S5:E5 Talking Takeaways from Hawaii + A Convo with Jarret Prusin

Join Seth and Jay as they talk about a cornucopia of topics

Transcript

Jay Ruane

Hello hello welcome to this edition of the law firm blueprint. Today I'm your host Jay Ruane hope you're having a great day with me as always my man Seth Price and BluShark digital and Price Benowitz Seth is just off a plane back from our 50th state Hawaii where he was participating in the mastermind and I've been waiting to have this conversation with you because how was your How was the mastermind you know, I love John Fisher I love everything he does. You had Michael McCready there you had John Marquis on Kate. I mean, you had like the power players in the space. So tell me about the mastermind. What your takeaways were what you learned ideas all that fun stuff. Well, first look, Hawaii is always awesome. And thanks to John fish right an excuse to go right. This is the the ultimate boondoggle, but it was just so special getaway you'd appreciate this time away from the kids. It was a whole committee my parents who were sort of semi able to deal with it with my sister overseeing it. So all that that said, beautiful spot. Never spend time in a wahoo I've always been off at Maui and Hawaii. Incredible Island to explore in its own right. When you get down away from the busy crazy Waikiki area. The North End is spectacular

Seth Price

Look, you got McCready, who is like to me, one of the best practitioners with use of technology. And what he spoke on Wall specifically targeting PII lawyers, I think is well suited for everybody. So what he is focused so much on is communicating with clients as much as possible. And he's using smart advocate as we do for RPI clients. And he is just basically taken, I have booked my goal has always been on the PI side two phone calls per month, not bullshit like we try to engage them but speaking to somebody twice per month. When you do that, it dramatically changes the equation. Whenever I see upset clients, it's because that's not happening. And when I see somebody not spoken to for over a month, it becomes a disaster, particularly in pre lay. That's one side of the equation. I would argue that my guess is that if you found a way to supplement your communication, even in criminal with text messaging, what you don't want is text messaging, leading to a call. But if you basically flood them with information and using Ryan McKean, ask Net Promoter Score surveying to figure out how much messaging how much non messaging, I just think he's a genius. And I hope he ends up doing more with that just like I built blue shark, I hope that he ends up sharing the love and helping people figure out how to communicate better with their clients in the near future.

Jay Ruane

It's interesting that we've actually rolled that out, you know, we're doing a lot of text messaging interesting. Lee, we experimented last year with ringless, voicemail where our CRM was pushing voice messages to our clients. And they were they were formatted. You know, they were, here's what happened with your, here's what's going on with your case, that type of thing. And what we found was that those voicemail messages, were actually causing more calls to come into the office, because people would get the voicemail message, not listening to it, and just calling being like you called me. And I get it. And so there's a difference. Like, I don't listen to voicemails, I paid after the $5 a month one of the best investments talking about hacks. I love it. Maybe it's automatic on an iPhone, I'm a pixel guy, I pay for the transcription.

And it's automatic. It's automatic. I love it.

Seth Price

And to me, that is the difference. The average person doesn't really have that.

And so what I'm doing is basically trying to figure out how can you message people without flooding your phones? Yeah, so what we did is we actually took a rip off of case status went out, we filmed a bunch of videos, we're texting people, links to YouTube videos that they're able to watch. And it's cut down on the number of calls, we're actually doing a lot of outbound stuff. As I talked about on the show earlier, we've got this, I guess you'd call you know, client outreach lawyer who's able to head off questions, which are have been huge for us, in that we're able to sort of interrupt that client stress time and get them back on, you know, our side because I really think as we go forward in the future, you know, it's the it's the firm's that have the best customer service that are going to be the ones that are the winners in this whole thing because anybody can

Jay Ruane

Anybody can hang a shingle as long as you have a license, but it's the people that are well reviewed. It's the people that people can't stop saying, Oh, I had a great experience with them. And that's what's gonna make the the big difference, I believe.

Seth Price

So if I think you're on absolutely no, I couldn't agree, I couldn't agree more customer service touches, how do you get them in a meaningful meeting people where they're at, and they're clearly not at voicemail, you've just, you know, so you know, buoy on you, you'll spin you'll pivot, you'll figure it out, you know, you'll do the videos, and you'll you'll figure out what they do want and where are they? And what adds value rather than just, hey, let me call my lawyer. That's the million dollar question. John, and Kate did an awesome job. What I what I asked them to do, and I think they did a great job is it's one thing to sort of talk about what's at the mike Moore's Law Firm, because you know, it's a buck 60 firm looking to double, which is not the average firm in our audience are at the mastermind. And what are the some of the fundamental building blocks, and they really did a nice job with that. And hopefully, we can have them on the, on the show, to dive a little bit deeper into some of the areas that they're that they're great at, you know, something we've talked about offline. They're, they're very tailored to the pie space, and they do, they do a really nice job with it. I'll sort of finish up the the mastermind experience, which was two people who were there, just little things, Marco Brown, just really interesting cat. You know, he's leveraging a lot of the great stuff that grant cardones putting out and I say great stuff. I am not a Grant Cardone disciple, but he's pushed me to sort of look at it and say, Hey, are there things I should be using on the sales side coming out of somebody who figures out how to leverage attention? So much of what he does is Grant Cardone to becoming Grant Cardone, I look at it to a certain extent, like how some of the social media players are getting there, like if you want to be so much attention grabbing, that's a business unto itself. Forget about the practice of law. So Jay Wayne stopped anything with the practice, and just became Mr. Connecticut. Yes, you can grab attention and do things. But that's, you know, a pivot from what we're doing. It's hard to do both. But I hope that Marko pushed me to investigate and see whether or not they're elements of what the tax world does that is relevant to our law firm, while still running a law firm. The other thing that was just a great little thing was Nicholas and his partner Jake, did some great stuff with portraits of their lawyers with their pets that I thought was brilliant. And I plan on emulating and bring you to my own firm. Yeah, we do that monthly in our newsletter, we we highlight one of their employees, one of our employees with one of their with their pet, it's part of our monthly giveaway of a pet gift basket that people then receive, they respond, they post a picture of their pet. And it's been a great to sort of, you know, one of the things that we're really focusing on now is not necessarily, you know, being more ego driven in our newsletter, but really making it about them. So we're trying to give them multiple opportunities to, to earn things and to and to win prizes and that type of thing. And sharing pets is something that's very inactive. Some people don't want to share pictures of their kids on social, which I certainly understand. But nobody has an aversion to putting up their pets. You know, I want to go back to something because while you were talking, I was looking something up. And you know, it's interesting.

Jay Ruane

It's something that I want to talk about today, and I'm going to mention it briefly. But you know, when I started on this journey, I don't know 20 something years ago, my, my, my days and nights, you know, I was my daytime, I was being a lawyer, my nighttime was trying to figure out how to scale and how to build a business. So I would either do one of two things, I would go to the local Barnes and Noble bookstore, and I would look literally, you know, buy every business book I could find because I remember doing the same thing for SEL, who was so little out there. So little out there. And the other thing I was doing is I was finding a few blogs that were out there of lawyers, one of the blogs I found early on, doesn't really exist anymore, and he shut it down. But that stuff is out there. It's called the non billable hour out of St. Louis called Matt Holman. Great guy, great thinker. He is He runs a business now where he helps teams come together to brainstorm does a lot of good things in his community. And what I did actually, this weekend, I was watching my daughter was competing in a dance contest. And so I was watching the live stream but I had to wait. So while I was on I was going back and I found his old blog and I literally was reading stuff from 2010 2009 and there's still nuggets in there that I'm like, I gotta get back to doing this type of thing. And I wonder how many times we

You know, we've started something, it's done well for us. And then it just didn't become, you know, routine. And we've stopped doing the things that really work. So one of my, one of my plans for the rest of this month is actually to try to go back and see all the things that we used to do that worked. And figure out why did we stopped and then we stopped them because we just figured there was something new and shiny. Well, new and shiny is brave. But you know, that new and shiny could fall off but and not necessarily prove the dividends. So I'm encouraging everybody in our audience to actually take a moment and think about what's worked in the past. What are your thoughts? I'll take it one step further. I mean, it's something we talked about conferences going to Hawaii for a week, like, let's, let's be honest, it was it was pleasure. 80% substance was amazing. But, and I got some things that will push me my business, no doubt. But there's a balance, I feel in that we can go at it. Like our favorite one of my favorite friend of the show, David handles, like one nugget pays for it's true. At the same time, if you don't execute on execute on the fundamentals, the nuggets, tweak and are great, don't get me wrong. But you know, what I would say is, it's really important to execute. And when I'm taking what you said, as you know, do you ever forget the fundamentals and continue to move on, and going back to them couldn't agree more?

Seth Price

You know, it's funny, as I move into a bunch of new directions, I'm hitting radio for the first time. You know, we started a program there, you know, purchasing a phone number that's more memorable. One of the things that David handle actually encouraged me to do, getting all fours in our market, things like that. But you know, it's one thing and I have a team large enough, I want to be able to push new things. But hey, are the you know, are we fully optimized for everything online? Are we, you know, are we doing the basic customer service things when people call in, you know, there's so much fundamental 101? If you just listened to a few recorded calls, that was one of the fundamental and not an, you know, instead of doing X, Y, or Z, how much would you move your firm forward, compared to reading the next business book? Yeah. So we're in a state where you can't record calls.

Jay Ruane

And, you know, with a recording, well, you can do the announcement, but we found that we would rather pick up the call first and not have people hang up, I will, I will challenge you. So what we're going to do, let me give you an

argue with people in your mind sort of talk set, when I'm saying what I'm going to say is, Google does it. So for LSAs, you can hear the conversation. So it's a way for somebody who doesn't want to invest in the call tracking, and call rail and that type of thing. And we ran into a problem. Let's talk. Okay, let's talk about it. So we ran into a problem with with blue shark when our site relaunched, because you guys, following best practices wanted to use call rail. So we've had multiple phone numbers showing up so that you can track it from from cradle to grave, which makes a lot of sense for a firm for most firms. But for us, we've really pushed our one phone number. For so long. We didn't want to have multiple phone numbers on the page, because it was then offering them the option to text that phone number and it wasn't an available text line. And we had I mean, we have somebody who's basically full time job is to monitoring text. So it ran into a problem. So our solution was since we had one single phone number, and we weren't going to be going with something like call rail to utilize Google LSA call recording. And now it's become part and parcel of our intake teams meetings every week, where they play best and worst stuff from the calls, and everyone gets the hearing. And so it's been huge and elevating their game. No, no, I look, thank God. I'm thankful that you're doing recordings purely because I just think it's so valuable. I would assume if we could put a man on the moon, there's a way to get recordings of the branded number through something other than call rail, what have you, but to me, I am a disciple I Falco. It's through and through, you know, don't record you are recording. Thank you. But the don't record your calls at your peril. Because what have you learned just listening to the LSAS? tremendous, tremendous, and it's not just, it's not like a fault. It's not like, oh, they suck all that. Clearly. There's plenty of cringe as my kids would say. But it is a constant teaching and learning process. That's what you want, right? You want them discussing what worked, what didn't work, right. And when you and I were more in the trenches when I met you, we were on more of those early calls. And yes, I know what I'm saying. I don't necessarily know what my other people are saying, unless you hear it. And really when when it used to be I had my intake team, you know, in the in the cubicles down the hall, so I could go in

Seth Price

stand there and listen to him. But now everyone's remote. But I gotta tell you, that's the piece, I've told you a story in the air, I'll say it again, which is, it's only half the story. It's better, it's better than nothing, you know, that they're answering. But I found when I actually listened to the other side of stories, it was it was disheartening over the years, and it breaks, the same person who's great one day is off their meds the next. And it's just it's you go from like your favorite person. Look, I just had a heartbreaking story. This is a pivoting out of the intake world, I just had a one of my favorite employees had a physical ailments, and then a psychological ailment, and is disappearing within a week. And I'm like, it just it's heartbreaking, because, you know, you look at this as a team, some people family, I would use your analogy. And this isn't somebody who would ever want to lose, but they're just their place in life is not there. And so I would say a, that's just hard being a business owner. But when that happens on the CMT side, which just wasn't our intake side, you want to make sure you find that out before your client, your potential clients do, right, because you don't want them you know, losing you know, 10s of 1000s of dollars in a window, that will never come back, you know that. And that's the type of thing you know, you pay for these leads, you need to, you know, either pay firms or service or you pay him through your vendors that you're hiring to help you with your marketing, or you're paying for them directly with LSAs and pay per click. And you know, and if you lose it, it's gone forever. And so like cost per lead. And cost per acquisition is something that we talk about a lot on my intake team. So they recognize the value of each ringing phone call, do your do your intake, people know that it is an LSA call when they're dealing with it? Yes. And they look good. But the corollary is going to be, I wish that there was a way for you to legally find, find the two, I'll give you an idea.

Are all your intake people in Connecticut?

Jay Ruane

Now they are in, let's say, Mexico, and Mexico. And Florida, if you weren't, actually my sales lawyer is the only one in Connecticut. Right. So I was just thinking if there was a way to get your people in a one party consent state, would that work around that? Yeah, I mean, I'm sorted out, I'm just again, see, with my Bar Association, though, I don't think that I would want to take that risk. It's

Seth Price

just this is the whiteboard. Ya know, I know, that's, that's why we have these shows. That's why we're talking about we're trying to figure out solutions as we start to grow. And as a criminal component to our firm, we were reticent to go recording for a long, long time. You know, I just found that at some point, you know, my law partners, truths like privilege. I feel like I can't service the clients well, without it. And that, you know, it's the access to recordings are only by people that are within the privilege circle. But it is, is a difficult, difficult thing to, to navigate. And look, Spence spend a few shackles on a local ethics lawyer to make sure that you are in compliance with what's going on. Yeah. And I mean, that's really a message that everybody should take is that if you are going to be pushing the envelope, you want to make sure that you have coverage, and that it's something that is going to not get you dinged by your bar. Absolutely. The last thing you want to do is, is lose your license over something that you're trying to do to actually help more people. That's really what it comes down to, I'm running into some trouble. We you know, I know I'm big on systems, what I'm finding is that our collection system is not as robust as I would like it to be. And so I'm working on that I'm hoping in the next couple of weeks to be able to publish that in the group, the system that we've developed, with scripting with text messaging with, you know, because you know, if you if you catch somebody within the first 24 hours of a collection failing, you've got a 90% chance of making it back, you wait a week, and you're down to like 30%. Statistically, let's let's make this a topic for next week. I want to build it out further because I think it goes well beyond your so many components. I love what you're talking about. frickin awesome. Can't wait to hear what you have to say. I've been doing thought on the front end, which is if you're more scientific with her on the fee for service clients on how you structure retainers, and how you're handicapping things, because we've talked over the years, there are people that theoretically can buy the, you know, will finance the case with a third party finance company there all sorts of interesting permutations. But I think that you know, in addition to everything you're talking about first 30 days immediacy. I think the two pieces that are not often talked about that I want to expand on are how do you structure retainers, and how do you how does the lawyer position

themselves many states, you can't withdraw over money, some places people seem to be able to do that. But what are the pushes and pulls? And what can the so how can it be structured for success upfront? And then secondarily, what actions can the lawyer take? Who is with that case to ensure it because I have people who have, it's statistically significant, I have learned that manage their cases with very high collections rates and ones with very low collections rates. And I'd like to be able to bottle the the better ones. Yeah, it's one of the things that, you know, you could do a lot of work. I mean, I'm looking at what you know, so far this year, what we haven't collected, and I'm thinking, Boy, if that plays out over the course of the year, that's, that's a, that's a big salary that we're not going to collect, now, we're getting the things in place. So that's not an issue. And some of it, I think, was part of the run up to the end of the year, with the intake team tried to close people that they needed to spend a little more time vetting. And so like people were able to make first payments, and then the second payment bounced, and now there's a lot of Chase going on. And maybe that you they were trying to hit a certain number for the week. And that's and that's a balance that you have to play like, you know, you don't want your intake team set signing up a bunch of headache clients, just to make their number. And then you're stuck doing work for free. And that reduces your ability to actually a enjoy your life or be your lawyers enjoy their life or see take out actually paying work down the line, because there's going to become a battle between this client hasn't paid us this plane as whose are we doing first? And then I'll take it one step further, which is half empty, half full, right. So Jay, you're like, hey, I imagine what I make of that. I often look at it again, I don't want to be crazy. Don't take checks for people accused to check fraud. Like there are some basic truisms of life. Right. But what I would say that I, that I, you know, that I look at when you are, when you philosophically look at things, and I'm channeling my inner J on this, right, you've taught me a lot of things over the years, you know, you pick up tabs, you you live life, and you you have an aura about you, that has made you a referral magnet, I am convinced whether it's gifting, whether it's buying a dinner or a drink, you are the first person to put a credit card down, etc. What one of the things that I've seen, and I'm by relationship is spending money to make money. I am a big fan of paying credit card fees, not that I want to pay exorbitant ones, but I don't want somebody thinking about it, I want it on their credit card and not the payment plan. If I can get a credit card, I'm happy to I'm not trying to move it to an ACH, happy to pay the three to 4% Max blended rate with debit cards much lower. But great. The next step beyond that is if you're aggressive with payment plans, and your breakage is let's say 8%. Right? You might have an overall with credit cards of 10% of money that doesn't hit your bank. I'm okay with that. If in fact, the payment plans bring in more revenue. And if you said Pay, and that is the piece and I'm channeling the J, which is if you're sort of saying Sure, we'll bet on you knowing a certain percentage will break not being stupid. And if it's higher risk raising the minimum upfront. But if you can keep your breakage to a single digit number, to me, it's the cost of doing business. And the way that I've sort of watched you, by analogy, spend money to make more money, I believe is possible there. Yeah, these are all the see. And that's one of the things about about this podcast about the Facebook group is that there's no one right way to do things, but you have to be aware of all the different ways and then decide which one you're going to do as a law firm owner. You know, it's akin to those lawyers who are like, well, you know, I've got a general practice firm. And statistically, they say, you know, did a couple closings, a couple of divorces, some low level criminal and a little bit of PII. And that was my, you know, my practice, and then all of a sudden, they say, Wait, if I just go all in on family are all in on Pei, you know, I can run a tighter ship. And that's everything. But they're making that conscious decision, after looking at all the numbers. And that's really what it comes down to is make sure you're making a intentional choice, rather than just being forced to do something. I think that's the most important thing. Because when you're here, you can actually get that sort of feedback. So if you do have questions that you want us to address, please let us know log into the Facebook group put up a put up a section there now said we're going to end the show like we did before with another interview. Because these have been great. Tell us about the interview that we have from an hour. The bonus segment today is Jared Preston, he's a friend of the show. We did a ton with him on PPP back in the day whenever he was desperate. CEHRT was the guy. He is a genius when it comes to this type of stuff. I'm not

saying you shouldn't be doing this or that, but like the education and the world that he plays in first, SBA loans, you know, still single digit loans recourse, you're gonna learn that, like houses are on the line, but up to $5 million, generally four times more than what you would get from a traditional bank because the government guarantees three quarters of it.

You know, it's a pain in the ass to get this is my words, not his. But when you get them, it's a pretty amazing way to borrow money for a law firm can be used for almost anything marketing, investing a mass tort, you name it. So there is something that if you don't want to use your money, and you need, and you have a good way to make more, you know, he does a really good job of explaining it, he talked about a secondary area of non recourse financing, for people that have cases that are going to pay generally in the planets or mass tort space. Those cases, those cases, are ones that you can get very aggressive loans on because they know they're gonna get their money, and then you could put the money to work more quickly. And then finally, an area that I know you've talked about in the criminal mastermind and we've had had on the show before over the years, is they are working to work with some of the larger players to help position people to be acquired. So the people who are looking at the end of their firm's life, making sure the employees have a place in the firm lives on and they can get a payout. As you know, it's one of those things that everybody's dancing around whether the non lawyer ownership is going to make a difference in Arizona, Utah, etc. But the he is at the forefront of that. And it's a great conversation. That's awesome. That's awesome. Okay, folks, so that's gonna do it for us today. Thank you for being with us. Of course, if you want to catch us anytime you can take us on the go with the law firm blueprint podcast that is available, wherever you get your podcasts, whether it's Spotify, or Amazon podcasts, which we just got listed on, or traditional Amazon, Apple, Google podcasts, we are available there, wherever you may be, of course, you can catch us live every Thursday 3pm, Eastern 12pm. Pacific, here in the law firm Facebook group where we take your questions here systems in the last week, I shared my business organization system that really went went wide, we got a lot of people downloading it. The engagement on that post was amazing. And of course, if you want to catch up with Seth, you can do so through any of his digital platforms at Price Benowitz or at BluShark digital.com. No travel this week, Seth, you're home. Yeah, we aren't home. But you're really excited about a big life moment is coming up at the end of the month, I will be presenting at PubCon for the first time in person, a place that you and I have sat in the back of the room in Vegas, smoky filled rooms, down in Austin, right? Correct. Yeah. And so this is, you know, I've been involved with online stuff with them. But I've never taken the center stage. So this will be a cool life moment. Oh, that's awesome. That's awesome. So I'm excited. I'm going to be home. Of course, I'm not going but I'm excited to hear the feedback from it. I was like, I'm gonna leave people with a final tip. You know, like, we all chase our points in our loyalty programs with hotels, snap travel, which keeps changing his name, I'll get the we'll get the name and put it out there.

Unbelievable hotel savings. I'm going to a meeting later in the year in Fort Lauderdale. The conference rate was 700 and change with, uh, with taxes. It was over 1000 night for a freaking room. Oh, my God. And I went online and through this third party site, no points, you're not going to get your loyalty nights or any of that stuff. But when all was said and done was 200 and change, I'm like, Oh, my God. That's a huge, that's huge. Yeah, I mean, really, as well as the points if you're saving 500 bucks. That's that couldn't agree more. I mean, you could buy the points that you're that you were losing for, you know, for pennies on credit cards. Now, the loyalty is almost paid for with the more expensive credit cards. So anyway, just the tip of the day. Good to know. Good to know. All right, folks, that's gonna do it for us. Stay tuned for the interview. And we'll see you next week here on the law firm blueprint. Bye for now. Welcome back, everyone. We're here with Jared from the Business Funding group. Great to have you.

Jared

Thanks, that pleasure to be here. Well, look, we spent a lot of time with you throughout the PPP, you know, build up and then pay out. We're now many, many lawyers out there taking advantage of the tax credits that are there available. But I've always looked to you as this person as a beacon of information about where money is available for lawyers. You know, there are plenty of people out there at extremely high rates that have tailored programs for lawyers that are turnkey, but I feel like you have always known of from SBA and beyond different places that lawyers can go for pretty competitive rates if they're willing to jump through a few hoops. Yeah, you know that that's pretty accurate. I mean, here

Here's what I'm seeing in the marketplace. The there are different funding options. But as interest rates rise, traditional banks are making it harder for small businesses to borrow money, and that the categorization of a small business is any business making $5 million a year in after tax profits. So that's, you know, over 90% of the businesses in this country. So as interest rates rise, cashflow of entities goes down, especially if they're borrowing debt. So for most lawyers, SBA is going to be their least expensive option to borrow money. And we're also doing very creative non recourse financings as well. And here's here's what

Seth Price

I break that down for a second. So being clear, 5 million in net profits, which is many lawyers, most of the lawyers listening to our podcast, I overnight somewhere 90%. overnight. I know the handful of lawyers that are that are that are exceeding that. But my question to you is what let's break down SBA, for what and then let's go to the non recourse options. Where would somebody use an SBA loan?

Jared

Great question. So SBA, you could borrow up to $5 million. And there are no restrictions on how you use the money. So if you want to use it to pay off existing debt, you want to use it to advertise for new cases, you want to use it for case expenses, general topics, the law firm, zero restrictions on SBA. What about investing in mass torts 1,000%, that's advertising 100%. Kosher. And the beauty part of an SBA loan is long as the borrower is making monthly minimum payments, the bank can never cancel the loan, even if you lose money for the next nine years. However, if the law firm wants to pay the loan off early, there's zero prepayment penalty. So the deck is really stacked in favor of the borrower.

Seth Price

That's awesome. What are the downsides? Like what would be a reason that like that wouldn't be a right loan for you?

Jared

Great question. Any borrower and this is a rule set by the federal government, not us. Rules are, you must sign a personal guarantee non negotiable. Number two, if you borrow more than $350,000, you are required to pledge any real estate that you have up to the loan amount. So for instance, if you own a home and you have a mortgage, the bank is going to require to take a second lien behind the mortgage. So those are the two biggest things that any borrower needs to realize and be comfortable with. So

Seth Price

essentially, if something God forbid, goes upside down, you invest in mass torts, and your your torque goes nowhere. And, and bankruptcy is an option. The house that might be protected under some state laws wouldn't be in this case.

Jared

Okay, certain states that the homestead states like Florida and Texas, you know, they have their own rules. But in reality, yes, the bank is taking it as collateral. But in reality, the banks and the federal government are not in the business of taking people's homes, they would rather do a workout, but yes, they you are required to pledge it as collateral.

Seth Price

Understood. Okay. So for those people, I

Jared

want to I want to add one more important factor because people are going to probably have this question to set. So Seth owns price, Berkowitz, most likely not your spouse, however, you and your spouse probably joint own the house. Correct. Okay. So in that scenario, you Seth is signing on behalf of the Law Firm. Your wife is not a signatory to the SBA loan, however, your wife would sign an acknowledgement that there is a lien on the house. So I just wanted to explain what the difference is.

Seth Price

Gotcha. Very interesting. And what are the what are rates on that? Is it is it prime plus a number? Yeah, it's

Jared

probably it's prime plus 2.75. So you know, you're looking at high single digits. But I do believe over the next year or two, I think rates are going to come down again. And the rates change on a quarterly basis as prime changes. And is it locked in or does it float? It's a floating rate.

Seth Price

So whatever. So when you were looking people were feeling pretty fat and happy for a while, and you were not significantly.

Jared

You got it. But again, for most lawyers, or any business for that matter. Usually my clients qualify for four to five times the amount of money under an SBA loan than they would a traditional traditional bank loan and the reason being says it is when when John Doe law borrows money under the SBA program, the bank is getting a 75% guarantee from the federal government. So if John Doe law defaults, the bank really only has 25% exposure. However, if John Doe law takes a traditional line of credit from a bank, the bank has 100% exposure. So therefore, there's a different risk profile for the banks that do the SBA loans.

Seth Price

Really interesting. Okay, so talk to me one other question about that is a lot of lawyers listening to our podcasts are looking at VA, they're looking at the use of a credit line, do you have to take all the money upfront? Or can you leave it out there and use it as needed?

Jared

Great question. The SBA says they will write lines of credit. But the reality is none of the banks will do traditional lines of credit. So this is a term loan. So if if Seth borrows a million dollars at closing, you're getting a million dollars wired to your bank account. It's it's very tough to manage SBA lines of credits, and the banks don't want to do it. So it's a term loan, you get all the money up front. Have you seen

Seth Price

lawyers, a lot of lawyers write into their retainer agreements for med males and other significant cases that interest is covered by the clients? Have you seen anybody creatively get the interest from an SBA loan to save the client money off of the traditional legal lenders?

Jared

Got it that way? So great questions that I have a lot of law firms where the states bars allow you to charge interest. Most of the lawyers have changed their retainer agreements to cover the cost of these loans, which, as you said, is a lot cheaper than illegal lending.

Seth Price

So they would just take that, let's say you had a standing million dollars that you rotated, the people that, you know, if you needed half a million dollars for a case, you would just you would apportion it for that. Is that something that you've seen done?

Jared

Yeah, what I've seen lawyers do. And from an accounting perspective, it's pretty simple. Let's say the interest rate, I'm just making this up as 9%. And on January 1, chef put $100,000 in a med mal case, the med mal case settled three years later. So it's a very simple accounting mechanism for for the borrower. And yes, I've seen a lot of law firms do it that way. And it's totally acceptable by most jurisdictions to pass that interest on to the client.

Seth Price

Awesome. And do you have in house, you know, information on what what some of the state idiosyncrasies are people on their own to figure that out?

Jared

We are not, you know, tax experts and legal experts

Seth Price

inserted about just the nuances there, guys, the guys who come packaged up, who know Yeah, so no, we were times that know exactly what's going on. If there's something that they're there, what is the best resource for people to figure out what they can push in their state and what they can't,

Jared

I have found that your state trial lawyer Association, or your board, or your state bar is going to give you the best guidance. And that would be my advice is, is those are the two best places to check because they're going to know the rules and the nuances in each of the state jurisdictions.

When you do a loan, let's say somebody said I needed half a million dollars, and their practice expands and they're like, I'd love to have another million are credit worthy. I love this question.

Seth Price

Is it a? Are you going through the same process again? Or is it any easier once you've done it once?

Jared

Great question. So the rules of the SBA are very specific set, for instance, any one borrower can borrow up to $5 million at any one given time. So if Seth comes to me on January 1, and borrows a half a million, and then eight, nine months go by and you want to borrow another million, you can again, borrow as much as you want up to the 5 million? Yes, once you already have an SBA loan, the secondary loan is a lot easier because now the bank has experience with you. You're providing good payments, they're comfortable, they're seeing you're growing your firm. So yes, it's easier to borrow. And most of our clients sets borrow money at least two times under the SBA program.

Seth Price

Awesome. Well, let's pivot from that. It's one of those areas that it's out there, and I assume it's like anything, once you try it, it becomes not addictive, but like you realize how powerful it can be.

Jared

You know, here's what I could say. Money to a business is like gas to a car. You need it to operate. And the more successful law firms I've worked with, and we've probably deployed between three and $4 billion over the last you know, X amount of years, so have a pretty good idea of the different, you know, inner inner workings of these law firms. The best law firms are the ones that know how to deploy capital efficiently, whether it's an SBA loan or legal lending, and they really understand the marketing side and how to add collateral value to their practice. Those are the ones that are some lawyers look at debt as a four letter word, some people look at debt as something that is leverageable. Because think about it says, you brought up advertising for mass torts, in my world, if you could earn at least three to five acts on every dollar you spend. And in some cases, you know, I have clients who are earning 10 to 20 times their money. Well, if I'm earning those kinds of returns, it's a no brainer to borrow money on, on the SBA rates, and even the non non SBA rates, because if you're earning three to five, six times on your money, and even if you're paying 20% a year in interest, that means four or five years, you're gonna pay 100% on your money. So I would borrow $1 To earn $5 and payback $2 all day long. Passion.

Seth Price

Cool. And you said, you, you alluded to, before we wrap up that you have some cool non recourse options.

Jared

So we do a tremendous amount of non recourse loans. And we're doing a lot more of these and bigger ones, for the following reasons. Ever since COVID, I found that especially in the mass tort world, it's taken a lot longer for lawyers to get their money, okay? You know, just with all the lien resolutions, and all the other things that need to get done in order to get paid out. So we're seeing the timetable on settled cases, take a lot longer. So what we've done is we've created a multi billion dollar fund to fund settled cases. So let's say Seth has 1000, Roundup cases that settled, you're entitled to 20 $30 million dollars in fees, but it's going to take 18 months to two years or longer. And you want to utilize that capital now. So we will provide up to 70 to 75% of your expected fees. It'll be a single digit interest rate, and you can use that money to pay off expensive to advertise, you know, whatever your needs are. So that's a new program we put into place for settlement funding.

Seth Price

Is it only for mass torts? Or what about for single event PR

Jared

100% Doesn't matter. It's settled cases are settled case under this bucket of money.

Seth Price

Awesome. Anything that you see, you know, there's a ton of people out in the, you know, for the for the client funding piece, any any products that you hate seeing clients, you know, part of the bane of lawyers existence is people that take loans that are so draconian, that they ended up eating up the settlement. And as a lawyer, it sucks, because the client's expectation keeps going because they've already gotten their money. And if the interest rates are high enough, there may be nothing left at the other at the end of the case. What any any thoughts or ideas on things that might be helpful for people who have our clients in those situations?

Jared

We strategically have stayed away from the plaintiff Advanced Business, I, I have a lot of the concerns that you do, Seth, because like you mentioned, you know, clients have certain expectations, they eat up the entire settlement, it makes it harder for lawyers to settle the case, when you get an offer when the client has a huge outstanding cash advance. So I, I don't have any good recommendations, because we purposely stay away from that side of the business. I, I don't like the plaintiff Advanced Business, because you're basically charging these exorbitant rates, and people are usually at their lowest of their low.

Seth Price

And I just don't sell me out. And I'm just a better solution. That was Yeah, I

Jared

don't really have it. And I stayed out of that lane purposely.

Seth Price

Very cool. How do people find you if they want to talk more?

Jared

They can go to business funding group.com. And, you know, we have different products ranging from, as I said, SBA settlement funding, non recourse loans, we do a tremendous amount of those. But Seth, there's something else in the marketplace that I'm noticing that I want to bring to your attention. So we realized over the last year, that 68% of the current owners of law firms are baby boomers, and we believe over the next five to 10 years. There's going to be a major transfer of equity in to younger generations for these law firms. We've also realized that a lot of lawyers don't have a Great option in selling their practice, you know, we've seen that they built this biggest asset, I get

Seth Price

the biggest question out there every you know, you're waiting for Arizona to bring hedge fund money in

Jared

we have another we have another model so. So we've seen like every other industry, people monetize, you know when they want to retire, they monetize their business. And the lawyers have not done a very good job at that what traditionally happens today, you normally give it to a couple of associates, it's a multi year payout. And the associates are not the Rainmaker that the current owner is. And usually those seals just

Seth Price

over and over, or a third party comes in and offers you something so low, you might as well still work it.

Jared

So here's what we've done, okay, we've created a bucket of money, okay, where we have billions of dollars available for lawyers that want to sell their practice, and here's how it works. We could come in, we could look at the law firm, we could help you figure out what it's worth. And we have buyers out there with very deep pockets that want to buy and acquire these law firms. And I'll explain why they want to buy him in a minute. And it's a great way for the lawyers to cash out a big percentage upfront on the asset that they built, then get a payout based on the performance. And the reason why. The reason why there are law firms that we work with that are very interested Seth, and buying these practices is very simple. Seth price has built a brand in your neck of the woods, you've spent a tremendous amount of money in building the brand, you've spent a tremendous amount of money building your infrastructure and everything else. If and when you're ready to sell. The beauty part is is technology has come a long way in managing practices, everything from intake to handling the case, well, we have very large practices, that light buying around the country, because there's economies of scale when you have a back office of a centralized office. And we see a tremendous opportunity for lawyers to monetize their practice. So this is a new division that we started about six months ago, we're working on some very, very, very large transactions. And it's a win for the seller, it's a win for the buyer. And candidly, it's a win for the existing employees to know that they have a home and you know, you can keep everything going. You're you're on mute.

Seth Price

Question is out of most people's first question out of people's mouths is okay. The, you know, the business world trades at a multiple of EBIT. Uh, you know, that's how everything is sold. What what are you seeing law firms trade at in the in the model that you've looked at? Is this is this a multiple of of net profits? Or how do you value firms, which have historically had a really hard time being valued?

Jared

It's a great question, Seth. And it's the hardest question to answer. But let me give you a couple of variables that are very important to come up with a valuation. So first, let's go with basic economics. Normally, what we do is we look at three years, let's say your last three years of financials and you look at the profit, you can take the three years and divided and get an average per year, I've seen deals that trade at three to five times earnings on a sale, but that can vary drastically. Seth, based on number one, the size of the current inventory of cases. Number two, how cases come in? Does is is 90% of your cases coming in from paid advertising? Or are you getting 50 to 60 percentage of cases organically because of the brand and which which is more valuable on the sale? Great question. If set price is getting a large percentage of your cases organically, that's more valuable because that shows the value of the brand and what you've created.

Seth Price

Gotcha. And then sort of concluding is is there a market for non plaintiffs firms? Do you see criminal or family selling or right now you focus primarily on the larger PII world?

Jared

Great question. We're really focused more currently on the PII and mass tort businesses. Gotcha.

Seth Price

Look, all all great stuff. Every time I speak to you, I learned a ton. I'm inspired. And thank you so much for your time today.

Jared

Appreciate being on with you, Seth. Transcribed by https://otter.ai

Load More

Don’t miss our weekly episodes. Subscribe now!

Subcribe to our newletter to receive news on update