of this month, maybe beginning of February, the firm will be in a really good position to make these types of decisions.

But I wouldn’t be too hard on yourself. Whatever you’re doing is working. Nurture your number one and number two sources of your leads and stick with it, tweak things as you go and just make sure the bottom line is going forward. Every single person, every single PNC, the source of that lead needs to be recorded. It’s a must. It’s a mandatory field in your intake. Okay. It is a must. Yes. We know that Everyone says, well, it came from Google and that used to mean one or two things. Now it can mean like five different things, but we can narrow it down and we can ask the question more than once. So I’d recommend that we make sure we are recording all the sources for the leads. And on your p and LI encourage you to make sure that everything isn’t dumped into a marketing or advertising line item. Break it out by channel. So pay per click, SEO events, whatever it is. And then we can very easily even on a monthly or quarterly basis, determine how much did you spend per channel, how many leads came in, how many clients did we get? And we can make some additional decisions based on that data.

Speaker 1:

Our last question is from an attorney who wants to implement a minimum billable hours requirement to an associate,

Speaker 6:

How do I roll out a billable requirement minimum to a associate who’s been longstanding and never really had one, understands conceptually sort of that he should have one, but we’ve never documented it and I don’t want to take the approach of just shoving it in his face with a piece of paper. So how would you approach that kind of reinstituting a new protocol and documenting it?

Christopher T. Anderson:

Rob, how would you do that?

Robert Leitner:

I would be pretty direct about it. Number one, I’d want to know what the billable requirement is and historically has this associate been hitting it?

Speaker 6:

So let’s assume you’re an associate who doesn’t care what the billable requirement is and has no idea whether he hits it or not. He just flies by the seat of his pant in any given day, in any given month, in any given week.

Robert Leitner:

I’m asking you though, this associate doesn’t record their hours at all.

Speaker 6:

No, no. They record their hours. There’s just no, in my opinion, there is no yearning to understand that there is a target to hit

Robert Leitner:

Okay. Again, I would still hit it dead on. I’d let him know him or her know that in order to pay their salary that everyone has to hit billable targets. That’s the way the firm works. Those are the assumptions that we base our budget on and that’s how we compare everyone’s salary. Couple things here, hours must be entered and there has to be accountability for the targets. So if this associate doesn’t hit targets, whether it’s weekly, monthly, quarterly, it doesn’t matter. There has to be some type of action taken with respect to that. It can’t be an empty requirement. There has to be accountability, there has to be consequence, there has to be remedial actions there. Yeah. You’re the owner of the firm. Everyone who works for you should have a billable hour requirement and it needs to be followed. And it’s not that I’m discounting what the associate would say or think. I’m saying that that’s secondary in importance because the firm is providing a nice standard of living for everyone who’s working there. And the billable hour requirement is a really key component in hitting your revenue and your profitability goals.

Christopher T. Anderson:

And then I would follow that up with what’s in it for the associate. Why should the associate care

Speaker 6:

So they don’t get fired?

Christopher T. Anderson:

Can we think of a positive reason why they should care?

Speaker 6:

Oh yeah. So they can provide more to their family. It puts them on track and has stability in their family and stability for their expenses and stability for their budget. And they should, I hate to, should all over people, but they should want this. I think it’s a fleeting, and what Rob’s saying is obviously a hundred percent accurate. I can do all the things I want to do, but it doesn’t sink in sometimes that this is important for the associate as well. Yeah. Oh yeah, yeah, I understand it. But then in the moment when you have to bill and do billing,

Christopher T. Anderson:

So I would think of it this way then I believe if you believe that this person would to bring home more money, if they don’t care if they’re independently wealthy or their spouse brings in all the money that they possibly could need to live, then this won’t motivate. But if they want to just want to, that’s enough. Because then you can approach this with, I think you want this and I want to help you get it. Just like with any medicine, I want to be fit and look good. All right. I’m going to help you get that. Put on your running shoes. We’re going out and we’re going, Hey, I don’t care. It’s 15 degrees, we’re going out. You might not like what it takes, but if you want to be fit, I’ll help you get there. Do you want to get there? Then we’re going to do it.

You may like some of it, you may not like some of it. So the medicine I would prescribe then here is you mentioned accountability. So I would put it in front of them every day, at least every week. Here’s what you did this week, or at least every billing cycle. Here’s what you built, here’s what was collected, here’s what’s going to come to you. And this is what I do with my team. Because those numbers, for a lot of lawyers particularly, they just go like this, I won’t hear ’em until you do this. And if you continue on this path, you will make this much in the coming year. That annual number, that’s one that attorneys know, they know what they bill per hour and they know what they make per year. They don’t know what they make per month, they don’t know what they make per week. And if you put it in those terms that it won’t resonate. But if you say, if keep this up, you’ll make $198,000 this year. Boom.

Speaker 6:

That makes sense.

Christopher T. Anderson:

So if you can put that number in front of ’em every week, or at least every billing cycle, that I think will be as close as you can get if that’s what motivates them, if that’s not what motivates them, you can say you are 10% on your way to a new Porsche or whatever else motivates them. It may be up to you to connect the action to the reward on a repeated and regular basis because apparently this person’s not going to do it for themselves.

Speaker 6:

Okay.

Christopher T. Anderson:

Yeah. That’s the practical thing I can suggest.

Speaker 6:

No, that’s very good. And it could be the negative too. Like, oh, you only bill 15 hours this week. If you keep on this track at 15 hours each week for the rest of the year, you’re only going to earn $80,000.

Christopher T. Anderson:

Right? Exactly. And then what could I do to help? It is so hard to convince, I don’t like the word convince, to make it clear to your team that you want them to make more money.

Speaker 6:

Right.

Christopher T. Anderson:

We are culturally not raised to believe that about our business leaders. There’s this sort of general ethos out there that the business owners are just out to screw their or exploit their employees, and that bonuses exist just for you to be fooled by them and to get screwed out of them. Whereas good business owners, which I know you are desperately want their employees to hit every target and earn every bonus, and we’ll help them do that. But so sometimes we have to repeat that and show it to help them believe it. And that’s like the most motivating thing because if they come to the conclusion that you are on their side with that, that is hugely motivating.

Speaker 1:

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

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