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Transcript: “Churn is a Choice” w/ Mike Whelan
Run your law firm the right way. This is the maximum lawyer podcast, podcast, your hosts, Jim hacking and Tyson metrics. Let’s partner up and maximize your firm. Welcome to the show.
In today’s episode, we’re throwing it back to a presentation from Max lock con 2019. Mike Whalen, a speaker, consultant, author and former solo law firm owner shares his presentation churn is a choice. Let’s get to it.
I’m excited to be here. And I think Jim and Tyson for letting me stand up and tell some stories. So I do like to tell stories, and I’m going to tell a few, I only have a few minutes here. So I’m going to tell them quickly, I want to talk about your assumptions about the assumptions that you have about what it means to be a lawyer where those assumptions come from, and how wrong they are. And there’s even a Hamburglar reference in here. So make sure you pay attention and keep track. So the first story starts in the late 1800s. In New York City, this is Broadway, in the middle of Broadway, there was a young man who decided to climb a pole, he had a new job. He wasn’t quite well trained in this job, because his very new job was to lay electric wire through out New York City, wrapping around the wires, the telegraph wires that had already been there. But he’d never done this job before. But he put on his overalls, which were a little too big and this hat, which was a little too tight. And he climbed up to the top and he grabbed the wire that he was working with. And he was going to run this line. Well, all of a sudden, he slipped. And he did the human thing, the natural thing, the reflexive thing, and with his other hand, he grabbed another wire. This is when the science happened. Okay, so what happened was, all of a sudden there was a really loud pop and everybody down in the crowd below on Broadway looked up to see this young man frozen in this pole in this position. All of a sudden out of his mouth, blue flames out of his ears out of his nose out of his eyes anywhere it could come out blue flames were escaping his body, his body actually began to melt. And as flesh and fluid dropped on the newsboys below who were delivering newspapers. The crowd just broke out right in a panic. The boys ran, the adults ran, everybody was screaming. No one had ever seen anything like this before, because they didn’t have electric lines before this point. So everybody’s panicking and freaking out in the middle of that crowd on Broadway in New York City was another young man who was also not ready for his job. And if you know the history of law firms, you might know this young man. His name was Paul Kerr Vath. Paul had just graduated from Columbia Law School. He’s 26 years old. This story is told in a great book called The Last Days of Night, which I highly recommend. And the reason I recommended it is because this experience that Paul Cravath had, with his new job in his first client changed the path of legal education and legal practice. And it changed the way you are told that you should practice in your law firm. You see, Paul had just graduated. And in the background, there was a case going on between these two men. This is Thomas Edison and George Westinghouse. In the age of robber barons, these guys were the first to deal with electricity. And they owned they were fighting with each other over ownership of the electrical lines. One One had alternating current AC, and one one a direct current DC, Thomas Edison, who was a crafty little Bester decided that he wanted to take out George Westinghouse and win the war of the currents by getting rid of George Westinghouse, and the way he did it was to sue him for 312 patent infringement on the incandescent light bulb, the USPTO, the Patent and Trademark Office just existed, it barely exists. And if you know anything about this history, you know, Thomas Edison did not invent the incandescent light bulb. It existed before Westinghouse, it did it it had done it, a couple other guys in the United States have done it. Some Italian dudes had done it years before, but Thomas Edison was the first to file. And if you deal with this area of law, you know that the first to file is the winner. So he did, and he sued Westinghouse. He sued Westinghouse for a lot of money in hopes that it would bankrupt Westinghouse and the case would be gone. He needed a lawyer. The problem was every lawyer was wrapped up in Thomas Edison’s web of influence all conflicted out. So he hired Westinghouse hired Paul Crobat, 26 years old, just out of law school at Columbia, didn’t know what the hell he was doing. But he brought him in because he could win the case. The only problem was he couldn’t win the case. The case just kept going. Paul would pay legislators they bribe legislators they brought in Nikola Tesla and asked if he would spot he had worked for Edison, and they wanted him basically to be a spy for Westinghouse thinking it would give him the edge effort after effort. Paul could not win this case, until he came up with an idea. Actually he stolen An idea. He stole the idea from Thomas Edison. Thomas Edison was not an inventor. He was an owner of an invention factory. The difference is, you see in this room, this is one of these old idea factories where he put a bunch of minions, see if this resonates with you. He put a bunch of nameless, faceless minions that nobody remembers, except for Nikola Tesla, because he left a bunch of people that nobody remembers. And they would just churn over a problem, right? Hours and hours trying to solve the same problem with the hopes that somebody in that room at one point would raise their hand and say, I got it. I got the solution. And then Edison would take the solution, slap his brand on it, run over to the USPTO and make a lot of money. Nobody knew who those guys in the room were. Paul decided, why not do the same with law stuff. And he did. He went back to Columbia Law School, and he hired four guys put them in a basement in an obscure building, way far away from his fancy law office. And those guys turned ours. And they churned and they churned billing in 10th of an hour increments, churning over words. Now, I’m gonna give you a little spoiler alert. Paul didn’t win this case. But he did. And the reason was, he snuck into the Metropolitan Opera House, he was not supposed to be there. And he cornered the banker JP Morgan. Morgan owns 60% of Edison, General Electric. So Paul corners him and he says, you know, this case, it’s so expensive. I’ve made sure it’s expensive. I’ve got dudes in a basement that it turned on ours. I know how expensive this is. And he says, this is going to bankrupt Edison. And Westinghouse, Morgan said, I don’t care, right? I’m rich. Get out. There’s security dudes on the other side of that door that are about to beat your face. And he was fine. He didn’t care. Paul offered him in an alternative. He said, instead of these two companies going bankrupt, what if we license the Westinghouse lines to you, you took over the Edison lines, and we get AC DC. And what you get Morgan is a monopoly. Now in the age of robber barons, JP Morgan’s ears perk up. Not only did he drop the case of Edison and Westinghouse, he got rid of Edison and Edison, General Electric became General Electric, a company you guys all know. Now, all of this is to say, obviously, after this case, Paul Kerr bath if you don’t know the history created a system known as the system, the crevasse system, the capital S system, that system in around 1900 became the gold standard for law practice. And it was taught in every law school ever since that same system is the system that you are told, you are supposed to practice it. It’s the one that makes you feel like you’re supposed to churn in the next hour, and the next customer and the next buyer over and over and over again, and that your value is captured in tenths of an hour. Here’s what’s interesting, though, the case was not about an invention. The case was not about an insight. The case was about intellectual property. It was about sole ownership of ideas. And yet pakka Rath didn’t build a system based on assets, he built a system based on ours.
Hey, guys, it’s Becca here. I’m sure you’ve heard Jim and Tyson mentioned the guild on the podcast and in the Facebook group. That’s because we’re seeing some really exciting things happening with guild members and their businesses. The Guild is this perfect mix of a community group coaching and a mastermind. Inside you’ll gain support, tap into a network of connections, and continue learning a common theme among successful entrepreneurs. There are so many benefits inside the guild, including weekly live events and discounts to all maximum lawyer events, head over to maximum lawyer.com forward slash the guild. Check out all of the benefits and watch a few testimonials from current members. Investing in a community is like the self care of business ownership. Being in a community with other people who get it is crucial when you’re creating a rock solid foundation to build your business on one that’s strong enough to withstand setbacks, transitions and growth. So head to maximum lawyer.com and click on the guild page to join us. Now let’s get back to the episode.
Here’s how this ties back to you. This other story is more modern. Now. Because I work at a legal research company. I don’t know if you recognize any of these guys, super smart white guys from the late 1800s always super smart white guys. They all worked at West Westlaw was a fairly new publisher. And they decided that what they would do like other traditional publishers, they would go to a court, they would go to a legislature and they would say I’ve got a deal for you. I’m gonna pay you money. And then I will exclusively be able to publish the stuff that you create all the law, the statutes, the court opinions, we’re the only people who get to publish them. Right? This, we think that we win from a monopoly. This is the monopoly we are all subjected to. It’s the monopolization of words, the legal publishers went and paid for control of the words. And then they charged you for access to the words so much. So that words became the identifying factor for Are you a lawyer, I did a search, this will be funny to you. I did a search for lawyer commercial. Look at that. All right. Every one of these people is sitting in front of a bunch of law books, and they don’t even read raise your hand do not lie to me. How many of you have law books out in some wall in your office that no one in your office reads? Come on, you know that you do. Because, hey, I have the words. Dear customer, I have the words. That’s how you know I’m a lawyer. The problem is that same search yielded this, you can go get free law book photos, you don’t even have to sit in front of a bookshelf of law books. The words are available to everyone. I work at case texts in a case text, we have a sign on the wall that says free the law. And this went on before we existed. There’s some cases we signed on in an amicus brief for a case that came out of Georgia to try to make judicial annotations freely available. That’s how far this has gotten. And the reason was the argument. The constitutional argument is basically you can’t say to somebody, ignorance of the law is not a defense, and then make it difficult for them to not be ignorant. That’s not right. Right. Now, there’s a social trade off with that, obviously, a lawyer when I tweeted about that amicus brief said to me, he tweeted me he said, you know, this is the end of lawyers. I was like, bro, if all you knew how to do is take pictures in front of law books, you got way bigger problems than our neon sign is going to create for you, right? If that’s what you sell, you’ve got a problem. Lawyers, you’ve got a problem. This isolated monopolize 10th of an hour nonsense. It used to be that we were both the scribes and the interpreters, we created the difficult language so that we could then charge for interpreting the difficult language right? Now, again, as a lawyer, I’m totally cognizant of the fact that some of that language is difficult because it needs to be. And I’m totally aware that when you give some of this language out to the average, Joe, there are going to be problems. But whether we like it or not, society has decided that there is a greater social cost to hiding those words, than making those words available. The environment has changed. In an environment that changes you have four questions to ask yourself, this is every business model, what value do you create? Who do you create that value for? How do you capture it? How do you charge for it? And who are you charging? Let me give you another example. Best Buy, there’s a book called unlocking the customer value chain, I read it that’s how big a nerd I am. It’s actually a classic riveting stories. Not. But they share the story of Best Buy. Has anybody been to a Best Buy recently, we actually bought something there recently, there was this dynamic that was going on with Best Buys, people would go to the best buy. And they would touch and they would fidget and they would play with the things. And then they’d get on their phone. And they go to Amazon, and they buy the item on Amazon. Not a great business model for Best Buy. So they freaked out. And they did the reactive things like suing LegalZoom. And making an analogy here, put it in your mind. They did the reactive things that you do when your environment changes. They put cell phone blockers in their businesses, they banned cell phones, you couldn’t go into a Black Friday at Best Buy with a cell phone in your pocket, they would search you right and take your phones from you. That was their reaction. They wanted to get people into the store and have to buy from them. All right, that’s like level nine Customer Service at least that’s awesome. That’s a terrible experience. It’s not awesome. So after a while, what BestBuy did was said, Okay, we can’t create that same value anymore. We’re doing something else. You know what we’re doing? Yeah, benefits from people coming in and playing with the fidgeting and the things and then goes into the Samsung’s, right? Sprint, Apple, all these other companies. If you go to a Best Buy Now, it doesn’t look like it did back when they banned cell phones, when it was just aisles of products. Now it looks like a like a flea market with booths. There’s an apple section, right? Apple doesn’t any more put their computers in the computer section and their iPads and the iPad section. And then their phones, right. It’s all in one section. And the reason is, Apple pays a fortune to be in that area. They have a different business model. They offer different value. They charge for it differently, and they collect from different people and Best Buy’s doing fine. We’re in the same kind of environment The model that I’ve talked about that I think is a better alternative that I think we are optimally set up for is a networked experts model. And what that means is that for you, lawyers who want a lawyer, I know that’s not everybody here. I know some of you here want to know about the SEO and the buttons on the socials and the clicky and the facie spaces and all that I know you want to be that person. And that’s great for you. But I’m pretty tired of the fairly hopeless message that if you’re a lawyer who wants to lawyer, you better go get a job. Because I think that’s nonsense. If you’re a lawyer who wants to lawyer and you want to be a deep expert, the networked expert model is available to you. It is how every complex system is handled. It’s how your brain works. It’s how computer networks work. It’s how transportation systems work. They all work on this networked specialized model. As you go through this event. And you hear the tips and the ideas, I want to ask you to step back a little bit and ask yourself, What’s the value that I create? Is it monopolized access to words, build in tenths of an hour? Or do you do something better? Do you connect people to justice, right? Do you connect people to real expertise? On our way over here? We stopped by McDonald’s in Harrison something Missouri, right middle of nowhere, and we drove through and why do you go to we all know McDonald’s are not the best burgers in the world, right? But we needed something quick. We were driving we were late to get here. And so we drove through this McDonald’s and was funny because we drive through and it was this really weird drive thru and we go up to the front and my wife asks for a lemon for her diet coke. So I turned to the lady and I said, Can I get a lemon for the Diet Coke? I roll I mean the bit like back like I was afraid it was gonna get stuck. She has this huge eye roll. And then she goes back and she gets the lemon. And she brings it back to me hands it to me. I said thank you. I roll again, twice, two eye rolls, and one experience. And you know what I did? I drove off, because who cares? It’s McDonald’s. I’m in and I’m out. When my wife and I were in Las Vegas, we walked by Gordon Ramsay’s Burger Joint. This is different. They’re not there for accessibility. They’re there for burgers, they charge $50 for one of their burgers. Totally different experience and different expectations, right? Only a moron delivers McDonald’s expectations for a high level event. Insert Image of Trump serving hamburgers to Clemson football player, sorry, that was in my robot, if that was my hamburger the reference. But look, when we’re doing that when we do that in our own businesses, when we have that mismatch between the McDonald’s and the Gordon Ramsay experience. were confusing the customers they don’t know. Most of them are first time legal buyers, they don’t know what to expect. They’re pulling expectations from different places. You have to decide what is it that you value? What value is it that you deliver? What do you give them? What do you charge them for? How do you charge them for it? That’s a business model. And you can all do it differently. You don’t have to go get a job more than ever connection is possible. Now, I don’t know what made you want to be a lawyer. I have no idea. I don’t even know what a lawyer is most of the time anymore, right? We have so many different roles. I’m a lawyer. I don’t take cases. But you know what I do? I use rhetoric and persuasion to preserve the definition of humanity that we create for ourselves. That’s our role as lawyers. It’s not processes. It’s not motions, its insights, the kinds of insights that lead to justice, that help people make decisions that help people preserve their humanity. That is our highest function. I hope that you will stop thinking of yourself as a monopolized giver of words in increments of tenths of an hour, and instead see yourself in the highest role that you have as an attorney, which is to deliver insights to people that preserve their humanity. Thank you.
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