Jonathan Hawkins: [00:00:00] So we’ve been talking a little bit about margins. I think you had a post that, I think you said, margin before mission.

Tom Spiggle: Yeah.

Jonathan Hawkins: So tell me about that.

Tom Spiggle: Yeah, I mean, you’ve got to have enough profit to be a going concern. And I think this is a bigger, I mean, this was kind of a not-for-profit that I was talking about, but it’s also true. I see it a lot, particularly in my kind of area of the neighborhood. With employment and civil rights, you know, where, you know, you’re in this to do, and I think all lawyers go into it to do good.

But I think some of them are more, you know, some areas are not as predisposed to being like, okay, I gotta be, the whole purpose of me doing this is tilting at windmills and fighting the good fight. And so for, you know, for people that are coming in at that kind of viewpoint, it’s kind of a mind shift to be like, okay, you gotta look at the back end of this business.

Like, this is a money making endeavor and it has to make money for you to be able to do all this good stuff that you want to do. And the margins have to be big enough that, you know, you can help more people and do more things. If you’re squeaking by at [00:01:00] three to 5% margins like that’s your own life support as a business.

Welcome to the Founding Partner Podcast. Join your host, Jonathan Hawkins, as we explore the fascinating stories of successful law firm founders. We’ll uncover their beginnings, triumph over challenges, and practice growth. Whether you aspire to launch your own firm, have an entrepreneurial spirit, or are just curious about the legal business, you’re in the right place.

Let’s dive in.

Jonathan Hawkins: Welcome to Founding Partner podcast. I’m your host, Jonathan Hawkins. This is a podcast where I get to interview founding attorneys and law firm leaders and learn from their journeys. And this is a special episode because this is the first. S two time guest I’ve had on the show, this is a first returning guest, so happy to do that.

So, today we’ve got Tom Spiggle. If you want to go listen to the first episode, it’s way back when, episode 22 probably [00:02:00] over a year and a half ago. But the reason why I wanted to get Tom back is because he’s been I follow him on LinkedIn and if you’re not, you need to go follow him. But he’s been dropping some just fire posts over the last, I don’t know.

Eight, eight to 12 weeks they’ve been really speaking to me and sort of where I am and what I’ve been going through. So I wanted to get him on and, and sort of talk about some of those topics and have him coach me and, and everybody out there talk about some of the journey, but to give it some context well first of all, Tom, thanks for for coming on and for to sort of set this up.

Why don’t you tell us, you know, introduce yourself, but tell us, you know, when you founded your firm, and then sort of what it looks like now and, and sort of the journey you’ve been on. And then we’ll dive into some of these topics.

Tom Spiggle: Yeah, absolutely. And lemme say Jonathan, I’m thrilled to be back. On such a great podcast. Your, your guest, you’re just fantastic. Every time I see you post new one, I’m like, oh man, that I love that person. I wanna hear, hear what they got to say. So, you’re, we’re providing a real service for those of us who [00:03:00] are trying to grow law firms.

Yeah. So I started my firm in 2009. I had graduated law school in 2001 and worked at some private firms at clerk for a judge. Had worked in the US Attorney’s office in DC which is the, the, the last, the last real job I had before I hung a shingle. And so when I started in 2009, it was just me and I had a laptop with a cracked screen.

And and a bunch of hope and unreasonable belief how this was gonna gonna go. That’s what I think what got me off the, so, yeah. So when I, like I said, when I started, it was just me. I’d ended up rent renting a small office, sort of backed into, I didn’t have any really grand plans to scale the firm.

I was just gonna go out and business was just gonna pour in and life was gonna be good, and that’s what I was gonna do. And I sort of backed into hiring. Attorneys. ‘Cause like I said, I started in 2009, which was the economy was just in, in a tailspin. It’s really an interesting time to open a [00:04:00] firm.

And I had a, a trial that was gonna, you know, be going forward in federal court in Eastern District of Virginia. And and I needed help. I had co-counsel, but you know, I needed help until I was looking for law clerks and I posted an ad and just got. Deluged with people, barred attorneys who were looking for work.

And I ended up hiring two, I think, and learned whatever firm has learned for the past thousand years that if I could pay them X amount and build them out at a higher rate within that, you know, could work out well for me. So that’s really how I started to to grow in the firm. And it wasn’t until, and of course, you know, you reach a certain level, you reach certain, you know, problems.

You know, I know you’re familiar with the book, the E-Myth, where he talks about the classic entrepreneurial journey, where Right. The pie maker comes out really gonna making pies. You’re making pies, people buying the pies. Too many people buying the pies. You hire somebody to make the pies, they don’t make the pies as good as you do.

That was kinda the learning process that I went through and it, I guess it was around 2013, I hired [00:05:00] Lee Rosen. He was one of the early guys out there writing about law firm management. And just like you were describing some of my posts, like he was writing posts that I was, he was blogging, this is back in blogging, was a, was a big thing.

And I was like, how did he get in my head? How did he know? Like how did he know that I was that I was, you know, and I remember one distinctly where I had a client you know, it was knock down, drag out fight in federal court. And and she at one point just came convinced that I was working with the other side.

I mean, and, and he, he had a, he posted about that, and I’m like, I thought I was the only person in the world that this had ever happened to. So I ended up hiring him as a coach and that really, he, he started the first, just the idea that you could scale a firm, how to treat it as a business. And that really started me on a trajectory.

And from there, I, I mean, I’ve spent I don’t even by, I shuddered or thinking how much money I’ve spent on coaching. So I’ve grown over the years and kind of fits and starts. I hit. A million in revenue in probably [00:06:00] 2017, 2018, and then have grown pretty steadily since then. Hitting occasional, you know, plateaus every now and then.

We’re, we’ll probably close out at over 5 million this year. We’ve got around just under 40 people total. I think we have seven attorneys. So yeah, that’s been sort of the trajectory.

Jonathan Hawkins: Well, the other thing you’ve got, I mean, you’ve got obviously attorneys and staff and all that, but you’ve got some, I’ll call it C-suite type people too, or at least one who I’ve met. And you’ve, you’ve posted a little bit about that, so I, I do wanna dive into that as well because that’s, you know, if you look at sort of the.

The evolution of a firm. You know, you’ve talked about some of it, but at some point you know, you start to hire these sort of c or, or higher level executive types that are, that may or may not be lawyers, I think probably better if they’re not, but you know, we can get into that as well. And so you’ve, you’re at least to that level.

And maybe we’ll just start there. What was that like? What made you [00:07:00] go out? To hire this non-lawyer, C-suite type person.

Tom Spiggle: Yeah. And as with most of my good ideas, somebody gave it to me along the way and really, so I was had joined how to manage a small law firm, was in that program for a number of years and that’s where I really got the idea of kind of building out a C-suite. And I had, think so I hired Brian, who is now my CEO.

I hired him as a COO, and I think at that time, well I had an office manager at that time. I had a sales manager. I don’t, I think we had like a marketing assistant, but that was kind of the extent of our, and me, the management team. And I, the advice I got was trying to be exactly right. They said, you know, hey, once you get to about a million and a half in revenue, the firm’s gonna start to, you’re gonna not be able to keep your arms around it.

You know, up to that point you’re gonna, you know, you’re gonna be able to keep your things, your fingers in all the pies and, you know, kinda be able to, to shepherd the [00:08:00] growth forward. But you’re, it’s gonna start to get out from under you. And that’s, that’s about exactly what happened. So we were approaching around a million and a half, and again, I’ll have to give credit to how to manage, you know, I was trying to do it on the cheap, you know, I was, you know, looking for somebody inside.

I was gonna, you know, hire a paralegal, you know, went promote one of our paralegals and they were just like, no, do not, do not, you know, you need to. You need to hire somebody who’s gonna come outta the box who knows what they’re doing and that you don’t have to train them up. And they got a strong assist from my wife, who had seen the, the underbelly of the law firm’s growth for years and was very aware, painfully aware of my strengths and my many weaknesses, one of which was the financial aspect and just financial controls.

And she was just like. You’ve, no, you’ve got to hire somebody who knows what they’re doing. That’s, and that ended up being Brian. And so I hired I, I, what’s the name of the association? The association of. Legal professionals, I think is the name of the [00:09:00] group. And so we posted there and I kind of caught Brian on the rebound.

He had been in big firms in DC for a number of years, had gotten burnt out on kind of the big firm life and had some things going on in his personal life and just kind of wanted to reboot. And so I hired him as my COO and you know, it was, it was with a lot of things. It, it was. Some taking action and it was some just serendipity, you know, that I, that he was good, that we worked together well, you know, as I think I post about, like, we, you know, I think when you’re hiring at that level, you gotta, it’s not like you’re gonna hire a CO or somebody at that level, and they’re all gonna be good, good at all the things, right?

They should know about all the things, but you’re, it’s like a. They’re gonna be stronger in one area. Like you hire somebody who’s like really good in sales and they know marketing and they know operations, but they’re really good in sales. And you hire somebody that’s really good with financial aspects and they’re a little bit of sale, you know?

So you gotta pick, you know, you that’s gotta kind of fit together. And with Brian, it really did because his. [00:10:00] His really, his strength was the financial controls and the financial operations. I mean, he’s come to learn the rest of it, but that’s really what I needed because you know, we were growing, growing, growing.

We were breaking revenue, you know, every month bringing in more revenue. But then we were breaking spending records more than the revenue. And as it turns out, the simple math, that doesn’t work out for very long. And so he. Got in there, and I’ll tell you, it was I think I, I can’t remember if I mentioned it.

It, we were, we joke about it now, but my, my my now legal administrator who was long-term par paralegal, they, they, she, she would joke with our other paralegal that we were the hot mess Express. Like that’s where we were. Just, you know, we were just boom, breaking the, everything was, you know, growing, growing, breaking, breaking.

And so when he started, it was just like. I mean there. Oh man. I mean, I remember coming to him and it’s one of those things like, it’s right, like it all happens in threes or tens. Like, you know, we had a real problem with one of our one of our attorneys. It, [00:11:00] you know, that my sale, well, I had a sales team, but as I, you know, now know, and as he helped me fix the comp, comp structure was just jacked.

It didn’t work well. Just a bunch of problems coming in. And I remember walking into his office and I’m like. A, it’s not really this bad all the time, and b, gimme 90 days don’t quit for 90 days. And we joke about this now, like, don’t gimme 90 days before, before you leave. And, and fortunately he didn’t, but that’s really what he immediately got in there.

And he was like, you gotta plug this hole. You gotta plug that hole. And we did, and we’ve been a good, because I’m, I tend to be. All gas and, and Brian’s not all break, but he’s enough break that it acts as a counterbalance to me. And so that’s been really good.

Jonathan Hawkins: So, yeah, there’s so much in there I want to ask it. So I’m gonna throw all this out there and we’ll just start a start picking. So, you know, I’ve, you know, and, and I’m sort of experienced in this right now, and people call it the messy middle or the swamp, or there’s all these names for it, where. You, you’re growing fast, but you’re not quite there yet.

So you, you know, you can see [00:12:00] it but it is chaotic as you just described, and you gotta hire people to, to plug the holes, but you don’t necessarily have the cash yet that you really need to, to invest. And so you’re in this sort of catch two, two kind of situation.

So you got this messy middle that you have to go through where your expenses are probably higher than. Then, I mean they need to be higher ’cause you’re not quite there at the revenue level yet. But, but it is sort of a, you just gotta do it.

And so, you know, I’m sort of going through that now a little bit. And then the other piece is. You’re a go, go, go kind of guy. You see the vision, you’re like, I’m going there and you know, I know how to get there, but it’s gonna take money and energy and all this to get there that you don’t, maybe not, maybe you don’t have it yet. So,

Tom Spiggle: Yeah, sure.

Jonathan Hawkins: take me through how you made it through all that, and I guess Brian helped you or, or whatever.

Tom Spiggle: Yeah, Brian sort of came in at the crest of that wave, you know, like, and helped, helped, you know, obviously help continue it. [00:13:00] But yeah, I mean, I think some of it is, there is a little bit of believing in the dream, right? And, and I’m no accountants, you know, you’ve gotta, right, there’s, there’s one, one of my friends who. Who ended her entrepreneurial objective, she said, I believe in gravity and the need to pay my mortgage. Right? So this is all you know, real stuff, but you have to, you have to believe in the dream. And I think there just are times when you gotta break out the amex. You know, I think probably if I had to do it again.

I would have a little bit more of a plan, you know, like just a little bit more like, okay, like here’s, yes, I’m kind of getting out. I’m purposely getting out above my, over the, my ski tips, but I know it’s only gonna be for a limited amount of time and this is when I’m gonna dial it back. But there was definitely a time when, you know, I was spending, which turned out to be a good decision, but I was spending money to get in rooms with people who could help me.

Who would, who are just, you know, few steps, a bunch of [00:14:00] steps before me. And some of that just ended up being, I don’t know that it’s a waste, but some of it hit and some of it didn’t. You know, I’d like to have some of that money back, but you just don’t know. Right. And you’ve just gotta, you know, you’ve gotta, you’ve gotta get in front of people who will help you and you’ve gotta take a few risks, I think, in terms of hiring C-Suite level people or really anybody.

And this is, you know, one thing that that I got from one of my coaching groups is. Don’t make the mistake of thinking, I’ve gotta be able to pay for this person for a year. Right? Like, okay, this person, whatever it is, you know, that I need, they’re gonna, you know, they want a salary of one 10, so I need to have one 10 in the bank to get me through my first year. like you need to have. 90 days worth of that salary because really after 90 days, they should be, if they’re a biller or if they’re a producer, they should be making that money and more. And if they’re not, they should be doing things. It’s, it would be, should be apparent to you by that point that they’re helping to move the ball forward.

You know, so you’re gonna make that money back. So [00:15:00] I think it’s those two things, you know, believing in the dream a little bit, maybe every now and then spend it a little bit of stupid money and taking a little bit of a risk. Preferably with some kind of plan, right? Even if it doesn’t work out exactly like you think it’s going to and hiring people, but not expecting that, you need to have, you’ve gotta hire a little bit before you’re ready and you know, you don’t need to pay it for ’em for a year.

You need to pay for ’em for 90 days and after. If it’s not working by 90 days, then you need to let ’em go.

Jonathan Hawkins: Yeah, the, the spending super money you had to post on that and I mean, we’ve all done it. If you, if you run a firm. You spent stupid money, you just don’t know it at the time. You know, it reminds me, there’s a scene in, in the movie Jaws when, when they’re on the boat drinking that night, and they’re all comparing their scars.

You know, I got this one, and, you know, all that, that’s what it feels like to me. With other law firm owners. It’s like, there’s lots of money I spent and I’m like, why the hell did I spend that? It’s just, I, it would’ve been better going to Paris and blowing it out, you know, or whatever. But.

Tom Spiggle: It’s [00:16:00] true, and I, you know, I, you know, ar John Robbins, who’s the one who does how to manage. He told a story one time, which resonated so much with me. He’s like, he’s like, you know, entrepreneurship, it’s sort of like becoming a parent. Like if you’re in a room with a bunch of parent. There’s a little piece of you that’s dead inside.

You know, you just, it’s just hard, you know, like you wouldn’t give up having your kids, but it’s probably is a lot different than you thought it was gonna be. And the way you reacted is different than you thought it would, and you would never rewind the tape. But you know, it’s, and the same thing with entrepreneurs.

There’s just a piece of you, you’re like. Just dead. You know? It’s just, it’s just hard and you’ve gotta, you know, that, that, the death of that, I’m not saying it’s not worth it, it’s great, but like the death of that initial shiny dream, to your point, you know, leaves a scar.

Jonathan Hawkins: Yeah. So I wanna talk about owner bottlenecks a little bit. I mean, and there’s so many, and they, and they never go away, at least. Maybe they do eventually, but I feel like there’s always a new one eventually that you bump into. And so just [00:17:00] over the years, I’m curious, what has been your experience or some of the bottlenecks that you know, you encountered that were you, that you had to say, all right, I gotta get outta the way.

And then how do you get past that? That’s a little bit, I guess, but how do you get through, what’s the mindset shift to be like, okay, I’m stepping aside and handing this over.

Tom Spiggle: Yeah, I, I mean, I think probably the, the best advice I got about that was McGinley Rosen early, you know, early on, and he was talking to me about delegating, and I, you know, was just stuck on a couple of issues and he was like, look, whatever you were delegating down in this. In this case it was legal work, but he is like, don’t expect them to be you. Right? They’re not gonna write like you, they’re not gonna talk to a judge like you, and sometimes they’re not gonna be as good as you. Sometimes they’ll be better in some aspects, but sometimes they’re not gonna be as good as you. But if you can get to 80%, I mean, of course we all want good client work.

They’ve gotta, they’ve gotta meet that, that, that, that, that goal. But if you can get to [00:18:00] 80%, like you just need to free yourself up to focus on branding, marketing, sales, the things that really help you kind of leverage the business. Because if you are constantly diving back in to try to get them to a hundred percent of you, you’re never gonna get past that.

And so I think, and that’s true for, I mean, that’s as an owner. The truth is, you probably are good at a lot of it. Maybe not the best, right? We’ve all got our weaknesses. But if you’ve could grown a business at any size, you’ve got the ability to deliver the legal services. You’ve got the ability to do the marketing, you’ve got the ability to do the sales.

I mean, that’s not to say that you can’t find better people, and that’s the idea behind hiring risks that you will will, but you’ve, you know. You’ve got some chops in those areas. And so what happened with attorneys, it happened with sales is another one, right? Because if you’re the owner, ah, man, your conversion rate is probably pretty darn good because you believe in the service.

You get in there, you’re like, you are, you’re, you’re talking, you’re working that you’re, that that prospect and they’re gonna, they’re gonna believe in you. Or when you pa it’s all a process of passing kind of. [00:19:00] That glow off, right? Whether it’s the legal services or the sales to other people and how do you, how do you make that work?

And so that was probably the biggest thing for me, is they’re not gonna be you and don’t expect them to be you. Yes, you need to have standards, but they’re gonna do things differently and that’s okay.

Jonathan Hawkins: So let’s talk about the, the sales or the consults, because I, I’m bumping up against that now, personally again, because I mean, I know it, I’ve been doing this for 15 plus years. I mean, I, I just. A client may come to me and say they have one problem, and after five minutes, I’m like, that’s not your problem.

It’s something else.

Tom Spiggle: Right, right,

Jonathan Hawkins: And it’s, and it’s hard to train that. So, and it’s, you know, it’s a fear. It’s a fear mindset where I’m like, I’m scared to let that go ’cause I might lose it. So I’m sure you went through that as well. So how did you get to the point where, all right, I’m gonna start handing off, especially Let Perfect example friend down the street refers you directly, so you need to talk to Tom.

He knew to like, how do you get out of that way in terms of handing this the [00:20:00] consult off to somebody else?

Tom Spiggle: Yeah, that’s, that’s a tough one. And, and it’s gotten easier for me over the years, but I mean, I would say for sales generally, and it depends on your practice area, right? Like, I mean, if you’re, if you’re straight business to consumer like me or like a bankruptcy or personal injury, it’s a little easier, I think, to pass along that trust because, you know, I think I posted about this, like if you’re a white collar criminal defense and you’re coming outta the US attorney’s office and the CEO has gotten a subpoena, you know, to appear before the grand jury handing that off to an associate, it’s, it’s not impossible, but it’s going to be more difficult.

You know? Whereas when people come to my firm and they have an employment law issue. Yes, in the early days they definitely wanted to speak to me, but I’ve got good attorneys that can file a charge with the EEOC just as well as I can. And so I think, you know, getting back to that kind of 80% rule, realizing that you are gonna lose some [00:21:00] people, that’s just a fact, right?

Like as soon as you hand it over, you know, unless you knock it out. I mean, there are, there, I mean, there are some really good salespeople. They’re hard to find. I mean, that’s a whole nother topic, and I haven’t cracked this one is where do you find. People who are good at sales. But anyway, like you can find people that can sell literally anything, but they’re rare.

But assuming that they’re like, you know, a good, a good, but not knock it out the top, you know, salesperson or whatever, you know, whatever role you you use in your firm, that you’re gonna lose some people, right? They’re not gonna be as good as you. And you’ve got to be, you’ve got to think about, you know, taking your time and increasing the volume of people that are coming to your firm such that, you know. If somebody is selling at the, you know, converting at 75% of what you did, well, you’re not feeling it because you’ve just upped the volume twice and there are people that are calling your firm in terms of people like your neighbor down the street. Like that’s just a tough one. I mean, I usually will often, I. And I’ve been doing this long enough now, you know, [00:22:00] people who call me know that I’m not gonna be the one handling their case, but normally I would be the, you know, have the first conversation with them and just be very transparent. Like, I’m not, you know, I’m a, I’m ha I’ll be overseeing your case. If something really gets here, you can reach out to me.

But. I’ve hired somebody really great who’s gonna handle this and do kind of the warm handoff that way, and just be transparent about what’s gonna happen. But, but I think you’ve got to, again, in delegating that down, delegating that piece of your firm down is hiring people who are good at that role, whether it’s sales or whatever you wanna call them, and understanding that you’re gonna have to increase the volume a little bit because they’re not gonna convert the same way that you do.

Jonathan Hawkins: Yeah. Yeah. It’s, it’s a challenge. I’m there and, but you know, I’ve made the decision that I think that’s the first part. You gotta make the decision, I’m gonna do it. And just the chips are gonna fall where they fall and so, so, yeah. So,

Tom Spiggle: Well, I, and I would just add, you know, we don’t most of the, we call ’em client service executives. They’re non-attorneys in our firm, but some there are attorneys who that’s they what they did, that’s what they do. [00:23:00] know, so you can find somebody who you know can again, ’cause you’re, you’re describing a situation where you need somebody who knows the business enough to be able to say, oh, you thought this was your problem, but it’s actually the holes over there, you know?

And so you can find somebody who, and again, a good salesperson is gonna produce, I mean, they’ll pay for their salary many, many times over. They’re hard to find, but they are out there.

Jonathan Hawkins: Yeah. Yeah. Well, I’ll be looking here soon, but uh, all right, so moving on. So another question. You mentioned it earlier, sort of plateaus and I think this is another just natural part of a journey of the evolution of a firm or practice or whatever. I mean, you, you’re gonna hit plateaus. And then so the question is how do you break through those?

And I’m just curious, you know, what plateaus, maybe if you can look back and say, okay, that was one, and then there’s another, and these, this is how I broke through them. Do you recall what any of your plateaus were?

Tom Spiggle: [00:24:00] Yes. So, and I think sometimes plateaus are good, right? They give you two things, right? One is if you’re growing at 20 plus percent, I mean. That’s a healthy growth rate and it’s stressful. There’s just no way you can grow that fast without some things being lit on fire. I mean, that’s just, and, and it’s tough on you.

It’s, I mean, it’s exciting, right? It’s great to have that kind of rocket ship growth. It’s tough on you, it’s tough on your staff, you know, like, ’cause when you are growing that fast. Things are changing a lot. And some people can live with that and some people can’t. And then you’re probably hiring and firing and people are coming and people are going.

And if you’re, you know, somebody told me that the, you know, the what is it the average law firm growth is by between two and 5%. If you’ve got people that are used to working that, or they come from the government where it’s like, you’re going along like this, like to jump into a firm where.

This, this is rocket ship is going, but this is on fire and this is on fire. Your job is this today [00:25:00] and tomorrow we’re switching around to do this. You, you know, even the most hearty are after a while gonna start to burn out a little bit. So a plateau can be a good thing, you know, and you may wanna schedule one every now and then give everybody a breather, you, because another thing too is like growth, as you know, takes cash.

And you know, you sometimes wanna kind of take your foot off the gas or take the opportunity when you hit them. To kinda look at your profit margin, like where are some things, can you kind of, you know, kind of clear out the weeds to get yourself ready to go? So when it’s happened for me, and we’re kind of hitting one right now, frankly but where it has happened for me prior to this one was again, when we changed kind of our sales process.

You know, we we were having. with bringing on clients that weren’t good fits for us. You know, you kind of get addicted to bringing on new clients, right? Like we have a separate channel and we don’t use Slack, but a similar, you know, you use Gchat, you know the channels, light new client, new client.

It’s like dopa dopamine hit dopamine, hit dopamine hit, and you get [00:26:00] addicted to trying to beat those numbers. But then we realized that we were bringing on people who were not a good fit for our firm and they ended up being unhappy and leaving bad reviews. And so we changed up our, we like really kind of tight down on our sales process.

You know, one of the problems that we had is like, people were just, you know, as much as we were, ’cause we don’t, most of our cases we handled on an hourly or flat fee basis when not contingency. And you would tell them, here is our evergreen re retainer amount and this is how evergreen retainer amount works.

And they would hear. This is a flat fee. So if I pay this, I’m done. Well, that’s not, you know, like if you’ve got a complicated case, you’ve gotta re-up and people were just weren’t getting that. And so we really tightened down on our sales process. Like we just really emphasized that. And the result was, was that our numbers dropped.

Right. We weren’t bringing, I tell you it was talk about panic, right. Again, ’cause you’re focused on that one metric. They dropped by about 20%. And and you know, the revenue slowed down, but the, the. Upside was about 90 days in, we realized our average case [00:27:00] value was going up. You know, so we ended up doing about, you know, staying even on revenue with fewer clients who were better.

And we were to take, you know, from that plateau, then kind of rebuild to the next step and, and we did. So, you know, sometimes you’ll just hit something like that where. You know, just the natural growth of it. You know, you kind of reach a, a, a point where it can’t grow anymore and you kind of gotta look and figure out what the constraint is.

And, and I, I, I need to take my own advice on this. It’s hard to, but not look at that as like a failure. You know, like you, we all been on social media, like it’s all grow, grow, you know, scale, scale. And I’m like that. And we want, you know, a lot of people want to do that. But doing that year after year after year. It’s uncomfortable and it, frankly, it’s not, probably not healthy for the business.

Jonathan Hawkins: YY Yes. I, I, I’m with you. I think it’s healthy. You know, I, I was thinking about it the other day and it is sort of like, it’s, it’s like the front lines of a war. If you go too [00:28:00] far too fast, your supply lines aren’t there and they’re not gonna be able to support the front line.

Tom Spiggle: Right.

Jonathan Hawkins: you, you gotta sort of make sure it’s a measured growth. Or else the whole, or else you gonna lose you, you know, you might run outta cash or whatever. And then the other sort of, I guess analogy is almost like a, you know, caterpillar turn it into a butterfly. It’s like you gotta just go into that cocoon for a little while and bake. Then you can come out maybe a little stronger.

And so that, you know, that’s just, you know, I’m going through it. I mean, we had. A shit ton of growth over the last sort of 18 months. And it just, it got chaotic and I’m just like, what the hell’s going on? So recently I’m like. Reading your post. I was like going through it. I was like, yes, you were speaking to me.

So now we’re like, all right, dial it back. Let’s sort of catch our breath, make sure, ’cause all the systems that worked before broke, we gotta rebuild all that and make sure it works better. And you know, Sonia going through that. So

Real quick, if you haven’t gotten a copy yet, please check out my [00:29:00] book, the Law Firm Lifecycle. It’s written for law firm owners and those who plan to be owners. In the book, I discuss various issues that come up as a law firm progresses through the stages of its growth from just before starting a firm to when it comes to an end.

The law firm lifecycle is available on Amazon. Now, back to the show.

Jonathan Hawkins: let me ask this. So, this is sort of along the line of growth. You know, a lot of firms out there want to cross that $1 million barrier.

And it’s sort of, I don’t know if it’s real or not, but it just seems to be this magical number that everybody wants to cross. I’m not sure it’s that much different on either side completely. But definitely some things start to change and I’m curious your experience, so, I’ll sort give a hint.

About some of the things I’ve gone through and then get your perspective. So, this past year, because I’ve been focusing on growth and operations and all this stuff, I’ve been taking a step back from production. And, you know, you know, six months, eight months in, all of a sudden you’re like, wait a second, revenue’s down a little bit ’cause I’m [00:30:00] not producing.

Tom Spiggle: Yeah, yeah, yeah. Sure.

Jonathan Hawkins: So, you know, revenue drops and then maybe expenses go up at the same time because you’re having to hire other people. So, maybe take, take me through some of the, those risks. I’m sure you went through it. We’ve talked, we’ve touched on it a little bit, but how did you, how and when did you take yourself outta production and how did that affect sort of the

Tom Spiggle: Yeah. Yeah, I mean, I think I, I took my, tried to take myself outta production too soon, like it was around again, kind of at a million dollars. And, you know, like you said, like, like that’s just a, it’s a psychological thing. Like you’ve hit, you know, you, you’ve hit seven figures. And I mean, it is. It’s a, it’s an important milestone.

There are not that many businesses that ever make it to seven figures, so, you know, ring the bell. You know, like, that’s, that’s all good stuff, but it’s just simple math, right? Like, if you’re gonna take yourself out of production, how big does the pie need to be for you to be able to not produce, [00:31:00] right?

It’s gotta be able to carry you. And it sort of, you know, everybody’s different. Like if you’re, you know. If you’re youngish and you can sleep on your parents’ couch, and if you’re making a million dollars a year in revenue and infirm, you’re probably not. But if you are, you know, then you can eat mac and cheese for a little bit longer and you know that that slice of that pie doesn’t need to be as big to feed you.

But if you are as you are, and like I was like, you know, you’re already out there and you’ve got a mortgage and kids and you know all the expectations and expenses that go along with that. slice of it mean the, the, the pie needs to get bigger, right? Because before the pie’s a certain size, but like you said, you’re part of the production.

Well now if, if you’re gonna keep that same kind of revenue coming to you personally, then you’ve gotta grow that pie. And how, and I think just being aware of that. And so, you know, if I had it to do over again, probably not try to pull the plug all at once, you know, try to kind of. Have a plan again, for if I hire this person, what kind of revenue goals do I need to be meeting at what timeframe?

And of course these can all change, [00:32:00] you know, what timeframe do I need to be able to grow that pie big enough to be able to pay myself to be working on the business? And of course, there should be some benefits to it, right? Like if you’re freeing up yourself to do the marketing and the sales and the branding.

But as you know, that can take a little while to, to kind of work its way through the system. And I think just being aware of that and doing like where somebody tell me like most, most most small businesses like. The, it’s simple math, right? The problems, if you look, break it down, it’s like simple math and do the simple math, like how big does the pie need to be to support you and maybe not take yourself out of production, you know, right away.

You know, you’re just kinda slowly, you know, rolling it out. And just being cognizant of that. Like, okay, I’ve given myself whatever, 90 days, six months, to be able to grow this thing. Am I on track to do that? You know, and if not, do I need to jump back into production? It’s a tough call. I mean, there’s no.

I mean there’s, I don’t, nobody does that perfectly smoothly. There are gonna be some times where, like you said, like. The canary and the [00:33:00] coal, coal mine is, is your bank account. And you look at it and you’re like, Ooh, this is revenue. I was hoping it’d be a little more,

Jonathan Hawkins: down.

Tom Spiggle: had my expenses going up. I, you know, this is not the, not the kind of graph that I was hoping for.

And that, that is normal. And just a question of how do you jump in and fix it? I think the wrong, I think the wrong lesson that some people take is it’s not possible to take yourself out of production. You know, just because you have some problems with it doesn’t mean it’s not possible. It is, it just means it’s not, you know. If it’s not a smooth handoff, that’s perfectly normal.

Jonathan Hawkins: So, another I think thing you, you spoke about a little bit is it. Sort of along these lines you know, growing too fast. I think you said you just cleared payroll, I think by 11 cents. I think that’s what it was. And so that, you know, I want to dive into that, but, you know, that’s, that’s bigger picture, you know, trying a case, you know, you’re a trial lawyer.

Trying a case is stressful, especially if it’s a criminal case. I mean, a defense guy, I mean, you’re, you’re putting your client’s [00:34:00] burden there. Freedom is on the line. That is stress, stress, stress. And you gotta prepare and you’re in it. It’s just, that is a stressful thing. So, and I’ve been there. We, you know, many dollars have been there.

But owning a business and running the thing, that is a different kind of stress. It’s similar, but it’s a little bit different because, you know, this meeting, the payroll thing, I mean, you got other people that depend on you and the firm. To put food on, you know, to pay their bills. Maybe talk a little bit about sort of the different stress.

You know, we, we read on LinkedIn and here on it is glorified of scale, like you says, oh, it’s all great, it’s all great, but it’s stressful and scary as shit sometimes too. So.

Tom Spiggle: Yeah. Yeah, yeah. I, it is, it’s, it’s really stressful and that’s why, you know, I say like, there’s nothing wrong with a paycheck, right? Like, you know, like there’s a lot of glorification of entrepreneurship and they’re not entirely unwarranted. Look, I mean, it’s an accomplishment if you’re able to do it.

And there, there are, there are real upsides that you can get through entrepreneurship that you, [00:35:00] that are di more difficult to get through a W2. But to your point, you know, I don’t know of anybody that’s started a business, even bought one that didn’t have times where you’re staring at the ceiling, you know, wondering, you know, how like you’re gonna make payroll.

Like, do I need to fire this person? Do I need to hire this person? Like it’s just. That’s part of the business. And it is, it’s real stress. And that’s why I think, you know, I remember when, you know, I started my firm and there were a number of people at the US Attorney’s Office that kind of came by and like, oh, you know, I’ve always thought about that, you know, but I’ve just two chicken and, and I, you know, thinking back, and I, that’s, you shouldn’t like beat up on yourself if that’s the choice that you make, right?

Like. You’re gonna get a a, an average job is stressful, right? If you’re an attorney, but like, okay, you get a steady paycheck, maybe an increasing paycheck, it allows you to take vacations and wrong with that, right? Because if you’re making a decision to go into entrepreneurship, you [00:36:00] are, there are gonna be times when maybe more prolonged than being in a trial where you’re not around your family either because you’re physically not there, or you’re mentally not there, or you’re stressed out.

And, taken slings and arrows. And so it is a real, you know, the stress is, the stress is real. And if you’re feeling it as an entrepreneur, like that’s part of the game, I think. I think one of the difficulties is like thinking that stress has to be there all the time. I’ve, I’ve, I have not been in this situation, but I have heard, and I can, I can see how some people get, get almost addicted to the, oh, we cleared payroll grant.

You know, there’s a little bit of an endorphin rush from, from, you know, surviving, you know, near financial ruin. And thinking that that is the norm, you know, because that’s not the norm either, right? Like you, you should get to a point where you’re, not that it’s Easy Street, but you know, I heard one entrepreneur describe it one time and has always stuck with me.

He is like. And he owned, he was not a lawyer. I think he owned bars or something like that, but he’s like, as, as if I was walking up a long, narrow [00:37:00] step of stairs, you know, flight of stairs and it’s slightly dark and then all of a sudden I open the door at the top and like it’s light and I’m standing there and I like, don’t, almost don’t even know what to do with myself because I’m used to walking up these stairs in the dark, you know, chasing this, this thing in the future.

So it does get better and you should be experiencing some of the upside, but, yeah, it’s, it’s, it’s not for the faint part.

Jonathan Hawkins: And, you know, I’m sure you’ve, you’ve felt this, that, I think I’ve talked to so many lords that felt that, you know, some days you wake up and you’re like, it’d just be way easier if it was just back in the day when it was just me.

Tom Spiggle: Oh yeah.

Jonathan Hawkins: It’s like, it’s like. Yeah, I’d be making a, you know, not that much less, but I got fewer headaches.

You know, my margins are like nineties ’cause I don’t have any overhead. Yeah.

Tom Spiggle: Yeah. Well, I mean that, right? I mean, that’s a choice to make too, right? I mean, like that’s if you wanna, if you wanna, you know, be out the, you’re out there with the one turning the wheel and some people love what they do and they wanna die with their boots on. Like, that’s [00:38:00] great. You know? And I, I think also recognizing that in yourself, if that’s what you want to have, you can have a good lifestyle business.

And nothing wrong with that, but I think it’s, the problem I see is people drawing the wrong opposite. Lesson, you know, they try to hire one person, it doesn’t go well. And so they’re like, ah, no, it’s not for me. You know, and it’s just, that’s, it’s like dating, right? Like you go out on your first date, you have your first boyfriend, girlfriend, what?

And it doesn’t work like well. Welcome to life. You know, you gotta do that, you know, rinse and repeat unless you’re one of the real lucky ones. And, and so the, the fact that it is hard and that your first two employees, it’s difficult and your margins are slim, doesn’t mean you’re not doing it right. It just means that that is the process, you know, and not, and I think it is possible to get stuck in that kind of payroll JBA wheel.

And I think that the. Again, I remember when I first started, like [00:39:00] I was, I had opposing counsel who had a firm, and he’s, and I’m like, yeah, I’m leaving to Junior to start my own firm. He is like, oh, you wanna worry about payroll? You, I mean, he was not like, rah rah. It was like, he’s like dumb ass, like, good luck.

And so I think there are a lot of resources out there now for the, that are available to help people to understand how to grow, because it’s not. It’s not easy, but it’s not rocket science. You know, there’s certain building blocks that you have to put in place, and so there’s no reason that you should be stuck in a continual kind of hamster wheel of feast or famine either.

Jonathan Hawkins: So we’ve been talking a little bit about margins. I think you had a post that, I think you said, margin before mission.

Tom Spiggle: Yeah.

Jonathan Hawkins: So tell me about that.

Tom Spiggle: Yeah, I mean, you’ve got to have enough profit to be a going concern. And I think this is a bigger, I mean, this was kind of a not-for-profit that I was talking about, but it’s also true. I see it a lot, particularly in my kind of area of the neighborhood. With employment and civil rights, you know, where, you know, you’re in this to do, and I think [00:40:00] all lawyers go into it to do good.

But I think some of them are more, you know, some areas are not as predisposed to being like, okay, I gotta be, the whole purpose of me doing this is tilting at windmills and fighting the good fight. And so for, you know, for people that are coming in at that kind of viewpoint, it’s kind of a, mind shift to be like, okay, you gotta look at the back end of this business.

Like, this is a money making endeavor and it has to make money for you to be able to do all this good stuff that you want to do. And the margins have to be big enough that, you know, you can help more people and do more things. If you’re squeaking by at three to 5% margins like that’s your own life support as a business.

And, again, I think for people who are, you know, maybe some criminal defense folks too, you wanna, you wanna get in there, you wanna fight the man, you wanna do the, you wanna fight the good fight and help all the people that you can. I think it’s easy to lose sight of the fact that you’ve gotta make a profit to be able to make this work.

Jonathan Hawkins: So we’ve talked a lot about growing, [00:41:00] scaling plateaus, and you’ve gone through several of these, I’ll call ’em, growth cycles, at least at this point. And whenever you grow, you know, some people can’t. Can’t manage that change. They can, they can’t deal with it. So as, as the owner or as the leader, any advice or any lessons learned on sort of bringing along the people, we’ll call it, we can call it change management, whatever you wanna call it, but any ideas or tips there?

Tom Spiggle: Sometimes you can’t. Right. I mean, I, I think the, you know, one of the bigger lessons I had to learn is, you know, the team that got you from A to B is not the team that will usually get you to B2C. Some of them will stay but some of them will not. And, and they, they should not. And so recognizing when somebody has, has reached their, their limit, you know, and their role and for what they can provide.

And I, I don’t, you know, when I first started that I was like, that’s kind of harsh. You know, like, okay, you’re good enough to go from A to B, but you’re not good enough to go to B2C. But the truth is. [00:42:00] That we all have kind of narrow windows of genius. We have genius, but they tend to be narrow windows. And, and as an entrepreneur, you know, you are essentially firing yourself along the way.

Like, okay, I am firing myself from sales, I am firing myself from doing the bookkeeping. I’m, ’cause there’s somebody, I have gotten myself from point A to point B, but I’m not the one that’s gonna get you from point B to point C. And and so I think realizing that in your team too, that there are people who. And of course you should work with people. You should, you know, be talking about them routinely about their personal, professional and financial objectives. You know, does it align with what the, you know, where the firm is going. And a lot of times if you’re having those conversations with people, they’ll tap out, they’ll be, and which is fine, you know, like, Hey, I, you know, I had fun doing during this part, but now I’m kind of transitioning myself.

That’s great. And you know, frankly, if I had somebody come to me, if I was hiring for a marketing position or you know, sales or something like that, if somebody came to me and [00:43:00] said, Hey Tom, you know what I, my level of genius is getting people from five to 10 million. That’s what I’m gonna do for you, and then I’m out.

I’d hire ’em on the spot. You know, because that shows a real professional maturity and that you understand that a business is going that from five to 10 million. Has different challenges, has different possibilities than a business that’s going from one to 3 million or from 10 million to 20 million. You know, there are different skill sets.

So I think realizing, yes, working with your team, trying to train them up when you can, painting a clear vision of where you’re going. ’cause some people may not want go there. And then understanding sometimes you’re gonna have to make the difficult decision that this person is not the person that’s gonna get me to the next stage.

Jonathan Hawkins: And, and sort of related to this and I’ve seen, I’ve talked to others, I’m sure you’ve seen it, is what works early on. Like, let’s just say the way you compensate people, it’s just loosey goosey. But as you grow and you get more people, it’s gotta become more structured, more [00:44:00] institutionalized, you know, maybe have frameworks around it and doing that change, I think.

It’s gotta be challenging. I’m sort of in the middle of it trying to figure this out. And you try to build it five to 10 years down the road, you’re like, okay, what can we build now that we can grow into and we’re not having to change it every couple years? What’s been your experience in that regard?

Tom Spiggle: Yeah. And that’s more than about real weaknesses for me personally, like, I just don’t think that way. Like I’m just, you know, like you really need somebody like who’s good at HR, like got some serious HR chops and so I couldn’t do it for you. Like if you were to talk to me privately, be like, Hey, I’d be like, you need to talk to me to hire somebody or consult with somebody who knows how to do that.

I mean, I was the same like I know, made lots of mistakes early on, both with compensation and with titles and all that ’cause I, not that I didn’t care, but I was sort of like, whatever works if you can, like whatever like gets us to next week. You know, if you wanna call yourself whatever, as long as you’re delivering on KPIs, like let’s try to do compensation fairly.

But it was a [00:45:00] lot of one-offs. And it really was when I hired Brian, who had been with bigger organizations, kind of thought more in that way. And he is like, okay, we need to have reviews, annual reviews, and everybody, you know, that’s when raises happen and this is kind of the bandwidth that, that they, that they happen in.

That’s what really did it for me. So I would say if you’re not the kind of person to do that, like consult with somebody who does do that to help you come up because it’s, it’s, it’s oddly difficult. I find, you know, to come up with a system you know, that that has enough flexibility that allows you to grow, but that you’re not, you know, just kinda shooting from the hip every time you talk with somebody.

In terms of title and compensation, it’s, I, I mean, even big businesses struggle with this, so it’s not an easy issue to it. It’s fixable, but if you’re struggling with it, you’re, you’re about with a, you know, however many millions of other entrepreneurs out there who are trying to figure it out.

Jonathan Hawkins: Yeah. You know, law firms, small law firms have a huge problem with over titling. We’ve all been there, all guilty, all get discharged. And you, you learn that a few times and then you [00:46:00] stop doing it, but,

Tom Spiggle: Yeah.

Jonathan Hawkins: people will tell you, and you still make that mistake. I think you gotta do

Tom Spiggle: until you have somebody come back and be like, oh, did you know a director makes dah dah? And you’re like, no, I didn’t.

Jonathan Hawkins: exactly. Exactly. So, so, so one more topic and then we’ll sort of wrap this up. You’ve been very, very generous here. So, you’ve sort of touched on a little bit, but, you know, you’ve gone through all this growth. You’ve removed yourself from certain roles and functions, but, you know, you know, I’ve also read and experienced and heard that you know, for, for the organization to grow.

The leader has to grow as well. So you, you’ve got to expand your mind, expand your skill sets, et cetera, et cetera. So any advice out there for me or other folks that, you know, have these aspirations to grow? How do you keep pushing yourself to grow along with the organization or maybe that has to come first.

I don’t know.

Tom Spiggle: Yeah, I think, you know, usually personal growth comes first. And then professional growth follows after. You know, [00:47:00] I think getting out from behind your desk and joining other groups of folks, you know, there are a ton of masterminds and coaching programs and going someplace that’s gonna put you in a zone of discomfort, you know, is the way that you grow.

Classic therapy can help too, right? Like, I mean, I think you’ve just always gotta be, like you said, working on yourself, but a lot of it I got from coaching groups and frankly I’m kind of, you know, circling, I took a kind of a breather from it ’cause I’d done so much of it that I, you know, kind of took for a year off.

But now I’m trying, thinking about trying to get back into the game and like, you know, how do I get into a room with people that are gonna push me? Because I think it’s hard, it’s almost impossible to do by yourself, right? You gotta be with people who are aligned with, you know, their goals and what they’re trying to do.

And frankly, you should be a little bit uncomfortable because if you’re not, you’re probably not growing. But I think that’s absolutely right. You’ve gotta, the more you expand as your own vessel, the more your business is gonna expand with you.

Jonathan Hawkins: And I am with you. I like getting in those rooms. I, I, you know, my goal is to be [00:48:00] on the very low end of the people in that room, not the high end. When you’re on the high end, it’s time to go to a different room.

Tom Spiggle: right. Exactly. Right.

Jonathan Hawkins: So well, Tom, this has been great. Is there anything else we haven’t covered that’s on your mind?

Happy to jump into anything.

Tom Spiggle: this has been fantastic. I appreciate you having me back on the show. Great podcast.

Jonathan Hawkins: man, that’s been great. So again, if anybody wants to find you, what’s the best way?

Tom Spiggle: You find me on LinkedIn. You can also find me at my law firm’s website spigglelaw.com. And yeah, that’s probably the two, two blessed pace places to find me.

Jonathan Hawkins: And yes, people on LinkedIn go follow Tom. He’s, he’s, he posts some really good stuff. Really good stuff. So keep posting that. Keep talking to me, Tom. Keep, keep doing it. Alright. Appreciate it.

OutroUpdatedWebsite-1: Thanks for listening to this episode of the founding partner podcast. Be sure to subscribe on Apple podcasts, Spotify, or wherever you get your podcasts to stay up to date on the latest episodes. You can also connect with Jonathan on LinkedIn and check out the show notes. With [00:49:00] links to resources mentioned throughout our discussion by visiting www.lawfirmgc.com. We’ll see you next time for more origin stories and insights from successful law firm founders.