YPM POD - EP104 - Turn a Recession Into Opportunity: Strengthen Your Law Firm

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[00:00:00]

Richard James: Do you realize your law firm is about to be hit with a recession? The question is that gonna be an opportunity or is it gonna be a challenge?

Whether or not your firm is going to suffer from a recession has a lot to do with your practice area.

Some practice areas are naturally going to thrive during these times.

Other practice areas are going to need to take steps to make sure they survive while other firms fail.

Depending on your practice area. There's gonna be a range of situations. some of your practice areas, are going to soar and some of your practice areas are at real risk, and I'm gonna kinda list those in the order from those that are gonna soar to those that are at risk.

if your law firm practices bankruptcy or tax resolution, your biggest decision you're gonna have to make is,

do you want to grow with a fishing rod? Or do you want to grow with a fishing net?

Because quite frankly, there is as much business for you as you can possibly handle. many of your states, allow for you to attend hearings without having to be there in person, which [00:01:00] means you could market to the entire state if you'd like, but quite frankly, your own specific geographic region

is got growth ahead of it.

Look, you know you went through the famine period over the last few years.

The feast period is ahead of you.

Now that's really good for your firm because you're gonna be able to generate more clients. It's really good for your clients because you're gonna be able to help more families, and it's really good for your team because they should be able to reap the rewards financially and feel secure in their jobs.

What plan do you have in place to maximize your goals?

Now if you're in immigration law, you can see that there's been a tide turning. there are changes that have been happening since the new administration have been put into place.

There are strange things happening both in lead generation and lead conversion. Even the way the courts are deciding to handle certain things are being uprooted.

For some firms this is threatening because they were comfortable doing it the way they always did it.

But for those firms [00:02:00] who have an opportunistic mindset, who are ready for the challenge, this really is an opportunity for them to stand out from everybody else.

You should know that this economic change that's coming our way is going to compound what you're already feeling when it comes to the current landscape of the immigration minefield.

Now, if you're a family law attorney, more than 50% of America is probably still gonna get divorced through a recession.

But the challenge is that money starts tightening up, we get some contraction in asset values. possibly in, real assets like real estate values and cash values.

we also get a general feeling that people want to spend less.

Sometimes people have lost their jobs as the unemployment rate goes up, and so there's less money available

So you're gonna have to take certain steps to ensure that you convert.

now, if you want A family law firm or a criminal law firm. you're gonna need to pay attention to what we call economic contraction or [00:03:00] scarcity of cash, some of that scarcity of cash is real and some of it is imagined.

And so there's some defense mechanisms you're gonna have to take Some people will have lost their jobs. some assets will reduce in value, so we'll have some contraction in asset value or some retraction in liquidity equity in their homes and then there's the imagined area where it's out of fear because of what's going on. They're less likely to spend the money they were more willing to spend, just six months to a year ago.

you're going to need to take some steps to put yourself in a position to win.

As this contraction takes place, you'll still likely have the same number of family law cases and the same number of criminal cases, maybe more because a recession starts to expose a lot of the nerves that people are working on in a family law situation.

it causes people to sometimes make dumb decisions and end up in a criminal situation.

And so you might end up with more cases. But it's the cash available to pay you. That's the real challenge. And so you have to take necessary steps to ensure that [00:04:00] you capture that cash. certainly there are many other practice areas, but the last one I wanna talk about today is estate planning.

And I would tell you that

this is the practice area that is most at risk. Now, look, I could be wrong about this. It's possible that the next recession that comes doesn't affect you the way that other recessions have affected the estate planning world.

when I was building a bankruptcy firm, we were booming in late 2008, 2009, 10, 11, 12 in that range, and you could just catch as many cases as you wanted to market for estate planners were going like this and they were really struggling.

during the pandemic, that changed a little bit. There was this little micro recession, but because people were thinking about their mortality, they were actually thinking about doing more estate planning.

And then finally, the reasons why people do estate planning are what? People get divorced, they get married, somebody is born, somebody dies. they move, right? All of those things were happening [00:05:00] somewhat en mass during the pandemic, so it was triggering a lot of thoughts about estate planning. as the economy contracts, there's gonna be less people moving even if they get money for their house, There's still gonna be people that get divorced, and so that's gonna cause an issue.

People are still gonna die and people are still gonna be born. But frankly, less people are being born now than ever, in the United States, especially.

So what is it that's gonna trigger this for them? economic wealth is another one that does it for them, but we're gonna have this contraction.

my experience tells me that estate planning attorneys are going to need to pay attention to the fundamentals if they're gonna stand out amongst their peers.

you should be on the lookout for a decrease in some key areas, and if your geographic region is affected, you're gonna have to take some steps, to avoid having it affect you to the point where you're taking losses every month.

There, there are a few things that you're going to need to do. In order to protect yourself or maximize how much your business will thrive [00:06:00] based on your practice area. Now, regardless of whether you're maximizing how much you thrive or protecting your firm, the steps I'm about to list are the same.

~I am. But I didn't write anything yet.~

~Yeah, it is.~

~Yeah, I'm gonna try not to bounce the camera here as I write.~

~Let's put on the plan, the five step plan. Let's add a bonus to it. And the bonus is never stop marketing.~

~All right, let's do it. So I'm recording.~

So the first thing you have to make sure you do during this time more than ever, is that you know your numbers. if I was sitting across from kneecap to kneecap at your office and we were talking about how to fix your practice to protect it against the coming recession, or to maximize the performance of the Recu recession, what we would need to do.

we would need to know your numbers.

You are a business owner and so I do need you to understand some basic arithmetic, right?

when we talk about lead generation, whether you're using a agency or you're built your own in-house agency, or you're doing things yourself, it doesn't matter, you need to understand what your, Cost per lead is your CPL, right?

How much is it costing you to make the phone ring per se? And phone ring means form fills that come in, or chats that come in, or emails that come [00:07:00] in as well as the phone ringing, right? How much does it cost you? And then, assuming you're a traditional firm that sets appointments, how much does it cost you per appointment set?

Because that's another important metric for you to understand. and then you have to understand what is it costing you to acquire a client? That's cac, cost to acquire a client. So what is it costing you to get a client from a marketing perspective?

Now, the cost per lead is the amount of marketing dollars you spend divided by your number of qualified leads. The cost per appointment is the marketing dollars you spend. Plus your appointment setters. divided by the number of appointments,

you have to understand what it's costing you to get an appointment all of these vary whether you charge for consults or don't charge for consults.

But right now what's important is you have to understand what these numbers are so that you can make adjustments accordingly.

Your cost per lead, your cost per appointment, and your cost to acquire a client. if you know [00:08:00] those numbers, then we can make necessary adjustments based on what this is telling us,

when the recession hits, we'll have a baseline of where we were before and we can see if anything is being adjusted in the marketing side, or is it really in the PCLC.

You have to understand your PCLC numbers, your perfect client lifecycle, which means you have to understand how many qualified leads you're getting. You have to understand how many of those are turning into an appointment.

You have to understand how many of those are showing to the appointment. You have to understand how many of those that show, or retain your firm. And then you have to understand your dollars, like paid in full, your average client value and things of that nature, you have to understand where the dollars are coming from, but you have to understand how these convert. the conversion between leads and appointments is called the set rate. viewed as a percentage. The conversion between the appointments and the shows is called the show rate, also [00:09:00] viewed as a percentage.

The conversion between shows and highers is called the higher rate.

And that also is shown as a percentage paid in full. The average client value, this is a dollar number. so it's let's call it average client value for, simplification we're not talking about lifetime client value, but average client value. In many of your firms, that is the same thing,

it's important for you to understand what these numbers are because you can start to maximize your conversions.

Hey, if you wanna Maximize your growth of your firm during this recession or you'd like to protect your firm because you're at real risk, and you want to learn more about these steps, just visit us at thelawfirmsecret.com

we'd be happy to walk alongside you and help you understand the systems you need to put into your law firm so that your systems can run your firm and people can run your systems.

when I built the law firm in Phoenix, we were able to grow so quickly, like from zero to.

Three and a half million dollars in gross sales in just a couple of years.

Why were we able to do that? It's because I knew all of these numbers.

I [00:10:00] knew which lead sources performed the best. I knew what my conversion rates were and I maximized them.

the very first thing you have to do is know your numbers.

The next thing that you have to do is you have to master the art of converting in the set rate.

You have to master the art of converting in the show rate. Converting in the higher rate and maximizing your client value,

which means you have to become a student of. Lead conversion You have to become a student of sales. if you're the attorney and you don't want to become a student of sales and you'd prefer to have somebody else do it, you can hire companies to do that for you.

But you can also hire humans that can work in your firm who actually like these things and they can walk alongside you. There are people who like sales that would do good things for your business, and so having somebody in your business who like the concept of sales is willing to learn and how to master this process, would be helpful to you and your firm.

Now, one other thing I really want to discuss [00:11:00] regarding this process is this idea that you're going to need to pay attention to how you speak to your perfect client avatar.

During a recession. Whether you're trying to capture as much business as you can, or protect your firm, You need to make sure that you're having a great conversation with your prospects.

And what I mean by that is your prospects need to think that you know so much about their life that they're wondering if you were sleeping under their bed. those are the firms that are gonna win during a recession.

You're either gonna capture more business than everybody else in an upswing because there's so much business to capture

Or you're going to protect yourself and capture more business than everybody else during a downturn. while everybody else is struggling to get business, you're gonna win.

So the way in which you speak to your client avatar is going to matter more now than ever because it's going to allow you to maximize the number of leads that you get. And this is called copywriting.

The question is, how do you develop [00:12:00] copywriting skills? my advice is to hire a good quality copywriter. you can go online to places like Upwork or Freelancer and find a copywriter who understands who your ideal target market is, and you tell them.

Who you love to do business with. Are they male? female? How old are they? are they certain race or ethnicity?

who is a perfect client for you? What is their job or when did they lose their job? How much money do they have, or how much debt do they have? what is it that they're struggling with right now? What is it that makes them the perfect client for you?

All of these things, we call them psychographics and demographics, make up who your perfect avatar is. if you can start to hone in on who that is, and give that information to a copywriter, they can take that information and put it into a story format and start speaking very clearly.

To that person.~ ~

~Quick story, my mentor told me years ago. He had a business that was a dating service for Christians. And he was trying to find, his perfect avatar. so my mentor told him, go dig up your database and let's figure out the commonalities. the client said, I don't think there's any commonalities.~

~They're all over the place. Funny enough. When they started looking at the commonalities of all the different psychographics and demographics, they landed on one clear truth that a very high percentage of this person's client base were long haul truckers. Who would've thought, right? And so what did they do?~

~They started speaking. To long haul truckers, they started to advertise where long haul truckers actually spend their time, and because they started to make these shifts and speak to that avatar, they were able to succeed in a very difficult economic time. While other services that offered similar services or other businesses that offered similar services struggled.~

~So if you want to capture more business than your competition, you need to learn to speak to your avatar and hire an expert who can put it in writing for you.~

The fourth piece that you have to consider. this will vary as to whether you're trying to [00:13:00] gain more business because there's a scarcity, or if you've got more business that you can handle what you want to do.

Consider Financing your client services. If you have an average client value of $3,000, you're gonna wanna make sure, if you need to capture more business, get more people to retain your firm because they don't have access to much money you might have to offer them terms.

So if you used to insist on your services being paid in full before they could hire you or do your work. Now you're gonna start allowing them to pay on some sort of payment plan. And if you get them paying on a payment plan, we're gonna increase the amount of people who say yes to you during the initial consultation.

So if you're in estate planning, you can start financing the deal for people.

if you normally took half down now and half down in 30 days, you could consider offering payment plans over three months, four months, six months The question is the number of people who stick you for the balance owed compared to the number of people that retained your firm because you allowed these terms to exist.

Would that equal [00:14:00] and net gain better? And the answer is, if you're going to do that, you need to make sure you have somebody in your firm that's managing your in-house collections or accounts receivable. And so that requires a system and work.

The good news is if you don't like doing it, there are people in this world who come from the collections world, who come from accounts receivable, and they have a reasonable understanding of.

How to actually do this, and they like doing it.

in Partners Club, we teach a step-by-step system that you need to go through to manage that process. But what you're looking for is if you're going to do this, you have to have the who.

Now on the other side of this conversation, for those of you who say that you're in bankruptcy or you are in, tax resolution.

There's so much business out there, you can actually go in the opposite direction. if you used to offer lengthy terms, this is an opportunity for you to contract your terms. if you used to let people pay over a year or nine months or six months, you might be able to shrink that simply because there are more clients available to you.

So if you want to limit bad clients and maximize the good clients, one of the [00:15:00] ways to do that is to contract the amount of payments you'll allow them to make on their case.

if you've got a great accounts receivable or collections team in your firm already, you may not need to do that because you have a realization rate.

What is a realization rate? That means as a percentage of how much you bill, what do you collect, right? So if you bill, a hundred thousand dollars, do you collect. $70,000. Do you collect $95,000 tax resolution gets really close to 95%.

Bankruptcy, oftentimes is somewhere really good firms between 85 and 90%. Rarely do I see bankruptcy firms that are growing rapidly crest over the 90% mark just because the nature of the people that you deal with. But oftentimes I see bankruptcy firms that are collecting less than 85, 80, 75, even 70%, and that causes real problems.

you have to make sure you have a really good accounts receivable team, You can consider whether you need to offer terms that you didn't offer before for family, law, criminal, or estate [00:16:00] planning. You can decide whether you're going to contract your terms, if you want to get a higher quality client because there's more demand than there is.

Supply.

For those that bill hourly and have a retainer. What I would not do is I don't recommend offering terms on the retainer. You'll get people who will take you up on it and your higher rate will go up. But let's say that you're a family law firm that has an average case value of $11,000 and you require a retainer of, $3,000 and you bill at $500 an hour.

You probably bill closer to 350 or $400 an hour, but I'm giving you credit regardless. There's 6, 7, 8 hours available there of billing. If you let them pay in terms and they have to pay that retainer over time, chances are pretty good. You're gonna get upside down in that case.

I actually recommend you don't extend terms. you'll get more people to retain you, but I think you're gonna find yourself upside down more often than you'd like. I really do like it for flat fee type firms, in [00:17:00] those cases, offering terms actually makes a lot of sense, for a multitude of reasons.

The fifth item we wanna talk about is micromanaging the client experience. What does that mean?

This is how you think about all of the touch points where your clients come in, communication with you.

from the very first moment they see your ad to when they pick up the phone and call you to how the phone is answered to the emails and text messages they receive to way their communicated with by phone to remind them about their appointment, to make sure that if they're coming in person or virtually, whether it be on Zoom or on the phone.

How they are treated and the instructions they're given. If they are coming in person, is there a parking space for them and how do we make sure they have directions into the building? From there, once they come into the building, how are they directed? And do we have their name somewhere? if they were coming on Zoom, do we stop and just make sure there's a sign that says, welcome Richard, or Welcome Brian or whomever you're talking to, [00:18:00] so they feel like they're welcome because people love to see their name.

If you were in person, do you go as far as making Otis Spunkmeyer cookies? that's what we did in the law firm that we built in Phoenix. It was before Zoom and virtual appointments. we really wanted to make people feel at home and we wanted to cover as many of the senses as we possibly could.

What did they hear? What did they see? What did it feel like in the office? Both in a feeling as well as what did the furniture feel like? was it new and upkept? ultimately what do they smell and what do they taste with the cookie?

And so we made sure we micromanage the entire experience. And then during the initial consultation,

we took meticulous care to pay attention to every detail because every detail mattered.

I remember the firm I built in Phoenix. I wanted to capture as much business as fast as I possibly could. We were in an up market, and I wanted to separate us from everybody else.

micromanaging the client experience is what allowed us to do that. When I have firms that are struggling, during a down market, they too have to use micromanaging of the client experience to separate [00:19:00] themselves to capture more business than they would ordinarily. That helps position them differently than their competition because there's a scarcity of business all of a sudden.

micromanaging the client experience, pays attention to everything up until the sale, and then it pays attention to how we get paid and how we collect, keep in touch with them? build relationships? onboard the client into the process? work the case and communicate with the client through the case?

And so all of this is important. We should micromanage the client experience until the case is closed.

Which includes if you're an immigration firm, are you bringing them in and celebrating their immigration process? If you are a bankruptcy firm, are you celebrating that they got their discharge?

If you are a family law firm, what are you doing to wrap up the case to make the family understand that you get them? If you're an estate planning firm, are you celebrating the fact that their plans are now in order?

How do you present them their files? Is it simply a blue binder? Do you just email it to them or do you make delivery special? And so what way can you make [00:20:00] your firm stand out from everybody else? Remember, we want to transform the people walking into your office from saying, why should I do business with you to will you take my case?

Okay, so I wanna give you one more bonus that I want you to think about. this bonus that I'm gonna discuss is what I call never stop marketing NSM.

during the pandemic, we actually thought that bankruptcies were gonna be on the rise. We didn't expect, the government to save as many people as they did.

we were teaching our clients to keep their foot on the gas, and many of them did. As many of you can imagine, there wasn't as many bankruptcies to be had 'cause courts were closed.

Debt wasn't being collected, repos weren't happening. garnishments weren't happening. There was relief everywhere. But there still were bankruptcies happening, so what did our clients do? They took their budget and expanded it throughout the state because they were able to go virtual, they [00:21:00] captured much smaller pieces of a much larger pie, which allowed revenues to stabilize.

If not grow. as they grew, They never took their foot off the gas of marketing. Maybe they cut it back a little maybe they altered it. But a lot of firms, the first thing they do when times get tough is they turn off the marketing.

Here's the problem in most of your law firms.

The marketing is the gas that keeps everything going. That new client attraction, pipeline advertising, generate leads, put them through the PCLC. That first step of advertising and marketing is essential Why? because if you stop advertising and you don't have enough referrals to bring you in business.

your payment pipeline and your cashflow pipeline is gonna dry up. You might have a three month, six month, a nine month, and 12 month and 18 month, whatever it is, pipeline based on how long it takes you to get paid, at some point the cash will dry up and you'll wake up one day wondering why you don't have any money in the bank, [00:22:00] and it's because

you stopped marketing. if you wanna make sure you continue to thrive you have to make sure you never stop marketing. Is it possible that your cost per lead cost per appointment and your cost to acquire a client goes up? Yes, it's possible.

I'd even argue it's probable. The challenge if you don't do it, we've turned off the spigot. We don't want to turn off the spigot of new clients. If you do that, you're going to get in a cash club, and then you're going to be forced to either take on debt to support your firm and your staff, or convince your staff to work for nothing and hope they don't quit on you.

Or more likely you're gonna end up having to lay off your staff and then when the tides turn, you're gonna have to bring everybody back again. Now look, sometimes during difficult times, you do need to lay off your team. Labor is your number one expense and you do have to save your way to solvency, so if that's what you need to do, because maybe you're a little top heavy and this is the time you have to prepare for this coming recession.

Then by all [00:23:00] means, do that.

But don't put yourself in a position where you're reacting because you've run outta cash because your firm stopped advertising. Know your avatar, convert your leads to the PCLC and never stop advertising. Your competition is going to stop advertising

You are gonna keep advertising. When you keep advertising and the storm is over. It's very possible. You are the only shrimp and boat left. you're gonna want to make sure that you are the shrimp and boat that's left standing. Never stop advertising.

we'd be happy to walk alongside you and help you understand the systems you need to put into your law firm so that your systems can run your firm and people can run your systems.

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