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Running Your Law Firm Like A Well Oiled Machine w/ Jim Hacking and Tyson Mutrux 391
Categories: Podcast

In today’s episode, Jim and Tyson chat with one another on this solo co-host episode! They dive into knowing your numbers in your law firm, giving you the basics, and the core principles needed. If you need some motivation to look into your law firm numbers and learn what they teach you, check out this week’s episode.

2:50 before you knew your numbers

6:32 numbers flowing in your firm

9:44 referrals and referral sources

12:14 leads, consults, and signups

17:00 don’t be afraid of your number

21:13 not every dollar is created equal

23:54 track your case duration

27:18 flipping it like a pancake

Jim’s Hack: Check out the Amazon Prime Documentary, Conan O’Brien Can’t Stop. When you’re going through a big fundamental thing happening in your life, watch this.

Tyson’s Tip: An easy way to shorten your average case duration is to limit the number of court appearances per case.

Watch the podcast here.

Join the Guild: www.maxlawguild.com

MaxLawCon 2022 Tickets are Live: www.maxlawcon2022.com

Jim:                  Welcome back to The Maximum Lawyer Podcast. I’m Jim Hacking. You just heard from Tyson Mutrux. He’s my wonderful co‑host, my good friend, my good buddy, my hermano, my brother.

Tyson, how you doing, man?

Tyson:             I am doing well. I’m excited about this episode. I think it’s going to be a lot of fun talking about numbers. I know that a lot of attorneys like to avoid that topic. But I think we’ll be able to give people some key numbers that they can look at – the differences between knowing your numbers and not knowing your numbers. I think it’s going to be a good podcast.

Jim:                  Yeah, I agree. And I think that’s a great place to start is to remember what life was like before I knew my numbers, right? So, I remember, specifically, living my life, as a law firm owner, sort of shaking the couch cushions wondering where the change was in a sort of like running around, not really anticipating expenses, not really anticipating revenue.

And I remember once, I was listening to a podcast and I heard a podiatrist, a foot doctor, talking about how he was able to know, a few months ahead of time or even just a few weeks ahead of time, how much money he was going to be bringing in based on some data regarding his leads. And I thought, “Oh, man. That’s impossible.” Like I’m, I’m a history major. I’m not a numbers person. I could never get to that kind of level of analysis.” And now, looking back on it, I’m like, “Oh, my God. How did I ever survive without those kinds of systems and numbers?”

Tyson:             Yeah. And it’s also pretty cool. Once you’ve tracked it for, you know, a few years, you can actually start to look at it, okay, year over a year. I mean, we know that in December or January, as an injury firm, that we’re fairly slow in those months, we just are traditionally, and so, we’re able to– we know that, right? So, we can kind of stockpile cases or we can push cases during certain months. And that’s why we actually– we just finished up with our, you know, 25 cases of Christmas – this little bunch of cases in December and the checks are coming in now. Part of that is because we know our numbers. We know that, in December and January, it is kind of slow. So, we want to kind of offset that a little bit. And there are a few of those trends throughout the year that we focus on. But, knowing that, it’s also kind of fun, but it’s also good for cash flow.

Jim:                  Do you want to talk a little bit yourself about life before you really knew your numbers as well as you do now?

Tyson:             Yeah.

So, it’s funny. When I started my firm, I remember– the only number I really did know was how much I needed to make every single week– because I was doing criminal defense, how much money I needed to make every single week to actually make enough money to support my family because all I did was I divided my salary, from my previous firm, by 52 and figured out what that number was. And so, that’s all I cared about.

But other than that, I knew nothing, right? And so, my cash flow was really inconsistent which is why on, you know, Friday’s and Saturday– Friday nights and Saturday mornings, I was calling people, harassing people, to pay me because I wanted to beat my target. But, other than that, I knew nothing. I didn’t know what anything meant.

I mean, for me, the biggest straw was cash flow because it just– you have these massive bumps and then nothing, and then massive bumps and then nothing. I had no idea, the number of leads that were coming through. Didn’t know anything about phone calls. I knew nothing. I mean, it was– for me, the biggest struggle was just inconsistent cash flow – not knowing when those bumps might be, when those dry months might be.

Jim, I wish I was like that orthodontist that I could have, at the time, predicted when I was going to have those shortfalls.

But it was a nightmare sometimes, you know, having to go home and tell Amy, “Hey, I don’t know when the next case is going to come through, and not knowing, you know, where those cases were going to come from, when we’re going to have money next.” It was kind of a– it sucked.

Jim:                  Yeah. You and I laughed about how we used to always focus on photocopying or taking a picture of the settlement checks, like that was– that was the one number that we would look at. And I would send my wife a picture of a stack of cash. And I just thought that was me keeping track of stuff.

So, you know, the funny thing is– something that you mentioned a little earlier is that, here’s the thing, even if you don’t know your numbers, you have numbers, right? There are numbers that are flowing through your firm. And these are numbers besides the numbers of, you know, the actual cash. So, you are receiving a certain number of leads each week. You are signing up a certain number of cases each week.

And, you know, we have spent a ton of time, you and I, sort of fleshing this out in our course for Guild members called Maximum Lawyer in Minimum Time. And we talk about the different stages of knowing your numbers. This is numbers themselves are sort of one of the seven components of Maximum Law in Minimum Time.

And I think that when you’re in that stage one of sort of just, you know, running around and trying to stay afloat, there are these numbers that you don’t know. And the simple act of starting to track the numbers without any edicts or, you know, grand declarations about change, or what you’re going to do based on the numbers -just the act of tracking the numbers week, and week, and week, and week changes the way that you operate your firm.

Tyson:             Yeah. And I want to caution people because we’re going to give people some key numbers that they’re going to track, both at stage one and then at stage three. We’re going to give those numbers.

But I want to caution people. One of those mistakes that many of you will make, I promise you, you’re going to make it because you’re getting excited and you’re getting juiced up and you’re saying, “I’m going to track everything.” That’s your problem. It’s tracking everything. Don’t track everything. Track the key numbers because when you say, “I’m going to track everything,” you will track nothing. You’re just– it will be overwhelming.

And the other thing is that you’ll track a bunch of numbers and you won’t have any clue what to do with it, right? Start with a couple of key numbers. And we’re going to give you about five or six. And for stage one attorneys, we’re going to give you more than that when it comes to– probably about another five when it comes to stage three attorneys.

But don’t track everything that we say. Just track a couple, to start with, and then build from there, right? Unless you’re fully systemized, your entire firm is in good shape, which I highly doubt it. Some of you may be. But, if you’re stage one, start with a couple – start with a couple of these key numbers and then build on it, right? Build on it. Don’t get too overwhelmed.

Jim:                  That’s a great point because it’s sort of like dieting where people say, “Well, I haven’t been taking care of myself. I haven’t been exercising. I haven’t been watching my caloric intake. Now, all of a sudden, I’m going to run a marathon, or I’m going to, you know, make all these grand declarations.” And that’s sort of what I was talking about. I really liked the way that you just framed that of, you know, we’re just going to– for now, no hard feelings, we’re not going to be blaming ourselves or kicking ourselves for the years or months that we haven’t tracked our numbers. We’re just going to start tracking our numbers.

So, do you want to talk about sort of what, you know, the numbers are when you’re in stage one that you’re talking about?

Tyson:             Yeah. So, here are the key numbers that we’ve identified that every firm at stage one should be tracking. And I’m just going to go through these really quick. And then, we can kind of circle back. But referrals and referral sources. These are in order, okay? Referrals and referral sources, new leads in, consults, signups, and revenue. That’s it. Okay. So, these are in order. What I mean by that is, when it comes to the actual chronological order, not order of importance.

So, referrals and referral sources. So, actually, tracking the number of referrals that you’re getting and who they’re coming from is a key, key number because you can actually start to track where the majority of your cases are coming from and if that’s potentially a problem for you. If you’ve got one referral source– Trust me. I’ve talked to a lot of attorneys. They’ve got one referral source and then they piss off that referral source. Guess what? You’re getting zero cases from that referral source from that point on. So, it’s really, really important to know that number.

Jim:                  Yeah. We have a friend who’s a very successful med mal attorney. And he was getting most of his cases from another law firm. And that law firm decided, “Hey, we’re tired of referring these things out. We’re going to keep these in‑house.” And that really changed his trajectory.

So, yeah. I mean, just the information that you’ve mentioned. You know, then, you’ll start to see. What you just outlined is really a funnel, right? So, you’re starting to see the outlines of a funnel. And as you sort of get into these numbers, you can start to see how different things connect.

Tyson:             Yeah, no doubt. No doubt.

You’re right. Funnel’s a great way of putting it.

So, let’s get to the next one. The next part of the funnel is those actual leads. So, the number of leads that are coming in each month, okay? You can do it by week. You can do it by month, if you want. But, if you’re just starting out, you may not be getting leads every week, you need to figure out why that is, but start tracking by the month.

This is really, really, really important when it comes to forecasting, okay? And we can get to forecasting later. But it’s really, really important for determining like that podiatrist, okay? When are we going to see these shortages? When are we going to actually see a boom? Knowing the leads in, it’s going to determine a lot more down the road for you.

Jim:                  Yeah. It’s going to impact your cash flow. And that’s one thing that a lot of people, especially when you’re in stage one, don’t think so much about. They think a lot about signing up cases and getting money coming in the door, either with the signup or on the back end on a contingency fee case like you have, but what they don’t necessarily think about is the actual in and out of money – the money leaving your firm, the money coming into your firm. And sometimes those go along different tracks and different timelines. And that can really throw you for a loop if you don’t have your eye on cash flow.

Tyson:             And I don’t know if everyone has noticed, to this point, but all these are connected, okay? And I’m going to get to that in a second because– especially this trio of leads, consults, and signups, okay? So, those three are highly dependent on each other. And it’s really important to know these because, let’s say, you have a bunch of leads coming in but you’re not getting that many consults, right, then you have a problem there.

Let’s say you’re getting a bunch of leads. And those are leading to a bunch of consults but they’re not signing up. Well, then, you know that the problem is between the consult and the sign up and why. Maybe you’ve got a person – maybe one person is doing really, really well. So, let’s say two people signing up – one’s Jim, one’s Tyson. Jim’s doing an amazing job of signing up all these people but Tyson’s not. Well, we have to figure out what Jim’s doing. We’ve to figure out what Tyson’s doing, and assess that, and stop what Tyson’s doing and start doing more of what Jim’s doing.

So, knowing those. Those are really dependent on each other. And knowing those things can lead to massive increases in money for your firm.

Jim:                  Yeah, for sure.

And, you know, that whole tie part of the funnel, you know, you really get to a stage, eventually, where, you know, the number of leads you have coming in or the number of consults you have, you can sort of tie in and say, “Now, I know how many cases I’m going to sign up during this next period.” It can really help save you at different times.

For us, we’ve had two different times where signup’s went way down in the last two years. One was when we pulled one attorney out of helping with consults. And she actually was really good at it. And then signup’s went down. And then another time is when the lawyers got really busy. And so, everybody was just sort of pushing off the leads team, the intake team, from that.

And, of course, at this stage, when we’re talking in stage one, you see that more on the individualized level where the attorney themselves, if they’re in stage one, they and their paralegal might be doing leads and doing, you know, the fulfillment of legal services. And they can start to see, “Well, my leads went down and my consults went down because I was getting too busy.” And that’s really going to give you that information you might need about getting more help.

Tyson:             You know, definitely.

So, the last one of these is that revenue. And for those of you that take payment plans and those of you that do contingency – the revenue forecasting. This is where the brilliance of forecasting. It’s amazing.

So, Jim, you take– if I remember correctly, you’ve said that you take– is it half up front and then half later? Is that the way it works?

Jim:                  Yeah. It’s half upfront and then a payment plan after that.

Tyson:             Okay. And I’m assuming you know how long your case takes.

So, let’s say that it takes six months for that second 50% to come in, right? What Jim can do is, he knows that, “Okay. Today, I’m getting, you know, $2,000.” So, I’m just going to do easy math. So, today, you’re getting $2,000. And, in six months– let’s say he has 12 signups for the month of January. So, that’s $24,000 this month. But he also knows that in June– I think that math’s right? Let’s assume it is for a second. In June, he knows he’s got another $24,000 coming. That’s great to know, right? Especially if he knows that he’s trending up.

And the reason why that may be great to know is, one, you know, you’re not going to have a dry month. Or maybe you’ve got a big expenditure. Let’s say you’re going to buy a company vehicle. Let’s say that you’re going to expand and buy an office. Well, you know you can do that because you’re not going to have a dip in income. So, knowing those numbers is really, really good.

When it comes to contingency, you know, “Okay. I’m going to be spending X number of dollars for the next nine to 12 months on these cases so I’m going to have this dip when it comes to this particular case.” So, I started the case in January. I may not actually settle a case for the next nine to 12 months but I know that I’ve signed 12 cases in January. In nine to 12 months, I’m going to have 12 cases that are going to settle, probably, right? Most with the filed suit or whatever.

But when you know those things, based on those numbers, it’s really great for forecasting.

 

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Jim:                  As a Guild member, you’ll build relationships and experience content specifically designed to complement your plan for growth. For a limited time only, The Maximum Lawyer in Minimum Time program will be offered for free to all new Guild members. Join us by going to maxlawguild.com.

 

Jim:                  You’re listening to the Maximum Lawyer Podcast.

It’s just Tyson and Jim, today. We’re having a great time talking about numbers, knowing our numbers, what you can learn from your numbers, what your numbers teach you, and why, in reality, you do not need to be afraid of your numbers.

Tyson:             Absolutely. You bet.

And before we get to the stage three numbers, we’re going to skip over stage two. We’re going to go straight to stage three. These are for Maximum Lawyer in Minimum Time. These are the things that Jim and I have been working on for the last couple of years.

But let’s talk about some of the reasons why some of the problems if you don’t, right, or some of the reasons, I guess, why you’ll want to track these numbers, right, some of the other additional reasons. Because one of the things that we don’t look at is you might be leaking money. Because when money’s good, Jim, that’s great, right? Money’s good. You’re bringing in cases all the time. And you don’t really look at the expenses. But knowing these numbers is also– you can identify if you’re leaking money, right? That’s a big part of this because your profits could increase quite a bit if you’re just looking at the numbers.

I know we just talked about some of the basic numbers. We’re going to get into some more of the advanced numbers.

But, I don’t know about you, I like to know if I’m leaking money, Jim.

Jim:                  Yeah. And, to that end, one of the things that we didn’t talk about really in stage one but that we talk about many times with people is sort of getting that chart of accounts set up at the beginning.

Now, whenever someone gets into the big group and says, “Hey, I just opened up my firm. What’s the one or two things that I need to do?” Laying out that chart of accounts and making sure your money is accounted for properly at the beginning is so, so important. That’s one thing.

And then, the other thing I wanted to point out, too, as we transition from talking in stage one to stage three is that we do see a lot of people – I’m always amazed at this, more often than not, when we talk about how many new cases people are signing up each month, I’m always surprised what a low number it is and how their expectation for that number is low. Now, I know not everybody wants to grow. But I’ve yet to meet an attorney who, when given the opportunity to take on some more cases – whatever some is, doesn’t want to take that opportunity.

So, you know, if you’re at the level of new cases where you want to be, that’s great. But I do think that the other thing is that, it’s sort of pushing yourself on your numbers, you know? Like, having the numbers is great but then, you know, where do I want to head? And that’s really what we talk about when we’re talking about sort of stage two and stage three.

Tyson:             100%.

It’s funny. You always ask the question of like– I don’t– whatever the number is, you inflate it by a hundred. “What if you got a hundred new cases?” You know, like I love how you– I don’t know the exact question. What’s the exact question that you ask?

Jim:                  Well, like someone will say– I say, “How many cases did you sign up last month?” And, literally, we’ve had people tell us, “Six.” And then, you know, obviously, at certain stages of your career, six is great. But then, just as a thought exercise, I like to gently push back and say, “What would that look like if, this month, you signed up 60 cases?” just to get their mind going.

Now, some people, high quick starts – people with a big growth mindset who really want to grow their firm, that might be really freeing, but it also– it gets ‘em to focus real quickly on, you know, “How would I scale? How could that even be possible?” And some people sort of freak out and like, “Oh, no. I couldn’t take on 60 cases.” Then, that forces them to have other conversations with themselves.

Tyson:             Yeah, I love that question. I just love looking at their faces whenever you ask that question. Like, oh, my gosh, it’s– it is kind of a liberating question.

So, there’s something else we haven’t talked about yet. But I’ve got some notes here that I took before the podcast and it’s– really, we’re talk about niching down quite a bit. Another thing about knowing your numbers is you can figure out which of your services, if you offer more than one– if you’re like I was, at the beginning, when I did criminal defense and personal injury. Knowing your numbers, you can figure out if you’re going to get rid of one of those.

Okay, what’s it going to cost you, right? How much, in revenue, is that? How much is it actually bringing to you? If you know how much time it takes you, you can look at, “Okay. I make this much per case per hour versus over here when it comes to personal injury.” You can figure all those out and really analyze those and see if it actually makes sense for you to do estate planning, and criminal defense, and family law, and personal injury. Those of you that are doing all those different things, if you know your numbers, you can analyze those and figure out which of those is most profitable for you.

Jim:                  Well, that’s really stage three stuff.

And it’s so funny, Tyson, because, for the conference this year, I spent probably 20 hours thinking about my main presentation. And I probably spent about 45 minutes thinking about my second presentation. And my second presentation was all about how every dollar is not created equally. And it really, sort of– I really dove into– for us, the analysis that we did is we figured out that a citizenship case makes us a lot more per woman‑hour/man‑hour spent versus an asylum case.

Now, we take asylum cases for other reasons because it’s part of, you know, what we believe in. And we think asylum work is really important. But, you know, once you get to that stage– that’s really stage three stuff where you’re sort of comparing time spent versus revenue generated and you’re sort of figuring out, “What is the best use of my time? What are the best cases to focus on? From a cash flow perspective, what are the numbers that an attorney should be able to generate? What are the numbers that a paralegal should be able to generate?” All that kind of stuff. That’s really sort of the stage three stuff where you’re sort of operating at that higher level and really can drill down and say, “Okay. If I sign up this many citizenship cases, I’m going to make this much, and it’s going to cost me this much time.”

Also, at that stage, it’s also when you start to see what a reasonable case load is for a lawyer and a paralegal working together, or a lawyer and two paralegals, or four paralegals and one lawyer, or two lawyers and one paralegal – whatever it is. That’s when you can sort of mix and match your data and put it to real use in making decisions about how to run the firm.

Tyson:             Yeah. No doubt.

I’m going to go through it really quick, Jim, the four things that really people should be focusing on stage three. You just went through, actually, half of my thing. But you want to know – we’ve already sort of hinted at some of this stuff, know why your cases aren’t signing up, okay? You need to know that. You need to figure out the why part of those, right? So, we’ve told you some of those numbers. Now, you need to figure out the why part of it.

You need to know your average case value, okay? And then, you need to figure out how to increase that average case value versus the amount of time you spend. And Jim’s already kind of talking about that. But you need to know that number. You need to figure out how much the average case is.

Trust me. Those of you that do criminal defense or family law, I know how some of you do it. You say, “Oh, for this client, it’s five thousand bucks.” But this person tells me they’ll pay me 3500, so you take 3500. You need to figure out whatever those numbers are – what the average numbers are.

Trust me. We’ve been there. Jim and I’ve been there. We’ve done it, too. “Friday, I need to meet my goal. I’ll take $2,500 to get this case in the door.” Okay, firstly, you need to stop doing that. But you need to figure out what that average case value is.

The next thing is, is that, again, we kind of already hinted at this – know the connection between the number of new leads, and the expected number of new cases, and future cash flow, okay? So, know that connection, right, and start to forecast with that because it is going to help you with your cash flow.

And then, the final one is, make sure that you’re tracking your case duration – your average case duration and figure out how to improve that, okay? Definitely, know how to improve it. Especially if you are taking a set amount– especially– so, let’s say for Jim’s stuff – and I’m sure, if Jim could speed it up to 20 days, he would do it. But you figure out how much money, right, you’re making and how long it’s going to take and, if you can condense that as much as possible, that just means more cash flow for you and less time that that case is just dwindling in your inventory.

Jim:                  Right.

And that’s the other piece of all this is that it’s not necessarily about getting more cases. It might be about being more efficient with the cases that you have. So, you know, this is when you start thinking about systems, and streamlining things, and optimizing people’s time, and automating as much as possible so that you’re increasing your margins on your cases. You’re producing your widget for a lower cost and, therefore, increasing your profit margin.

I know this stuff, for some people, is going to sound really unusual and really impossible but that’s exactly where I was when I heard that podcast from the podiatrist. So, when you need to get going, this was very, very good. This is the kind of stuff that we’ll be presenting at the conference and it’s certainly something that we spend a lot of time talking about with people in The Guild.

So, you want to go ahead and wrap, T?

Tyson:             Yeah. And just, as a little teaser, I’m going to give a tip to some of those people that have to appear in court for their cases. So, a tip as to how you can shorten your average case duration.

But let’s wrap things up. Before I do, I want to remind everyone to join us in the big Facebook group where we have over 5000 members. Make sure that, if you want a high level conversation, join us in The Guild, maxlawguild.com. And also, get your tickets to Maximum Lawyer Conference 2022, go to maxlawcon2022.com. And as you’re listening to the rest of this episode, if you’ve gotten any value, at any point, from this podcast, please give us a five‑star review. We would greatly appreciate it.

Jimmy, what’s your hack of the week?

Jim:                  So, last week, after we had our morning meeting in The Guild, one of my star employees told me that she was resigning and I was very bummed about that. And I happened to watch a documentary this week on Conan O’Brien and, specifically–

I don’t know if you remember this, Tyson, but Conan O’Brien was hired to replace Jay Leno as the host of The Tonight Show. And then, after six or eight weeks, Jay Leno decided that he wanted to come back to nighttime television, that he missed it, and Conan O’Brien basically got the shaft. And not only did he get the shaft, he was prohibited from being on television for six months. And this documentary called Conan O’Brien Just Can’t Stop or Can’t Stop. It’s really, really good.

And I don’t want people to watch it right away. I want people to watch it right when they get kicked in the shins or in other body parts by something big, like an employee, that you really love, leaving or some big kind of a fundamental thing because he sort of takes that energy of how angry he was and he goes out on tour for six months and, basically, recreates a show on stage while he works through this anger that he has at NBC for basically screwing him.

So, you know, I kept thinking – as soon as the employee told me she was leaving, I thought of the talk that Billy Umansky gave in 2019, at MaxLawCon, about flipping like a pancake. I’ve been repeating that to myself throughout the week.

But watching this documentary, at that moment, or during this week of adjustment for me was perfect because it’s not sugar coated. It’s not easy. It’s hard to see Conan sort of go through it. You know, he has that comedian wit where he makes jokes, but he’s also sort of bitter. And so, it sort of is a nice track, when you’re in that right spot, watch that documentary, it’ll get your mind right.

Tyson:             I like that. That’s really good. Is it on Netflix or where is it?

Jim:                  Amazon Prime.

Tyson:             Amazon Prime.

He has built a podcasting empire, by the way. Conan O’Brien– there are so many podcasts that many of you listen to that are Conan O’Brien podcasts. He’s done a lot of great things. So, good for Conan.

So, I was teasing this a few minutes ago. So, an easy way of shortening your average case duration is by limiting the number of court appearances per case. So, let’s say that you’ve got a– let’s say you run a DWI practice, limit it to two court appearances or one court appearance before you set the case for trial.

Now, I’m also assuming that, like it is in St. Louis County, where to get a case to trial, you’re still looking– you may set a case for trial, it’s probably, you know, five, six months down the road. So, it may be more difficult in some venues where you set a case for trial and it’s next week, right? So, adapt it for whatever your purposes are. But an easy way of shortening, if you take DWIs.

Now, there are additional things you have to do in Missouri. But you could set it for, let’s say, two court appearances. By then, you can get your administrative hearing in, in Missouri, and next thing you know– you know, it’s not just dwindling and just kicking around for months. You now have a set limit on it. You let your clients know, “Hey, I’ll do, you know, two court appearances on this case. And then we’re setting it for trial.” It makes them make a decision. It makes the prosecutor make a decision. It pushes that through your pipeline.

And you can do that for any of your cases. If it’s family law, if it’s criminal defense, or whatever it may be, figure out whatever it is and then set the case for trial. That way, it’s not just– you know, you’re not kicking it around every month. You’re not just- you don’t have 30 cases that you’re just going to court on every single month until you get ‘em done.

Put a limit on them. Make sure your office knows what the limit is, make sure your clients know what the limit is, and that’ll shorten your average case duration by quite a bit. So, that is my tip of the week.

Jimmy, it’s been fun. I like doing these podcasts with you. I think that, whenever we do these together, it’s always a lot of fun.

Jim:                  Stuff, man.

Tyson:             All right, brother.

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