Buying Your First Law Firm? Here’s 5 Things You NEED to Avoid!

Atty. Edward Bartholomew: [: 00:00:00

Welcome to Your Practice Mastered Podcast

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MPS: Hey Law Firm Owner, welcome to the Your Practice Mastered podcast. We're your hosts, I'm MPS.

what he did to go from that [: 00:01:00

And so, Ed, thanks for being on the call today. I appreciate that you're being here, got to talk to you off camera a little bit. I love your heart. I love your spirit. Can't wait to have this conversation today.

Atty. Edward Bartholomew: I'm looking forward to that as well, Richard. And I, appreciate the invitation to be with y'all today.

MPS: We're equally excited to have you. And Ed, one of the things we like to do is break the ice a little bit. So, why don't you kick us off by giving us something that maybe not everyone knows about you?

Meet Ed Bartholomew: From Kitchen to Law Firm

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Atty. Edward Bartholomew: So, I spent almost 20 years in the kitchen before I became a lawyer. I started working in kitchens at the age of 13, and I actually worked as a cook in a kitchen after I became a lawyer even. I worked at a firm in Raleigh 2 years after I worked at what was now my firm for a year. And unfortunately, my first quote unquote big boy job was not really a well paying lawyer gig.

I was paid $36,000 a year there.

So that was not going to [: 00:02:00

I certainly know what it means to burn the midnight oil in both of those situations, and then after I purchased this firm, that midnight oil situation never went away. We're in a situation now where the midnight oil is only because I have a case that I need to keep myself up, and do the research or, oh man, I have trial tomorrow, I have a little bit of anxiety going on.

Which, if you don't have anxiety going into a trial, are you really a trial attorney? but that's basically sort of an icebreaker way of saying that that was my entree into a high pressure low reward situation. But the nice part about being in a kitchen is that, when the door closes, it's over. being a business owner, you don't get to do that, it goes with you wherever you go.

Richard James: So are you a fan of the bear or not a fan of the bear?

Atty. Edward Bartholomew: I love the bear.

Richard James: Yeah.

worked in a couple high-end [: 00:03:00

Now there's a lot more drama in the bear than there is in a real kitchen, but there still is a lot of personality that is clashing in kitchens.

People that think that they're better than they are are constantly being put down by people that are not. And the same is true in our profession, You a lot of people that consider themselves high profile, and they don't want to be heard by the person that's lower profile. So, they talk over you, they talk down to you, they intentionally misspell your name in emails. It's all for posturing and it's all for peacocking but end of the day, it doesn't really matter. It doesn't actually help the client anymore. If you're being a on the other side, all it does is feed your own stuff.

n and turn them handle first [: 00:04:00

that was a good lesson learned from that point forward. But yeah, kitchens can be an interesting place to work. They are very high energy, they're oftentimes very long hours, and it's a great segue, as you said, into the hard work you realize you're going to have to put in into the turnaround for this firm.

MPS, I think that's a great segue your next question.

MPS: Yeah. which is, I mean,

The Journey of Purchasing a Law Firm

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MPS: walk us through that a little bit. So, from kitchen to firm, walk us through that journey in the firm to purchasing the firm. At least from the high level.

graduated from law school in: 2013

k? I don't even care if they [: 00:05:00

Richard James: Yeah

Atty. Edward Bartholomew: And how it it be on the ground too, depending on the situation. So Joel Avery, is the person that I purchased this firm from, heard my plight. And because he has a huge heart, or had a huge heart as well, he invited me to come and work for him. And the offer was, come work for me, I'll pay you a hundred bucks a week, and I'll pay for your lunch.

I was like, cool, even the hundred bucks, I just want the lunch. So, He was a large guy just like me, and we both did. Did very well for that situation. And I worked for him for a little over a year. Once he saw that I was competent about two weeks in, he actually started paying me a very fair wage.

irectly to my second job and [: 00:06:00

I did that for about 2 years and I was getting worked ragged there. I was working about 60 to 65 hours a week there and then another 40 hours a week in the kitchen, leads only about 30 hours a week to sleep, which that's not really enough to sleep. So, I finally decided, I needed a change. So called Joel back up and said, Hey, can I come back and work for you?

He goes, yeah, come on back, I can't afford to pay you as much as I was paying you before. But if you bring in some cases, you can keep what you kill. I said, Okay, that's fair. So I came in and he started giving me some of the cases that he had coming in. And then I started generating some of my own through connections that I have in the community because I'm from this community.

o he asked me, he said, Hey, [: 00:07:00

Lessons Learned in Business Valuation

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Atty. Edward Bartholomew: We started the conversation, and about 2 later, after we did due diligence, after I did all the money, looking at it, I really should have hired somebody to value that because that was dumb.

doing it by by myself and I really know what I'm looking at. And I would have advise any person that is buying any business to hire a independent third person to look at that, because you're thinking emotionally, you're not thinking Logically, when you're doing this type of thing. and a third person can bring you back to ground and say, Hey, that of money that you're trying to pay is way too damn much or, Hey, maybe you should offer some more because the business actually has really good whatever inside of the area and people know the business.

So, if you're going to keep it the same name, great. but as we know, law firms are routinely named after the people who own the firm, and that's what chose the after, named after him. Right. Obviously, I'm not Joel O'Leary, so I can't the law firm in the name. So I did the the simple thing and named it after myself.

And, now we're looking [: 00:08:00

want the brand to be me. I want the brand to be its own thing.

And that way, when I try to sell the firm at some point, because it's not my goal to be a lawyer until I die.

So at some point, when I go to sell the firm, I actually have goodwill that I can sell it because the the business is not connected only to my name, it's connected to the name that I've created for it.

Richard James: Ed, there is so much to unpack there, right? First and foremost, congratulations on taking the leap. I remember when I bought my first business, I was 25 years old. I bought it from my uncle. We came up with the price together, I think, he was generating about $350,000 000 a year in gross sales. and I think we came up with a price somewhere around $400,000 and so, I'm not sure exactly how we came up price or what made a lot of sense, the logic made sense at the time.

all good things happen. But [: 00:09:00

But the reality is, is by making that leap and purchasing that business, I learned a whole bunch, I made a whole bunch of money and it gave me the opportunity to do what I do today. Now, conversely, when MPS bought our business or 50% of our business this last year, we actually went and had the business appraised. Because having lived that story, I didn't want him to feel like, was getting the wool pulled over his eyes in any way that I was just creating this price. MPS, I assume that you feel like that valuation process was important, yeah?

MPS: But

Yeah, it's important, and it also gives you a third party to offer different perspective on different sides of the business, and things to consider over and above just the valuation of the business itself. as well

Richard James: how much should you get paid?

: Right, as much, As well as [: 00:10:00

Richard James: Yeah. So,

that's a great Lesson for anybody listening, right, MPS?

MPS: That alone is a very good lesson, is to do your due diligence, and find the experts in whatever it is that you're looking to find the expert in in this case, business valuation. And that will save you a lot of time and money down the road.

Challenges of Owning a Law Firm

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MPS: Ed, made the transition, you guys found number, went for it, what was the first year like owning the firm?

Atty. Edward Bartholomew: The first year was extremely stressful. So, I actually met my wife around the time that I purchased the business. And I told my wife at that time, who was definitely not my wife then, but was an interest. I said, look, I'm going to purchase a law firm, and she looked at me like, you're nuts.

And that [: 00:11:00

because if I I had had third party tell me, Hey, you're paying too much or, Hey, you're not paying enough, then that would have been good information. of like the old adage we have in the law where, you as a lawyer have yourself as a client and you have a fool for a client. And I think the same is true, in any type of business arrangement, if you're trying to buy or sell a business, you shouldn't be the one that is buying or selling it alone, somebody else appraise it.

lawyers are really terrible at math for the most part So Us being the ones that comes up with the valuation, I mean We might as well just throw a dart at a board and say, whatever number that is, add a few zeros and we're good to go.

future bride, that maybe you [: 00:12:00

Atty. Edward Bartholomew: But

Balancing Personal Life and Business

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Atty. Edward Bartholomew: that journey was difficult. My wife, when I met her, lived in California. So, we were flying coast coast to to see each other. So, one of us would go to California, for, I'd go to California for a weekend, where she would come here for a weekend. she a school teacher before she became my wife and the mother of my children.

And worked in Southern California with some really at risk youth. So, we have very similar desires in life as to what we want to do and how we want to serve people. So, that was a beautiful thing. But, the number of hours that I was working was insane. and I think, any person that either purchases or starts a law firm is going to realize that there's going to be things that were really good about that business, and there are going to be things that are really bad about that that business too.

ach one of those people were [: 00:13:00

We did not have a VPN set up at that point, so we had no way for her to access files from home to do any work from home. We didn't have virtual phones at that point, so she had no way of answering phones from afar. We have since implemented all of those things but our VPN is not as great as it should be, so we're looking for new options on that.

But back then, I started digging into the books, I started digging into our case files, and I just found mess after mess after mess after mess after mess to try to fix and clean up. up. really what I did first is I came in, I looked at the database that we had, and I literally pulled every file out.

ity, these are low priority, [: 00:14:00

the

Transitioning Clients and Building Trust

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Atty. Edward Bartholomew: other is transitioning from one lawyer to another is also difficult, because you're going to lose a percentage of your clients when you do that. we sent out letters to every single person that was a client of Joe's when I purchased the business.

And I was very grateful and very blessed that almost all of them, I think, we had 3 that decided to go with different lawyers out of the over 300 that were cases at the time. So that's a damn good retention rate, but At the time, nobody knew me. These were all new people to me and I was a new lawyer still.

I I mean, I'm going back to doing civil law when all I had done was criminal for the last two 2 years. So, that's a lot of trust that you're putting in somebody that hasn't done this work for a couple of years.

t of a John Grisham book. So [: 00:15:00

uh

Atty. Edward Bartholomew: truth.

Richard James: Yeah. So, that's good, I mean the regular layman doesn't understand that. So, gives you an advantage. just being lawyer, it was a win for them. Now, I'm curious, So, follow up question to MPS, when you made this decision, and I'm trying to speak to the person out there that might be thinking about buying in somebody else's practice or, they're in the middle of the process or whatever.

Reflecting on the Decision to Buy a Firm

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Richard James: Looking back now, so we're going to get to success story in a second.

I'm sure MPS will lead you there. So, we know the end of the story is that we have some success, but the process that went through looking backwards, not regret, do you think

You were happy that you bought the business and still to clean up all the messes and everything that it taught you and you learned? Or do you think would have been better off taking that energy, and effort, and money, and just building a new practice on its own?

Atty. Edward Bartholomew: That's a great question. I've thought about that a lot over the years. bet. Yeah.

drawback of buying a firm is [: 00:16:00

Richard James: Okay,

So, I'm hearing you say that the good Outweighed the bad. And even though the bad was there, maybe there was a lot of it. You learned from it, you grew from it, it taught you a lot about what not to do if anything else, and you became a better business owner because of it. Is that a fair statement? fair

Atty. Edward Bartholomew: I would absolutely say that. I had no experience in business of my own before I bought this firm. And I think a lot of lawyers have business experience before they get into the business of being a lawyer. and that's a double edged sword, because you are not only a lawyer, you are a business owner.

and you

Balancing Lawyer and Business Owner Roles

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yer, you're obviously really [: 00:17:00

Which means, that not every case can have 100 hours invested in it, unless you're only taking two or 2 or 3 cases. And then, how do you price that case to make it worthwhile for you to put that kind of effort in? in?

Transparent Billing and Flat Fee Model

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Atty. Edward Bartholomew: we at our firm have a different kind of model where we usually do a lot more smaller cases, But we do everything on a fixed flat fee.

tell you, Hey, you're down to: 1000

look at it is that creates a [: 00:18:00

Client Communication and Payment Plans

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Atty. Edward Bartholomew: But if we structure it in a way where you can do a down payment, and payments over

over time at a percent interest rate, then we can get more clients through the door that are paying at a smaller amount, but over time, and for those people to pay us through that time period. And so far, that model has been pretty useful for for us.

Richard James: Yeah, that's really bright, especially, coming from somebody who never really owned or ran a business before, and figuring that out, whether through your own research and study or just thinking about it and having it be like, this is how I'd like to do business with me, it was very bright. And and it gives you a unique competitive advantage in your marketplace when you bill flat fee and have transparent billing.

And we're all for that model [: 00:19:00

Boy, if we could just grab that little snippet and use that everywhere to help lawyers understand that this is an important thing for them to know, I think it would help everybody. Don't you, Michael.

MPS: Absolutely. That was like the headline of the podcast right there, right? That snippet was gold, really. So, I do want to transition to the success, right? Because you went through, you bought the firm, you had some challenges, you had to overcome, and now you're here, so walk us through the rest of that story. What did it look like? What were you able to accomplish?

Atty. Edward Bartholomew: I

Training and Sales Strategies

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o their job. Now, obviously, [: 00:20:00

And reception at my firm is not pick up phone, transfer to ed, It's pick up phone, and potentially do sales, potentially land a client, potentially then transfer a hot lead to me to close. So, a lot of what my people do is through a script that they develop. I give them sort of the hot topics on how I want them to sell.

And

Service and Enforcement in Legal Practice

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Atty. Edward Bartholomew: then, what we, a lot of lawyers forget is that this job is a twofold job. The first portion of it is sales. The second portion of it is service. So if can't fulfill the service that you're selling, then you're not selling anything anymore. So you have to be able to do the service After the sale. And if you can't do the service after the sale, then you shouldn't be selling. And that's way it is in our business.

focused business, right? And [: 00:21:00

Atty. Edward Bartholomew: would say, there's also a third portion of that, and that's enforcement. obviously, all of our clients sign a retainer agreement with us.

And because of our model where we do a flat fee paid over time, that means that my clients have a little bit more hands on experience than they normally would with a lawyer, which means that either myself or my staff is reaching out to them on at least a weekly to monthly basis to check in and say, Hey, how are you doing? Can you make your payment this month? If you can't, Tell me how much you can pay. If you can't pay anything, all right, let's talk about if we need to restructure our deal together.

uys up front are phenomenal. [: 00:22:00

And significant traffic practice where I am, because that's obviously bread and butter for any criminal attorney is a robust traffic practice. That gets people back when they have other charges later. If they have other charges later, hopefully they don't. My goal, whenever I do a criminal case, is to never see that person in my office again.

ssue that's in front of them [: 00:23:00

Richard James: that's special.

Atty. Edward Bartholomew: And

that's what we try to do here is fix problems. if that's biblically based, if it's monetarily based, if it's mental health based, if it's some type of societal pressure based, then we try to do whatever we can for the person that leaves our office to feel better than they did when they got here. And, that's hard to do in a criminal practice, because nobody comes here On a good day.

Richard James: Yeah. But the fact that is your focus allows for the possibility of that happening. A lot of firms don't have that as their focus, so it's impossible for that to happen in that firm, simply because they don't pay to it.

But MPS, what Ed said, without maybe realizing he said it, was that, proactive communication rather than reactive communication will help maximize your collectability on these payment plans that you give. And that's something that you teach as well, MPS, yeah?

issue, they'd rather you be [: 00:24:00

Improving Business Systems

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MPS: Ed, what's got you fired up and excited today? Could be business, could be personal, could be both?

Atty. Edward Bartholomew: we're finally getting into fourth quarter, which is, make or break time for any business. It's the time where you are putting the pedal to the metal, or the time where you're letting up, depending on how you've been going throughout the year. the year. This fourth quarter, I am already claiming that this will be the best fourth quarter of my business ever.

ever. And the reason I'm saying that is, focused on improving all of the systems in my office to make it even easier for myself and my staff to be effective and efficient at what we do. I don't want too much time on anything, but I also don't want to spend enough time on anything.

nect, which is an incredible [: 00:25:00

It's only about $400 bucks a month, and it will pay it for itself within the first the weeks 2 weeks of Cause they can, they link with link with LawPay. if you're already using using LawPay to get they link with it and you can send text messages with an invoice to your clients. We made over over $2,000 today off of text messages. which that's awesome, I almost paid for an entire year of connect in one day. day

MPS: Yep.

Richard James: Well, we should cut that little snippet out and send it to Connect, because they'd love it for a testimonial, for sure. But that aside, I think, you're absolutely right to be excited about uh, what you've put out there at manifesting your best quarter ever. believe that Ed, because, I've been doing this a long time, about 15, 16 years working with owners of law firms.

d many new owners, just like [: 00:26:00

And so, you're doing all the right things. And the fact that you just want to make everything a little bit better, is exactly why you're going to reach your goals this quarter and every quarter thereafter. And I got to tell you, I don't know if you're fired up or inspired, I'm fired up and inspired we don't even know one another.

s, and they're going through [: 00:27:00

Atty. Edward Bartholomew: Absolutely. if you

Success Story and Future Plans

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Atty. Edward Bartholomew: guys want, I can put some numbers on things and give an idea of what that looks like. So, when I purchased the firm, the gross receipts of the firm were between $175,000 and $200,000. it was approximately $180,000 the year that I purchased it, and was was between $175,000 and for the for the past years before that. So there really was some stagnation in what had happened at that firm on the books.

Richard James: We

erson that is purchasing the [: 00:28:00

So, I implemented some systems on my own when I was just an employee here and said, Hey, look, let's do this, we'll transition to a more user friendly version of law where we're giving us flat fee for everything. And that way, we can tell the client upfront, you will only pay this amount, this is the maximum you will ever pay.

If I screwed up my pricing, that's my fault. It's not on you to fix my pricing issues. I'm going learn what prices are as time goes on. I'm going to figure out what's a good price for certain things. So, I'm probably going to grossly underprice myself at the beginning.

to the problems that you're [: 00:29:00

To that note, we created a solution to that problem of how to increase revenue. So the first month that we implemented my system, we went from a a $15,000 a

month to a $35,000 a month. We more than double the profitability of the firm in a month, which insane.

Richard James: So cool.

Atty. Edward Bartholomew: That's not something that is normal in business. You're not normally two X X-ing out the door.

system, we might be able to [: 00:30:00

And so, I it, it maybe feels like this unbelievable difference And it was, but but the lesson I want everybody to learn here, right? From you, not to diminish what you did, cause what you was amazing. But is that, if they could just find that one system that they could fix, amazing things can happen. that We call it the phenomenon. And so congratulations to you for figuring it out. And congratulations to selling the who sold you on the business to give you the opportunity to do that in return for lowering the purchase price. MPS, that's a cool move right there.

MPS: It's a very cool move. And Ed, I appreciate you being willing to share everything you have today. You should be super proud of the growth that you've brought into the firm, it's awesome to watch. And again, I appreciate you sharing your insights, and to the law firm owners listening, thank you.

me love down in the comments [: 00:31:00

Atty. Edward Bartholomew: And

Streamlining Operations and Final Thoughts

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Atty. Edward Bartholomew: guys, just to put a end cap on things, we also started streamlining other systems in the business. So Joe's practices were ones that created a lot of front end work to make the back end easier, because he had automated documents, but the way that you did it was enter everything into Microsoft access.

with and and they would they [: 00:32:00

Richard James: And you know,

Atty. Edward Bartholomew: you can

Richard James: the.

Atty. Edward Bartholomew: messages, which is cool.

Richard James: The most valuable asset in any business is the business's list and its relationship with that list. right? And so, you just nailed it, man. You just nailed it. You identified that that's what you guys needed to focus on, and that's, another reason for your success.

So, congratulations for today. I think, we need to have you back because I think there's so much more for us to talk about. Because it sounds like, you've done a lot, and and I don't think we even scratched the surface on all the little things that you've done that someday we can continue to unpack.

But for those who want to learn more from you, if they wanted to reach out and contact you, please don't give your cell phone. What's the best way for them to reach out to

-: 7467

Richard James: nice, Ed, thank you very much again. We appreciate the time. And that's the pod.