18. Accelerate Your Firm: Intake and Understanding Revenue

Chad Dudley (00:02):

If we have a database of 300,000 people, 1%, 3000 of that group will probably get into a crash with injuries over the course of a year. If we’re having an ongoing dialogue with them, if they’ve had a positive experience with our firm, then we’re going to be top of mind when they need to make that choice.

Maria Monroy (00:18):

How much do you guys pay your intake specialists, bilingual intake specialists? I had answers from $40,000 to $150,000. I’m thinking this is a $100,000 position because in that moment, that person is your firm.

Chad Dudley (00:34):

When they’re signing up bad cases and they’re working on bad cases, their labor ratio goes up.

Maria Monroy (00:40):

Wow. So, this is way more complicated than just, “Hey, how many cases are we signing up?”

Chad Dudley (00:44):

Correct. So, you ask yourself, “How many fee centers do I have, and is each fee center producing a million dollars or more?” Ballpark number is around 8% of your team should know absolutely everything about your firm.

Maria Monroy (00:58):

Everything.

Chad Dudley (00:59):

Everything. No information’s off limits. How much everyone makes. Who’s getting hired, fired, disciplined. There’s no information that’s off limits to 8%, and that 8% believes and lives your culture.

Maria Monroy (01:09):

In law school, attorneys are taught to challenge everything, tear things apart, break them down. But the qualities that make lawyers great can be some of the worst for running a business. At every stage of growth, running a business and practicing law can feel overwhelming. And what happens when you try to add life and family to the mix? It can feel nearly impossible. You don’t have to do this alone. I’m Maria Monroy, co-founder and president of LawRank, a leading SEO agency for ambitious law firms. Each week we hear from the industry leaders on what it really takes to run a law firm, from marketing to manifestation. Because success lies in the balance of life and law, we’re here to help you tip the skills.

(02:01):

Chad Dudley is joining us today for the second time. He is seriously one of my favorite guests. Chad and I discuss what you really need to be doing with intake to be successful. And it’s more complex than you might think, so make sure you listen and take notes. How to accelerate the growth of your law firm at any stage and the five reports you need to stay on track.

Chad Dudley (02:29):

I’ve gotten to work with probably over 200, 250 law firms all across the country over the years. And I go in and I look at how can I grow the law firms? How can I get them to where they want to be? And I can tell you the one mistake, the biggest mistake that law firms make when they hire a coach, they hire a consultant, they bring someone in. Recommendations are made. They say, “We do that.” And what I mean by that is that you’ll come in. They basically say, “Look, I believe in what you do. I believe in your skillset. I believe in your processes. I think you’re good at what you do and I’m asking you to help me.” But then when you tell me what I need to do to help myself, I dismiss it by saying, “We do that all the time.”

(03:10):

“Hey, you fix this in intake.” “Well, we already do that.” “Talk to your clients.” “We do that.” “Run evaluation committee.” “We do that.” And the problem with that is that they’re missing the details that really make the thing work. And if they’re doing it at 80% of what I’m saying, getting that extra 10%, getting that extra 15% of just getting fanatical about it really makes the biggest differences. That’s where you see the biggest gains. And so when firms say, “We do that,” it’s almost like it kills progress. It kills improvement. It kills all the good stuff that they want. And I try and tell my coaching clients, “Don’t ever say that. Don’t say that.”

Maria Monroy (03:49):

It sounds defensive, in my opinion.

Chad Dudley (03:51):

It is. And I think, look, I always say I’ve been to a ton of conferences. I’ve visited a ton of firms and I’ve been to… We all have. We’ve been to good firms. We’ve been to bad firms. We’ve been to good conferences. We’ve been to bad conferences. But I would challenge you to have a attitude of learning that whether you go to a good conference, a bad conference, a bad firm, a good firm, you can always learn something from somebody. What are they doing well? What can I learn? And sometimes it’s not directly from what they’re saying, but sometimes just hearing them talk on a topic makes you think about something that you can apply to your firm. And so the firms I like being around, the firms that are growing at a rapid rate, don’t dismiss things. They say, “Tell me more.” And it’s the details that matter.

(04:38):

If there’s a great process that somebody does, I would encourage you to break it down to the most granular level you possibly can. If someone says, I was talking about the firm and they casually said, “We do supervisor file reviews.” And not a big deal. Most people in the room are like, “Okay, we do that.” And I sat in on a few. I watched how the partner actually did them, how he ran them, what software did they use while they’re doing it. Is he typing as he goes? Is he writing it on a notepad? What questions is he asking? Is he diving into the file while he’s asking these questions? Who’s in the room when it happens? How long do the meetings go? What reports do they look at before they go into the meeting? All the details is where all that stuff happened. And if I said, “Supervisor file reviews. We do that,” I would never dig in. And they were doing it better than we were doing it and I learned from them, but I would’ve missed out on that if I had this mentality of, “We do that.”

Maria Monroy (05:36):

Two things. So, first, whenever we’re creating a process, my husband always says, “I want you to pretend that you’re going to put this process together and you’re going to hand it off to someone you’ve never met and you can’t communicate with them.”

Chad Dudley (05:47):

I like that. That’s great.

Maria Monroy (05:48):

So, this is like, there’s no way. There’s no Slack, no email, no text, no phone. Nothing. You cannot communicate with them. And when you’re done with that process and you hand it off, you are not nervous that they’re not going to fuck it up. You’re confident that your process is so good that it doesn’t matter who you hire. You could hire a child. They can do it.

Chad Dudley (06:08):

Yes. I like that standard. That’s a great standard. I’ve never heard it phrased that way, and that’s perfect.

Maria Monroy (06:14):

And then the other thing is, when you said, “We do that,” and then you explained it, the first thing I thought of is every single time I ever bring up intake with a client. Every single, “Oh, we do that. We have a great intake. Oh no, we close 95% of the cases we want.” “How do you know that?” “Oh, because we closed the cases.” “Okay, how many leads did you get in, and how many of those did you want?” “Well, I don’t know.” “Well, then how do you know you’re closing them? Are you listening to calls?” “No.” And then they start to backtrack and sometimes they get defensive. I’ve had clients say, “Turn off CallRail. I don’t want you to listen.” Because their intake is so bad and we’re bringing it up. And so-

Chad Dudley (06:51):

Yeah. They take ignorance over clarity. I mean, they just want to be like, “Oh my gosh, I don’t want to lift up the rug and see what’s under there.” Yes, I hear you. And intake is one of the worst spots where people are just like, “We do that.” And I cannot tell you how many times… So, when I go into a firm, one of the things that I do the most is I’ll go in and be like, “Okay, let’s find the best 5% of their cases in the building. Let’s focus on intake and what will stress test intake.” And we run them through down to the detail of every iteration of how a call can go, is it tracked properly in their CRM? And you would not believe-

Maria Monroy (07:31):

Oh no, I would.

Chad Dudley (07:31):

… how many holes… Yeah. I mean, it’s crazy. It’s crazy. How many holes you find.

Maria Monroy (07:34):

I would.

Chad Dudley (07:35):

And you’re totally blind on this data point. You’re totally blind on this data point. If you’re blind on this data point, you have no idea what your intake’s doing and you’re flying blind. And so intake’s crazy. We can talk days and days for intake. But absolutely, that’s one place where I start. Then the next place I start is, let’s find the best 5% of your cases in the building. Which cases-

Maria Monroy (07:54):

Wait, wait, wait. So, let’s go back to intake for a little bit. What is good intake?

Chad Dudley (08:01):

Every time someone calls your law firm to seek representation it is a opportunity. It is a privilege. It is an amazing thing. And looking at it any less than that is a crime. Now, what is the best things that can happen? You got two batches of, when someone calls you. There’s the group that meets your criteria that you want to represent. Okay, that’s the first batch and that’s great. And you want to convert those into contract at a rate that’s 93% or higher, 95% or higher in that range. And then you got the next batch that goes, “Okay, these are not cases that we want to handle in-house, but these are cases that we can refer out for a fee or be co-counsel.” Okay, that’s great.

(08:39):

And you want to execute amazingly on that. You want to build up your referral network so that their conversion rates are high and that they actually work with you and report back to you and build out that referral network, and that’s a whole nother conversation. And then the third category is the group that, “Okay, it’s not something that we want. It’s not something that we would send to our referral network, but we still want to compassionately reject their case and help them in any way that we can. Okay, it’s only a property damage claim. Hey, here’s our PDF on how to handle a property damage claim on your own. Okay, it’s a family law claim. Okay, here’s a great family law attorney that we work with and that we do surveys with and we know that they treat clients right.” Whatever it is-

Maria Monroy (09:21):

What if there is no case?

Chad Dudley (09:22):

What if they don’t-

Maria Monroy (09:22):

What if they don’t a case? What’s the right way to handle a call where it’s the fifth law firm they’ve called and they keep getting told no, but they keep calling? Why does that happen?

Chad Dudley (09:37):

I think that it’s still a privilege to be called by that group of people and we got to treat it compassionately, treat it kindly, treat it how you’d want your mom, your parents, your kids, your grandmother, grandparents to be treated if they were in a bind and they’re trying to find an attorney just to guide them in the right direction. And can we do that? Can we execute on that on a consistent basis as an intake department? And if we do that, if we do a good job of converting the cases we want into contracts, if we do a good job with the cases we don’t handle with referring them out to people that we get a fee on, good.

(10:14):

And the other group, can we do the most we can for them so that if they ever do have a case, they go, “You know what? I did call five firms, but this firm seemed to be the firm that cared the most and treated me the nicest and went out of their way to add value or help me out. So, now that I do have a case, I want to go back to that firm.” That’s the goal for that group.

Maria Monroy (10:34):

Or even just explaining to them why they don’t have a case so that they don’t keep calling law firms. So, I think that’s a huge missed area of opportunity for a, reviews. So, somebody could say, “Okay, this is the fifth firm I call. Finally, somebody got on the phone and explained to me why I don’t have a case.” That builds referrals, and a potential great review.

Chad Dudley (10:56):

Absolutely. Look, we actually had cases that have come from clients that said, “Man, the person I spoke to was so nice. They were so kind. They took so much time with me to just talk to me and hear me out,” that when they did have a case, they came back and they said, “The reason we came back was because of the interaction we had when we didn’t have a case or we got turned down by you.” And so the other thing is that there’s a lot of good data. And so obviously the ones that we sign up, we have all their contact information and so forth. The ones that we refer out, we tend to get their contact information.

(11:31):

But the ones that we don’t sign up or refer out, are we still getting enough information from them to know, “Okay, zip code, email address. Can we help them out? Can we create a dialogue with them?” Because as you build out a database, 1% of people in the average population get into a crash with injuries each year. So, if we have a database of 300,000 people, 1%, 3000 of that group will probably get into a crash with injuries over the course of a year. If we’re having an ongoing dialogue with them, if they’ve had a positive experience with our firm, then we’re going to be top of mind when they do decide to make that choice or when they need to make that choice.

Maria Monroy (12:09):

Interesting. Now, how do you train someone to do intake?

Chad Dudley (12:13):

The first things that we go is going, “Okay, let’s go through and make sure that the scale works correctly.” And what I mean by that is that the data points have to be accurate. There can’t be any gaps where they don’t have visibility on how many leads they got, how many of those were qualified leads, how many of those got converted to contract, how many are what I would call no contacts and how many I would call no decisions. No contacts are, there’s some type of interaction, but you did not get enough information to make a decision to accept, reject, or refer the case. A no decision is a situation where you got enough information to make the decision to accept, reject, refer the case, but you did not make that decision. That sounds insane to someone that coaches on intake. Do firms actually have a conversation with a client and get enough information to accept, reject, refer, but don’t do it?

(13:01):

Yes. And a lot of times they don’t track it. And there’s been many firms where that was a gap in their data, and once we got them visibility on it, they started going, “Oh, okay, let’s just make some decisions.” And their conversion rates went up. Their sign-ups went up. So, start there. Let’s make sure that we’re measuring those things properly. Then the next thing with, fortunately in this day and age with phone systems, you can actually just say, “Hey, look, send me live recordings on a regular basis with my intake team.” Okay, cool. We’re going to start that. The other thing is, let’s have scripts for not only how the call is supposed to go, but I would argue we’re trying to get the minimal information possible to make a decision on the case. And there’s often a battle between possibly the attorney and legal assistant saying, “Hey, ask them everything.”

(13:48):

And then you got the intake department going, “Hey, we’re just supposed to sign up cases.” And so I would argue, yes, you want your intake team signing up cases and getting the minimal information possible to make a decision and get your marketing data, okay? Now, there’s a kind way to do that. There’s a sensitive way to do that. But minimal information, and we script that. We also script what do you do when you run into issues like conflict and how do you handle that and coach them in those situations. The other thing that we want to coach them on is, do you have brag lines for the firm? Do they know eight, nine, then things about the firm? “Hey, they got the highest verdict against a drunk driver in the state of Louisiana,” or, “Hey, we have 50 attorneys and we got a trial team.” What are bragging points that they can use to run into common, maybe issues with converting cases, and so are they armed with that? So, script, brag lines. And then we’ll go, “Okay, let’s record some of the calls, right?

Maria Monroy (14:44):

All of them.

Chad Dudley (14:45):

And then coach them. Yeah. Record all of them, right?

Maria Monroy (14:47):

Yes.

Chad Dudley (14:47):

Let’s randomly grab-

Maria Monroy (14:50):

Let’s fix them. Yes.

Chad Dudley (14:50):

… a batch of them and go, “All right, we said we’re going to do these four things in a call. We got the greeting, take the information, make a decision, convert.” Walk them through that, and how good are they doing those things? And then coaching them on a weekly basis. And have a mentality of, “We’re doing this not to beat up on anybody. We’re not doing this to embarrass anybody. But we’re doing this because we want to be the best at what we do. We’re want to be the best intake.” If we get intake right, it solves a lot of other issues. If you get intake wrong, it creates a bunch of issues that you never knew you had.

Maria Monroy (15:18):

How much do you think firms are leaving on the table because of poor intake on average?

Chad Dudley (15:22):

Oh my gosh. I’ve seen firms leave anywhere between 10 to 40% on the table during intake. So, I mean, think about that. Say a firm signs up 50 cases a month in auto, and they’re leaving, say, another 15 cases on the table. So, 15 cases times 12 months, that’s 180 cases. Say 70% of those cases make it to the finish line with a fee. Now we’re talking about 136 cases that you’re missing out on. 136 cases times an average fee of even $10,000, you’re getting into some really big numbers really, really quick. And then here’s the problem is that when you miss out on that revenue over a course of a year, that impacts what you can spend on advertising the following year, what you can spend on hiring key people, what you can spend on growing your firm. And it is a cumulative impact on your firm. So, you got Firm A and Firm B. Firm A kicks asset intake. Firm B sucks at intake. Okay, year one, Firm A is putting more money back into its firm and it’s exponential. And by five years, they’re two totally different firms.

Maria Monroy (16:37):

Do you think that anyone can do intake?

Chad Dudley (16:40):

So, when we’re hiring intake, I’m a fan of personality profiles. I’m a fan of the DISC profile. I’m a fan of the DISC profiles that show you, “Here’s how you are at work versus your natural or relaxed state.” And what we’re looking for is people that are natural and relaxed in a state where they’re highly social, but also pay attention to detail and so forth. And finding that rhythm, it’s more important that they enjoy people, that they like people, and then we can teach the systems and processes to them. If we have an intake person, if we have a reception that is a low I on the DISC profile, it’s not that they can’t be great at intake, it’s just that they’re predisposed to not excel in this position. Now, they can overcome it, but we just got to proactively know that that’s what we’re working with. And so when you ask the question, “Can anyone be great at intake?” No. I think it just takes a special person. And-

Maria Monroy (17:32):

I agree.

Chad Dudley (17:32):

… you got to find that person. And there’s a bunch of those out there, but it takes a special personality.

Maria Monroy (17:38):

Yeah. And they have to have empathy. So, they have to be friendly. They have to have empathy. But they have to be able to sell a little bit. They have to-

Chad Dudley (17:45):

It’s absolutely a sales position.

Maria Monroy (17:48):

Right?

Chad Dudley (17:48):

Yes.

Maria Monroy (17:48):

It is. And I think it’s such an important position, but I think it gets overlooked so much. And oftentimes I see this where whoever’s doing intake is also doing a thousand other things.

Chad Dudley (18:00):

One of the first things, you go into a firm and you go, “Who is obsessing over intake on a day-to-day basis? Who’s the one that is thinking about, ‘Gosh, our conversion rate’s down. What’s causing that? Is it across all of our intake specialists or is it one? Did something happen? How can we fix it? Let’s look at the metropolis reports to see who’s spending the most time on the phone and average time on phone and how many calls. Who wants to really obsess over the numbers? ‘Hey, this is our conversion rate When they talk to an attorney.’ Who’s going to think about it?” If you don’t have that person at your firm, you’re screwed.

Maria Monroy (18:34):

Do you think that they need to be bonused or have a commission structure?

Chad Dudley (18:36):

You have to make sure that you’re compliant with your local bar rule.

Maria Monroy (18:38):

Of course.

Chad Dudley (18:39):

Set that-

Maria Monroy (18:39):

But assuming that you are.

Chad Dudley (18:40):

Assuming that you are the next question is, who gets to make the decision to accept, reject, refer the case? And in some states it has to be an attorney. In other states, they trust the non-attorney to make those decisions. So, there’s that component of it. With incentives at the intake level, you got to watch those, what I would call want ratios because here’s what’s happened. So, most want ratios for firms that do auto on a mass level is between 40 to 55%. So, that’s it. So, whatever your firm’s want ratio is, just know what it is. We can talk about how you calibrate that in a second. So, let’s put a pin in that. We can calibrate and find out what the optimal want ratio is for your firm. But wherever it is, you start there.

(19:30):

And if it’s your non-attorneys and they’re making decisions on the case, you want to make sure that they’re making the right decisions. Okay, so set that aside for a second. Now, once they make the right decision, you want to make sure that they’re doing a good job of converting those into contracts. If you’re going to do a bonus program, I would recommend doing it off of the conversion rates, not necessarily on the want ratios or pure signups or whatever, going, “Hey, when we make a decision to want a case, how good are we at converting those into contract?” There’s two ways you can do it. You can do it on a rolling 90 with a 30-day lag, which sounds super convoluted and it kind of is. But that’s saying, “Hey, let’s look at your 90 days worth of conversion rates, but let’s give it a 30-day time to settle.”

(20:14):

The reason you do that is because you give them some time to chase the call. Now, the other way to do it, which is more effective, is saying, “If we’re tracking our chase calls and what I call our no contacts…” Let me back up. There’s three things that you’re watching on an ongoing basis in intake. How many active chases are do we have? Those are cases that you want that you don’t have contracts on. How many active no contacts do we have? Those are cases that you don’t have enough information to make a decision to accept, reject or refer the case, but you’re still trying to get that information. And then you have your no decisions. When your active chases, your active no contacts and your no decisions all go down to zero, that data set is closed. It’s not changing. So, we do that on a weekly basis and we’ll look at, “Okay, here’s six weeks ago. Okay, it’s still live.

(21:00):

We got one active chase from that week. Okay, the next week after that, no active chases, no active, no contacts, no no decisions. That week is closed. What’s our conversion rate? 93%. Okay, bonus.” So, if you’re going to do it, that’s my preference. When you do it off want ratios, it can get funky. When you do it off pure signups, it can get funky. There’s a way to do it. Can we do it at the individual intake specialist level, and can we do it at the intake department level? I like those a little bit better. But to answer your question, yes, I think there should be some type of incentive, some type of a bonus. There should be a scoreboard that everyone is cheering for and rooting for and trying to help improve, and that helps create that mentality, in my opinion. And you just got to do it right, because you can do some weird stuff with incentives where people artificially reject cases so they don’t show up as chase calls. And I’ve seen a ton of stuff.

Maria Monroy (21:54):

Yeah, the unintended consequences of commission. And reminder, it is a sales position. I think a lot of lawyers don’t get that.

Chad Dudley (22:02):

Correct. And a lot of attorneys don’t get that and they don’t train it in that way. Gosh, there’s a lot of stuff outside our industry in terms of sales and converting leads into contracts that exist outside of our industry that are great resources to improve the sales abilities of your intake team.

Maria Monroy (22:21):

I think I’d be great at intake. I mean, I’d probably be bored after a week, but I think I’d be great at it.

Chad Dudley (22:25):

Well, here’s the thing. It is a tough, tough job and firms treat it as an entry level position when it is a superstar position that really can massively impact your firm.

Maria Monroy (22:36):

So, I once asked on Instagram, “How much do you guys pay your intake specialists, bilingual intake specialists?” I had answers from $40,000 to $150,000.

Chad Dudley (22:47):

Wow.

Maria Monroy (22:48):

Such a huge gap, in my opinion. Also, the value that they’re giving this position. Where I’m thinking, “This is a $100,000 position,” in my mind, just after commissions and everything, because in that moment that person is your firm.

Chad Dudley (23:05):

Absolutely. I mean, you think about who the client’s going to actually interact with at your office. Intake is one, deciding whether or not they’re going to hire, fire, stick with your firm. And run the math, the math we talked about earlier. If you can get 10 more contracts, 15 more contracts and say that’s a million more dollars to the firm over the course of a year, invest in your intake team. Get awesome people. Get really badass people and it’s absolutely worth it. And a lot of firms just, all right, they don’t respect the position. They don’t celebrate the position. And everyone’s always trying to get out of intake and you want to make intake like, “Hey, this is a great place to be.” Because they’re handling call after call after call. It is a tough gig.

Maria Monroy (23:50):

It is. Now we put a pin on something. Did we cover that?

Chad Dudley (23:51):

So, one of the things we talked about is, how do you know if your want ratio is correct for intake? It means that, say that you’re running your reports and you get 100 auto leads, and on average 45% you want or 45% meet your criteria. Is that good, bad, in between? That’s an important question. And so the way that we answer it is, let’s now look at your closed with fee ratio. And so many times when people are working on intake, they never look at their closed case stats. And that’s a big mistake. And the reason it’s a big mistake, it’s going, “Hey, we made decisions to represent these people. What happened? Was it a good decision? Was it a bad decision?” And when I say that, so you got to look at your closed case data. If your want ratio is 45%, but you only close 50% of your auto cases with a fee, you’re making bad decisions. Half of your cases are crap. Half of your cases, you’re working on them and they’re bringing in zero fees.

(24:48):

And people never look at that. So, you’re like, “Okay, let’s take that 50% that we close with no fee. Let’s put them in a stack and let’s go through each and every one and we’re going to put them in one or three buckets. The first bucket is, we should have never signed this up and we should have just done this at intake and we would not have signed up this bad case. The second bucket is, if we had just done this, this or this at this stage of the case, we could have got out of this case way earlier. What’s the earliest we could have gotten out of this case? Third bucket is, shit happens. We couldn’t have done anything differently. It just went bad. And that’s the cost of doing business.” And you’re calibrating your intake want ratio. You find a bunch that you should never have signed up. Your want ratio may go back down to 40%.

Maria Monroy (25:31):

Got it. Wow. So, this is way more complicated than just, “Hey, how many cases are we signing up?”

Chad Dudley (25:37):

Correct. I always talk about, look, there’s two numbers that firms should obsess over. It’s your true cost per case and it’s your average close fee. Your true cost per case is saying, say you spent $100,000 to get 100 cases in the door, okay, so your cost per case is $1,000. But if you close only 50% of those with a fee, your true cost per case is $2,000. Does that make sense? And so you got to know that true cost per case. You got to understand your close of fee ratio and you got to make that work with your average close fee. And if you’re not looking at that stuff and you keep making bad decisions on intake, then what I’ll see with firms is, we talked about this a little bit earlier, when they’re signing up bad cases and they’re working on bad cases, their labor ratio goes up. It goes through the roof.

(26:28):

And what’s labor ratio? If you take everything you spend on labor, all-in, benefits, salaries, bonuses, commissions, everything you spend on labor at your firm divided by your revenue, that’s your labor ratio. Typically, for most firms it’s below 40%. Some firms can get it below 35%. There’s a handful that get it below 35%. So, when firms have labor ratios that are high, above 40%, they go, “Is my team working on bad cases for long periods of time?” And if you’re close fee ratio’s low, you fix that by either intake or getting out of them quicker, and you’ll see your people get to be more productive. It makes sense. If you gave someone at your place 100 tasks and 50 of them resulted in no revenue to your business, that sucks, right?

Maria Monroy (27:21):

Yeah. Yes.

Chad Dudley (27:25):

But that’s what we do unknowingly when we don’t look at our close of fee ratio.

Maria Monroy (27:27):

But see, just me listening to you, I’m overwhelmed just getting all this information. I feel like somebody listening to this right now might feel like, “I don’t even know where to start. How do I implement all this?”

Chad Dudley (27:39):

So, take a breather. Just go… Intake. Okay, intake. Intake is something I would recommend. You got to get some professional eyes on it. You need someone to sign off on your intake. You should probably do it once a year. Just get someone to audit your intake.

Maria Monroy (27:56):

Anyone you recommend?

Chad Dudley (27:58):

I’ll do it. We do it. There’s a bunch of awesome people. We do a great job. We’ll break it apart and find holes in your intake.

Maria Monroy (28:05):

When you say we, who is we?

Chad Dudley (28:07):

We is Accelerator. Accelerator is a consulting company that I started to help firms with stuff like this. And we’ll go into firms. We’ll audit their intake. We’ll audit other parts of the firm. We’ll do some ongoing consulting with them. We’ll coach them. We’ll do other projects with them. Sometimes it’s a limited project, but we’ve done that. I’ve been doing consulting for about 15 years now. Worked with a bunch of firms and I love doing it. We got a team that works with firms. They’re awesome and they can do all these things.

Maria Monroy (28:35):

I have so many referrals for you.

Chad Dudley (28:38):

So, intake is one of those things. The second thing that I’ll often look at at a firm is what I’ll do a profit and loss analysis. I’ll just look at their P&L, and I’ll look at it for the past three years and I’ll look at a couple key ratios. I’ll break up the revenue into case type. Cool. Then I’ll look at their expenses and break it up into four categories: advertising, attorney labor, non-attorney labor, and everything that’s not in one of those three other. Boom. So, one of the things I’ll look at is their labor ratio, because firms can just get so whacked by their labor ratio. Meaning they’ll go, “Gosh, we have so many people. They’re working their butt off. They’re going, but they’re just not… How are we not profitable?” And so the first question is, “Is my team producing the amount of revenue that this team should produce?”

Maria Monroy (29:28):

And how do you know what that is?

Chad Dudley (29:30):

Okay, so what I like to do is going, “How many fee centers does a firm have?” So, a fee center can be an attorney or it can be a non-attorney that produces pre-litigation fees. Does that make sense? So, some firms, their only fee centers are attorneys. They’re the only people in the building that are expected to produce fees. The reason I don’t say attorneys is because a firm can have 10 attorneys, but maybe one’s a managing partner that doesn’t produce fees. One is a research attorney. One’s a intake attorney. So, really you have seven fee centers, not 10, even though you have 10 attorneys.

(30:01):

And in other situations you may have seven attorneys that are expected to produce fees, but then you also have two case managers that are expected to produce fees pre-lit. You have nine fee centers. So, you ask yourself, “How many fee centers do I have, and is each fee center producing a million dollars or more?” And if they’re not producing a million dollars or more, I would say, “All right, that’s possibly a revenue productivity issue.” And if they’re producing a million dollars or more on average, then you’re like, “Okay, they’re producing what you would expect a fee center to produce. The issue is on the expense side. It’s not a revenue side.” Are you with me?

Maria Monroy (30:34):

Yes.

Chad Dudley (30:35):

Okay. So, then that’s the first place you check. So, when say it’s an expense issue, if they’re producing the fees you need to produce and your labor ratio is still high, above 40%, the next question you ask is, “Let’s go look at our closed with fee percentages, because possibly they’re spending a chunk of time working on bad cases.” So, what percentage are we closing with no fee? The next thing you look at, “What is our time on desk for closed no fee cases?” It’s okay to sign up bad cases. It’s not okay to sign up bad cases and work on them for chunks of time.

Maria Monroy (31:08):

What’s too long?

Chad Dudley (31:09):

Over three months.

Maria Monroy (31:11):

Got it. Okay. Now-

Chad Dudley (31:13):

That’s simpler.

Maria Monroy (31:14):

Yes. Okay. I swear we have listeners that are overwhelmed right now. I guarantee you. I’m just curious. Where did you learn this?

Chad Dudley (31:23):

I’ve probably worked with more firms than anyone out there. I have a spreadsheet that has five tabs. If a firm fills out those five tabs, I can most cases give them what they need to work on for the next year. And it’s just from repetition. I’ve spent so much time on this. I love doing it. I enjoy doing it. And it just starts to-

Maria Monroy (31:42):

You see patterns.

Chad Dudley (31:43):

You see patterns. You absolutely see patterns over and over, and you simplify it. And believe it or not, it’s easier when I’m working with firms. I give them a visual of what I’m talking about and saying, “Okay, labor ratio off. Let’s go to this tab. Here’s your close no fee percentage. Here’s your time. This is hurting you. Let’s not work on bad cases for a year. Let’s not work on bad cases for two years.” It sounds simplistic, but firms do it all the time. Most firms don’t know their closed with fee ratio or their time on desk for closed no fee cases.

(32:16):

And so you got to get some of these data points locked down. And so when I do an audit of a firm and they don’t know their data points, that also tells you something. You’re like, “All right, they need to work on this.” You need five reports. You need an intake summary report. You need a fee production report by case type, a fee production report by attorney, closed case report by case type, closed case report by attorney. With those five reports you can manage your firm through, I mean, 80% of the stuff you’re going to run into.

Maria Monroy (32:42):

So, as overwhelming as this sounds, it sounds amazing. And I’m sure once it’s implemented, it just makes things run so smoothly, and like a business should run, right? At what point in time should this stuff be implemented?

Chad Dudley (32:57):

Lots of stuff in firms break every time they double. So, start off with 10 people. 10 people, you know everybody in the office. You really don’t need systems and processes. Or you think you don’t. You can cover things because you’re just so small and you can just wing it and you think, “Okay, life is great.” And then you go to 20 and then things break. And then depending on how many partners a firm has, one of the most difficult transitions that’ll hit is between 40 and 80 employees. Because you can’t know everything that’s going on at the firm and you can’t be in control of everything that’s going on at the firm. Your quality of life just goes to crap. You’re working 100-hour weeks. It gets really, really insane. And so that’s a big pain point that a lot of firms don’t get past.

Maria Monroy (33:39):

And I know we talked about this last time, but remind us. How many direct reports should you have?

Chad Dudley (33:43):

I would say somewhere between five to eight. If you’re really working with your direct reports and if you’re engaging with them on a weekly basis and having one-on-ones or even every two weeks, once you get past eight it can get crazy. Now, it’s an ongoing thing, but I think, for example, we have about close to 60 attorneys now, and we had stuff that was awesome. It was great. Our evaluation committee, how we set values on our biggest cases, boom. 15 attorneys, awesome, easy, put them all in one room. As you get more, it gets a little bit crazy. 60 attorneys, I mean that thing’s broken 20 times and we can’t have one managing attorney over 60. And so we had to break them up into teams and we broke them up in teams of four to six. And each team, they report to a team lead. And that’s how we scale it. Ballpark number is around 8% of your team should know absolutely everything about your firm.

Maria Monroy (34:36):

Everything.

Chad Dudley (34:37):

Everything. No information’s off limits. How much everyone makes. Who’s getting hired, fired, disciplined. There’s no information that’s off limits to 8%, and that 8% believes and lives your culture. Because you need ambassadors throughout the firm. Now, what happens is when you’re 10 people-

Maria Monroy (34:54):

You are that person.

Chad Dudley (34:55):

You are that person. Boom. You got it covered. You double, now you need another person. Look, start getting disciplined about this stuff when you don’t need it, right? And when you’re 10 people, 20 people, start working through this stuff. 30 people, 40 people. You want to change the tires on the car when it’s not moving. Because when it starts moving, it just gets insane. And there’s never any time. We can’t do this and we’re too busy. And that sucks because when you get too busy to work on the things that matter, then you stall out.

Maria Monroy (35:27):

Absolutely. And you see the biggest issues when firms are scaling.

Chad Dudley (35:31):

Yes. Yeah, absolutely. I think the hardest thing, the absolute most difficult thing that I see firms go through when they’re scaling is that, so say you’re at 30 people and you have your 8%, so you’re talking about maybe you got three, four people that are on your leadership team, your executive team. When you want to take that firm from say, 30 people to 60 people, the firm has now doubled. And that team has to get twice as good, and they got to grow with the firm. And the thing that is the most difficult thing I see firms go through is that they love and care about their key people and having those crucial conversations when those key people don’t grow with the firm, and you don’t have to ask them to get off the bus, but you ask them, “It might be time for you to take another seat on the bus, and are you okay with that?”

(36:23):

And if they’re not okay with it, then they need to get off the bus because I know we all want them to succeed. We want them and we can see how they can, but the truth is they either don’t have the bandwidth to do it or the desire to do it, or there’s something that is not clicking. And we keep trying to make it happen, and we cause them stress. We cause ourselves stress. And the blindness to that holds so many firms back.

Maria Monroy (36:51):

What other mistakes do you see firms make when they’re scaling?

Chad Dudley (36:55):

I do this thing called a Roles and Responsibility document. It’s a spreadsheet. And on the spreadsheet it’s especially helpful if you have more than one partner, but the first column is, “Okay, who’s the partner that is in charge of this process or metric?” Then the next column is, “Who’s the person on my executive team that’s going to own this process or metric? And then is there another person, the next layer down, that owns this process or metric? What is the expectation of this thing?” Meaning if this thing is going right, what are the indicators that it’s going right? And then it’s going, “Okay, as a partner, what kind of visibility do I want on this? Do I want to be reported to this reported on this daily, weekly, monthly, quarterly, annually? And then the person that is the frontline person, how often do I want them looking at this.”

(37:48):

There’s a column for each quarter. Third quarter of 2022, the leader that owns it reports on it. This thing’s on track, it needs attention or it’s on fire, and here’s what we need to do. What this does is whenever something doesn’t go the way you want it at your business or at your firm, you go to that document and say, “Have I been clear about how I expect this to go?” And if it’s on there, then that’s easier. If it’s not on there you’re like, “Man, I have not been clear.” And you go through it and you make it clear and you put someone in charge of it and make sure that someone owns it. And what happens is as things scale… When you’re 10 people, 20 people, the owners and everybody in the organization can wear a bunch of hats.

(38:34):

I can run marketing. I can run legal ops, and I can actually fix a printer every now and then when I needed to and go make copy. Whatever needed to be done at 10 to 20 people, you can do it. But the issue was as you grow, people have to wear less hats and give up some control. And that document helps you do that in an organized fashion so that things don’t slip through the cracks. Or if somebody, a key person steps down or leaves, or if you take a job that you need to split into two, it allows you to do that in a way that processes and procedures don’t slip through the cracks. Because how many times do firms go, “Gosh, we used to do that. We used to do this thing, but we just stopped and we don’t know who owned it. We don’t know why it stopped and it just fell through the cracks.” And so I would encourage that accountability at the process and KPI level and that you monitor that and check in on it quarterly.

Maria Monroy (39:26):

Is there a percentage of profitability that firms should have within a certain range of revenue? And I’ve heard that the larger you get, the more profitable you are. Is that true?

Chad Dudley (39:38):

It depends. I would say as firms reach over a certain size, I mean, the margins may stagnate a little bit. There’s a great book called Simple Numbers and Simple Profits. And one of the concepts that that book pushes is when you talk about profitability, are you taking the owner out of the mix and saying, “If I had to replace the owner on the open market, what would that cost?” And that’s an important thing. Because say a firm’s generating less than five million dollars in revenue. It has three attorneys. One of them is a partner and the partner is generating three of the five million. And on the books it might look, “Hey, the firm’s super profitable.” But the owner’s working 100 hours. They’re doing all the heavy lifting. He’s actually the only one that’s profitable. The other two attorneys are not profitable. It’s misleading to say the firm is profitable.

(40:25):

And so what I say in that situation is, “All right, firm. Partner, we’re taking you and setting you to the side and you’re on an island and you had to replace yourself with someone that can produce three million dollars in revenue. What would you have to pay that person on the open market?” Boom. Okay, let’s add that fake labor in there and let’s look at it that way and say, “Now, how profitable is your firm?” My number that I like is, just as a general number, is partner or partners living on an island replaced on the open market, is their profit percentage higher than 25%? Okay, that’s them not working in the business. That’s totally removing them and accounting for the labor. Because sometimes I’ll work with firms and the owner is living on an island and he is just popping in every now and then.

(41:12):

That’s different than someone that’s working 100 hours in their firm. And so that’s a way to normalize the data and say, “Okay, can we compare apples to apples and who’s really profitable?” And we’ll look at it that way. Now, the thing is with smaller firms, you can have these crazy swings. If you get a big hit on a case and you get a five million dollar case and you’re averaging three million dollars of fees a year and all of a sudden you just doubled your revenue, your profit numbers can blow all those ratios out of whack. So, while I say there’s certain guidelines you should look for, what I do with firms is, “Let’s look at your past three years.”

(41:49):

If they’re a firm that’s a mass tort firm that gets these big hits or if they’re a small firm that gets these big hits, I might go look back five years or seven years and see how often those hits come in. And we’ll try and plan what they want to look like in the good season. “Hey, when you get these big hits, what do you want your numbers to look like? And when you’re in those in-between years, what do you want your numbers to look like?” And we try and design it like that so that we can account for the big swings. Firms that are a little bit more stable, then we can predict it a little bit easier and we can create profit targets for them as well.

Maria Monroy (42:23):

Got it. If a firm is listening and they can implement three things, what would you recommend that they do? They’re going to go back and they’re going to do three things that you tell them to. What should they do?

Chad Dudley (42:35):

I’m going to say there’s three things that they should work on in their firm, and then there’s three things I would say do in general for your firm. Three things on your firm. Absolutely, first thing’s intake. Go there, make sure it’s airtight. Make sure there’s no holes in it. Make sure that you’re maximizing. Every time your phone rings, it’s expensive to make the phone ring, every time your phone rings that you’re getting the most you possibly can out of it. That’s one.

Maria Monroy (42:57):

Okay. And Chad is a lawyer, a very successful business owner. Because nobody listens to me, but please listen to Chad.

Chad Dudley (43:07):

Absolutely. Maximize intake. Make sure that you’re taking advantage of every time the phone rings. The second thing is, find your top 5% of your cases and make sure that you’re maximizing value on the top 5%. Part of that is doing an honest assessment of the skillset of your attorneys. If you have some multimillion dollar cases or cases that have the potential of being multimillion dollar cases and you don’t have an attorney that has handled multimillion dollar cases before or taken those cases at trial, you need to be honest and go, “What’s the best interest of the client?” And make sure you take care of those cases. Third thing that I would recommend is get your core reports. I’m not talking about a thousand reports. I’m not talking about 50 reports. I’m talking about there’s five that I mentioned that you have to get right.

(43:43):

There’s probably another five that will close the gap on some stuff that are variations of those reports. You got to get those reports right so that you can get visibility on what’s going on at your firm. So, those are the three things I recommend. Those are the basics. Get those right today. Now, if you just go, “Okay, let’s talk at a little bit bigger level. What should firms do to grow?” I would say, get coaching. A good consultant will accelerate your implementations. Things that would take firms five years, they can get you doing it in one year or six months. I’ve been a law firm consultant for, like I said, 15 years now. During my journey, I still will reach out and grab coaches from either in the industry, outside the industry because I want to get challenged about how I think about things and how I do things even though I’ve done this for so many firms over the years.

(44:31):

The second thing I’d recommend is, keep learning. Go to conferences. Read books. Listen to podcasts like this. Do those things because you just get so much good information. Now, I mentioned this today when I was speaking, you may get 100 great ideas from this podcast and other podcasts or all the things, conferences you go to, books you read. Be purposeful that out of those 100 good ideas, there might only be five ideas that are good for your firm at this time for what you’re trying to accomplish, and be smart about… I’d rather you violently implement, execute five great ideas that are right for your firm than half-ass implementation of 100 things. But you got to get out there and keep learning. And the third thing I’d say, go visit firms. Go visit other firms. If you have a friend that’s running a firm, if you have a friend that is doing good things, if you have someone that will say, “Come check me out,” you learn so much by just hanging out with them, hanging out with their people, seeing how it actually happens in real life at another successful firm.

Maria Monroy (45:29):

Do people visit your firm?

Chad Dudley (45:30):

All the time.

Maria Monroy (45:30):

Really?

Chad Dudley (45:30):

Oh yeah. All the time. We have an open door policy. We say, “Hey, look, give us a holler.” Sometimes they’ll sit in on one of our meetings. Sometimes they’ll just come and visit. And we’re an open book. We would not be where we are but for other people just sharing and being open books to us. We’ve always adopted that mentality. And we have people visit all the time. We have people always reaching out all the time, and we’re cool with that.

Maria Monroy (45:54):

And they just shadow you guys.

Chad Dudley (45:55):

They just shadow. They might come in and go, “Hey, look. Oh, that’s cool.” And then they go do it. We have an agenda. They usually come in on a Sunday night. They sit in on our Monday huddles. They’ll go to the meetings on Tuesday, and then they fly out. We are of the mindset that by doing that, there’s a small batch of people that actually will implement the things that they come and see. And we build friendships and relationships with them, and those are the people that we like to hang around.

Maria Monroy (46:20):

Now, have you ever audited a firm and thought, “Oh, there’s nothing here for me to do. You guys are doing it all perfect and great”?

Chad Dudley (46:28):

It’s funny. It is so rare, but I had one. It was from out in southern California. They hired me to audit their firm, so I did what I do. I audit their firm. Everything looked amazing. And so when everything looks amazing, the next question I’ll ask is, “Man, your numbers are awesome. As an owner, as a leader, let me ask you, is this a quality of life thing? Are you calling me because you’re working 100 hours and you’re trying to do this thing that you’re doing, but with less input from you?” And he’s like, “No, I got a good quality of life. I got a good team. I work this many hours and I’m working the exact amount of hours I want.”

(47:05):

And I’m like, “Man, that’s awesome. And so this firm, are you trying to grow this? What you’re making, are you trying to increase revenue?” He’s like, “No. I mean, if I make this amount of revenue each year, I’m good.” I said, “Why’d you reach out? What was the pain point for reaching out?” And he goes, “Look, I felt good. I just wanted someone to do a checkup, to do an audit.” This guy was, I guess, in his fifties, and he said, “I do this executive wellness thing where I’ll go in and they check everything. They check your blood pressure, your urine-

Maria Monroy (47:41):

It’s funny. That’s what I was thinking about. I’m like, “This is like your checkup at the doctor.”

Chad Dudley (47:42):

That’s exactly. He’s like, “I did this thing. They do a CT scan. They check all your vitals and everything under the sun. And if you get a clean bill of health, you’re like, ‘Whew. Okay, I feel good. I’m going to keep going.'” He’s like, “I felt that’s what I wanted this process to be. I felt like everything was good. I just wanted to make sure that there’s nothing that I was missing.” He had a small firm, a small batch of cases. Low volume, high value cases. He was running his intake and he was running his cases off a Google Sheet.

Maria Monroy (48:13):

Really?

Chad Dudley (48:14):

But it was working. I mean, I audited everything. Want ratios, conversion rate, everything. I’m like, “Man, it’s low volume. It’s working for him.”

Maria Monroy (48:24):

But was he running the reports that you say should be ran?

Chad Dudley (48:27):

He was creating these pivot tables and it was working. And would I recommend someone in that situation go convert to a case management system and pay this? And I’m like, “No.”

Maria Monroy (48:36):

It’s not broken.

Chad Dudley (48:38):

It’s working. It’s working at a crazy high. He had a 45% average net profit year-over-year. Just a great practice. I’m like, “All right.” I say, “I don’t say this often, but I think life is good. Keep trucking. You’re in the top 1% of personal injury firms in the country.”

Maria Monroy (48:57):

Wow.

Chad Dudley (48:57):

“If you’re happy, keep rolling.”

Maria Monroy (49:00):

That must’ve felt good for them. They must been like, “Cool.”

Chad Dudley (49:04):

Yeah, but I’m not trying to just go create stuff to work on. I’m trying to find out, what is this person trying to build? What do they want their firm to be, and how can I help them get there?

Maria Monroy (49:13):

So, I know you talked about this last time, but now you’re partnering up with firms, right? Can you tell us a little-

Chad Dudley (49:20):

Correct. So, there’s two things. One’s, firms will reach out to us and either they want us to audit their intake, audit their firm as a whole. Both of those can be done remotely. The other thing was with different projects, we’ll work with them on, “Hey, I want to launch this initiative at my firm.” Generally we like to work with firms at least for a year, but sometimes we’ll take special projects. And the intake audit and the law firm audit are things that take about 30 days. That’s just a 30-day engagement. But the other things are usually then we’ll work with firms for a year at a time. In addition to that, one of the things that we’ve been doing is management contracts with firms where we’ll come in, the short version is they keep their brand, they keep their equity, they can terminate the contract whenever they want, and we get paid on a percentage of the growth of net profit. If we don’t grow the net profit, then we don’t get paid. If we grow, then we participate in the upside.

Maria Monroy (50:14):

That’s amazing. So, Chad’s cell phone number is… I’m just kidding. How can people-

Chad Dudley (50:20):

Reach out to me at [email protected]. That’s D-U-D-L-E-Y-D-E-B-O-S-I-E-R.com.

Maria Monroy (50:32):

Thank you to Chad for joining us a second time and giving us even more of his insights. There was a lot of information today. If you only take away three things from today’s conversation, focus on intake. It can almost always be improved. Maximizing the value of your top cases. And to understand the health of your firm, run these five reports. Intake summary report, fee production report by case type fee, production report by attorney, closed case report by case type, and closed case report by attorney. If you found this story valuable, please share it with someone you want to see succeed. Subscribe so you never miss an episode and leave a five star review. It goes a long way to help others discover the show. Catch us next week on Tip the Scales with me, Maria Monroy, president of LawRank. Hear how the best in the business broke out of limiting beliefs, overcame adversity, and built a thriving, purpose-driven business in the process.