440. AMMA — The 7 Most Common Questions Scaling Law Firm Owners Ask

(upbeat music) Outside of revenue and profit metrics and average case value and all those different things, it's like, are you engaged and excited every day when you show up to the office? Like, are you excited every day to come in and you like the people that you're working with? Are you engaged by them? Are you enjoying how you're spending your time? (upbeat music) I'm Michael Mogul, founder and CEO of Crisp, the nation's number one law from Growth Company. I've built my business through practice, not theory. Crisp started which is $500 to my name and has grown to over eight figures in revenue over the last two years. Earning a spot on the ink 500 lists of the fastest growing private companies in America. Our approach has been to take everything we've learned about generating massive growth within our own organization and help the country's most ambitious and committed law firm owners do the same for theirs. In each episode of this podcast, I sit down with innovative market leaders from the legal industry and beyond to learn from those who thrive in the face of adversity, challenge the status quo and define what it means to be a true game changer. This is Jessica, head of coaching strategy at Crisp and today we're flipping the script for another special edition episode to get Michael's take on. Understanding how scale impacts decision-making and creates bottlenecks, how to diagnose the root causes of friction and misalignment with your firm's leaders and how to define your executive priorities and measurable success beyond revenue targets. Winning is a very personal thing that somebody has to define for themselves and actually do recommend you write it out. What does winning look like to you? Because it can mean different things and different people. That's coming up on the Game Changing Attorney podcast. All right, it is AMMA time, but with a little twist this time. - Ooh, okay. - Are you ready? - Well, so for my understanding, it is more questions. - More questions. - More answers. - More answers, more words. - So, okay, so before we get going, I just wanna say, look, if you're tuning in for the first time, you guys submit questions. We answer the questions on the podcast. This is our most popular segment, the AMMA, ask Michael Mogul anything, right? Really, you're gonna ask Jessica anything you want to. You text us at 404-531-7691 and this is one of three different types of episodes on the podcast. We've got the interview style podcast. We bring on a guest. We've got the on-core editions. We bring back some of our most popular episodes and then these are the AMMAs. And usually we kind of do a little bit of riff before the podcast starts, but you mentioned we've got a lot of questions more than the typical three. How many we got here? - Today we've got seven questions. So these are some of the most common ones. - Okay, is it pretending to like any topic or anything like that? - We're just going rapid fire. Keep you on your toes here. - Okay, all right, well, we'll try this out. Kind of a new segment, new approach. You guys tell us if you find it valuable. And the other thing you might notice is that we do not run any ads on this podcast. Never have. I'd like to say we never will. The only thing we ask is that if you get any sort of value from the show that you leave us a review on Apple podcasts or on Spotify and you share the podcast with a friend. It just helps us reach more people, helps us keep the podcast free. And we keep it free so we get to say whatever we want, right? Because as soon as you bring on sponsors and advertisers and et cetera starts to, in some ways, influence the formatting of the podcast of what you can say, who you can bring on. And that is not something that we are interested in. So with that, let's get going, Jessica. What do we have this week? - All right, so as I mentioned, these are some of the most common questions that we get asked primarily from our eight and nine figure firms. So with that, I will kick us off. So what decisions felt straightforward in a smaller law firm that became genuinely hard as the firm scaled? - So if you're looking at it, what gets more challenging from a judgment or decision making framework as the firm scales? When you say it from like a smaller firm, I'll say a six figure firm, under a million in revenue, to a seven figure firm, over a million, eight figure over 10 million, nine figure over 100 million. I think the biggest thing, and I'd say, like what's the biggest difference between, let's say six and seven figures, to eight and nine figures from a decision standpoint, I would likely say a lot of it has to do with people and particularly with the leaders that you have in the firm. Because what you're really doing at that point, especially as the firm scales, is you're delegating a lot of decision making judgment to your team and especially to your leaders. And there's a lot more leverage at play. So if you're delegating judgment, it can impact a lot more people as those teams are bigger, right? So meaning that if you've got the right person in place and you're delegating decision making in judgment to them and their respective department, they're over let's say 30, 40, 50 people or more, sometimes 100 people, and they're making the right decisions than that's moving the firm in a very positive direction. But if you put the wrong person in place there, that can have a much higher impact as a firm scaled, then when the firm used to be much smaller. I remember when we started the business, we could all sit in the same room, and like we saw him as a son of a floor. Yeah, that was the whole company. You just look around left and right. Now we've got people just all across the country, in different countries, it's just people come in from different backgrounds, the teams are much larger. I mean, it's over 100 people. So that's where when you're exercising leverages and leader and as you scale, you really want to make sure that you have the right judgment cascading down. So that's what makes it tricky because your leaders start to impact more and more people, and that trajectory, you can run a very fine line on that. So if you have a leader who's not performing, and you say, okay, well, we need to replace said leader, for example, then you have to consider, all right, well, if I replace them with a leader that with somebody else, who's to say that that person can perform any better, and if I do have to replace them, how long will it take to find that person, and then they ramp that person up and get them into a place where they can actually start making a positive impact, and that time and that runway can be much longer as the firm scales. So meaning that you can't just slot somebody in immediately, right, they got to learn the playbook, they've got to be able to kind of ramp on their own, they've got to learn a lot of institutional knowledge, they've got to learn a lot of systems and process, even if they come in with a tremendous amount of experience and a tremendous amount of capability, it's just the business, there's more complexity at play. So it's harder to turn a cruise ship around than it is to turn around like a little like one of those, like kayak, right? So, and that's just because there's a lot more moving parts, and you're impacting a lot more people with every decision. So I think that's where it becomes. I wouldn't say more challenging, there's just more inputs to consider, and perhaps more complexity to evaluate. - Yeah, I would definitely say complexity on that one. Okay, next one, how do you recognize when a challenge in a law firm is actually a leadership issue versus a systems or structure issue? - Ooh, okay, so it's, I know sometimes we gravitate towards, if something isn't working, you look at it and say, well, it's because of the leader that we have in place in that particular area or that department in the firm. And it could be, but oftentimes we look at and say, all right, first of all, if we're evaluating like a system or framework, the first thing we like to evaluate at least is that is there even adherence to the system? Like for example, if you have an intake team, are they following an intake script? Are they following a consistent process? Are they doing it each and every time? Because if they're not, then you don't know if the system is working or not working because they're not adhering to it. And that would be a leadership issue because I do believe it is the job of leaders to ensure that there's adherence to a processor system. But let's say there is adherence, and people are following the script and they are following the process, just in this particular example. And it's not working out, well, then you probably have the wrong process or the wrong system or things that need to be updated or evolved because they're obviously adhering to it, it just could be the wrong system. So I really do think the first thing is just to determine whether there's adherence or not to the system and if there is based on, is it working or not? And then again, I think the leadership is evaluated after that, it's like you kind of have your steps that you go down to see if like why is something not working, right? Does this person have the resources they need to succeed? Like are they applying those resources? They have autonomy or just as enough time, if you're given them enough runway to determine if something is successful, but if you're evaluating a system or a framework, it's how do we know if that's the right system? Because in my mind, you would have the right system if people follow it and it works and it generates predictable results. But if people follow it and it doesn't generate predictable results, then it's not an issue with the people, it's an issue with the system. Anything you would add to this? - Yes, so I would actually add to make it a little more complex and roll off of question one, it could actually be both. So if you are in a place where hey, the team is following this system and this process, but said system and process is not working, that is also on the leader to identify that and to be proactive in changing the system into something that is more future-proof. So in a complex way, it could actually be both. The systems could have outgrown your current leadership. - That's right. - Yeah. - All right, question three. What is the most common way law firm owners accidentally become the bottleneck as their firm grows? - Ooh, okay, this is actually very, very common. And what it really comes down to is that there's the things that were necessary of you to scale the firm, which a lot of firm owners, they pride themselves on the work ethic and they say, "No one will work me." And it's just a lot of grit. And that inevitably creates the bottleneck as the firm scales because what they haven't done is created in leverage or really been able to effectively expand their capacity or delegate in any way. So where it becomes bottleneck, the simplest way to put it is this desire, I think some of us have as founders or owners to maintain our identities. As I am the rainmaker or I am, like just I played this in really integral role in generating the new business that comes into the firm or I've always signed off and made all these decisions in the past and I am kind of the, at the very top of the pyramid here. - It's an identity thing. - It is very much the identity and I think what creates the bottleneck is not letting go of that. The whole, I mean, the word bottleneck itself, like the bottleneck is really at the top of the bottle, right? So that's where you are as the leader. And if you maintain that identity as the firm scales, you actually do become the bottleneck because there's only so much that you can do in any given day, you only have a certain number of hours, you only have a certain amount of capacity. And if so many things are dependent on you and your judgment or in your work ethic, then that's going to really prevent the firm from being able to scale. And I think the best thing you can do to remove that bottleneck is to create a firm that can be self-managing that can operate without you that is not dependent on you for every type of decision and is not dependent on you for bringing in the cases and being the rainmaker and you stop saying things like I work so hard. When I come across a firm owner and they tell me how hard they work, I don't look at it as like a badge of honor. I look at it as a very poorly optimized framework, right? It's basically saying that you equate your hard work with the output of your firm. And I prefer you say, I don't do anything at all in our firm scales every single year. And I'm like, okay, with that, that sounds pretty interesting to me. It sounds like there's a lot of leverage to play. - Yes. - And in terms of like how the firm is able to scale without being reliant or dependent on your day-to-day efforts. - All right. So next question. At higher revenue levels, the biggest risk inside a law firm are often internal. What are the early warning signs that a law firm leadership team is misaligned? - Okay. So it's like, what is the cannery in the coal mine? If a team is misaligned, well, a leadership team especially. I would first look at it as there's a metric I love, which is like the decision making velocity. So if a team is aligned, chances are a lot of decisions are being made. Whether they're right, whether they're wrong, it's just there's a lot of progress that's happening where it's like we decide. And if a team is misaligned, then there's usually the time it takes to even make the simplest decisions is like meeting after meeting after meeting. And I see this in some of the firms that I speak with where they're like, oh, well, we gotta present it to our partners. And then a week goes by, then a month goes by, then a month goes by, and it's like the simplest thing. And I always ask them like, hey, it seems like there's a lot of friction here and there's a lot of drag on you being able to make decisions. Is this typically how the process goes? And they're like, yeah. So I'm like, well, how many decisions do you be able to make a year? And they're like, well, we meet like four times a year. And then I'm like, okay, would you guys make decisions at every meeting? And they're like, well, sometimes, sometimes we, you know, don't make a decision of one meeting, we move it to the next meeting. And I just look at that and say, what an inefficient practice, right? Because ultimately, like you are relying on consensus and there's just so much friction internally around like people are having to make decisions that come from, I mean, perhaps you have people making decisions with different motivations and different incentives. And that's why decisions don't get made. Because one person wants to do something, then another person doesn't want to do something. But the one who wants to do it may want to do it because of the reasons where they really want to grow and scale the firm. And the one who doesn't want to do it may not want to do it because they don't want to retire. And they don't want to take a hit to like their cash out or their distributions because they're going to invest more into the practice. They don't want to do that, right? So you have kind of like misaligned incentives taking place. There's friction amongst those decisions. The other things that I would say that you can tell from leadership team is misaligned is if there's just not a whole lot of dissent. So meaning that where there's conversations happening and either you're getting like yes, like everybody just agrees all the time. Or people are afraid to speak up and share their perspective or concern. Because maybe there's kind of an environment of fear or they just don't feel like they're going to be hurt or listen to. So when they stop contributing, that also is like a sign that the team is misaligned. I think those are probably the two main things when you look at like decision making velocity and then whether there's like really candor that's taking place. Those are probably the early warning signs of, okay, we kind of have a misaligned team because you don't always have to agree. I think the most aligned teams can disagree and commit. Like they can make decisions and say, look, there might be some people in the room that don't agree with that decision, but still can commit to it and still can follow through on it. At what point did we decide that everybody in the room has to agree to do something? Absolutely not. Like I mean, chances are if you've got a team in your firm, like, I don't know, say you got 100 plus people. What are the chances that all 100% like 100 of those people agree with every single decision you make? It's like 0%. You're probably going to have at least 10% to 20% of people that don't agree with whatever decision you make at any given time, even if it's like the right decision that grows and scales the firm. So instead of trying to chase like 100% consensus, it's more so aligning with the fact that there's going to be certain decisions you make that some are going to agree with, some are not going to agree with, but the ones that don't agree will still commit to it serving a kind of the bigger picture. Right. Because there may be other decisions that they agree with the other people disagree with. Exactly. Healthy debate is very important. Yeah. All right. So what separates a law firm leadership team that looks good on paper from one that can actually scale the firm? So when you say like, looks good on paper, it's like maybe they have a really great resume, pedigree, and from ones that can actually scale the firm. Well, it's probably a number of factors. You know, look at almost like the Fox hole analogy to where there's, you know, the ones that look good on paper a lot of times they come in and it's very much, it's kind of like a selfish mentality. A lot of times you see this where it is important for them to be right. Like they come in and they've got their perspective and anything that challenges that perspective is it's not something they agree with. So you're almost at like an impasse when it comes to any sort of like just decision making versus I think the ones that, you know, outside of the resumes, it's just, if their number one goal is winning and the firm growing and scaling, then it's mess about, I want to be right and more about, I want to make progress and what do we need to do to achieve XYZ result? Whatever that takes, right? So it's like humility is obviously a big factor. The willingness to collaborate, the being team first, like selflessness for sure, people that are less concerned about their own outcomes and more of the outcomes of the firm as a whole. This is also why when you see this sometimes with like all-star sports teams, right? You see like all-star Olympic team and you think man, they got the best players, shouldn't they like absolutely dominate everyone? And sometimes the best players are the best teams because internally there's a lot of friction and there's just not a whole lot of like collaboration in, I mean, there was like, you know, the documentary but I've been like the 1980s Olympic Men's hockey team, right? Miracle. And that team went up against like the team Russia which is like a professional team. You could argue that like the US team at the time was a very much amateur team and they were one, right? And if you go inside the locker rooms of these teams that end up winning, sometimes it's not because they had the best players, it's really just because they were the most aligned together in achieving a common goal and a common vision which requires them to be selfless and more about we and me and exercise humility and to be able to learn from, you know, kind of experience and feedback as experiences and something you experience, experience is something that you learn from and apply into the future. It's they're able to adapt and change behavior based on new information. I would look at all those things before I would look at just, you know, they look good on paper 'cause sometimes they look good on paper and someone's on their way down. Their best days were behind them. Right. Versus somebody who may not look as good on paper but they're on their way up and, you know, their motivations are very different from somebody who is like, you know, already kind of been to the Promised Land and, you know, they're posting. Yeah, they're kind of coasting at this point. All right. So question number six, I'm losing count here. So if you stepped into the CEO role of an eight figure law firm today, what would you focus on in your first 90 days? Ooh, okay. So stepping into the CEO role, I mean, I get this figurative question all the time when I'm speaking with some of our, like, coaching members, like, what would you do in my law firm? And it's almost like this expectation of, like, bar rescue, right? Or like, you know, the profit. I would really do two things. So in the first 90 days, what I'm really looking for is to identify constraints. So to get very, very, very clear around, like, what is preventing us from being able to achieve what we're trying to achieve? Like, what are, where are the constraints? Is there a capacity gap? Is there a capability gap? And just to really, really hone in on where the areas of focus and where the priorities need to be, because you could fix 100 things or 200 things. There could be all sorts of things that are important, versus things that are urgent, right? So if you can identify the clear constraints and really define, okay, here is where our priorities should be in line with like what we're trying to achieve, focus on this first, then this, then this, right? Like, priorities. And then the other piece is really, I would want to meet with everybody to get a sense of, okay, who are the players? Like, who are the players that are putting this in motion? Do we have the right players on this team to be successful? Do we have the right leaders in place to be able to achieve what we're trying to achieve? Because we can lay out the constraints and we can lay out the priorities and we can be clear what we need to do, but do we have the right people to do it? And if we don't, then it's gonna be a fool's errand. So we need to make sure we get both pieces right. And a lot of times I would say that it's, it's probably a mix of both. It's probably a mix of a lack of focus and clarity along with just certain people that may not be in the right roles or may not be in the right organization. Yeah, quite frankly. But that's what I would look for in terms of just like, in first 90 days, let's just get clear on what is preventing us from getting to where we're going. Let's get very clear on that. If we do these specific things, we have to have like a roadmap, we have to have a game plan. If we do these specific things and improve these areas, then we will be successful. And then do we have the right people in order to achieve that? Yeah, and an outside perspective on those things is just invaluable. 'Cause you're when you're in it, what is it you can't see the forest for the trees? Yeah, and then you're mostly tied to it and you're like, well, this person's been here a long time and they always do this and they were here since the beginning and they always bring their dog and like, yeah, just you start to get emotionally compromised because you're looking at it from the standpoint of, okay, well, I'm considering it from all this additional context that may not be tied to growth and performance. But it may be tied to loyalty or it might be, but it might be actually hindering like, when you think loyalty is an interesting thing, right? So you're gonna have loyalty to somebody who's been at the firm a long time, but that same person can be preventing you and the rest of the firm from achieving what you're trying to achieve. So in some ways, you're being disloyal to the rest of your organization by being loyal to this person. It's a good way to look at it. All right, so to close this out today, beyond or not, revenue, what does winning actually look like for a nine figure of law firm? Well, everyone's got their definition of winning and look, the definition of success. The simple answer here beyond revenue is profit, right? Because I mean, revenue is like a food gaze. You're like, who cares, right? It's just such a vanity metric. Profit for sure is a real, like just tangible. Are we improving our profitability? I think it's a good metric of business efficiency overall. But outside of that, honestly, because if you look at what you're winning, I think it's kind of a, what is the delta between expectations and reality? So when, you know, depending on where you are in the firm and what your targets were for the upcoming year, or the next three years out or five years out, is where you're landing every year? Is that equal or better to what the expectations were? And if it is, that's probably winning. At the same time, you look at how accurate are you in your data and projections? And if you can like, project accurately within like 1%, within 5%, and you're aligned with that, then you say, OK, we do a very, very good job of forecasting the future. If you're off by like 20, 30%, 40%, right, especially in the wrong direction, you're like, wow, we don't do such a great job in terms of projecting and forecasting and that impacts our ability to make decisions. And then, I mean, there's also the personal piece in terms of, you know, outside of revenue and profit metrics and average case value and all those different things. It's like, are you engaged and excited every day when you show up to the office? Like, are you excited every day to come in? Do you like the people that you're working with? Also, like, are you enjoying how you're spending your time? Like, is it something that engages you, right? Because you could be making a ton of profit and you can, you know, you can have, you know, very accurate projections, but you dread it every single day. So, winning is a very personal thing that somebody has to define for themselves. And I actually do recommend you write it out. Like, what does winning look like to you? Because it can mean different things to different people. For some people, it's like, winning means we're better than this competitor, right? Or we do better, right? For somebody else, winning means they never miss like their kids ball games, right? Or they never miss like ballet practice or whatever. For somebody else, winning means that they're able to like go on date nights with their spouse every week. Or they're able to go get eight hours of sleep a night. It's different things to different people. And what I would encourage you do if you're asking this question is to not get caught up in this comparison game of trying to compare yourself to any other firm owner. Especially when you see them on social media and you're like, "Oh, they look so far ahead "and they're doing this thing of private equity." And they're like, you know, just et cetera. You just constantly have these feelings of inadequacy. When in reality, like, you don't know what their day to day is like. And, you know, whether they cry themselves to sleep or they wake up in their morning this bump and they're excited and I would encourage you to run your own race. - Love that. Awesome. Thanks for tuning in. It's a special edition here. Let us know what you think. - All right. Until next time. (upbeat music) - You've been listening to the Game Changing Attorney podcast with Michael Mogel. If you found this episode valuable, here are three free ways that we can help you grow your law firm. Number one, download the first chapter of Michael's book absolutely free at gamechangingatourney.com. Number two, you can shoot Michael a text at 404-531-7691 and ask him any question you'd like. You might just hear the answer on the next episode. And finally, number three, if you can leave this podcast a five star review, it will help us gain access to more influential thought leaders and bring their lessons learned here to you. For more information on this episode, see the show notes in your podcast app or visit legalpodcast.com. (upbeat music) (upbeat music)