Welcome to they Don't Teach this in Law School, the podcast filled with great conversations and exceptional ideas helping entrepreneurial law firm owners build their best lives, and law firms Brought to you by Law Firm Alchemy. Go to lawfirmalchemycom for more information. And now it's time for the show. Hello everyone, and welcome back to they Don't Teach this in Law School.
Speaker 1:I'm your host, charlie Mann of Law Firm Alchemy. I'm really excited to have this guest on today. He's someone who I followed for some time before actually being on his podcast, and now it's about darn time that I return the favor, because I think he's an incredible source of wisdom on how law firms should operate to be exceptionally profitable, and he challenges the rules that you see out there that are often laid down of what is a good profit margin, how much money should an attorney that you hire make and all these other numbers that people just take for granted. He's applied more formulas to them and really helping law firm owners anchor themselves against those formulas. So I am very excited to introduce the founder and CEO of Profit with Law, the host of the Profit with Law podcast, emotion Amsell. It's great to talk with you.
Speaker 2:Charlie, thank you so much for having me on your show, and what a great name for a podcast. They don't teach this in law school. I mean, it's incredible and really gets to the nuts and bolts of the issue, which is everything that's outside of the actual practice of law.
Speaker 1:Everything that lets you, everything outside of what you learn in law school, is what lets you actually do what you're doing in law school. So, Mosh, I'm going to ask you the question what is one thing they don't teach you in law school?
Speaker 2:So I know that this is a question that you probably get a lot of canned responses to, but I'm going to equate lawyers to doctors, right another professional service, right. And if you think about what do they not teach in medical school? Right, and that is they don't teach bedside manner. So you can have the top cardiologist in the world, right, but if he doesn't have bedside manner, 90% of his patients are not going to be satisfied. They may have gone to him because they needed this particular thing corrected, and he's the best person to do it, but they'll walk away with a less than adequate level of, you know, of satisfaction with their experience. And I think that when we boil down the art of success in business, it has nothing to do with how good you are at your trade and it has everything to do with how satisfied your customers are with the experience. And it's not just the experience of serving them, it's the experience before you serve them Like. What is it like when somebody calls your firm?
Speaker 2:What are the experience when the phone gets picked up, if it gets picked up, because we both know that Clio ran a famous test back in 2020 for their Clio legal trends report, and they called 2000 small firms across the nation and 66% of them either didn't answer the phone or didn't call back after a voicemail was left. So what is the experience that somebody is having when they're interacting with your firm from the very first time they reach out to the very last time when their matter is finished and you're done and parting ways and I really think that that is the underlying theme between when we look at somebody who's successful and somebody who isn't is the ones who skyrocket in growth is, very simply, that they have created such an experience for their clients that they're just leaving raving and talking about it and sending more business their way.
Speaker 1:So here I go, moshe, introducing you as numbers formulas guy, and you're like, no, I'm going to turn the tables on this one. We're talking about human to human connection. We're talking about emotional intelligence, bedside manner. So being the guy who talks formulas, I mean, I know that it's not all that you talk about. Far from it, right. This sounds like it's the side of it. That's look, you want to hit a formula. You can't just science this thing. There is almost an art to it. So let's go in depth on that Bedside manner.
Speaker 1:When you're talking to a firm owner what are your expectations on how they deliver good bedside manner?
Speaker 2:So I'm going to flip it back to the formulas, right?
Speaker 1:So here we go.
Speaker 2:Everyone knows the term KPI and that gets thrown around and it creates a lot of confusion to business owners who are like I know that I need to be measuring things, but I don't know what I need to measure. Well, you can measure the experience people are having, and I don't mean taking a survey and asking them how you're doing. I mean tracking what happens at every stage of the journey. So let's go back to answering the phone. Versus not answering the phone, you can start tracking clicks on your website, views on your website, right, how many people are actually getting to my website? How many people are converting from a viewer to somebody who's submitting a form or clicking to call us? Right? How many calls are we actually, when the phone's ringing, that we're actually answering? How many of those are converting into? How many of them are leads and how many of them are converting into consults, for example? And then there's every step of the way. We can measure and we can see how we're doing. Even we're doing poorly in any one area. We now have room to fix that, we have room to elevate that, and the numbers are going to tell us where the problem is, but the solution. That's where the emotional intelligence comes in right. So there's no like, oh, I'm not converting, well, from consult to sale or from lead to consult, and therefore it's a problem with XYZ. No, that just unearths what the problem is. We actually now need to go and figure out, like, okay, what is causing that problem. It's kind of like I will go back to the medical, by the way, when I focus on medical, I'm also a paramedic, so, like there's a lot of crossover between what I do in my day job and what I do in my night job. But when somebody has a stomach ache, there's so much going on there, right, like there could be a problem with their pancreas, there could be a problem with the gallbladder, could be a problem with their intestine, could be nothing to do with any of those, and they have a UTI, right? So there's so many different things that could be happening, but it's the symptom. Is the stomach ache, right? So let's take one of these numbers and this is a very common one Leads coming into the business, converting into consults, yeah, right, what's a good number for that?
Speaker 2:Well, I would hope that it's really high. I would hope it's like 70 or 80% of them. Why? Because if they're calling you, they need you, right, they need a solution. So if they're not booking a console, they're not taking the next step. There's a problem with how am I setting us up in that conversation to be able to then have the next conversation with them? And that's where we need to start diving in and say, okay, if I've got a conversion of 20%. So my phone rings 10 times and I booked two consults.
Speaker 2:Why is it so low? And what do I need to do to get the other eight people to come on and do a consult? And it could be anything from oh, free versus paid for the console and a barrier to entry for them to I'm not talking their language. I'm getting all legalese on them before we even get into a conversation. I'm not asking questions, I'm not being a human in that conversation, and that's really the thing that we need to dive into and say, okay, what are the things that we could try to improve or try to change that can move this number? And the beautiful thing is is that if I'm monitoring that number now, I can see, as I'm implementing those changes, is that improving? Am I going to 30%, 40%, 50%? And the crazy thing and this is where this is why you talked about how.
Speaker 2:I talk about massive profitability. A law firm should be making somewhere between 30% and 50% profit on every dollar that comes in, and I can tell you that 95% of the law firm owners out there are not making that kind of money. So where's the drop off? What's the problem?
Speaker 2:It all starts with simple and almost stupid things like this, and the reason is because we spend so much time, effort and money on marketing that it's the same amount of effort to get the phone to ring 10 times to get two consults versus eight consults. Imagine how much more money I'm gonna make if I could get those 10 calls to become eight consults versus two. And it all starts there like that's the beginning, that's the pipeline coming into the business. But then it continues. I'm serving clients right. How can I serve them effectively and efficiently so that I'm moving more clients through with the same amount of staff? And there we can start looking at automation and systems and processes and things like that. But all of these things are based off of the numbers are telling me a story and if I start to follow the breadcrumbs of those numbers, I can really start to unlock the real potential of my firm.
Speaker 1:What I appreciate that you're breaking down there. It's actually interesting. I was having a conversation with a coaching client two days ago, from when we were recording this, and we were talking about KPIs. His question was what KPIs should I be assigning to team members? And the struggle was it was trying to find these really individualistic KPIs, these like totally unique to the receptionist, totally unique to the paralegal, et cetera. And I said let's zoom out a layer and if the idea of KPIs is where we're struggling, let's switch our term here to metrics.
Speaker 1:What would be a metric that, if this were a department you were managing, you would be tracking? So something like number of leads that have been moved from the number of qualified leads that have been moved to appointment, number of appointments that have been actual signed clients, and then what's the velocity after you've signed a client to the first significant point of action in a personal injury firm it might be the demand package is sent. We're taking the letter of representation for granted, which we sometimes should In each one of these firms. How are we looking at numbers that actually move the firm forward, as opposed to especially in some of the smaller firms and I work with a lot of firms that maybe have five to 15 people in them, towards the upper end, 35 people, and they're looking at sometimes smaller number chunks. So that's actually the next question I wanna talk with you about. Since you know a lot of these formulas and everything, do you have thoughts on finding numbers of statistical significance and what is worth tracking at different levels versus not worth tracking at different levels?
Speaker 2:Yeah. So it's very interesting because it's kind of like hey, in a human the vital signs are blood pressure, pulse rate, respiratory rate and now they've added blood glucose level, right, like those are like the four key things. That like when we're responding in an emergency to somebody, that's the first thing we do is we assess those numbers and that tells us how that person is doing. So you're asking like are there are numbers like that in a business that we can just look at those and say, okay, I can see from this how this business is doing? The answer is absolutely yes, there is.
Speaker 2:But I think that if we look at the big picture numbers, we're gonna miss the small picture opportunities. So let's talk big picture real quick. Great, there's revenue, there's expenses, there's profit. And actually if you ascribe to Profit First, which I'm a big fan of, then there's revenue, profit and then expenses. Okay, so don't look at the order. Put my accountant hat on versus my profit. First, hat on, right. But ultimately, the very first thing that we can look at is how much revenue am I bringing in and how much profit am I getting from that revenue? And that tells an immediate story. One of my early clients in the legal industry. Had a $2 million law firm and she was making $50,000. Now $50,000.
Speaker 1:Sorry it took an extra second for that to set in and realize that that was 90% less than what I thought I might be hearing.
Speaker 2:Right, exactly, so my goal for somebody who has a million dollar firm is to be making $400,000, not $50,000, eight times the amount that she was making. Now she could go out and get a job in Starbucks and earn more than it took to build a $2 million law firm and run it day to day with all of the aggravations that it has. Right, yeah? And we gotta look and say, okay, like, why am I doing this? And that's obviously why she was working with me, right? So she knew she had a problem. But that number tells a story. So immediately, when we look at that number, we can use percentages to make it simple, because it's very different, right, million dollar firm versus $100,000 firm. But if we take the profit divided by the revenue, it gives us a percentage. 50,000 divided by a million is 5%, right, so we wanna be operating at a 30 to 50% profit margin. If I'm operating under 30%, there's room for improvement. If I'm operating under 15 or 10%, I'm probably losing sleep at night Because it's so razor thin that I'm worried about making payroll so big numbers. That's like the very first place that I would look. Just, I'm working with somebody. The very first thing we're gonna do is take a look at that. Second thing is cash flow. Cash flow is very different from profitability and business owners have a very hard time wrapping their head around this, because it's kind of like I get to the end of the year, I sit down with my accountant and my accountant says oh, congratulations, it was a great year. You made $100,000, you owe $50,000 in taxes. And you look and you're like well, how come I have zero dollars in my bank account? Because there are things that you're paying, making payments on, that are outside of the profit calculation, like debt service. So I'm paying loans that I owe or credit card payments that I owe. That's not expenses today. That's expenses I already had. I incurred it before and I'm just paying that back now and on top of that I'm paying the interest. So debt service is a big one. That causes us to not realize what our cash flow situation is. The other is is taking money out. So owners take money out just because I need it. Right, so I'll take $5,000 out because I need it. I'm not thinking like, oh, I'm paying myself $5,000. I should be putting aside money for taxes for this $5,000 I'm taking. I'm also not thinking that this is profit because I'm paying myself and we can have a whole conversation around owners pay versus profit, but at the end of the day, we have to look at cash flow also, which is I know my revenue numbers, I know my cash coming in. What is my cash outflow every month? And that's different than my expenses every month and am I cash positive month to month or am I cash negative, because that also tells a story. I could have high profitability because I finally got to this point of profitability, but I'm playing catch up on three or four years of bad business decisions and I'm still cash poor every month. So it feels like we're not getting anywhere, but really we are. So those big numbers that tells us the story on the business.
Speaker 2:But your client that you worked with two days ago this is a very common thing is like law firm owners or business owners in general. Well, law firm owners don't. We don't understand what should we be measuring and what does it mean and how do we use it. So what I like to do is break down KPIs into two sets of two buckets. So the first set is is this a firm level KPI or is this a position level KPI? In other words, love it I trying to Achieve an objective for the firm as a whole and therefore we're measuring something, for example, like Client conversions. Right, we want to get X number of client conversions or we want to elevate our leads to sales by you know this percentage.
Speaker 2:When we have that objective, as the owner, I'm trying to increase my revenue. I'm trying to increase how many clients I'm serving the employees they might be, they might be responsible for different things along the way. There might be one person is answering the phone, someone else is doing an intake call, someone else is doing the console, someone else is doing the actual sir, you know, serving the client. They're all responsible for the collective KPI. And that's the kind of thing that I could be. I could put the KPI on the wall and I could say, if we hit this metric, then Craig Golden farb does for his team, order a food truck for them for the court right, and they come, the food truck comes in and everyone gets food from. The food truck cost them fifteen hundred bucks, but it really helped his team drive collectively towards a KPI, towards a vision.
Speaker 2:The, the individual level KPI is much less about what do I want as a firm owner to achieve and much more about how does my employee know If they're doing a good job, how do they measure their own performance To know that they're doing what they're supposed to be doing, and how do I give them something to motivate them towards that? So that's the, you know. At the big picture it's like OK, which one are we talking about? We're talking about a firm level KPI. We're talking about individual level KPI. The other two buckets are Is this a KPI to achieve a goal or is this a KPI to measure basic performance? And those are two different things also. So, for example, my receptionist she should be answering the phone, right? I want to know you would think yes right.
Speaker 2:I want to know how many calls got answered. We had the phone rang a hundred times this month and we answered eighty of the calls live. Ok, what happens the other twenty? Now? It could be the receptionist was out six. She was in the bathroom. She was on the other line.
Speaker 2:There's a lot of reasons why they she valid, valid reasons why she wouldn't answer the phone. But if that number is fifty she's only answering fifty percent of the calls then probably something else is going on. So maybe I gotta start looking. Is she on Facebook all day and ignoring the phone ringing? Is she outside having a smoke every fifteen minutes? And you know, that's why the phone's not getting answered. So those, the numbers, tell me whether she's achieving her basic level of performance. At the same time, we can have a KPI that's goal oriented. So I want to achieve this particular result and therefore we're gonna set a KPI for that. And in the example, the receptionist I might have a goal that Every single lead that comes in, eighty percent of them are gonna become consuls, and the receptionist is the one who's setting that up. So her basic performance is answer the phone. But I want her to perform above and beyond that. I want to actually get somebody from the phone call and, by the way, I keep saying her the receptionist could be a guy to.
Speaker 1:I'm not singling out rule of this podcast is we don't take offense.
Speaker 2:Yeah, no, and I mean there's, there's multi talented individuals and at every level. You know, I want to be really careful when I, when I use vernacular, that I'm not Paging somebody into a box. The receptionist can control that and, with the right motivation, can achieve what we want them to achieve. So that's the place at the basic performance. I'm looking at like this person, somebody I keep right, fire right, need to like, educate some more and get her to do her job right, right. And the other side of it, when it's towards a goal, how do I motivate that person to go the extra mile to do it? It's less of a training issue and it's more of how do I give them the desire to achieve this goal.
Speaker 2:And that's really where it's important for us to understand the nuance, because KPIs that we're trying to get somebody to go above and beyond. We have to have a carrot there. We have to have a reason for them to do it. Whatever that is, it could just be accolades, it could be money, it could be, you know, bragging rights would. Whatever that carrot is, we have to know at what level does is a carrot achieved and what does that carrot look like? And that's very different than I want to know if basic metrics are being met. So that's how I look at KPIs with my clients is basically like a firm level, employee level, and then is it To measure performance or is it to achieve a goal, and that's really what drives the conversation around. Ok, what are we measuring and and and how do we measure it?
Speaker 1:Yeah, you know it's interesting. You talk about performance versus goal. The linguistic device that I use with my clients is process versus outcome, so it's it's always good for, I think, everyone to hear that common Good business principles tend to rise up through the top. It doesn't matter what words are put on them. You can see these Distinct, you and I using similar dichotomies to handle situations in law firms to help guide law firm owners into making these, these better decisions. Now, one of the things that you mentioned in there was the difference between owner pay versus profit, and that's definitely something we can't ignore here, right, because I know that I have people that I work with who need, who need, some reinforcement on the difference between those. I really would love to hear your thoughts on that motion.
Speaker 2:OK, so the best way to explain this is with an example, so everyone understands. A company like Apple is a publicly traded company. They have tens of thousands, if not hundreds of thousands, of employees throughout the world. Right, I go into the market and I buy a hundred shares of Apple. I'm now an owner of the company. Right, if the company makes money, the board of directors might decide to issue a dividend to the shareholders, and that dividend is basically taking some of the profit and paying it to the owners. I receive that money as a dividend check. Now we we know that there are two things that I'm not gonna do. One is I'm not gonna walk into an Apple store and say, hey, I'm one of the owners of Apple and I'm here to work for the day behind the counter.
Speaker 2:Right, right the second thing I'm not gonna do is I'm not gonna take the dividend check and send it back to Apple with a letter saying hey, I know the copier on the fourth floor of this is building needs to be fixed and that'd be very generous.
Speaker 2:So I want you to use the use the money that I just got as a dividend and fix the copier Right now. Why would I not do those two things? Because in that example I understand the division of the role of owner versus employee and responsibility of operational expenses versus reaping the rewards of being an investor in the business. So, using that example, I now go to the law firm, where the owner of the firm is wearing all the hats. You're a shareholder the firm, you've invested in the firm, but you're also an operator, you're working in the firm. And if we separate those responsibilities, we now realize that there's actually two different ways that you're supposed to get paid. One way is I'm working in the firm, so when I'm clocking in, clocking out, I should get paid for the work I'm doing. And the second is I own the firm and when the firm makes money, I should be getting some of that money. I should be receiving some of the profit in the form of dividends or whatever your structure is and how that's paid out.
Speaker 2:Where we get into trouble is we combine the two. We think of ourselves as just a person and we mix everything up. So when we're short on money, we take our personal funds and we feed it in. So we basically take our profits and give it back. And when we have a lot of money, we splurge and spend in the business, first of all make mistakes there, but then we take money out of the business because, oh, that's flush with cash. We could take some money out and not thinking about, oh, am I paying myself for the work I'm doing or not? I'm taking a profit.
Speaker 2:Where this really becomes a problem is two places. First, in the operation of the business, because there's no clear understanding of how's the business doing. And when I look at profitability, I'm looking at profitability that includes my pay. So you know, I might think, oh, we made a hundred thousand dollars, that's really good. You earned a hundred thousand dollars for all the work that you did. Is that really good? Could you have earned that? Working for another firm is all you wanted to do to replace a paycheck, or do you want more out of it? So what is getting paying you for the job you're doing and what is actually profit on the business? So what if we said, ok, I want to earn a hundred thousand dollars as an employee and pay you a salary, whether it's on W2 or not is a tax accountant question. That's not what we're talking about. But I'm going to set my salary at a hundred thousand and then, if there's extra money, I'm going to pay myself some of the profit. And that's really important for me operating the business to understand what's going to be, because when we mix them together, we essentially are giving them the business a free employee and just looking at it as a business owner making profit, or vice versa. We're not trying to make a profit, we're just trying to make a paycheck. Either way is a dangerous place to operate, because it allows us to make decisions that are unhealthy for the business, because we spend money the business doesn't have, because the business should be making more money than that, because we're wearing a new shirt.
Speaker 2:The second place that this becomes a problem is if you ever want to exit. So if you want to exit your business, you want to sell it to somebody. It's going to have value because it's profitable, right. But you never paid yourself or you never looked at your profit as your salary and you thought, oh, I've got a million dollar law firm, I'm making $200,000 a year, so we have a 20% profit margin. That's worth something in the marketplace, right, I can go sell it and maybe my business is worth two or three million dollars, right.
Speaker 2:But when we actually go to look at value of the business, we say, okay, what's the first thing we need to do when you sell me the business is I need to replace you, what's it going to cost me to replace you? I got to go out and I got to hire an attorney. I got to also hire a CEO and I got to hire you know office manager or whatever. I got to hire a collections person. Also, you start looking at all the things that you were doing and we got to hire all those people.
Speaker 2:And guess what? Not only are we not profitable, we're losing money or we're just making a little bit. All of a sudden, your business is not worth anything. So, even if you're not looking to exit, if you start to look at the business that way at from an investor perspective, it puts a totally different spin on where are we at. And I think it's really important for us to have that delineation and not just to have it, but to actually have a process where we're paying ourselves two different ways. One is our paycheck, our owners pay, and the other is the profit.
Speaker 1:I do think that profit first really is such a strong formula, such a strong framework and just a different way for people to think about it, with the idea of you know what you're taking out of the business. You have to lay that down. But, moshe, what comes to mind when you're talking about the profitability and people looking to buy, invest in a law firm is how far away are we from private equity entering the equation and bringing this thought processes methodology with them? And I see, I saw like just a little smile come across your face there, so I feel like it sparked something. So I'm going to I'm just going to drop it over to you Thought process there.
Speaker 2:Yeah. So I mean, first of all, we're not far away from that at all. So for those of you who don't know, at least in the state of Arizona, non lawyers can own a law firm. It's a sandbox project and you know you need approval from the state and all that, but it's already here and when we look, when we look at, I think that the best way to look at it is to understand that there's two ways to start a business. One way to start a business is I am, I have a skill set and I want to start a business for that skill set. So I'm going to open the doors with me as the practitioner and I'm going to do the work until I've built the business up big enough to bring other people in.
Speaker 2:If we look at anybody who has built any sort of legitimate business that has multiple employees working for them, they either were not the practitioner or had a partner that wasn't the practitioner, or they had this realization early on or knew from the get go that if they were the practitioner, they were beholding themselves back when they come in as an investor, like if I were to start a law firm. So I go out to the state of Arizona and, by the way, I've actually been thinking about doing this as a pet project, to just publicly go through opening a law firm and doing it and, just you know, sharing the entire process. It's still it's something I really want to do. I have to have the financial backing to do it and I'm not quite ready to do it myself at this juncture of my own business. But I think it'll be extremely valuable for, obviously, the coaching side of the business, but also for just for the legal industry as a whole to be able to see and witness what that looks like.
Speaker 2:But if I were to open a law firm in Arizona, who would be the first person I have to hire? I'm not an attorney, right, I'm not an attorney. How do I provide legal services without an attorney? I'm the first person I would have to hire as an attorney, before I hire a receptionist or a VA, or I need an attorney on staff, because the moment that I get my very first client, I cannot serve them.
Speaker 1:That's right.
Speaker 2:So when you start to forget where's the industry going and what is this going to do to the legal industry? It's going to be good for the legal industry because any business that's open, that consumerism is at play. It ultimately is going to force people to elevate their game. It's going to provide a better quality service. It's going to decrease the cost to people receiving it and it's going to force law firms to run more lean, to make better business decisions and it's going to just get rid of bad apples and bad players. So I think ultimately it's going to be a good thing for the industry.
Speaker 2:But let's just from our perspective of small business ownership, just think about it for a moment. If I were to open my law firm and I wasn't an attorney, what would the first thing that I would be doing be? And that is to hire an attorney. And I actually have a set of slides that I use in a presentation to map out what does it look like to go from 300,000 to a million. And it is. When you lay it out that way and you show the math, it's almost a no brainer like why in the world isn't every law firm operating at a million dollars or more, like now, because if you look at an attorney who's not the owner, so all they're doing is legal services. Let's just say that you're billing them at 300 bucks an hour, which is low. I'm in New York. 300 dollars an hour would never fly.
Speaker 2:Let's just say they're 300 dollars an hour and I pulled up in a calculator right now. Do the math live here? And let's say that they are billing. You're not working them to the bone. They're having lunch breaks. We're being realistic here. They're billing six hours a day times five days a week. That's 30 hours a week. Let's say they're only working 48 weeks a year. So multiply that times 48. And $32,000 is the revenue stream that that lawyer can bring into the firm. Now give them a paralegal who's also a biller. We start to change the equation, right? But and that's low right, that's a low number of billable hours. It's a low hourly rate. I used and I use per hour fees, which I hate, unless you're a litigation.
Speaker 2:There is absolutely no other area of law where you should be using hourly billing. But all those things aside, how many of our solo law firm owners are earning $432,000 in revenue in their firm when they're operating on their own, even with support staff? I would say probably one to two percent of them. Yeah, yeah, okay. So that's what you're doing holding onto this and not hiring an attorney because you are wearing all the hats.
Speaker 2:You're not providing legal services exclusively. You're doing everything else. You need to be the marketer, you need to be networking, you need to be overseeing other staff members, you need to be dealing with clients with non legal issues, you need to be doing the billing and the collections and all of that stuff. So even if you're bringing in staff to do that, you're never billing six hours a day. As a matter of fact, we'll go back to Clio Legal Trends Report. Clio and their Legal Trends Report reported that the average solo attorney is billing 1.6 hours a day. It was wild. And collecting 1.2 hours a day they're not actually collecting everything, they bill A whole 25%, just right off the top.
Speaker 2:And, if you think about it, okay, Now all of our solo law firm owners and I'm sure there are some listening to this show all of our solo law firm owners are putting in work at night. They're putting in work on the weekends, right, Like you're working yourself to the bone. You're only working an hour a day. You should be on the beach the other five hours right, but that's not what's happening.
Speaker 2:This is why, if you can wrap your head around this, run to the marketplace and find yourself an attorney and hire them. Now, why aren't they doing it? Because they're not capitalized right? That's really like. Ultimately, when we look at it, it's like okay, I said okay, I have a skill set, I'm going to go out and I'm going to sell my skill set, but we didn't walk into this as an investor. We did not walk into it as an investor, we walked into it as an employee. When you walk into it as an employee, you are going to take the very long road to success because you're never going to be ready to hire someone else Never. There is never a juncture in your business career that you will say I have enough money in my business that I can go hire the next person. And I have this conversation in other ways. We can talk about the witch came first, the chicken or the egg right, Like how?
Speaker 1:do I know?
Speaker 2:when I'm ready to hire somebody, and I'll go down that road in a moment. But if you approach this as an investor, the very first thing you would do is hire an attorney, and then the very next thing you would do is invest in ways to fill that attorney's plate with clients and within 90 days you would have a $400,000 to $500,000 annual revenue stream. At a minimum, it's only costing you $100,000 to $200,000, depending on what you're paying the attorney and depending on your marketing costs. Right? Yes, I oversimplified it, but that's really what we're talking about. The business of law is the business of selling people's time, and the people are your inventory. And when you walk into it as the investor and say I'm the inventory, it's kind of like opening a supermarket and creating 24 aisles and putting one item on the shelf and saying I'm open for business.
Speaker 2:You'll never like it.
Speaker 1:I mean, you're certainly preaching to the choir on this one.
Speaker 1:I really hope everyone is hearing exactly what you've talked about, because this is a discussion you and I have with law firm owners all the time, undoubtedly, which is that that brinksmanship between investor versus operator, right, I know that I want to be a business owner, but I am afraid of giving up. Maybe it's my identity of being a lawyer. This is a big discussion with a guy who I coach, who does a lot of criminal defense work. He's thinking about himself as the trial attorney, right, getting up there and handling the murder trials and all that. And he's starting to come around like wait, I can hire someone to do that for me and have a point of leverage in the practice. So maybe, as a last note here, mosha, the idea of when you know that you're ready to hire or I'm sure, as you'll probably put it the way that I would put it, you're never fully ready to hire it's when you have to hire, so that way you don't get behind on hiring. What are you telling people about this?
Speaker 2:Yeah. So I mean, I like to say which came first, the chicken or the egg? And it's this concept of do you get to the point where you have enough money to pay somebody and then you bring them on, or do you bring them on in order to get to the point where you can afford them? And ultimately it's the latter right. If you're waiting for the right moment, when you have enough money in the bank to bring somebody on, you're going to be waiting a long time.
Speaker 2:Now there's other ways to get capital and I strongly encourage people to think about that, because as an investor, I'm going to think about okay, how can I afford to make this happen?
Speaker 2:It's not going to be from my cash flow. So how do I carry somebody for the first 90 days so that I can hire them and then they can start improving the top line, which will ultimately pay for themselves and then pay for the business very rapidly? Because if we take that $432,000 revenue stream and we say, okay, how much am I going to have to pay this attorney, depending on where you are in the country, somewhere between $70,000 and $100,000, right, maybe 120, depending on how many years of experience, or whatever, but to get them started. That's your outlay. So your outlay is 25% at a max of that revenue they're bringing in. So that means that if I calculated them billing six hours a day, I need to get them to an hour and three quarters of billing a day for them to cover their own salary. How quickly can I make that happen? Probably six weeks from when I hire somebody right.
Speaker 2:Okay, so it's really not. Oh, I need to invest $100,000 in somebody. It's, I need to invest six weeks, eight weeks, 10, 12 weeks of salary. Can you get your hands on $20,000? Yes or no? And if you could then go hire yourself an attorney, right? So, ultimately, the way that I deal with this with my clients is I tell them where do you want to go, what do you want to see yourself in 12 months? And if we say, okay, I want to have a million dollar revenue firm, I want to have a two million.
Speaker 2:Okay, let's paint a picture. How many attorneys do we need to make a million dollars? Oh, we need two attorneys. Okay, how many power legals? What does this look like? How many clients am I serving? Okay, yep, that's the end result. How do we start taking the trip towards there? Yeah, who's the first person? What's the first role we're hiring? And I would strongly encourage so. First of all, when new coaching clients come on virtual assistant, 40 hours a week, 2k a month it's easy Bring somebody in, because there's so much stuff you're doing that you shouldn't be doing. That's the number one thing. Even though I just preached about hiring an attorney, you got to move the needle on your own time first, so that you can actually spend time looking for an attorney, hiring one, training one and all of that right. So the first thing is like bring on an inexpensive overseas VA. There are plenty of them available in the marketplace. I don't know if it's okay for me to share a vendor, so I'm deeply attached to Get Staffed Up.
Speaker 1:Same here.
Speaker 2:You have great experiences with them and if you go to profitwithlawcom, forward, slash, get Staffed Up, take your right to their website and I've had Brett Trembly on my podcast. Profit With Law did a great session recently about what are the first seven positions that you should hire the VA. He actually has a new book that he wrote on that 24 Months to Freedom.
Speaker 1:It's a good idea.
Speaker 2:Exactly so. Pick that up on Amazon. I'm sure that Charlie's going to link that up for the show notes for you. But go get yourself a VA. Step number one just start getting the crazy simple things off your plate. Get the collection and the billing off your plate, get the talking to clients and answering their emails and all of that. Just hand that off to somebody and then take the time that you just unlocked and go find yourself an attorney. One of the things you asked like okay, when am I ready to hire? Guess what, when you're ready to hire is not necessarily when the person who is a good fit for your firm is going to be looking for a job.
Speaker 1:And I encourage my clients For those who are not watching this. I'm like nodding emphatically and freaking out over on my side with joy.
Speaker 2:Yeah. So I encourage my clients to do is to always have a job opening posted, always, even if you're not ready, you're not currently hiring, doesn't matter. The fact that you have a job posting doesn't mean you have to hire somebody.
Speaker 1:Mosho.
Speaker 2:Oh my God, you're literally like your echo.
Speaker 1:That's the dear every coaching client who is listening to this episode. And we've been talking about the always be hiring. Have the job tabs on your website, keep the job ad active on indeed on LinkedIn, et cetera. You just heard Mosho say it as well. Like this is for real here Always be active. And that phrase just because you have an ad out, doesn't mean you have to hire. Oh, we're singing the same song, my friend.
Speaker 2:Yeah, because here's the deal, there's really good talent out there, yeah, and you don't know when that talent's going to have their final straw at the firm that they're at and they're like that's it, I'm looking for a job, and they're going to go out there and search for it. And if you don't have that job posting up, you just lost the best candidate for your firm. Now you're going to say, okay, well, what if somebody does come across and they're like the perfect person and like they are going to be the rock star? Well, guess what? The same way that if I told you here's the winning numbers to tonight's lottery, but a ticket's going to cost you $10,000, but it's a $500 million lottery, you're going to come up with a $10,000? Yeah, you will.
Speaker 2:So you can find the money when that person comes in. You can find the money to carry them for 90 days and it's not going to take you 90 days, but you can find the money to carry them for 90 days to get them into your firm. But you would never have known about them, you would have never had access to them if you didn't have that job posting up there. So hopefully that motivates some people who are listening to take action on this. I love it, but really like there's the right time to hire is before you're asking the question when's the right time to hire?
Speaker 1:Oh, just this is. This is so good. I already know I'm gonna have to. There's so many things I've written down that I want to chew on in a future episode. We can dive so much deeper on this, but, moshe, we're coming up the end of our time, so I do have to ask you one final quick little trio of questions. And it's reading, watching, listening to. So, first off, what are you reading these days?
Speaker 2:That is a really, really good question and I mean I'm going to be boring as anything, I happen to be an IRS enrolled agent and I need to. I need to finish the mandatory hours to maintain that so. I'm currently weeding through like tax updates and stuff like that.
Speaker 1:So I'm not.
Speaker 2:I'm not reading anything for fun. At the moment. We're also in the middle of a marketing launch here at our business at profit with law, so I'm very much involved in the creation at this point and I kind of so. Interestingly, I'm a big fan of reading. I read a lot, but one of the things that I do is when I'm in creative, creative mode, I step away from learning, because it's a completely different energy, and if I try to learn while I'm being creative, then I'm mixing everything up, like it's you know, because I'm new ideas are coming and it's messing up with the, with the ones I already I'm working on. So I'm on pause right now, but I can tell you that the next book that I will be reading is by Robert Chaldini, and it's helped me out.
Speaker 1:And is it?
Speaker 2:Pre-Swasion. Pre-swasion is a new book on. You know, basically it's about preparing the marketplace for the conversation that you're going to have with them. This is one of one of the greatest marketing writers of our time and anybody who really wants to move the needle on the marketing of their business probably should should think about reading his books. But that's, that's the one I've got. It's in my backpack, like I'm carrying it around with me but I'm not reading it right now.
Speaker 2:Your next question what are you watching these days? Okay, so it's football season, so basically all of any other watching is off the table. You know, I'm in a pick and pull, I'm in a fantasy league and my watching is it's it's either the games or it's the good morning football and NFL fantasy, you know, live or whatever. Everything football now is like I'm living, eating, breathing football and in my the little you know spare time that I have.
Speaker 2:Actually, my seven year old son, tyler. I got him into football already two years ago. He started picking for fun in the pick and pull, like just, I had an extra one and he would just like the first. Two years ago he was picking by color, like oh, I like this logo, I like this logo and he was picking teams. Then last year he started to understand the spreads and the numbers and he started picking and he actually was doing better than me about halfway through the season. I edged him out at the end, but but he was doing really well and I took first place in my in my league, by the way. So like that's not like he was doing better than the last last place person.
Speaker 2:So actually this year I teamed up with my father in law and we split the buy in and and bought him a spot in the paid pool. So and we're we're only two weeks in, so it's very early, but he just had a monster week last week and he and I are tied in second place in the pool. Excellent, but he's got this. He looks at the team that's playing and he'll go and look at the players and look at their stats and he'll make a decision about how good the team is and then he projects what he thinks the score is going to be and matches his projection to the spread to like, come up with like, okay, which one of my am I choosing? He does more detailed analysis than I do.
Speaker 2:I love these at these teams. But to answer your question, that's what I'm watching. I also swat came out with a new season just now, so I've been trying to try to find that too.
Speaker 1:And then last question what are you listening to these days? Music or podcasts?
Speaker 2:So I'm listening to the heartbeat of my own born child. My wife is due in a month and that's you know where we're very much into the, the phase of getting ready for this baby to come. Not listening to podcasts and not like there's. There's very little, very little room for for that right now. I'm an avid podcast listener and once this baby comes, I'm going to start running again and and I'll be listening to. I've got a whole bunch of books on what a bull that are waiting to be listened to, as well as my favorite podcast shows.
Speaker 1:Well, I feel like I'm not even going to ask the question of what people are listening to for the next few episodes, because you just you landed the plane on that one, my man, you landed the plane and congratulations. I'm so happy and excited.
Speaker 2:I mean, I've seen your family on Facebook.
Speaker 1:I know you've been celebrating a lot of occasions recently and I'm so happy for you. That's phenomenal.
Speaker 2:Yeah, it's been a crazy, crazy few months. So my I have three daughters from a first marriage. I call them batch one and batch two. So I've got three and three right now and this will be the fourth, with my wife now and my three older girls. Actually, the oldest, mimi, works with me in the business. She's my podcast producer, really my right hand person for for everything. So my three older girls are Jewish Orthodox.
Speaker 2:Now I've chosen a different path for myself, but that's how they were being raised and that's that's what they. That's where they are, because I have to give that as a premise because people have a hard time wrapping their head around this. But the way it works in the Jewish Orthodox world is when you date somebody so you date very few dates six to twelve dates and then decide to get married and then it's a very short engagement because you're not touching each other before you get married, so three months max. And then boom, we got a wedding. So all three of my girls got engaged in less than three month period. So we made two weddings in August and we're making one in November.
Speaker 2:The third one has to wait until after this baby comes, and so it'll be three months and three days from the first wedding to the third one, which is just something that is hard to wrap your head around, and we're we're we're welcoming a new child into the family. So, yeah, it's been, it's been full, it's been really busy, but we're so excited. And on the business side, we have a training that we're doing and think it'll already have happened when you release this episode, but I'm really excited about that as well. It's gonna encapsulate a lot of what we talked about today. It goes through. The training is gonna basically lay out a formula that you can use to run your business on, and I'm really excited about that.
Speaker 1:So people should go to profit with law dot com to connect with you. Where's the best place to send folks who want to know more about all of this?
Speaker 2:Yeah, so I'll give you two URLs because I don't know the timing of the release. So profit with law dot com forward slash revolution will take you to this training that we're doing and, obviously, the website. You'll see our podcast and all that. Profit with law dot com forward slash.
Speaker 2:Profit first we talked about profit first a number of times in this episode will take you to basically a cheat sheet that I've created of implementing profit first, like literally step by step. You don't have to read the whole book by Mike McCallow it's and you can just go through and understand how to implement it. And if profit first is something you want to get involved in, what once you download that you'll get? You'll get some more emails from us and we have a whole two day workshop that we do to help you Implement that. If that's something you want to do but really it's, you know come and come and join us for something that we do. We have a YouTube channel, profit with law. We have a podcast, profit with law. So come and consume some of our free stuff and see if you know if it's the right place for you would love, we'd love, to get you.
Speaker 1:Awesome. Moshe. Thank you so much for your time, for your, your energy and your insights today. I really appreciate you.
Speaker 2:Charlie, I appreciate the time that you gave me to be here and interact with you, and I love the name of your podcast. I love what you're doing and anybody who works with you is you know they're. They're going to go places.
Speaker 1:Appreciate that. Alright, everyone. We'll see you in the next episode of they don't teach this in law school. This show was a law firm alchemy production. Go to law firm alchemy dot com right now for free giveaways. Strategies and tactics you can use in your law firm.