Sam Black: [00:00:00] So how do we ensure that a monthly call is happening to every client every single month and what happens if they don’t answer and you’re like leaving a voicemail instead of connecting with that?
Rusty Speedy: So, I mean, you know, the big thing that we get into is obviously system software processes and reports.
Ideally, what you would have is a place in something like a CRM or practice management software where you can easily see how much money each person owes or who’s due for a relationship call. And that the call happened, so that your people made those calls, and then what the outcome of that call was. Did they answer?
If they did answer, did they make a payment? So that’s really ideally what you want, and then you want to be able to report on that.
Welcome to Tech Talks, the ultimate podcast for law firm owners looking to revolutionize their practices through technology and strategic business management. Brought to you by 4iiz Systems, your trusted partner in creating custom software solutions and reports to ensure that [00:01:00] everything works together seamlessly to drive your firm’s success.
Each week, your hosts, Rusty and Sam, will dive into the world of law firm operations. exploring how you can leverage technology to streamline your intake and phone systems, improve your case management workflow, and maximize the potential of custom software solutions and insightful reporting. From working with hundreds of law firms across the country, we understand the unique challenges faced by law firms today.
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Sam Black: All right. If you’ve been deciphering financial equations in search of the magic formula for higher profits, this episode is your treasure map
Rusty Speedy: prepared to debunk the tall tales that have been leading law firms astray.
Sam Black: from the myth that clients are always late with payments to the illusion that expanding to new markets guarantees instant riches.
Rusty Speedy: We’re here to separate fact from fiction, offering you practical tips for boosting your bottom line from building client relationships that actually pay the bills to discerning between expenses and investments, and even unveiling the truth about payroll. This episode is your compass to navigate the labyrinth of illegal finances.
Sam Black: So grab your calculators and join [00:03:00] us in cracking the code to a more prosperous law firm future.
Rusty Speedy: Alright, so we first really started digging into this idea of profit versus money in the bank. After hearing a speech from a business thought leader named Keith Cunningham, he hammered into our heads that profit is a theory and cash is a reality. So if you look at your accounts receivable or your Profit and loss statement. At the end of the month, you’ll see a big number at the bottom that you’ve made a lot of money. That money might not necessarily be in the bank, so.
Sam Black: All right. So after talking to law firms across the country, we hear a lot about profit and cash, and there’s definitely some misconceptions or myths that firms believe about profit and cash. So Rusty, can we go into some of those?
Rusty Speedy: Yeah. A lot of them think that just ’cause they have more clients, they’re gonna have more money in the bank.
Sam Black: Another one we hear all the time is that . They believe clients are always gonna be behind on paying their bills and there’s not really anything they can do about it.
Rusty Speedy: One of my [00:04:00] favorites If I cut expenses, I’ll make more money.
Sam Black: And one of mine, if I open more offices and more locations, I’ll make more money.
Rusty Speedy: There you go, So what are the answers to these questions? we get into it, I think we’re important to say that we’re gonna be talking about levels for law firms in this episode, and we go into more detail about what these levels are in episode one and which you might be in currently in your firm. But as a quick refresher, Sam, do you mind going through them?
Sam Black: Yeah. So level one, we describe this as the attorney level or where you’re kind of a single practice attorney. And level two is the manager level. Level three is c e o, and level four would be the investor level.
Rusty Speedy: All right, thank you. So let’s get back to the first myth and that is that more clients equals more money in the bank. we, found this out working with a firm in North Carolina. And Sam, what do you know about that firm?
Sam Black: Yeah, so this firm in particular, [00:05:00] they were seeing 50% growth year over year for four years in a row. So huge growth and in a pretty short period of time. at the same time, all of their expenses were rising pretty much as quickly as all of their revenue was.
Rusty Speedy: Yeah, and in order to break that cycle, it took the implementation of a bunch of systems, adding new employees and different levels of management to get them out.
Sam Black: exactly. So it definitely a lesson learned and we’ll be talking more about they handled that later on in this episode. But our second kind of myth or thing that we find firms believing is that their clients are always gonna be behind on paying their bills.
Rusty Speedy: Yeah. And, and last week we talked about using phones to get more clients. But another key component is using the phones to keep that relationship good relationship with your clients, while also being able to collect on the payments that they owe.
Sam Black: So, at the attorney or manager level, levels one and two may have these kinds of calls combined or [00:06:00] The same person making both relationship calls and and collections calls. But as you start getting into the c e o and investor level of your law firm, these teams are probably separated. So you have a relationships team and a collections team.
Rusty Speedy: And just briefly touching on the relationship team calls again. American Bar Association still says the top reason for malpractice complaints is you know, a failure to communicate with clients. Client communication is the key to avoiding malpractice complaints.
Sam Black: Alright, so, does all this communication look like? basically your relationship call is an update on the case. So this requires your relationship team to know the status of the case and make sure that it’s moving. couple things that we discuss . On these teams is an incentive structure.
So you can incentivize your relationship team by reviews on Yelp and Google. So when your relationship agent is making that call about [00:07:00] their case, they’re encouraged to, Hey, if you know you’re happy with how everything is going, please leave us a review on Yelp or Google. You can mention my name. And then if their name is mentioned, then they get incentivized based on that review that they’re then getting for the firm.
Rusty Speedy: The second call type is collection calls, and this is obviously when you’re collecting payments or attempting to. So in order to have these types of calls, it requires knowing whose payment is coming up or whose payments are overdue. then when you’re making these calls, it’s important to note that you’ll not likely be able to collect it all at once. But asking the client to pay something is better than nothing, and it, you know, keeps that momentum going with the case. And so you kind of tie that in with your case updates as well, your case status updates because hey, the case is gonna move faster if you finish paying me. do have a couple different goals that we have used in other firms, and one of them, depending on size of firm obviously but just as an example at one firm, each agent’s goal. Actually [00:08:00] floor is to collect $15,000 per week of overdue payments. And then they bonus on different tiers. So if they reach 25,000, they get a higher bonus. If they reach 40,000, they get an even higher bonus. And Sam, why did we have to add these additional tiers other than just the 15,000?
Sam Black: Yeah, definitely. So. We noticed that people were getting to the 15,000 and then like, oh, okay. I’ve met my goal for this week. I’ve collected the money. I can kind of check out. I don’t need to make any more calls. So we modeled this kind of like, car dealership sales system where you get a higher percentage of bonus based on how many cars you sell.
So they’re now encouraged to make more collection calls and get more money into the firm if they can keep going after that $15,000 floor.
Rusty Speedy: Yeah, we, we don’t want to compare you guys to used car
salesman, you as far as collecting money, what works, works. So let’s go with that.
Sam Black: So how do we ensure that a monthly call [00:09:00] is happening to every client, every single month? And what happens if they don’t answer and you’re like leaving a voicemail instead of connecting with that client?
Rusty Speedy: So, I mean, you know, the big thing that we get into is obviously systems software. Processes and reports. Ideally, what you would have is a place in a, something like a C R M or practice management software where you can easily see how much money each person owes or who’s due for a relationship call and that the call happened so that your people made those calls, and then what the outcome of that call was.
Did they answer? If they did answer, did they make a payment? So that’s really ideally what you want. Then you wanna be able to report on that. Very easily so you can see who’s collecting the most, who’s behind. You can do a lot of different reporting with this, which I’m sure we’ll dive into when we get into later episodes of financial reporting. But one of the easiest ways to get started, and at the very least you could do, is you could get a big list of your clients in Excel [00:10:00] and you can check them off one by one. So you’re, you give this list to your phone agents, they go down the list, they make a phone call, they write a note in column D or whatever it is. That’s better than nothing.
Sam Black: All right, so again, we will be getting into the full collections process in later episodes. And this includes other things like follow up sequences with emails, warning letters, and then finally withdrawal letters,
Rusty Speedy: Good stuff. So the next myth, if I cut expenses, I’ll make more money. I think it’s important at this point to note that there is a difference between, you guys know this, but there isn’t a difference between expenses and investments. So to give you one example and one of those that’s dear to Sam’s heart marketing, marketing is an investment because you can track the return on that investment.
Sam
Sam Black: yeah, so I have a, a client story. We were working with a firm in Georgia and I do not recommend doing this at all ever.[00:11:00] this firm was really struggling and cash quickly, so they just cut off all of their marketing. their two top lead sources, they had a really large P p C budget and a really big direct mail budget, and they just stopped everything like cold Turkey.
So it didn’t really see any effects until six months later. Their cases were down by 75% and it took a long time to get them back on track After making that, Such a big decision like that. So I definitely think marketing is the last expense to cut. And if you need to, it should only be temporary.
that doesn’t mean that you shouldn’t be measuring your lead sources. Obviously, if, a lead source isn’t working, if P P C really wasn’t converting into clients, then yeah, you should cut that budget or make strategic cuts To change up to different lead sources. I normally compare this analogy to if you think you don’t have enough money to eat today, it doesn’t mean that you shouldn’t buy groceries next week.
it’s a big difference. And you the long-term effects.[00:12:00]
Rusty Speedy: Yeah, and like Sam’s saying, cutting off all marketing is different than cutting off one source. So, you know, anyway, I’m surprised that was, anyway. All right. I’m gonna let that one go. So I do wanna talk about a different investment. And again, an investment is where you can measure the return on the investment, the r o i, and that is payroll. So, as you guys know, payroll is generally the biggest expense for most law firms. So the different ways that you can measure this and track how well you’re doing is looking at things like payroll as a percentage of your gross revenue, and then also profit per dollar spent on revenue. You guys know that gross revenue doesn’t necessarily mean money was paid to you. So profit per dollar spent on payroll, but it’s also important to know that payroll percentage of gross revenue because it could lead to a different problem. You might have a collections problem, and so it might not be as high as you think it would be. Or profit per dollar spent on payroll should be higher if you solve that problem.
Sam Black: Anything else [00:13:00] about payroll or profit
Rusty Speedy: Yeah. So, you know, we talk about payroll, we talk about these different roles in your company. We already talked about collections. We already talked about relationship calls, but another important one is sales agents. And again, this is an investment. You can track the R o I on this.
Sam Black: Yeah, so say you’re spending, or, or you’re paying $4,000 a month per phone agent. And those phone agents are setting 15 appointments, and those 15 appointments convert into 10 hires.
Rusty Speedy: Yeah, so the way you would do that math is you would take the total value of your cases. So let’s say that someone hires you, the value of your case is 3000. If it’s 10,000, even better, right? So for those 10 hires, You would get $30,000 in revenue for the work of a $4,000 employee that you, you know, normally wouldn’t have gotten.
And we get into this especially more, and I believe it was episode two, we talk about you know, using the phones to make more money. Outbound dials to people who didn’t set, didn’t show, didn’t hire. These are the ones that we’re [00:14:00] talking about. These are the ones that are worth a lot of money that people don’t necessarily do because they don’t wanna hire that person to get that extra, what was that?
$26,000 in every month.
Sam Black: what else? as far as payroll and profits,
Rusty Speedy: Yeah, I, I know I’m talking a lot about the different metrics here and everybody’s falling asleep. But another one profit per attorney, especially for associates. You guys have probably seen this, especially in eat, where you kill firms, but if you’re looking at hourly billing versus flat fee especially, it’s easy for hourly billing. How much did they bill out versus their salary? And you know, sometimes you can make that math a little bit more complicated, but basic level, how much they bill out, how much are you paying ’em?
Sam Black: Yeah, and this goes in . With the flat fee model as well. So this is looking at paying at your most highly compensated people and giving them only the tasks that only they can do. So all the other tasks that other people can do, [00:15:00] those should be to the less compensated people. So they’re fills up faster and you can get more of, that team at that level.
Rusty Speedy: Yeah, so like your attorney shouldn’t be scanning documents, they shouldn’t be filling out basic forms. So you have paralegals, case managers, production staff for admin tasks, stuff like that. Your attorney shouldn’t be doing that. They should only be working on the cases and only those tasks in the cases that nobody else can do, only they’re qualified for doing it. was the next assumption, Sam?
Sam Black: Okay, so, this one is, if I open more offices in more locations, I’ll make more money, which can be true it’s not necessarily true. And so normally we see this in that transition from the manager level to the c e o level. Rusty, can you talk about how this works,
Rusty Speedy: Hey, you caught me drinking some coffee.
Yeah.
So basically if you aren’t creating economies of scale, then you are just tacking on more expenses derived with revenue, right? You’re opening these new offices, [00:16:00] you’re hiring people if you’re not making, so when I say economies of scale, I mean, hey, since you have. More people, more places. It’s costing you less to handle cases. It’s costing less. You don’t need to hire as many people because you have the same people that can work in one office doing these things. that kind of gets into
Sam Black: So really we’d like to be running each office like a separate business.
Rusty Speedy: Yeah. And, and in order to do that, you, you really need a few different things. You need accounting per office. You need a separate budget for those Offices and you need to be able to track the revenues you’re getting for each of those offices.
Sam Black: So we’d also wanna create separate each offices. If you’re moving into a new market size this would mean you would Expect a different number of leads in per month. A different number of clients to get per month depending on where you’re opening that second or third or fourth location.
Rusty Speedy: Yeah, and you know, ideally this is something you look into before you open a location. It’s not [00:17:00] like, Hey, I just wanna be in the next town over. know, for bankruptcy firms, you can look at things online such as the number of filings in certain districts. immigration firms, you can look up things like demographics. There’s a lot of different ways that you can research where it might be a good place to open a new office.
Sam Black: Yeah, and the marketing per office looks very different. we were working with a firm that had an office in North Carolina and then opened an office in California. I. The cost per lead and the spend on Google My business and on Facebook and all of our paid lead sources looks very different from an expense wise, from marketing, but also the, the customers react with the ads just because one lead source in one area.
Worked does not mean that’s gonna work necessarily in every area or how it works, might be a little bit different. People in California we found we’re a lot more skeptical to our Facebook advertising than they normally were in, in North Carolina.
Rusty Speedy: Yeah. And another big one it’s sales per [00:18:00] office. We get into this a little bit more, I believe it was in the second episode, but we talk about things like that perfect client life cycle. How many leads you’re getting in, of those, how many set an appointment? How many of those show up, how many of those higher? It may be different for different locations. You might have to work those leads a little bit differently. Like Sam was saying, North Carolina, California, it’s a different kind of level. It takes more touches in California than it does in North Carolina to get a higher, so you have to be able to tell that and be able to adjust your strategy for those separate offices.
Sam Black: So we’re talking about all these separate offices. How many people do we need in each office?
Rusty Speedy: So ideally you just need one person at the front desk to kind of like greet people as they walk in, accept payments you know, accept documents, get ’em to sign documents stuff like that. Maybe you need someone doing admin tasks like, you know, dealing with mail. But it also depends on the volume of traffic to that office, right?
So Sometimes your front desk person can do all of that. [00:19:00] But if you know they’re dealing with 10 clients in the front all day, or 10 prospects all day, then you might need somebody else doing those admin task. And then finally, based on how you’re set up someone to do consults, so one, two, or three, but two generally.
Sam Black: Yeah, and this does not need to be a full team of people. you don’t need to have all of your production in every office. we were just working with a firm last week actually that have a satellite office and a client was trying to go in and sign and pay in cash. And I was like, just, just send someone there.
You just need one person to meet them there. Collect the payments and if they need to meet with a consultant, we can set them in front of a laptop or a zoom room or anything like that, and you can virtually zoom in a consultant from another office. Just have someone be there to at least meet them and accept that payment.
Rusty Speedy: And I realize there may be some pushback on things like zoom rooms if you don’t know what a zoom room is. We’ll talk about that later when we start talking about things like virtual comp. Insults, [00:20:00] but there are definitely ways of handling this where you’re still giving the client, you know, all your retention. It’s, you make it feel a lot more like you’re there in the office. And we’ll talk about those different strategies later on. But again, the whole point of having these few people in the offices is creating those economies of scale, right? You don’t need a lot more expenses for this one office. You have your production team in one centralized location, so it, the cost doesn’t go up as much by being able to do that. Yeah, we’re getting into some bottlenecks.
Sam Black: yeah, so as you grow in your firm from attorney to investor, the most. Pressing question for the firm normally changes. So as we’ve gone through these episodes, we’ve talked about how do I get more clients and this one, how do I get more profitable with priority we see with smaller firms is normally how do we get more clients?
And then once they have a handle on that, it goes into how do we get more profitable.
Rusty Speedy: Yeah. And once those areas are stable, firms realize they need to focus on workflow. Right? They’re getting a lot of more clients in. They’re making [00:21:00] more money, but now they gotta do the work.
Sam Black: workflow. This is Rusty’s favorite subject. we’ll be diving into that on next week’s show,
Rusty Speedy: It really is my favorite subject. Yeah.
Sam Black: Okay? So, you can follow us on four eyes.com/podcast and we’ll have all of the resources that we’ve talked about in these episodes posted there.
Rusty Speedy: And you can also go there and submit some questions and we may talk about, you know, the questions you posed to us in future episodes. just provide you more resource to answer them right there on the website. Or lastly, you could hire us and we do all this stuff for you.
Sam Black: All right. Thank you.
Rusty Speedy: Bye everybody.
Thank you for listening to this episode of the 4iiZ Tech Talks. I hope you learned some actionable strategies to attract more clients and grow your law firm. Remember, consistent small wins over time lead to massive growth. Try implementing just one tactic from this episode and see how it goes.
We’ll be back next week with more strategies to take your law firm to the next level.[00:22:00]
