Chuck Newton

Schmooze-You-Loser

I do not know what it is with lawyers starting their practices. They always seem more concerned for their work environment, and the internal image they have of being a lawyer, than considering how to properly and effectively solicit clients. They equate building an office with building a practice. The concepts are completely different. Building an office concerns itself with debt, lost of time, overhead and loss of money (now and in the future). Building a practice concerns itself with paying clients, earning money to pay overhead an to make the life of a lawyer comfortable. Getting the two confused or prioritizing office building over practice building often has terrible consequences.

In this regard, attorneys fall into two very distinct and aggravating categories.

The first is the snooze-you-lose category. This is probably the most common of the two. It concerns itself with lawyers who cannot get either the energy or enthusiasm to do what it takes to actually survive in the practice of law. They hang a shingle and expect the world to find them. Generally that is not going to happen.

But, an equally frustrating category are those bodacious lawyers that also do not understand that overt salesmanship does not work out well. We will call this the schmooze-you-lose category.

I do not need to spend time in this post on the snooze-you-losers. You know who you are, and you know you need to quit fidgeting with thing that do not matter in the overall scope of things, and get out there and find paying business. The best way to start is to just start. However, do not let your enthusiasm get the better of you in the process.  You do not want to become a schmooze-you-loser.

From where does schmooze-you-losing come? Ego, maybe. But, I tend to think it comes from a lack of self-confidence or certainty that result in an over correction. A lawyer has jitters about selling, so they blow caution to the wind, inflate their chest, and barrel out into the public trying to convince everyone about how great thou art. The fear of meeting and greeting and talking about oneself is overcompensated for by becoming a schmooze machine.

Nobody likes a salesman, and schmoozing in the end seems so Hollywood, so plastic, so opportunistic. People, companies and organizations have to deal with schmoozers because they are technically buyers, and it comes with the territory. It does not mean that people like it. And, in an age of choice it has serious consequences. Everyone knows what it is like to screen their phone calls, ignore their doorbells, and avoid a table at a luncheon to avoid schmoozers. Nobody but nobody likes to have services crammed down their throats. There is nobody that has not been conned so many times, or disappointed with the products of a schmoozer that they instantly believe the schmoozer's services suck. It is a visceral thing. You do not want to come across as self-serving like a telemarketer or a slick used car salesman. Yet, many lawyers do only to wonder why they are spending so much time and money to gain no referrals or no paying clients.

Sure, this might sound counterintuitive to some of the suggestions I have made over the years. After all, I am for making contact with people, taking your clients and referral sources to lunch occasionally, and marketing your niche. The key is, however, I sometimes take my referral sources out to lunch. I do not wine and dine people who have not referred me business generally.

You need to make yourself available - often - frequently - conveniently.  But, the hard sell leaves almost everyone believing you are not listening, not caring, that lawyers are not trustworthy, and that honest representation is not available. There is a difference in making yourself available and in being a stalker. Lawyers need to make sure they understand where that line lays.

Avoid the schmoozefest. It is important to understand that regardless of all of the gimmicks promoted on TV, in sales departments, and in motivational books, that apart from making yourself available and being trustworthy, that most of it is a big waste of time and money. Sponsoring the CLE, trade shows, and seminars of others with catchy slogans probably has less effect than just presenting at one for free. Playing golf might be good recreation but its power to generate enough business for the costs is generally overrated. Wining and dining potential customers for business ... Well, they are just tagging along for a free lunch.

The other problem is that there is more productive, and less expensive work, to do back at the office. So, when invited, you need a simply elevator speech that informs others as to what you do, why you do it, and how you can help. Being prepared is good. However, if you want to randomly get in front of people, groups and organizations with a hard sell, well then just Glengarry Glen Ross yourself!

To schmoozefest is usually an excuse to ignore and avoid the bigger problems piling up at the office that need attention anyway. When a lawyer is at the club, in expensive restaurants, necessary decisions are not being made, and generally it is taking the law firm deeper into debt. After all, those credit card bills have got to be paid sometime.

Take schmoozing out of overdrive and take that money spent on airfare, expensive meals, sponsorships, and just be yourself.

Do not be a schmooze-you-loser.

This Is What It Is Like To Get Through Security At The Houston, Texas Federal Courthouse

 

Raising Money To Start A Practice? Forgetaboutit!

I communicate with lawyers starting out all of the time, and most often they ask how to get law firm start up money.  They are, in terms of law firms, talking about borrowing money. But, there are two main problems with borrowing money.

First, the reality is that raising money to start any business, including a law firm, is excruciatingly hard unless you have a track record. And, the reality also is that new lawyers do not have a track record. Law school is not a track record. Further, the time spent trying to raise money could be spent defining your practice and finding paying clients, thereby helping to eliminate the need to raise money.

Second, and I think more importantly, too much debt can be ruinous in the short run and the long run.  It really does not do much to accelerate earnings for a law firm presently. Most of the money goes to living expenses. Also, it might very well decrease earnings as it gives the young lawyer a false comfort level. Then, for course, it decreases earnings long after the firm is established as the funds have to be paid back with interest.

For these two reasons I would argue that the best thing to do is to avoid fund raising to start a law firm. Concentrate your limited time and resources and focus like a laser beam of locating paying clients and cases.

4 Steps To Snowball Your Law Firm Profits

I think the problem is that most lawyers look too often for what they call in Texas "the big lick". It is a case or line of business that gushes money to the extent that it can cure all of the law firm's misjudgments. Oh, the big lick happens once in a while to a few, but increasing profits for a law firm is usually accomplished on the margins.

The overall strategy takes a constant eye for what needs to be accomplished as the increase in profits rests on the margins. As with a snowball, it starts small and builds on itself quickly. But, that does not mean that you do not need to create the right environment for this to happen.

Let us look at what it takes to create an environment that will allow a snowball to roll and grow quickly.

1.    Aggressively control overhead. It is easy to let overhead get out of hand. The more overhead the more you are working for others and not for yourself. It represents more money you have to bring in without paying yourself. Whether you bring in another dollar or decrease overhead by a dollar it will still result in you earning another dollar to take home. I think most lawyers forget this. Increase earnings by a dollar and decrease overhead by a dollar and you now have conditions to start the snowball rolling.

2.    Niche your practice. This is a matter of taking your strongest and most profitable practice area or cases types and concentrating on those. The purpose is to increase those cases that pay you more, and take less of your time, while decreasing those cases that pay you less and consume most of your time. Realistically, the more time you have to spend on cases the higher your overhead will become. Time intensive cases is often a lack of proficiency in the case type. Experience cures this problem. But, have you ever noticed that the less you get paid for a case the more time that case seems to waste? The time issue is important because the more time you spend on a case type the less you make. After you niche you will naturally start to increase the number of the profitable cases you want. This will represent an exponential increase in earnings over time.

3.    Increase your prices. Once you niche your practice, become more efficient and become better known as the go-to person for a specialized problem, then you can increase the fees you charge. This is so because your pool of potential clients becomes larger and you can afford to be more choosy.  Your more profitable cases become even more profitable with more money coming in and less money going out.

4.    Network. You need to build a referral base. This helps in a number of ways. It results in more paying clients, paying you on the more profitable cases, in which you are earning more money, but the lack of advertising allows you to keep overhead under control. It helps build your reputation as an expert. An added benefit is that referred clients usually represent more qualified prospects and take less time to service. This is because they come with a level of trust that skeptical advertised for clients often times lack. Networking can greatly increase the number of leads. The more leads, the more cases. The more cases, the more in earnings. This leaves you only to fight against overhead.

So with low overhead, concentrating on your most profitable case type, working to make your time more efficient and increasing the value of your cases, and getting those cases and client through the front door economically, the profits will quickly increase like a snow ball rolling down a hill.

Sweat Equity Is B.S.

How can I put this? I have learned it the hard way myself. The notion of sweat equity is unreasonable, it represents folly, it is a farce, it is a crazy concept, and it is just plain crap.

Law firms, by and large, do not have equity in any sense that a lawyer can realize.

It is a concept which means that the attorneys are trying to build a law firm should not pay themselves a salary while they are trying to build the law firm. In other words, the attorney should work for nothing.

You hear this a lot from newly minted attorneys that go out on their own. They speak of it in terms of paying for their education. That is a silly statement as well. They have already paid for their education many times over.

I tremble when I hear these statements.

When I speak of a salary, it might not be a fixed amount, but it does represent money that needs to be taken out of the firm to properly and respectfully feed and care for the family.

I do not know of any law firm that has failed because the attorney paid himself a reasonable amount of money. The failure of a law firm, as the failure to pay the lawyer money, often represents much more serious financial problems that indicate the law firm is not working out well.

Sure new law firms often lack enough quality clients or cases, but this is cured by our ingenuity. When you as a lawyer need cases and money, you will get out and find cases and money. If you do not get out and find it, you are asking for failure.

The bigger problem is a problem of too much overhead and debt. It still astounds me sometimes that new lawyers and new firms, without cases or clients, will go out and incur debts and liabilities. They will not think first how to make a living for themselves. It is counterproductive. It is harmful. It is a recipe for failure.

I do not know why this happens.  Maybe it is because we lawyers are just overly legalistic and into fictional organizations. But, I see most new solo attorneys go out and spend money to incorporate, which also increases the ongoing cost of doing business.

I see newbies lease space, bring on a legal assistant, hard wire phones, pay for professionally designed websites, conjure up advertising needs, buy new computers, buy a new car, join a bunch of unnecessary organizations for their needs, and generally guarantee they will not be earning in a salary or money for themselves.

Lawyers need to structure and build a practice reasonably to pay themselves and not to cover expenses.

The sweat equity rational only tends to mask the problems of a new law firm.

Just ask yourself where your law firm would be without you? The answer is nowhere. Would you work to keep someone else's law firm going without being paid? I doubt it, and you should not do so with your own firm.

The rewards of the practice of law should be yours.