How to Build a Large, Influential Law Firm (Part #10)
Turning Around a Failing Business Starts with Great Sacrifices
This series lifts the kimono and exposes the unvarnished details on how we built Sterling Law from scratch to be the largest, most influential family law firm in Wisconsin in less than 3 years. I hope our story and the lessons help you build your practice or business.
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A team’s record is the best indicator of how good the team actually is.
The number of close or “overtime” games doesn’t matter. Key injuries are irrelevant. Unlucky bounces don’t make you better or worse.
If a team has a losing record, they stink. Period. Own it.
After 18 months, we had a losing record.
We stunk.
It did not matter how many clients (a lot) chose our firm to serve them. It did not matter how fast we grew, or how many new areas of law we practiced.
Our financials reminded us that we were losers.
It was time to clean house and hit “reset” on the firm.
Smart technologists in Silicon Valley would say we needed to “pivot the business.” For a Midwesterner like me, we call it a “turnaround.” We needed to keep the good parts and blow the rest of the business up.
Help from an expert with skin in the game
Turnarounds require fresh eyes on the sinking business. So, we approached Lee Rosen, a self-described “peripatetic lawyer” with a very successful firm in North Carolina.
Lee is not an academic who loves to tell you how to do something, yet has never done it himself. He has 30 years of skin in the game and has built a very successful firm. I had been reading his blog for years.
By the way, here is a free experience share that will save you a lot of pain.
Please stop reading or following “experts” who have never done what they telling you about. They may sell a lot of books, get a lot of readers, or attract a lot of viewers. This just means they are good marketers.
Everyone seems to be building a “personal brand” nowadays. There are 26 year old, divorced “life coaches” living with mom. Social media thrives on “hype” and our heavily edited highlight reels.
More than ever, we need to be vigilant about what we allow in our malleable brains. I have found that a great content filter for my brain is paying attention to people who have actually done it–whatever “that” is.
Back to the story.
Change started with $10,000 pain
I asked Lee if we could meet with him for a day to discuss our firm. He charged an eye-popping $10,000/day. That was a big, fat number to us. The thought of adding another $10k to our expenses made my head hurt.
I thought about the python on those documentaries that swallow the pig. It looks super painful, but the serpent does it to survive.
Our pig was the $10,000 fee for eight hours of Lee’s time.
I have learned that the more I paid for advice, a couple of good things happened. I listened deeper. I hungrily sucked up every morsel of information.
Best of all, I executed on the expensive advice faster. I was so afraid that the investment would not pay off. So, I tended to prioritize following through.
We had to do something to staunch the financial hemorrhaging. Spending $10k to get good advice seemed like rational triage.
The first day of our future
Tony and I began preparing for our meeting with Lee. I sent him pages of advance questions and financial results. We also had an exploratory phone call to align on expectations and goals.
December 1, 2015 arrived, and Tony and I flew to Miami for our consulting day on South Beach.
I always feel uncomfortable on South Beach. I dress, look and act like a guy from the suburbs of Milwaukee. You might say I am a conspicuous presence.
We met at the planned location and started early. Tony and I hammered Lee with questions and poured out our frustrations.
The day was extraordinarily insightful. We took copious notes and learned a ton.
We began to see our firm in a whole new way. A path to what we envisioned began to come into focus.
By the time 3:00 rolled around, our heads were bursting with information and ideas.
One last nugget of gold
My final question that day was: “Lee, after sitting through a day with us and seeing our financial modeling, what is the question we are not asking, but should?”
I wanted the cold-hearted truth about our business. This is the wisdom that is often the most difficult for entrepreneurs to see or hear. We tend to blind ourselves with optimism.
He thought quietly for several seconds.
Lee’s answer was penetrating and insightful.
He said, “Where is this is going? What are you trying to do? You are running in a dozen directions. Are you hoping to make up the losses in volume? How can you ever be profitable with any healthy margin if you stay on this path?”
He was depressingly right.
Lumbering, mediocre firm circling the drain
We had to make massive changes and focus. We were a lumbering, mediocre firm marching to certain destruction.
Both Tony and I dreaded the idea of spending our careers being average. But, that is what we were.
We went across the street to a coffee shop and talked for a few hours about next steps. A concise list of the most critical changes began to surface.
Great firms make great sacrifices
Tony and I wanted to build a great firm that served clients in amazing ways and transformed the legal environment.
The truth is that great firms make great sacrifices. Our time to sacrifice had come.
We had to say “no” to a whole lot of things, even to things we were “good” at.
We settled on these three ideas:
1) Focus, focus, focus. We knew we needed to go deep in one practice area where we could be the absolute best. This would mean cutting significant revenue and laying off part of our team.
2) Build a client-centered firm. This started with killing the hourly rate. We needed to move to fixed fee pricing. Clients hate hourly billing because it’s a blank check. Conversely, lawyers love hourly billing because it protects them.
3) Outsource everything not in our core skills. We looked at our firm and saw many things we were doing that were not central to our mission. Third parties could manage these tasks so we could concentrate our energies on what mattered.