I’m Melissa Shanahan, and this is The Law Firm Owner Podcast, Episode #204.

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Melissa Shanahan: Hello, everyone, and welcome to this week's episode. I'm thrilled to finally, finally, have John Grant on the podcast. Hi.

John: Hello, thank you. I am thrilled to finally be here. I'm glad we're finally making this happen.

Melissa: Well, this has been top of mind for me for a long time, over a year, probably a year and a half, something like that. Because I think when I first got the chance to talk to you, it was January of 2022, I believe. A lot was going on at that time, which I'm sure you will share more about. But all good things. Your focus was shifting and needed to shift. And now, you've since shifted back to your company, which is incredible.

The reason I really wanted to have you on was because number one, I had a client who used you. You helped them.

John: Oh, great.

Melissa: Ben Hudson. I know he's fine with me sharing that. And he really enjoyed the work with you and how much you set him up. I mean, so much so, he was giving people new ways to think about things, in a group that I was leading at the time. That was because of the work that you did with him. So, you helped him work on his workflows inside of his practice. And it changed a lot for him.

So, that was super interesting. Plus, I got the chance to talk to you and learn about how you think and how you help attorneys think about their workflows, and probably much more than that. But that's like how it's encapsulated in my mind.

John: Yeah, no, that's a big chunk of it.

Melissa: And more should know about it. So, I’m thrilled to have you on. I hope this isn't the last time I have you on. I hope that I can get you to present to our group sometime. I think that the kind of work you're doing is really important for efficiency, streamlining, optimization, client happiness, and success. Also, internal happiness and success.

John: Big time. Totally.

Melissa: Will you tell everybody, many people probably know who you are, but who are you? What's your company? And what do you do?

John: Yeah, sure. I'm John Grant. My company is Agile Attorney Consulting. If you search for “Agile Attorney”, I am likely to come up. I have this sort of weird background. I've talked about in other podcasts, and I won't go deep, but I'm a fourth-generation lawyer. So, that’s one thing. And I think how that manifests, more than anything, is without knowing that I was growing up around lawyer culture, I grew up around lawyer culture.

And so, I feel like I have a pretty good, almost instinctive understanding of how lawyers tend to think and tend to approach things, for better or for worse, right? And that's sort of part of it. Growing up with a family of lawyers, I had no intention of going to law school. I had no intention of becoming a lawyer.

I graduated and went to work for a hot sort of dotcom startup in Seattle in the mid-90s, which was the coolest thing in the planet to do at the time. It was super fun and I learned a lot. Fast forward, and the very fast version of it, there were tools that are used in entrepreneurship and startups and technology, that are incredibly powerful and incredibly impactful for those companies and for their users, for their clients, customers, however you want to call it.

And I've sort of made it my mission for the last more than a decade now, to help lawyers understand what those tools are, and translate them in a lot of ways. When I first started doing this a decade ago, I was like, “Oh, great, Agile is this cool thing, and it's completely revolutionized the tech industry. Lawyers should just start doing Agile.”

And that was pretty naive at the time, because the concepts of Agile work really well. But the specific practices that work in technology are not the same practices that work for other disciplines, including legal. And so, I've really spent the better part of the last 10 years really diving in and trying to understand not just the practices, but the principles behind them and the methods and the philosophies.

And then, working with my own consulting clients, or in other sort of capacities. I am a founding board member of a legal nonprofit here in Oregon and served as its interim Executive Director. Which I think was that thing back in January of 2022 that was taking up a good chunk of my time. But I've just learned so much by applying these concepts and these principles in real world situations.

So, I'm super excited to be on your show, because I feel like I'm shouting from the mountaintops now, like, “Hey, come try this stuff.” When I first started doing it a decade ago, it was a theory. It was like, “Oh, I wonder if this could work for lawyers?” And now it's like, “Oh, no. This works.” I don't want to oversell and I don't want to throw around that it's revolutionary or life changing, but it really can be kind of life changing for lawyers and their clients. I think Ben's a good example.

Melissa: Yeah. As we're recording this, there is a series going on, on my podcast, about consistency. And one of those episodes is talking about how people aren't focused on creating consistency or a new normal with the foundational things. And they're focused on whatever, I don't know. Like this marketing campaign that's going to bring in a ton of traffic.

Not that you can't do some things simultaneously, but they're focused on these big shiny levers that they think they should be pulling. And to me, and what we talked about in there, there is an order in which to build consistency or put your focus. And all too often I see… This is businesses in general, but I happen to just work with law firm owners. You see people who on the outside look like they're growing at a good clip. And on the inside, the foundation is a house of cards.

What you do, the work that you provide, feels like such a solid example of where to show up consistently to get these things right so that you can really have a strong foundation. Which is leverage for when you really want to optimize and grow. I think that what you do is key to having a strong foundation. And so, if someone is going to focus on creating an end result for themselves, they have to show up and work consistently towards that result, which you can help them with.

John: It's that whole metaphor of the duck; that looks like it's all chill above water, but it's swimming like mad underneath. And I think that's so many law firms, so many law practices. And it's exhausting. Right? It's overwhelming.

Melissa: I think people think it's a pipe dream, to not have that as a reality.

John: Yeah, I think that's right. I mean, there's like the split things, right? There are the management gurus, whatever, that traffic in what I think of as “hustle porn”, which is like, “You’ve got to be doing this, you’ve got to be doing that.” And that's very much triggering.

There's a lot of fear-based marketing in legal. I see it from some of our competitor frenemies in the legal coaching space. I see it in the legal marketing. This huge thing with ChatGPT right now, that is a huge FOMO thing for people.

All of those are important tools. But to your point, there are some foundational things. And some of it is just mindset, that if you can take that deep breath… It's funny, I just watched the Air Jordan movie, and they sort of mocked Phil Knight for being a little New Age-y, lean into your breath type thing. Which I think is funny, but it also really works. Right? Meditation is good.

Melissa: It’s a reason he is who he is.

John: Yeah, it can also be a laugh line, but exactly, right. He's the definitely the richest guy in my state, which is Oregon. Hard to knock him; hope he can take a joke. But it is. It's some foundational things. Because that grounding, and really sort of understanding the core things that will make not any legal business work, but your legal business work, right? And it really is having that confidence.

So, I just had a blog post come out. One of the things I do for fun in sports, is respond to Reddit questions, the various lawyer Reddits. The lawyer Reddits are fascinating and horrifying sometimes. But there was someone that was just desperate to find benchmarks and this or that, and what should I be doing? And my response was, effectively, “Hey, timeout.” You're not in law school anymore. You're not being graded. There's no class rank.

You may be comparing yourself, but that's just you. Other people aren't really judging you. Nobody has an idea of, “Oh, yeah, you're the fifth best. You're tied for the fifth best XYZ attorney in the tri-state area.” Ultimately, it's not a meaningful thing to be chasing.

What is true is that you have a legal business. If you're listening to this podcast, or if you have it as a going concern, it's probably doing fine. You probably wish it were doing better. But a lot of people don't always have a great concept of what better means to them, right? And so, they have to be looking at these other things. And the whole, whatever, “Comparison is the thief of joy” quote. But I think it's true. I think that’s Teddy Roosevelt.

But there's just so much to be found, there's so many potential successful ways to run a legal business, that I think the key is to find the one that works for you, and not worry about the hype and the noise and the FOMO or the Joneses. You can get good ideas from other people; I'm not saying don't pay attention. But take it all with a grain of salt.

Melissa: Yeah, what you're saying is true, period. And I think they want to hear sometimes that there's a plug and play thing that is going to work. I referenced this recently on the podcast, but it's almost the difference between a cook and a chef.

A cook follows a recipe, and a chef understands fundamentals, understands flavor profiles. So, if you don't have the recipe, you're screwed, if you're a cook. But if you're a chef, you know how to dig in and look at your business from different angles. I know I'm mixing two metaphors.

John: I love that metaphor. I think that's great; I'm going to steal that.

Melissa: It's from Tim Urban, I think that’s his name. He's a writer. He's an amazing writer. I think that's his concept that I'm regurgitating, right now. But it's similar. People, sometimes they just want a recipe. They're so spread thin, there's so fried, that they just want to know what to do next. And they want someone to tell them that.

One thing inside of Velocity Work, what we do, everything is centered around quarterly planning. And in those plans, I think it becomes very obvious what needs to be focused on next, inside of their firm, and what needs attention or completed or set up. And that's what we call Rocks, the quarterly Rocks. That's their job. I could see a case where people's Rocks are to hire you to implement these workflows. I mean, that.

John: Well, I mean, I love that idea, obviously. But here’s the other thing…

Melissa: It's foundational. And it's going to change their trajectory, if they have something foundational like this in place. Can you give people a nuts and bolts, something to wrap their hands around, which is probably so cheap, so you can make this more rich. And we can go into what goes into it. What I know you created for Ben, is workflows on, and I don't remember the software he used, but it was a Kanban board style. Where the workflows move through stages, keeps it very organized, responsibilities are very clear for who does what, deadlines, all of it. There's no question mark, there's no gaps. I wanted to say that because people are probably like, “What is this guy going to do for me?” That's sort of an end product. But we've talked a little bit, before the recording started, on what is required in order to even get to those places. I know what you’re going to say here.

John: The Kanban board, and full disclosure, I briefly debated using KanbanJohn as my Twitter handle, instead of instead of JEGrant3. So, it's K-A-N-B-A-N, for people that haven't heard the word. Some people say Can-ban, some people say Khan-bhan; there is no right. It's a Japanese word, and I won't go into the deep origin.

I want to hit briefly, just because it stuck in my head as you said it, the quarterly Rocks, which I'm a big fan of, and that planning, but the hardest thing, at least in my experience, and tell me if you see this too, is when you set those quarterly Rocks, you have to have it in your mind that you're doing so at the exclusion of other things.

Melissa: Yeah. 100%. They're on the hook for that. They’re on the hook for completing that. And that's hard, because you have to really constrain down to focus on this.

John: And you have to sort of put your blinders on to shiny object syndrome and that FOMO and that Joneses and all the things, right? I'll get back to Kanban, I promise. But of course, legal marketing companies are going to say to you that you need more leads, right? Because that's their hammer, and everything's a nail.

But as you know, with any business, not just lawyers, if the leads that are coming in through your marketing outstrip your capacity to deliver, then that's a form of waste. Because those leads are being wasted. And so, that means that you are frankly wasting your money on marketing.

Melissa: Well, I guess this is probably capsulated in what you said. I was just thinking ‘capacity’ when you were saying that.

John: Capacity. Yeah, capacity is huge for me.

Melissa: But then also, service level or customer retention or customer happiness or success. Like if that goes poorly, you have a leaky bucket.

John: So, you're feeding into Kanban. And I'll say there's sort of multiple things that people define Kanban as, right? One of them, in its purest form, it’s a Japanese word and it means like card or sign. And so, in that context, a Kanban board is something where your work is represented by cards. And it goes through phases of work, in order to get to completion. And so, that's one way of thinking of it.

The Kanban board is a tool, right? And it's a tool for making knowledge work visible. So, at its purest form… And again, one way I sometimes talk about it, and I know lawyers will cringe at the idea of, “We're not a factory. We don't want to do commodity work.” My response to that is, “Most factories aren't doing commodity work.” There's so much customization that comes out of modern factories. This idea that not wanting to be a factory is somehow a bad thing, is just…

If you have an opportunity, wherever you are, to go on a factory tour, I highly recommend it. Because factories are sophisticated delivery machines. And they are not delivering Spacely Sprockets. There are components of standardized work that they do and that's a big part of it. But they also have huge amounts of customization, most factories, that they're using to meet specific customer needs.

And so, when I talk about a Kanban board, making knowledge work visible, when you're on an actual factory floor, you can see the work as it's being assembled. You see the raw materials come in one door, you see the different workstations, and you see how those materials are manipulated, assembled, polished, painted, packaged, and all of the things, so that eventually it goes out as this valuable good.

With knowledge work, you don't see that, right? It's all happening either between our ears or on our devices. And so, the Kanban board is a visual fiction effectively, for knowledge work, and it helps you see work move through a work flow, much like you would see work moving through the flow on a factory floor.

Melissa: Love that. Gosh, I haven't thought about that with the factory. And now I want to go tour a factory.

John: I love touring factories. I've had a few opportunities to do it, and it's always just fascinating.

Melissa: Well, okay, so to get there, to get to the place where you can actually build that result for the client and with the client...

John: And that's ultimately what it's about, is getting that client result. Yep.

Melissa: We've talked about internally, productizing and thinking through unbundling the legal work that you do, the legal services you provide. And it doesn't mean that you have to present it that way externally. But doing that internally can be really useful. Can you say more about that?

John: Sure. And so, there's been a lot of talk, for years frankly, about unbundled legal services, about productized legal services, about subscription legal services. And I want to try to divorce the business model from the conceptual act of really pulling apart and examining what are the components of your delivery pipeline.

And so, I'm going to set aside… I don't care, for purposes of this conversation, whether you bill by the hour, whether you have a flat fee, whether you do retainer subscription work, whether you're in-house, whether whatever, right? So, I'm going to ask the listeners to put ‘how am I going to get paid for this’ aside for a minute. Because I think these concepts work across all different pricing models and billing models.

So, in terms of unbundling, for me and the clients that I work with, it's really about, number one, just understanding what are the steps that it takes to deliver a final product? And it's not always a product, of course, it's an outcome. A divorce isn't a product. A Green Card, maybe it's a product, maybe it's an outcome, it's a little harder.

But it's hard to say, “Okay, this is the widget.” There are a few areas of law where it's maybe more like that. In an estate plan, you can put a bow on it, print it on fancy paper and put it in a binder, and that feels like a final product. I think most estate planning lawyers would tell you that that's actually not, I mean, yes, it's a manifestation of the work. But there's so much more to the process than just that deliverable.

And so again, for me, and I'm going to that end, but it's about understanding, okay, what are the steps, number one. I think a lot of lawyers have done that, so I don't want to oversell that. Like, “Oh, yeah, I can just set up my task menus in Clio. And I can bap-bap-bap and go right on through.”

That's a version of what I'm talking about, but it's going, for me, another level deeper. Which is to ask the question, what is the benefit to my client at this step? That's a tricky question for a lot of lawyers. Because there are a lot of things that we have to do in our processes that aren't directly client facing. Right? I mean, we have to make filings that really, the primary customer of that filing isn't the client, it's the court or an opposing party or administrative agency or whatever it is.

And so, we're delivering work product that is on behalf of the client, but it doesn't really feel like it's for the client. And when I'm working with my clients, we try to challenge that assumption. We really try to think about, “Okay, what are the steps of my workflow through the lens of client value? And how are these individual steps that we're taking, number one, furthering the client's cause?” Getting them a step or two closer to their goal, that's important.

And again, I think a lot of lawyers are pretty good with that. What they often struggle with, and as I said before we started recording, I'm experiencing this very acutely because I have two different family members that are caught up in legal issues right now. And their lawyers bedside manner is borderline atrocious. It's so frustrating how uninformed and uncared for my family members are feeling right now.

And they turn to me to try to understand, well, what just happened? Why did they do that? What's going on here? And so, the framework for that, when I'm working with my clients, is we try to really make sure that we're building out the steps of the process, but also, how are we going to communicate value to the client at each step along the way?

The phrase I use with my coaching clients, consulting clients, is what's the tangible manifestation of value? There's a lot of work that we do, and there's conversations we have, or there's filings we make, and we know as lawyers, as professionals, that it's necessary to get people the next step or two down the road. But clients don't know that, right?

I mean, we're this foreign language, foreign practices, it's not instinctively understandable to most everyday people, the things that are happening, in whatever your particular part of the legal process could be. And we have to guide them through it, right? We have to make sure that we're communicating value and also getting feedback.

That's another thing that lawyers really struggle with. We might ask for a review at the very end, but we're not always checking in. It's almost like we're acting more as technicians than caregivers. And one of my principal beliefs is that at its core, lawyering is a caregiving profession.

Melissa: Yeah. You did talk about though, before we started, which I was just nodding yes, emphatically about. Many law firm owners are focused on polishing their craft, so to speak. I don't know how exactly how you said that.

John: Yeah. Well, okay. Again, another one of my sort of fundamental beliefs. And I've come to this through experience working, both in my own practice when I was practicing law, but certainly in helping other lawyers. And it's that ultimately, clients are not very good judges of the quality of your legal work. Because they have no basis to understand whether that memo you wrote or that brief you filed or whatever your trade is, they don't know whether it's good or not.

They assume it is because they're hiring a professional. And they assume that the professional is going to do professional work. But they can't judge you based on the quality of your legal writing. They can't judge you based on the quality of your legal research, because they don't know how to judge legal research. They don't know whether it's good or not.

What they do know and what they can judge is whether they are having a good client experience in working with you. They know whether they feel communicated to. They know whether they feel understood. They know whether they feel cared for or fought for or supported in whatever ways that they're looking for.

And different clients are looking for it in different ways, right? There is no one client archetype. Although a lot of, again, trial lawyers like to think they are, because it's all these boxing gloves... It's either a boxing glove or a Pitbull in the ads, or motorcycle. I guess that one comes up a lot, too. But tough guys, right? I want a tough lawyer. And that's true, there are certainly clients who want a tough lawyer. But there are also clients that just want to feel heard, or feel supported. And so, it's not the only way to go about it.

Melissa: And so, the point you made beforehand, is that sometimes they focus on the legal work side of things, and advertising that for sure, but also the perfection of that and getting better. And that's good. I don't think that people should not try to be expanding their skill sets and knowledge base and experience all of that, right? I’m not saying that it should be. But when you have sort of a sole focus or a heavy focus there, and not around the client experience, then it can lead to really poor outcomes for you in terms of your business, regardless of how good you might be.

John: Right. I think that's exactly it. Again, we're not in law school anymore; you're not getting graded, you're not getting compared to other lawyers. Part of it is the shift towards caregiving and this caregiving mindset. The things that people will remember, six months, ten months, two years after you've done this work for them. And then, by remembering, recommend you to friends, colleagues, others that maybe are having similar problems, is their experience working with you.

I think you're right; it is important to be technically good. And it's important to stay on top of those things. But at some point, there's diminishing returns on continuing to polish your technical skills, while neglecting maybe your internal workflows or your client experience or your employee experience, your team building capabilities, right?

As a business owner, you have to try to find balance across multiple pillars that are going to support your practice. And you may not be an expert in all of them, in fact, you won't be. And so, some of that is finding help when you need it, to sort of shore up the places where you're maybe not as strong. Part of that is just committing to giving it the time and attention that it deserves.

Melissa: Yeah, it's an investment. I used to work with dentists and doctors doing the same kind of work, and I haven't in years, but it was always very evident to me who really understood that world. I would walk in and work with these business owners, and you could see how smart and almost introverted… In many cases introverted, smart, highly technical, precision level kind of work that they actually produced.

But the patient doesn't know that. The patient doesn't know that the margin of the crown is beautiful. The patient doesn't know that the margin of the filling is so good. The patient doesn't know if the margin of the filling sucks and is going to be a problem in two years.

And so, you would see the difference between the, even though their quality is such high-quality work, their business was really suffering because they didn't have, these other pillars weren't given the attention that they needed to make sure that the customers or the patients were communicated to and understood what they were supposed to pay and when along the way, no surprises. All of that, it's the same that lawyers have to deal with; different but the same.

John: Yeah, absolutely.

Melissa: I would also make note that there were practices that were burgeoning, because of the level of communication and care and vibrancy that they had, in the relationship with the patients. But I've seen those X-rays, and I would not sit in that dentist's chair. I would not. It would be the thing where I'd have to be back next year because of a problem. But their practice was just thriving. And the balance of both, when you can strike that, the sustainability of success is immense.

John: That's the key, right? You can't just focus on one or the other. You don't want to be all hype. There certainly are practices out there, both legal practices and then also consulting, marketing, whatever practices targeting lawyers, that have a lot of hype.

And make big promises about whatever, I won’t use 10X because I think it's trademarked, so we're going to 11X your business, right? We'll make it Spinal Tap. But I don't think most people would know what to do if they doubled their business right now, much less 11X it.

I sometimes use a metaphor of raising a tennis net or a volleyball net, or if you want to get like really fancy, a bridge across the river. You don't just tug on one side of the net in order to get it set up. You have to work on both sides, and it's maybe not always at the same time, when you're tensioning something, you're making it right, you've got to go back and forth and pay attention to both sides in order to get it up there.

Melissa: And the work that you do with people is truly both sides focused. Because if they are unbundling, internally having a look at that, unbundling things, really having a look at things through the lens of the client, it inherently forces better quality work. Or maybe not forces, but it’s a byproduct.

Better quality legal work is a byproduct of being really organized about understanding the workflows. And then on top of that, in client satisfaction you're winning on that, because you also have worked into the workflows communication points, etc.

John: Absolutely. Just to use an example, I have a client down in Southern California who does pretty high-end estate planning and administration for high-net-worth Californians in his firm. A lot of navigating federal tax law and California tax law, and gifting and complex trusts and business assets, and really, really complex work. And over the course of many years of working together, they've actually flat feed that work.

So many lawyers are like, “Oh, this is too complicated. I couldn't flat fee it.” And again, I'm not necessarily advocating for a flat fee, it was a multi-step process that got us there. But the thing that was really the key, at one point, we took his process… He had done the thing that is not uncommon in strong, conventional wisdom. He had really, really robust, detailed process documents about what his team was supposed to do at each step of the way.

But very few of those bullet points or list items, whatever, were focused on, what does this do for the client? Or what should the customer experience be as part of this thing? And so, we spent many weeks, months really, pulling apart the administration process in California, and trying to look at it through the lens of a client and what is the client experiencing. Who is the client even, right?

Because in trust administration, the main character is dead, they're gone. And so, the client and the people that you're supporting, obviously, aren't the deceased; it's the executor, or the administrator of the trust. But it has all these connections to the other beneficiaries, or these third parties, or if there's business assets involved, business partners, employees, customers of those businesses. There are so many things that can come into play in a complex estate like that.

And so, we really did the work to think about what is everybody's experience. Because even if you're representing the trustee on a complex trust, what are their drivers? What are their practical drivers? What are their emotional drivers? How are we going to make sure that they feel like they're getting what they expect, and maybe even a little bit more from each phase of the process?

So, avoiding beneficiary disputes is a big part of that; if you can, and you can't always. Having a good way of connecting with business partners is a big part of that. Because those business partners and that trustee, they're talking without the lawyer in the room. They're seeing each other at social functions or whatever.

As a lawyer, your job is to make your client's life work, not just their legal matter work. Trying to see all those pieces, and the key takeaway is it really caused us to rethink how we approach the deliverables in each stage of the administration process. And the client response has been off the charts. I mean, clients are really, really happy. To the point that they're parting with, six-figure flat fees in order to get this experience.

Melissa: One thing that you mentioned was that pricing comes second. And oftentimes, people want to price too early in this journey. And so, could you say more about that?

John: Yeah, and pricing, that's a whole nother podcast episode.

Melissa: Let’s do it. Seriously.

John: Totally. The key to pricing is… The default assumption, with legal, is that we're going to bill by the hour. And so, when we bill by the hour, we set an hourly rate. And the way that you're told to set your hourly rate is figure out what you personally need to get out of the business. Then calculate all the expenses of the business, and blah, blah, blah, blah. That totals up to an hourly cost, and then add a little bit, and that's your margin and now you have your hourly rate.

Then you're in this world where the focus of the legal business is to make sure you're capturing time, that you're not writing things off, and that you get a high realization rate. And that's all fine. That is the traditional, at least for the last 50-60 years, model for success in a legal business. But it's a not very sophisticated look at profitability, and also pricing power.

A couple of things about pricing. Number one is that price is itself an indicator of value, right? And there's all the studies. The one where they took the same bottle of wine and put it in three glasses. One was marked $10, and one was marked $15, and one was marked $25. And for everyone that comes through and tastes those three glasses, the $25 glass tastes better. Because people are weird, emotional creatures.

I love the Dan Ariely book Predictably Irrational. We are not rational. We like to think we're rational; we are not. In fact, we're so not rational that his point is, that once you understand these emotional drivers, you can start to predict human behavior in a very irrational way.

And pricing is one of them. People are not always rational about pricing. The key for me, coming back to how you deliver legal work, it's about understanding what the client experience is and what the drivers of value to the client are. And then, doing the harder work of trying to say, “Okay, well, what's that worth?”

Value, at its simplest level, is just a benefit that you receive from a transaction, minus the cost that you pay. And those benefits and those costs are not just money, right? In fact, money is oftentimes just a small component of it. It's your own time, it's your own attention. It's how it makes you feel, whether you feel empowered, or whether you feel, as a client, as almost an afterthought in your own matter.

Which getting back to my family, one of my family members feels like an afterthought in her own legal matter. The lawyer is out there doing technical things, and talking with opposing counsel and swinging this and that, and then my family member doesn't find out until a week later.

Melissa: The perceived value is low.

John: Again, they feel like they're not a meaningful participant, much less in control of their own matter.

Melissa: So, by unbundling first, to really play out as you're saying, what you facilitate, is looking through the lens of the client experience, through that work it then allows you to come up with a price that makes sense. Not just from cover the time and expenses, but also just make sense in terms of the value that you're providing.

John: Absolutely, yeah. When you get into discussions around value pricing, or just pricing in general, one of the maxims is “price the client, not the work.” And so, when you're billing hourly, you are almost necessarily pricing the work, you're pricing your effort. And you're assuming that your customer values your effort, right?

Melissa: Because I know that there's certain people listening that will want to take shortcuts to this. And something that I noticed about many people that I meet initially; their flat fees are too low. It's not covering their margin. And so, they do need to do some work to make sure they understand. Because what if they're warped in their sense of what this is worth to the client? It seems like you do need some bit of data in terms of how long it does take your team or you, and really understanding the cost for your firm to push this through. Maybe not explicitly, but having a strong idea.

John: Absolutely. And when I talk about costs with folks, it really is about cost. So, one of the mistakes that I see lawyers make with flat fees all the time, and we're diving into the flat fee discussion. I'll hit it briefly; they compare what they did quote as a flat rate with what they would have earned had they billed hourly.

And if what they quoted as a flat rate is less than what they would have earned, or what they got as a flat rate was less than what they would have earned when they total up their hours, they think, “Oh, I lost money.” From an opportunity cost perspective, that's true. But you didn't actually lose, you weren't necessarily not profitable. So, the key to profitability is to understand what your actual costs are.

I even look at it even more through the lens of how most traditional businesses work, which is I separate out cost of goods sold from SG&A (Selling, General and Administrative Expenses). So, cost of goods sold... Well, what are the costs that are required to have made that individual unit that you've sold, that product? We don't have a lot of raw material costs in legal. We're not buying ingots of iron or whatever, in order to pound them into a thing. So, in cost of goods sold it’s pretty much the salary of the workers who work on that matter. Right?

You can express that as an hourly number, as an hourly cost. But there's not, usually, a lot that goes into cogs than that. Maybe if you had to buy some specific software and all the rest. But everything else, the stuff about keeping the lights on your firm, and the receptionist, or whatever answering service you might be using, those are all part of the general administrative costs that go into an SG&A.

That's the difference between your gross profitability, which is on that sort of unit-by-unit basis, and your net profitability, which is, how is your business overall doing?

Melissa: You and I think very similarly about this. Because there's times where I'll meet people, and they'll say, “Well, but we split up, we divided, the overhead among these things.” I'm like, aargh. I mean, you can, but they don't have a sense of separating out, truly, as what you're saying, they don't have a sense of the true cost of goods sold.

John: And you'll never shake that sense of… Yeah, sorry, talking over you. You'll never get the sense of the profitability of your product lines when you do that. I'll use a stick with estate planning firms for a minute. And one of the things that I think estate planning lawyers will admit is that estate planning and estate administration and probate are completely different practice areas. The business models are different.

They use the same documents, to be sure. But it's kind of like IP licensing and IP litigation, right? They're over the same documents, but the clients are different. The business drivers are different. The cost structures are different. And so, one of the things that I have done multiple times now, is by looking at this data, convince an estate planning and probate lawyer to pick one or the other. Right?

Melissa: Wait, pick one or the other?

John: Either estate planning or probate for your legal business. Specialize, don't do both. I've got plenty of clients that still do both. I'm not saying that's the only path. But even for those clients that are still doing both, it's recognizing, the way that we can understand our profit margin on estate planning, which is a much more… I think probably a lot of estate planning lawyers, if you're listening, have already gone flat fee on estate planning.

But understanding that as a product line, not as individual widgets that you're selling, and looking at profitability across the product line. And understanding things like, if we can invest in improving this template or a particular piece of software to help us with this thing, then, yes, we're going to make an investment. Ultimately, that's going to roll through to a higher profitability for our widgets, estate plans.

People are probably cringing, if I call a legal product a widget. But it can be a very high end, customized widget. An iPhone is a widget; people love their iPhones. So yeah, it's looking at it in that way. So, we've gone totally down this other…

Melissa: I guess, circling back to sort of the fundamentals. And I would love to do an episode on pricing, get your thoughts on that, and hear what you have to say on it. But to circle back, essentially you did mention to me, and so I wanted to bring up, that pricing is second once you've sort of unbundled all of these things.

Certainly, you're going to see things around time, when you are breaking things down to the workflow level. But you're also going to be seeing the value for the client, or opportunities to increase the value for the client through the experience. Then and only then, should you be considering pricing after that.

John: Yeah. One of my other recent experiences is, as Executive Director at the nonprofit, which one of the things we do at the Commons Law Center is family law. We made the decision to stop doing full scope family law work for low-income clients. Because the whole idea of the upfront retainer, we were doing evergreens, we were doing a lot to try to protect ourselves from all of the challenges of doing that kind of work.

And it was creating this really confusing, sort of terrible client experience. When you're dealing with the modest means population, they’re always pressed for money, right? And understandably so. And we didn't want to be in this place where we were always asking for money, for money’s sake, right? “Oh, well, you have to replenish your retainer.” Well, what does that mean? Nobody understands that.

So, we unbundled first, internally, what are the pieces of the divorce process? What are the kinds of things that people need help with? And what we initially did, was try to sell those things sort of ala carte, and it went, okay. But it didn't do great. It was not as successful as we hoped it would. Because, again, it didn't quite comport with what people think they're getting when they hire a lawyer.

They still wanted someone that they could think of as “my lawyer”. And part of the message, even though I don't think we were necessarily making this explicit, by saying, “Okay, great, we handled your pleadings and your service. And that'll be $800. And when you're ready to do XYZ, come back to us.” The message that people were getting was, “Oh, well, I guess they're not my lawyer anymore.” And they kind of weren't coming back.

What we actually wound up doing was, once we pulled things apart and thought about pricing, thought about value, thought about how we're going to deliver this work to a client, to a low-income client, in a way that is accessible and affordable, and still providing good help for them. What we've wound up doing is re-bundling a lot of that work.

And so now, instead of just getting a pleading, you can buy a first chunk of your divorce package. And a big part of what that includes, frankly… And this was another one of the assumptions we made that turned out to be wrong. Not completely wrong, but not as solid as we thought.

We thought what people wanted was the documents. What they wanted was the file. That “Here's the pleading. This is ready to go. You can e-file it or we’ll e-file it for you. Here's how you serve it. Or you can work with us and we'll hire the process server.”

Clients understood that they needed that, but it's not what they wanted to buy from us. What they wanted to buy from us was time with a lawyer. They wanted to be able to speak to someone, right? These are people that are in these high stress, high uncertainty, mentally turbulent situations, where I think at the end of the day, it gets back to this thing about lawyers being caregivers.

What they want is someone to feel like they're being cared for. And so, it wasn't just “Here's your document, good luck.” Which, again, lots of courts do, paralegal filing services do that. What they really wanted was, “Help me understand what this maze looks like. And assure me that it's going to be okay, at some point. Help me envision what my new normal is going to be some day. Help me feel confident that I'm still going to have relationship with my kids. That I'm going to have a place to live because we have to sell the house.”

All of these things, there's practical components to it, but emotionally, it's just so hard on people, and understandably so. And so, the comments have really reworked the work that we do, and we're still doing that delivery work. But the thing that people are really responding to are these legal coaching sessions.

Melissa: Oh, oh, okay. Well, can you explain kind of how you have it set up now?

John: Yeah. So, it's interesting. Well, let's see, not all of this is at the Commons, it's not all exposed directly through the website. But one of the things that was getting us in trouble from a low-income, low-bono space, was the amount of preparation and all the work that it took to go do hearings or attend trials. And so, we still do some of that. But for a lot of our modest means clients, we're actually coaching them to be better pro se people.

One of the great things about this, and we've been doing this for about a year now, we've got a pretty good stable of case studies where our pro se coachees have gone up against represented opposing parties and won. So, they're going up against lawyers. We're helping them understand some of the practical stuff around; what's the court process going to be like? What should I wear? where should I sit? How should I talk to the judge? All of the very basics.

Which, when you have a lawyer running interference for you, maybe that comes up in trial prep or hearing prep, maybe it doesn't. But you're looking to that person. When you're going to go appear pro se or pro per, depending on what part of the world you're in, that's a different thing. And so, we really help people with those sorts of practical things.

But what we really do is help them understand what's their strategy, what are they looking for? How should they approach this? What the other side might be thinking. What other lawyers might try to pull, try to do. I shouldn't say try to pull. There are definitely lawyers that will try to take advantage of having a pro se on the other side. How to speak to judges in a way that comes across as knowledgeable and confident.

And by empowering people. And really, it's an empowerment exercise. We're helping people advocate for themselves. And I think part of the reason that so many of our clients are getting good results, is that ultimately, a person that understands what they want from the process, and how to communicate that, is at an advantage over a lawyer that has 38 other clients. It is this intermediary fighting on behalf of their client, but doesn't have that sort of personal skin in the game.

And that's just an example. Right? So, it's a different way of thinking about lawyering. It's a different way of thinking about caregiving. It's very, like I said, it's very informed by notions of empowerment and support and education. And a lot of it comes from the perspective, and this isn't me, this is this is other people in the organization, that we're not just trying to get people through the hearing. We're trying to get people an outcome that they can live with.

They have to go on living their lives. If they've got kids, for however many years and then some. There are so many things that happen after the lawyer isn't around anymore. It's not just about X's and O's, what's on the scoreboard, at the end of the trial.

It's about how are we going to actually draft a parenting plan that when something gets wacky down the road, and there's emotions involved? What should we do so that the parenting plan is it makes sense and it's readable and it's understandable. And the parties can not wind up boomeranged back in front of a judge.

Melissa: There's two things that occur to me that’s sort of meta, listening to you say this, is that the only reason that you came up with what you currently have is because you were brave enough to first institute this unbundling externally. And in a way that you really believed in, and you did the work to figure out what that could look like.

You put it out into the market, the market responds, and then you tweak because of what you've learned. And that's how you build the business. And so now you have this solution that is more fitting, and you literally never could have come up with, had you not gone through the first iteration.

John: I think that's right.

Melissa: And then the second thing that strikes me, is that this is such a perfect example of you and the organization being the chef, not the cook. And really understanding your company, understanding the business, understanding the people that you're serving, and the leverage that that gives you. It’s empowered. It empowers you to be able to make decisions that truly, the firm next door shouldn't implement. It's not the right thing for their business.

John: It's just going to say, I hope nobody in this podcast goes out and tries to just implement a legal coaching program unless you're already doing it. I'm not saying that you shouldn't do it eventually. This isn't a plug and play thing. Right?

Again, the fact that the Commons is a low bono, modest means program… I mean, we're not allowed to serve people that make more than 400% of the poverty level. So, we're addressing a very specific segment of the population. It turns out to be a huge segment, it's over 50% of all Oregonians, because of income inequality.

But it's people that have very different needs than I think most clients, that most lawyers… Because if you can afford a lawyer, you're almost, by definition, upper middle class, right? Unless something is really, really bad, you have no choice, and you're going to go without some other thing because you have to spend this money on legal.

Melissa: Yeah, this is so awesome. It’s inspiring to hear. I think sometimes, for any of us business owners, these principles sound so good. Intellectually, you understand the concepts. But really, to apply them can feel tough, and I think that's where facilitation is really helpful. And so, hearing strong examples of how you approached determining that, for you guys, I think, hopefully will serve other people listening. And how could they approach it in a similar way; it's going to be a very different outcome. And that's the way it should be.

John: You hit the nail on the head. The first piece is to actually be willing to take some risks. And in the Agile world, and we've hardly talked about Agile or Kanban, all these things are grounded in. I'm a big fan of these Agile approaches. Obviously, I use it in my brand name. They're all very customer first approaches. That's number one. They're all very human centered.

Melissa: Let's be honest, your expertise in this world is the only reason that you got to that first iteration, sort of brave move that you made. Which, I think, if I remember right, not everyone, there was one or two people on the board that you really had to convince them. “Oh, please, let's do this. This is the right move.” And that takes guts. Because it turns out, you weren't totally right but it led to the thing that was right.

John: Yes. We did. We had one member of the team that was a very experienced family law lawyer, and he was insistent that what we were talking about, he'd get frustrated. He couldn't even put it into words. He'd be like, “That's not lawyering. That's not what lawyering is.” And it just didn't fit.

He wasn't wrong, through his lens and experience and all the rest. The guy's brilliant. He knows Oregon family laws so, so well. But he just couldn't grok this different way of approaching. If there's one thing I learned in my pre-legal career, working with these tech startups, is disruption.

It's a totally overused term, but it comes not from out-and-out risk taking. I mean, we know lawyers are famously risk averse, right? So, the whole idea that we're sitting here saying, “You have to be comfortable taking risks,” it's like, yeah, of course, lawyers are uncomfortable taking risks. That's not who we are.

Melissa: You’re calculate

John: In the Agile world, we talk about “safe to fail experiments”. It’s this great term. And so, it's an experiment, not a risk. That's the key, right? You're not taking a risk from the standpoint of, “Ooh, I hope this works. Ready, set, go.” It's looking at things, it's talking with people. We talk with a lot of our clients, a lot of our customers, in order to understand what their drivers were. We ran a lot of numbers.

One of the reasons that we were comfortable taking this risk, is I was like, “Look, there's an economic risk here, to us making this change. It may fail. And frankly, it might take this whole nonprofit down with it, if it does. But I also know that looking at sliding scale, hourly, full scope work, is definitely going to take this nonprofit down someday. It'll just take longer.” It wasn't working out; the margins just were too hard. And so, we had to come up with different ways of thinking and different ways of delivering the work.

Melissa: Yeah. Yeah. That's so good. Man. You said we've hardly talked about agile, that's true. And I want more of that with you in the future.

John: To your point, all of this is Agile. It is all Agile.

Melissa: Yeah, this is the result of Agile thinking and that approach to looking at the work. Yeah. 100%.

John: Feedback loops. That's one of the biggest things in Agile, feedback loops. We're so bad in legal at closing… I mean, so much of the legal work; you write a bad contract, things might go right, they might go wrong. If they go wrong, you might not find out for decades. That's a terrible feedback loop. We just don't know.

So oftentimes, our feedback loop is other people's opinions. Right? Oh, someone read that, and they don't like an Oxford comma but I do, and so now we're in a bicker about whatever. But that's not a genuine feedback loop, that's an opinion loop.

It's actually talking with clients: How, how does this make you feel? How did this work for you? How did this support your goals? Those are hard conversations to have. But they're essential to the learning cycle that is necessary, through the experimentation that is Agile.

Melissa: 100%. Wow. Thank you for coming on the podcast.

John: Yeah, thanks for having me.

Melissa: You should come back.

John: I'm sure we went long. Yes, I think you and I could probably go forever. But I’d love to do it again.

Melissa: But you know what, though? I enjoy long-form podcasts. I don't know if this technically qualifies as long form, if it’s long enough to be that. But I like the Tim Ferriss episodes, and the Andrew Huberman... I like the length and depth versus, I don't know, high level, what's your bullets, John? What you got for us? Thanks, have a great day. Yeah, that bugs me. So, I like that we get to dig in, and learning where we want to dig more in the future. So, please come back on the show.

John: Yeah. And I love talking about this with you. So, we should be doing more stuff together.

Melissa: Yes, definitely, man. Well, thank you. Talk to you next time.

John: Thanks for having me. Okay, sounds good.

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