Law Firm Business Planning with EvolveLaw

Welcome to Accountants LawPod, where accounting professionals and law firms converge, hosted by Lynda Artesani, Sarah Prevost, and Stephen Libhardt.

Welcome back to the show, everyone. Um, Lynda and Steve, we have some guests today.

We do. Some pretty cool guests. We're so excited.

I, I am. It's— the topic is about business planning, law firm business planning, and our two lovely guests is Roxanna Jensen and Bill Horton, which I would love for you all to do. Um, I know we've had some good chats in the pre-recording here, but do a little introduction about yourselves and we could dive in. And sounds like we have a lot of good things to talk about today.

And they live in my city, so I get to have them here. Ooh, isn't that cool?

Really? Oh, I missed that segment when I was getting my coffee.

Yeah, we are Denver-based, um, although we have affiliates who work with us who are in other spots as well, all across the country actually. So, um, Evovla started in 2014, but I'm a longtime lawyer. I worked at Morrison Foerster for about 17 years. I practiced at the intersection of antitrust and intellectual property.

Wow.

And it was a really big firm. I was spending a lot of time in Tokyo. Our Asia practice was booming, and I had 3 kids in 3 and a half years and needed to stop being in Tokyo. So I started doing consulting work for law firms pretty much right away, which now I've been doing for nearly, for over 15 years.

Oh, good for you.

And as law, as Evolve Law for the last 10 or so.

Bill? Hi, hi, hi everybody. I'm Bill Horton and I am not a lawyer. I started off my career as a CPA I spent about 10 years in Big Four public accounting, Big Eight for people that are my age.

Yeah.

I spent 10 years in the engineering construction business doing tax work and M&A. I kind of came up on the tax side, which is a little different. After that, I pivoted into consulting and have been a consultant for most of my career since then in more of a CFO role or an outsourced CFO role. With the exception of about 7 years spent as the CFO for Sherman and Howard in Denver, which recently became part of Taft. So I've worn lots of hats. I've been a revenue producer, I've been overhead, then I've been a consultant trying to help professional service firms, you know, operate more efficiently and prepare themselves for growth and/or M&A opportunities. Mm-hmm.

—revenue producer in the legal industry, or—

No, as an accountant.

As an accountant.

Okay. Yeah. And how did the two of you join forces?

Well, I'd say actually through the consulting work, and I'd love to tell you a little bit more about, um, the law firm itself. Our clients are mostly managing partners, executive committees, uh, and other C-level executives in law firms who are looking for some background help, mostly commercial law firms.

Okay.

We met, Bill and I met, um, ages ago, doing some work for a firm that you would know, Steve, very well, and helping them set strategy and move on at an interesting inflection point for them. And they ended up doing kind of a major merger. We had known each other some since then, but that's when we started working together. So, that's a good 14 years ago. And since then, we've done things together. soup to nuts all across the board for clients from mostly west of the Mississippi, but on the East Coast as well. Big and small firms, but again, mostly commercial. A little bit of work for firms in other spaces like family and immigration, for example. And we have some great affiliates. Bill is on almost everything that comes through my door because the financial side is essential. But we also have someone who works with us on leadership training and development. Matt Plavnik, who I know you know, on the marketing business development side. We have some great data scientists who are in New York, Parker Analytics, and a, a person who was a guy who was with Thomson Reuters forever on the management side, doing work with, with law firms large and small. So we've got some really great people that we like to work with.

Well, you Yeah, you partner up then. So it's like you're building a team. What we like to refer to, Lynda and I often say, we like to plug into your team. It's partnership. And I think Bill has said it really well earlier is the type of approach that most law firms have to business versus working, being an attorney. Bill, I don't want to mess up your words, but—

That's all right. I always said, yeah, we focus. There's a difference between the practice of law and the business of law.

Yeah.

And you know, I've seen in my many years of working with professional service firms and not taking shots at lawyers at all, but almost the more you can charge per hour, the, you know, you don't have to be as good at the business of law to make a profit because your billing rate's higher.

Yeah.

You know, the people at the lower end, the engineers and the architects just by, and the accountants just by necessity, have had to be better at it and, you know, embrace business practices earlier than attorneys because of the fact that they can charge more for their work.

And I was a managing partner at Morrison Foerster, managed the Denver office for a few years, and that's what started taking me up to sort of the 30,000-foot level. So when I made my transition, it really— I loved that stuff. And so I think those who get into the higher levels of governance by necessity have more of an understanding the business of law, but still generally not enough. Legal education just doesn't keep up with that.

Yeah.

You know, Roxane, when I worked in law firms, and I've worked in several of them, I loved when I came across a law firm that had somebody in your position, you know, that was in charge of the firm, in charge of the business side of the firm, because I knew that the accounting side would have more support and there would be a better understanding of what we were taking to the managing partners in the numbers and procedures and recommendations and KPIs and all those things. So, you know, kudos to you. I just love when I find somebody in that position.

Oh, well, that's kind of you. I managed the Denver office for about 3 years, so I just don't want to leave anybody with the impression I was managing the 1,500-lawyer law firm. I wasn't. But I got to work with the person who was the managing partner of Morrison Foerster overall, was also in the Denver office. And that really helped me understand the business even more.

That's just a great point because, you know, to the extent that law firms underinvest in their finance department and just want to hire people to keep score as opposed to being strategic, you know, they're really short-sighting themselves and sooner or later they'll pay for it. It's penny-wise and pound-foolish.

That's the phrase I keep screwing up all last week, but I love it. [LAUGHTER] Lynda Artesani had to help me out because we were like, wait, it's such a valid point. And I feel like boutique style firms on up, it's an interesting, Lynda and I have honestly this last week have had an interesting presentation of different firms that have come to us for advice and or, you know, need our services. And it boggles my mind to think of— and I think this part is true to us, is we're similar professions in a lot of ways. Bottom line is we're business owners. And when you take the transactional piece out of the equation and start building the team, like you're saying, Bill, and you start focusing on the, the parts of the business that a lot of people don't even really think about. You're, you were right, and like, you're producing, why would I need to think about these things? But divorces happen in a lot of firms, uh, changes, evolution happens. You start your own thing, you think you can do it well, you're not a producer, you have to build the formation around you, you have to look at all the pieces. And, um, I'm curious about how you all take this journey and help with the evolved law, what does it mean to have a business plan and an operating agreement? And how do you align the front house, back of the house in a succinct way with not just growth, but just that idea of like, this is a, you know, this is a business. Now you got employees, now you got this. How do you help? What type of clients come to you and what, where are their pain points that they start with? with you all?

Incredible variety of pain points.

Okay.

But the challenge that you so eloquently point to is that lawyers in general are very, I mean, they have a narrow and focused vision on what they can provide that's of value for clients. It's in part a function of really being able to provide valuable services, obviously, but also, of being told since the minute you walk into law school, look backwards to find your answers. You know, the 1800s opinion from Oliver Wendell Holmes has probably got the answer in it. And, you know, they've got nose to the grindstone on their particular tasks and value almost all the time. And that causes them to be really siloed, I think, in general in their practices. Mm-hmm. So, it takes intentionality to understand first of all, that this even, you know, it is a business that requires teamwork and understanding across barriers to be able to function well. So the biggest challenge I think that we face in dealing with our law firms is that often there is no shared vision and the silos keep them from—

Right.

—from understanding. Sometimes they don't even know what the partner down the hall does, much less how their different practices contribute to the overall functioning of the law firm. And then even if they have a plan, it sits on the shelf. I mean, you guys may know this term, but there's strategic plan on the shelf spots. We see that an awful lot as well. It just, it doesn't go anywhere, even if they have an overarching business plan. Mm-hmm. So those are, those are two big issues for sure, and getting them to become more business-focused. Sometimes, unfortunately, they, they have to come through us, come to us through the back door when they really need us. There's some drastic question, there's an inflection point in their law firm, and we have to try to help them with that inflection point as well as back them up into setting the foundations that will make them understand each other and their business better. Yeah, so—

Yeah, thank you, Roxanne. And, you know, from my seat, one of the first things that I like to look at on the way in and to try to get a quick win, if you will, with the law firms is to get them to look at their billing rates. Because, you know, it seems so simple, but it's the quickest way to increase revenue. And it's gotta be part of any revenue enhancement goal because, you know, people don't generally retained consultants that they're hitting it out of the park. I mean, usually there's something, you know, they want to grow or they're leveled off or they're, you know, a myriad of reasons to want to get some help or some advice. And that is usually the quickest win. And to me, it's so surprising how attorneys are afraid to raise their rates. They just are. In my experience, you know, it's one of the big wins that I had, I think, when I was in the CFO seat. Is as long as you're delivering value to your clients, there's no reason that your billing rates shouldn't be able to be increased over time, at least to keep up with inflation. And that should also reflect the fact that as you get more experience under your belt and get more specialized, that you ought to be able to charge what the market will bear. You know, and there's been several articles out on, uh, Amlaw recently talking about rate increases, particularly with the inflationary cycle that we just went through. And a lot of, not just the large firms, but some of the medium-sized firms have been increasing their billing rates by 7% or more over the last couple of years. And if you look back at what inflation was, that just keeps you level. It doesn't even really help you get ahead. But there's just a lot of clients are going, oh, I mean, a lot of lawyers are saying, oh no, I can't raise my rates. My clients will freak out. And my experience is that just isn't true.

When you have that conversation though with them, do you find they'll ask you, well, how do you, how do I know I'm at the right rate? Do you give them benchmarks or?

Yeah, absolutely. There are, you know, a couple of of services that we relied on heavily when I was, you know, in the CFO seat. PwC does an annual and quarterly updates on billing rates, and you can pick peer firms and they will give you statistics, and it's got it by level and by geographic location and by specialty. And then, you know, there's also Peer Monitor. And other services because, you know, when you're getting— trying to get somebody to do something that's not easy for them, it's easier to swallow if your recommendations are data-driven.

Yeah, absolutely. Thomson Reuters does a law firm economic survey, and it's also got a lot of that sort of rate information as well as a bunch of other stuff too that can be really valuable in helping lawyers understand where they sit versus their peers.

Have you ever had anybody go, like, be at really absurdly low rate and then you're going, this is what the standard is for your industry, and they just sit back going, oh my God, how am I gonna get from here to here when it's that far off?

Absolutely. And it, you know, it can be a process, but, you know, it's, if you can show them, particularly if there's an objective compensation system in place.

Yeah.

And you show them, you know, gosh, your revenue can go up so much faster by raising your billing rate $50 an hour than for you to try to give your work away and work 2,000 hours to make a decent living. And what you're doing is, you know, not only are you hurting yourself, but you're hurting your firm because, you know, it, it, that becomes the, you know, the, the perceived benchmark of what lawyers at your firm charge, and you're kind of holding the firm back, if you will.

Yeah.

Mm-hmm.

What do you find is the impact on their retention when you do get them to change the rates? What are they coming back and telling you?

You know, again, it comes back to value. I mean, as long as you're taking care of your clients and they perceive they're getting value, most sophisticated clients don't really even bat an eye. I mean—

That's a good point. Yeah.

Yeah, they may, you know, they may hem and haw a little bit because they're trying to negotiate. But what this can do is it can weed out situations where someone is just sort of hanging on and not providing value. And, you know, with overhead per lawyer going up and, you know, costs are going up, you If you're a member of a firm, it behooves you to be able to keep up with your peers, if you will, and to be able to keep your seat at the table.

I think too, Steve, great question, because I think what clients worry less about your standard rate than they do about what you do after they get your bills.

What are you producing? Sure.

It gives you a higher Starting point for your negotiations. We find that as well. And another thing I would throw into the mix on the rates function is that on that and many other issues, lawyers don't seek enough regular client feedback. That's a non-negotiable part of any business plan from my perspective. Not only does it provide, you know, low-hanging fruit where there's revenue that you can grab almost immediately if you do good client surveys generally, drafted in cooperation with an outside consultant and administered by an outside consultant so that you could get really, really good, honest feedback from your clients. Many lawyers think they have these great client relationships, they don't need that, but it's not true. Okay, they need it. But it also will give you direct feedback on rate tolerance.

Mm.

Which is just, you know, incredible. So if you focus your client feedback by some of your best industries or picking clients that you know are at a high growth rate, important for your future. So you can get a lot of cues on not only rates, but other issues. Um, and it feeds your cross-selling possibilities across different practices, which help you break down silos. And it's just an incredible tool that reaches all sorts of different directions.

Well, I'm curious too, because we've seen it's been hard for firms to acquire. Attorneys at a decent rate when, when there was a huge spike. I feel like some things have come back in line. Depends on the pockets, the practice area of, um, getting a producing attorney or being able to have an attorney, a junior associate that you can actually maybe mold or, or, you know, build into the firm in a way that maybe that's— they came out of law school and they weren't too sure what exact practice area and they joined a firm. And we see this sometimes. It's, we have firm owners that come to us and they're like, we're having a hard time finding in the region or a remote worker with production. And what the compensation model should be and the competitive rates should be. And we've seen this true of paralegal work as well. It's becoming hard for some firms and other firms. Mm-hmm. It's like a drop in the bucket.

Yeah, well, obviously those that are having trouble— yeah, those that are in trouble should look at what those that are not having trouble are doing. But different firms, different approaches on that front. I think, you know, large firms have a lot to compete with, right? Kirkland Ellis doesn't have trouble bringing associates in, right? Because they've got a lot of money that they can throw at that problem, and they can promise amazing training and a resume builder that's beyond belief, right? But then you're small, you're I mean, they pay ridiculously too. I just, you know, yeah, $250,000 for first year these days, which is just, it's—

That's amazing.

Yeah, it's amazing. So, you know, smaller firms, I think small firms have to compete on expertise differentiators. So it's really important for firms to have differentiators that set them apart from the pack, the reason that they make their competitors irrelevant. Right?

Got it.

They win. And if they can tell that story to and have a strategic plan, a business plan that is aiming them in a direction to leverage their strengths, right? I mean, associates are not dumb. They will see that. They, you know, even though they may not know a lot about how to run a business, they want an organization with a vision, with a shared vision and consistent messaging from the partners who are recruiting them. Right? And the folks who are recruiting them on campus or whatever. So they need to, they need to hear that. And it, it all comes back to that business planning foundation, which is what you guys came to us to, to discuss. So yeah.

Yeah. Incredible. Strategic mindset, I feel like.

Exactly. You know, and with regard to these plans, one of the things that we like to see from the finance side Yes. Is to build in clear objective measures on how the plan is going to work, because it's one thing, okay, we'll say we pulled it off the shelf and we're doing it, but if you're not measuring against something, then you don't really— you still don't really know how you're doing. And sometimes it's hard to develop the objective measures, but you need to do so. And then you need to regularly follow up with how you're doing against those measures. And what that allows you to do is, if you, you know, if you're doing those two things, you can course correct, you know, based on the results, and either find a better opportunity in the short run early on, or if something isn't going as well, you can, you know, course correct by pivoting or cutting some unnecessary expenses, or, you know, putting people on a a project that might be more beneficial going forward, or what have you. And then the second piece— and now this isn't the last time you're going to hear this in our short discussion here— but you need to adopt and use profitability measures. And putting in profitability tools is not easy, and it's not cheap.

Yeah.

But there's a high return on investment, and, you know, I've been around this for a while and, you know, it's putting in profitability is a lot harder than putting in an accounting system. You need a good accounting system to be able to do it, but you have to go farther and make sure that you're collecting all the correct data before you can do that. But if you, if you have one of these in place, you can measure profit by, you know, by matter, by client. Yeah. By individual attorney, by office. You can slice and dice the information several ways, and it does a couple of things. You know, it allows you to allocate resources to where they would be best used, and it gives you some real live objective data to help make compensation decisions. Because as we know, lawyers don't work for free, and they want to be paid for the good work that they're doing.

Yeah, that's— when you say, um, the hardest part is implementing it, obviously we, we talk about this, the three of us. When you have junk financials, you're gonna have bad— I mean, it's just bad all around. So if we clean you up and get you into structure— and Steve and Lynda have spoken about this— you can't start looking at every stone and try and measure it. You have to pick a few to begin. But when, Bill, when you're saying when you're implementing this, what, what is the first— is it a mindset shift? What is the first hurdle to overcome starting a practice like looking at this as a measurable item?

Well, if you're, if you're trying to look at profitability, the first— there's really two things that you have to have. One is You know, when you set up your accounting system and your Matter Opening System, there are these extra fields usually off to the side.

Yes.

And you know, what you need to do is you need to designate those and earmark them, whether that's as an office or as a practice group or an industry group or however you want to designate it. Because without the proper structure on the front end, you can't, you know, you can't gather the data that you're going to need later on when you develop a profitability matrix or measure. But the second piece is just after you set it up, it's also critical that when someone opens a matter, and I can't overemphasize this enough, that, you know, lawyers, when they set up a matter, just want to put enough information in there so they can start charging time.

Airman.

Yeah.

Yep. And what you need to do is you need to have the, the matter opening police there that says, no, you have to completely fill out the form. And this is part of X industry group in Y city in Z practice group. And if you're gathering that data as you go, then you at least have a fighting chance when you want to later measure if a particular matter was profitable or not, you at least have the information to do it.

Mm-hmm. And I, you know, lawyers want this stuff. They want it. So when we come in and start talking with them about business planning and we do, you know, whatever values and culture underpinnings we need to lay as a foundation. And when we start talking about examining both the internal and the external situation of the firm.

Mm-hmm.

On the internal side, if we're working on a SWOT and they start talking about strengths, weaknesses, opportunities, and threats. They're always grasping for understanding.

Yes.

Without really even knowing it.

Yeah.

Right? Or they have conflicting business models in their law firm. This is something that is one of those backdoor issues that sometimes firms come to us talking about. You know, we have a— we are a high-level commercial practice. We have a labor and employment group. It's high volume, low rate. Does this really fit? What are they asking? What are they asking? They're asking, what is profitable?

Yes.

And how do we deal with that?

Yeah.

Right? So, you know, they're grasping for it even if they don't know it. And they become chagrined when it's difficult to measure.

Mm-hmm. But yet they, it's the mindset at the beginning, the time it takes to put in the data, which we have this conversation. Steve, I think you have a few to highlight, but Lynda, I know that you do when it comes to the marketing side. And the first thing they want to do is measure it. But she starts asking questions and they're like, I don't do that.

Yeah.

I, I—

They don't follow the lead.

So they, they will set up an elaborate system to spend a lot of money with a marketing firm, but then they don't follow. Like, is there—

They don't, they don't follow through. Yeah.

They don't ask why. And you know, where'd you find us? Where'd you hear from us? And if you don't ask that question, how do you know it's working? If you've done multiple channels of marketing, how are you gonna know? And that's always one of the things we kind of tell them to follow through. But also to your point about getting like a rating or feedback from the client, that's hard to do. Sarah and I've talked about it. It's like, uh, do I really want to know? So a lot of the times when clients leave, it's like, oh, thank God that's over. Sometimes, you know, sometimes it's good and sometimes it's an amicable person leaving, but really we should be doing that. We should be doing that piece because it gives you a lot of feedback. I don't know if everybody fills that out, but they should be doing that during the course of the client journey because maybe the ball is getting dropped in the very beginning with the receptionist, especially like in an immigration firm. Where is it being dropped and how are they going to learn that? And I think that's part of helping your client. But it's, it's funny because all the things you're talking about, we've dealt with and we have conversations with clients right at the get-go with— we've had discussions about they don't want to spend the money on the software to track the billing, to track the trust. It's like— Gosh, you know, well, that's really expensive. Why do I need it? And then you have to tell them why they need it. And it's like, you really need the software. And then you find out the admin is the bookkeeper who doesn't know bookkeeping. And then you've got another whole other issue to look at. And then to Sarah's point, back to cleaning the data, garbage in, garbage out. We can't give you— they were in a hurry to get the KPIs, but if the records aren't there, how can I give you KPIs to help you go forward?

Yeah.

Especially most of them that really, really want them. Never ever had them. So they get excited when they get into software that they can get the data out, but they have to be patient with us to know that we have to clean it up first.

Mm-hmm. Mm-hmm.

Go all the way back to the last tax return and then we start to go forward from there. And sometimes when it's trust, we might go all the way back to when you first opened the trust account. Hmm.

It's very expensive. Well, and it's the forecasting. How do you begin to forecast and plan? To kind of what probably Roxanna and Bill do a lot of strategic planning on is if you're going to fine-tune a practice area, then how do you forecast what you're going to plan on the next practice area or build it out? Or—

Mm-hmm.

I'm sure that you've— I mean, I guess the question I have is when a firm is coming on a micro niche, very specific, and you're looking at it and they're well-producing, Do you guys both feel that, okay, that ball could drop? Do you have something else in a practice area that you can practice? Like, do you advise them to look at a different area of strength or build a department for that to help them balance it?

Sure.

You got to look at the future and examine markets. I think one of the questions firms always ask when we talk to them, regardless if they come through the back door and asking a really specific question, they're interested interested in sustainability, right? And many times they're at an inflection point where the issue is, are we going to grow or are we going to die?

Ah.

Right? And at that point, planning strategically, seeing what sort of niche practices or geographies could help you to grow in terms of talent, revenue, and profits. Is critical. And they don't— and most firms don't understand succession planning either.

Yes.

Which is super, super important. And by the time, say, their highest-producing partners who may have a responsibility for an ungodly amount of their revenue reach the age of 60 and start looking around and saying, I don't want to do this much longer, that's too late. That's too late because they want— they need 10 years to plan.

Yeah.

So, they're not necessarily— again, it's just because they're very focused on what they actually do. They just want to build their hours, provide value to the client, pay their costs, take the rest of the money out and go home.

Well, you know, having succession planning or an exit strategy in place and reviewing it minimally annually, on an annual basis, will tell them a lot about what's going on in their business because it makes them stop and think, what would happen? What are we going to do if we want to exit? And what, what are the key things to make that happen? And then that starts them looking, you know, you almost go to the end and start working your way backwards.

Absolutely. That is, is so true. And unfortunately, Steve, You know, we see a number of clients who will come to us when they're just losing associates or non- partners and say, what are we doing wrong? We say, well, do they know what they're going to do when they grow up? And maybe that's why they're leaving. They don't know what they're going to do when they grow up. So help them figure it out and they will stay. And that, of course, you plan your succession around your strategy, right? So if you don't have a strategy, you don't know what to teach them and what they should be moving towards, right?

One of the most painful One of the things I've witnessed in working in law firms, and Sarah and Lynda know this, I've brought it up before, is the annual bonus. And come Christmas, and in the accounting department, you sit there and they come to you and they go, this one gets $5,000, this one gets $10,000, you know, all the numbers. And you know in your heart of hearts, and it just breaks my heart, that they're going to lose some staff right after they get the bonus. You know, and it's like, how did you get there? Why is this happening? Yeah.

Well, you know— A part of our strategic planning— I'm sorry, Bill.

That's all right.

A part of our strategic planning, definitely every single time, is to help them identify firm-first behavior so that they have a list of firm-first behavior that they can refer to, and they have an objective foundation for what ultimately is a subjective decision about bonus amounts. So, sorry, Bill.

Oh, that's all right. You know, I was going to say it's been a great discussion over the last 5 or 6 minutes, and everything that keeps flashing right in front of my eyes is You know, we need good objective data to help make these decisions. You know, I mean, you just do. And the more good data that you have and the better that you're able to communicate that and really have credibility in communicating that to the executive committee, it helps them make better decisions, whether it's how much to bonus or which lines of business should we be in, or God forbid, the thing they blow off the longest, which is succession planning. I'm not sure in all the law firms that I've ever worked with, even some of the ones that are highly functioning, that most of them ever get to that. It's kind of like, you know, back in accounting, it's like, well, you know, we're going to hire somebody to document our procedures. I mean, for the life of me, you know, nobody ever documents their procedures unless the SOX people are coming through to audit you.

Yeah.

You know, and so it's kind of the same thing. But again, you know, if the more objective data that you have and the more you stay out in front of things and are able to forecast rather than just react to what has happened, the better off you're and the healthier your organization is going to be.

I love, Roxanna, you said it, firm first behavior, which is kind of what Bill was saying before. It's you can't be siloed in your behavior as an apart, as a partner, as an owner. You know, of how you're gonna approach this. And I will say I've had this conversation, I think with, uh, both Lynda and Steve. I've seen this quite a bit where a firm doesn't have a family legacy to turn over to, so they're actively seeking another member that they like, another attorney that they want to bring in and build that succession plan kind of like live almost. I've seen a few of these. Yep, yep. They're like, we don't know what to do. We're either going to sell. One just was like, that's it, just find another firm. Like, it was gone, it was done. And then one I've met, I happen to know the recipient that's going through this process, is that was the succession plan. Um, literally it was to bring someone in to take over. Exactly, someone that they liked that worked for a different firm. And was honestly out on their own at one point and then swept in very quickly. And kind of seen this a few times. I've seen one not work at all because obviously the data was bad. I came in, looked at it, gave my advice, showed my concerns. There's a lot of me-first behavior in those books. It was very easy to tell based on the asset section alone.

Did these attorneys coming in come with a book of business or were they just there or two, they liked them and they were going to fit in and manage what was there.

It was a combo, I feel like. It was definitely a well-known position play, I guess you could say. They either had their own book or that following of, "Hey, where you land, I follow," kind of thing. But yes, it's interesting because if you're not in a legacy-style format, and you're looking at that succession plan in a different way. Some of the, probably the larger ones are looking at it in a different way. It gets more complex, I'm sure. Mm-hmm. It does.

One thing that pops to mind when you're talking about that, Sarah, is if you're wanting to reach outside and bring someone in to provide the sustainability that you want for your firm and name recognition and so on going forward, Gosh, it's nicer if you can do that organically than bringing someone in because you lose some of who you are every time you bring someone in. So you have a brand and you have a reputation, you have goodwill. Anytime you bring someone else in, in a firm that's, you know, say below the AMLA 250 or whatever, anytime you bring someone in, you're shifting that. The culture, you're shifting the reputation somewhat, and that's just yet another obstacle. Not that it can't be a good tool, but it requires a lot of data and analysis to be able to bring a lateral in, not only who's going to be economically successful, but also who fits with the firm and the client base.

So, the question I have too, that you got me thinking on this topic is, And I've seen this come up, so this is partly where my question is going to land, is the firm is predicated on the individual, the named owner-operator. That's their reputation. When they are kind of seasoning off and wanting the employees, that brand has shifted publicly. So the people that we're taking care of, and we, we try very hard in our firm just just you come to us, you're not going to work with us directly all the time. You're going to have someone else that's going to work with you. That transition of power when you're at the— I guess it's in the succession planning— is how do you have it where clients come in, they're coming in by your reputation and your reputation alone, and now maybe you have someone in your firm that wants to acquire it because you, you're ready to retire. What do you do then? Because that, that transition of power of brand marketing has really gone from you Now it's got to go to the firm. And that's a hard change for some people to make.

Extremely hard. Extremely hard. You know, Matt Platnick, who I know you guys have talked with, would be an expert at that branding exercise. I mean, there are many firms out there that have named partners who've been gone forever and they've made that transition and still retain the power behind those older names by having a reputation as a law firm instead of as an individual. But when there's, when there, you know, there is someone who has to, who has been responsible for the goodwill of a law firm, then that succession planning better start, you know, 15 years in advance.

Yeah.

Instead of even 10 years in advance if they want legacy because the identity of the firm is something much different, right, than it is for one of the huge firms.

Roxanne, you mentioned I might know about the firm, and you don't have to name it, here in our market. Did they end up going out of business if I think— if I'm thinking of who it is?

Can you repeat that? I'm not sure.

The firm you mentioned a while ago that I would know the name of— I would know the firm in Denver that you were referring to that, that I believe is no longer in operation.

I'm not— I— can you give me a little more context? Because I think I've lost that.

That's okay. I guess what I was going to say to, to what we're talking about right now is I went to—

Now I know what you're talking about.

Okay. Anyway, are they— did they go out of business? No, they didn't. Okay.

Emerged.

But what we're talking about right now where, you know, the succession is happening and the name and the reputation of the partner who has been there forever, you know, is at stake at that point. I went to the garage sale, if you will, of a major downtown Denver law firm that had been in business forever, almost 100 years. And here were the founding partners' pictures on the wall still. And it was kind of sad. To see that because I was like, what happened? What made them go out of business? And they— oh, they must have had a couple hundred attorneys in the office here. It was, you know, that making you wonder, did they grow so big that they didn't know how big they were and were losing control of all the, all the systems, or systems that weren't there? You know, all the things that we're talking about today, because sometimes they don't know, you know, they just keep going and going and going. Wow.

Until it's too late.

Until it's too late, yeah.

Until it's too late, yeah. They're not addressing that inflection point at the time that it needs to be addressed by going back and—

Exactly.

—who they are as a group and how they grow next, how they sustain themselves.

Yeah.

For sure. So, the smart firms see that inflection point coming and begin to plan well in advance. And it isn't unusual to have firms wait until it's too late. And it, even if they survive, Bill and I just did a huge project. We helped Sherman Howard, um, find the answers to make themselves sustainable going forward. And they merged with, they merged with a national firm, Taft, which was a great answer for them. But the longer that you wait to figure out the foundational things that are causing you not to have a shared vision and move towards it effectively, the more options you take off the table, right? So, you know, someone like Sherman and Howard, maybe they joined a firm where they can retain their culture because Taft's vision for how it operates is to have really markets operate quite independently, right? But would Sherman and Howard maybe have preferred to do it a different way by taking small bites? And growing that direction, you know, buying, acquiring firms in geographic markets that made sense that are smaller and not being acquired by a national firm. Maybe they waited too long and took that option off the table for themselves. So that's, you know, it's tricky.

A lot of times when firms go out of business, though, you know, quickly, it's not just the foundational stuff. It's that you get disgruntled rainmakers and you only need a couple of the disgruntled rainmakers to bolt and it's kind of like letting the air out of the balloon.

Oh yeah, yeah.

It can happen very quickly.

So true, 'cause there's a lot behind just their work, the meaning of their work as rainmakers and the operators that are—

They could have half their, you know, a handful of people could have half the revenue of the firm.

Yeah, exactly. Is there any disruptors that you foresee that firms really should be paying attention to or thought processes around like that come to mind? Because we're— I feel like we're in a big shift, obviously, with the AI, uh, coming in, the adoption of it, uh, the changes in the way that you, uh, both of you have brought up the kind of the evolving door of where you need to be. Is there anything that comes to mind or thought processes of what that you're finding is a theme or they should be thinking about differently?

From my seat, I think it just enhances the need to look forward. You always need to be looking forward. And I think that, you know, and I'm, this is a little self-serving, but I think that these firms, you know, need a strategic CFO and a strategic chief operating officer if they have both. That allow them to look forward. I've always said that, you know, CFOs make history and controllers report history. And if you're always looking, if you're not looking ahead, you're always 6 months behind. And so you need people. You need a good back office to make sure that we're processing transactions, getting the bills out, and somebody watching, collecting the money and everything else. But your CFO and your COO need a seat at the table with the other lawyer leaders and to be, you know, watching where the ship is going. Because, you know, a lot of times these ships don't course correct very fast. No. You've got all sorts of culture that keeps you from, you know, from changing quickly. And that's not the way we do things here and everything else. And if you're not looking out ahead, all of a sudden, you know, you've been sort of left in somebody's wake. I'm using too many clichés here, but—

No, it's true.

But you know, that's exactly how it works. You must be looking forward.

Yeah.

And, you know, and people don't like to look forward. You know, it's scary out there and you simply have to have the discipline to do it and, you know, see where do you see the firm in a couple of years? Because to the extent that you're doing that and your competitors aren't, it's likely that you'll be here in 2 years. They may not. And, you know, AI and some of the AI and the, all the AMLAW 100 firms that have come into our market.

Mm-hmm.

You know, there's increased competition and costs are going up and associates are getting more expensive and you have to have margin to pay for those associates getting more expensive.

Yes.

So, you better up your game and do the industry specialization that Roxanne talks about. There's a myriad of things that, you know, that you can do to stay relevant and stay ahead of the game. But if you're trying to do things the way you've always done it, you're going to get left behind.

You know, one word that you just said in what you just said in the last few minutes, the word allow, allowing yourself to— have permission to get the information, allowing yourself to study what's going on, allowing yourself to grow, allowing yourself to sell the business, allow— that word is so powerful in so many different ways. It can take the fear out of it. I love that you use that word to describe that.

Lawyers don't like to make mistakes. And it makes them scared to allow themselves to do the sorts of things where you definitely will make mistakes. Forecasting is inherently very imprecise, right?

You're going to be wrong, but at least you've got a map forward.

You've got to try.

It's got to be wrong. It's okay. It won't be that wrong.

Another thing they don't allow themselves to do as well as I think they might, that I just want to make sure is an underlying theme here, is they tend to be really internally focused. And things like looking externally, researching markets, markets that either you're currently in or that you might want to look at if you're strong in particular practices or industries that are growing in those markets. Looking externally, really scary. Getting client feedback, really scary. Yeah. And lawyers are, you know, they tend to be risk-averse. That's the whole point to being a lawyer is to minimize risk, right?

Yes.

They tend to do that. And I think looking externally and forecasting are two things that that they need to allow themselves to do. As you say, Steve, I'm gonna use that word more because—

I love that word. I know. When Bill said that, I'm like, bingo, there's the word. Allow yourself. Give yourself that gift.

There's so much pressure to look forward. It feels like right now in this day and age, it feels very daunting. It's like, do I wanna peel this back? How much do I, if I don't do it, I feel the pressure of not doing it. I feel, how do I lead? How do I become a better person in this? And it is, you know, that mantra for a while, the hustle, hustle, hustle, gone, right? Now, how— oops, my thumbs went down, I guess.

Yeah.

How do you lead with intention? And I do feel like this segment really is the thing that you said is the firm-first behavior. Even in the accounting profession, we are going through such a change and deficit of qualified people, um, CFOs harder to get, making sure. And I think, Bill, this is the biggest point: when we come in as an outside firm to assist you, no judgment on our side. We don't— we're just coming in to make sure we're getting good stuff. We want to help your team.

Yeah.

And I find sometimes when you're hiring a coach, you're hiring it under the wrong— like Bill kind of mentioned earlier— hiring under the wrong pieces. You got a different, you know, idea. You want the right person in that seat. When you get these CFOs and the CEOs to work with you, that you got to tap back into this side. They can't be segmented, they can't be separate. And I've always kind of been baffled by this mentality of, I'm gonna have a consulting CFO over here and, and they're just going to orchestrate and direct and whatever they do. We— Lynda and I met with one and we thought Whoa, it's not that comment of, you know, just kind of a passive way of saying the work that you do is a little bit less than. No, the work that we do builds the information that you need to drive the next 5 years. And if we're not doing it succinctly and we don't have the same pattern, we can't build the right foundation for you.

Yeah, I think, you know, sometimes, Sarah, unfortunately, they don't understand why they're asking the questions in the first place.

Exactly.

So again, it's returning to that, Yeah. Answer the question why they need the foundations of shared vision and shared goals that flow from that. And then execution tactics that make sense where there's accountability, there's follow-through, there are timelines, and there are measures for success. If they have all that set up, then the stuff that you bring to the table, they're immediately looking, okay, where does that fit into our plan? And they have a much better understanding of how you can help. They're missing that foundation.

Yeah. Well, and the first, I think going back, the first thing is being tapped in, understanding. We say this all the time. The moment you make it transactional with us, it becomes a less qualified relation for us. We're business owners. We get it. We're serving the same feelings.

A lot of times. The people that come across as dismissive when they're in that consulting role and not to take shots at my competitors.

Yeah.

But simply because they don't, they can't get in the weeds and they don't understand it.

Right.

So they pretend like they're better than that. And, you know, one of the things that I've always had to do is sort of be able to ride the elevator where I can get down in the weeds if I need to and I can pop up and hopefully disseminate that at a level that my constituents and the people paying my bills can understand. But you, if you can't get in the weeds, you I'm a firm believer in you can't supervise if you couldn't do the work yourself.

I think that we would not disagree with you in that.

Yes.

That's why, I mean, it is a, we have our colleagues that have always said, you know, you can't do the day-to-day. And then every now and then Lynda and I are like, but the day-to-day helps us keep our, keep us skilled at this, helps us understand the relevance. Software changes so fast.

Yeah.

And even us, we're like, wait, why is this looking like this? And this is looking— why aren't they talking the same? What's the deal? So I, I happen— I agree with you 100%. I, I've really— to me, I've always been about relationships. And the original clients that stick with me, it's about the relationship. It's not because I'm lazy. It's not because I can't get to you. It's about our relationship, and I want to make sure that when I am looking at your stuff, we are looking at the whole picture together. We're driving it together. How do you want me to tap in with this individual to help you drive this business? Um, yeah, and I think that's true of you too, is it— they're coming to you and unearthing the why. You gotta stay open and honest and, like she said, allow.

And I will say, a differentiator for us, and, you know, maybe this helpful to kind of start wrapping up. A differentiator for us, you know, whenever you want to, a differentiator for us is that we're not McKinsey, we're not Bouncing Consulting Group. We don't walk in, hear your question, provide a 5-inch binder with all the answers and tell you what to do. We work on it together, right?

Yes.

And dig into the weeds and understand who you are, and why you are who you are and what that means about your future. Nothing wrong with McKinsey, Accenture, Boston Consulting Group coming in and providing those notebooks. They can be of extreme help in certain situations for sure. But it's not the same kind of service that we provide. It's not as deep.

Yeah, it's tailored. I always say this, it's tailored services. It sounds like we have very similar ideas.

Yeah, we definitely do. Yeah.

Oh, this has been a great— thank you.

Oh my gosh, this is music to my ears today.

I have a whole sheet of notes right here.

I've been writing too.

I'm like, this is incredible.

I'm like, don't look away from the camera, but you gotta get this in.

I'm like, no.

Feel free to come back to us anytime.

Well, thank you, Bill, and thank you. Yeah, yeah, made it very easy. You guys are wonderful conversationalists, and certainly we see great need for what you do. That's where we have—

Vice versa.

Yeah. Both ways.

Exactly. Both ways. That's true.

Absolutely.

You know, and the way—

We appreciate the opportunity.

Yeah. And the way that I like to do things is, you know, opportunities back and forth. I mean, that's how referrals is how this works. And you know, it's just, it's nice to meet a, you know, an impressive group like yourselves and look forward to interacting more in the future.

Thank you.

Thank you.

Us too.

Us too. Yeah.

Yeah. All right. We appreciate it.

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Awesome. That was great. Great session. Thanks, everybody.

See you all next time. Thank you so much.

Mm-hmm.