John Scott: Improving Your Law Firm’s Financial Metrics

In this episode, Steve Fretzin and John Scott discuss:

  • Storytelling with the numbers that leads to a logical conclusion.
  • Why spending time in the numbers is key.
  • Dynamic forecasting and cash flow.
  • Four categories of important financial metrics lawyers need to look at to grow their firm.
  • Improving poor billing hygiene.

Key Takeaways:

  • If you pay attention to the numbers regularly, you can make necessary course adjustments along the way rather than scramble at the end of the year to make sure everything is fine.
  • Your goals need to be realistic based on your capacity. Set up your goals, even challenge goals, but then you need to look at them and work through how they can be achieved.
  • If you want more rainmakers, you have to train them to be better at what they do.
  • Bring in a non-lawyer finance team to focus on your firm’s finances. Delegate those things that are not your superpower. Let them focus on the numbers and keep you appraised of where they are at now, not just what they used to be.

“The biggest part of running your business’s dynamic forecasting is taking the data points that we have within the practice management system and within our accounting system to determine cashflow, 3-6-9-12 months out so that we know where we’re going.” —  John Scott

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Episode References: 

About John Scott: John Scott is a Partner in Tax at Anders CPAs + Advisors. With over thirty years of experience, he brings a breadth of financial knowledge and a deep expertise in advising law firms. With a long track record of success that includes firms of all sizes and specialties, John helps maximize profits via cash flow management and KPIs, while minimizing taxes with his extensive understanding of the tax code.

Leading the legal industry division of his firm’s Virtual CFO services, John offers strategic advising to mid-sized law firms, using a customizable, industry-leading tech stack that allows firms to make data-driven decisions. He advises on strategies around: staff utilization, cash flow planning, when to hire, creating clear career paths, trust accounting, accounting controls, and partner distributions. He is the author of a forthcoming book on creating a roadmap to success for law firms.

Connect with John Scott:  

Website: https://anderscpa.com/virtual-cfo-legal/

Email: [email protected]

Book: Judicial Dollars and Cents: https://home.virtualcfo.cpa/johnscott

LinkedIn: https://www.linkedin.com/in/john-c-scott-cpa/

LinkedIn: https://www.linkedin.com/company/vcfobyanders/

Connect with Steve Fretzin:

LinkedIn: Steve Fretzin

Twitter: @stevefretzin

Instagram: @fretzinsteve

Facebook: Fretzin, Inc.

Website: Fretzin.com

Email: [email protected]

Book: Legal Business Development Isn’t Rocket Science and more!

YouTube: Steve Fretzin

Call Steve directly at 847-602-6911

Show notes by Podcastologist Chelsea Taylor-Sturkie

Audio production by Turnkey Podcast Productions. You’re the expert. Your podcast will prove it.

FULL TRANSCRIPT

[00:00:00] Steve Fretzin: Hey everybody, before we get to the show, wanted to share another amazing event we have coming up called Bootstrap Your Marketing to Build Your Personal Brand with me and my friend Ashley Robinson. We’re going to be talking about cost effective ways to grow your personal brand. It’s on March 22nd. You can sign up by going to Fretzin.
[00:00:15] Steve Fretzin: com slash events. See you there and enjoy the show.
[00:00:23] Narrator: You’re listening to Be That Lawyer, life changing strategies and resources for growing a successful law practice. Each episode, your host, author, and lawyer coach, Steve Fretzin, will take a deeper dive helping you grow your law practice in less time with greater results. Now here’s your host, Steve Fretzin.
[00:00:45] Steve Fretzin: Well hey everybody, welcome back to Be That Lawyer. I am your host as the announcer mentioned, Steve Fretzin, and we are ready to rock and roll today. Another great episode to help you to be that lawyer, someone who’s confident, organized, and a skilled rainmaker. And as you guys know, there’s so many different, uh, amazing guests that I’ve had on this show over the years.
[00:01:02] Steve Fretzin: You know, we’re actually coming up, we’re not far from like 400. I think we’re really, we’re rapidly approaching that number. It’s kind of amazing, because I think we’ve been doing this for about four years. But it’s, it’s all about, you know, this, the beautiful aspect of, of running a firm or being a part of a firm and knowing that, you know, you’re still in charge, you’re still, it’s still you Inc.
[00:01:20] Steve Fretzin: Everybody, you still have an opportunity to grow your business and be who you want to be. And that doesn’t necessarily mean worker be that just does everyone else’s bidding. I think there’s opportunities for an entrepreneurial side of you to come out, even if you stay at a firm. And, uh, today we’re going to be talking all about the numbers.
[00:01:34] Steve Fretzin: I’ve got a top expert here, John, uh, sitting in the wings. How you doing, John?
[00:01:38] John Scott: Great, Steve. Great to be here.
[00:01:39] Steve Fretzin: Uh, you ready to rock and roll? Oh, yeah. Okay. All right. Me, me too. We love to start off with the quote of the show. And guess what? It is a numbers based, uh, quote. And this is by Jessica Turner. The quote is, The best accountants are not just number crunchers.
[00:01:53] Steve Fretzin: They’re financial storytellers, and I know that’s going to leak into our topic today, but tell us a little bit about that quote and welcome to the show. Thanks for having me. That
[00:02:02] John Scott: quote is really important for financial professionals to understand because when we’re talking to other professionals or our clients, whether they’re lawyers or business owners, They don’t have the same base knowledge and experience that we do, so we have to tell them the results of our work and the future based on storytelling that they can understand.
[00:02:22] John Scott: We have to build a story that leads to a logical conclusion.
[00:02:27] Steve Fretzin: And I think people can, you know, that stories are the foundation of, you know, human existence and how, you know, history has been passed on and, and how we get messages across. So, if they’re, if you’re able to tell something as a story versus like, I’m not a details person, John.
[00:02:40] Steve Fretzin: So, like, you come to me and you want to break down all my numbers and get into the weeds with me. I’m kidding. I can hang with you for like 5 minutes and after that, I’m going to fall apart. So, I do, I’d prefer to hear it as a story or hear it as, as, um, in a way that’s going to, that’s going to resonate with me.
[00:02:54] Steve Fretzin: So great to have you, John Scott, you’re the CVFO at Summit Virtual CFOs by Anders, and give us a little bit of your background and how you got into the number crunching. You know,
[00:03:04] John Scott: I started at a mid sized local firm in the, in the early nineties, and like every other person in our firm, we were generalists.
[00:03:13] John Scott: But early on in my career, I was fortunate to meet a very entrepreneurial attorney who he decided after reading the E Myth books, which were some of my favorite books, That he wanted to work on his business rather than in it, and he developed processes and a set of data points and KPIs that he followed to expand from just one metropolitan area to every state in the United States.
[00:03:35] John Scott: And I watched him over 17 years make good and bad decisions, but based on data, and I would never claim to be the reason for his success, but I did earn the equivalent of a PhD in law firm growth and operations while working with him. And I watched it, even when he made a bad mistake, because he paid attention to the data, he could course correct quickly.
[00:03:59] Steve Fretzin: Yeah. And there’s an old saying that people that listen to this show may have heard, but you know, you can’t, um, you can’t manage what you’re not measuring or something like that. You can’t measure, if you’re not measuring, you can’t manage it. Something like that. It’s like, we’re not spending enough time in the numbers.
[00:04:13] Steve Fretzin: We’re spending our time, you know, just helping clients and going through the day to day and putting out fires and we don’t just take the time to step back. You can’t. Why is that so important to do? And why do generally law firms do you find struggle with the numbers?
[00:04:27] John Scott: It’s not just law firms. Accountants are the same way.
[00:04:29] John Scott: They’re no,
[00:04:29] Steve Fretzin: no, no, it is. It is just the lawyers. We’re trying to make them feel special.
[00:04:33] John Scott: Okay. It’s just the law. But we have these great professionals who are really good at their craft, but they think if I just do the work that’s in front of me, that’s sitting on my desk and my client base, that good things will happen.
[00:04:45] John Scott: And many times they do happen, but every once in a while, the economy stalls, you lose a client or a big group of clients, and then you have to figure out. What do I do from here? Well, if you paid attention to the data along the way, it’s a lot easier to course correct and, and, and react. Whereas, you know, some partners look at it in October and they realize, Hey, we’re 20 percent off budget.
[00:05:09] John Scott: Oh my God, how did this happen? When we knew that back in March, we just didn’t pay attention to the numbers. If you think about this, it’s a lot like when our grandfather took the family on a, on a trip the night before the trip, he looked at the, uh, He looked at a 10 year old atlas and he made some notes and the next day he piled everybody in the family station wagon and he took off.
[00:05:30] John Scott: Well, all he could do was react to what happened in front of him. And then our parents, they had it a little better. They had triple A triptychs and, and where they, they knew that in Atlanta there was construction so they had to work around to still get to their destination on time. We today have all this instantaneous data, and we have the Waze app and Google Maps.
[00:05:51] John Scott: We get in the car, we didn’t need the Atlas or AAA. We know that two miles ahead there’s a roadblock, there’s construction, and there’s a slowdown. And oh, by the way, the app will offer you a workaround to still achieve your goal. And that’s the same thing we have in accounting today. There are many accountants who are stuck in the Atlas days.
[00:06:09] John Scott: They’re just bookkeepers and historical in nature and telling you what happened. We want to get to the point where, as advisors, We are telling you, here’s your goal, here’s the roadmap to get there, and oh, by the way, your hours aren’t pacing, so we have to do something different to still achieve our goal.
[00:06:26] Steve Fretzin: Yeah, and how are they coming up with goals? I mean, I work with lawyers on goals all the time, and we try to make them high, but realistic. What’s, is there any kind of special sauce or magic sauce for lawyers and law firms coming up with goals?
[00:06:38] John Scott: Well, I think goals have to be realistic based on your capacity.
[00:06:42] John Scott: You can’t say, I want to grow 20 percent if I’m already full and I can’t add any talent to the workforce. Uh, so I think you, you, you can set out outlining your goals and maybe even some challenge goals, but then we have to backfill and say, okay, how do we get there? Do we need to go add five people? Or do we have the capacity in house to achieve those goals?
[00:07:03] John Scott: I think it is really just a conversation and then stress test those goals to ensure that you can achieve them.
[00:07:11] Steve Fretzin: That sounds great. And there’s, um, a term that you shared with me that maybe not everybody’s heard of called dynamic forecasting. And so what is dynamic forecasting and, and, and, and cashflow for law firms?
[00:07:20] Steve Fretzin: What is that all about?
[00:07:22] John Scott: I think it’s the biggest part of running your business. Dynamic forecasting is taking the data points that we have within the practice management system and within our accounting system to determine cashflow 3, 6, 9, 12 months out so that we know where we’re going. And if we know it early enough and we think we’re going to fall short of the cash that we need, what levers can we pull?
[00:07:45] John Scott: Can we ask for more hours to be charged on a weekly basis? If we don’t charge by the hour, if we’re a contingent firm, you know, how many more cases do we need to get? And then we can look back at our marketing efforts and how do we fill up that pipeline with additional work? We have to analyze what’s working and what’s not working.
[00:08:04] John Scott: Maybe the ads that we put at the bus stop. Are generating a lot of phone calls, but we’re not closing those. So we just have to analyze the entire intake process, the close process to change
[00:08:14] Steve Fretzin: our outcome. And what happens when you identify that maybe one lawyer is feeding everybody or that they just, they’re not developing enough business to grow at the, at the pace or the, at the pace or, or what the, what the, the managing partner wants to.
[00:08:30] Steve Fretzin: I think
[00:08:31] John Scott: at that point, if you want more rainmakers, you have to train them. You have to train them to be better at what they do. And I know you might disagree with this. I don’t think you can take the introvert and make them the best rainmaker ever, but you can make them better. You can make them focus on the efforts that they do for business development pay off.
[00:08:50] John Scott: Because, you know, maybe they’re going to lunch with their buddy, thinking that that’s going to lead to work. It’s not. They need to focus on the referral sources that are providing work for the firm. And that’s where they should spend their BD efforts.
[00:09:01] Steve Fretzin: I mean, I don’t know, introvert, extrovert, I work with both and I think you’re right that introverts, I mean, to say that they’re going to become the, the, the top rainmaker at the firm and not saying it hasn’t happened or it can’t happen.
[00:09:11] Steve Fretzin: It’s definitely a more challenging path. More than that, what I’m finding is it’s motivation, it’s ambition, it’s interest in learning and learning, wanting to be trained, wanting to be coached and then to, to have some type of sustainable efforts. And that’s not most attorneys.
[00:09:29] John Scott: Yeah. And I think being coachable is, is huge.
[00:09:31] John Scott: And it’s not just here, but you can start that with your kids. They’re either coachable or they’re not. And mom and dad reinforcing a kid who’s not coachable, that’s not going to set them up for success in life. Kids need to be open to receiving feedback and saying, okay, maybe I do need to change. And that leads to adults and professionals that will be coachable as well.
[00:09:54] Steve Fretzin: Do you happen to do any teenager consulting? I may, I may need to hire you for that.
[00:09:59] John Scott: Uh, four kids. So I, I do have some experience there, but to the fourth, until we got it, right.
[00:10:05] Steve Fretzin: Well, I’m, I’m sort of like a one and done, so I’ve got a, I’ve got a pickle, but if it involves fishing or guitar and music, then I’ve got my kid wrapped up in no problem at all.
[00:10:14] Steve Fretzin: But if it comes to me inserting myself into his grades or his schooling, that I think we’re. You know, I tell my wife on a regular basis, let’s let the school do its job. We’re in a great school district, you know, we’re paying big taxes to be here. You know, let’s just communicate with them. What’s going on, let them handle it.
[00:10:28] Steve Fretzin: And I think that works much better.
[00:10:29] John Scott: Oh, I totally agree. And I got a really quick story to tell you about that. My, my third child called and he had his cell phone in class, which is a no, no. Right? Yeah. I took his cell phone on a holiday weekend. So he wasn’t going to get it back till Tuesday. He’s like, dad, you have to call Mr.
[00:10:44] John Scott: So and so and get my cell phone back. I’m like, wait a minute. What happened? Well, I had my cell phone in class and he took it and I’m gonna get it back till Tuesday. I’m like, I’m not calling him. This is brilliant. Your cell phone was supposed to be in your locker.
[00:10:57] Steve Fretzin: Yeah, the next question is, so what do you want to do this weekend?
[00:10:59] Steve Fretzin: You’ve got time, right? Exactly. And we turned, we turned and we turned lemons to lemonade at that point. I mean, the funniest thing in the world is watching a teenager’s body language when you take their phone away or it gets taken away. It’s like the best thing. Like, you’re never going to see such like that, um, what’s that like car dealership wind, you know, wind balloon type of body language when they lose their phones anyway.
[00:11:22] Steve Fretzin: So anyway, just a side note for the number crunchers that we’re talking about the number crunching today, that there’s some teenager advice there. Really, really wonderful. So, so let’s, so dynamic forecasting cashflow being really, really critical. And then what are the, what do you consider to be some of the most important financial metrics law firms and lawyers need to look at to grow their law firm?
[00:11:43] John Scott: You know, I think they fall into four categories, cash, production, financials, and pipeline. Within cash, it’s really a function of how much cash do I need to operate my business? What do I need to pay, not only rent and labor, but to pay myself over the next three to six months? And then when we look at production, it’s utilization.
[00:12:02] John Scott: So charge our expectation realization. If my realization is 105%, then my rates are too low, right? I had a managing partner brag to me that they had the star staff member who always got 105%. And I said, well, raise the rate. You know, we’re not risking enough here, but your realization shouldn’t be a hundred percent either.
[00:12:25] John Scott: Right. You need to set your rate. So that’s 90%. But if it’s too low. And I think we got to go in and look at, are we providing enough training? Are we developing our people? Or are we leveraging enough to get them the experience to make them better? And then on the financial side, you know, you got to have financials that are put out on a regular cadence and accurate on the accrual side.
[00:12:47] John Scott: I’m not saying you’re going to pay taxes on the accrual side, but. You need to know what your WIP and AR are, or if you’re a PI firm, what the inventory of your cases are worth, because that’s how we do the dynamic forecast. I can tell you that if your WIP and AR are trending down, your cash flow is going to trend down as well.
[00:13:04] John Scott: And then lastly is pipeline. It really comes down to capacity. How much capacity do we have or not have? And if you think about it from a contractor point of view, if you get three beds for a kitchen remodel and two beds are super high, But they’re good quality vendors and one’s lower, but they’re really good too.
[00:13:25] John Scott: You’ve gotten a lot of good recommendations. It’s because that third one has capacity and we price things based on our availability right now, the labor market is really difficult. Firms are struggling, especially the smaller and midsize firms to attract and retain talent. And so there shouldn’t be much in the way of price discounts these days because we need to just focus on our A clients where we don’t have the capacity to offer discount.
[00:13:51] John Scott: If we do, we’re in a good position to grow, but we got to fill up that capacity. You can’t really do it unless you know what that capacity is. You could have the best rainmakers in the world bringing in all kinds of work, but if you can’t get the work done, you’re not going to convert that effort to cash.
[00:14:06] Steve Fretzin: Yeah, that’s an incredibly frustrating situation for any law firm to be in, to be able to, I mean, I get. When there’s controversy or there’s conflicts and such, but when you can’t take something on because you just don’t have the capacity, that’s just like, that’s a, that’s a huge no, no.
[00:14:19] John Scott: Well, I think that it’s incumbent upon analyzing your client base and stratifying them, the A clients all the way down to D clients.
[00:14:28] John Scott: And you have to make some tough decisions. Maybe that D client is a friend of one of the partners in the firm, but at some point, you have to say, we’re going to take on this better work and shed. Refer out some of the lesser work or,
[00:14:43] Steve Fretzin: or get or get rid of. Or get rid of crazy. That’s always a good, oh yeah, go ahead.
[00:14:47] Steve Fretzin: Group to get rid of
[00:14:48] John Scott: You could be a great client, but if you’re crazy, you’re not an a client. No. If the staff don’t, don’t wanna work for that client, it’s demoralizing to them. Why are we doing?
[00:14:57] Steve Fretzin: But when you have that, that business coming in, it really gives you that, that pause to really look at who your clientele are.
[00:15:06] Steve Fretzin: And make some decisions about getting rid of that lower 10%, um, which I think it was that a Chrysler thing. I think that was like Chrysler thing. Or I think it was. Lee Iacocca. Lee Iacocca getting rid of 10%. Was it 10 percent of this, of the people every year or something like that? That might’ve been employees.
[00:15:21] Steve Fretzin: Due to him or general electric. Okay. But I think, was that people at the business or was that clients? I think it might’ve been people that work there.
[00:15:29] John Scott: That was people, but I think the same thing applies. The same
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[00:17:27] Steve Fretzin: So ultimately, law firms need to make data driven decisions to, to impact the future and how they’re going to run things. Is there a process or method for that, that you could share that, that would help them figure out how to make those decisions?
[00:17:41] Steve Fretzin: Well,
[00:17:41] John Scott: they don’t really focus on the data now, right? They outsource the, the accounting function to their neighbor’s cousin who happens to be a bookkeeper. And the bookkeeper does it on the side. So they get that information. It’s stale. And by the time you get stale information, there’s nothing you can do with it.
[00:17:58] John Scott: What I’m suggesting is they entrust the finance function to non lawyers. Let the non lawyers do it on a regular cadence, so that you know at any one time what your cash position is, what the hours pacing is in the firm, what the WIP is, what the AR is. If your AR is getting stale, someone’s paying attention to it to get that cash coming in the door.
[00:18:21] John Scott: And when you have more instantaneous information, That you’re just getting a report that says, hey, we’re good in these areas, we’re lagging in this area, then you can make your decisions based on the, the areas of emphasis that need to be paid attention to. You’re not trying to be the financial expert, you’re just practicing law and relying on the finance team to tell you what the metrics are, what the data is that produce.
[00:18:48] John Scott: Results that will get us to our goals.
[00:18:50] Steve Fretzin: Yeah. It’s in line with everything we talk about on the show, you know, delegating the things that aren’t your greatest skill or focus or superpower. And I’ve, I’ve outsourced my bookkeeping or the entirety of my business 20 years. And I get reports every month, maybe not as proactive as, as if I had, you know, a CFO on my team, but at least I’m seeing the numbers and understanding where I am compared to last year, last month, et cetera.
[00:19:14] Steve Fretzin: Uh, And where my business is coming from who I need to focus on all that. Um, what my AR is, I know, I always know what I have coming in. Um, what I have to do the next month. Do you have a story, um, John, a different story of, of a firm that you went into kind of what their situation was and then what you did for them and how kind of they, they turned things around.
[00:19:37] John Scott: Sure. We worked for a 15 person firm in the last couple of years where when we came in, the, the two owners had not taken draws in six months and they couldn’t figure out why their, their controller quit abruptly, gave them only two weeks We came in and after about a month, we figured out no one was hitting their charge hour expectation, including the two partners.
[00:20:00] John Scott: And once we identified that, communicated it back, then the partners started charging more time. They weren’t doing the work, they just weren’t accurately reflecting their time. And they also managed their people to hit their charge hour expectation. And it took about another 45 days, but then they, We’re able to take owner distributions again, so the cash position improved enough just by paying attention to the charge hour and the pacing of those hours.
[00:20:29] Steve Fretzin: I’ve had, um, also, I mean, things keep going up. I mean, we’re, we’re talking about inflation and we’re talking about how much more expensive groceries are and everything’s more expensive today than it was. I mean, imagine building a house today compared to even 15 years ago. It’s a completely different situation.
[00:20:45] Steve Fretzin: How do lawyers figure out what to charge, how to raise rates, the right timing, the right people, maybe even how to, how to, like, share that with their clients to say, hey, this is how it’s going down. Do you have any advice on that?
[00:20:57] John Scott: I would always consistently push your standard rate, the rate that you quote to people.
[00:21:02] John Scott: The value decision is made when you prepare the bill. And really what we’re trading here is the client needs something, you perform it, what’s the perceived value? And, and nirvana would be, we’d get the value billing, right? Client says, I’ve got a big problem. To me, it’s worth X amount of dollars. The attorney says, I’m willing to do it for that, and we get away from hourly billing.
[00:21:24] John Scott: But right now, historically, we’re stuck in this hourly billing model. And so I think you push the standard rate to a high enough value that when you look at the WIP, you make a value judgment and you bill the client for either standard or something less. That’s your average bill rate. And I think that’s where you can get to, and you have to avoid the situation where you don’t push standard rates each year, you go up a little bit each year, rather than waiting 3 or 4 years to go up a lot.
[00:21:56] John Scott: That’s a lot less palatable to the market.
[00:21:58] Steve Fretzin: Yeah. The other thing I tend to see is, I ask lawyers, I go, uh, When you lock up new business, how often are they arguing with your price, with your rate or your price and are getting pushback and just being difficult about it? And wow, that’s really high. And then some lawyers say, well, never.
[00:22:16] Steve Fretzin: And I go, you know, that might be because you’re too low. And what, what is everyone else around you that has the same level of experience charging? And it’s usually higher. And so I say, look, you know, let’s. Let’s start to make some moves, especially with the new people. You know, it’s one thing to change rates with existing clients that have been with you for 10 years.
[00:22:32] Steve Fretzin: And I get what you’re saying about gradual increments. That’s the only way to go. If you’re charging 500 an hour and you meet someone new that doesn’t know what you’re charging, really, And you know that 650 is the right number for that type of work. And that’s what other people in your city, you know, have some moxie bring, you know, and if they, again, if they balk and you want to knock it down to 600 to do a favor, you’re still a hundred bucks an hour over where you were.
[00:22:55] John Scott: That’s very powerful. And you’re right. You need to pay attention to what the market in your area will bear. And the other thing is on, on the, the billing side, you have to have good billing hygiene. So, What we’re doing here is we’re turning effort into cash. And if we, if we have good billing hygiene, we can shorten that cash cycle.
[00:23:18] John Scott: We can perform a service and get the cash much quicker than we are today. If you think about it right now, we’re working on a client matter, charging time on day one. If we only bill once a month, we’re waiting 30 days to make the value judgment and send out that bill. And if they pay in another 30 days, that’s a 60 day cash cycle.
[00:23:37] John Scott: If we start billing twice a month, or even on a project basis, when the project is done, we bill, but what does that, what does that mean? That means that I have, my whole team has to put their time in on a regular basis. They can’t wait until the end of the period and do it. And so many firms have one or two partners that will bill twice a year.
[00:23:56] John Scott: And it’s so unfair to the rest of the partner group because the rest of the partner group is financing their poor billing hygiene. Yeah. They go, well, my clients pay by return mail. Well, sure. But if you build on a more regular cadence, we wouldn’t have to wait six, seven months to get that cash.
[00:24:12] Steve Fretzin: Yeah. I think people find out the hard way when they’re doing that.
[00:24:15] Steve Fretzin: And the other piece of it is collecting. I find that a lot of attorneys are spending their time, especially at the end of the year, like in, uh, in, uh, you know, December of this year, of last year. Chasing after this money that they’ve worked so hard for that. They’re not getting, you know, and people aren’t paying.
[00:24:30] Steve Fretzin: I, on one hand, I’m like, I get that you want to be personal and calling them directly, but I think if you had just set up how things are going to work from the day one and be more on top of it, to your point, John, you may not be collecting as much, or maybe you’re outsourcing the collection to a paralegal or someone internally that can do it, not your, you know, your billable hourly rate to go collect.
[00:24:53] John Scott: Right. And also, if you think about it, there’s a concept called hotel billing, and it’s like when your transmission goes bad on your car, you have a real pain point. Right. And the guy fixes your transmission, you go pick it up. He makes you write a check for it right then. And you’re happy to do it because you need your car back.
[00:25:08] John Scott: If you wait six months after you’ve solved the client’s problem, there’s not that same incentive for them to pay right away. So billing hygiene starts with, I send a bill out and the client pays by my terms. Once I let them avoid those terms and pay beyond those terms, I’m saying it’s okay. So you have to train, especially new clients early on.
[00:25:30] Steve Fretzin: Yeah, there’s a setting of expectations or maybe even a better word is agreement about how things are going to be handled and that way, you know, you’re not, you know, you’re not leaving it loosey goosey where it’s going to end up being a problem and you’ve got all this money to collect. So really great stuff.
[00:25:46] Steve Fretzin: Um, John, I want to wrap up with our game changing book or podcast, and this one’s been brought up on the show number of times, but I think it’s so in line with what everything you’ve shared today. And that is the E Meth. And for those who haven’t heard about the E Meth. It’s, it’s one of the top five best books for business owners, I think ever written and, and talk to us a little bit about, about why you believe that to be true.
[00:26:09] Steve Fretzin: If you haven’t read the E Myth books,
[00:26:11] John Scott: you should. If you have read them, please go back and reread them. It’s all about creating a business that outlives you, a business that you’re working on, but not in. It will lead you to creating processes. That you can leverage down and let other people do. And that doesn’t mean you’re not going to be involved in the business.
[00:26:30] John Scott: It, it will help you grow the business to, to have it perform the way you want it. And then you can do the things that you enjoy rather than the. Making of the pies or making of the widgets, you know, you want to have a business that outlives you something that you can sell or pass on to your heirs or someone else.
[00:26:52] Steve Fretzin: And there’s so many lawyers who feel stuck where they’re spinning so many plates because they’re managing the firm, they’re managing their team, their business development, they’re running the finances, they’re trying to do all these things. Yeah. And it’s absolutely not really sustainable
[00:27:10] John Scott: and it’s not their highest and best use
[00:27:11] Steve Fretzin: right, right on, right on, um, and john, I know you’ve got your own book coming out and it’s, you know, it’s, um, it’s right in line with our conversation.
[00:27:19] Steve Fretzin: Would you share a little bit about that? And also how people get in touch with you if they want to reach out to you to utilize your services? Sure.
[00:27:27] John Scott: It, the book is called Judicial Dollars and Cents, it’s where we talk about these data driven decisions and the metrics that we focus on and the levers you can pull to change your outcome, as well as how we do dynamic forecasting.
[00:27:40] John Scott: We’ll provide a link to the book as well as a link to my calendar so that you can schedule a call if you wish.
[00:27:48] Steve Fretzin: Okay. That’s really great. What, and what’s the best way for them to reach you? Is it email? Is it your LinkedIn? Which, which are, what are the best ways to reach you?
[00:27:55] John Scott: Uh, LinkedIn, John C. Scott CPA, or email is jscottandanderscpa.
[00:27:59] John Scott: com.
[00:28:00] Steve Fretzin: All right. Very cool. Um, as we wrap up, I want to take a moment to thank our lovely and wonderful sponsors, of course, Lawmatics. Get staffed up and green cardigan marketing all terrific friends and, and, uh, wonderful sponsored not, but it’s more than that. They, they are providing a lot of value and I’m using them all.
[00:28:18] Steve Fretzin: So like, I’m not talking out of my rear end. I mean, they’re helping me every day with my outsourced marketing, with my, with my outsourced, uh, VA with my automation of my marketing. So, um, I just, I love working with them every day. So check them out and, uh, In the show notes and all that, John, thanks so much.
[00:28:35] Steve Fretzin: This was great. I appreciate you coming and sharing your wisdom. These are the areas that I think just like with, with business development, I think they’re similar finance and business development, not things they learned in law school and good things to maybe leverage talented people to help them fix it.
[00:28:50] Steve Fretzin: Well, I agree. Steve. Yeah, my pleasure. Thank you everybody for spending some time with John and I today working on your business, not in your business. There’s an email for you right there. Uh, and this, uh, again, is just an opportunity for you guys to continue to try to be that lawyer. Someone who’s confident, organized, and a skilled ray maker.
[00:29:07] Steve Fretzin: Take care everybody, be safe, be well, and we will talk again soon.
[00:29:15] Narrator: Thanks for listening to Be That Lawyer. Life changing strategies and resources for growing a successful law practice. Visit Steve’s website Fretzin. com for additional information and to stay up to date on the latest legal business development and marketing trends. For more information and important links about tips Check out today’s show notes.