Episode Transcript
[00:00:00] Speaker A: Welcome to the relay. I'm Gabriel Sertz, founder and CEO of Luxamica, the leading attorney referral network. Our show is dedicated to forward thinking leaders in the legal industry who are passionate about leveraging technology and AI to enhance their practices. Today I'm thrilled to have Chad Dudley, the managing partner of Dudley DeBosier Injury Lawyers, one of Louisiana's top personal injury law firms. Chad is known for his innovative approach to law firm management and his expertise in managing case values. I have been a follower of Chad's for a number of years. I've had many opportunities, opportunities to listen to him talk. And every time I do, I come away with something new. And Chad has both the mind for litigation and law firm management, but also one of the best understandings of how to apply those frameworks in a clear way to law firms. So really excited to have you on the show today, Chad, and talk about how law firms can create a framework or implement a framework to maximize the value of their case docket. Chad, welcome to the show.
[00:00:57] Speaker B: Thanks for having me. Good to be here and yeah, always a pleasure.
[00:01:01] Speaker A: Yeah, fantastic. So just a few weeks ago, got to hear you talk about your case ranking system. I know this is something that if you're a Chad Dudley follower, you've probably heard already, but there's, there's, there's many people who haven't encountered this yet. So excited to hear about that, just at a high level. Tell us about what that is and why it's important to have a system for ranking and grading the cases in your law firm.
[00:01:27] Speaker B: Sure. You know, I've been doing consulting with personal injury firms since maybe 2000 or so, so for almost 15 years or a little over 15 years now. Early on in my career I would go work with firms and each firm kind of had its own spin on how they graded cases. Now there's some that didn't grade them at all, but for the most part, each firm had some spin on it. You know, this firm said these cases are worth 0 to 15,000. You've seen those, right? I call it a bracket ranking system. And then I started working with some really, really top notch litigation firms and just really impressed with how they looked at cases, how they evaluated the value of the cases. And it really transformed early on how I thought firms should look at the values of their cases. And here's the biggest two problems I see with most firms. They use a bracket system, which is each case is worth 0 to 25.
And they use what I call a ground up approach. A case comes into their office and it's worth zero. The client gets some treatment. Now it's worth a little bit more. They get a positive mri, it's worth a little bit more. They get maybe an injection, it's worth a little bit more. And it goes from the ground up as treatment occurs.
The top firms that I was working with in consulting that were just getting really knocking values out of park, that use a top down approach to valuation, they say, this case is a great case, tell me why it's not.
And so they say, when a case comes in, I'm going to assume every case that comes in is a great case. Now tell me why it's not. It's a completely different mindset. And I said, okay, that's interesting, let's borrow from that. And then the issue with the bracket ranking system is that, well, when is the bracket assigned? Is it at intake? Well, some cases, you know what they're worth at intake to some degree, very few. When does it get updated? Is it through the life of the case? Is there something that, that you know, at 90 day, when do you update it? The other issue was who updates it? Do, do you trust every single person at your firm to be able to assign that value? And so between the bottom up approach that I saw and this really loosey goosey bracket system that while people used, they had very little confidence in, we had to find something different. Like there had to be a better way.
What we know about cases is generally what I see over and over is for high performing firms, around 20% of their best cases generate about 80% of the revenue. Their top 5% generates around 50% of the revenue. And if you're not doing that, it's a loose indication that you're not finding your best cases or you're not getting your best cases to the right people. The right people being people that can maximize value. At the heart of this is how you rank your cases. If you don't rank your cases properly, if you're not good at identifying your best cases, you have little to no chance to making sure those cases get to the right people. So that's where over the years got obsessed about how firms rank cases and filing a system that allows you to do that. And that's when I developed, I call it the Pareto point ranking system, Vilafrito Pareto, the Italian mathematician that came up with the concept 20% of your efforts create 80% of your results. And I said, okay, let's look at firms and what type of cases produce 80% of their revenue. And it's a little different by case type. It can be a little bit different by what type of cases a firm takes. Like you have some firms that handle very few cases, I call them lower volume firms. Like their criteria is so high.
It may look a little bit different. But for most firms, for the bulk of the firms, cases, believe it or not, that are worth $50,000 or more tend to make up about 20% of their cases and they tend to generate about 80% of their revenue. And so, okay, let's use that number, 50,000 and then let's talk about the top 5%. For most firms, that top 5% is somewhere around $250,000 or higher. Again, 5% of the cases generates about 50% of the revenue. Okay, let's use those two numbers when we look at how we're going to evaluate cases. Again, keeping in mind the whole point of it is to get the cases with the most potential to the attorneys with the most skill, experience and results, and support them with their best resources.
[00:05:51] Speaker A: Yeah, and a question here. When you're going into firms, what kind of a baseline are you looking at? Are you looking at the average value of the case that they're getting?
What's the need that you're trying to move by implementing the framework here?
[00:06:07] Speaker B: Yeah, so where I start with the firm is when I get in, I'll do like what I call a proto point analysis, which is basically saying, okay, if a lot of high performing firms, their top 20% generates 80% of the revenue and top 5% generates 50% of the revenue, how is this firm doing against those numbers? Right. And so I'll take a look at usually like a year's worth of cases that they've closed out and the ones that they close with the fee, where do they stand in relation to that standard?
[00:06:34] Speaker A: Just you're starting with the distribution curve and looking for Pareto level distribution. And if you're not finding that, that indicates that they aren't correctly allocating the cases to the right attorneys.
[00:06:46] Speaker B: Well, there's two components of it. Right. Again, I always go back to what is the mission of a personal injury firm. It is to find the cases with the highest potential, get them to the attorneys with the most skill, experience and results, and support them with your best resources. Right. And so step one, find the cases with the highest potential. How good is a firm? Well, let's backtrack. The Pareto point analysis tells us how good a firm is at that mission statement. If a firm's top 20% does not produce 80% of the revenue. We have questions. What's happening? Is it they're not identifying their best cases, or is it that they're not getting them to the right people?
And so you might see a firm that their top 20% doesn't produce 80% of the revenue, it produces 60% of the revenue. Okay, what's going on here? Well, Chad, we just don't get good cases, which I don't buy. I think every firm gets great cases and they just, they don't find them. Right. You know, everyone's, I'm waiting for this really crazy, you know, injury case with tons of coverage and clear lot. No, that's not how.
That's. Once in a kajillion years we get different looking cases and they don't. You got to be good at finding them. And so to answer your question going, okay, at first we just start like, how good is this firm at executing on that mission statement? Cases of highest potential attorneys with the best skill, support them with your best resources. The Pareto point analysis gives you essentially a grade on that exercise. And if your grade is bad, we got to find out what part of that mission statement is not happening. Right. So first part, finding the best cases. I go and look at their current cases, and if they don't have any ranking system in place, I'm, we got a lot of work to do.
[00:08:35] Speaker A: Right?
[00:08:36] Speaker B: They do have a ranking system in place. I'll look at what their numbers, how their numbers pan out. Right. How many cases do they have ranked where they believe they have a chance of getting? 50,000 or more. And how many are in that bucket? As a general rule, if less than 30% of their cases are in that bucket, it catches my attention going, gosh, they should have at least this number in there. But then you're gonna go, hey, Chad, you just told me five minutes ago that only 20% will fall in that bucket. What's this 30%?
Here's what happens. Just because you put them and rank them that way does not mean that you're guaranteeing you're going to get that result. Okay, you're saying we got a shot here. It has the elements, the damages. Are there, causations there. Coverage is there. I'm gonna go back to coverage.
That's, that's where you start, right? And you're like, okay, not all 30% gonna make it. About 20, 20 of the 30% will make it. And that's your sort of Pareto point. Right? But if you're not identifying around 30% that had that potential, then something's off.
[00:09:40] Speaker A: And my, you know, let's say that I'm, I'm a law firm saying, chad, this is the first time I'm hearing of this. Have you, maybe I'm the exception to this. Maybe my law firm's different and my curve is flatter than everyone else's. Do you see exceptions to this or have you found that by going in and forcing that framework, you are, you are essentially moving them into this, this. And it works well here, here's the thing.
[00:10:03] Speaker B: So then you go, okay, when you do the exercise, let's go see what percentage of your cases are you're putting in that bucket, right? And they might go, chad, we went through all of our cases. We just don't have, you know, you said we should have 30% in this bucket, but we really only have 20%, okay? And that's all we can find. And we really don't even have any big, big cases. And I go, huh, let's talk about your attorneys, right? Because when I say cases with the most potential to the right attorneys, the right attorney on a big case is someone that has had experience, results, and the skill to handle a big case. We have an attorney tier system. It's a loose tier system that I use to generally understand what kind of skill set the attorneys at a particular firm has. It's one through five. So one easy. It's someone that's brand new to the practice of law or they're a brand new lawyer. They need tons of supervision, tons of coaching. You're.
You're going to watch every move they do, right? And then you have a tier 5, which is basically you trust. This is someone that has the history of getting big verdicts, first chair, jury trials. You essentially trust them to handle any size case as first chair. And then you can talk about tier 2s, 3s and 4. But I ask the owners, like, give me an honest assessment of what kind of attorneys you have at your firm. It's not for an ego thing. It's not for a, to embarrassing one thing. But, you know, you got to be honest with yourself. If you have a bunch of green attorneys, tier 2s, tier 30s, and you're trying to find a big case, it's a tough thing to do. You know the joke I use? I'm from Hawaii, right? And Hawaii is how they spit, they actually say it over there. So I'm from that island. And if I were to ask you, gabriel, look, I need your help and I need to find a humahumu nukanu apua. You're like, chad, what the hell is that? Do I look under my desk? Do I look outside my window? Like, what is that? And I said, well, Gabriel, that's the Hawaii state fish. And it looks like this. And here's the beaches where you find it. Right. If you knew that, you're like, okay, easy, boom. When you're asking tier one, tier two, tier three attorneys to go find cases worth over 250 cases worth over a million dollars, it's almost like asking you to go find the humu, humu nuku nuku of fish. You're like, I never, I need some help. And so if you have some green attorneys and your numbers don't match up, that's usually like, okay, let's get some help in here to go find those cases. Because the stats, unless you're a statistical anomaly, they're there. And so it's not a bad thing. It's okay. I mean, again, not to embarrass, but saying, don't fool yourself. This is what you're up against.
[00:12:52] Speaker A: Right? Right. So it sounds like there's two components. One is you have the framework for grading the cases, but you also have to have experts to correctly grade cases, especially at the top end, to identify the ones that have that potential. Those experts being your tier four, tier five lawyers.
[00:13:10] Speaker B: Correct. And here's, you know, you run into all sorts of things with some of the green attorneys. But like the.
So when I, when I talk about a ranking system, here's what we do. We say, okay, every case that comes into your door, let's assume it's a great case. Let's start with that premise. Once you, once you give yourself 90 days to affirm that suspicion or challenge it. Right. And so here's what we're trying to try to find out. Let's find out, what can we find out about coverage? Okay. Most states don't require the liability carrier to disclose limits pre suit, but some do. Okay, but find out, is it, you know, is commercial policies more than is it course in scope? Is there anything like that? Find out what you can about liability. Some use third party provider or to get coverage. Obviously your client's insurance. You can find out. Let's talk about where do we stand on liability? We like it, we don't like it. Let's talk about property damage. Let's talk about what's the treatment status, frequencies. Are they going a lot? Not so much. Can we get a diagnostic test in whether it's an MRI, CT scan, something that gives us Something tangible. And then based on those things, let's, let's make a decision at 90 days and here's where we go. Every case starts off as a B. That's basically saying we treat this like a good case, but we don't know what it is. Right now at 90 days, we're going to put it into one of three buckets. An A, C or F. F is basically saying, you know what, we need to get out of this case. This is just not, we thought it was good at sign up. We need to get out. A C case is basically saying there's no way, no chance. It doesn't matter whose hands are on this case. We will never get over $50,000. That's that proto point, right? Let's put it to a C. And an A is essentially, it's not a C or an F. We still got some. Something's still in play. This could still turn into a good case. It's not a C or F. Yeah. Okay. And that's one of the most. That decision right there. Which bucket. Bucket to put the case into is one of the most important decisions at any firm. Okay. And so you should not leave that decision up to the attorneys on their own. But it's something that you should entrust a couple people that usually tier 4, tier 5 attorneys or people that are getting great results at your firm or a supervisor of some sort that approves that process. So for example, if you were the supervisor and I was at the firm, I'm an associate attorney and I'm a tier two. And I got this case and I'm like, go. You're authorized to. We call it killing the bees. But you're authorized to approve me moving in out of the bee bucket. I'm going to go, Gabriel, look, I got this case. They disclose. It's a minimal limits policy. There's no un. And the client went to the er. They did a follow up visit with primary care physician, but they didn't go back. They're 26 years old. And look, there's no way I'm going to get more than 50 on this case. Can I move it to a C? You go, yeah, or I might go, hey, look, here's a case the client's treating. They're still in pain. Got an mri, you know, showed some positive findings, but the client really does not want to go back to the treat. We think the defendant driver was in course in scope, but we haven't figured it out. But the client just doesn't want to treat even though they're still in pain. Can I move to a Semet? You might go, whoa, hold up. Let's get the client on the phone and let's just talk to him. We're obviously absolutely not trying to manufacture an injury. We're not trying to force treatment, but we're also trying to communicate to the client that if they're hurt, we want to document their injuries and understand what is going on with their injuries before we enter into negotiations. And we have that conversation. And so it's sort of a checkpoint where we may. And we may look at it and go, yeah, it is a C. Or we may look into it and go, you know what? There's still some stuff at play here. Let's move it on to an A and go from there.
[00:16:59] Speaker A: And I think what's brilliant about that method is that it's a forcing mechanism. So you're not allowing it to stay in the same category. You're giving time to acquire more data and then forcing it to either be moved up and taken seriously at that next level or to find a. It has to go through a gate to move down to a C. And so you're continuing to force that movement up unless there's a clear off ramp for it, but you're also not letting it stay at the B category and sit there indefinitely.
[00:17:29] Speaker B: Well, again, I mean, there's so many firms that have this system that is essentially saying, all right, attorneys, we're valuing the cases from the bottom up. And so here's what I need you to do. Attorneys, whenever you get a really, really good case, like it's turning into a good case, can you raise your hand and proactively let us know? Even though we may move the case to more skilled attorney, or even though, you know, we may scrutinize your handling of the case more, can you just raise your hand and tell us. You're like, no, no. And so you run into this issue where you're asking them to come.
Got a good case, and those things. It just doesn't work. Now, some. It doesn't work because the attorney might not know they have a good case, or it doesn't work because the attorney is trying to hide that case. So they don't. It doesn't get taken, or they don't have as much scrutiny on their handling of the case. Neither one of those is a good answer.
[00:18:24] Speaker A: Yeah, yeah, absolutely. And we could get into all of that and other parts of this issue. How does that evaluation committee work and what are the mechanisms of it? How do you Move lawyers up from tier one to tier five. And we're kind of getting, getting to time on this and, and we're trying to keep this more of a bite size. This is awesome, Chad. I mean, there's so much in this, and it's hard to say, okay, well, what's the one takeaway? I would say listen to this episode three times over so that you can clearly understand the framework and then call Chad when you're, you know, when you're ready to really start to, to work on it. But I would say, like, there's so much in what you're saying there just as a framework for thinking about your cases that I absolutely love. I think it, it's very, very intelligent from, on a lot of different levels from a systems design perspective, from a choice architecture perspective, from this forcing mechanism for treating your cases, raising the bar on them. So I really love it. I enjoy hearing about the framework every time. And if you're a lawyer and you haven't implemented this, you need to. This is the best in class for doing this. Chad, just as a wrap up, I mean, how many, how many law firms have you seen do this, roughly? And what's the average gain that you would expect someone to get who's just kind of coming off the street, Believe.
[00:19:40] Speaker B: It or not, Gosh, I mean, it's been, I mean, somewhere between 50 to 70 law firms and look in all different jurisdictions and they see anything just from identifying the cases and then, and then setting values. And we talk about another podcast, how you set values on those cases. Specific values. Right, because we're talking about very broad buckets over 50. You know, they've seen increase in their average close fee by 30%, 50%. Some have doubled it, some even more than doubled it. And depending on where you are in this journey of, you know, pushing your, your results for your clients, you can grow a lot, but it will make you better if you're not doing it.
[00:20:20] Speaker A: Absolutely. Chad, thank you so much for being on. We'll certainly be talking more about these other pieces if you missed it. Chad's saying that you can increase your Firm's revenue between 30 and 100% without hiring more people. That's the best value offer I've ever heard. And you got it for free on this podcast. That's all I can say. I didn't talk much, Chad, because this is something that I was excited for all of our listeners to hear directly from you. So really appreciate you being on today. And yeah, thanks for being a part of the show.
[00:20:51] Speaker B: Thank you.
