How to Break the Capacity Ceiling in Your Law Firm (Full Transcript)

[00:00:00] Speaker 1: Stephanie, I talk to a lot of lawyers who, they're running their firm, it's going along, they have a going concern, but they feel like they're on like a hamster wheel. They're bringing in clients, they're doing the work, they're, you know, getting everything done and then it's kind of rinse and repeat and just doing the same thing over and over. And they're, a lot of them are, I don't want to say miserable necessarily, but kind of frustrated at the very least. And they feel like they're running a sprint with no finish line. They're just going, going, going, going, going, and everything's staying above water. But it's tough. What's going on there? I know you've run into that a lot too with attorneys that we coach.

[00:00:47] Speaker 2: What we're seeing is that they've probably hit a capacity ceiling. You know, that could feel tricky because it's not necessarily failure from the outside. In fact, revenue might even be growing. But inside the business, everything is being held together by that founder's personal effort. So their time, their decisions, their presence, everything requires them. And so when growth comes, when they have more clients coming in and more cases and more demand, instead of the business absorbing that growth, it just dumps more weight on the one person who's already maxed out.

[00:01:26] Speaker 1: And they do not see that coming necessarily because, I mean, they're busy. They're doing the things. They've got clients. They feel like, I mean, it feels like I'm winning, you know, I'm busy, Zach, but yeah.

[00:01:39] Speaker 2: It feels like success until it doesn't, right? Until you're missing your kids' school events and you haven't taken a real vacation in three years and you realize this business owns you, you don't own the business. And I know you and I talked about this in episode 600, law firms rarely collapse suddenly. They kind of quietly trap their owners over time. And I think that's the capacity ceiling. That's what it looks like when it shows up in our practice.

[00:02:08] Speaker 1: Because little, you know, more clients, more stuff. It takes a little bit more from the heroics of that attorney.

[00:02:16] Speaker 2: Yeah.

[00:02:17] Speaker 1: Then what actually creates that ceiling, though? Because I think a lot of people would say, like, I need to hire more people, obviously. But is that the real answer?

[00:02:26] Speaker 2: Yes. Sadly, I mean, hiring can help, but it doesn't automatically solve the problem. And sometimes it can actually make it worse. Because if you haven't built systems, hiring just is going to give you more people to manage, which means more decisions are running through you, not fewer. And you even said it just a little bit ago, where you were just like, yeah, it's just a little bit more and a little bit more. You know, so the ceiling that I'm talking about, it isn't a headcount problem. It's a design problem. And we see it showing up over and over again in a few very specific patterns. You know, the first one, I'll call it the approval bottleneck, where everything, every client communication, every filing decision, every invoice, all runs through that founding partner for sign-off. And so even if the founder didn't consciously decide that, it's how it's evolved. And now, you know, it's like the founder is our pace car for every single thing that happens in the firm.

[00:03:25] Speaker 1: I bet a lot of people watching this video or listening are saying, you know, that that sounds familiar. Like, I've been that person 100%, and I struggle being that person right now in my job. You don't even realize that you've created that system, because you're just trying to make sure things get done, right? You know, it's your butt on the line.

[00:03:47] Speaker 2: And it comes from good intentions, right? Like you care about the quality, and so you want to stay involved. But then the consequences of that is that nothing moves without you. It's a real problem. Yeah, I know. Let that one sink in. I mean, I can't tell you how many founders I've talked to when I'm working with them and coaching them, and they have that aha moment where they're like, I'm the bottleneck. It's like, right, you're the bottleneck. And that's, so we have to solve for that. That's, you know, that's a design problem. We can design the systems to work differently. Everything doesn't have to run through you.

[00:04:26] Speaker 1: That's kind of nice, though. Like, okay, we can solve that.

[00:04:29] Speaker 2: Great. I think that also kind of brings up what we see the second pattern happen, which is what I'll call the institutional knowledge trap, right? Everything about how the firm runs lives in your head, in the founder's head. You know, everything from the intake process to client communication preferences or file organization logic or pricing decisions, like you name it, any aspect of the firm is living inside the founder's head, and it's not written down anywhere, which means if you ever want to delegate anything or take a week off, you know, right now you have to be there in real time to explain what to do. And so again, it's not a team problem. That's a systems problem.

[00:05:19] Speaker 1: Oh, yeah. And that fits dovetails or something. That fits with that first one, you know, absolutely. Okay. So what's the third?

[00:05:29] Speaker 2: This one is decision fatigue, right? So we know that these founders are being asked to make all these decisions, and it compounds in a way that's really hard to see when you're inside it. But every decision, whether they're big decisions or even all those little tiny ones, they're costing you. They're costing you cognitive energy. And when you're the decision maker for everything in your firm, on top of doing the actual legal work, you start running at a deficit constantly, which means, you know, your best thinking gets spent on the wrong things, and you're making high-stakes strategic calls. You're running on an empty tank because you've already used up everything deciding, you know, which vendor to use, software to buy, or how to respond to this client complaint, not really preserving your good energy and brain space for those big decisions that can move the business forward.

[00:06:27] Speaker 1: And that, again, all three of those patterns kind of fit together, right? You know, they all seem to connect to each other. Well, so in episode 600, you asked, and this fits with this as well, like, what breaks first if demand doubles? Like, everything goes amazingly. What breaks? So let's actually answer that. How does someone diagnose where that ceiling is?

[00:06:56] Speaker 2: It's actually just by using that question, you know, that little scenario builder, if you will, that you just asked. So if you sat down right now and imagined, great news, a bunch of clients just called and our work just doubled.

[00:07:09] Speaker 1: I know. It feels amazing. Great problem to have.

[00:07:12] Speaker 2: But yes, imagine you woke up tomorrow, and now you have twice the client demand. Walk through your firm step-by-step and question whether it could handle that volume of work or does it rely on you personally making every impression? And by the way, maybe doubling is as unfair because you'd say, I mean, if, yeah, doubling, of course, everything's going to break. You know, if that feels, if that's too hard to imagine, just take it up by 25%. You know, the idea is, though, what still is running through you and what could kind of run lockstep without you, without all the decisions going through your head, without everything hitting your desk that only you can answer? You know, how could your team be able to deliver your business run if all of a sudden volume went up? Because that will really kind of tell you what's going to fall apart.

[00:08:06] Speaker 1: Most people are going to find that it falls apart in multiple different places. It's not just one bottleneck necessarily, especially with the three scenarios above. You know, that's going to fall apart in all over the place, really.

[00:08:19] Speaker 2: Probably. But the point is, is like, that doesn't mean you have to run out and try to fix all of them at once. You just want to first have the information, okay, now I can know, I know what's going on in my business. And then really kind of think about which one is most load bearing, if you will, like the one that if it breaks, everything else breaks with it. And you can start there and try to fix that first. For most firms, it's going to be your intake or your delivery systems, because that's probably where you're, you know, the founding partners is being consumed most directly.

[00:08:53] Speaker 1: Then what is the first move actually look like? So someone's listening to this and they say, okay, I get it. I feel all that. Now what?

[00:09:01] Speaker 2: This is like the least sexiest, fun answer in the world. But your first move, just saying it like it is, your first move is, is documentation, right? Because you can't delegate what you haven't defined. And so pick that one process that runs through you most often, usually, like we said, it's client intake, maybe client onboarding, and write it down. Or if you really want to have some fun, go to your favorite Gen AI tool. And you can even open up that little microphone option and just explain to the tool, here's what happens when we get signed a new client. First they call, then they do this, then they do this, then it's this, like map out every step, every decision point, every template, pretend you're writing it for someone who's never done it before. And this is really going to help you. You could also just like record a video of yourself doing this, like there's, it's super easy. I know it sounds like ultra boring, but we just want to get that process out of your head and onto paper so you can start seeing it. By the way, in doing that, you'll probably find some easy places where you can improve. And so you can go back and then add that in and find those levers and be like, oh, wait, could we automate this? Could we do this better? Right? Like those are great opportunities. But the ultimate goal is that we want to document the system and the process because that's going to enable you to delegate it.

[00:10:32] Speaker 1: Yeah, you say that's the not sexy part. It takes, even with AI, you know, even with using the prompts, it still kind of takes a little bit longer than you think. So I think people underestimate how long that's going to take, but it is, like you said, fundamental. It's necessary, you know.

[00:10:52] Speaker 2: It's worth it, number one, because doing it on the front end is going to save you the equivalent of explaining it over and over again indefinitely. So it's a compounding return on a one-time investment. But also it's an opportunity to, you don't have to do it all at once, right? Just pick the first thing, maybe map out two hours, block out two hours on your calendar every other week and use that time to just do another process. Encourage your team members to, maybe there's some processes that they are involved in and they still come to you for that final decision, but they could go ahead and map out all the other steps and then you guys could work together on refining it. But the goal here is, you know, your job is to be the architect of what you're building, right? So you said this best, heroics are not scalable, architecture is. So our job is to create a business that doesn't need us personally saving the day and wrapping our arms around everything, trying to fix it. We want these things to be able to run without us.

[00:11:58] Speaker 1: Well, and maybe that is kind of sexy. Maybe that is fun work, you know?

[00:12:03] Speaker 2: I'll go with it. Sure. The good news is, it's going, I mean, I do have fun doing this work and yeah, I mean, I know, I'll say this, it's more fun with AI. So use your AI tools. That's true. That definitely makes it more fun. But you know, the thing I want to leave people with is, this is the necessary work that's going to give you your time back. That's going to allow you to grow without breaking. That's going to allow you to build that business that you're proud of. And it's so hard because I talk to people every day and they're like, they know they want to change. They know something needs to change. And yet they're, it's almost like they're unwilling or are incapable of then taking that first step and making the change. And so, you know, the definition of insanity, like something has to change. And this isn't easy for a step to take. Like we're not asking you to go out and do anything, you know, super crazy. You're not trying to like rebrand your whole business. It's just simply documenting your processes so that you can start delegating them and getting them in somebody else's hands.

[00:13:14] Speaker 1: Well, if someone wants help with that, if they want a strategist to help them with fixing that ceiling.

[00:13:21] Speaker 2: We'd love to help. That's exactly what we do in Lawyer's Lab. You can bring your firm's specific situation. We'll help you figure out, you know, where your ceiling is, what to build first. We're going to guide you through the process and give you step-by-step instructions on exactly how to build it. So we'd love for you to check out Lawyer's Lab. We'll make sure the link is in our show notes.

[00:13:41] Speaker 1: Awesome. Well, last episode is next and we're talking about AI, which we kind of teased here, but we're not talking about hype version or, you know, crazy stuff. It's strategic infrastructure version. So don't miss it.