Regain Control of Your Firm: Data-Driven Decision Making

I'm Melissa Shanahan, and this is The Law Firm Owner Podcast, episode number 295.

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.

Well hello everyone. Welcome to this week's episode. Today I want to talk to you about something that I have had discussions with law firm owners about recently. There's been a cluster of them, and usually when that happens, I always try to take a page and say, okay, wait, we need to talk about this on the podcast. We may have talked indirectly before about what I'm going to talk about now, but I'm going to come at this from a different angle.

So what's been happening is I get on the phone with law firm owners and they want so badly to get their hands around their business. They want to have data. They want to be able to figure out what to focus on next. They want to be able to figure out how to get out of certain ruts, whether that's a plateau with revenue, whether that's, you know, just a rut of not being able to take much from the business, like a low profit margin.

There's things that they want to understand that they don't feel like they have the time to dig in and figure out how to understand. And every time I'm having this conversation with someone, it usually does come down to they are not getting what they need from their business. Their business is operating, but it's sort of this machine. They wish that they could adjust some levers on the machine and they don't know how.

And so they're stuck inside of this firm that they have built and they've built essentially this glorified job for themselves. And when I talk to them, they can tell me all of the things that are stressing them out, but it's very difficult for them naturally, as you can imagine, when you're in a state like that. It's not easy for you to see solutions. You just feel the problems.

And the thing that I hear commonly after we have conversations about what is going on, they say, "I just don't know what to do. I don't know what to do." And so then when we start digging into like, okay, I have some questions that give me some answers. I do some math. I ask some more questions. I dig into really I'm trying to get underneath, like, what is some of the sources of issues?

I can see there's a lot of issues that you're having with your business, but I'm trying to get underneath that a little bit and understand why you are having that experience with your firm. And so I'll ask questions about the team size, about people costs, or just even about producers. I'll ask like, what do you pay that producer? What do you, do you offer benefits? Like I can start to piece together roughly what they're paying and then I can start to do some math and then I can start to pull some things together to help them see, okay, listen, you've got to prioritize X or you've got to prioritize Y.

And that's my hope is that that's really helpful for people because they always feel like there's so many things that they could and should be focusing on yet they don't feel good in their business and they don't feel like they have the breathing room to do anything that they’re supposed to be doing. And so there's almost a panic that sets in. Now, people panic in different ways. Sometimes there's panic that is very overt, and you can feel that it's just like coming off of them. They are so desperate, and they're outward with that. They're desperate to find out and to fix this.

But then you have another kind of panic that is for those of you who just hold it in. And so they're more stoic on these calls. And you can feel resistance and fear rise in them as I'm talking about the things to focus on. Because essentially what I'm doing is I'm saying, you need to constrain down to do X. X needs to happen this quarter. Maybe that's getting a tracking sheet set up that's actually filled out every month that you look at every month. That's the thing that has to happen this quarter.

If it was easy, it probably already would have been in place with the people I'm having a conversation with. Maybe it is easy and they just don't think it's going to be, but it's usually some work to get some historical data put into a tracker. So we give the tracker, if people are a part of our sphere and they join anything that we do, they get a basic tracking template. And that is so helpful. Helpful is the wrong word. It's essential. It is essential.

So if that, for instance, is in the way and they don't have that data, they have hunches about things, they know sort of what they spend generally per month, or they, no, no, no, no, no. That's not what I'm talking about. What I mean is that you have a place where you don't have to go digging. The numbers are there. You look at the numbers. You see what you think about those numbers. You figure out what curiosities you have about those numbers. You get curious enough to say, huh, why is that low? Or why is that so high this month? And then maybe you go digging in to figure out why.

This is what I mean. If you don't have this place, then your brain will spin a bunch of stories about what might be happening from a numbers perspective. What road you're on, where you're headed, and your brain doesn't know. The only way that you will know is if you have data. Facts, not feelings. This is when that saying comes into play. Facts, not feelings. But to get the facts, it requires that you focus and constrain down to just getting that right. Just looking at that one thing.

I realize I've bent towards this data thing, but this comes up a lot with people. And the barriers that people have as I'm talking to them about like, okay, this is the thing you need to focus on this quarter, period. You've got to get your hands around this. Sometimes they'll say things like, I just don't have time, or I don't know that I'm going to stick with it because other things catch my attention.

And I really hope that you guys listening to an episode about this can hear it or see it. But when someone says things like that, it's not that I don't understand where they're coming from. I do. Which I think is what makes me good at working with people. I don't have judgment on people.

But, objectively, listening to that sentence, if you are going to run with that, I'm too busy, or I'm gonna flake out on this, I'm not gonna finish it, I never complete these things because I'm onto the next thing, or something's on fire, and then I forget about it, whatever. It's about getting distracted. And so when you say to me, I don't know if I have the time for this, what you have to understand is that you are also saying, or what you're really saying is, I will not make time to get myself on a different trajectory. That is what that is saying.

You get to decide how you spend the hours of your day. You get to decide the guardrails you put into place. You get to decide what you delegate off your plate. You get to decide who you're gonna hire and for what work. You get to decide what you do when you find yourself with a free moment. You get to decide before you start every week or start every day if you're gonna look ahead of the day and make a very strong plan for the day and do your damnedest to honor it. You get to decide.

So when you say things like, I don't have time, I'm not going to be able to, you are coming from a completely disempowered state. And though this isn't meant to be a self-help episode, this boils down to the way that you are thinking about it. You are taking a victim stance in this, and no one is going to give you the time. No one is ever going to give you the time or the space to do all the things you'd like to do on your business. All of a sudden you have to take it.

So this episode, I really want to be around, like, look at yourself. If you find yourself sort of stuck in a pattern or a cycle that you don't like, or a situation that you don't like as it pertains to your firm, maybe it's that you're spending too much on X or your people cost is too high or your conversion rate is too low or you're taking too long on cases, they're sitting because there's a backlog. Whatever situation you wish was different, even if you don't know how to change it, you have got to decide and commit to something very specific that you are going to stick with.

You're going to see through because you know it's that important, because you know that the future of your firm and how you feel in your future firm depends on it. You're not ever gonna get peace of mind in the long game, like within your firm, unless you do the work that it takes to get underneath like root cause, what is going on. You have to be like a heat missile towards truth. What is the truth about what is going on here? Let's cut the crap.

Why do I constantly have anxiety about paying this contractor who is doing really good work, but I never feel like I have the money to pay them? Why is that? You can't just allow your brain to ask questions. You have to go hunt for the answers. And most of the time, 95% of the time, the answers are in data. The answers are in your firm's numbers. And you don't even have to have some complex report. And in many instances, it is basic information that will point you and guide you to what is going on. And so then you can make decisions from there.

So this episode, I really want every single listener to think about their situation and where they need to take the reins in a way that they haven't felt like they can before, but that's because of what they're telling themselves. Each of you has the ability to. I understand that doing this kind of work and digging in in this way may not be in your wheelhouse, but that's not a reason to not do it. Get yourself the help and support that you need to get your hands around your business.

Get yourself to the place where you have data. High level basic information about the money that walks through the door and the money that you send out. Money in, money out. Income, expenses. And within expenses, I highly suggest people cost is separated out from the rest of the expenses so that you can evaluate how much you're spending on people. Then you can go back and listen to the people cost episodes I have to figure out how you want to think about that for your firm.

And then of course, what will be calculated if you have those numbers is profit margin. Get these basic numbers. Get your hands around them. Be familiar with them. There's so many business owners that I meet that they don't have this data. They have hunches about it, but they don't have it.

And it's time that you stop allowing yourself to have excuses not to have it, period. When you have what you need as a business owner, you make decisions that make more sense for your future, that are aligned with outcomes that you'd like to see. Get yourself support. We are an option for you to have support to get your hands around this. And I love it. I love working with people on this.

So I realize I sound a little passionate. I hope I'm not, you don't think I'm going to be judgy or mean when you come in because I'm not. It's my favorite thing is to help people with this. But the reason I'm doing this podcast is because no matter if you use Velocity Work, or you use someone else as a support, you need to get support in getting what you need as a business owner.

If you do not, you will not ever create the thing that you want to create. Period. There is not a chance in the world that you will ever have a profitable firm that gives you what you need in terms of space and freedom and a great team and no like very few not no headaches. Every business has headaches but few headaches it's not a hard thing to own a firm you will never ever get there if you do not dig in and focus and constrain down and figure out what you have to do first, and then what you have to do second, and then what you have to do third.

I think we are very good about that. When people come in, the first thing we do is get them rolling on data. We have to. And so that's for firms, you know, under $1 million typically, but we do have this, it's called phase one. It's essentially a deep discovery and audit of the firm. And then you're presented with the analysis with slides. Once we have all that, then we get into a room for two days and be able to plan strategically forward because now we understand the current state and the history.

So it's an awesome experience. It's two to three months long. It is a standalone engagement. Every private client has to walk through that before they can work with us ongoing. But we have people who are doing under $1 million, much less than under $1 million, and they do phase one so that they understand their business. It's like help and getting their hands around it.

And then they feel like, oh, Mastery Group will be easy now. Like I can do that and have some accountability and that'd be great. Or now I'm good to be on my own. I don't need to keep going with the program. I got what I needed and we're good here.

So when I say get support for yourself, do not feel like you have to dig into this by yourself. It makes no sense. It makes no sense. This is not your wheelhouse. So borrow someone else's expertise and guidance and facilitation and support until you don't want it anymore. But don't just sit back and say, I don't have time.

That's the other thing. One of the things that people ask is how much time do I have to spend in Mastery Group? And I will answer them. And which is, you know, up front, it's more because they have to get their data together. So two to three hours a week, one of those hours is with us on the phone on a call. So two to three hours a week, and they should be, they'll make really good headway. And they'll by the end of onboarding they'll be set to go and then they can do strategic planning.

And so then I talked about the time. There's a day, every quarter for strategic planning. There is a weekly call. And of course, you're going to want to work on your business outside of those calls as well. And people say, I just don't know if I have time for that. I'm like, okay, back up.

Make no mistake. This is not time on Velocity Work. This is time on your firm. You are saying that you need to do this. You are saying that you need to focus on this, and yet you think that I'm asking you to give more time to us. No, I'm asking you to show up and let us help you with your business. I'm asking you to show up and let us help you with your business. I'm asking you to show up and be led to get things that are basic and going to be super helpful for you so that you can bump up your skill sets in terms of being a business owner. And then you'll learn how to plan strategically. You'll learn how to think in a way that's going to serve the growth of your business.

All of this is a byproduct of "spending time on Mastery Group" or in Velocity Work. It is not about us. It's about you. So when you show up, it's for you.

The people who ask that, they are the same ones that think I don't have time. The whole mental game is flipped in a way that's unhelpful for those that think in that way. I don't have time to do this, and if I join, I don't have time to show up.

You have to be honest that you are actually saying, when you say that sentence, the truth is that that translates to, I will not make the time to spend on my business for my future self, for the future outcomes, so that I can have peace of mind. I will not do it. So that my fees are adjusted well, and I've learned how to do that based on data. I won't do it. So that my people cost isn't too high. Nope, I won't do it.

That's what you're saying when you say, I don't have time to show up an hour a week. You'll never ever be given that time. You're gonna have to take it.

The last thing I'll say here, the last point I'll say is, everyone is in a different season or chapter of life. There are times when I meet a law firm owner, and sometimes this happens with members, that they are in a chapter of life or have recently landed in a season that it isn't priority anymore. It's taking a backseat because something in their personal life has come up and really is winning out in terms of attention. And that's okay, too.

So as passionate as I am about, you know, do not be a victim with this, it doesn't mean you have to fix it right now. But do not sit back and say, I don't have the time. You're either going to make the time or you're not. It is a choice and you have every right to make the choice not to, but don't act like you can't. You can. It may not be easy. It may be uncomfortable. Maybe you let someone down here and there because you're going to take some time back for yourself. I don't know. You're going to have barriers. But it doesn't mean you can't do it.

So this episode, I'm hoping, is a wake-up call for any of you who have been saying, I don't have time to do it. I don't know if I have the bandwidth to do it. I don't even know how to run those reports. I don't know. Like it just all feels like too much. And so you just stay in the cycle that you're in and just, you think somehow if you just try harder that that's going to get you the results you want and that's not how this works. That is not how this works.

I know a lot of us got some really great places in our life because we just put in more work and did what we needed to do and mustered it up. This is not the same. This is not how this works. That strategy is not going to work here. So you're going to have to scrap it. You're going to have to get honest. You're going to have to say, I either will spend the time and figure this out so that I start to have relief when I start to have some profit margin, I start to not feel broke in the business, I start to feel like I have bandwidth I can take some time away, or I will not spend the time right now so that I have those things. I knowingly am making that decision.

And if you say I will not, maybe just right now isn't the right time. Maybe you say, you know what, I'm not going to do it. I'm not going to do the things that will create velocity for myself. But next quarter, I'm going to put something on the calendar. I'm going to start attending X or I'm going to join Velocity Work. I'm going to get involved in there. I'm going to have a consult with whoever, right, to see what the options are. Do something for yourself.

Don't just sit back and say you don't have it. Figure it out. When are you gonna do it? What makes the most sense? If it's not right now, when is it? Calendar that, commit to that and be done with it. And then don't spin anymore about how it hurts. It hurts the lack of profit, feeling like the cash flow is not in a good position. And there's a lot of things that hurt, but you decided you're going to wait to address these things. So just decide.

Don't be at the effect of things. Decide. Take the reins in whatever way that looks like for you. Take the reins.

All right, everybody. I hope you have a wonderful week. 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 VelocityWork.com, 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 VelocityWork.com 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 VelocityWork.com 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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