Episode 3 – Michael Sullivan: Lessons Learned Growing a Firm to 50 Attorneys

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Michael Sullivan

Michael Sullivan

General Managing Partner, Michael Sullivan & Associates LLP

Michael Sullivan hung his shingle as a California solo-practitioner in 1996. In 2001, Law Firm Excellence’s Michael Bell joined him as a paralegal. By 2006, the firm had five attorneys and Bell was the firm’s business manager. Ten years later, the firm has 50+ attorneys, seven offices and is the top workers’ compensation defense practice in the state. They reflect together on lessons learned along the way.

Full Interview Transcript

Michael Bell: Michael Sullivan is the General Managing Partner and Founder of Michael Sullivan & Associates. A workers’ compensation defense firm with seven offices throughout California. And going back as far as 2001, he was my boss in one capacity or another. We worked together from the earliest days of the firm and we wanted to take this opportunity in this podcast, and perhaps a few more that might follow, to really to capture some of the lessons that we learned growing the firm from the smallest origin all the way up to…how many trainees do you guys have Mike?

Michael Sullivan: I’m not sure, somewhere between 40 and 50. A lot.

Bell: Yes, so lots of lessons going from that stage. I came on board as a paralegal, and I like to think of as your earliest still continuing employee.

Sullivan: Well, you’re not my employee anymore.

Bell: It’s true.

Sullivan: Yeah, that’s true. People ask me, what’s the secret to success and I say, “Make the same mistake three times every time and you’ll never make it again.” You had to watch me repeatedly bash my head against the wall and you had a pained look on your face most of the time.

Bell: Yeah, it’s funny. We’ll get into a lot of stories along the way as we talk. But one of the things that I always enjoyed about our dynamic is you are man of action, you go out and do things. I tend to be thoughtful and so I just really thought that that was a cool combination, because you were not afraid to try things. And of course when you’re starting out a new business that’s a really valuable and important skill, is to just go out and do stuff. Like you said…of course there were some mistakes along the way, but they tended to be mistakes of going for too much. Or trying to make something really big happen which is of course an important component of the success that the firm is now enjoying because it was very growth oriented.

Sullivan: I think it’s a basic tenet of business, and this certainly applies in law firms, that there’s usually a visionary who is maybe not as hardworking, maybe a little reckless, but nevertheless possesses an unreasonable level of courage. Usually because of a lack of foresight as the possible negative consequences and it is some adventure. And then there’s always the implementer, somebody who is actually implementing the vision. And that takes a lot of brains, and homework, and diligence, and intelligence, and judgment, and restraint, and all those things that the visionary doesn’t have. And I thought you and I…I used to say we’re Kirk and Spock but the truth is we’re probably like Ernie and Bert.

Bell: Right, and of course, nobody wants to be Bert.

Sullivan: Nobody wants to be Spock, but it’s bitching to be Spock.

Bell: Yeah.

Sullivan: It’s bitching to be Spock because Kirk doesn’t function…the really are as a team…and the Spock role to some extent has to divest themselves of their ego. That’s not just a bad thing.

Bell: Yeah.

Sullivan: That’s really not such a bad thing.

Bell: That’s cool.

Sullivan: To be the person who’s not narcissistic, can be better than the person who is.

Bell: Great, all right.

Sullivan: You pay the price for narcissism, I can tell you from personal experience.

Bell: Yeah, today we were going to try to shake out as many of the things that we could think about that we’ve either seen through our own experience, or through the experience of watching other firms that we’ve interacted with, and knowing other leaders in other firms, and really just try to identify what are some of the things that we see consistently that firms do wrong or the leaders of firms do wrong that hold the firm back. Before we got on this webcam, we were talking the other day about a little hiring. Actually, no, no, no, that’s not what I wanted to ask you about. I’m sorry. I’d ask you question, what is the number one mistake that people make or thing that they do wrong when…let me rethink it. What is the number one factor to create an excellent firm? Do you recall your answer? Because if not I’ll just tell you what you…

Sullivan: I know what my answer is. The number one factor of success in a law firm is being a damn good lawyer. It’s the law firms that do excellent work, value laden work, are the ones that have something to sell to the market that objectively make sense. The first thing is be a damn fine lawyer, just be that. And by that I don’t mean obsessed over cases to such an extent that you’re working it to death more than it needs to be worked. I don’t mean showing off in court. I mean delivering value to clients by looking at files of dedication, insight perception, a willingness to research, courage in implementing the vision of the file, but at the same time understanding what the client’s goals are, and delivering value in accordance to those goals.

Sometimes they’ll want you to bill 100 hours on a case that’s worth $2000. Value for them means calling the other side and settling the things even if it’s for $200 and it’s worth $100. It’s not about your ego, it’s not about showing off, it’s not about how you think we look if you’re on television. It’s about really listening to your client, correctly perceiving their goals, and then delivering value in that context by being excellent at what you do and the skill set that comes with being a lawyer.

Bell: That sounds like something that would be easy to do. But how many years into the growth of the firm would you say you were before you had that understanding at the level you currently have?

Sullivan: About 15.

Bell: So what was your perception of value and how did it differ from the client’s perception?

Sullivan: The problem with being in charge of an organization is that nobody tells you what’s going on except the market. The clients are not going to tell you. They’re just not going to say any work. Your colleagues are not going to tell you, because they’re competing with you and they’re happy to see you stink, or they don’t feel responsible for helping you develop your psychological issues. In my experience, when I was young I was just so into what a wonderful lawyer I was, and how aggressive I was, and how tough I was, and how I’d go to trial and win. And that was a big part of my identity as a lawyer in my own mind.

What that meant was regardless of the client’s situation, I was doing endless discovery, screaming at people and taking the case to trial. That’s what I was going to do. I’d meet with prospective clients, I’d say, “I am going to kick butt, and we’re going to find a way to go to trial and win.” What I wasn’t perceiving is the client’s looking at me like, “Okay, I’m going to be paying for this kid to go and develop through his sense of himself. He’s not listening to me, he just wants to go in there and fight and that’s it”. So they would recognize that immaturity and they wouldn’t give me work. It took me five years just to develop my first caseload. I got 50 caseloads now, but I didn’t get the work and I didn’t know why. And it was very confusing because no one would tell me. And when people would hint at it I didn’t want hear it, because you only hear of what you want to hear.

And so I would just continue to act that way. Until I got to a point when the client would say to me, “Look, Mike, you can’t leverage apply pressure, use your lawyerly skills, and then sell it for value. Because the thing you have where you want to spend 250% of the money that I should be spending on this case on your fees, is not attractive to me”. For us, lawsuits are an expression of our professional skills. To clients it’s a problem or opportunity that needs to be looked at in terms of their business realities. My problem was I was refusing to recognize that distinction and until I did, I just wasn’t getting any business.

Bell: Right. There was another phase two where you could get new clients, but they tended to fizzle out and we’d have to go out and repeat that process time and again.

Sullivan: Well there are two sides of that. It’s either I’m not listening to the client about what they perceive the value to be at a given case, but then there’s another level of course that comes with associates.

Bell: Right.

Sullivan: It’s not that hard to turn yourself into a really good lawyer. If you weren’t, you wouldn’t really be owning a law firm anyway. But it is hard to construct that thing that exists in between you and your client, which is an associate attorney that can deliver value. That’s really hard to construct. And there’s a whole bunch of ways to do it wrong. And you don’t have any idea when you start how to do it, and you do all of the things wrong that you possibly do. You suffer immensely for a long period of time. And either you say, “It’s the world’s fault that I’m suffering,” or you learn from it. But that’s your decision, but you’re going to suffer either way. The question is—Am I going to stop suffering?

Bell: One of the things that you and I have talked about over the years is the importance of rigorous self-introspection, or just trying to do that objective analysis and understanding that it’s the marketplace that gives you feedback. But what the marketplace doesn’t tell you is what the feedback is or what the problem. That’s the thing that you need to discern for yourself.

Sullivan: Yeah, and it’s very simple. It’s just really hard for lawyers, because lawyers have such strong egos. And you have to believe that you’re the best in the world to go into court and fight like you’re going to win against a bunch of really smart people who are trying to defeat you. You’ve got to really believe in yourself. That lack of humility can really be a problem because it’s a very simple formula. When the market does not give you what you want, the correct response to that is what am I doing that’s not right? What is it about me that’s making me not succeed? The wrong thing is, look at all the bad luck I have had or look at the unreasonable adversity I have had. That is for losers. Blame somebody else, blame the market. I’m not succeeding and you’re pointing your finger at everyone but yourself. The correct response is just to relentlessly ask yourself what you’re not doing right in the market that’s resulting in this. Because ultimately it gets back to what’s in between your ears. It’s really that simple. You can either acknowledge it or not and that’s the choice that makes the difference in succeeding or failure. Making that choice correctly that’s the difference.

Bell: So let’s say you’ve got a practice. You maybe have four or five attorneys working for you, and you hear this message and you’re inspired. You say, “I’ve got to improve my own practice a bit. And then after I get my act together, I need to bring my associates up.” What’s the first place to start with? If that attorney feels like they’re not where they need to be yet, personally.

Sullivan: The first place to start is your own practice. If your clients are not happy with your practice, they won’t send business. And they should send business because your practice is good enough, right? I think that’s where you have to start is in your own personal practice of law. And that doesn’t mean just, how are my skills on cross-examination? Or, how is my strategic vision for the case in terms of what the law allows or doesn’t allow? But also like I said, it involves being in a relationship with the client, correctly perceiving value after you listen to them as they see it. If your practices are really strong in all these areas across the board, communicating with the clients, communicate with opposing counsel, your litigation skills, your judgment as to value, your aggressiveness and case valuation, your creativity, all of these things that make great practice, then you need to step back from ideas about growing the law firm, increasing financial position, diversifying your client base, hire more lawyers. You got to build your house under the rock, and you are the rock. If you are not strong rock, then you better run a couple of rebars through that thing.

Put some cement on it because if you don’t have that…I see this time and time again, especially with young lawyers who are so eager to succeed financially in the business, that they just push it, push it, push it before they’re really seasoned and they understand what they’re doing. I was like that too and you’re just not going to succeed. You lurch forward, you get a bunch of clients, and then they’ll dissipate. And you’ll go, “Wow, look at the world. It’s treating me badly.” And then you’ll do it again and again and again, until you, yourself, are really rock solid. You just need to step back, just practice law and watch the results. Take a year, practice law. Take the toughest cases. Try to be creative. Don’t think about the other stuff so much. Think about your practice and try to be better and better. Talk to mentors, outside people, educational sources. Most importantly, observe your own creative process and implementation, and ask yourself if it’s working. And if so, why? And if not, why? And once you do that for a while, you start to become strong and that will be the foundation of the firm.

Bell: Another thing, too, that you did, which I’m not sure is something that I’d necessarily recommend to every law firm owner out there, but you along with some co-authors wrote a comprehensive treatise in California Workers Comp law.

Sullivan: Yeah, not everyone has to do that. It took almost five years.

Bell: But that definitely took your practice to a much higher level.

Sullivan: Yeah, that’s true. So what happened is it took almost five years, and the law firm was at about ten lawyers and it stayed that size for all those years. Because I was busy writing a book, which involves analyzing and articulating every aspect to this one area of law. It was really hard, expensive, everyone was yelling at me, “What are you doing? You should be growing your law firm. You should be doing this and that.” But there’s just no substitute for creating a solid foundation or anything you’re building.

I did find that once I wrote this book and published it, then it became the standard book in the industry. And of course, the law firm just took off exponentially. Whereas, if I’d just built the firm, built the firm, I think I would have taken two steps forward, one step back. And always would have been this lurching, stumbling, little bit forward at a time thing until I get my feet underneath me and just like boom, boom, boom, marching forward and nothing could stop me after I put on my heavy boots.

Bell: The thing that I observed is, that was originally conceived as a marketing project.

Sullivan: Yeah.

Bell: And it was originally going to be a 250, 300, maybe 400-page book. I don’t recall exactly where it’s at, but I remember at one time estimating about 1.4 million words, it’s got something like 16 chapters and 13 volumes.

Sullivan: Five thousand pages, 30,000 sited cases. At some point, you’re just showing off.

Bell: But here’s what I observed, is that you got into the project and once you were into it, I distinctly recall seeing you in the first six months realizing that if you were going to do it well it was going to have to be massive. You struggled with that for a while, and then it seems to me you got inspired, and you got on a roll. And the thing that I loved about it was it’s like you couldn’t do it and not make it excellent. You didn’t do it halfway, because you weren’t going to put something out that way. Is that how you looked at it or how you saw it, because that’s what I thought I was observing?

Sullivan: You’ve got to be careful and guard against being absolutist and perfectionist in practice. I’ve seen lawyers that do that. They just works stuff to death, to death, to death, to death. And they can’t make a decision. They can’t pull a trigger, so that’s just not good. But that’s an extreme. I think that the virtue you were observing wasn’t necessarily my insistence on a product that was perfect. I think what you liked was how I was internally motivated. You have to love what you do. There are a lot of lawyers that are really unhappy practicing law. They’re in it for the money, or they feel chained, or handcuffed by the law, because they’ve gotten themselves in these golden handcuff situations. These lawyers, in my experience, don’t succeed as much as lawyers that just love what they’re doing.

So the thing that was driving me when I wrote that book was this curiosity. I wanted to understand the law in depth and the way I did that was for myself was about articulating it. And I didn’t care about anything as much as I did understanding the law. That’s what I care about the most. The thing is when you have that internal motivation or a love for something, then the exterior rewards tend to come to you more easily.

Along the way people think you’re dumb, or you feel dumb sometimes because you’re killing yourself on something that doesn’t appear to bear fruit in the immediate sense, or in the short, medium-term sense. But I just don’t know any other way to be successful other than really have a strong sense that you’re doing what you should be doing. It’s a little bit idealistic, but I think there’s some truth to it.

Bell: Yeah, yeah.

Sullivan: Not every new lawyer or law firm owner is not going to write a defining treatise for multiple years, you can’t do that. But to go back to your original point which is, are you really a good lawyer? Do you have that experience base? Do you have that skill set? Do you have it in your heart? Has that manifested itself successfully? Do you have a proven experience? Do you know what you’re doing? If you can’t say, “Yes,” to all of those things, then you have got no business trying to have people follow you. Each lawyer in that position is going to have to discern for themselves how far along they are, whether or not they’re really ready, whether they’re worth following. Make yourself worth following. If you are hey, full speed ahead.

Bell: So, I’m sorry go ahead.

Sullivan: There’s always somewhere between of course, but you get the idea.

Bell: Yeah, okay, so two key principles that we touched on. One is excellence practice for yourself and then next up for your associates. That has to be the standard. And then, another important one is communication. As I think about communication with clients, three mistakes that I see, sometimes coexisting, sometimes independent, some attorneys don’t listen to clients. Other attorneys don’t keep their clients informed or keep them in the loop. And sometimes those things go together, sometimes they don’t. Another thing is being responsive. If a client calls and it takes you two weeks, but when you get back to them you’re ready to have a great conversation. I think most clients are really frustrated by that point. So just simply a timeliness of responsiveness is what I see is a third issue in communications with clients. Do you see any other big types of mistakes with client communications, categorical mistakes?

Sullivan: Well, I think we all understand in principle, the importance of intensive and frequent communication with clients. And we all understand the need to listen to clients carefully as to what they want or what they think they want. The more challenging part is building things in a structural fashion such as those things become possible. Some law firms in an effort to be able to bill lots of hours will overload lawyers, associates with lots of files. And they just don’t have the ability to respond to clients that well, so you’ve got to take the case of law enough. The other law firms do is they don’t build in any accountability. They don’t have any way to supervise, or measure, or get feedback on the way their associates are communicating with clients. One of the things that’s really hard when you’re small trying to get big, is you don’t have the resources to do the things you want to do or even need to do all the time.

You’ve got to build it piece-by-piece. You can’t spend all day every day training an associate because you won’t bill any hours. You’ll go bankrupt. But you’ve got to have at least some way, other than waiting for the client to call up to complain or fire you, to make sure that associates is communicating with this client. Communicating and is dedicated to the concept of communication. You’ve got to train them, supervise them, and build systems to make sure that there’s communications. In my law firm, we created a computer program which would send us an email if we haven’t written to the client a letter after a certain period of time. We do occasional audits of files. I talk with the clients to see their experience with the associates. You have to dedicate resources to making sure that the associates are doing that stuff, and use those resources to put into place systemic solutions to the prospective problem of lack of communication. Say, “I want you to in physical contact with the client twice a month.” That’s it. At the end of month, they’ve got to report to you those contacts or their plan for contacts the next month. If you don’t do that they won’t do it, because they don’t know.

Bell: Yeah, so it’s not just preaching but identifying some tangible way of identifying is it happening or not.

Sullivan: Yeah, the things that people do wrong are, first of all, they preach without implementing a way to measure behavior. And the second thing they do is they don’t…my first firm, their training program was they give you 100 files and then scream at you when you do something they don’t like. You just don’t know what to do. You’re doing the best you can but that’s really not the way to go. I’ve seen preaching, I’ve seen abusing, and none of those things work. You have to have specific standards, specific instructions, specific ways of measuring.

Bell: It’s interesting too, I would say that, that method of training is pretty common.

Sullivan: You know why? Because you resent anything administrative when you own a young law firm like that. It doesn’t appear to have value to you, whether it’s training associates…you tell yourself you’re training associates. You tell yourself you’re watching their work, getting client feedback but you just resent the time. Associates come in that want to talk about cases and you resent it, because you’re trying to get a bunch of stuff done. You’ve got hours to bill. You’ve got cases that are really important and so it’s just really difficult not to start managing by pressure.

Bell: Well managing by pressure, and the thing that I’ve also seen attorneys in leadership positions do, not too much in our firm. But more of things that I’ve seen in the industry are attorneys who hide from their associates.

Sullivan: Yeah, that’s true.

Bell: Get the file under the arm and they go out of the back door. That kind of thing.

Sullivan: Yeah, well you have to sometimes, if you have a trial the next day. You don’t have time, and I get that. And you also tend to make them feel bad when they ask you questions. So they do it anymore so they’re deterred. You don’t want to hear from. It’s tough, man. It’s just really tough. You’re stretched really thin.

Bell: Yes, okay, so this brings up…well a related thing that I’ve seen a lot…or no. I wouldn’t say I’ve seen a lot, but as our firm developed looking back, I wish we had done each of these things earlier. One is a written procedures and that’s something that we’ve always had, but I think that there’s a lot of power in that where people can just look things up versus having to track you down in the hallway, ask you questions. And I’m aware of a lot of firms that I’ve seen, I remember we were interviewing an attorney who wanted to maybe merge with us. And we joined him in his office as he was returning to his office for the first time in about let’s say half-a-day. And he was greeted by probably 20 people, no like seven or eight people, each of whom had five or six questions for him. Luckily, we were already at the point in our firm where that’s just not how…people didn’t need to ask somebody how to send out a letter or something. It was almost that level of question. To a listener, if that describes your experience, the answer’s writing things down and disseminating them.

Sullivan: Yeah, that’s for sure. And the other thing is, like I said you’re jealous of your time, you can be jealous of your money too. It’s hard like. When I first hired you as a business manager. It was a part-time position. It was a real strain financially. How do you justify spending that kind of money for this esoteric idea of managing business. I see this a lot with law firms, they just won’t spend money administration because they see it as a way to save money. But they don’t run well.

So you can’t write down everything you’re telling every associate all the time. And some of the things are not even law-related that need to written down. Just how are we doing things? I think you need to get in a non-lawyer to do administration as much as you can afford. Because that does take stuff off your back. You should just be doing the law and the client relationships. Everything else you should delegate. You try and do it all, you’re just dead. But you got to bite the bullet to do that. You’ve got to spend more money, otherwise no one’s going to do it. And then you get that, everyone’s asking the questions. “What’s going on?” “Well, I don’t know.”

Bell: I’m trying to win this case. What about performance standards? You were talking about that earlier. But I think…I had three items under the category, leaders failing to communicate his or her version to the firm. One thing, is no written procedures. Another one is no written performance standards. And I think before we got real clear on performance standards in the firm, it was a more political environment. Because the only way to distinguish yourself is to do so politically, jockey for position.

Sullivan: Yeah, you see in most firms, and what I did for a long time, is you have this year in review process. Right? In the year-end review, you have maybe some categories you check from one to five or something, integrity, and performance, and effectiveness. So you check off the boxes, but you haven’t really to looked at the attorneys’ files. And you’re finding your main goal is to keep the associates happy so they don’t leave.

So the evaluation process becomes about making them happy. And you have some perceptions about things they can be doing better but you may, or may not, pull some punches because you don’t have the evidence. You think you know what they’re doing or how they’re doing it, but you don’t really know. And you know that once you get into conversation with them about it they’re going to say, “I’m not doing that,” or “I’m doing that already.” And so you just don’t have any leverage to have an honest discussion. So you’re write a glowing review and you them a raise so they feel happy and you go away feeling discontent. And they can have a sense that you have an issue with them. And they sense that, and they’re not getting the feedback so they don’t like it.

It’s a like a child that goes to get disciplined. They know it means they’re not loved. If you’re not invested in the work of these associates such that you can give them feedback that’s based empirical data, it’s an exercise that actually does more harm than good. You’re relationships start to rot from the inside. But it’s tough, man, because you do not have time to review all their files.

Bell: Right.

Sullivan: Not all year long. So the question becomes, how am I going to manage that? How am I going to review, and give feedback, and truly mentor this people within the time I have. The answer is you write down clearly what it is the behaviors that you want. You communicate it very clearly and you make the time to review their work within specified, research allocated standards. And then have the courage to give them honest feedback. That’s how you do that.

Bell: One other thing that I had under the category of failing to communicate is having written values. And that felt really important to me, because as the firm was growing we had leaders. And every leader, absent of framework, is going to bring your own ideas of what being a leader entails.

Sullivan: Yeah.

Bell: And so the values are an opportunity to identify, “Hey, this is how we make decisions around here.”

Sullivan: Yeah, those come in as a certain size, I think under 10 lawyers. You have such a personal relationship with every lawyer that your values are pretty clear, but once you get this office, a new office, a new office, you start to grow more and more, we did do an offside for a couple of days to make clear description of what our values actually were. Not what we wanted them to be, but what they were. I agree with you, that’s very helpful. But at every stage even if you can’t have it offside and make a poster, you’ve got to have a clear idea of your own values and you’ve got to consistently communicate them to the lawyers.

Bell: Right. Honestly I think at whatever point you’re at, if you feel like…how would I put it? By the time it’s clear to you that you need to publish the values, I think it’s already a little behind the curve. The ideal is to start talking about the values and identifying that they are your core values while the firm is still small. For example, say we had done it before it had grown beyond 10, then as those people moved on into their own leadership roles in other places that were physically dispersed, they would have already had that awareness. And that conversation would be in their heads so they could have that conversation going forward.

Sullivan: Yeah that’s true. It’s just…

Bell: But it’s always a resource issue.

Sullivan: Yeah, it’s always…

Bell: That’s always the challenge, yeah.

Sullivan: It always…now the nice thing about getting to be a certain size is, that’s not as tough.

Bell: Right.

Sullivan: Then it’s just a matter of resources versus growth. It’s just not tough if you choose to back off of the growth. But in these early stages like five, 10 attorneys, you just don’t feel like you have time for anything.

Bell: Yeah, it’s true. Well let’s see. If you could go all the way back to the five attorney level and sit yourself down for a couple of minutes, can you think of any key lessons that…obviously you learn the lessons along the way and that’s part of the richness of the experience.

Sullivan: I can do without rich experience. Yeah, I had a big insight when I was about that size, maybe eight or something like that. I kept turning over lawyers and it was just really bad. I just didn’t know why and this went on for a long time, like years. I’d hire them, they’d turn over. And I went home and I said to my wife, “I’ve figured what’s wrong with my law firm?” She said, “What?” I said, “I’m wrong with my law firm.” She said, “What do you mean?” I said, “I’m hiring the wrong kinds of people. I finally have the insight that I was turning them over. I observed their behavior and their behaviors were they just failed to value where they were. They were very immature people.”

I was hiring all these aggressive, frat boy types that were really ego-driven. If they couldn’t succeed in five minutes, they were out and their relationships were very fragile because they just cared about themselves. I was hiring that type because I thought clients wanted really, really aggressive lawyers, which they do. But that’s not all there is to it. So if could back and tell myself, I would make that shift a lot sooner. I made the shift to hiring lawyers that were intelligent, and mature self-possessed, but with a strong sense of relentlessness. That became my new standard.

Bell: Relentlessness.

Sullivan: Yeah, there was intelligence. Not just smart, but real smart right. Mature and self-possessed, they knew who they were. They’re not crazy. They value the relationships they’re in. They’re grown ups. They don’t have inflated ideas about themselves, but they believe in themselves. And then that sense of relentlessness really matters, as well. So when I made the switch to hiring those kinds of lawyers, all of a sudden, no turn over. And training, supervision, client relationships, marketing, all these things just went a lot easier because I wasn’t hiring crazy people. Not as much anyway. So if there’s one insight I would have is that, one thing that is really key is that hiring process. Having the correct idea of who you want to hire and being able to through the interview process to correctly discern who these people are. That, to me, is to some extent the whole game. The rest of it sort of follows from that.

Bell: What is relentlessness in a healthy person look like? What does that…

Sullivan: That’s a good question because to some extent being relentless, as much as lawyers are relentless, is inherently unhealthy. If somebody just gets their jaw wrapped around a bone and will not let go until they die is not a healthy person. It doesn’t show you’re judgment. Sometimes it’s not worth it. There’s a natural tension there. I can feel it in your question. How do you hire relentless people, but not crazy people?

Bell: Right.

Sullivan: And there’s no easy answer to that, but I think you know it when you see it. Somebody that isn’t crazy, but they have eye of the tiger. They’re playing to win. And they’re not going to make bad value decisions or bad judgments, but they have a tendency to visualize strong results and desire those strong results. And that’s different than, “I’m an egomaniac and I’m going to go around yelling at people so everybody can see how tough and wonderful I am.” I’m talking about a mature sense of confidence.

Bell: So it’s outcome focused rather than behaviorally focused or showing off? And…

Sullivan: It’s not about their ego. It’s about that desire for results. The desire for a value delivery that’s just in their guts.

Bell: The way that I always defined it to myself is someone who is internally motivated to achieve excellence.

Sullivan: Yeah.

Bell: Which is in the neighborhood of what you just described. But to me, it brings in those components of creativity. They like visualizing an excellent outcome, because that’s fun. And they’re not going to split every case right in the middle and just make it routine. They want something to latch onto in every matter that they’re handling.

Sullivan: Yeah, and an inherent pride in workmanship is quid pro quo. Pride in workmanship is not the same thing as someone who just needs a stage to demonstrate their own narcissism.

Bell: Right, okay, so in the topic area of hiring, mistakes to avoid. The first one is attorneys or leaders who don’t a vision of what they’re looking for. So we just talked about the vision, but the next challenge or mistake I would say, is not knowing how to find that person when you got him sitting in your office. So let’s talk about some of the distinctions that we made about interviewing. What’s the number one method of discerning greatness do you think?

Sullivan: Well, I don’t know if this answers the question but there’s a trap that you fall into when you need to hire, especially when you’re really new at this. You need to hire for two reasons. One is, because you’re getting a lot of business and you need to fill a spot. And the other is because you resent the time that it takes to get a good hire. You don’t want to do 20 interviews. You want to do one interview, and one hire. You have this orientation towards thinking that the person that you’re interviewing embodies the values and the personality type and all that stuff that you want, because you’re dishonest with yourself. You tell yourself that they’re the right candidate.

That’s one problem that you have to face is you just going to have to take the time and resources and have the discipline not to hire a bad person. It’s really hard to do that, though. You just want to hire so bad. You’ve got stuff to do. The other thing is that lawyers are not business people. So we do get a good sense of human nature because we cross-examine all the time. But that being said it’s still problematic, because we don’t know how to interview. We don’t know how to do that. And interviewing well is a subtle art. It’s hard one…to lots of experience. You can read books on it. You can have ideas about it, but it’s tough to do you may or may not be able to do it well, at first.

Bell: Right.

Sullivan: I developed a certain philosophy and manner when it came to interviewing, which I’ve found to be very successful. I don’t know if you want me to share it now?

Bell: Yeah, because we want to go into some details and some of these topics later. But I was interested in hearing about is the understanding that it’s evidence that we’re looking for, not assurances.

Sullivan: Yeah, that’s what I was going to say is that the best indicator of future behavior is past behavior. So you ask a lawyer, “Are you a good lawyer?” They’re going to say, “Yes.” Some will say, “No,” in which case you’re already wasting your time. I remember asking, I said, “I’m in this business to hire…” What was it I said? “Heroes.” Remember we used to advertise, heroes only need apply. I said, “Are you a hero?” But the guy goes, “It depends on what you mean by hero.” I’m like, “Goodbye.” But let’s say that they have enough sense to tell you that they’re a hero.

Bell: Right.

Sullivan: Well, everyone’s going to tell you about their virtues and how good they are, but what you want is the evidence that they did it. And what that means is specific examples of performance in the past. So the most important question in my mind in an interview is, “Give me an example of a time that you were in a bad spot, a tough position, but you were creative, smart, or you exhibited some other virtue which makes you distinctive. And you’ve got to give results.” A lot of times you’re interviewing a lawyer, and you like them a lot, and you think they’re pretty great, and they tell you how great they are and they’re snowing you, and you’re believing it. Partly because you want to, partly because they’re probably good at it at this point in their career. They’ve done it so many times. But then you ask them that question.

Give me specific examples of a distinctive behavior, and they can’t answer it. Now you start to excuse that in your own mind, because it’s a tough question or whatever, you tell yourself why it’s okay that they can’t answer it. But the truth is that the reason they can’t answer is because they’re not distinctive. They stink. They’ve never got anything distinctive in their lives. They just float around and they give good interviews. Whereas someone who is a really distinctive lawyer will have…think about it, that you or me.

If somebody asks that question in an interview, “Tell me some distinctive behavior on your part,” you would say, “Oh, yeah, let me tell you about the time I grew this law firm from one guy into 50 lawyers. That’s distinctive, right. But a bad lawyer in sheep’s clothing is not going to have a story. Or they’re going to tell you a really weak story. Like, “This lawyer was really mean and intimidating, but I decided to go to trial anyway. I wasn’t scared of him.” “Did you win?” “No, I didn’t win, but the point is that I wasn’t scared. I went to trial.” “So you’re telling me you’re not too scared to go to trial? That’s your distinctiveness as an attorney?” You know what I mean?

Bell: The one I like is where they discovered a really good fact and they used it.

Sullivan: Yeah, right. “I was reading the file, and I found this fact that was in my favor. So I brought it forward to the judge and he ruled on my favor.” Excellent people have stories of excellence. If they can give you three stories where you were impressed, where your eyebrows go up a little and you say, “Wow.” There’s a reason for that, and you have to trust that. You have to trust the evidence-based approach to your hiring.

Bell: Now it is a bit more challenging when you’re talking to someone who is just graduating law school.

Sullivan: Yeah, it is harder, but they have the life experience. When I graduated from law school, if you asked me to tell you about distinctive behavior, I would tell you many examples. It’s just not well related.

Bell: Right, and that’s what we’re looking for in that situation.

Sullivan: Yeah, that’s a really key thing when it comes to hiring. There are many other areas of interviewing and hiring that we could go into.

Bell: I thought that the three big mistakes around hiring are number one, not having a vision of what you’re looking for. Number two, not having interview skills, and number three, not recognizing the importance of hanging in there until you find a good one. Because a lot of people just to be done.

Sullivan: Yeah.

Bell: But in my experience making a choice to hire someone that doesn’t meet your standards is just deferring the problem. Or really immediately making your problem worse, but you’re going to experience it in a couple of weeks or a couple of months.

Sullivan: Yeah, I’ve had that experience many times. I Hire a lawyer, I give him a new account. A month later the client is complaining, and I’m starting to make excuses for that lawyer. And I’m in their office, and they’re telling me why it’s all okay. And I’m believing it because I want to believe. Because I’ve already made the decision to allocate this lawyer to this new client, and I’m in there now. And to not believe it would mean that I have to go back, fire them. Hire someone new. Tell the client why it stunk. That’s not going to work. So then two months later, the client’s expressing grave concern. I’m taking over cases myself and I’m putting him in my training program. And three months later the client fires me, and I fire the lawyer. Because they’re obviously a hopeless case and I just was willfully blinded every stage.

Bell: It’s tough. Of all the various functions that are really point to the success of a business, I think interviewing is the number one skill where every time you go in there you’ve got to bring your humility. Because the minute you string together a couple good hires in a row, you now think you’re the hiring wizard, and now you stop paying attention. And somebody slips by that shouldn’t have. So my watch word is, you’ve got to be humble every time. And honestly, the way that I look at interviews is that I will not hire someone unless they prove to me that they belong in the firm. So my default is no unless they prove yes. One of the things here, and I talked about is sometimes we can get a little too strict in that regard. So you also have to have a certain willingness to be loose when it’s appropriate.

Sullivan: It’s tough, because sometimes…I was talking to our Executive Director here who used to be a VP at an insurance company. And when she would bring in 1000 files that would be integrated into the claims system in a month. She would hire whoever came up at the door, and then she would ferret them out on the backend. And yeah, she knew she was taking up what you call management debt. You’re going to pay for that. Right? Because there’s going to be a lot of bad stupid stuff on those files, and they’ve got to be fixed and it’s going to cost money. And it may kill the client relationship in process. But you have no choice, so those kind of situations can arise.

You can’t be risk adverse that you harm the client relationship in your own practice by…but inevitably, in my experience it’s very rare. What’s much, much more common is not having any discipline to wait for the good hire when you really can manage to do that. That’s really where it’s at. Because when you…the concept management debt. You go into debt, it’s like taking out a loan. Because the piper is going to come due when you hire a bad lawyer.

Bell: Right.

Sullivan: It’s just a question of when. Just don’t do it, man, don’t. It’s the worst thing you can do. You have a problem now? You don’t have a solution. You think you have a solution. You tell yourself you have a solution, but what you really have a bigger problem.

Bell: Right.

Sullivan: And sometimes you have a disaster. I know it because I did it a dozen times at least. So did you.

Bell: Yeah, again that’s where humility comes in. I feel like the best you can be is 75% at hiring, maybe 80%. I don’t know what the number is, but you get the idea.

Sullivan: Yeah, that’s true.

Bell: And that’s just the way it goes. If you don’t bring your A-game in every time you ‘re sitting down to talk to some then that number gets worse.

Sullivan: Yeah.

Bell: There’s a couple of other things identified. I could almost run through them quickly, because a lot of these are administrative, not as much about practice. But they add up to have impact. And again, you and I worked together in a defense firm, so a lot of the things we’re talking about are more defense oriented than other types of firms. But in the early days our building cycle was flexible and that caused us a lot of problems. I’m very proud of tightening that up, and I can’t imagine ever letting that slip. I have talked to folks in other firms who have much larger firms than we were at, at the point we tightened that up. I’m just shocked to hear at how bad it can get and what impact it can have. The building cycle, it’s a train. The train leaves when the leaves, and if we are not holding up the train for anybody.

Sullivan: Yeah, some lawyers that don’t bill us they go, and then they don’t have their billing in at the end of the month.

Bell: Yeah, okay, right, exactly. Another one is not requiring associates to bill in real time as they work. What percentage, would you say of an attorney who bills at the end of the month, how much of that person’s billing is gone forever never to be entered? At least percentagewise?

Sullivan: At least 20% to 30%.

Bell: Yeah, gone.

Sullivan: Yeah, it’s gone.

Bell: So either you’re under billing your clients for work that was done, or they’re making stuff up that isn’t true to make up the difference, and your clients can perceive when something is on a bill that’s not real, or they block-bill. Which is really frustrating for clients, and frankly, a lot of clients simply don’t allow it anymore.

Sullivan: We should write a book called, “Stupid Things You Tell Yourself.”

Bell: Yeah.

Sullivan: Yeah, now this is the stupid thing you tell yourself in this area. If I discipline the lawyer, this is talking about really holding the line, I put them to this risk and I can’t afford to the relationship at risk. Therefore, I won’t discipline the lawyer. Right? And that is a big fat lie, because undisciplined lawyers, are lawyers that don’t feel cared about. But in this area, I’ve seen…we have our manager in Orange [SP] who’s more authoritarian than I would normally be.

But you don’t have you billing done on Friday, you’re coming in on Saturday morning, and you weren’t leaving until your billing is done. It was that simple, or you were fired. He could come in and even raise his voice, and he would just tell you this is happening. And you know what? The lawyers did it. Lawyers, they’re such funny creatures that will become petulant, and they will act very childishly if you allow them to do that. But you need…on the critical points especially, you just got to tell them that this is how it is and if you don’t do it…you have to have standards. If the lawyer doesn’t bill as they go, then they’re reporting at the end of each day and in writing as to their billing that day.

If they’re not doing it as they go then their butt’s going to be in the chair on Saturday until it’s done, and that’s it. And you have to have the chutzpah to enforce it. I find that the relationships actually become stronger. They’re stronger when you do that because you’re being reasonable. It’s making sense. You’re just don’t allow them to be unreasonable. It’s kind of paradoxical but it reinforces relationships with lawyers when you’re willing to put the relationship at risk over your refusal to create a relationship where you’re both pretending that something isn’t happening. It’s real. You refuse to have it any other way. Lawyers respond to that. They don’t leave over that. You think they might but they don’t.

Bell: A couple of thoughts that I have around that. One is that…you were talking earlier about management debt and this is a great example. If you let these kinds of very sloppy practices exist long enough you’re going to suffer when you make the transition into getting your act together, and that’s a great example of management debt. But if you allow those things to persist, greater pains will occur. It’ll limit your ability to grow. It may impact the very stability of your firm, and like you said, you’re encouraging petulance and inappropriate behavior.

But I feel pretty strongly that if there’s a changes that you need to make, the way to do it is to gird yourself, and recognize what’s happening, and be strong and don’t waiver, to say, “There’s a new sheriff in town,” or, “There’s a new set of procedures and this is what’s happening.” And then you got to take your lumps on the management debt until that’s the way it is. But the thing that I’ve also found is when you create that structure and you’re very clear about it, people really don’t have a problem with it. Especially as you’re adding new people to the firm. The way it is, is just the way it is when they’re joining the firm. So it gets easier and easier.

Sullivan: The problem is when you have a highly productive, experienced lawyer. Highly productive, highly profitable, very experienced lawyer who is just effective at client relationships and the whole thing. And that lawyer won’t get together on the administrative stuff like billing, and that can present a really, really tough choice. Because there are some lawyers that will implode rather than being organized. The thing is when you’re a smaller firm, you don’t have the kind of leverage that comes in the market attracting strong associates. That comes with size, and prestige, and strong brand. You don’t have that. You’re scrambling sometimes. You don’t even know how to recruit. You don’t how to find lawyers. You don’t know how to interview lawyers. You get a good one, they’re like gold to you.

It’s really hard to hold the line, but I guess there maybe individual instances where you let it go. But the most common mistake is a refusal to be the boss. People want a boss. They need a boss. It’s appropriate to have a boss. And you got to be the boss. And if you’re too scared to have the tough conversations and risk the relationship, you’re going to lose the relationship anyway because they never respect you.

Bell: Right.

Sullivan: So you’ve got to do it.

Bell: Well and another thing that really was never an issue for us because handled billing centrally and receivables, but I know that a lot of firms delegate receivables and collections to handling attorneys or maybe to the originating attorney. So there’s a wide variety of receivable collections efforts, some are ineffective. So we handled that stuff centrally and we were willing to have those tough conversations if something was getting out of hand. But that’s another area of risk that you just can’t risk it. You’ve got to make sure that stuff’s happening the way it needs to happen.

Sullivan: You’ve got to remember, this is another of your general principle, it’s a lot easier to incentivize then to chase around with a wet rope. You and I had a story where the associates just wouldn’t bill the hourly requirement. And they would have a reason why they didn’t bill the hourly requirement, and then we would say, “Bill it or you’re fired.” But then they would have an excuse, and we didn’t want to fire them because they didn’t know what to do. So we would get mad at them and then they would promise they were going to bill their hours and they didn’t.

It just wasn’t effective until one day we set a threshold and we put a bonus in collections with meeting that threshold. But that threshold was higher than what they were billing before and the difference in billing made it for the bonus and them some. But you know what? They all started billing the hours. What I mean to say is if you can build in structural incentives, that positive reinforcement is usually the best way to get the behavior that you want.

Bell: Right. So if you’ve got a receivable collection issue then it’s worth taking a look at what can you do to incentivize that behavior as well.

Sullivan: And then the other thing is if you’re going to put in negative reinforcements, it can be you’re mad at them. It’s got to be something specific. They get hurt if they don’t do it. And that’s just how it is. Like I said, they come in on Saturday. It’s not that you’re yelling at them for not billing, it’s that they’re coming in on Saturday. They’re sending an email at the end of each billing day. It’s not that you’re coming in and checking on them, or you’re going to be mad at them if they don’t bill at the end of the month. It’s that they’re sending an email everyday. So it’s like that. It’s like with any discipline it has to be specific consequences and you have to hold to it.

Bell: Very cool. Well listen, I’m sure we can keep going on and on, but this has been a nice conversation. I think maybe this is a good time to end it.

Sullivan: Okay.

Bell: And thanks a lot, Mike. It was great.

Sullivan: I’ll look forward to more of these.

Bell: Yeah.

Sullivan: Okay, thanks, bye.

Key Links

Show Notes

  • The number one factor to create an excellent firm [4:45]
  • The importance of paying attention to what the market is telling you [6:50]
  • Learning from the loss of a client relationship [09:43]
  • Delivering value to the client through your associates [10:15]
  • How to improve your own practice (if it’s deficient) when you also have employees [12:45]
  • The impact of writing a legal treatise [16:00]
  • The importance of effective communication with clients [22:00]
  • Creating structure in the firm so everybody communicates well with clients [22:50]
  • The value of written procedures [27:45]
  • Being willing to spend money on administration [29:15]
  • Having written performance standards [30:35]
  • Having written values [33:30]
  • What advice would you give your former self (at the time the firm had only five attorneys ) if you could? [36:00]
  • Hiring: qualities that define excellent attorneys [37:40]
  • Once you know what kind of attorney you’re looking for, how to discern when you’ve got a candidate that fits [41:20]
  • Respecting the interview process [42:15]
  • When hiring, rely on evidence, not assurances [43:28]
  • Being willing to hold out for a strong hire [47:30]
  • Key administrative policies to implement (for defense firms) [52:00]
    • Respect the billing cycle [52:27]
    • Attorneys must bill as they go [53:00]
    • Don’t be afraid to discipline your lawyers [53:50]
    • Having effective receivable collections policies and practices [59:00]
  • The power of incentive over discipline [59:50]