The Critical Weakness Law Firms Need to Know in 2023
In this compelling episode of "Your Practice Mastered," hosts Richard James and Michael address key challenges limiting law firms' growth. They unpack three main issues: knowledge deficit, the bottleneck phenomenon, and the allure of the "bright and shiny." They highlight the importance of leveraging technology, understanding firm metrics, and effectively delegating tasks. The hosts stress the dangers of attorneys handling low-value tasks and the pitfalls of venturing into new practice areas without robust systems in place.
Check out some of the topics covered in this episode:
- Knowledge Deficit: The hosts discuss how many law firms lack the necessary knowledge to effectively implement systems and processes that would increase productivity.
- Bottleneck Phenomenon: The conversation explores how professionals, particularly attorneys, often take on tasks that could be delegated, thereby creating a bottleneck that hampers efficiency and profitability.
- "Bright and Shiny" Object Syndrome: The episode dives into the tendency of law firms to be drawn towards new practice areas or marketing tactics without having solid systems in place, often resulting in regrettable decisions.
- Importance of Robust Systems: The hosts emphasize the need for robust systems in law firms, particularly when venturing into new practice areas or implementing new marketing tactics.
- Value of Knowing Your Numbers: The episode highlights the significance of understanding your firm's metrics, including lead conversion rates and client acquisition costs, to make informed decisions and avoid falling for fraudulent marketing pitches.
This episode provides crucial insights and advice for attorneys and law firm managers seeking to optimize their operations and boost productivity. Tune into "Your Practice Mastered" and start mastering your practice today.
Check out MPS and Richard at:
Transcript
Michael: Hey, law firm owners. Welcome to the Your Practice Master Podcast. We're your host. I'm Michael Strout. Call me NPS for short.
Richard James: And I'm Richard James. Welcome to today's show. We're gonna be talking to you about the things that are getting in the way or they're struggling with at law firms. Is that right?
Michael: Yeah. The biggest weakness facing your law firm right now?
Richard James: Weakness. So the swat. Right. The strength, weakness, opportunity, and threat. What's a threat to your law firm? What's a weakness to your law firm?
Michael: Yeah. Well, they may or may not like to hear this answer, but I think this podcast is a little bit more about giving them what they need to hear, not just what they want to hear.
Richard James: Yeah, I, so, yes, I agree with you. It's sometimes my wife, your mother would tell me that my least, her least favorite characteristic about me is my willingness and ability to hold the mirror up to somebody's face when, and she suggests that I should often instead take time and look in the mirror myself.
Michael: Well, I think we all could.
Richard James: Yeah. [:Michael: Take the oath,
Richard James: right?
Michael: Yeah.
Richard James: Made every mistake there is in the book. It's why we can do what we do because of the number of mistakes we've made. I mean, you've been doing this since you were 13.
Michael: Yeah.
Richard James: And so you've gained, you know, Maxim Gladwell's 10,000 hours in your short period of life. And I, I, I've been doing this since I was 18 and I'm 53, and so I've gained the 10,000 hours that everybody talks about. It just means that you keep, you know, you've made enough mistakes to learn from them. And so we're gonna talk about that one big thing that's in the way for law firms and that is,
Michael: You,
Richard James: you, yeah.
We don't mean it in a direct,
Michael: of course not.
Richard James: We already know they're what? Intelligent.
Michael: You made it through law school, you passed a bar. Exam. Intelligence is not in question at all.
Richard James: Work ethic.
u, you might have started in [:So work ethic, not in question at all.
Richard James: Desire to serve their clients?
Michael: I would say for the most part, not in question at all.
Richard James: Not in question at all. I mean, I, this isn't a question of their integrity or their willingness. We're, we're talking about three fundamental things we're, we're talking about first, we'll put it under the category of knowledge.
Michael: Yep.
Richard James: We've got some notes here, so I'll refer to them, right?
Michael: Yes.
Richard James: So the the second thing we're gonna talk about, Bottleneck. And, and the third thing we're gonna talk about is bright and shiny object syndrome.
Michael: Yes.
Richard James: Right? And so let's talk about knowledge. What do we mean when we say that?
Michael: Yeah, I mean, so look, when when we talk about knowledge, you gotta look at it from this perspective.
wyer. But, You probably have [:Richard James: Hmm. Yeah. So we say we fill the gap, right? That's what our job is here.
Michael: Exactly.
Richard James: Right. We're gonna invest our time, money, and resources into creating this information for you so we can help you fill the gap. By the way, why don't we tell 'em about the, the gentleman's agreement.
Michael: Yeah. The gentleman the gentleman's agreement.
Yeah. So look we put our time, money, and resources into this podcast for you. We wanna make sure you are getting value out of it. All we ask for in, in exchange is that if you enjoy this and it's not your first time watching or listening on whatever platform you're on, that you give us the opportunity, go ahead and hit that subscribe button or follow button depending on your platform.
Turn the bell notifications on and if it's helpful, feel free to share it with a peer or a colleague of yours as well. That's our only ask. To you on this show.
ou put into becoming a great [:And this is how much most small law firm owners put into becoming great small business owners. And it's not because of a lack of interest necessarily. It's often because of a lack of time and some other things we're gonna talk about. And our job is to help fill the gap, right?
Michael: Right.
Richard James: To understand how to actually run a small business.
Now, I think we should address something in the room, right? Because there are some thought leaders out there that teach, but my experience is they've never actually done it themselves.
Michael: Yeah. So, look I think you're spot on with that and, and some have their strategies in ways that they've developed over time, but why don't you tell 'em a little bit more about how that differs with us a little bit?
done it right? And so I also [:I can remember years ago I hired E Myth Guy, and he was from Michael Gerber's organization, and I paid him a whole bunch of money to be my consultant. And that's when I owned the pet supply business.
Michael: Right.
Richard James: And so one of the challenges was every time I talked to the guy we'd get on the phone and I felt like every single call I was, educating him about my business because he didn't know enough to give me proper advice.
Michael: I, yeah, I was in a similar boat. I, I invested money and time in a mastermind and I loved the connections. The connections were great, but prior business, no one was in YouTube, and so it was hard for them to really relate and provide feedback on the business and where there were opportunities or where I was going wrong, which obviously could be a little frustrating.
re, there's this mismatch in [:Now, the reason why you want to be able to do that is because step one what you, you get to keep some of it, but step two, what does having more profit in their firm allow them to do?
Michael: What allows them to reinvest in the firm and grow it
Richard James: and grow it, which allows you fundamentally to serve more families.
use it's, we listen, we hear [:Right. They've got real challenges.
Michael: Very much so.
Richard Jamesr: And you save them a whole bunch of time aggravation, and in many cases, money if you do your job right. And so I believe you should be able to acquire more of those people by investing your profit back into your company and growing it. And, but when you grow it, grow it so that it maintains profitability.
So this is the lens that we view this through, right? So, For, for us it's this lack of knowledge of not only how to run a small business, but how to be a great manager, a great leader. Like what are some of the biggest challenges you see when it comes to, you know, owners of small law firm managing or leading their team?
Like, do they, do you feel like they know how to do it?
knowledge passed down to the [:Richard James: There's a reason for that.
Michael: I know there is.
Richard James: Yeah. I've figured that out through the years. And you have too, that attorneys because they're intelligent, because they're hardworking, because they've been, you know, beaten to death by law school, you know, brow beat with a certain, certain way of thinking.
They make an assumption that everybody else that comes and works for their firm should kind of act the same way and have the same talent and skills and oftentimes they don't. And it's harder and harder to, harder to find those people these days. And this is why we've come to believe through the years that no, no systems should run your law firm and people should run your systems, right? And so, Like do, have you found when lawyers who were maybe originally cantankerous, let's call it that way they were maybe a little bit, you know, not as friendly with their team?
Michael: Sure.
in place, they become better [:Michael: naturally, because now you've actually got structure in place across all of the functions of your firm.
And then when those people that you put in place to run those systems understand how it runs not everything is pure chaos. So there's just more structure brought to everything.
Richard James: Yeah. By the way, I'm not suggesting to you that this is easy, like Okay, running a small business is hard.
Michael: Yeah.
It doesn't matter if it's a law firm.
Any small business is hard.
Richard James: But running a law firm is harder.
Michael: It is,
Richard James: it, it just is.
Michael: It is,
Richard James: you've got opposing counsel, you've got judges or trustees. You've got the Bar Association then you have clients and their real life problems. And then you have to matter that you have to actually manage to get a good result.
And oftentimes it means the I are dotted and the Ts are crossed. And it's a very, very difficult business. The product itself is a difficult business. There's a reason why you, you can be as profitable as you can be.
Michael: Yeah.
r clients and kill it in the [:Michael: It, it's disappointing to see
Richard James: because they work so hard at being so good and create such value and then they work for nothing. How many times I wrote that book, The Favor around this idea of, of Attorney Johnson and, and, and how he was growing, but his income didn't grow along with it.
Michael: Right.
Richard James: His firm got bigger. He had more employees, but he didn't make any more damn money.
Michael: Right.
Richard James: You know, and, and so I know it was a fictional story than I wrote, but, and it's so true. It happens so often.
Michael: You see that come through more often than you'd like to see. That's for sure.
Richard James: Now, one of the things I think it happens is because the second point we talked about with them being a bottleneck.
Michael: Hmm. Yeah.
Richard James: Why, what? Talk about that. What is the issue with them being a bottleneck? Where, where are they a bottleneck and why is it a problem?
Michael: Usually a bottleneck in just about every system in the firm at some point. And there's a reason for that. Because if you start out small and solo and it's just you, you're used to wearing all the hat.
be the one overseeing every [:It's. Intake, right? They're still answering the phones, plus managing all
the pieces.
Richard James: No, the phones are ringing their cell phone.
Michael: Your Yeah, sure.
Richard James: And then, and then it tries to go to
voicemail because the attorney's in court.
Michael: Right.
Richard James: But there's no voicemail because the voicemail says voicemail is full.
Michael: Full. Yeah.
Inbox is full. Right. So now
Richard James: bottleneck number one.
Michael: Bottleneck number one. Now our, our our ability to get more leads into set appointments is, at capacity because there's literally no capacity in your voicemail to even return a phone call,
Richard James: right?
Michael: So, so you got that, that's, that's one bottleneck, right? If you carry down the line, you've got the next bottleneck, which is consultations.
are still running their own [:But it chews up so much capacity in your schedule and,
Richard James: and then they have to get the work done after they sell the client,
Michael: right? Which is the next part, and that's where the next bottleneck comes into play. Now you've sold the client, congratulations. Good work. Now you gotta go and get all the work done.
And depending on how many team members you've got on your firm now, this is where you start to see that feast and famine cycle kick in, because now all of a sudden you've done all this marketing to generate leads to get the deal closed. Well now you've actually gotta go fulfill the work.
And if you're fulfilling the work now you don't have time to. Answer the new lead calls and run the consultation. So now you gotta turn off marketing. Hopefully not. But in many cases you do. So that way,
or ignore it
or ignore it, which [:So you could see every system in a law firm, you start to become a bottleneck at some point,
Richard James: and they just, look like this. I mean, they just have this look on their face that just says, help. I don't, I can't. What did I do? What did I sign up for?
Michael: Well, just me talking about each of those bottlenecks. I'm like, oh my gosh, this.
Right? That's a lot of different functions in a firm. I mean, I don't blame you. I I would have the look on my face too.
Richard James: Yeah. And we didn't even talk about getting paid.
Michael: No. That's a whole separate conversation. Right. You close the deal, you do the work, you got 'em on a payment plan or on a retainer, and now you're chasing down payments to make sure that what they said that they were gonna pay, they actually pay in full. And now you've gotta go capture a percentage of that. And you're wearing that hat too. Oh, by the way,
eneck is, is so, so we know. [:Michael: Sure.
Richard James: Why does it happen? So, so I, I think the why it happens is stems to the first point we made, which is sometimes they expect that their staff should just be smart enough to be able to handle hardworking and smart enough to handle the, the job they give them, and, many times they end up disappointed.
Do you, do you ever end up disappointed when you have new staff sign on in your company? Yeah. I mean, that's the reality, right? It happens. And so, They, they get trained that they, if it's gonna get done right, it's gotta get done by me. Do you agree with this?
Michael: I agree with that, and I would take it one step further.
There's also several law firm owners that are listening to this, that are small and solo, that are at that place where they've realized they're the bottleneck, but haven't actually even hired staff yet. So I, I would say it even starts there. Yeah. Like, being willing and open to take that next step of leveraging staff to be able to remove yourself from those roles.
chard James: Yeah. Well, and [:Michael: right.
Richard James: Maybe they're introverted by nature. They really don't wanna be a manager. And so it freaks them out that they're gonna have to have employees. They've heard horror stories from all of their, you know, their peers about having bad staff and staff stealing from them.
Hey, listen, we've all, we've heard it, we've heard, we've heard staff members have stolen from clients before they came into our world at a tune of $200, $250,000, right? Because there was no. System running the firm. The firm put all their trust in a human being.
Michael: Yep.
Richard James: Not having the trust in the system and allow good human beings to run the system.
Right. We got it in reverse.
Michael: The paradigm there. Yeah.
, I gotta trust that I gotta [:Michael: You gotta trust somebody. And then once you've actually taken those initiatives, we gotta be careful not to get caught in the third point, which is that bright, shiny object.
Richard James: Yeah. I, I completely agree with you. One more thing on the bottleneck thing. So before I go there, if you're okay with that.
Michael: Yeah.
Richard James: So, so this idea that you're the bottleneck, the other thing is, Jim Rohn used to say this stop majoring in minor things. So, I don't know what, if you have an example of when you did this as a business owner, but I can tell you me. So I remember way back when I was 23 years old.
I was in the, no, I was 24. I was in the funeral business. And my best friend's dad died. And this was in Scranton, Pennsylvania. And it was like a 60 car funeral. Now you probably don't know what that means, even bec, even though you were kind of raised around that business, most of you might know what that means.
vania, right? And so it's my [:Michael: Yep.
Richard James: And I've got these guys who have been working with me now, I've, they've been working with my family for 10 years, 20 years.
They've been working for me for at least a year now. And I know what they're capable of, but I want it perfect. And so I think to myself, I gotta make sure it's perfect. I likely parked every single one of those 60 cars so that it was lined up perfectly. And my uncle's standing up on the porch and he's watching me and the guys are all standing like this.
nd I felt so good about what [:He goes by the way, while you, you were parking one of those cars, there were three ladies that needed something inside and your grandmother helped them out. And, and there was two changes in the car list that that I took care of for you. He said he goes, if you keep being the car parker, you can't be the general, he says, great job parking the cars, but you just spent a whole bunch of time doing things that you shouldn't be doing, because there's other people that can do it. Even if they couldn't park the car as good as you could, they could get it really, really close. And it wasn't a big deal if they got it. 80 or 85%, right? And so, I think lawyers get caught because they're professionals into having a really hard time of letting go of the, let's call 'em the $15 or $20. Today's day age $20 an hour jobs, $20, $25 an jobs.
Michael: Yep.
Richard James: Right. [:And that's the way to do it, and that's a mentality issue. So, so let's come back to the final one, which you said bright and shiny. Talk to me about that. What does that look like?
Michael: Yeah, I mean it just making sure that we stay focused on the goal at hand and implement the proper structures and systems for many firms what I see in terms of bright, shiny object is a new practice area. Right. We, we maybe haven't mastered and fully gotten all of our systems in place for our existing practice area, and now we think it's a good idea to go add another practice area because maybe we heard something good about it. Maybe we saw that it's starting to perform at a higher rate because of macroeconomics and all of a sudden we want to introduce this new practice area.
I mean, in my [:Richard James: They weren't ready.
Michael: They weren't ready.
Richard James: They weren't ready. Yeah. Chasing the bright and shiny, they think the grass is greener somewhere else. Right. But the reality is the systems that run the new practice area, the same systems that should have been in place to run the old practice area. I used to say it differently. Used to be before practice areas and before, before the pandemic era, everybody thought they needed another office.
Michael: Oh, well, yes.
Richard James: Another location. I used to say all the time, you wanna find out how good your systems are, go ahead and open up another location.
To your point, wanna find out how good your systems are? Go ahead and start another practice area.
Michael: Right.
Richard James: It's happened so many times. I, I've lost count at this point.
Michael: Well, even just in the last year, year and a half alone, because of Covid, you know, caused a lot of firms that had maybe a declining practice area to them shift into a different type of practice area, and it really put the systems to test.
Richard James: Some of them succeeded.
Michael: Some of them succeeded. But I
Richard James: So are not suggesting you shouldn't do it.
systems in place and you're [:Richard James: Yeah, that's a good one. So what about the other bright and shiny stuff like marketing and things like that?
Michael: I would say there's a good balance, right? Because you don't wanna be completely oblivious to all of the tools and resources out there to make marketing more efficient, but you also don't want to get taken down such a rabbit hole that that's now your only focus.
Right?
Richard James: Yeah. And I think, do you th do you think, I'm curious about your opinion. Do you think attorneys confuse, they would prefer to just be able to go pay a vendor to get them new leads that'll give them new clients and not pay attention to the sales and selling systems of setting appointments
Michael: sure.
Richard James: And getting the show and get 'em the
hire, get 'em the pay.
easier for them to do that. [:And I'll tell you the answer's, probably not. Oh. If they come into the office, I'll close 'em. Because that's wrong for the most part.
Richard James: Yeah. It's funny, I so I'm calling what you say that the lead conversion machine system's in place. Okay. So let's a, let's go with that.
Michael: Sure.
Richard James: So here's, here's what works. Here's, here's how you know you've got it. So I had, now I'm dating myself a little bit, but it is what it is. So, when I built a law firm in Phoenix, we had the yellow page salesman come into the door. Okay.
Michael: So definitely dating yourself.
Richard James: I'm dating myself. Okay. So the yellow page guy comes into the door to make the sale.
low page, of the yellow book [:Michael: I'm sure you could.
Richard James: And so, so I knew the lead conversion machine was in place. I knew exactly what it cost me to create a client, and we found the, the yellow pages were starting to wane to the point that Paper click was taking over, and yellow pages were starting to barely break even.
Michael: Yeah.
Richard James: And they were coming back if, if you, you never had to buy Yellow Pages. But you know, when you buy a Yellow Page ad, you're literally, like, they send out one book, right? So you have to pay for that ad for the whole year. Right? So you only get one print shot. So like, if it's 60 grand for the year, you're paying 60 grand.
And. You're in, right?
Michael: Yep.
Richard James: And so for the next year, he is gotta sell you why you're gonna do this again next year. And for many years, Yellow Pages was, was the one thing, and you kept upping your game to buy more, right?
Michael: Sure.
Richard James: But now all of a sudden it's declining. And so now they realize this and they come in with a pitch.
e about this guaranteed lead [:Michael: Yeah, yeah, yeah, yeah.
Richard James: So they gave me this guarantee, right? And so I'm like, I go, all right, I'll bite. Tell me what your guarantee is. And they tell me the guarantee.
And I get up on my whiteboard and I get my pen and I go, tell me that guarantee again. And it was like, we guarantee you a hundred, whatever, right? And I go, okay, a hundred, whatever. So we know that those a hundred impressions, we get about a 3% click rate on those a hundred impressions. And of those a hundred of those three clicks we convert about one and a half of those into a lead, depending on the landing page. So let's call it one, one of those into a lead. And, and then of those one probably, you know, we're converting 25 to 30%, so we don't even get a client out of this. And so all you're doing is guaranteeing me a pile of crap,
Michael: basically,
Richard James: right? But they, so they try to hide behind these weird guarantees,
Michael: impression and, and impressions, the eyeballs that lay on your stuff.
conversion machine in place, [:Michael: No. Especially when you have the, the, the machine in place. Plus you know your numbers
Richard James: Correct. When you know your basic, it's just basic arithmetic folks. We're not asking you to know advanced calculus here, right? It's just addition, subtraction, multiplication of division. Right? So, And I know that not a lot of attorneys love math. I get that some,
Michael: but it we're not talking complex math.
Richard James: Yes. I mean, some attorneys literally went to law school so they could avoid ever having to deal with math and science.
Michael: Sure.
Richard James: Again. I hear that all the time. I get it. But this isn't complicated. They're intelligent people. They can figure it out. Right. And so I'm just saying, look, having a lead conversion machine or not having a lead conversion machine prevents you. Now, let me say it better. If you have a lead conversion machine, It helps you prevent chasing after the bright and shiny, bcause you can tell the frauds from the real opportunities.
Michael: Very true.
Richard James: To your point, there's gotta be a happy mix.
Michael: Yes, right.
Richard James: There are times when you should take on the opportunity,
out there, there's different [:Richard James: So we covered three. Well, first we said it was their fault. Sorry.
Michael: Yeah, sorry about that. But
Richard James: yeah. And the three reasons we gave them was one knowledge.
Michael: And then we talked about them being the
bottleneck.
Richard James: Bottleneck. And then the final one was that
Michael: bright shiny object.
Richard James: Yeah. Shiny object. So if we can help you overcome that, if you can, if you can know the truth.
That's really what our goal was today, to help you know the truth. If you know the truth, well then you could do something about it, right?
Michael: Sure.
Richard James: And so we're not calling you out. We're not. You know, calling the baby ugly. We're just saying this is the reality of what we find after dealing with thousands and thousands of firms through the years. Right?
Michael: Yeah.
Richard James: So I hope this was helpful to you. Hope it inspired you to take a look. And we've talked about the Gentleman's agreement.
Michael: Yeah. Again,
e listing to turn those bell [:We love to engage with that, and if you found it super valuable, share it with a peer.
Richard James: Yeah. All right.
Hey, today was a good show.
Michael: Today was a good show.
Richard James: Yeah. I love it.
Michael: Thanks for tuning in.
Richard James: All right, thanks.
