Jay Ruane  0:07  

Hello, hello, and welcome to this edition of The Law Firm Blueprint. I’m one of your hosts, Jay Ruane. With me, as always, is my man Seth. Seth, I’m preparing for a vacation. How’s your week going?

 

Seth Price  0:17  

It is going great. I had an awesome 

 

Jay Ruane  0:19  

Knicks won!

 

Seth Price  0:20  

The Knicks.. I mean, think about it. In our lifetime, we were playing with house money now, time wise. We never thought we would see this. I mean, Jets, another story, but a couple times in the 90s, I mean, it’s been talked about in the desert for so long, you know. Got to go to Cleveland with my son to see the sweep for game four, and just what it has done for New York City, beyond words,

 

Jay Ruane  0:44  

you know what, and not for nothing. I think there’s some parallels, some lessons. I hate to be that guy who’s going to bring up the Knicks in our first recording since day one, but one thing that you got to give this team, and I think it translates to us in the legal world, is there is no quit in them. They had the opportunity to lose four of those games and lose it dramatically by double digit points, but they just kept their head down and kept working because they knew they had a system and plays and players that were going to make it work, and I think that translates to law firms.

 

Seth Price  1:25  

You know what you know, Brunson being slapped to the floor. Nobody calls it, it’s unfair. People don’t make the right calls, you know, whether it’s, you know, whether it’s ethics stuff, clients, all sorts of stuff. Bashing, bashing, bashing. It’s what do you get up, and when everybody else goes to sleep, are you still on the court? You know, crushing it. It’s very, very apt. Look, right now everything is tighter than ever, right? Costs are higher, pay per click is higher. We just saw Colorado announce that they’re going to ban lead gen. You know,

 

Jay Ruane  1:59  

everybody should do that. You should be doing your own lead gen, or nothing else, you know.

 

Seth Price  2:02  

I, you know, but my point is, the world is topsy-turvy, every inflation, all these things. Are you going to give up, or are you going to say, “Look, I got the goods, and I’m going to, I’m going to keep fighting, because if you ask me, “How do they pull it off each time? No idea, you know. You remembered how they tanked the first quarter, particularly of game four, was awful. They couldn’t do anything, other team was crushing it, you demoralizing, and somehow piece by piece, one point a minute, they came back. You know, it’s crazy. So, yes, I think, look. Even today I got, I got, like, you know, ethics people with something. The DC rules are so crazy that, you know, you put yourself in jackpots, just living life. You know, your team three levels down from you does something, your bar license is on the line. I got, I’m trying to do something with a family, a business deal, where I need a family friend who’s a third-party contractor to do something, and I said, “You know what, I’ll agree to your terms, but I need payment terms to be slightly different. And all of a sudden, a dear family friend is sending me texts, saying, “You’re being condescending, when I’m just saying, “Look, if you can’t say yes, let me speak to the person who’s saying who has the ability to say yes. I mean, business in life is not easy, and I think the Knicks analogy, apropos, and ever, and look, it’s a team, right? Clearly, like when Brunson needed to be there in game five, he was there, but how many games was he being carried by the other guys? Crazy,

 

Jay Ruane  3:40  

for sure, for sure. So, I have a topic that I want to bring up with you today, and it’s not necessarily critical of another agency, whatever that’s out there, but it’s something that they’re out promoting a lot online, and I’ve heard a lot of chatter about it. I’ve gotten some text message about it, so I want to get your input on it. I’ll give you mine, right? And there’s another company out there? I won’t talk, tell their name, but they’ve got a conference coming up, a webinar, you know, and they’re pushing this this narrative that you should be spending 20% on marketing, 40% on your teams, 10% on coaching for your own self, and then 30% profit.

 

Seth Price  4:19  

20% marketing, 40% on team.

 

Jay Ruane  4:22  

10% on hiring them to coach you, and 30% profit. And I just.. I cannot, for the life of me, see how those numbers work.

 

Seth Price  4:32  

Well, first of all, Where’s your overhead?

 

Jay Ruane  4:35  

Well, they.. I think they said, ‘Oh, that’s also part of team and tech, or also that’s the thing, like they’re throwing out these numbers, and I don’t know if they’ve ever run a law firm. I mean, the people that I know that are involved are marketing. They’re good marketers, but they’ve never actually run a law firm, you know, they don’t talk about your benefits, they. You know, like,

 

Seth Price  5:00  

I’m not sure, I don’t know who you’re talking about, but I would say it sounds like tithing to me. You know, like if you’re, you know, giving to the church, you look. Again, I’m all for coaching. I spent a lot of money across the board, I was later the game than many, so I am all for spending coaching, but 10% on coaching sounds like a, that sounds a lot.

 

Jay Ruane  5:19  

A lot of money.

 

Seth Price  5:20  

Right, and many of the coaching programs squeeze as much out of you on coaching and don’t advocate for money being spent on marketing. We’ve seen that with a number of the large coaching programs, and that’s been frustrating. I think that some of the better coaching programs are now starting to look at marketing as more essential if they want to see their clients grow, but if the coaching place looks like, hey, we have a life cycle with our coaching client of 18 to 24 months, that they are there. They’re sort of taking some of that money into it. The better ones, I think, are here’s your money for coaching, but you know you better have enough money for the other piece.

 

Jay Ruane  6:06  

But I mean, if you’re grossing a million or $2 million a year, I can’t imagine that you could take 100 or $200,000 out of your firm devoted to coaching, because if you’re saying, say you’ve got this 20,40, 10,30 that they’re advocating, right, and you take

 

Seth Price  6:30  

that’s where it falls apart. Look, the number of firms outside of PI that have a 30% profit margin in the B to C space, nominal.

 

Jay Ruane  6:39  

I know,

 

Seth Price  6:40  

I don’t know exactly, pretty innovative guy with saving a lot of money on a lot of things, and you don’t spend a ton on marketing, to be fair,

 

Jay Ruane  6:47  

right?

 

Seth Price  6:48  

Right, so you’re low on marketing, and you’re very efficient, you’ve leveraged overseas labor, and you’re not at 30% So I think 30% for most people, for a firm run, right, is a pipe dream. I say that, and I saw it. Look, I saw that at BluShark, that any time profitability started to rise again. I’m giving you old normal, before AI was a real, was a real factor, but when the numbers started to rise, every point over 20, you could see breakage. Things that weren’t being done right. There’s only so much in that if you want to do right by your client. So, look, I first 30% sounds high, unless you’re in PI, in which case I see it right. Second, 40% on labor, depending on how you’re set up. Again, B2C world, now certain areas pyramid a lot. SSDI might be a lot of non-lawyers, but if you’re in something like family, good luck with that, right? Meaning, if you labor is what you’re billing, okay?

 

Jay Ruane  7:49  

So you got a million dollar divorce practice, right? You’re gonna spend $400,000 on your team and tech, so that’s also your possible.

 

Seth Price  7:58  

It’s just not that’s not team, tech, rent, what about everything else?

 

Jay Ruane  8:02  

right? Like, and this is what I’m talking about. There are hundreds, or 1000s, or probably hundreds of 1000s of lawyers out there that are seeing this and saying, my numbers aren’t anywhere like this. I must be a failure, and I guarantee that your firm set these numbers are different for your PI versus your family versus your criminal. You’re getting different numbers for each one of your verticals.

 

Seth Price  8:31  

right? And, like, I’ll tell you things that I’ve seen: any immigration lawyer that is not diversified with overseas labor is likely. We were in a mastermind, I think you were there, guy, 100% US labor underwater, right? That’s how thin it is. So, God forbid you’re trying to figure out the marketing, and the 20% to be fair, if you have an, you know, most people in the B2C space outside of PI are nowhere near 20% so in the PI space, 20 is a growth mode higher if you want to be hyper growth, less if you’re established, right? But outside of it, what are you at? What’s your percentage on marketing? I’d be surprised if it was 10 or..

 

Jay Ruane  9:17  

I’m at 13, and I’m happy with where we’re at. In fact, we were just talking, should we go up to 15 or should we stay where we’re at? We’re probably going to stay at

 

Seth Price  9:24  

13, include in-house labor like that, you including salaries.

 

Jay Ruane  9:28  

Okay now here’s the thing. Here’s the thing about that. I had a conversation with John Knock Hazel about this, and I said, shouldn’t my marketing employees be part of my marketing budget, and he said no, and I pushed back. Let me ask you this again. I asked the question twice. I said, look, I said I got a videographer, I got my copywriter, I got my web guy, and he’s like, no, that’s payroll, that does not go under your marketing line.

 

Seth Price  9:54  

I’ve had this conversation, many others, no, no, agreed, and I think that it can. You, it, because, okay, their payroll, what if they were 109(s? All of a sudden, you put them in your.. I mean, that’s again some of these things, and I think that what makes John and others brilliant, you pick something, you go with it. Who cares?

 

Jay Ruane  10:13  

I get what he’s doing, because he’s doing it at a different level. No, no, no.

 

Seth Price  10:17  

But right, but your videographer, you happen to have a W-2. Most people don’t. They have a 1099 right? And you know, for me, I have let.. I have limited in-house labor on the W-2. Most of it is on contractors.

 

Jay Ruane  10:38  

The truth of the matter is, my videographer is my brother in law, my video. My website guy is my brother, and my mom and my mother in law want to make sure they get benefits, so that’s why they’re w2.

 

Seth Price  10:48  

Well, but Jay, that’s a great example where you got to see through it, so you know what? Ignore it, they’re not W2s, they’re W2s for your purpose. You’re the only guy on the planet who’s putting people’s W2s and not telling anyone they can, so like as normal, J is outside

 

Jay Ruane  11:05  

generous.

 

Seth Price  11:06  

No, but it’s not. No, no, no, it’s not too generous. It’s what you, how you want to live your life. It’s called owner benefit. That said, you know, so just take them out. When you gave me the 13th, it included those people, I assume.

 

Jay Ruane  11:18  

Yes, it included those people.

 

Seth Price  11:20  

So pick your poison, but even though I’m still, but you know, you’ve made your investments have been in a full-time videographer, that’s unusual for a business of your size, right? But you like it, and it works for you, I like it, it

 

Jay Ruane  11:35  

It works for me, and there’s

 

Seth Price  11:37  

No value judgment, so look, the 20, anything that’s an absolute. Anybody who says from stage, you should be this. What’s what do you give me flack about? What do I always say? And it does, but there are certain rules and red flags. So, for example, if you’re over 20% on marketing, you need to say, am I growing at the rate I should be for that? Okay A. B, you know, coaching the fact that that is a 10% My guess is just like many things who people have self-interest in what they’re saying that you should spend 10% on the churches, say you should donate 10% to them, right? You know if you’re a believer, God bless, is that the ultimate use of those resources, but there are many people out there, and you know what, you know if there are many people out there that need a lot of different coaching, but what if you had a consigliere in house? I met a guy when I was in Australia that has a frack, a guy a couple days a week whose former parliament member, who is sort of his advisor, he’s a W-2, not an outside coach. Does it have to be a coaching program that has a sales funnel, or can it be any sort of sort of intellectual development that you’re doing?

 

Jay Ruane  12:55  

I mean, at the end of the day, though, I really want our audience to listen to what we’re talking about and just realize that anybody can throw out arbitrary numbers on a whiteboard and say this is where you should be, and you should take that with a grain of salt and realize that it may not work for your business and how you want to live, so don’t just take those numbers as gospel.

 

Seth Price  13:19  

Well, time out for a second. Okay, the classic story told by Chad Dudley about Rick Harris, one of my favorite people. Just saw him in Vegas, right? They were in a non-numbers mastermind that was basically a mastermind, but nobody was sharing their financial data in the room, which, if you’ve been part of one of those groups, is a game changer, right? So people are putting their numbers out, then you’re starting discussions about does it include this stuff, but you can just comparatively, if 10 firms are doing criminal, what are they spending on marketing? What are they spending on labor? If somebody’s labor is way out of proportion, is there a reason? Is because they’re J and they want to put people at W twos, or is it because there’s some other reason? So Rick Harris is in this, is in this group, and there’s a group out of Seattle that’s bragging about their digital prowess, and how they’re making fun of Rick in the room, because Rick is not actively on digital. He was on TV, made billboards, he was a relationship guy, referrals, and they finally shared some numbers, and they were generating, I believe nine cases a month through their digital early days of digital, and Rick is like, you know what, you’re right, I’m a total failure. Turns to his assistant, he’s like, Sally, grab my briefcase, we’re gonna leave, I’m a failure, get let’s get on my private jet and fly home, right. So the idea is, let’s, when somebody’s giving you that advice, what are the results for the people they’re doing it for? Because the 10% is a pretty good number if you’re trying to sell coaching of their coaching clients. What are the success stories? What look, I’ve seen coaching programs where the coach, where they are very good at rating. Raising top line revenue objectively, but I met a woman who was a year or two, and she was a rock star, beyond rock star, who had raised herself to a million dollars in gross revenue in a couple years, that said she had $50,000 of profit.

 

Jay Ruane  15:17  

Well, that’s the thing, like, and profit is not just money in your pocket, it’s the lifestyle that you get to live on your show,

 

Seth Price  15:24  

meaning you’re like you’re saying that there’s things where, hey, you’re writing off a ton of stuff, maybe

 

Jay Ruane  15:30  

just saying like I get to leave, I get to leave the office at 3o’clock because I’m going to go coach Little League, and I’ve built a firm that supports that,

 

Seth Price  15:39  

understood, but there’s also a number globally that you want to be at, and so, like anything else, you should. This is true for everything, keeping up with the Joneses, you know, the car. My kids say to me, “Hey, our neighbors down the street have probably 450 $500,000 for the cars in their, in their garage.

 

Jay Ruane  16:00  

God bless you.

 

Seth Price  16:01  

I drive a Hyundai Ioniq Five, the most expensive car I’ve ever bought. You know, at 5050, 60k Like the idea that you are looking at people, the number of people that you think are successful that don’t have a penny saved, that one thing that’s going to knock them over. So, like anything else again, those are, you know, there are times when those generalizations are interesting and thought-provoking, but I, you know, look, I love it when people embrace marketing if it works and it’s making them more money, and I don’t like the idea when there’s other stuff there, but to say that your entire operations is running for 40% I would argue outside of some incredibly well-run skyrocketing PI firm, nobody else is able to play that game and have quality.

 

Jay Ruane  16:57  

I would agree. I would agree, and I just.. I want our audience that’s out there, that’s listening. Like, if you see this in your feed, don’t feel bad about how you are running if you say, ‘My numbers don’t match these numbers. Now, obviously, look at your numbers and make sure that they’re working for you, and you’re, you know, but

 

Seth Price  17:14  

instructively, not like.. and also, Who’s saying it? What’s behind it? Like, all of this stuff, it’s, you know, what is the fundamentals, and crowdsource, right? Like, one person tells you it’s

 

Jay Ruane  17:28  

tough to crowdsource, because a lot of people don’t want to share that information, especially if you’re, you know, in your..

 

Seth Price  17:34  

I mean, crowdsource multiple opinions on those numbers.

 

Jay Ruane  17:38  

Oh absolutely, absolutely. But I’m looking at their numbers, and I’m saying, boy, you know, you’re saying you sell me, you sell me marketing, and you want to sell me coaching, you want to take 30% of my gross revenue, and that’s a lot, because if they’re doing 20% on marketing services and 10% on coaching at a million dollars, that means I pay you 300,000 and I have to run everything else and make a profit with $700,000 that’s not gonna work.

 

Seth Price  18:04  

No, and I look, I also have a big believer that the, we see problems when that stuff gets intermingled. The person giving you the advice, I mean, look, everybody, like with what we’ve seen, the value we could add to the coaching world is dramatic, and yet I sit there and I’m like, I feel like there’s a, you know, I like, I work with people on intake and different operations and hiring issues and all sorts of stuff, but at the same time I’m, you know, very much a believer that when that stuff starts to get bundled, it gets dicey, and are there? Yeah,

 

Jay Ruane  18:40  

yeah, I don’t want to go there, and we only have a few more minutes, because you got it, got it off, but I want to throw something by you. I’m curious, how you’re handling it. How do you train for mid-level management? Because we don’t, we’re not IBM businesses,

 

Seth Price  18:55  

that this is not the look, the hardest problem out there. We’ve talked about it.

 

Jay Ruane  18:58  

Right isn’t it? 

 

Seth Price  19:00  

It’s first. I think it comes to first, get your management team right, right, that, and again, if you have flux and management, you’re in quicksand. It’s not impossible. You can only truly do that in my experience once you have the people in place, because you can’t emulate something unless you’re emulating from something you approve of, so for example, we were in the desert for so many years on intake, we have an amazing intake manager who now has three or four mid-level managers, but if she was not able to bring that down, it would be very, very theoretically, academically, you as that master showman at the top could do it all, I think that assuming that you’re delegating it down, it’s building systems and processes, but until that top end, what you will find is, and I could say for myself, if the top person on your C suite, or whatever you want to call it, forget it, but that’s the leadership team, when there’s a flaw in the leadership team. Shockingly, you’re going to see flaws in the mid-level managers,

 

Jay Ruane  20:04  

and let me ask you this, and we’ll end with this, because I think it’s, should you promote somebody to management because they’re good at their job?

 

Seth Price  20:12  

Well, that’s the ultimate, you know, the answer. We thought, like, that’s look, we all do it.

 

Jay Ruane  20:18  

I screwed up, I did it, and now it’s biting me in the ass, and I can’t get this. What am I gonna do? Demote this person, because they’re awesome at their job, and they just suck as a manager.

 

Seth Price  20:30  

Look, every sitcom had an episode about it. Yep, I forget. It was Clinger or Radar got promoted on Bash for this old enough to have seen that every show.

 

Jay Ruane  20:39  

How old are you?

 

Seth Price  20:40  

Yes, exactly. It is the struggle is real. Like, don’t like, not give them opportunity. I mean, there’s no good answer. I think what you do is you attempt, you’re small enough, meaning even though a substantial firm, where you could just strip away some of those responsive ways and make them a special envoy for this without the people under them, you know. Look, everybody, I’ve talked to Tom Tona about people, he’s everybody’s gone through this issue. Fisher’s done it, you know. We, you know, you are not alone. We’ve all, and we’ll continue to do it, because if you have a rock star, you want to give them opportunity. Yes, you should be testing and doing all those things, but what are you going to do? Not give that person opportunity. I think that I had the great story that I tell, where I had a person who was the senior person at Price Benowitz on the marketing side when I was starting to build and grow it, as BluShark was about to be an idea, and I made a decision that that person I had to have a very tough conversation with her, saying you are going to keep your salary. You’re going to keep your title, but from now on you’re going to report to what turned out to be David Brenton, who was a junior intern slash basic associate, but realizing that it was untenable with that person in leadership, and she stayed three more years doing the substance at a very high level that we needed, but could not manage people, and I think that if you can, I think that that’s a doable thing, you’re not changing money, and if you’re not changing ego, right? The question does the person love it and need it, but assuming that they don’t, they may be happier, and ideally I had to make that very stark poll. But if there’s a way just to slide that stuff out and just put a different person in place, that’s my wish for you.

 

Jay Ruane  22:36  

Well, I’m hoping that maybe it gets solved while I’m away on vacation. Folks, I’m going to be out of the country for the next three, three and a half weeks, so we’re going to take a little hiatus. I’m sure Seth might do something with some older shows, and if I can find some time with the time change, but one of the things that I like to do in my firm is actually live the life that I wanted. So we’re going to Spain, to France, to Italy, and I’m going to be in much different time zones, so hopefully we can get an episode or two while I’m overseas.

 

Seth Price  23:10  

Let’s aim for that first week in July. We’ll try to do a something.

 

Jay Ruane  23:14  

Okay, that sounds good. That sounds really good. It’ll be interesting to be.. I want to hear

 

Seth Price  23:19  

Jay from the roads. How is it going? Have you ever taken this much time off?

 

Jay Ruane  23:23  

Uh, not this much time in a row. No, I’ve never done,

 

Seth Price  23:27  

and overseas.

 

Jay Ruane  23:28  

Right

 

Seth Price  23:29  

now, the great thing about overseas,

 

Jay Ruane  23:31  

I mean, I did, I took time off, I took a month off when each kid was born, but that’s,

 

Seth Price  23:36  

yeah, but you’re sitting with your phone the whole time, right?

 

Jay Ruane  23:38  

This is,

 

Seth Price  23:39  

this will be it’s a great test, you will, you, this is test. So we

 

Jay Ruane  23:48  

should do shows every week, and I just send you messages of all the shit that’s broken in my firm. While

 

Seth Price  23:54  

we’ll put the best of next week, and then the week after, we’re coming back, and we’re gonna find out from Jay what’s broken.

 

Jay Ruane  24:01  

All right. Well, folks, that’s gonna do it for us. Thank you so much for being with us. You can take us on the go anywhere you want to go by subscribing to the Law Firm Blueprint podcast, and see us live on LinkedIn, live in our Facebook group, 3pm Eastern, 12pm Pacific, most weeks. Check us out, see what we got next week while I’m on the road and set this hunkering down at home. Bye for now.