How to Build a Large, Influential Law Firm (Part #7)
Our First 18 Months of Steel-Toed Boot Kicks in the Teeth
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.
For the first 18 months of our existence, we sucked at our core product — our legal service. (See part #6)
We did not, however, confine our failures to our legal work. We were an equal opportunity failurer.
Client advocate service failed
We developed a new position called a Client Advocate. The job duties were fuzzy at best.
The Client Advocate’s job was to help clients with non-legal tasks related to their case.
No one understood what success looked like. And when there is no clarity, failure is the likely outcome. The loss here was not my team’s fault. It was my responsibility.
I dreamed up this bad idea.
I imagined offering a “life concierge” to our clients. They were going through a rough time, and I wanted our team to deliver value above expectations.
The problem was that clients were not asking for this service.
I also didn’t understand or think about the cost.
In retrospect, this was a laudable idea—but we did not have a way to pay for it, and it became unsustainable.
We had great intentions. But gold-plating a service only works for a tiny percentage of the market. That is why there are many Kohl’s and few Nordstroms. We were trying to offer Nordstrom service at Kohl’s prices.
Law student intern program failed
We failed with hiring law students. We assumed that law students wanted to work while in law school with hopes of securing a job after graduation.
The reality was that most law students we interviewed did not want to work a set schedule. They had a hard time committing to consistency. Many seemed reluctant to do tasks they deemed below their station in life.
We also realized that we did not have the capacity to build a training program for recent graduates.
In the end, our law student intern program became another misdirected effort.
Sales failed
In another near fatal failure, our client conversion numbers were horribly inconsistent.
Many potential clients called us and came to our offices with legitimate legal problems. They accepted our free consultation and legal advice.
Unfortunately, relatively few clients actually hired us. We struggled with connecting with them, showing our value, and winning their trust.
No sales means no revenue, which suffocates a business in a hurry. This was an urgent issue.
So, we brought on a full time “sales manager.” That didn’t work either.
Our lawyers did not respond to the manager. We had no clue what we were doing. We could not seem to create and manage an effective process to articulate our value to clients. Potential clients did not trust us.
It was not the sales manager’s fault. I didn’t set him up to succeed. Our sales failures was 100% my responsibility as the leader.
Something was systemically wrong with our firm.
Expansion plans failed
My prideful lust for growth convinced me that we needed to expand into the Milwaukee suburb of Oak Creek. So, we opened an expensive office there.
We never moved in or used the office.
In the end, we paid a high price for a costly lesson in restraining my ego. The experience costs us ~$200,000, which was double my entire college and law school expense.
I spent seven years and learned many lifelong lessons in college and law school. Yet, in a matter of weeks I paid 2x for one single ego tax education.
Branding with radio failed
In another expensive blunder, we spent $53,400 on radio advertising. This was our first effort at brand marketing.
As far as I know, we did not get one client from radio.
But, all was not lost. We did get a few positive comments, which fed my ravenous ego.
I recall hearing five random compliments about our radio advertising. By that math, the going rate for ego strokes from radio campaigns is about $10,680 each. You can buy as many as you’d like.
Radio did not work for us for three main reasons:
1) Our strength is digital marketing, not old-school media. We got out of our strength zone and did not understand how radio branding worked. We orient toward direct response marketing – not long term, hard-to-measure branding.
2) Our messaging was not clear. People heard our name but did not get what we did or why we did it. Spending money on a vague branding message is financial suicide.
3) We could not and did not commit to a long term program. When branding anything, your success odds go way up through message consistency. Your potential customers need to hear your message over and over.
Lawyer compensation failed
In another dumb move, we paid attorneys on a percentage of what they brought into the firm. That is common and makes a lot of sense.
At our firm, when a client paid a retainer, we paid the attorney, even though the work was to be done in the future. We trusted the attorney to follow through.
This is not a problem — unless the attorney leaves the firm before doing the work.
Well, one of our attorneys did something fraudulent. So, we had to fire the attorney, who took a few clients on departure. When the clients left the firm, we refunded their retainer. But, we never got the money back from the lawyer.
So, we paid for work the attorney never did and for which we were not paid. That was a painful lesson.
My leadership failed
Any time a business repeatedly fails in a short period of time, the core issue is leadership.
Our 18 month string of impressive failures was due to my ineffective leadership. Most of these losses originated with my ego.
I desperately and naively tried (and still try) to hide my ego from everyone, but it’s obvious to those around me. It’s like the big yellow labarador who hides his face under the covers thinking you can’t see his big butt hanging out.
That was me. My big ego butt was hanging out, and I was oblivious.
The headline lesson that I learned (again!) was to focus, focus, focus. We were too unfocused, and it cost us big time.
Takeaways from our failures in the first 18 months:
1) Don’t gold plate your service if clients are not asking and you can’t afford it. We built an expensive service that clients were not asking for and were not willing to pay for. Of course, they accepted and utilized the service. But, we did not have a financially sustainable business with the Client Advocate concierge.
2) Don’t assume you know what motivates your team. Our expectations, needs, and assumptions never matched up with the law student interns. They were motivated by opportunities beyond our young firm’s ability to provide.
3) Sales revenue is oxygen. If you don’t have oxygen, you die. Firms without revenue die. This is the #1 priority an any startup. We didn’t emphasize this enough.
4) Don’t expand until you get your business model right. We were not successful in our first location. I pushed opening a second office before we had the first office profitable. I learned, yet again, that you can’t make up losses with volume. The opposite occurs.
5) If you want to brand your business, study the discipline and commit for the long term. Branding success is very difficult to measure. We were already good at direct response marketing. Branding was a completely different craft, and we were not ready for it. We didn’t study or understand it.
6) Leadership failures are usually due to ego and pride. The ego tax is a completely self-inflicted wound. It pays to get visibility and accountability around you. Leaders have blind spots. We must figure out a way to understand what we can’t see about ourselves.