Jay Ruane 0:00
Hello. Hello, and welcome to this edition of the law firm blueprint. I’m one of your hosts. Jay ray with me, as always, is my man. Seth. Seth in the Price Benowitz headquarters today, because I see a UPenn thing there on the board on the wall behind you. How’s your week going? You’ve been

Seth Price 0:23
traveling recently. The tread been a crazy got the blue shark Summit. I had the NTL with the whole rollout of the blue shark transaction, and then the price Benoit summit on Friday. It is a whirlwind, just preparing for John Fisher and the mastermind experience in Puerto Rico next week.

Jay Ruane 0:42
God, you are non stop it. But that’s, that’s a wonderful thing. But I want to talk. I know you’re, you’re, go, go, go, me. I’m Stop, stop, stop. But anyway, in fact, you know, I just started looking at some speaking stuff in the coming year, and I’m like, Oh God, I gotta travel, like, three times, but I’ll get through it. I’ll just big buffers.

Seth Price 1:01
There’s always good buzz when Jay speaks,

Jay Ruane 1:05
especially when I speak in Colorado and states that have legalized. THC, right? That’s where, right? So I want to talk to you about Florida, because you were down at NTL, and I gotta figure that private equity was the talk of the town, because it’s coming. It’s coming fast. It’s coming for pi. And so it seems like that was probably a main topic among the people buzzing outside the lectures. And of course, you know, a couple of presentations about

Seth Price 1:32
it, right? It was so look, personally, it was sort of like the public announcement of the BluShark herring mode transaction. So high fives, congratulations. Felt like a coronation. What I was concerned about as being, oh, you’re being destroyed. Was, Oh, my God, look at the firepower behind you. It was kind of it was very cool to see, but very cool. It was ironic as old as as new news is that almost it’s old news, right? You know, private equity in the marketing space not news. Private Equity in the legal space is news. You know, for years, Andrew Finkelstein was talking about non lawyer ownership. We saw Arizona, you know, with their abs, you know, play. And all of a sudden I thought this was, you know, not yet. Here it is. Here the private equity world is full on into the personal injury space, I can say the legal space, but we both know it’s really focused first and foremost. You know, the lion’s share there, but the Chad Dudley, Dudley debosier announcement that they that private equity is taking a position with a managed service organization, for those of you that don’t know that, it’s basically the back office that you know, all of the non lawyering piece, which essentially which both of us run for our firms. The idea is private equity is coming and saying, Hey, we’re going to run your, you know, your intake, your accounting, your finance, your collections, your marketing, all of the non legal piece, and that will sit below the lawyering. I think it’s analogous to what you’ve seen in the medical space. You know, there’s not a single dermatologist that has not been rolled up because, frankly, they were not particularly good at those things. They all put a managed service organization in place, and it is their way of getting around the now, again, ethically, everybody’s telling us it’s good. I think the jury is still out, but people are telling me it is, it is, it is locked and loaded. But the Chad Dudley news, Dudley de Bergeron news, huge thought leader, maybe the smartest guy, certainly, you know, 50 and under in the space he, he is brilliant for him to take a move like this shows that this is not just on the fringes. It’s, it’s main, you know, Main Street, and he clearly wanted to be a platform player in what he’s doing. But to me, this was massive seismic shift within the legal space, from talking anecdote to it’s here.

Jay Ruane 3:54
Yeah, so I wonder. I mean, you know, for for the PI people. I mean, pi is great to bring in private equity, because you can value cases. You can identify opportunities for real sort of economies of scale, right? You know, you can, you can do that. And I know, at least in my state, you know, I file a personal injury lawsuit, I have a clear timeline of where things are going and the like. I don’t know if that necessarily translates to areas like, you know family law, where you know you could have very agreeable spouses going through a divorce, or very disagreeable spouses, or agreeable turns into something and so you may not necessarily have the same ability to handicap profitability on cases I know certainly doesn’t happen in criminal context.

Seth Price 4:45
Because I would yes and no pi firms run, I’d say, incrementally more business like than non pi

Jay Ruane 4:54
firms, absolutely. And I think, I think they’re the most business like, and I think that’s what makes it easy.

Seth Price 5:00
Right? Yes, but what about counterpoint, which is given the non rational business players in the criminal space who don’t know what they will right? I What I’ve seen a blue shark. I can’t unsee. I have a criminal place that came in for blue shark. We got them LSAS. They were 1015, days into working with us, and all of a sudden they’re like, this sucks. We want our money back. We don’t like the quality of the LSA is, I’m like, I’m not Google. My point is that’s the level that I’m playing at that there are people that don’t even understand what is an agency and what is Google media, if you know. So in one sense, margins may be less agree, but the inefficiencies within these criminal firms, from marketing to everything else, I think, leaves, you know, if you imagine, if you talk a lot about, like the old time lawyers, if they could just be left to lawyering, if these guys can figure out how to efficiently do the back end and allow lawyers to be lawyers. You know, they’re not just criminal. You know criminal because the criminal mastermind. But I mean, how many of those people, if you said, Hey, do you let this guy continue running his operations and marketing? Grab somebody who runs everything by the numbers, do it 19 times out of 20 you’re like, I’d rather have the latter.

Jay Ruane 6:24
I mean, yeah, but I think, you know, I think the nature of the people that are that align with criminal defense are sort of anti, anti government types that want to do everything on their own. I think I’d be curious if, if private equity thinks that either family law or maybe immigration, and they may be avoiding immigration with the current political climate, but immigration is a is a practice area that is in all 50 states. It is very form, driven with, and I think that there probably has the most opportunity

Seth Price 7:04
going there through the ABS is, I think all Brit bets are off. What’s happened under the current political administration changed everything like you mean, we have a lot of dear friends in the immigration space that are dying on the vine right now is not good,

Jay Ruane 7:16
right, right? And it’s, it’s amazing. We we have a job posting up, and all we’re getting is associates from immigration firms that are saying, We’re We got nothing. We’re going to get laid off because we’re not having

Seth Price 7:30
work right? And the people that were doing the crimmation To me, that was always, I mean, I hate to be snarky, but I had never seen a successful business model in that space with people that love what they did. They did God’s work, but it was a very difficult place to scale and make real money again. I think

Jay Ruane 7:47
the problem with crimmigration is that you’ve got a foot in two different canoes, and so, you know, you’re not able to sort of focus,

Seth Price 7:55
yeah, no, yeah, I do, but I think you’re exactly right that until this seismic political change came, that that that immigration was was right. And you saw people, people who had been, who had, who had crapped out on mass torts, were saying, hey, I can make a quick buck doing this, because it’s scalable. There was a group with an Arizona abs that had, I remember hearing they had three lawyers. I know it was just the DC market or beyond, and they were doing free consultations, which is not the old model. They pay a lawyer to do 1819, you know, consultations a day, and that person signed one or two cases a day. And that was their model. They did a high volume pay per click that fed to that and that, that’s a that’s a business, that’s a widget. We were talking about widgets. That’s a solid widget. And so if you you know, in the criminal space, you have the widget, you have the charge. It’s a little bit more murky, but on the lower dollar criminal, is it any different than look we’ve seen like Cordell and Cordell scale family. I don’t, I don’t love how they’ve done it per se, or they’ve done it all, but that said they have been successful at getting that number significant. And now the question is, if you can centralize things like marketing, accounting, all operations, all of a sudden, the piece that we don’t see in our world is things being run intelligently and as I see the masterminds, particularly in the PI space, the sharing and best practices, when I looked at a pivot store to our next topic, for instance, you know, we just did this massive price Benoit summit we’ve had to the last two years that Were like half days in office. This was a neutral off part, off off site, where we had three keynote speakers, including Bill Biggs. On culture. We had a sales trainer come in, Rob lime, we may have talked about on the show before, and and Peter Shankman, who’s, you know. Futurist, the blue shark. He came in and gave a kick ass, you know, big picture customer service keynote that went over amazingly. And then breakouts to discuss, you know, what the rocks are for 2026 It was an awesome day. These are things that take me 20 years to evolve, to take a day away, putting people in a room, thinking about, how do we move things to the next level? Not cheap. Flew people in from around the freaking globe, you know, right? All over Latin America. Dozen plus people from Latin America flown hotels, meals. It’s not nothing, but the idea that’s there. So all of a sudden we’re doing things in the business world. No big deal. Right? On sites are part of regular business in the legal space. It’s like, I’ll have some guy in the Philippines for 10 years. Never meet him. You know? The the idea is, are, you know, is bringing these best practices something you are 100% right? I don’t see the smartest money coming to pi to non pi first. But I you know, we’re bearing our burying our heads in the sand if we don’t think that there’s going to be a play coming. And in fact, I took a meeting at NTL with a group that was already playing in the non pi space. I didn’t love how they set it up as their at least their opening salvo. But that said, their goal was an amalgamation of firms with best practices a little bit more amorphous than I’m sure, what the Chad Dudley platform will be, to then gain firms in every market and create this juggernaut.

Jay Ruane 11:37
Yeah. I wonder if you know, if a, if you are a successful non pi law firm owner, if you can make yourself more attractive to private equity, more attractive to by setting up an MSO or getting yourself ready by acquiring other firms, bringing you know, all your intake into an Operations Center, having the, you know, the right finance team, having the right HR people, and being able to do that over multiple offices, multiple brands that you’ve brought together, and you will become, then on the front end of when they’re looking when they’ve eaten all the PI that they can eat, because, you Know, the what’s left are solos and small shops that never really get to the revenue numbers that private equity wants. Then they’ll look to other other niches in law, and you can make yourself more attractive if that’s what your end game is.

Seth Price 12:33
Yeah, and I would say by analogy to other industries right now, the smart money is taking out 10 million, plus even a law firms. That’s what I’m here. They may be tucking in more over time,

Jay Ruane 12:46
right, right, but will they have to get to 5 million?

Seth Price 12:52
That’s not my point. I guess my point is the flagships are going to be there, then they’re going to be finding and as I’ve learned more about private equity, it’s, you know, it is all driven by EBITDA, the way that they operate. And that, I would say, I’m less concerned about you creating an MSO, per se, because the whole point is they are coming to, not so you don’t need that, not that you don’t want it, because you needed to get to there. But I would say, you know, and this goes to, sort of the, actually, ironically, the third topic I want to talk to you about today, which is, today, which is sort of profitability, which is, you’re going to be judged on your EBITDA and slotted accordingly, so that if you’re sitting there saying, Hey, I’m doing 4 million in revenue, but I’m only at a 15% profitability, that’s not going To be as interesting to people as if you’re a 3 million, you know, but you, but you have a 30% profitability, you know. And that, you know, I have been struggling, you know, we spent the last three or four years at Price Benowitz really pushing the PI piece, where it’s just about, you know, caught up to the rest of the firm at the same time, very bluntly, you know, I’ll be, you know, be open here. We took our eye off the non, the criminal family, and did not, you know, were not as tight as we needed to, and allowed turnover, not to keep those, those those selling units in place. And so it, you know, it just shows you like it. None of this is easy, you know. And they said, you know, a mid size to larger firm that, you know, as you’re doing this, you know, it’s easy to sort of say, Hey, this is going great, but take your eye off, intake for too long, and you’re to be screwed. Take your eye off, you know, training and developing your lawyers for too long, you’re to be screwed. It’s each of these things has to be done in concert. And if anything isn’t working, you know, the numbers don’t lie. When profitability drops, you really, it’s humbling.

Jay Ruane 14:47
Yeah, well, I’m interested because your firm itself is one of the last remaining like, you’ve got a large pi, you know, that’s 50% of your revenue. But you also have family and criminal. And it doesn’t look like private equity is looking for your type of firms. They’re looking for the PI shops, right,

Seth Price 15:05
correct? And I’m not ready to go to one

Jay Ruane 15:08
saying that you are, but

Seth Price 15:09
I would say if you I think you’re exactly right, and that it is a cleaner platform is what they’re going to want for whatever they’re doing, and

Jay Ruane 15:19
theoretically spin off your PI to get right,

Seth Price 15:23
yeah, but it’s also, I think you have to be careful what you ask for. I know that the deal that Chad does looks incredible as a platform play, but what I’m seeing in some of the downstream guys, I’m telling you what they’re offering publicly, I’m sure the actual deal you get is better, but that if somebody is offering a, you know, you know, a three, four, let’s say a 5x multiple, which are, you know, if you get up to five, that’s not a crazy place by today’s standards. I’m sure Chad did better. But that if you’re doing a third upfront, a third in three years, and a third rolled into equity. You know, you’re putting all your eggs in the roll up basket. It’s just not that, right? Then you’re betting on this, this amalgamation of EBITDA, which, again, that’s how this stuff works. But if it’s not done smartly, and you know, somebody has to want to buy it, we’re seeing all the AI giants in the legal space with these crazy billion dollar valuation, is there anybody today that’s going to pay a billion dollars for it, you know? And so the question is, you can have all the valuation you want, you can have all the multiples of anybody you want, but somebody has to actually come and give

Jay Ruane 16:34
you money for it, yeah. And I think that, I think that’s something that is going to be a challenge going forward, is that, you know, there are only so many dollars out there, especially with borrowing costs as high as they are right now. And I think, you know, I don’t know if, unless you are in that 10% 15% of pi firms, I don’t know if the next 10 years. I mean, maybe that’s five years someone’s gonna knock on your door and give you an obscene amount of money for your firm?

Seth Price 17:03
No, because it’s all based on I think the thing about the law firm, it’s never ideal, and I don’t want Jay sitting on a beach, because we know it’s going to devolve, but I think that the that it’s that you’re going to it’s going to be a while for the non pi guys to have a situation where they can’t make themselves dispensable, and have other people run to court that be earned out. So there’s some tax advantages depending on your state, meaning long term capital gains that you would get from a transaction I get. That’s a huge benefit, and so that gives you some additional value in what they’re offering you, but the idea that you’re losing control, especially if it’s not 100 cents the dollar, where they’re not you’re not getting the not, you’re not getting the full thing, because it’s they’re they’re only buying a percentage of the firm to give up so much control without a meaningful amount. I think the argument has to be, are you, is it worth not just running the firm for X number of years? They’re I think they’re targeting people that are towards the end and don’t plan fine, but for the average person, where, what is Jay going to do without his firm? I’m not sure. Yeah, I mean,

Jay Ruane 18:11
I mean, my move is simply hire the right talent and management take a little bit of a haircut on what my profit is and and not have to, not have to sell it out. I mean, that’s, that’s, you know, I think that was my move. But I wanted to run a question by you, because you choose your advice on something, talking about having remote workers, not meeting them. Cool thing happened for one of my remote workers this weekend. His son is in the 50 meter freestyle in the Philippines, and one at like, I don’t think he was very close to a new record in the Philippines. And is like, and is expected to be in the Olympics in two years, which I believe are in Los Angeles. So he’s already said, I want to come to the United States and see my son. And so I’m like, Well, if your son’s in the Olympics, we’re coming out to watch and we’re going to cheer for him, so that’d be pretty cool, but I had a question for you, and to ask you, how you do with this? We had a a remote worker in in a South American country, brush back on their raise. They got a 5% raise this year. We told everybody that the raises were going to be anywhere. Three to 5% is what our normal is. And when you do your job well, you get 5% I mean, they still get annual bonuses. They’re overseas in South America, so they get their Aguinaldo that comes every year, and that’s part of their package. But when they got a 5% raise this year, they said, I thought I was worth more to this company. I only got 5% and they say, you know,

Seth Price 19:44
yeah, and I know which first. I just had the amazing opportunity to spend time and break bread, and we had a final brunch at my house. It was just awesome. We had a dozen, 15 international people from Latin America that were in and it was the talent level. Oh, my God. I. Was, you know, lawyers from Columbia that were just rock stars born in a different zip code. They would be, you know, this is a guy who would own us both, and they do amazing work. I think of several things first, and I analogize this to the same issue we’ve talked about with associates. You bring person, they graduate law school, they’re a law clerk. They graduate law school, they pass the bar. You know, historically, the number we always threw out there would be over under 6065, grand, and in nine to 12 months, the market looks them, is worth 90 to 110 and you’re like, You’re the same schmuck I just paid 60,000 to what the hell right? I I think that we are in that same moment that the world that we are living in, that a year with J ruwayne makes this person go from, if you’re direct hires, or are these, to a service, these are direct hires, direct hires, so you know, anywhere from six to $8 an hour to start generally. Is that fair?

Jay Ruane 21:01
So, I mean, right now, I think she’s making 30,000 American a year.

Seth Price 21:05
Well, it’s 15 an hour, that’s not, that’s not six to eight. So if it’s 15 an hour, that’s a whole different game.

Jay Ruane 21:12
I mean, she’s a lawyer in Argentina, no, no, understood, but

Seth Price 21:15
lot of lot, you know. So if you are really at a $15 an hour number, that’s different. But I think what’s happening is that at different skills and different jobs, I’ll tell you our story. We started like, you know, the market was five, $6 an hour. That’s what all of these national third party groups were paying them, and then marking them up to 12, which why I had trouble working with some of the third party groups, because I wanted the person to be at market. If you’re paying 12, and the person is getting five or six, and it gives a lot of ability for them to leave. So me, I’d rather be paying them 10, not of the third party service. They’re making 20 a year at some, for instance, for a non lawyer position and be able to retain. So I think that you need to remove at least short term. The market is not developed enough, and you are adding enough value that you need to think of this, not as a paralegal in the US, where you know what market is, and you look, if it wasn’t for a cost of living adjustment, it’s not like they could go somewhere else and make more. Hypothetically, right? If you’re paying your paralegal 70, could they make somewhere? Yeah, they might. But that if they get their three to 6% adjustment, whatever it is, year over year, it puts them in a good stead, and that in three years, they’ll be at numbers, and we have to be careful, because that may get them to numbers that are untenable. I think we have to look at it differently, rather than a percentage increase, I really think we have to look at this as what is market and that it’s developing. I saw this in the Philippines that, you know, there was a period where two to $4 an hour was something that was acceptable, and there’s enough competition, the cream has risen to the top, and we’re seeing people demand $10 an hour plus, which is good for them, but it’s not a 3% raise that if you do that, it’s a risk factor for retaining the talent. If you really want to keep now, you also may say, hey, my training programs good enough. I’m comfortable with this number, and if I lose somebody, I’m fine. But know that, make no mistake that the market is moving north. Yeah.

Jay Ruane 23:21
I mean, it’s moving incredibly north. The pushback we got was, well, you know, inflation has gone crazy in our country, and the buying power isn’t there and and so if a 5% raise isn’t enough to keep up with my living expenses, when inflation in my country is 15% this year,

Seth Price 23:36
I think what they’re saying that, look, in one sense it’s not your problem, but in one sense, so let me ask you a quick Did you get a number from them? What this first?

Jay Ruane 23:46
This is an email I woke up to this morning, and so I delegated to my identity.

Seth Price 23:51
Like everything a conversation is needed. Sometimes it’s like, you look at it, it is 12% increase instead of a 3% increase, maybe, or it just may be that dollars were at there, and the way the market has moved that, you know, we’re talking when we talk about $1 an hour raise, or a 50 cents an hour raise, that’s a lot more than 3% as a percentage on a smaller amount. But that, you know, it’s, I think that you almost have to check that, because we have a more of a stable economy here, whereas we’re sort of creating that there, and sadly or positively, and I’ll take the latter and to make it half empty, we are dealing with a situation where people are now for good, for them, showing value in a market. You know, some of these big aggregators that have done a decent job of training, but weren’t great to their people. We see the resumes all the time now where they’re coming and trained. And so the question

Jay Ruane 24:47
has more value to you if they’re coming in trained? Yeah,

Seth Price 24:50
look, it’s also, are they trained your way or not? There’s, there’s issues with that. But the fact is, they know what they’re getting into. At least one of the biggest risks we all have. You know, when you hire your lawyer, I want to go back to the. Government I want to do this is, do they want to do it? They know what the deal is. So if the truth is they’re going to be a paralegal at a US law firm, and you treat them well, and we treat them as a team member, etc, you know that, to me, means you it’s a huge advantage, and that, you know, I’m going to sort of land the plane with, yes, we want to keep adding money to it to make sure it retain great talent. But something I saw at BluShark on the other end is you can get fat and happy with expanding it too much because it seems so cheap, and all of a sudden it’s eating it to EBITDA, even though it is reasonable, and I still would rather have three amazing offshore people than one person below the subsistence line here, that’s going to cause drama and issues, etc, but it’s not a free lunch. And then if you’re not careful with keeping that in check and being efficient, you’re gonna have issues in the other direction.

Jay Ruane 25:53
Yeah, it’s a challenge, and it’s just something that I had not expected. It’s something that, you know, I woke up on Monday morning to but it’s certainly something that my leadership is starting to deal with, and I think it’s something that you need to be aware of, and maybe you need to outline this when you onboard somebody in your offer letter saying and customary raises are in this range. So you they come in with open eyes, right? And, and, you know, yeah, so maybe in their country there was a 20% normal raise every year, but that’s because the currency had devalued so much, and people needed to keep them, you know. And maybe that’s something I need to consider, and take a look at what’s but then I look at, I look at some people and say, Okay, if I look at chat, GPT or Google or whatever, and say, I know I’m paying you. X, and if I put that into these, you know, these websites, and they tell me that you’re in the top 5% of people earning incomes in your country, you know, I think I’m taking care of you.

Seth Price 26:50
Okay? I only have one situation I know of personally where I think that I’m probably overpaying for what I have based on longevity and institutional knowledge generally. It is been a solid deal, and that, you know, I am less concerned with what somebody could make there, but what the value they are they’re adding to me. I think that as we move away and we preach it, they’re not vas, they’re international team members, right? You know, as you see it, and what I really felt this last long weekend with our international team members is that if you build, develop these people, there’s very little they can’t do, and that it’s just a global economy depending, you know, looking at the entire planet, rather, here’s cheap labor in this particular country that, you know, it’s not Like, hey, I’m going to the Philippines because it’s cheapest. Philippines because it’s cheapest, but like, Where can I find people, if you have a job for X social media assistant to you, where on the planet is the best person? And knowing that, if it’s not in the US, it’s likely to be a lot less that all of a sudden, you’re again, you’re an I think that, you what’s interesting is to see, I’d love to see how the cruise ships do it, because they have people from all over the world, and they pay according they, you know, they have local agencies hiring. They pay according to where it is. But it’s very clear, you know, I was on a, you know, a virgin trip, and the Virgin cruise, and they clearly were paying a notch more and getting people who were a notch more, personality wise, more than on the old ships, which they wanted. You know, I have not done the high end, you know, Vikings and oceans that my in laws do, but I’m sure that they have figured out a way that within that world there, if they offer X amount more they’re getting the next level, they’ll have their own, they’ll be able to choose from different people. And that, I think that we’re sort of dealing with a similar piece, which is, you know, within one country, if you’re fixated on that, it’s one thing. But I think that what you’re seeing, especially when I see with private equity, is, if you’re looking at the entire globe as your hiring universe, it changes things. Goes back to why we are so dismayed that we have to find a Connecticut or Virginia barred criminal lawyer. We have to because they have to go to court. We have no choice, but that’s the pain point and our limiting factor on some more growth.

Jay Ruane 29:16
Yeah, it’s, you know, it’s, it’s, it’s crazy as we work on our firms, you know, we find a solution of remote talent, we find and it seems to be working. And even that is going to have wrinkles and bumps and and issues that come up. This is folks. This isn’t easy. If it was easy, everyone would be doing it. We’re a unique bunch of people that are entrepreneurs in the legal space, and these are all the factors that you need to start thinking about as you grow and as you as you scale your operation, whether it’s with a private equity exit plan, whether it’s just pass it down to somebody, whether it’s to sell internally, these are all the things that we need to worry about and be thinking about. Up now so that we can address them later, and that’s why we have this dialog every week or so. Seth and I, so that we can talk out in the open and have these therapeutic sessions. So thank you all for being with us today. That’s going to be another wonderful episode of the law firm blueprint. I am Jay Ruane. He’s Seth price. We love having you see us every Thursday, 3pm Eastern, 12pm Pacific, live on Facebook in our Facebook group, the law firm blueprint, and live on LinkedIn. I got nothing else that you got anything else?

Seth Price 30:27
No, I appreciate you. This is this is good. I mean, again, I hope the I know that we get great feedback from the audience, better and better over the years. But you know, to be able to think through these things and talk about huge value for me personally. Appreciate the platform we have here.

Jay Ruane 30:44
And if you got anything out of today’s episode, please go into your podcast player and give us a five star review, because the more, the better it helps our distribution. I appreciate that that’s gonna do it for us. Bye for now.