← Personal Injury Mastermind w/ Chris Dreyer
Personal Injury Mastermind w/ Chris Dreyer
411. The 8 Bottlenecks Killing Your PI Firm's Growth (And How To Fix Them)
00:24:30
Adapting Alex Hormozi's business bottlenecks specifically for law firm owners.
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What's up, squad? Usually on this show, I'm sitting down with the heavy hitters to unpack their strategies. But today it's just you and me
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for a special solo episode to break
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down the exact bottlenecks holding your firm back from massive growth. We're talking about the real constraints. Why your cost to acquire might be too high, where your intake is leaking cases, and how to actually fund your next stage of scaling.
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If you're ready to break through your
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revenue ceiling, you're in the right place. This is Personal Injury Mastermind. I'm Chris Dreyer, founder and CEO of Rankings IO, the elite performance marketing agency
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for personal injury law firms.
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Like I said, at the top, going solo today. I recently attended an incredible workshop hosted by the man Alex Hermosi on the constraints that hold business back. The thing is though, it was fantastic, but it wasn't tailored to personal injury law, so. So I thought I'd give back. I took some time, reflected, and adapted it specifically for you. I call them the dryer eights. The eight constraints you have to attack one by one to finally break through your plateau and completely dominate your market. The solo format lets us get down to the nitty gritty of how to apply these massive growth principles directly to your intake, your marketing, and your bottom line. Grab a pen.
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Let's get into it. The Persona that I'm using for this example is going to be an auto accident law firm, a personal injury firm that wants more auto accidents. So the first constraint is money. Duh, right? If you can't fund growth. So there are different ways that you can attack this. The first method is you can reduce some of your labor costs and potentially do referrals. Right. If you're a firm that can't afford the trial attorney, that's 300,000 plus and, and you can't carry the expenses, you're early on. Sending a great case to another firm across the country can be an amazing way to generate some, some cash flow and keep your costs down. Today it's much more common to get 40% or even 50% from a referral. And the kind of the 33% model is kind of aged out. And maybe if you're the top of the top trial attorney, you could still command that. But now I'm seeing even the best firms, they're paying 50% because look, they don't have to pay money to acquire the case outside of the referral fee, which I understand is the cac. The second thing that you can look at is if you're a Seasoned firm. You could get a line of credit from Esquire Bank. There may be other banks. Look, I'm not a financial advisor, don't take this as financial advice, but you can get a line of credit there. They'll you can basically borrow from your existing case inventory on prime plus a handful of points. And I know many law firms across the country that do this. You've probably heard of line of credits acquired through, you know, HELOC's home equity line of credits. And look, if you own your building at the law firm, that could be a method for you to acquire some capital. The next method is venture. Venture typically wants an exit. So it's not as common in the legal space. However, I have had the legal tech fund on Zach Posner. It's starting to become this emerging space. They're looking for more tech enabled firms. It's something to explore, but it's not as common. More common today is pe. So private equity is coming in. We saw a lot of money flood in the mass tort space, especially during the Lejeune heyday where there's a ton of fraud in that space. But that kind of brought in the money. So there's some firms that are doing it with a lot of leverage. There's several we just had Steiner Green and Finer on and you know Esquire Law and there's other firms that are doing this consolidation strategy. So PE can be a method of getting some capital. Now granted you're going to lose some equity, but if you have a larger business than giving up some points might be worthwhile. There's things like the ABS and these MSOs that allow capital to be deployed. That's a manner of getting some money. Also there's some things in your business and I'll give you an example for myself, I was resistant to hire a cfo. I worked with an outsourced accountant. You know, I had accounts payable handled because I didn't have a volume of cases like you guys do with a lot, you know, a high volume auto accident practice. But what I've discovered is a CFO can do accounts payable strategies where you're not just paying every bill immediately. That helps with your cash acceleration strategies. You know, a CFO or a controller can look at time on desk and you can try to speed up your your cases to where you get your revenue in faster. James Farren from Farren Law, he talked about that from North Carolina during his episode. And then there's also things like scale economies. So if you read the book seven Powers by Hamilton Helmer. Scale economies occur. You get buying power as you increase your capital deployment. I'll give you an example, and I'm not going to name any names, but I work with some of the biggest PI firms in their state. Actually, in some of the states, the number one, right, and what they're doing is they buy so much broadcast television, they get extremely discounted rates. They'll get these other added things, you know, I just talked to, I think Clearwave or Lamar, one of them, where they'll do these additional marketing components where you go buy a ton of billboards and then you end up getting some excess remnant, you get some posters. So scale economies can be very beneficial, especially on the broadcast television perspective. You know, I know of one individual that's paying 30 or 40% less than the market rate. So those are some strategies to just think about in money. But ultimately, if you can't fund growth, you need to be thinking about leverage, using it wisely, or starting small, keeping your labor costs down, your expenses down. That first constraint is money. If you can't fund growth, those are some strategies to help with it. The second constraint is your marketing. And the biggest signal to tell if your marketing sucks and if you have a constraint here is if your CAC to LTV or your CAC to value ratio is less than a 3 to 1. So let me explain that if your cost to acquire a case is $3,000 and your average fee is less than 9,000, so 9,000 would be a three to one, you have a big problem. Your marketing isn't good enough or your values aren't good enough on the lawyer side. But in the auto space right now, across the country, and there's some outliers, California is an outlier where your cost to acquire a case could go all the way up to $5000. Florida is around $4000. But across the country, if your CAC is exceeding $3000 for an auto accident case, and look, I'm generalizing, right, I'm not talking about the 18 wheeler, but you may have a marketing issue. It could be brand, it could be the channel. That's a signal. If your CAC to LTV is too high or it's too low, right? If it's less than a three to one, you want to shoot for a four to one. That means if you're paying, let's say $2,000 to acquire a case, you're making at least $8,000. Investigate deeper. If your marketing's not good, you know, your brand, your talent, all the things. The next one didn't fit neatly into mosy6. So. So I'm going to call it monetize but ultimately it's intake. So the biggest way to identify if you have an intake issue is if your wanted conversion rate is less than 90%. That means of the cases that you actually want, if you're converting at less than 90%, you have an intake problem. Now here's the deal. Most of you are filling this with bullshit. Your wanted conversion is not 96%. Okay? If it's coming from brand and the people like you got to add in the cold traffic, the referrals, all of these different sources, you can't just look at the brand people. You know, you're paying your Google tax and you're always surprised you're converting at a 96%. You got to look at the cold traffic too. And it's important that you actually segment those. So if you have a big leak in your intake, you want to conversion is less than 90%. That is an issue, right? You may need more staff, you may need better tech, you need better training. There's a lot of things that go into that. The other thing from a monetization standpoint on intake is if you're too selective. So you only select a certain type of case and you just turn down everything else and you're not monetizing the turndowns. So any case that isn't good for you potentially is good for someone else outside of blown statutes and just bs, you know. You know, no cases. But like there are certain situations where you get a Lemon Law case or an SSDI case or a med mal case, it may not be right for you, but it could be right for someone. That's how you set up referral relationships. That's how you can monetize some of those cases and not carry the labor costs that can help you solve the money constraint. But again, I would say the biggest thing if your wanted conversion is less than 90%, then you have an intake problem. So that's your constraint that you need to solve.
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The next constraint, number four is manpower. Manpower could be solved with a number of things. This is labor based leverage. The first thing is you need to track your utilization rate. If you find that you're not able to do more work because everyone's utilization rate is 80 plus percent or higher, you need more labor, you need to hire More staff. Now on the flip side, I'm going to kind of contradict myself. If your intake utilization rate is above 65%, that means they're on the phone higher than that. That can be an issue because then you don't have availability to answer the phone. So if you see your missed calls increasing, you may need some excess utilization there, you may need some excess manpower. But in general, if it's a technician doing the work, you know, shoot for that 80 plus percent look, it doesn't have to be tracking hours. I'm not the biggest fan of tracking hours. I like more output and outcome oriented things. But it is a method to help you make better decisions. The other thing too is there are two ways to solve the manpower issue. You can hire more in house, right staff or you can outsource and work with an agency. Now there are pros and cons of each. If you hire it in house, it's more effort on yourself. You gotta have the processes, the training, the responsibilities, you gotta have the oversight and you have more control, right? So it's, it's, it's more effort and more control. Now if you work with an agency, it is less effort cause the agency does it all, but you have less control, right? The agency has their own processes and it's hard for them to productize things and do things unique from a bespoke perspective for a larger number of individuals. So that's one way to solve the manpower issue. There's also nearshore. If you can't afford someone from the us you can look at Central America, South America. There are companies that specialize in this. There's talent cross, there's legal soft, that's some methods of cutting down your, your labor costs. From a pricing arbitrage perspective. There's also manners to simplify the skill requirements. So, and I'll give you an example for myself and then you can kind of place this for the lawyer labor perspectives for myself. It's very challenging to hire an SEO specialist that can do everything, that knows technical SEO, that knows local SEO, that knows link building, that knows content. But I can hire an individual for each of those different components. And on a whole I have one very skilled individual. So let's say you can't hire the 300, 400,000 plus minimum required trial lawyer. Maybe you can break down that skill set. Maybe you have someone that does depositions, maybe you have someone that does the pre lit. I don't know those components. But that's how you can break up a complicated role into smaller roles. Because then it requires an individual that doesn't have to know all the things. Maybe just a certain component. Then there's also the A players. It makes me want to puke my guts out when I hear, oh, we only want to hire A players. Well, no shit, we all want to hire A players. I don't want to hire some dumb, dumb. The issue here is you want a good filter on the hiring process, but you want to fire fast. And the cycle, let me repeat this. The cycle is what is important. It's, I'm saying the thing that people don't want me to say. It just is what it is. If you give someone the opportunity to succeed, you think they have their values, but they can't get it done. You need to cycle that role until you find the person that can fit within your organization and then move on to the next hire that you need to make. It may take several hires to do so. I've been guilty of this. We put them through all of the processes, all the great interviews, all the, all the training and all the bs. But at the end of the day, can they do the job specifically for you? And at the end of the day, as Dan Kennedy says in his no BS people and profits book, it is the employees the responsibility to make themselves indispensable, not the employers. Let me repeat that. It's the employees responsibility to make themselves indispensable, not yours, not the employees. The next one is metrics. Number five is metrics. Look, if you don't know your numbers and the other things that I just talked about, you don't know your cac, you don't know what your cash on cash or your time on desk or your case values are. You have a metrics issue. In order to make good decisions, you have to have good data. Could be a cfo, could be a controller. I was late to the game on this. I have now a few data analysts that work for me and different roles of the department. It helps me make decisions. I'm not just guessing and throwing paint against the wall. I, I know where to deploy resources. So there are many methods to solve this. I think that's one of the benefits of eos is it helps you drill down into metrics. John N is phenomenal at this. He's got some resources. I know crisp coaching has a lot of metrics as well as Chad Dudley is excellent and he's very willing to share the metrics. But again, if you don't know your numbers, that's where you start. Foreign. The next constraint is Going to be model. You could have the wrong model. And what I mean by that, really there's. If you had to simplify it, it's are you a B2C law firm or are you B2B? Now, there are some hybrids that are successful, but for this example, the purpose of this example, if you're a B2C, you may want to look at trade names. If you Is your name too complicated to say or to remember, like you're advertising to the consumer that you need to be very memorable? I'm talking two, maybe three words at most. And the word has to have meaning. If you can't pronounce it easily, you've got a shit name for a B2C marketing effort. Now, on the flip side, if you're B2B and your name carries authority because you're an excellent trial lawyer and your ICP is not the consumer, your ICP is that you're targeting is your peers for referrals, then, okay, use your long name that no one can pronounce, but your peers can pronounce it. But your marketing efforts need to be cles. It needs to be training, you need to be speaking at these events, you need to be writing books, you need to be hosting a podcast. It's different tactics. So depending upon who you are as a law firm and what you thrive at, your model could be the constraint. Foreign. Number seven, the market. If you have found that you are deploying a ton of capital, your marketing was good, you had a good cact LTV ratio, everything was firing up on all signals, but you're just pumping more money in and you're just really struggling to get cases. You may need a bigger tam, a bigger total addressable market instead of hitting those diminishing returns. So there's a few ways that you can approach this, right? The first thing that I think is wildly, wildly underutilized is opening a second local office. If you're in Houston and you're advertising in local services, ads or, you know, Google Maps for SEO, one of the ranking factors is proximity. Not only that, yelp has a 20 mile radius restriction for their ads. Everything is constrained by this radius. So even in a big city, you may want to consider opening a second city because consumers are lazy. They want to go to whoever's closest to them. They want to know who's in their community, in their neighborhood. So the first thing that you could potentially do is open another office, not in a separate city or jurisdiction in the same city. One of the things you could do to look at this is local Falcon. You can look at share a local voice, you can look at your data and your zip codes of where your consumers are coming from. But ultimately, you know, that's one tactic that can help your SEO, that can help your LSAs. You could have a TAM issue. It could be the market. You could move to a different state. I know Texas has some crazy tort reform. Florida's had some, everybody's up against tort reform. Now you got California and EB37, all the Uber stuff. Look, get a second state. Now. My advice here is to look at how you're currently attracting business. If you're getting your business through billboards and broadcast television, you may want to connect locations like maybe you want to go Arizona, Utah, maybe you want to go Arizona, New Mexico, maybe you want to stay on the west coast, the east coast. It's very dependent upon how you are currently acquiring cases. Take that into consideration. Not just the laws are great for big cases and those types of things. Because when you want to go break into a new market, it could take a few years until your CAC starts to drop down to a low level from a go to market strategy. So just keep that in mind. The next thing is more a lot of times as humans, we have this ability to constrain ourselves. Like we will throttle ourselves. We'll see that Google Ads is working and we're spending $40,000 on it. And we're like, oh, okay, let me go to Facebook ads, let me go to broadcast, let me go to radio. Why not do $400,000 in Google Ads? Do you know for certain that there isn't more meat on the bone? You're doing one radio station, you're getting some cases. Let me do some billboards. Why not a second radio station? You're doing SEO. It's completely crushing for you from a local maps perspective. But I've got one freaking office. Why not another office? All these things play into the more component. It's quantity creates quality. Let me repeat that. Quantity creates quality. So don't throttle yourselves, you know. Well, I'm doing X. I need to find a new channel, frigging quadruple it. So let me go back over these. These are the dryer eights. Number one is money. You can't fund the growth. So line of credits, some cash acceleration strategies. Number two is marketing. If your CAC to value ratio is below a three to one, you got some issues, bubba. Number three, monetizer intake. If your wanted conversion is less than a 90%, you got issues. Number four, manpower. You don't have utilization to do more or the quality of your people aren't good enough. You need to cycle the poor talent out for good. It is their responsibility to be indispensable, not yours. Number five, metrics. If you don't know your numbers, that's the first constraint you got to solve. You got to start collecting the data to make good decisions. Number six, your model. Take an internal look at yourself. Are you to B2C advertising firm? Are you a B2B advertising firm? You know, B2B, maybe you got boots on the ground. Networking. You're developing relationships with your peers versus B2C. You're looking for distribution, advertising, television, digital marketing efforts, SEO. Number seven, market. Is your TAM diminished? Do you need a bigger city? Are you in that 20,000 population city and you're just dominating? Go bigger. And number eight, more. Don't throttle yourselves. If you've got something that's cooking, pump it, pump it until you hit that. Diminishing returns.
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That's the dryer eights. Look, you can listen to me talk all day, but if you don't actually identify your firm's biggest bottleneck and fix it, nothing changes.
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Go look at your cac, check your
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intake conversion and find your constraint. And listen, since this was our first time going totally solo on the feed, I need your honest feedback. Send me a message. Leave me a comment. Let me know if this direct, no fluff format is hitting home for you. If it is, we'll keep them coming. For more resources on how to dominate your market, visit us@ Rankings IO. I'm Chris Dreyer, and this has been Personal Injury Mastermind. I'll see you next time.