How to Scale a Law Firm

Allison Williams: [00:00:11] Hi everybody, it’s Allison Williams here, your Law Firm Mentor. Law Firm Mentor is a business coaching service for solo and small law firm attorneys. We help you grow your revenues, crush chaos in business and make more money.

 

Allison Williams: [00:00:25] Today’s guest, Ken Hardison, is known as the millionaire maker for a reason. He has helped lawyers across the country triple and quadruple their law practices and income by bringing them the insights, knowledge and critical strategies of legal, marketing and management that can only be learned in the trenches of real law firm success. With over 30 years of legal experience Ken has personally grown and sold two seven figure law firms and has shared his knowledge and experience with attorneys, helping them experience exponential growth, increase profits and ethical market preeminence. So I’m really excited that today we have the guest Ken Hardison of PILMMA. And for those of you that don’t know what PILMMA stands for, I don’t know where you have been. You must be under a rock to not know about the organization. But essentially PILMMA has been an innovator in helping law firms, in particular in the personal injury space. It’s not solely for personal injury attorneys, but that’s what Ken’s practice area was. That was his claim to fame, if you will. And in his work with PILMMA, he has been able to take lawyers from just starting out, struggling, hustling into the stratosphere of law firm success. So PILMMA, for those of you that don’t know, stands for powerful, innovative legal, marketing and management association. So that’s P-I-L-M-M-A and we had a great talk today about a lot of different topics of law firm growth. We spent a lot of time talking about team and about cash flow. So I want you to really dial in today listening to our episode. But think about the strategies that you can use today in your law firm to make your law firm a success. And if you have any questions about how you can get a hold of Ken, that information is going to be in our show notes, but I’m really excited to share with you this conversation because it was very enlightening and very entertaining. All right. Enjoy.

 

Allison Williams: [00:02:25] All right, Ken Hardison, welcome to the Crushing Chaos with Law Firm Mentor podcast.

 

Ken Hardison: [00:02:30] Thank you so much for inviting me.

 

Allison Williams: [00:02:32] I’m really happy to have you here. And I’m a little bit star struck just having you here in my studio because, you know, you’ve had such a profound impact through your company and helping lawyers to grow law firms, which is, of course, what we do. But we do it in a different sector. And we also have some overlap in our philosophical beliefs. But of course, the more people that have access to people that know what we’re doing, like you and I do, the better we’re able to help the community. So without further ado, I want to dive into what I think is the sexy topic of the day, what you know a lot about, because you’ve got a lot of people with us, which is how to scale a law firm. So we know that lawyers often get in their own way and there are a lot of barriers to growing a law firm. So why don’t you tell us what you think the top three barriers are to growing a law firm.

 

Ken Hardison: [00:03:22] Well, number one, believe it or not, is a lack of leadership. And it starts at the top with you. You know, if you don’t have a vision or a plan, then how can your people get you where you want to go if you don’t share it with them. And you’ve got to be a coach and get really good people and coach them to be better than they were yesterday and be better tomorrow than they are today.

 

Ken Hardison: [00:03:51] And another big deal is, is having the right people. You can… No great law firm was built on the back of average staff, I can tell you that. And the deal is, people make the excuse that well, I just can’t afford the A players. But the deal is, A players will do three times as much work. You can pay them one and a half times what you’re paying your average players or staff and you’ll still come out ahead. But it’s that, it’s hard for people to see that, you know, then I think the third thing is the… is cash flow, lack of cash flow. And that’s, my big statement on that is revenue is for vanity, net profits is for sanity, but cash flow is king or queen. And, you know, the big deal overall is, here’s what I see happen. As you get bigger, bigger things get more complex. And what I mean like. I’ll make this very elementary, maybe too simple. You got two kids playing together, everything’s OK. You put a third one in there, everything goes to hell in a handbasket. And but you’ve only increased it by one person. But it creates total chaos as you, as you know. And the bigger you get, the more people you add, the more complex it gets and the more you got to be structured. And, you know, with the processes and systems and all those things, you know, that you know very well. And so that kind of a, that’s a big barrier because then you’ve got to have, you’ve got to be organized. And lawyers, just like doctors, tend not to be organized when it comes to their business. I mean, you know, they don’t have the infrastructure set up to handle the complexities of a bigger firm.

 

Allison Williams: [00:05:42] That is, that is… There so much insight there. I mean, the fact of talking about the complexity and how complexity grows as you grow people is very true. And that’s the reason why when people apply those hundred thousand dollar strategies to their five hundred thousand dollar law firm or those five hundred thousand dollar strategies to their two million dollar law firm, everything just collapses under the weight of the ineptitude.

 

Ken Hardison: [00:06:04] Yeah, for sure. (Yeah.) So that’s the three barriers as I see them. Yeah.

 

Allison Williams: [00:06:10] Yeah. So you mentioned team and we actually, coming up in, in Law Firm Mentor, we have a whole retreat on optimizing your team. So I love to talk about getting the right players in. And you spoke very eloquently about not being able to build a top quality law firm on the backs of mediocre people. Right. So talk to us a little bit about team like what is the key to hiring and retaining that eight plus staff that’s going to really get the job done for growing the firm?

 

Ken Hardison: [00:06:39] Well, everybody says, you know, hire slow and fire fast. That’s pretty much, you know, everybody knows that saying. But but I think it goes the. I think when you, what I think you need to do first is look at what the cost of a bad hire is. And it’s not just their salary while you were paying them. It’s the time it took to train them. It’s the time it takes to replace them. It’s the time to train the new person that you’re replacing. So when you do that, it’s not just you know, I’ve had people tell me anywhere from two times or 15 times the salary. I think it’s probably somewhere around two or three times a person’s salary to replace them. So why would you want to go out there and hire somebody that you know is going to fail? You know, or you don’t know that you’re going to be an A player. And so what you got to do is, you can’t… Most people want to hire somebody just to be reactionary. And it’s I got to get somebody to fill the slot. I’ve got to get somebody fill the slot. Well, let me tell you, the last person I hired for PILMMA, which was like a month ago. Five months. It took us five months. We interviewed a lot of people and we did a lot of testing. And we got through this whole onboarding.

 

Ken Hardison: [00:07:53] There’s a guy named Brad Smart and Jeff Smart brothers, I think, and they got this book called Onboarding. The whole big deal is you’ve got to really, we use scorecards and everything and you really want to figure out what the person’s skill set is, and you really got, people… I think the biggest problem people don’t interview right. What I’m saying employers, because a lot of people on the employee side know how to interview. But here’s the one takeaway from today about hiring. When you hire them, get them to give you their last five jobs, and then ask them these two questions, and this will get right to the meat. I get through each job, and say okay. What, who was your immediate supervisor and what would they say was your biggest strengths and your biggest weaknesses? And then I go through each one of them. And then after you asked that question, and now are you willing to sign a release so I can talk to that person and give me the phone number, because I do want to talk to them, but I am going to follow up. And if they hem-haw around or if they give it to you and then they go awol. You know, there’s problems. Right. But but the deal is most people don’t even, I mean, I’ve had lawyers that don’t even do background checks and then hire criminals. You know, or people with warrants out for their arrest for embezzlement. You know, you just be surprised.

 

Ken Hardison: [00:09:19] So, I mean, you’ve got to do your due diligence, just like you would be doing if you were going to invest hundred thousand dollars in a stock or something. I don’t think you just pick the first one. You would do due diligence. You got to do due diligence in the hiring. You know, you got to look at, like I hate to say it, but you got to look like you’re purchasing something that’s worth, you know, a lot of money to you because it is. And so you don’t want to make a bad buy. Right. And so you’ve got to do these things, you know, do a background check, you know, in a my God. And then I think the other deal is when you hire them, you can’t just throw them in there and let them sink or swim. And that’s where, you know, you got to have, you need systems and processes. And that makes it so much easier to onboard somebody you know, to train somebody. Because one of my old old mentors told me, if somebody is not performing, it’s usually you. It’s your fault that you didn’t train them properly, you know. It’s not their fault, but but you’ve got to get the right person in there to, you know what I’m saying? But a lot of times it’s your fault. It’s not their fault because you didn’t train them properly. And then the problem is people say, I don’t have time, but the deal is. You know what’s worse, you know, keeping them and not training them?

 

Ken Hardison: [00:10:41] I mean, that’s that’s that’s crazy. So, I mean, the deal is that’s one of your biggest resources. And so, you know, you want to look at it as investment and not make bad hires and not be a guessing game. You know, we do a lot of testing and not just the DISC and different things. I do this test that I use from a guy out of Raleigh, North Carolina, for 12 years, it’s called Real Talent Hiring. Jay Henderson. I don’t get anything from him, but I was in a mastermind with him many years ago and met him in Raleigh. I’m from Raleigh and my law firm was in Raleigh, so we got to be friends and we were both Dan Kennedy followers and things like that, who’s a great marketer. So I’ve been using his test. I don’t hire anybody without them taking that test. Like, I get to the final two or three. And then they take the test and then I talk to him and he always guides me right ninety eight percent of the time, I’m not going to say 100 percent, but 98 percent of the time he’s right and I’m wrong. So, you know, that’s the big deal about hiring is, people just don’t put enough into it. I mean, and they’re too lackadaisical about it and they’re too lazy. I mean, you really, really. And they try to fill it way too fast. Be it such, is so important.

 

Allison Williams: [00:11:56] Yeah. So a lot of great things there. First of all, shout out to Jay Henderson. He is a friend of Law Firm Mentor and we use his hiring assessment as well. And I recommend it. I recommend it not universally, but I tell everyone all the other assessments out there, they’re never going to give you as much as this one gives you about how people manage themselves, manage others and manage tasks. And the information is just critical. Now, one of the things you said that I love, which is this idea of people being bad at interviewing, because one of the things that I see lawyers do all the time is they take someone’s word for it, that they’re going to be good on their feet, that they’re going to write good motions, that, you know, even if you ask someone who is a reference and say, you know, tell me about this person’s writing skills, tell me about this person’s arguing skill, how do they try cases? You’re still getting a perspective. You’re not getting your perspective. You’re getting someone else’s perspective. So what if they happen to work for a lawyer that’s a B lawyer and you are an A lawyer looking to hire a talent? Well, the B lawyer’s going to say they’re great, but then you’re going to see them and you’re going to say, oh my God, what did I bring into my law firm? So I always tell lawyers, you know, you need to put them to the test while they’re there. You know, I don’t ever hire a lawyer to work in my law firm without having them cross-examine somebody in a roleplay during the examination. During the interview. I want to see what you got. And I don’t want to see it after you’ve had months or years to prepare for it. I want to see it on the fly.

 

Ken Hardison: [00:13:20] You know, and the other thing I used to do, I’ve never really talked about this a lot, but. I used to hire a lot of lawyers out of law school, and there’s two different trains of thoughts on that. But but I liked it because. I let them work during the summer and then I’d see if they were a good fit culturally for our firm. And I had to hire a few with experience, but I wanted them to learn it my way, even though maybe my ways, you know, my way’s, my way. You know, I think it’s the best. It may not be, but I think it is. And I’m writing the checks, so you’re going to do it my way, right? But I used to ask these questions when I was interviewing these law students because I was trying to figure out. You know. Number one would they be able to relate to my clients. Number two, do they have the work ethic? Do they know what work is? And so I am going to ask them questions like, did you work during summer in high school? Did you work part time when you were in high school? College? You know. You know, and then I would ask them this question. This has been 20, 20 years ago.

 

Ken Hardison: [00:14:24] I say, would you rather work 40 hours and make 60,000 or work 60 hours and make 100,000. And believe it or not, over half of them would say 40 hours to make 60. You know, so, you know, that’s the ones I didn’t hire because I wanted somebody who was hungry. And what is it John Walker says you can’t teach hungry? You know, you either got it or you don’t. You know. And so I feel like two, if they worked in public jobs, you know, most times they work in the summer or whatever. They work jobs with dealing with people, average people, you know, and so they get to know how to deal with people on a, on a basis on a one on one basis. And they got some skills on dealing with people in service and client service. So I always ask those type of questions. I felt like they were good questions. You know. I hired some really good hires and they turn out to be great lawyers, you know. I sold out ten years ago, but there’s lawyers that I hired, believe it or not.

 

Ken Hardison: [00:15:32] 85 percent of them are still there. So that tells me I was OK while I did it, you know what I’m saying? I had a couple of, a couple left and started their own law firm. But that’s just part of being real hungry. I mean, you’re going to lose some. That’s OK. If somebody can better themselves, I got no problem with it as they treat me fair and don’t try to steal money from me. I got… I’ll help them. I’ll send a business. If they try to screw me. Of course, we’ve got a different problem. Right. You know, I’m going after your jugular. That’s business. I mean that’s business. I’ll give you the shirt off my back, but you try to take something from me, you know you’re going to pay for it. (Yeah.) 10 times. That’s just the way I do business.

 

Allison Williams: [00:16:15] Yeah. Well, if you had eighty five percent of your lawyers stay, you’re doing far better than average because the ABA reports that, on average lawyers turn every four years. So if you’re keeping your team, that means you’re not just getting good people, but you’re treating them right and you’re creating a culture where they want to stay. So they recognize that the risk of leaving is never going to be worth the loss of what they, what they would leave behind.

 

Ken Hardison: [00:16:38] Yeah, which brings me to, I want to say this. I’ve got a lot of sayings. I’m going to write a book about it one day. But one of mine is the way you treat your staff is the way your staff is going to treat your clients. I’ve always really, I’ve always really believed that. And another good deal about keeping these people is… you make them money, is you know. They want affirmation and to feel appreciated. And if you don’t do that, you’re not going to keep them. You know, they say the number one reason people quit is they’ve got an ass for an immediate supervisor. The second one is they just don’t feel appreciated or, you know,  that they’re valued. And then the third one is they don’t see room for advancement. And then fourth one is money. It’s not. Money’s not. Everybody thinks money. I mean, I think it might be a little, but if you get really good people, that’s not going to be the reason they leave you. It’s going to be they’re immediate supervisor. Most often it’s just they don’t feel appreciated. I mean, you know, and that was a problem for me. When I first started out, I felt like I was paying them good.

 

Allison Williams: [00:17:40] That’s the appreciation, right?

 

Ken Hardison: [00:17:41] And I didn’t need. I didn’t need the affirmation. I didn’t dislike it, but I didn’t thirst for it. You know, I didn’t have a yearning for it. I felt very confident, I guess, in myself, the. But 90 percent of people need it. And I didn’t understand that, and I had a mentor in my office administrator. This is how she got me to doing it. She created a happy, a happy, some stamps. One of them was a happy face. Another was great job. And when the people send me stuff, I’d stamp it and send it back to them, my paralegals, because I just wasn’t good at it.

 

Ken Hardison: [00:18:20] But now I’ve got a lot better. Yes, that’s something you can learn. I really try to go out of my way to. To do shout outs to people in front of their peers, you know, and, you know. Then when you got to jump on them, you do it in private. You don’t embarrass them, you know? But you got you know, if you want to build a great firm, you’ve got to have really good people and you’ve really got to be a coach. If you don’t manage people, you need to coach them. When they say a great leader is somebody that will help somebody, you know, grow to be another leader. And I think that’s true. And so I’m always trying to figure out how I can help my people B become better. Find out what their goals are, what’s their dreams, and try to help them get there.

 

Allison Williams: [00:19:05] Well Ken, I really appreciate your being so candid about not necessarily being the atta boy, atta girl type person, because the reality is most entrepreneurs aren’t. Most of us had the grit, the gut to get there on our own. And we don’t understand the mindset of the people who need that affirmation, that positive reinforcement. And you mentioned Dan Kennedy earlier. One of the books that I gave out at our Marketing For The Masters Retreat is the No B.S. Ruthless Management of People and Profits book. And in it, he tells a story about one hundred people starting on day one. Five of them get promoted, and then are required to manage the other ninety five. And their answer is, well, how do I do that? That in me I don’t need like a checklist or a spreadsheet or 15 different cheerleading mantras for me to get the job done. You gave me a job. You gave me the tools, I got the job done. But you at the top five percent are not the other ninety five. And you cannot create your policies and your systems and your procedures in your law firm, as if everyone is going to be another version of you, because they’re not. If they were another version of you they’d have their own law firm.

 

Ken Hardison: [00:20:11] I agree. I agree wholeheartedly. That was hard for me to learn though. That was probably one of my biggest obstacles for management, you know. And I’ll be honest with you, I know how to manage, I just don’t really like it. It’s but, you know, I could teach it. But I’ve always had real strong managers in my businesses. People that were really strong and I really, I didn’t like abdicate it, but I’ve delegated a lot of it and I just kind of… I manage the managers.

 

Allison Williams: [00:20:45] Right. But that’s the brilliance of it. Like, you knew it well enough to know what you didn’t do well and what you were likely never going to do exceptionally well. Right. You could get better at it, but it was never going to be your jam. But then you hired the right people so that they could be in their zone of genius doing the work that you don’t want to do.

 

Ken Hardison: [00:21:03] You know, I think I think this, this is when I think you really know that you’ve got a successful law firm or business is when you’re in the room with your management people and you’re the dumbest one. And, you think, what? But but really. I mean, really. I mean, think about it. I think that’s been a big part of my success is I know it’s hard for lawyers. Put your egos at the door, and be brutally honest and figure out what your weaknesses are. I knew I wanted the best trial lawyer. I want out and hired the best trial lawyer I could find. I thought I was a real good negotiator or something. A lot of mediations, OK? I was real good at marketing, so I did a lot of our marketing. I did alot of stuff that probably not apes and lawyers never do. I wrote a lot of copy. I wrote a lot of ads. I wrote a lot of commercials. I did like commercials for like 20 years and I wrote every commercial I ever did on TV. I enjoyed that. Ok, managing a staff of 60. Naw, that’s no fun. Not to me, you know what I’m saying? So I guess it’s. I kind of divulge here. I mean, you know, I’m kind of getting off track, but I don’t know. 

 

Ken Hardison: [00:22:14] I just think that you’ve got to hire people that are stronger than you are, that complement your weaknesses. And what you need to do is take your strengths and leverage them. (Yeah.) And I think that’s the way you’re going to be happier. Because whatever you’re good at but you’ve got a passion for, right, or you wouldn’t be good at it. (Right.) And that’s what makes you happy. So do the stuff that makes you happy and you’ve got a passion for, when you can afford to. I mean, I know sometimes when you’re starting out, you gotta do, you gotta where, you gotta do some stuff you don’t really like to do. And that’s just part of life. You know. You got to crawl before you can walk, walk before you can run. You know, things like that. But the sooner you can get there, the more happy you’re going to be. And I’ll be honest with you. You’ll make loads more money.

 

Allison Williams: [00:22:54] Isn’t that true?

 

Ken Hardison: [00:22:55] I mean, you really will. I mean, people say… but it happens. And I’ll tell you, when I got out of cases. I finally got out of cases because that was another big obstacle for me. I was so afraid somebody’s going to run off with my big, you know I did PI, and they were going to walk away with my seven figure cases. And I just held onto all the big cases right up to about the last five years of practice. And when I finally let them go. Man, I freed up my time and I could work 100% on my business and we like doubled, tripled my income in like the next three years. It was amazing, but it was that view that was a hang up. And I was afraid somebody’s going to steal my cases, you know, because it happens a lot with PI firms. I mean, you see a big firm, you know you got an associate working on a big case and he says, oh, I’ll just take this and I’ll get a million dollar fee and I’d start my own firm. (Right.) You know, it’s tough. It’s a tough business. 

 

Allison Williams: [00:23:54] Yeah. You know, a lot of lawyers have that fear. And and I don’t, I don’t really know any lawyer that I’ve encountered that has started a law firm that didn’t at some point vocalize the, what if I train them and they leave? Right. You know, they don’t think what if, what if I don’t train them and they stay? 

 

Ken Hardison: [00:24:10] Yeah, that’s the problem.

 

Allison Williams: [00:24:11] What about what if I train them and they leave? Or what if I turn my head and they pick themselves up and walk themselves out with my practice? And, you know, and I tell people all the time, you know, here’s the thing. You can always make more money, OK? I know it’s an awful thought that your money might leave with one person. But here’s the thing. Once you create a brand and you create a system for using that brand to get more clients and get more reputation, you get more notoriety, you can make more money. Now, obviously, there are things that you can do to protect yourself from people doing the glut and run. But, you know, I just I had one of my one of my attorneys is a senior associate in my office at six years practicing, she argued before the New Jersey Supreme Court because I had the reputation to get the types of cases where people would come here knowing that we would fight to the death in a practice area where people don’t typically fight. And then I turn those cases over to her so that I could go be the CEO of a law firm. And a lot of people said to me, what are you doing? Like everybody wants to argue in the Supreme Court. And yeah, there was a little tension inside me that said, do I really want to turn this over to somebody else like she’s got the rest of her career? I only have so many more years that I’m going to be in a courtroom at all. Why would I lose that opportunity? But I looked at it like this. I get to market that opportunity, right. So I’m not marketing myself anymore. I’m marketing the firm. And I get to say the firm creates this quality that the firm has these people and I have that is a marketable asset for my law firm. And it’s worth more for me to market the asset of someone else than it is for me to market myself. Because if I go market myself, people that want me and I get stuck back in the weeds and my income gets limited. You know, it takes a lot to get our egos out of our way to really think about what’s best for business instead of what’s best for what feels good in the moment.

 

Ken Hardison: [00:26:01] Yeah, you know, you’re right. You can do some things. I really advocate when you do a lawyer, you do an associate agreement, that you put in there that you can’t hire any of your staff for like two years. You know, because what I find is a lot of clients go because of the staff, not because of the lawyer, believe it or not.

 

Allison Williams: [00:26:19] Yeah.

 

Ken Hardison: [00:26:20] That’s because they formed relationships with the staff members, not with the lawyers. I mean sometimes they do. But if you got a volume price, it’s just the way you’re picked. Can can only talk to so many people, you know. It might be a little different with a domestic practice, I guess. But, you know, things like that. There’s certain certainly, you know, you can’t have a non-compete because lawyer, you can’t. Clients got a right and an ethics to choose who they want to be, their law firm. I mean, you know, but then I say this. I think the way to prohibit that or. not prohibit, but to make people think twice before they walk out and try to steal cases is to… When that happens, you fight hard, like you said, you take it Supreme Court, and then they know that all the other people in your law firm know, that Ken hardison is crazy as hell. He probably lost one hundred thousand dollars, fighting this associate of his over two hundred thousand dollars worth of fees. And if they know that then they’re going to be more likely to do at least deal with you in a different manner, you know, in a fair and equitable manner.

 

Allison Williams: [00:27:32] Right. And working out the finances, I mean, you can build in financial incentives to keep someone to stay and you can structure in bonuses that that don’t work best until a certain point or that they get clawed back if they leave with certain certain circumstances. But, you know, all of this is very specific. In fact, I at one point I had employment agreements that actually talked about not hiring out other people. And even that became, in my lovely land of blue state New Jersey, that became a real issue.

 

Ken Hardison: [00:28:05] Really?

 

Allison Williams: [00:28:06] Yeah, because the whole idea was if you restrict where the employee can go or the employee could go, but the lawyer is barred from bringing the lawyer, bringing the staff, then that might ultimately induce that lawyer not to leave, in which case then that client doesn’t have the right to go seek out that lawyer because that lawyer is now constrained with what their mobility is, which is a far stretch, in my opinion. But ethics can often be a far stretch, in my opinion in lots of different ways. So you have to, you have to just check the ethics rules about that. I just want to give that little caveat to people. But, yeah, I want to move now to talking about one of the second things that you referenced in talking about the barriers to growing a law firm. And I think it’s one of the most important ones, which is cash flow. Right. Because if you don’t have money, you know, cash is king, like you said. If you don’t have money, you’re going to be out of business and you’re going to be doing a lot of stupid things. And that’s what gets lawyers disbarred. That’s what gets us, you know, hanging up shop and going to work for somebody else and just not not making the best of our business. So let’s talk about what you refer to as the seven levers of cash flow that law firm owners need to understand in order to have a successful business deal.

 

Ken Hardison: [00:29:16] So the deal is you’ve got, I mean. You can have you know, Verne Harnish said it in his book, Scaling Up, that you can have, you can get by with average employees and you can get by with average execution and average strategies. But man cash, when that’s gone, you know, you’re dead. And that’s why most small businesses don’t make it, believe it or not. That’s not just law firms. That’s all kind of business. They’re undercapitalized. And so there’s two ways to do it. You’ve either got to go out and borrow the money, or you’ve got to figure out how to generate more cash flow. And cash flow is nothing more than how much you got in the bank at the beginning of the year, how much you got in the bank at the end of the year. And so I talk about the seven levers and one of them is price and these seven levers. And some of them apply more to law firms and some of them are more to manufacturing plants, but they all apply to law firms. If you can tweak a little thing, add, increase something five percent or three percent, or one percent. Decrease something, you know, one or two percent. Like I do a presentation where you decrease two things, one percent, increase one thing, one percent, and you end up 19 percent extra profit for the year. And they say, how can it happen? But I could show you it’s going to be hard for me to tell you, but I usually need a board to do that. Let’s just say price. 

 

Ken Hardison: [00:30:39] And this, most lawyers don’t charge what they should be charging and they’re scared to charge more. And the younger you are, the harder it is to charge what you’re really worth. But look at it this way. If your fees, you say you’re an average law firm. If you’re taking in a half a million dollars a year in fees, and you were to increase your your your your fees, whatever you charge, whether it’s flat fees, hourly fees, contingency fees. If you would just increase your fees by 10 percent. That would be 50,000 dollar profit. And then if you went in and your overhead. If your overhead was say like three hundred thousand. If you were to decrease that by 10 percent, that would be 30,000. OK? I just made you 80,000 dollars, right? Now, if we can increase our conversions by 10 percent, and we’re signing up 20 cases a month out of 100. And the average fee is five thousand dollars and we can increase that 10 percent, that would be 22 cases. And that’s just, I’m not saying that’s what it should be. I’m just giving you easy numbers and that’s an extra 10,000. That’s an extra 120,000. So now we’re at two hundred thousand dollars extra profit. Do you see what I’m saying? 

 

Allison Williams: [00:31:59] Very little changes.

 

Ken Hardison: [00:32:01] Very little changes, and, of course, accounts receivable. You got to get your money in there. I mean, you know, if you, if you work off a flat fee, you need to get your money in as quick as you can. If you’re doing it early, you need to have some kind of, you know, there’s different ways of doing it. And, you know this a lot better than I do, Allison, but. I would, if I was doing hourly rate, I’d be getting me like a 5,000 dollar retainer and every time it got below 2,000, they’d have to, they’d have to fill up the coffers again, so I don’t get caught screwed over, you know,

 

Allison Williams: [00:32:34] Yup. We highly advocate evergreen retainers.

 

Ken Hardison: [00:32:37] Yeah. That’s the thing, you’ve got to do that. So that’s the way to do it. And if you can do that, think about, instead of being 30, 60 days out, you get your money, you know, within 10 days that you bill. You know, think about what that does to your cash flow. And then accounts payable. And I’m not going to go through every one of these. But accounts payable. And this is something that I hadn’t really thought about. I’ve always been real studious about, you know, fast pay makes fast friends. You know, I’ve got to pay my bills on time. I want a perfect credit rating and all this stuff. But if you think about it, if you could get what you can negotiate with your lenders. Hey, listen, I know you got 30 days, but we’re going to be in business, it’s going to be 60 days. You know, say what? Just say. I’m trying to keep my cash flow. So if you can hold on to that money for 30 extra days, that’s more cash flow. And you’re using that money, you know what I’m saying? So, but you just saw real easily…………… It really is easy to raise your prices. It really is. With contingency lawyers, everybody does a third, a third, a third and I’ve talked some of my people into going 40 percent. And it’s making like a tremendous impact on their bottom line. And then if you can look at your line items and just say, well, you know, 10 percent, five percent, maybe you start at five percent, you know. And I’ll go line item by line item.

 

Ken Hardison: [00:34:09] If this is not directly making me money, I’d get rid of it. Bam. You know. And then what will happen to you if you do all this, when you get ready to sell your business it will be worth so much more. I mean, really it is because, you know, you know, you’ll have bigger, bigger profits, you know. And then cost of sales is another one, which really is, you know, what does it cost to produce your work? That’s a little harder for law firms. But, you know, with PI cases, I say now what’s the time on the desk because cases work out of what it is. It’s a little differently if you’re doing hourly, then the deal is, if your billing out your paralegals then, I guess it’s OK. But if you’re not, then you’ve got a problem. So I don’t, I mean, I don’t know how you do it Allison, but a lot of…. I was talking to this domestic lawyer last week, and she bills out her time at four hundred and her paralegal’s time at 150. And I’m thinking, man, 150. I said, well, that’s great. I said, you can really get great paralegals. She said, you know. Pay a paralegal sixty five thousand. A student make really good money off of them. They’re a profit center. They’re not a cost center.

 

Allison Williams: [00:35:21] Yes. It’s interesting you mention that. I have a colleague. He has a family family law firm on the West Coast and they’re are pretty decent size firm. I think they’re up to thirty eight lawyers now. (Oh my gosh.) But ironically, his paralegal staff is twice that. And the way that his paralegals work is he has a system of case managers. And so essentially everything runs through the paralegal. The lawyer is almost ornamental. So the lawyer gives legal advice on a schedule and they have prerecorded all of the types of issues that tend to come up. So, you know, when your child’s not being dropped off at six thirty and it’s six forty five and you’re pissed off and you want to run to court, there’s a video for that. When you want to, you want to negotiate more interim support before the judgment, and you have not, you’re not satisfied with the amount that’s given. Here’s all the factors that are considered, there is a video for that. So they have been able to by virtue of scaling the paralegals, who don’t have malpractice insurance costs, who don’t have CLE costs, who tend to earn less and a lower percentage of the total revenue stream, they have been able to create a lot more profit because there are fewer lawyers for the number of cases that you normally have to handle. So each lawyer can handle 75, 80, 90 cases because the case manager is doing all of the heavy lifting, if you will, and the lawyer is spending a lot less time per case. Now I haven’t, to be candid with… I heard this model and I thought, oh, I don’t know how I feel about lawyers being excised from the process. But he’s been able to make it work and he gets very, very positive reviews online from his clients as a result of the way that they’re working, because they’re able to charge lower fees but still make more profit than the average domestic relations firm.

 

Ken Hardison: [00:37:10] Yeah, and I think that’s fine. I think I think what you’ve got to be careful with and I always warn lawyers about this, because that is where you leverage your profits and your paralegals or your case managers. But when they start giving legal advice, you can get disbarred. Actually, a lawyer in Louisiana got disbarred for two reasons.

 

Ken Hardison: [00:37:30] One reason was he was paying his paralegals a percentage. 

 

Allison Williams: [00:37:32] Ha! That’s probably the big reason. 

 

Ken Hardison: [00:37:36] … and he was paying them a bonus based on what they settled. And then the other one was they were giving out legal advice and he got disbarred. He had a big law firm and they just came down on it really hard. And I thought that was kind of interesting. Every time I hear Louisiana I think of Huey Long. And all the corruption back in those days. And I’m thinkin’. You know, I thought that’s where you could get by with murder, you know. But anyway, I think things change. 

 

Allison Williams: [00:38:02] You can get by with murder. You just can’t get by with giving legal advice through a paralegal.

 

Ken Hardison: [00:38:06] Yeah. Yeah. So I always tell people, I always caution people when we were doing it, we, we used paralegals a lot, but we had emails going back and forth between the lawyers and that. We had, we had a, we had a, not a paper trail, but we had a digital trail in case anybody ever came in and questioned, because I was scared of them, to be honest with you. (Yeah.) Because I had a real, here’s the problem. When you get really successful, everybody comes gunning for you.

 

Allison Williams: [00:38:31] That’s very true.

 

Ken Hardison: [00:38:32] When I was just average, nobody paid attention to me. When I got, when I was like one of the top three PI firms in the state of North Carolina, I had lawyers making complaints about me every month, something. Like making complaints about my commercials, my direct mail. I mean, they’re just… (the website) I mean, they really go after you and, you know, you just have to go… I just had to have an ethics lawyer on retainer. I mean, you know, but I mean it was, I never got in trouble, but it was always, it was just another thing you had to deal with. Right, the cost of… 

 

Allison Williams: [00:39:09] New devil, right?

 

Ken Hardison: [00:39:10] You know, the cost of being successful. You know, but that’s just the way, you know. And people say, well, you know, aren’t you mad? No. They’re just upset. They’re not willing to do what I do. Because they could do it. I’m not that smart. They could do it. If I could do it, they can do it. But since they’re not, then they get jealous and they want to try to, you know, hurt me. But I never let it bother me. It’s part of the cost of doing business. I try to do everything ethical.

 

Allison Williams: [00:39:38] You know, that’s a brilliant way of looking at it because, you know, I think a lot of lawyers stop themselves from growing because they are so afraid of the risk associated with exactly that, right? I get too large, I become a moving target, or people are going to all of a sudden start calling on me or I can’t do that because someone’s going to make a report. And I tell them, I said, listen, the likelihood of you getting through your legal career without getting sued, without having somebody file a grievance, without having some adversary file a file a complaint or request an investigation is slim to none. If you are so safe that you are keeping yourself mediocre. Sure, you increase the likelihood of that not happening. But what happens if you did maintain your mediocrity and you got that complaint? I would rather keep my money and keep my growth and keep my status and also have to deal with the complaint, then assume that I’m going to avoid that by virtue of hiding out.

 

Ken Hardison: [00:40:30] Yea. I never got a complaint. I never got a complaint from a client ever. So and we handle thousands of clients. But the claims came from lawyers. From my competition. That was amusing, really.

 

Allison Williams: [00:40:45] All right. So I want to I want to put a fine point on this conversation we’re having. And I love that we’ve kind of gone deeper into the weeds of a lot of these topics because you’re just such a wealth of knowledge on this. But I want to talk about differentiating practice. So as soon as we mention competitors. You know, those people out there that are thinking that they’re doing what we’re doing, but they’re not doing it as well and they’re doing their own version of it. Like, how do you really take your law practice and differentiate it so that people don’t see you as a commodity, but they see you as the choice versus someone else you know?

 

Ken Hardison: [00:41:16] Well well, you know, you talk about Dan Kennedy. I mean, he’s the one who taught me about unique selling proposition. It’s a differentiator. And I think it’s one of the hardest things I teach. It’s the hardest thing for lawyers to grab hold of, it is it is a little bit hard because here’s what all the lawyers say. We all do the same thing. How can I differentiate myself? But you can. And so here’s why you want to do it. When somebody is looking for a lawyer, they got two questions in the top of their head. Do I need a lawyer and if I do need a lawyer, why in the hell do I need you over everybody else? Why should I pick you? Because they all. They’re all they’re saying the same thing. We’re tough. We’re aggressive. We care. Preconsultation da da da. Everybody’s looking the same and they’re getting all these messages. But what you got to do is, you’ve got to stand out from that. And it’s usually with a benefit. And it could be… You know, there’s a process. There’s actually a book. Let me see if I can find the book, because it’s really it’s a good book. You should ten different methods of how to figure this out for your law firm. It’s by a guy named Bodri. B-O-D-R-I.

 

Ken Hardison: [00:42:26] It’s on Amazon, but it’s. I like, there’s three methods I like, and so when I was trying to figure out mine, I never said we got the best settlements. I never said we were the best lawyers. What I said was this. No lawyer can ethically guarantee you results, and neither can we, but we can and we do guarantee you that if you’re not completely satisfied the way we treat you in your case, first 30 days, you can get your file, no fees, no cost. And we could do that because we were a PI firm and we were doing that. And when I did that, everybody thought I was crazy, that you just, you know, you’re going to have people go in there, get their case worked on and then take the case to go settle it. I did that. I lost two cases in seven years. 

 

Ken Hardison: [00:43:18] My intakes, my cases with the same amount of money went up 23 percent. By changing that one thing on my ads. You know, and we were all about client service. You know, and we had a, so we didn’t just talk it. We had a client, 800 free 800 client advocate hotline. If anybody was upset about any lawyer, any staff they could call it. Went right to my office manager. We had a client bill of rights. So we did things, that we had our guarantee. And so. I know it’d be hard for adomestic law to do. And then the other things is, you know, like domestic lawyers, you could say, I’m only going to represent women or I’m only going to represent men or I’m you know. And I’ve seen some as you know. You know, the, DUIs is what we do and it’s all we do. You know, that kind of differentiates yourself. But you got to figure it out.

 

Ken Hardison: [00:44:16] I’ve seen lawyers that work with an insurance department before. And they’ll say, you know, we know the secrets. We know the inside secrets. A former defense lawyer, you know, shares the secrets. You know, if you’ve been a former prosecutor, you know, if you’re going to do criminal work. You know, or you can have a book that could be you differentiator. You know, I did books, too, and I used those. You know, this is a differentiator. This guy wrote a book on it, so he must really know what he’s talking about. Right. But it is so important because what you want to do, if, when you ever you compete on price, you’re always going to lose. Look at Kmart, OK?

 

Ken Hardison: [00:44:54] You go look at look at RadioShack, look at Circuit City, look at look at Blockbuster. Any time you try to get on price, you’re going to get killed because you’re always going to be somebody to go lower than you. So you never want to compete on price. You’ve always got to answer that question. Why should I pick you? What is the benefit? You know, we can talk about Timex, you know, takes a licking, keeps on ticking. Federal Express when it absolutely has to got to be there. You know, that’s what everybody uses. Dominos Pizza. Thirty minutes or less. You know, that was that was the differentiators, although Dominos had to stop that because of law suits by us lawyers. You know, but the deal is, you know, and then you can and everybody says we do the same thing. Well, why don’t you take something that everybody’s doing and claim it? Schlitz Beer did that back in the 60s. The guy went in there and said, well, you’re still cleaning the bottles. He said, you know, everybody does it. He said, well, we’re going to we’re going to we’re going to. He said, that’s just part of the process. So they ran a big campaign on that. They had, you know, steamed clean bottles for the beer, you know, and their sales were up 23 percent for like five years. And it was something everybody else was doing, but they claimed it.

 

Ken Hardison: [00:46:11] So there might be something you do. And everybody does, but you can claim it and you claim it first and you own it. Right. So that’s the way I look at it. But it is hard. I’m not going to lie about it. I’ve worked with a lot of lawyers on that over the years, and it’s probably the hardest thing to do, I think. I mean, maybe it’s easy for you, Allison, but I found it to be very hard. It was hard for me and my law firm because what I did, I did the method where you call people up. Like a hundred of your best past clients and ask them like 10 questions, you know. The thing I love about your law firm, is this. The thing that your law firm does that no other law firm is this. You know, and ask them these type of questions. And then. And that’s how we came up with our client service, because what happened was, they said, you know, you guys. It was never was about the money. With ya’ll it was always about putting us first. You always worried about us. And that was our little tagline, which is different than a USP was always putting you first. That was like a tag line on top of our class service guarantee, which was our USP. And, you know, and we did other stuff I talk about.

 

Allison Williams: [00:47:20] It’s definitely not easy.

 

Ken Hardison: [00:47:22] I don’t think it is. I mean, I think it’s hard.

 

Allison Williams: [00:47:24] One of the things I think is probably the greatest barrier for lawyers is they are so busy trying to be like everyone else. They look at who is most successful and they try to copy and paste. And lawyers are always asking. I see it in Facebook groups online. I see it in community chat when we were out and about in the public domain. You get together. Oh, well, who are you using for this and what are you doing for that? And they spend so much time trying to be like everybody else that the one thing that differentiates you, which is who you are, doesn’t show up. You just get this cookie cutter, you know, pasted version of someone else. And then you look like a commodity because that’s what you’re trying to make yourself into. Yeah.

 

Ken Hardison: [00:48:06] And, you know, my big deal was that you listen to my voice, you can tell I’m an old country bumpkin. You know, I was raised in the country.

 

Ken Hardison: [00:48:13] I’ve never tried to be anything other than what I am. And actually that was saleable for me. I was I used to do commercial. I said, you know, we don’t talk the old legal mumbo jumbo. I mean, we’re going to talk to you in straight English, you know. And you’re going to understand when you talk to our lawyers. They’ll explain to you stuff that you can understand. … like, you know, and people like that. I mean, you know, because believe it or not, people are intimidated by lawyers. (Yeah.) It would be like you trying to go figure out if you had somebody said you’ve got to have brain surgery Allison. Well, how are you going to pick your brain surgeon? I mean, it’s a big, and you’re going to be intimidated and it’s going to be a hard decision. And so your question is going to be, I guess I need a brain surgery. I’ve got two doctors telling me, but how do I choose? Why should I choose this one over the other three?

 

Ken Hardison: [00:49:01] I mean, I don’t I mean, you know, that’s, is it because he’s got the best success rate because he knows the newest techniques? I mean, these are the things that, you know, and we’re we’re thinking more high level because of brain surgery. Maybe they want a good example. But the deal is, you know, it could be even for getting your cat your cat washed. I mean, why am I going to pick this one over that one? Maybe you don’t care if you don’t love your cat, maybe don’t care. But if you really love your cat, you want them treated by somebody that’s going to treat them nice and look after them. And you know what’s going to be the differentiator? Who are you going to pick? That is the big question you’re going to answer, because let me tell you and I’ll tell lawyers, this is the biggest mistake I see in marketing. You should never put the word we in anything you do because they don’t care about you, right? They really don’t care about you. They, what’s in it for them? You know, that’s what they will be. And we’re the same way. Everybody’s that way. Everybody’s selfish, you know, no matter what it is, we’re all the same. We’re the same way. What’s in it for me? And I say, so when you’re back in your, you know, that’s a whole other we could speak 5 hours. I’ve taught 5 hour courses on how to how to create ads. And and the deal is, there’s a lot to it. But the bottom line is it’s all about them. It’s nothing about you. You know, if you can set your stuff up like that, you’re going to be a lot more successful because they really don’t give a shit about you. I’m sorry.

 

Allison Williams: [00:50:33] And that is, I think, a perfect place for us to put a pin in this. This has been a great conversation. I really appreciate having you on the podcast. You’re always such a wealth of information. PILMMA is a high quality, high success organization that helps lawyers grow law firms. And we’re going to put a lot of information about that in the show notes. So I want to give you an opportunity for any person who’s listening that doesn’t already know you and already know how to reach you. How could they do that if they want to reach out and more about your organization?

 

Ken Hardison: [00:51:00] Ok, well, PILMMA is P-I-L-M-M-A. Powerful, innovative legal marketing management association. It’s dot org. And my email is Ken. K-E-N at PILMMA dot org. Our number is eight hundred four nine seven, eighteen, ninety. And, you know. We’re here to help. You know, and see what, you know, give us a call if we can help. You know, everything I do Allison, I’m a little different, but I think I picked it up from my law practice. I guarantee you everything I do. Anything we sell or anything we. I got 100 percent money back guarantee, you know. All our bids, all our coaching programs, all our membership programs, all our products. You know, I just. My bottom line is I don’t want your money if you don’t think I’m helping you. Why would I want that? All you’re going to do is talk pure trash about me. I don’t want that. I mean, you know, if I give you money back, maybe you will just tell two or three people, because we know that I used to tell my staff that if we do a great job, they’re going to tell one or two people. If they are upset with us, they’re going to tell 20.

 

Allison Williams: [00:52:17] And nowadays they’re going to post it online and share the polls.

 

Ken Hardison: [00:52:21] Yeah, having to to go put it on Yelp, Facebook, Google Plus. Yeah. Everywhere. Yeah, that’s true. But this is back before you had all that and I tell my people that, you know, if they love us, they’re going to tell one or two people. And if they do anything, they just don’t like us. They’re going to tell 20 to 25. Because people like to share bad news for some reason. I don’t know.

 

Allison Williams: [00:52:43] Well, very true. But luckily, we are not about sharing bad news here on the podcast. We’re all about bringing resources to those of us that have settled into a law firm. So I want to thank you again Ken Hardison for your great wealth of information. And for those of you that are listening, thank you again for tuning into the Crushing Chaos with Law Firm Mentor podcast. I am Allison Williams, your Law Firm Mentor. Everyone, have a great day!

 

Allison Williams: [00:53:19] Thank you for tuning in to the Crushing Chaos with Law Firm Mentor podcast. To learn more about today’s guest and take advantage of the resources mentioned, check out our show notes. And if you own a solo or small law firm and are looking for guidance, advice or simply support on your journey to create a law firm that runs without you, join us in the Law Firm Mentor Movement free Facebook group. There you can access our free trainings on improving collections in law firms, meeting billable hours, enjoying the movement of thousands of law firm owners across the country who want to crush chaos in their law firms and make more money. I’m Allison Williams, your Law Firm Mentor. Have a great day!