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Melissa Shanahan

#264: Is Your People Cost Healthy?

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To win at the game of being a law firm owner, there are certain numbers and information you must wrap your head around. Last week, Melissa walked you through the importance of evaluating the ROI you’re getting from your hires, and this week’s episode is the perfect follow-up to producing the healthiest version of your firm possible.

What is your people cost? Do you know what should be included in and excluded from your people cost? How do you identify the right decisions to make when it comes to your people cost? And how can getting into the nitty-gritty from a numbers perspective help you run your firm more smoothly and even create happier employees and clients?

If you feel like you’re just surviving as a law firm owner right now and want to understand the levers you can pull to truly thrive, listen in this week. Melissa is showing you how to calculate your people cost, what you might need to do if your people cost is higher or lower than it should be, and she’s also giving you prompts that will allow you to run the checks and balances necessary for a healthy firm.

If you’re a law firm owner, Mastery Group is the way for you to work with Melissa. This program consists of quarterly strategic planning facilitated with guidance and community every step of the way. Click here to learn more!

Show Notes:

What You’ll Discover:

• What your people cost means.

• The difference between people cost and an overhead cost.

• What you should be including in and excluding from your people cost.

• A rule of thumb when it comes to splitting your firm’s income.

• How efficiency can make a huge difference to your people cost.

• Why your people cost might be more inflated than ideal.

• What’s happening if your people cost is lower or higher than it should be.

• Prompts to help you investigate your people cost.

Featured on the Show:

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Join the waitlist for our next Monday Map Accelerator, a 5-day virtual deep-dive event.

Schedule a consult call with us here.

#106: Goals vs. Rocks

#263: Hiring: The Smartest Way to Build Your Team


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Full Episode Transcript:

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I’m Melissa Shanahan, and this is The Law Firm Owner Podcast Episode #264.

Welcome to The Law Firm Owner Podcast, powered by Velocity Work, for owners who want to grow a firm that gives them the life they want. Get crystal clear on where you're going, take planning seriously, and honor your plan like a pro. This is the work that creates Velocity.

Hey, everyone, welcome to this week's episode. Oh, my goodness, I just realized when this airs it's going to be already into July, almost Independence Day if you're here in the States. Holy cow, time is flying. It's about mid-summer. Well, I really hope all of you are enjoying your summer in one way or another.

Okay, so this week on the podcast, we're going to be talking about People Cost. What is it? What's supposed to be included in People Costs? When we look at that number, what is it supposed to mean to us? We're going to dig into this a bit. I've been digging into this, always with private clients. Definitely with Syndicate, which is a group of people I work with, a group of law firm owners.

And then also, in Mastery Group, this came up on our numbers and KPIs call. It's just such good conversation. I think some of us know we're supposed to look at certain numbers, but we're not exactly sure what to do with them. We're not exactly sure what it means. And this is meant to bridge that gap. This episode is meant to help you do that.

This is perfect as a follow up to last week's episode, which was all about the producers in your firm; paralegals, in some cases legal assistants, and attorneys inside of your firm; how to evaluate if the money that flows into the firm, because of the work that they are producing, is that healthy? Does it make sense for the firm?

So, it's a very important conversation. It's very important that you grow and develop yourself, to be able to understand these things, and be able to evaluate these things. I had a member tell me that they listened to that episode twice, because there was so much in there, they wanted to make sure they really wrap their heads around it. I'm like, that's fantastic. I want it to be a resource for you guys. I want you to be able to understand this.

I do not think that this kind of information needs to be hidden behind some paywall. I want to give and do my best in this podcast, to give you the resources and the tools, as listeners, to win at this game that you're in, called owning a law firm.

So, there's a way to survive as an owner of a law firm, and there's a way to thrive as an owner of a law firm. And it's really important that we talk about tools, that we are honest on this podcast, and we can give you things to think about that you can sink your teeth into.

For those that want to dig in with me, with Velocity Work, and the people that I have supporting members… it’s not just me. I am a big part of it, but there are others as well… then you know where to go, And if you're not ready for that, if that's not something interesting to you, at least here is a resource that is hopefully useful to you, that you could take and you could think about in your own firm. So, I am hoping that this will also be one of those resources that many of you will find valuable.

And even if you are well on your way with your law firm, and you feel like you're totally dialed, it would still be interesting to listen to this to see if you are doing this, if you are calculating this, if this is a number that you look at. And if it is, are you calculating it correctly? Are you including everything that should be included in this number that we're going to be looking at?

Okay, so let's back up. People Cost, that's what we're talking about today. What is “People Cost”? “People Cost” is the total amount of investment that the firm puts in to the people to perform the functions inside of the business. Now, this is money; we're going to get to a dollar amount that is put in to having all the people perform the functions inside of the business, so that your business can produce the services it produces.

Now, some of this is producer level, right? Some of it is actually working up the file and working on the case. Some of the main functions in the business that are required for success of the business are not producer kind of roles. They're not actually directly producing the income.

But there is plenty of work in a firm, and especially as you grow this expands, that needs to be covered, and it's not by a producer. It's not by an attorney or a paralegal or a legal assistant actually performing tasks on the case or the file or the matter. It is someone else in the firm that is there in supporting that work, or taking care of a different bucket of the business or department of the business; maybe the finance aspect, or maybe operations, or intake, which is before the client work begins, right?

There are so many roles inside of the business. Maybe “roles” is too strong of a word. Because it really does depend; it may not be a full role. But there are so many duties and responsibilities within your law firm. They are covered by certain people.

Those people, when you add up the total amount that's put in to having those people perform all of those functions and duties and responsibilities… whether it's direct production that brings indirect income, or not… that total number is a number you should know.

I will talk about how to get to that number. I will talk about what to do with that number. And then, I will talk about how to look at it and think through decisions that you need to come to based on facts, not feelings; based on the numbers that you pull together.

So, what is included in People Cost? Okay, I'm going to break this down for you. If you have employees, of course, their pay is included in the total People Cost that we're going to calculate.

And by “pay”, I mean either their wages, so salary or whatever they're paid hourly, plus bonuses or incentives that are given, plus the taxes that the business pays to have them employed, plus any benefits; health benefits, or other benefits that the company pays because that employee works with you. This could be licensing dues. This could be CE’s, or malpractice insurance.

Anything that the company invests in this person should be included. It's not, when I say “benefits”, it's not just health benefits and retirement, things like that. It's the benefits that the company is spending on for the employee. Alright, so that's employee level.

Now, let's talk about contractors. Contractors, if they are performing functions inside of the business to keep everything running the way that it should, absolutely. They should be included. I will tell you who's excluded in a minute. So, in that case, the contractors pay would be in it and any benefits that you offer them as well. You may not offer them health benefits, but there may be some perks that are part of the deal for working at your firm. Those need to be included.

The other thing, when we think about benefits, I also encourage people to think about perks, employee perks. Some of my clients have a budget set aside for team stuff; team outings, team lunches or dinners or happy hours, or team-building stuff that you might do together. Any of that should be included. I have clients that do car washes for their team. Those are perks. Those are costs for the business, for the sake of the people. This is a People Cost.

So, those are what should be included in People Cost. Now, let's just clarify what should definitely be excluded. What should be excluded is professional services that the company pays, that the firm pays, in order to fill a need, but are not integral to fulfilling the functions of this law firm. For instance, your accountant, your bookkeeper. Those are professional services. Those are not People Cost, those are an overhead cost.

Of course, it's an expense, but it's not in your People Cost. I'll give you another example. I have an Airtable engineer that we use to help us build and work on our company database. I use him as I need and I am billed hourly. That's not People Cost.

This is a professional service that I am engaging in order to get a result in the business. It is to better the health of the company, but it is not to deliver what my company delivers. It does not have anything to do with the duties and responsibilities inside of my company.

Another example that should be excluded from People Cost is coaches. If you pay a coach or consulting service of any kind, that is not People Cost. That is a professional service, so it should not be included. That usually covers most of the questions that I get about what should be excluded for calculating People Cost. So, hopefully that does it for you guys.

Okay, so now let's talk about calculation how to think about this number. You'll add up all the People Costs; which I’ve already gone through what should be included in that. You get all that added up. Now, typically there's a few places you'll go for this. If you use QuickBooks, you could probably go there and pull the right reports to see how much has been spent on people.

There may be a couple of different categories. So, you may have to look at “payroll costs”. And then, you may also have to look at a different category. To look at some client benefit information, in terms of how much has been spent; whether that means actual health benefits and 401k, or whether that means any money spent as a perk for the people who work for this firm. You know what I'm saying?

If you've QuickBooks that’s… Wherever. This is the first step in this episode. I would just jot down: Where are you going to have to go to get these numbers, so that you can add up for total People Cost? And if that means you need to go to your email inbox and email your bookkeeper, that's totally fine.

But if you're going to pull up the actual software and look this stuff up, you just need to think through: What all do you need to pull up so that you can tally these numbers, that you can pull these numbers together? And my strong recommendation is, even if it's just a no-frills spreadsheet, when you go look up these numbers, jot down a note on where you went to find the numbers, and put the numbers in the spreadsheet.

It just makes it easier for you next time around. You'll get more sophisticated with this. You don't always have to use this beginning sheet that I'm referencing here, but try to make it easier for yourself in the future. Then you'll come up with better and faster ways to just get this information in front of you.

Alright, get the numbers that you need, put them in a spreadsheet, and add them up. Here's what I like to do. I like to do it over a period of time. So, as I'm recording this, it's almost July. We have about six months of time under our belt in 2024. So, I'm going to run through an example right now. In the last six months, the company has spent $120,000 on people. So, $120,000 People Cost. Okay, good to know. Get that number into your spreadsheet, just so you can record that dollar amount.

Now, we're going to figure out what percentage of your revenue, what percentage of the firm's income, is being spent on people. To do that, you need to know the revenue. The income for the firm in the first six months of this year. Let's say the total firm income from January through June is $300,000. Clearly I'm keeping round numbers.

Well, what you're going to do to figure out the percent is take the People Cost divided by the total firm income. So, $120,000 / $300,000. And that calculation will produce .4; move the decimal twice, that's 40%. So, 40%. Your People Cost is 40% of your firm's total income.

Now, what do we do with this information? Is that bad? Is that good? Where is this? Well, there is a golden rule out there… and it's not so golden, so we'll just back off of that for a minute… but it's a good guide. There's this rule of thumb out there that a third of your firm's income should be spent on people, a third of your firm's income should go towards overhead… I will describe that in a moment… And a third of your income should be profit.

So, that's how it should break up; with the income that comes in third should be profit, a third should be spent on overhead, and a third should be people. There are a few things to unpack here. Number one, what is “overhead”? Overhead is your total expenses,  the expenses you spend on everything, not just people. Total expenses minus People Cost. So, it's really all of the expenses except what you spend on people. Okay?

These are things like software, technology, your building space, rent, travel, conferences; literally everything except the People Cost. And what that tells us, what this recommendation is basically saying, if a third is people, and a third is overhead, that means about 66-67% of the income should be spent on expenses… and that's healthy… leaving a profit margin of about 33.3%.

Okay, this is interesting. I very rarely meet someone that's really divvied up into thirds in this way. However, it force functions a really great conversation. Because if we know that out there in the ether, it is recommended that People Cost is a third, and you are at 40%, which is what we just calculated; using People Cost $120,000, total income $300,000.

Alright, so your People Cost is at 40%, well, that's higher than 33.3%. So, is that bad? What do I make of this? Should I try to get myself to 33.3%? And, of course, the answer is, it depends.

I'm going to walk through this a little bit so that you can think through for yourself. Once you know your People Cost, the percentage of People Cost, then you can pit it against this guide, a rough guide, of a third being spent on people.

And then, you can ask yourself some of the things that I ask when I'm digging in. These are the things that I look at when I am trying to evaluate, is this where it needs to be? Or does it need to be lower? The things that I look at… this is if the People Cost is higher. Because there are certain cases and instances when many of you will calculate this and your People Cost will be like 20%. Okay, that's a different conversation. I will go there next.

If your People Cost is higher than a third, then my brain goes a few places to check out what's really going on behind the curtain. The first place is producer, ROI; the whole episode last week.

Do you know what multiples you have? Or what the return on the investment is for specifically within your People Cost, the producers in the firm? Are they doing 1.5 times what you are paying them? Is that what they're bringing in? Or are they bringing in 3.5 what you're paying them? You have to know those numbers, and that was last week's episode.

So, if you do not know those numbers, and you are not sitting at a third, you absolutely should push pause and go figure that out so that you can answer this question. Because this is a filter question. You cannot know if where you are sitting, in terms of People Cost, is healthy or not unless you can answer the questions I'm posing now.

The first of which is: What is the deal with your producers and the income that they are bringing in? Is it healthy? And the only way you can do that is to go through the process I talked about last week on this episode. Okay, so that's the first thing. Now, whether it's a yes or no, it's a box you need to check to see, what is it exactly?

The second question I ask is: Are there areas in the firm that are clunky in terms of process, systems? Maybe there's double work happening, but it doesn't really matter because people are kind of working in silos. So, there's a little bit of double work, but it's all still getting done. Where is there room, is there room in your firm for efficiency and streamlining? To improve workflows with ease, so that the work can get pushed out with less friction.

Because if you improve efficiency, then it means that your team, the same number of people, will have more capacity to handle more clients and more client work. Because they aren't bogged down in bits of work that they don't need to be bogged down in. So, efficiency is a big deal here. Efficiency can make a huge difference with People Cost.

Because if you can streamline some things, then that means the more work you bring in, so the more income that you have, with the same amount of people, it means that your People Cost percentage will go down. This is very important. Efficiency can increase capacity. That's the second thing I look for.

And then, the third thing that I automatically go towards, is people who are doing more than they need to do in the firm. What I mean by that is not working more than they need to work. What I mean is the type of work that they're doing, they shouldn't be doing because someone else can do it. So often I see attorneys doing paralegal work, or attorneys doing admin work in some cases.

That's not a good distribution of work, considering it's an expensive employee or contractor. So, you need to be careful about the set of responsibilities you give a person. It needs to be appropriate for their job. And by “appropriate”, I really do think of it as getting them to the place, each person in their role, to where they are doing the work at their highest limit. In many cases, when we're talking about producers, what their license will allow them to do.

And that can take a while to get someone to the place where you really trust them with that, because you want it done in your way, you want to ensure that there's quality. But that should be the goal. Because if a paralegal can do certain kinds of work, but the attorney is doing the work, that's a very expensive paralegal; by paying the attorney to do the paralegal’s work.

So, you can see why People Cost would be a bit bloated out or inflated, if that's what's happening. It's very expensive workers for the type of work. So, that's the other thing I go to.

Other things that certainly cross my mind… With private clients I have this data at my fingertips, so I can go in and I can verify for myself, and I can have conversations with the owners. Are the deals too sweet that you are offering your people? Or are they in line and fair and reasonable, and maybe even a little above market?

But I have conversations with people that are paying way more than they need to. Maybe not in their salary or their hourly rate, but in bonuses, for crying out loud. Their bonuses are insane, and for not really stretching that hard. It doesn't make any sense. So, are the deals to sweet that you are offering the people in your firm? That can be tough to walk back from, but absolutely, there's a way to do it that feels right, feels good, is an integrity, etc. And so, I talk through that with people.

The other is looking at their rates. When is the last time that they did raise any rates? Has it been a while? Are they competitive in their market? Rates can be something to look at as well.

The things that I've mentioned here, that's where my head goes. That's what I dig into with clients. And from there, their answers to those questions that I'm posing and to the data that I'm requesting, tell me if there's opportunity to decrease the People Cost percentage.

And if there is opportunity, okay, good to know. We can start to get to work. There's no reason to feel this sense of urgency around it. It's just, “Okay, now we have data. We're making decisions based on facts, not feelings. And we're going to decide what levers we're going to pull in order to get that People Cost percentage down to something that feels healthier,” even if it's not a perfect 33.33%. It's not about perfection, it's about getting things in line with the business. Getting a business healthy.

So, those are a set of questions that I dig into if it's too high. Before I go into if it's too low, this feels like the perfect time to explain that if they do see opportunity, in one or more of the areas that I just went through, that could affect People Cost percentage, those are their Rocks.

Listen, if you don't know the difference between goals and Rocks, if you don't know what Rocks are, there's an episode on it. It's called, I think, “Goals vs. Rocks”. We could put that episode number, or the link to the episode, in the show notes.

But Rocks are basically the key quarterly priorities that are going to get accomplished. It is the effort that's going to be put forth to right-size the business. To get the business to where you want it to be from a numbers perspective. And these, if they identify an area of opportunity… Let's say that they said, “Yeah, my attorney is doing a lot of paralegal work and even some administrative work here and there. Because this is the attitude, they're just willing to pitch in. They're willing to do what it takes.”

Okay, that's amazing. That's good to have a team member like that. But let's get this set more appropriately so that you are paying out something that makes more sense for the level of tasks that's being handled. So, the effort that needs to be put forth could be something like training a certain set of team members to handle certain things that the attorney has been handling but doesn't need to.

So that the attorney can get the right stuff transferred to someone who just makes more sense, based on the pay to get those tasks completed.

I'll give you another example. Let's say that when I'm asking the question… the People Cost, the 40%... I'm asking the questions that I just posed here a little bit ago, the things that I would dig into to see if there's opportunity to make some adjustments so that it's healthier for the business.

And one of the things they point to is that they know that they need a process for something big in their business, something really specific. Because they don't have a process, there are some inefficiencies, people are doing a little bit differently, sometimes the client gets confused, and whatever.

They know that there needs to be a process put into place that will really create more efficiency in the business. And that will create more capacity to handle more clients, which is handle more work, which means allow for more income with the same amount of team.

In that case, the Rock would be, the quarterly priority, would be named. A project will be named “Develop and implement X system.” That's the project. That is the thing. That is the effort.

And inside of Velocity Work, that's where the accountability lies. Because if you do the things that you say you're going to do, and those decisions on the things that you said you were going to do came from facts, not feelings… it all stemmed from looking at the data… and it helped you make some decisions that are really going to help move the needle over time, then this is what there's accountability for inside of Velocity Work.

I'm saying this so you guys can see, “Yeah, it's one thing to make these realizations. What are you supposed to do with these realizations? Just hustle your way towards getting this stuff fixed?” I mean, sure. But it's better to have a look at these things quarterly, and make some decisions about what bandwidth you all have as a firm, to be able to really work on the business in this way, that is going to produce a healthier version of your firm.

From a numbers perspective, but also from a total health perspective in the firm; more efficiency, better morale. When things are running smoothly, everyone's happier, including your clients. So, this is what you do with it, You realize the opportunities. And you decide what projects you're going to put into place to capitalize on the opportunity, to seize the opportunity.

Let's go back and talk about, what if you calculate your People Cost and the percentage is low, it's lower than a third? Let's say you calculate it and it's at 20%. Many of you listening to this will do this, and it will be below, well below, 33%.

So, here's what that tells me immediately when I see that. And of course, there are still questions to ask and to dig into. I, with near certainty, can bet that the owner is spread thin, has no room to breathe, is taking on a lot of work and doing all kinds of things themselves. So, admin, paralegal work, attorney work; they're doing it all; owner work, on the business work. They're trying to do it all. And let's be honest, that is impossible to do it all.

You might be failing at it and feeling stressed because of it. Most people that are at that, the example I'm using is 20% People Cost, they're feeling it on a cellular level. They're not happy. Because humans that are supposed to handle everything, and juggle everything all the time, things are going to fall through the cracks. There are going to be mistakes. You're going to have to stay up late. You're going to have to work weekends and nights. It's too much.

So, usually, when I see a number like that, I cock my head to the side and I know exactly where I need to start investigating to get the truth of the situation. I'll ask questions based on that; that I have hunches about. I'll ask questions to verify, or I might be wrong. And I'll tell you the exceptions to that, when I am wrong, my hunch is wrong, and it's when they have a lot of overseas workers to fulfill all the functions in the business and that keeps People Cost lower.

Most of the time, people don't have enough of that to get it to 20%. But there are firms out there that are fully virtual, and overseas virtual, and very little People Cost because of that. The full team is overseas virtual. And so, in those cases, sometimes you'll see People Cost that low. You can still ask the questions about the processes, and efficiency in the business, and what the producers are doing, and what is coming in because the producer’s healthy.

You can do all the checks and balances and investigating with the prompts that I gave earlier. Just because it's 20% and the cost is super low, it's skewed down because you're paying for overseas work. So, it can be sneakier, right? You could have a low People Cost percentage because you're paying so little out to get the work accomplished.

And so, sometimes that can hide all of these issues. It can hide that the producers actually are not producing well at all. But they kind of don't “have to” because the business isn't feeling it very much, because the People Cost is so low.

So, you still want to ask the questions. If it's a low People Cost percentage, and it's because it's mostly overseas VAs or paralegals, etc. handling it, that you're paying $6 to $8 to $10/hour… and that's the highest that you're paying for a position in your firm except for maybe an attorney… okay, your People Cost is going to be super low.

That doesn't mean it's unhealthy, but you still need to look at the opportunities to make sure that the business is functioning as healthy as it can be. Right? So, you do ask about the producers. Do you know those numbers? Are you sure that those are what they should be? And again, that is last week's podcast. I laid that all out. So, you can go back to that as a resource.

The second question: Are there areas that you know that there's just clunky work happening, or clogged workflows? There needs to be some systemization or processes or standardizing put into place? If the answer is yes to that, you don't just sit back and not do it because your People Cost to so low. Absolutely not. It’s not a good business owner decision.

And it doesn't mean you have to strive for perfection, but you do need to make improvements that are obvious in your business. And you may, if you're being honest with yourself, even if your People Cost is low and you're asking the question about process system, ease, flow, workflows, and there's work to be done there, do the work. Don't just rest on your laurels.

There will come a day you wish you took care of this stuff while you had the ability, the bandwidth… when your People Cost was so low… and you could’ve addressed some of these things. Scenarios don't stay the same for long, long, long, long, long periods of time. Stuff shifts, stuff changes. And if you are in a situation where your People Cost is low, and you do have some areas to tighten up, go for it. Do it now, because you have an amazing opportunity while some of your expenses are so low.

And listen, I hope you can always keep them that low. But you never know what's going to happen in the next year, etc. It's nice to take care of things as you identify them.

Alright, I think we've covered a lot of the nuts and bolts. There's one miscellaneous thing that I'm going to mention here, because sometimes it comes up. People often ask, “Is this included in People Cost?” And “this” is the following: Software licenses, so per user expenses that you incur as a company. And there are other things that are similar to that, that you sort of attribute to People Costs, and the answer is no. You should not attribute that to People Cost.

It is Overhead. It's your software. It's the technology involved. It is not the cost towards the person. It is a cost towards the software. This is Overhead. It's not the end of the world If you do break it up and you put it into People Cost, but that creates complexity. It's a lot more to keep up with. It's more granular. I would absolutely just keep it Overhead.

The things for People Cost are everything I mentioned prior. So, if it's outside of that, I would really question if it should be People Cost or not. These are questions I answer in specific scenarios for members and for clients. But generally, just roll with what I outlined earlier, that should be included. You will be in a really good position if you do that. Everything else, Overhead.

Well, as we round out this episode, I guess to recap. People Cost is an important number to look at. On a call that I recently had with Mastery Group, we were discussing some of these numbers. Someone said, “So, this is really just a cross-check kind of number.” That wasn't a terrible way of explaining it, but what hit my brain was, “No, this is not just cross check.”

These are vitals. Just like when you go to the doctor or the hospital and they take your vitals. There are a few things that tell them, generally speaking, the health of you, what they need to look into, or what they need to dig into further.

People Cost is one of the vitals for your company, for your firm. So, it's an important number to know and to become familiar with. And the more you are in tune with it, and you are familiar with it, and you're willing to dig into it and evaluate how things are going as you look at that number, the more you will develop yourself as a business owner. The better business owner you become, the more developed business owner you become, the more success you will experience, period.

So, this is not something that should be looked over. The first time you dig into this, it's probably going to take some time. It's probably going to be a bit of a thing. But after that it's not. Build a simple spreadsheet that's not pretty, but it packs in the numbers. You add it up and then you do the division I said. It's not much math, so put it in there so that you have it to play with in the future. And you could just play with it, but stay connected to that number.

Now in Mastery Group, we have a basic tracking template that people fill out, it's month to month. So, for every month, they have certain stats that they put in. I don't see this unless they want to share it with me. It's yours, you make a copy of it and you make it yours. But in there, there's room for all of the vitals, so to speak.

There's room for revenue, and revenue by practice area. There's room for People Cost, and it calculates the percentage for you. There's room for overhead, and it calculates the percentage for you. And then it calculates net profit.

So, your vitals are in there. And if you created one spot, just to have your finger on the pulse of the vitals of the business, man, you start looking at that consistently, you're set to go. That will change the game for you. If you do not already have that, it will change the game for you.

And for those of you listening who think, “I have my numbers. I know where to go from my numbers,” do you review them consistently? Because you should. Who cares, if you haven't tracked, if you're not going to go look at them.

So, how can you use this episode to take your next step as an owner? To do one step better? Maybe that's just calculating People Costs and playing around with it in a spreadsheet. Maybe that means actually having a tracker where you put your vitals in, and this is one of the vitals. Maybe you have all that stuff tracked, but you never look at it.

That's sort of the order too. You need one spot that you can look at the vitals of your business. And then, once you have that spot, you need to be able to look at it consistently so that you can think through it. Check in on it. What do you think about that 40%?

When you ask the questions that I posed in this podcast, what stands out to you? What are the areas of opportunity? One final thing… I said one final thing earlier, but now I really mean it… There are certain practice areas that tend to have a higher People Cost percentage.

One of those, the main one that’s standing out in my mind right now, is immigration. Not business immigration, but family, removal; just everything but business. It tends to take more hands to get that work out. And of all the immigration firms I've worked with, 33% is really hard. And it's not even healthy to get to 33%. That's not their healthy sweet spot. It is something closer to 40%. 38%-40%, something like that.

Really, when I say it's not about being perfect 33%, it is about evaluating where you are, asking yourself the questions that I asked earlier in this, making sure that you know the answers to those questions, and make incremental improvements.

Seize the opportunity that you have to make improvements that are going to be the right thing for the business, instead of stressing about driving that number down to 33.33%. Because it may not be in the best interest of your particular firm. Most firms can get to 33%. It is immigration that, in my opinion, is not even healthy to push to get there. It doesn't make sense.

We find out when we do this work together. Really, this is about progress, not perfection. This is about identifying opportunities. This is about developing yourself as you look at numbers and you think through decisions. That's it. Don't make this about perfection and getting to 33%.

Alright. Thank you, everyone. I'll see you here next Tuesday.

Hey, you may not know this, but there's a free guide for a process I teach called Monday Map/Friday Wrap. If you go to, it's all yours. It's about how to plan your time and honor your plans. So, that week over week, more work that moves the needle is getting done in less time. Go to to get your free copy.

Thank you for listening to The Law Firm Owner Podcast. If you're ready to get clearer on your vision, data, and mindset, then head over to where you can plug in to Quarterly Strategic Planning, with accountability and coaching in between. This is the work that creates Velocity.

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