Podcast Summary: "Second in Command: The Chief Behind the Chief"
Episode: Ep. 430 - Mike Morse Law Firm COO, John Nachazel
Release Date: December 10, 2024

Introduction

In Episode 430 of the "Second in Command" podcast, host Cameron Herold engages in an insightful conversation with John Nachazel, the Chief Operating Officer (COO) of the Mike Morse Personal Injury Law Firm based in Michigan. This episode delves into John's extensive experience in business operations, his strategic approach to leadership, and the innovative practices that have propelled the law firm from a modest 24 employees to a thriving team of 210. Listeners gain valuable perspectives on leveraging data, optimizing metrics, fostering company culture, and scaling operations effectively.

Guest Background

John Nachazel brings over two decades of diverse experience to his role as COO.

• Education: Bachelor's in Finance from Miami University of Ohio and an MBA from the University of Michigan.
• Career Path:
  • Auto Industry: Spent 20 years, including six years at Ford Motor Company in sales and marketing.
  • Data Analytics: 13+ years at RL Pulp, specializing in selling data to the auto industry.
  • Mike Morse Law Firm: Joined in 2008 as COO, instrumental in scaling the firm from 24 to 210 employees.

Quote:

"Mike and I have been able to grow the firm together to where we're now the largest PI firm in the Midwest."
— John Nachazel [01:47]

Leadership Philosophy: Being the Second Best

John emphasizes a unique leadership strategy: striving to be the second best in every role within the firm. This approach ensures that each department is led by individuals who excel beyond him in their respective areas, fostering a culture of excellence and continuous improvement.

Quote:

"What I strive to be is the second best person in our firm at every position that my direct reports have."
— John Nachazel [05:49]

He provides examples:

• Marketing: Initially led by himself until he recruited Trudy, a superior salesperson, to take over.
• Finance: Hired Justin as CFO to handle accounting, recognizing Justin's superior expertise.

Data vs. Finance: Understanding Indicators

John distinguishes between financial metrics and data analytics, highlighting their distinct roles in driving business success.

• Financial Metrics:

  • Focus on profitability through balance sheets and income statements.
  • Involves budgeting, forecasting, and managing expenditures to achieve desired financial outcomes.

• Data Analytics:

  • Concentrates on leading indicators that influence lagging financial results.
  • Involves tracking activities and events within the firm to predict future performance.

Quote:

"From a financial perspective, it's largely based on balance sheet and it's going to be more so the net income statement... whereas data is about the activities and events that are occurring within your firm."
— John Nachazel [07:19]

Metrics and Measurement: Selecting the Critical Few

John discusses the importance of identifying and focusing on key metrics that provide actionable insights without overwhelming the leadership team.

• Jumbotrons: Summary-level data dashboards delivered through Power BI, accessible to all managers.
• Category-Specific KPIs: Each leader has a set of Key Performance Indicators (KPIs) pertinent to their domain, ensuring alignment with overall business objectives.
• Color-Coded Indicators:
  • Green: No immediate action required.
  • Yellow: Monitor closely.
  • Red: Immediate attention needed.

Quote:

"If it's green, I don't want to talk about it. If it shows up red, then I know I need to do something."
— Cameron Herold [12:45]

Industry Trends: The Impact of Autonomous Vehicles

John addresses the potential long-term effects of autonomous vehicles on the personal injury law sector, acknowledging concerns but maintaining an optimistic outlook.

Quote:

"It's going to take steps and iterations. It's not going to be overnight, abracadabra."
— John Nachazel [13:47]

He believes that the transition to autonomous vehicles will be gradual, allowing ample time for law firms to adapt and maintain a steady stream of cases for decades to come.

Marketing Strategies: Balancing Traditional and Digital

The Mike Morse Law Firm has strategically shifted its marketing focus from predominantly TV advertising to a balanced mix incorporating digital platforms and billboards.

• Historical Shift:
  • 2011-2024: Transitioned from 80% TV spend to 45%, with digital and billboards taking the remaining share.
• Cost Metrics:
  • Cost per Case Acquisition: Maintained around 20%, below the industry average of 25-30%.
  • ROI Focus: Emphasizes cost per case signed to evaluate marketing effectiveness.

Quote:

"TV is still our number one spend... but digital and Billboard have replaced some of that."
— John Nachazel [15:55]

Compensation Models: Aligning Interests with Profit-Based Pay

John explains the firm's innovative approach to compensating attorneys based on the profit they generate rather than the revenue from cases. This model incentivizes high performance and aligns the attorneys' interests with the firm's profitability.

Quote:

"We pay our attorneys based on the profit that they generate rather than the revenue that they generate... We're able to be wildly aggressive on upside because once they cover their cost, the accelerator kicks in massively."
— John Nachazel [24:52]

This strategy not only motivates attorneys to maximize their case outcomes but also fosters a sense of ownership and accountability.

Mastermind Groups: Collaborative Growth and Best Practices

John and Michael have actively engaged in mastermind groups, collaborating with other top-performing law firms to share insights and best practices.

• Formation of Own Mastermind:
  • Fireproof Masterminds:
    • Launched in partnership with industry leaders Bill Biggs and Kelly Williford.
    • Targets personal injury law firms while being open to related practice areas like family law and criminal defense.

Quote:

"We're in the process of setting up our own mastermind cohorts because we believe in the process so much."
— John Nachazel [31:12]

This collaborative approach enables firms to benefit from collective intelligence without the fear of direct competition.

Entrepreneurial Operating System (EOS) and Scaling Operations

The firm leverages the Entrepreneurial Operating System (EOS), developed by Gino Wickman, to streamline operations and maintain scalability.

• Integrator Role:

  • John's Position: Acts as the integrator, focusing on systematic processes and data-driven decision-making.
  • CEO Partnership: Works synergistically with Mike Morse, the CEO, who handles vision and creativity.

• Flexibility within EOS:

  • While adhering to EOS principles, the firm allows for some flexibility to accommodate its larger scale (210 employees).

Quote:

"We still run our firm on EOS... When we're with Gino, we are pure. He'll throw us out of the room if we're not pure."
— John Nachazel [39:26]

This disciplined yet adaptable application of EOS has been pivotal in managing substantial growth while maintaining operational integrity.

Company Culture and Team Management

John attributes the firm's ability to attract and retain top talent to its exceptional culture, heavily influenced by leadership practices.

• Culture Highlights:
  • Profit-Based Compensation: Encourages high performance and rewards based on profitability.
  • Employee Treatment: Emphasizes treating employees exceptionally well, fostering loyalty and satisfaction.

Quote:

"We treat them great. We have a great culture... we're very different than a normal firm."
— John Nachazel [24:52]

By aligning compensation with performance and cultivating a supportive environment, the firm ensures that its team remains motivated and engaged.

Diversifying Revenue Streams: Turning Expenses into Profits

John discusses the firm's strategy of transforming internal expense areas into independent revenue-generating entities.

• Internal Tools as Products:
  • Jumbotrons: Originally used internally for data visualization, now offered as a service to other firms.
  • Analytics and IT Services: Developed and marketed to external clients, generating additional income streams.

Quote:

"We've turned a couple of our expense areas like our jumbotrons that we build into revenue-generating ideas."
— John Nachazel [44:44]

This vertical integration not only diversifies revenue but also positions the firm as a leader in providing technology solutions within the legal industry.

Advice to Younger Self: Embrace Risk and Let Go of Caution

Reflecting on his career, John advises his younger self to be less cautious and more willing to take risks.

Quote:

"I was a worrier. Stop worrying. Stop being so cautious. Take a chance. Go for it."
— John Nachazel [45:20]

He underscores the importance of stepping out of comfort zones to achieve significant growth and success.

Conclusion

The episode offers a comprehensive look into John Nachazel's strategic leadership and operational excellence at the Mike Morse Law Firm. Key takeaways include:

• Leadership through Empowerment: By being the second best in every role, John ensures that each department is led by top talent.
• Data-Driven Decision Making: Effective use of leading and lagging indicators to drive business outcomes.
• Innovative Compensation Models: Aligning attorney incentives with firm profitability to foster high performance.
• Collaborative Growth: Leveraging mastermind groups for shared learning and industry advancement.
• Scalable Systems: Adapting EOS to manage large-scale operations while maintaining flexibility.
• Diversified Revenue Streams: Turning internal tools into profitable services enhances financial stability and market positioning.

John's holistic approach to management, coupled with his commitment to data and culture, serves as a blueprint for COOs aiming to drive their firms toward sustained growth and excellence.

Final Quote:

"You have to throw caution to the wind and just go for it, for goodness' sake."
— John Nachazel [45:43]

For more insights from top COOs, visit cooalliance.com and subscribe to the "Second in Command" podcast on your preferred streaming platform.