Speaker 1: Welcome back to the Wild A Successful Law Firm podcast. I'm your host Nermeen, and we are getting right into your most burning questions that you have asked me over the years as a law firm consultant. And we are going to answer one super important question that I get not just from new law firm owners, but also from well-established law firms. By the way, if you don't already know, then from right now until March 31st, 2023, if you purchase a copy of Zero to a Million, which is where these questions are coming from, then I am going to answer one question about your law firm, and that's included in the price of the book. So the link for the book is down below. Go check it out. Let's get to this question, and you definitely want to stay until the end because I'm going to share with you a little secret that not a lot of people know about. Okay. I get this question a lot, and that's, Nermeen, what are the most common types of law firm models? I know that there is a lot of confusion about what kind of model is right for your firm. And so in this video, I'm going to share with you the different kinds of models and the questions that you should ask yourself to see which model is the best fit for you. And not only that, but I'm going to debunk a couple of myths that there are about some of the models that you've already heard of. Let's start with the easiest, most common law firm model, but again, not the only one, but a lot of people think it is the only one, and that is the traditional law firm model, aka the Rainmaker model. The way that this model generally works, and you see this in big law firms, and you see this in small law firms as well, is that there are a few people, or there is just the law firm owner, and they are responsible for rainmaking, aka business development, aka bringing in the business. They are bringing in the work. They are bringing in the clients. They are the front-facing person in the business and in the practice. Then once the work comes in, they have other people, associates, paralegals, legal assistants, to do the work that they have just brought in. That is the most commonly talked about law firm model. It is the one that everyone thinks of initially, but the reality is that it's not the only one, and it's honestly not the best law firm model. For me, it's a traditional model. It's the model that big law has, and I don't think that that model is a good fit for small law firms. It works when you're here at the thousand-plus level, at the 500-plus level, at the 300-plus level. You're in a big city. You're charging 700-800 an hour. Cool. That works. Well, kind of works. There's reasons why it don't work. It doesn't work, but that's a different video. Let's talk about these other models that exist. I'm not going to spend a ton of time talking about the big law firm model, the rainmaker model, because we all know about that one, right? It's pretty simple. You've got the rainmaker. They bring in the business. They've got people behind the scenes doing the work. They're the face of the business, and that's that. It's pretty simple. Nothing super complicated about it. Hey, law firm owners, take two seconds right now and please hit the like and subscribe button below. It goes a long way for the growth of this channel that just helps other law firm owners like you do the right things to grow their practice. Thank you so much. Let's talk about this next model. This model is what I called the highly specialized law firm model. So let's talk about the specialized law firm model. It is probably one of my favorite models. It is definitely my preferred model to the big law model, but the specialized model is really for those attorneys who are law firm owners in a very specialized field of law. I want you to think of ERISA. You know that code that is like hundreds and thousands of pages that not only is law in and of itself, but then there's also state regulations and then federal IRS requirements. Yeah, that thing is big and it's hairy and it's messy and it's disgusting and no one wants to deal with it unless you're an ERISA attorney, and that is a specialized field of law. It is very specific. You have to not only understand the code, but you got to know where to look for the answers and where to look for other options. It's a whole thing. That is one example of a specialized area of law. What I see with this model is that the person who is specialized relies heavily on the business relationships that they've had in the past. So how this works is they worked in big law. They worked for a couple big firms. Maybe those colleagues of theirs went in house and now they're doing ERISA work for those people who are now in house. It is heavily relationship-based and they understand that they would rather work with someone who's a five-person, ten-person team rather than go out and hire a big law firm and like triple their client's expenses. At least triple, right? So I like the specialized law firm model. It's a little bit of business development, but not heavy on the business development, but it is a lot of doing the law work. Why? Because there aren't a lot of attorneys who are in that specialized field. There aren't a lot of ERISA attorneys, so they're not going to be able to hand the work off like you may be able to if you're in corporate M&A. Corporate M&A, there's tons of those associates to do the work. ERISA, not so much. Now I know I focused on ERISA in this one example here, but there are other kinds of specialized attorneys. If you are an attorney who has a biochemical degree and then you went to law school and now you are writing patents, you are in a specialized area of law. If you choose to start your own law firm, you can definitely use this model to your advantage where you don't have to spend all of your time being client facing or doing business development. You can really rely on your close personal network to bring the business in for you, and then you can do the work yourself. If you watched a couple episodes ago, I talked about how many hours you should work as a law firm owner, how many hours you should bill, how many hours you should do marketing. Definitely go back to that episode, listen to it, explain it all. You would be a good fit to be in this specialized model where you're doing a little bit of work and a little bit of business development. Okay, let's talk about my least favorite business model is the high volume business model. Obviously, I don't like it because it's high volume and I know so many attorneys who are in this high volume practice and when I say high volume, I mean higher than their team can handle and high volume also means the clients are not the quality of clients that they should be working with. I will tell you a lot of personal injury offices are high volume and I understand logically why they need to be high volume. You don't know if every case is going to pan out, so you end up taking on more cases than you can actually handle because only 10% will go to settlement and then another 10% will actually be worthwhile and that's the bullshit that you've been taught about how to run a personal injury firm from someone who doesn't know how to run a business. I get it. I don't like the high volume model. I've started to see a lot of immigration practices getting into this where they charge these really low rates, provide really crappy customer service. You know which ones I'm talking about. I don't need to even call that up by name and then they just end up being in this high volume practice. Your associates are filing 10 applications a day. They're seeing 20 consultations a week. It is very overwhelming and it is that high volume model. Bankruptcy practices also fall in line with this model. Bankruptcy is price sensitive which means that you can't charge $10,000 for a bankruptcy when the person across the street is charging $7,000 and not only that but the person you're working with doesn't have money which is why you're filing for bankruptcy anyway. So bankruptcy practices end up being a very high volume model and on a monthly basis you know the trustee may only be giving you 70 of the $7,000 that you are owed back every month. So to make ends meet you need hundreds of those clients and I've seen that model and I don't like it. It is highly stressful for those people who are working there. It's very stressful for those law firm owners. There's high turnover and at the end of the day clients aren't happy and everything I think about is what's the client's experience in this? Why are they being treated this way? So I want you to think about that. If you are in the high volume model you can become a specialized model. You can become a rainmaker model. You just have to stop working in such high volume. That's really what it takes. You got to start working with other kinds of clients. You got to have a better intake process to vet out whether or not a client is actually the right fit for you. Okay let's talk about this next law firm model which is my favorite and it's a secret. Not a lot of people know about it. It's what I call the hybrid model. It is a really nice mix between the specialized doer model and the rainmaker model. In this model you have a law firm owner who is willing to do the work for the practice. They are willing to review the contracts. They want to. They really enjoy practicing law. They enjoy writing estate contracts. They enjoy filling out immigration forms. They enjoy writing demand letters. They genuinely enjoy practicing law. They want to do that but they don't want to do that exclusively. Let's say if you were in the specialized model. They want to do that but they also want to do a little bit of this business owner thing. They want to do a little bit of marketing strategy. They want to help come up with their brand design. They want to talk to people but they don't want to be a rainmaker and have all that pressure but they do like their relationships and it is important for them to have those relationships in their life. So this hybrid model is where I like to put a lot of my law firm owners and by giving them specific structure around okay Monday is your marketing day, Tuesday is your finance day, Wednesday, Thursday, Friday you practice law. It works out really well for a lot of them and they like having that structure that doesn't tie them exclusively to practicing and doesn't tie them exclusively to business development. It's the best of both worlds and that's why I like that model. You didn't go to law school to then just sell the thing that you're doing, right? You went to law school because you like the legal argument process. You like filling out form. You just you like being a lawyer and I know so many lawyers who like being lawyers and they should be able to be lawyers. They're in fact some of the best lawyers that I meet. The ones who really enjoy the work. This is the best model for them. If you have friends, by the way, who are trying to think about what model is right for them or they need to switch, please share this episode with them. They will get so much relief because I see that Rainmaker model being just shoved down people and it's not the right fit for everyone. Now I'm sure you're wondering, okay Nermeen, this is really great information but how do I really decide what questions do I need to ask myself to say yes this model, no not this model. Look you may already have it down to two models but now you need to make a decision. So I'm going to ask you some more questions here, okay? How do you as a law firm owner choose the right law firm model for yourself? Well there's a few questions that I want you to ask yourself and really listen to these carefully and be really honest with yourself, okay? The first question I want you to ask yourself is are you going to be a solo law firm owner as in no other attorneys? It's just you? You've maybe got a paralegal, maybe two paralegals, but you're going to be the only attorney? Or are you going to have other associates in your practice? Now this question is going to help you decide what kind of model you're going to have because if you're going to have other associates and you're going to have three, four, or five other associates, you have to start asking yourself the question who's going to feed them business? Who is going to bring in the work? Someone's going to have to. You can't rely exclusively on SEO and Instagram and all that other stuff. You got to have sources of those clients for you and someone is going to have to do some form of business development. So ask yourself is it just going to be you or are you going to have other associates? And that is really going to help you decide here's the model, here's the right model, this model doesn't work. The next thing you want to ask yourself is are you practicing in a specialized field of law? I will give you the default response here which is no. 90% of law firm owners, 90% of lawyers do not fall in a specialized field of law. It's not just that you have to be practicing ERISA or patent prosecution or whatever that very specialized thing is. It's that most attorneys fall into these really big buckets of non-specializations. Estate planning attorneys, even if you only work with people who are filthy millionaires, great. That still doesn't make you a specialized field of law. I'm sorry. You could be a personal injury attorney who only does eye cases. Great. That's a niche that's not really specialized though. I really want you to just be honest with yourself and if you're not specialized and you're not, move on. And that's that, okay? The next question you want to ask yourself is what are your revenue goals for your law firm? I know you all want to be ambitious and you want to say I want to make a million dollars a year, okay? But it takes a lot to get to a million and you may be actually even happier at 400 because at 400 maybe it's just you and two paralegals. And that's it. You don't have to answer to anyone else's bullshit. You don't have to deal with associates who quit on you. You don't have to deal with finding an office space. Everybody is happy working from their own little office. Your take-home pay is $250,000. Not a bad year, right? That's what big law associates make their second and third years. Especially if you're living in a not super expensive city like New York or Boston, you can definitely support a family on $250,000 a year. So be honest with yourself, okay? Because you could end up making a million and then you've got two associates which brings you down to like $750,000. Then you got a team of three which brings you down to like $500,000. Then you've got office space, you got this, you got that. Before you see it all, you're at $150,000. And at that point, why would you even have a law firm, right? Don't own a law firm with the intention of barely making it as a firm owner or just to make just as much as you did as an associate, right? Do this with the intention of you want this to be your way and you want to be profitable and you want to maintain 60% to 70% profitability, all right? So here's a question I get a lot from new law firm owners especially. They're wondering, okay, Nermeen, this is really great. These questions are wonderful. Now, what kind of law firm should I have as a new law firm owner? And to be honest, I don't know anything about you. I don't know anything about your practice of law, but nine times out of 10, a new law firm owner, I'm going to put them into that hybrid model where they're doing a little bit of business development, but they are also still doing the legal work, the stuff that needs you want to become a lawyer in the first place. And I usually say do that for about two years. Spend 40% of your week doing that business owner stuff, that accounting, that finding the right team, that looking for business development and client development and client relationship development. Spend about 40% of your week doing that. The other 60% you should be spending doing client work and doing legal work. So over time, having that sort of 60-40 split in your week, you won't get burned out by either. And the benefit is that after two years, you will then have a better idea for yourself on what the thing is that you want to do more of. Or maybe you love that split so much that that's what you want to do for the next decade. So stick to that in the first two years of your practice, that hybrid model, and you will be able to decide for yourself when the time comes, no, this is actually what I want. I know that there are people that will say, oh, well, this is what you should do or that's what you should do. Truthfully, I think you need to do a little bit of both, a little bit of the business development, a little bit of the law, and then see what you actually like and what you want to keep doing. And you don't know until you actually do it. So you can take all the quizzes and questionnaires in the world and do all of these things, but until you actually have six months where you're splitting every single week, building business, and then doing the legal work, you're not going to know for yourself what you should actually do or not do. So give yourself this time as a new law firm owner to truly explore and experiment. I think the best thing I can tell you as a new law firm owner is the first two years are going to be an experiment. They're going to be an opportunity for you to test out a bunch of things. If you just stick to one thing and just do that one thing, you're going to lose out on the benefits of being a business owner, which is you get to decide for yourself what every fucking day looks like. And that's why a lot of people end up leaving big law is because they want the freedom and the flexibility. And every business owner, every law firm owner I talked to says, I left for the flexibility and flexibility in choosing clients, flexibility in choosing schedules, flexibility in deciding what their day-to-day looks like. So you have that opportunity right now. I don't want you to lose it because you're nervous or you're scared or, you know, whatever, whatever that might be. I don't want you to lose this opportunity. It's a really good time for you to see like what is actually best for you. So in this episode, we've gone through a lot of information on the business models. If you're still confused, if you have more questions again, buy the book, you can reach out to me and I'm happy to answer a question. If you want to do more deep or detailed consulting, we can work together on that too. I have a whole page on all the ways that we can work together. And all you have to do is just click through on that page. So that's everything for this episode. My friends, thank you so much for listening in again. If you've got colleagues who would really benefit from this episode, please share it with them. It goes a long way for law firm owners like you who want to know the right business advice, not hacky bullshit duct tape advice. Alright, that's everything for now. Have a wonderful week and I will see you all next week. Thank you so much. Bye.