Episode Transcript
[00:00:00] Speaker A: Welcome to the Relay, the legal show for personal injury law firm owners presented by Lexamica, the number one attorney referral network. I'm your host, Gabriel Steeritz. Joining me today is Tim Mackey, founder and CEO of Vista Consulting and someone who's spent decades helping plaintiff law firms reach their full potential. I am a personal friend of Tim's, or rather vice versa. Have known Tim for a long time in the space. He's been a mentor to me, especially early days when I was just getting into the plaintiff side. Really excited to have Tim on the show. And we're actually covering two topics. We're doing back to back episodes, but the first one that we're going to talk to about today is sustainable law firm growth. Before we dive into that though, just a couple of things about Tim that I find really helpful. One, Tim's a CPA and as such he deeply understands the numbers behind what makes law firms tick. And I think that's something that is absolutely critical to every law firm owner is to understand the numbers behind your law firm. You're a great lawyer, you've invested in marketing, you have a great brand. If you don't know the numbers behind your business, then in the long run you have a high chance of failure. Actually knew a guy who was a third generation business owner and he almost destroyed his billion dollar business because he didn't understand how to read a P and L. He grew up in the business, he was the third generation and it just proves that understanding your numbers is critical. So that's one thing that I, that I really respect to admire about Tim and the other is that Tim is a guy who really just wants to help law firms. He is not flashy, he's not a sales guy. He's one of those people who when you talk to him, you're going to get some real value from the conversation. So really happy to have you on the show, Tim. Welcome.
[00:01:36] Speaker B: Thank you so much and thank you for all those kind words. But I did notice that you slid in that I've been doing this for decades, which I think was a little bit of dig at my age. But I'm going to let it slide. And you know, I think, I think the feeling is mutual. Very much admirer what Gabriel and his partner Josh have built with in Lexamica. I think it is a valuable service and we could talk about that. But that's not what this is about today, I don't believe.
[00:02:02] Speaker A: No, no, no. The topic for this episode is a blog post that will be published, I imagine by the time this episode comes out, but talking about sustainable law firm growth and the difference between quality and flash. And so Tim, give us a little bit of a headline on this. And as usual, what we're doing with the episode is 1520 minute discussion and making sure that there's real actionable takeaways for law firm owners at the end of the episode. So give me the high level. What are we talking about here?
[00:02:32] Speaker B: You know, the blog post that I put together and as you said will come out in the next week or two is simply about some things that we see in the industry. There's, there's so much about how law firms should grow. And I think that the, the go to for most law firm owners is we've got to get more cases. So how do we market? How do we make this happen? I don't necessarily disagree with that. However, there can be some ordering of things that I want to talk about and then setting the table, if you will, to be able to handle new cases as they come in. We believe very strongly that there's only four ways to grow a law firm. And those four ways are this. And two of the four are actually subsets. One is get more cases. Okay, Just what we talked about. The other is to, to increase the value of the average value of the resolution of those cases, increase the case value. The third one is to create a system of wowing your clients so that they will revisit or refer. But revisit is a tough one. When you're talking about people who have been in, for example, a crash or have slipped involved, something like that. We don't want to say, hey, we hope that happens again, come back. That's not it. But we want to build a system to where they're treated so well that they refer and become raving fans, which is a subset of get more cases. Right. The other one, the fourth one, is to increase the efficiency and effectiveness of every process within the firm, which also helps you get more cases and helps you increase the value of the cases within the firm. If you have an efficient operation, you can get more throughput. Okay. And we say efficiency and effectiveness intentionally fast for fast sake is not what we're looking for. It's being able to have the system to, if the case does need to be fast tracked because of lots of reasons that the attorneys know low coverage, not, not the best facts, all the things that can happen within cases, but also being able to identify the cases that need to be, for lack of a better term, slowed down a little bit slow down questions for value.
[00:04:42] Speaker A: Yeah, that, that, that's great. I appreciate that. So two, two questions about this list. One is what do you see the biggest mistake law in, in relation to, let's call them three ways where you're, you're getting more cases, you're increasing value of average value of cases and you're increasing process efficiency. What's the biggest, what's the biggest mistake that you see law firms making when you're looking at this list? Is it that they don't understand it or is it that they're miss misvaluing one of those three things?
[00:05:07] Speaker B: I think they misvalue it initially. You know, they get more cases, get more cases and sometimes if that they're very successful at that they are. My turn for it is they're throwing another log on an already overloaded wagon that their, their systems are not there, things are clogged up. And I use the example of doing a great marketing for a restaurant but not training the wait team or the chef. So lots of people come, but they only come once. And that's not what we really want. We want to build that relationship. So you know, it is sexy to have sales. What this blog post is really about is about the non sexy part of handling cases, creating the systems and processes, then turning on the spigot if you will, for the marketing. And sometimes you know, our clients and look, I'm guilty of it myself. Sales. Sales, Sales. Because it's sexy.
[00:06:00] Speaker A: Well, let me push back on that a little bit which you know, it may be it's flashy but I also think that for some it's what you know how to do. And I think it's also, it's in because it's that it's comfortable and when things go wrong, we naturally revert to well, what's the thing that I know how to do? Like how did I grow the business to where I am today? Well, I grew it because I got good at getting clients. I, I started marketing. I ran my first ad campaign. It went well. The phone started ringing. Wow, that's amazing. I hired more people. And then you start to, and, and, and correct me if I'm wrong, but a lot of times when you're coming in, you're hit it, you're finding these people who've rode the first wave of growth which is off of marketing. But the second wave of growth isn't going to just be piling on more marketing. It's now you have to actually know how to operationalize the back end because your marketing was successful. You can't just app phase A and phase B and that's where people tend to get really stuck, I think. But tell me if I'm wrong.
[00:06:57] Speaker B: No, no, no, I 100% agree. You know, it's what got you here may not get you there or another way to say it is, you know, to a hammer, everything's a nail, you know, so, hey, we've done really well in sales. We're just going to keep selling and let the chips fall where they may. And I think it is the wise person who slows down and really thinks about, okay, I'm at a plateau here. You know, we've the dog caught the car a little bit. We've got the cases coming in, but we're not efficient and effective at handling those again. And you mentioned the CPA part of me and you know, I, I told somebody just the other day, you know, I had a weak moment about 40 years ago and took the CPA exam and. But it's helped me a lot in looking at operational metrics. I mean, you mentioned financial metrics and how to read P Ls and that kind of thing. That's all very important. But knowing your numbers in the operational area is so important. You know, again, getting systems and processes to handle cases. But going to the marketing side for just a second, if a firm is spending money to market, whether it's traditional type marketing, lead gen or whatever, if you don't have the system to catch those, to look at what we call your conversion rate, which is the cases that, you know, you get a number of leads. There are leads that, that, that meet your firm criteria. And then there is the ones that you actually sign if you're looking at numbers. And again, the CPA comes out a little bit if you, your conversion rate from the ones you sign to the ones you want is 80%. And we know that the best firms in the country, we've been in over 300 firms, are doing 93% or better. And you say, and you look at the numbers and say the difference between you know, signing 80% that you want in 93 happens to be five cases a month. And your average case fee, just to make it easy is 10 grand. Okay, that's 50 grand a month that you're missing and 600 grand a year that the firm is simply missing without any additional marketing cost. Now again, we zoom to the sexy thing, the marketing part.
[00:09:00] Speaker A: But I was, I think you actually started to answer the question that I wanted to ask, which was what are the signs that more sales More marketing, more acquisition or call volume isn't the answer anymore to my firm's growth, because I do think that's like. That is a major inflection point. And I spent quite a bit of time talking with some folks that are working kind of like at the larger size of scale, like a $50 million plus. And there's another plateau there. But I think this is a. This is one that a lot of law firm owners get to, which is I finally cracked the marketing that I'm making the phone ring, but something isn't right now. So you said bad intake conversion rate. So 80% or below, that's. That's a big crack starting to show in your operations where the phone's ringing, but you're just not seeing the return there. What are other cracks that start to show up when you've essentially maxed out your just make the phone ring strategy and you need to figure out the next phase of your company?
[00:09:55] Speaker B: The very. The first one is just what we talked about, the conversion rate, because you can get more cases with better systems and processes, training, your intake team, etc. And again, you know, intake is sneaky, tricky, if that makes any sense. There's a lot of moving parts. You know, your team needs to show empathy, all the training that goes into that. The other part of it is, you know, if there are two different types of intake. You know, if you've got Legion, you've got outgoing calls with, if you do in marketing and you've got incoming calls, you know, some people don't train for the difference. And then there's the timing of reaching back to those clients. And then there's the Chase procedure. If you can't get them, you know, on the first call out, or they say, hey, I've got to talk to my significant other, or whatever, what are the things that you can get them to do? It becomes somewhat of a sales thing there. Because you're the best. That's what you want them to understand. I mean, that's what we want our potential clients to think about. Vista, we're the best, but sometimes people are hesitant to pull triggers and that kind of thing. What are the techniques that can get them to do that in a way that allows you to then service them to the best of your ability and we can go on. And the case management, the handoff from intake to case management.
[00:11:14] Speaker A: Yeah, yeah, yeah. No, I think, like, what I'm trying to get to is, let's say that I've got the phone ringing a lot, but it feels like I'm spinning my tires. You're saying low conversion rates on calls. So below 80%, because that's where you start feeling the tires slipping on the road. That's one of them. Or below 90%. But you're starting to see that drop. What are other signs that there are that my strategy, which is getting the phone ringing to grow my business. What are other signs that. That I'm seeing this tire slipping on the road and I should really be not focusing all my time on getting the phone during anymore, but start thinking more internally around building the operational structures for the. That, like you said, that sustainable growth. What are the other cracks that you see as a pattern across law firms?
[00:11:57] Speaker B: And I want to make sure that I'm answering your question. You're talking about other cracks in the intake procedures or.
[00:12:03] Speaker A: No, no, no, no. Just broadly across the firm, other signs, other red flags that my make the phone ring strategy is no longer the path toward more growth.
[00:12:12] Speaker B: Got you, got you. Well, you know, again, going back to that list that we talked about earlier, getting more cases, and I think you're saying, okay, we got that. What are some of the other things? Well, you know, the other big piece is increasing the average case value. And there are, there are many different ways to do that, and they, the ways depend on the setup of the actual firm.
[00:12:33] Speaker A: And again, let me, let me flip that a little bit. So, so because I'm looking for cracks, to me, what I'm hearing is bad intake conversion rates is a crack. Low average case values is another red flag that the. My biggest problem is no longer getting the phone to ring, but something internal. Correct. What does that look like? So if my average case value is, what should I be looking for as far as an average case value? Otherwise, I'm saying, hey, let me put a red flag on that.
[00:12:59] Speaker B: Yeah, I'll talk about that. And I get that question a lot. What should our average case value be? The other question that we get is how many cases should a paralegal handle? And I'll give you the ultimate consultant answer, which is, it depends. First of all, you got to know what your numbers are to begin with. You know, if your average case fee is $7,000, then we simply need to improve that. I mean, we see firms, you know, in the 15 to $20,000 average case fee, but if you're at 7, you've got to go through a lot of numbers to get to 15 or get to 20. Okay, let's start on that. What are the things that we can do to. To improve it? From 7 to 7, 7500 to 8. Those are the things. And it's. Unfortunately, it's not a light switch. It's a process. It's going through, working on. I mean, in the business at this point. And what I mean by that is creating the procedures and having your team do certain things, ask certain questions. And I'm going to give you one very clear example is lots of times there is not good commun.
From the team that is handling the client. Let's just call it a paralegal, legal assistant or attorney. There's not good communication. There's not consistent communication. That is, number one, having that consistent communication when a client is going through treatment, asking them the question, you know, are you. You know, how are you feeling? Are you getting what you need? Et cetera. And we insist that most of this communication be just like you're doing here. Now, direct text and email is okay for updates and things like that. But when you ask questions either on a zoom or on a telephone. And let's. For example, if you said, tim, how are you doing? You been in treatment for six weeks. I'm okay. Well, you know, if you say I'm okay like that in a text, you don't get that. That cadence, that inflection. If you. I'm okay. Well, what do you mean by you're okay? Well, you know, I'm developing. I've got a little bit of tingling in my left hand. All of a sudden you've got something that can drive case value. Maybe we've got some nerve issues. Maybe we've got this. And look, we're not practicing lawyers. We're helping with the business systems and questions to, to help the lawyers be better at what they do. We're not getting the case strategy and all that. So I hope I'm hitting on a little bit of what.
[00:15:19] Speaker A: Yeah. No, but. Yeah. So low average case value. It sounds like there's just. There's a lot of process communication issues that underlie that as. As a root cause a lot of the time. And then the third thing that I heard you say, so bad. Low intake conversion rates, low average case value. And then case load or per. Per case manager or general caseload ratios being out of whack is another red.
[00:15:42] Speaker B: Flag that can cause inefficiency and ineffectiveness. Okay. And different firms have different systems, if you will. Some people, some firms have a team that handles a case from cradle to grave, whether it's a smaller case or a larger case. We have some of our firms that have pre litigation Departments and litigation departments. And I want to, I want to make a point here that. And I got this from a guy named Bill Biggs. I think whenever I say something like this, I try to give people credit, but it's so good that pre litigation is not just before litigation. It is preparation for litigation, prep for litigation, pre litigation, getting the cases set up as if they're going to trial is a big driver of value. You know, if you're saying, hey, we're not going to ever get this to litigation, you know, you may recognize some of those, but that's generally not the way to do it. But depending on how the firm is set up, different procedures can be put in place. If they have a cradle to grave system or they have a departmentalized system. And you know, again, it goes back to what are the questions to ask? What are the handoffs look like? If you're going from pre let to let you know, what's that handoff look like? And I'm going to give you one example, and then I'm going to slow down a little bit. A lot of times clients, our clients, the attorneys tell us, you know, we get complaints from our clients, the ultimate person who has been injured by the negligence of others, saying, I don't want to be here. I don't like being handed off to different people within the firm. Well, I propose to you that if we set this up correctly from the beginning, say, look, you are going to talk to more people within our firm. The reason for that is your case. We're going to assign it where it needs to be. I don't want you to see that as a negative. It's actually a positive. So we convert a potentially negative, hey, I'm getting handed off to these guys told me this was probably going to happen, and now it is happening. And so it's just, you know, a matter of course. That's about getting the case and the client set up and understanding how the process will work. So, again, very important. And again, I hope I'm hitting on some of the things you. You wanted to talk about.
[00:17:51] Speaker A: No, absolutely, absolutely. And we're getting close to time, so just to do a little bit of recap here. And this has been great, Tim, I really appreciate it. So at the very beginning, you said there's only three ways to grow a law firm. One is to get more cases. Sorry, I consolidated getting more cases with client referrals, so. But you did say 4. 3. So getting more cases with. With client referrals, being part of that client experience, being really important. Increasing the value of resolutions and increasing the efficiency of every process in your firm. We talked a lot about how getting more cases is the first thing that you do to grow your law firm or one of the very, like, very beginning, right? Like you're, you're just out of law school. Like, what do you need? You need cases. You have to have cases, otherwise you can't do anything. You grow on that. And as that grows, then it becomes really important to make sure that the back end support, support, stat, the efficiency and the case resolution values. And there are red flags for when just making the phone ring more isn't the answer to your law firm's growth issues when things start to feel like they're stalling out. If you're looking at metrics like your, your intake conversion rates being below 90%, low average case values are warning signs. And then caseload ratios, depending on your law firm's makeup being a red flag that you maybe have overloaded your team. And then I would say one that we didn't talk about, but I'll throw on the end is if you don' Know your numbers, that's the biggest red flag of all.
[00:19:15] Speaker B: Because throwing out of all the processes. That's.
[00:19:18] Speaker A: That's right. That's right. If you can't, if you aren't measuring it, then that's the biggest red flag of all. So before you can even know if you have other problems, you have to start measuring. So this is fantastic. Tim, we could talk about this for two hours. Try to keep it a little bit bite size here. But I really appreciate your time and talking about this and we'll, we'll absolutely have to have you on again because there's a wealth of knowledge here. But I really appreciate you taking time to chat with me this morning.
[00:19:42] Speaker B: You're very welcome. I enjoyed it. I believe in what you guys do and love working with you when we get a chance.
[00:19:47] Speaker A: Thanks very much.
