Episode 4 – Seth Perlman: How “Writing the Book” Led to Sustainable Growth
Senior Partner, Perlman+Perlman LLP
Seth Perlman joined his father in 1985 in a practice that had a mix of general and non-profit work. He enjoyed working in the philanthropic sector so he began focusing his efforts in that direction and the firm began to grow. However, after the two-volume treatise he wrote on fundraising regulation was released by Wiley in 1988, things really took off. His firm experienced an influx of business and a steady growth trajectory that continues today. Perlman+Perlman is now the largest provider of state charitable solicitation registrations in the country.
Full Interview Transcript
Michael: My guest today is Seth Perlman, senior partner at Perlman & Perlman LLP. A law firm headquartered New York City, and one of the few firms in the country devoted exclusively to the practice of non-profit law. He is the author of fundraising regulation, a two-volume treatise covering that topic on a state by state basis. And I’m really excited because today we’re going to talk about, what it’s like growing to law firm in a specialized sector, and also how the work that your clients do can have an impact on your own team. So thank you for joining me Seth.
Seth: Thank you Michael for having me.
Michael: You bet, you bet. So I hope, maybe, just to start the conversation, I would love to know, where was the firm when you started? And just kind of, what’s the overview? How did you get into this specialized area of law, and what was it like when you first started?
Seth: Well, admittedly, I had a bit of a leg up. So the firm when I started was the sole practice of my father. He was a general practitioner who had been the first regulator of charitable activities in the country. He was hired in the 50s by the state of New York to oversee a new department called the charities bureau in New York. Did that for about four years, came out, started his own practice, and inevitably started working with a lot of folks who he had previously regulated. I joined him in about 1985. He had been a sole practitioner his entire career. And the practice was a mix of general practice with a small specialty in non-profits. When I entered in 1985, he retired a few years later, and I was the general practitioner for a few years, probably five or six years. And I got to realize that the part of the practice, I really enjoyed was working in the philanthropic sector, work with non-profit organizations. Essentially working with people who had a cause, and wanted to do something about supporting it, and making the world a better place. So I started to focus more in that area. I had some clients to begin with,and I sort of took it from there. At one point, there was myself and an assistant or secretary, and it’s since grown to a much larger enterprise. That’s been the trip to a larger enterprise.
Michael: So how long was it, would you say, before you had a need to add attorneys because of the book of business that you were sort of having to deal with on your own at that time?
Seth: Well, the first attorney I added was my brother. And he and I have run it ever since. So he came on about three or four years later. I started adding paralegals first. One of the things that I did… The first one was my brother, but I started adding paralegals. What I was doing was working with charitable organizations, and I had a bit of a specialty in the charitable solicitation area. So the states all had different regulations and statutes around the solicitation of charitable contributions. Many of my clients at that point were doing mass solicitations. They were doing direct response through the mails mostly, occasionally by telephone. And I was working with a lot of the state attorney generals, and dealing with those issues. The states were requiring registration, and that’s when I got into the book, and we can talk about the book if you want.
Michael: Yeah, sure. Well, yeah, tell us about the book.
Seth: Right, absolutely.
Michael: Yeah, what was the origin of that?
Seth: Well, I realize there was a need out there. There were more and more organizations getting into sort of the mass direct marketing as a way of raising funds for their clients. This was especially prevalent in the 70s and into the 80s. So in the 80s, this became a bigger deal. And I realized that I needed to… That there was an opportunity here. What we had formally done was we’ve done the sort of registration, state registrations for clients on almost a pro bono basis. But it was becoming more and more complex. There were a number of important Supreme Court cases in the 80s that limited the abilities of the state regulators, and the states themselves, to oversee the activities these charitable organizations that were out there soliciting. So they started to get much more aggressive in the registration process. Some of their laws have been remanded, or knocked out, declared unconstitutional, and they saw the registration process as a way of gaining control over the activities of charitable organizations in their states. I saw an opportunity happening, and I realized that it was important to try to get out in front of everybody else, and starting a business dealing with the state registration process. So my theory was write a book about it. Be the guy who wrote the book. And if you’re the guy who wrote the book, everybody believes that you’re the expert.
Seth: And so I spent about almost a year and a half along with a paralegal in my office working on this two-volume treatise on state charity regulation of charitable solicitation activities. And that really sort of kicked it off, and today we are the largest provider of that service in the country.
Michael: So, a couple of questions around the book. One is when did that come out? When did that first get released?
Seth: I think it was first published in 1988.
Michael: Okay. And then great, you finished it. Now what? Like how did you get it out there?
Seth: Well, I had a contract in Wylie, they published it. It was the largest book they had ever published. The thing was 500 pages long, it was two volumes. The problem with it, it no longer is out there today, and the whole practice has morphed somewhat. But what this was a sort of a handbook on how to do this, what the laws were, what the regulations were. And it actually had all the forms with instructions on how to answer all the questions. Some of the questions were quite tricky. You need to understand that this process is intimately intertwined with organization’s free speech rights. So the states have to get limits on what they can and cannot do, and we were trying to give answers that fit within those limitations, and let people know that the states could ask certain questions, and others they could not. And for a while it sold fairly well, but to keep it up… The states are constantly changing their laws, we’re dealing with 50 different states. And honestly, it kick started the practice, and once the name got out there we didn’t need the book so much. So the effort needed to put into updating, it just made no sense. It didn’t make sense anymore.
Michael: So a question from a devil’s advocate perspective. Did you have any concern around the idea that, if you were to publish all the answers to these questions, that either clients would do all that work for themselves? Or that you might sort of give the road map to a few sort of attorneys and other practice areas who would sort of quickly glam onto that opportunity? Were those concerns that you had or did?
Seth: Michael, so that’s an excellent question actually. Initially, I thought that might be the case. But I also believed that this system was so complex, once people started taking a look at, and trying to do it themselves, they would throw out their hands in frustration and come running to us to finish it off for them. And honestly, that’s exactly what happened. So people did try to use the book. Some people did, during that process in-house using this manual to help them through it. But eventually most of them decided that it was just too much. And it really is, it’s a difficult process. You better off out sourcing it. There weren’t a lot of places to go to outsource it. I was concerned that I would develop a road map for competitors, and I think it did that a little bit. But that was certainly outweighed by the benefit that our firm received in having all these folks come to us and say, “We tried doing this, and now you take care of it.”
Michael: Right, so let’s see, it came out in 1988. Is that right?
Michael: Yeah. So you know, I’m just thinking back to that time. I mean, it was pre-internet, you know, obviously people aren’t going to walk in Barnes and Noble looking for that book. How did you get it into the hands of the people who at least would be interested in that?
Seth: Well, we were lucky to have to be able to work with Wiley, who at the time was the largest publisher in the non-profit sector. So they had an advertising budget, and they put it out. And so it was listed along with their other publications, and so they were the one’s who sold it.
Michael: Yeah, that’s really awesome.
Seth: And that worked out pretty well.
Seth: And it was in publication for about 10, 12 years. It was the most expensive book that Wiley sold, because it was a largest book that Wiley sold.
Michael: What did it retail for?
Seth: I think it was about $175 or more. I’m trying to remember, yeah at that time, at $175.
Michael: That makes a little more sense to me. Because I was wondering like, even if it’s fantastically successful, there is still not a huge market for that. So at that price point though, I can see maybe they can run a few thousand of them and feel reasonably confident they were going to move them all.
Seth: Right. I mean, I think, I got a few checks after the upfront royalty payment. But it wasn’t about making money. It was about making a reputation. And I’ve talked to a lot of folks in different fields, and when they ask me, “What’s the best way to really sort of kick start my career in this field that I believe I’m an expert in?” I tell them, “Find a niche in the field and write a book about it.” Because people come to the guy who wrote the book, you can always use that. And as you see, it’s some almost 30 years later and I’m still using it.
Michael: That’s really great. Okay. So one other kind of question around this… Because I think that is a fantastic foundation for the growth of the firm, no question about it. But I wonder…? What if in your practice area, you find that there are several reasonably solid legal treatises, and by the way, they’re long, they’re not… They’re comprehensive. So if you’re a small law firm leader, maybe five attorneys, you’re thinking about this as a marketing strategy. Are you going to take that on head on, I mean, how do you…?
Seth: Well, it’s an undertaking. You need to understand, I mean did spend a year and a half of weekends, pretty much, putting this book together. So I’m not putting this out there, write the book, no big deal, you can do it in a couple of weekends. No, it’s a real undertaking. And you need to find the niche. You need to find a place. So let’s say you’re in construction law. Well, there are a lots of different aspects of construction law. And you need to find one that has some relatively broad appeal and focus on that. If you think that there is a practice, if you think there is business in that area, write a book about it. That will really… People will certainly believe, and that will be true, because you’ve taken the time to write the book…
Michael: The books you’ve done, yeah.
Seth: … You know what you’re talking about. And that applies with any field. I mean, outside the law as well. I had a close friend of mine who was in the drug pricing arena, and I recommended to him that he write a book about drug pricing. And he did, and he has his consulting practices doing fantastically well, and that was what kicked it off.
Michael: Nice, nice. Okay. So well, the firm has a lot of different areas of practice all around sort of non-profits. But I wondered, do you have any practice areas outside of that realm? Like when your clients who work with you primarily for those reasons need other things done? Or do you kind of sort of tell them, no they have to go elsewhere if they come to you with those types of questions?
Seth: Well, let me put this way. We like to consider ourselves a general practice within a specialty. So we act as general counsel to many non-profit organizations around the country, and all kinds of issues come up. Employment issues, IP issues, IT issues, litigation with attorney generals potentially, investigations. A lot that we can handle, but we don’t fool ourselves. We don’t know everything about everything. So we have developed a network of other attorneys in other specialties. In fact I, a number of years ago, joined a group called the International Network of Boutique Law Firms. And they have groups in most of the major cities in the United States, and members around the world. The nice thing about this is in the New York area, there are 31 different member firms. So basically, I have 31 different specialties that I can call on at anytime. Tell me a large law firm anywhere in the country that has 31 different specialties. So those affiliations become really important when you’re a Boutique firm. If there is a complex real estate deal, we’ll bring in a real estate professional. If we get into a very complex IP issue, we might bring in an IP firm. Employment law issues, that sort of thing. Although we handle… We now have an employment law attorney in the firm. So that works quite well for us. For a smaller firms I recommend it, you can’t be everything to everybody.
Michael: Right. So that’s kind of neat. See if this is an accurate description of the model, as one area of extreme specialty. General practice sort of in neighboring areas, but then a recognition that if things get really intense in any of those areas, you’ve got this network of other experts that you can rely on to best serve your clients.
Seth: Right, and you want to know those other experts are the top in their field. I mean, they’re top folks. And that’s the nice thing about this network, is they’re all vetted pretty carefully into this Boutique Law Firm Network. But the other thing is… I mean, we are in philanthropy. So what does that mean? I think that philanthropy is morphing, it’s changing. It’s generally the non-profit world, and people who worked for non-profits fundraisers, other vendors, so forth. Cause marketers, large companies, we have a lot of large fortune 500 companies that are involved in cost marketing with various philanthropies. But it’s also… It’s starting to spill over in a big way into the for profit world. So we are expanding our reach into for profit corporations who perform some sort of social good as part of their primary DNA. There’s a new world called benefit corporations out there. There is I think, there are a lot of different monikers but essentially, there are for profit corporations that have some social purpose built into the company. We’ve started to work in that area quite heavily. And that’s an area that’s starting up and growing quite quickly.
Michael: Right, I saw on your website that you’re a B Corp. A benefit Corp. And I’m not sure how long that’s been around, so I don’t know if this is… I’m curious, I mean, how early on in the firm’s growth did you decide to do that?
Seth: Well, I think we need to distinguish what’s that about. And so and there is some confusion, and I think it’s a branding problem, honestly. There is a group called B lab. B lab is a certification agency that certifies any sort of company, and certifies that it is responsible, both to its stake holders and to the public at large. There is a 200 question test, essentially, that you go through. You need to score at least 80 out of 200, showing that you’re sensitive to environmental concerns, the concerns of your employees, the concerns of the community at large, and the concerns of the wider community. So it’s a branding, it’s a certification. A benefit corporation, I want to distinguish this, is a state statutory designation for a type of corporation that’s embedded into a social purpose. So it’s different. There needs to a change in the nomenclature, because a lot of people are getting confused by it.
Michael: Yes. So…
Seth: So there are many benefit corporations that are B Lab certified. Not all of them, obviously. Yeah.
Michael: B lab, is that like laboratories?
Seth: B laboratories. A couple of guys who make a lot of money in Silicon Valley, they came out and wanted to do something, and they are trying to establish a set of criteria that people who deal with these companies know that, in fact somebody has taken a close look at them, and they are in fact the socially responsible companies they say they are.
Michael: Okay. So you know, one of the things that I would love to know from your vantage point, that’s maybe slightly outside of this concept of running a law firm but it’s more in that the concept of running a business is, how you’re seeing the impact of a social cause affecting the ability of a company to be effective and profitable, create a team work environment. Do you perceive a distinction? I guess you must, because that’s why they’re all doing it. But what sort of reflections can you give on that?
Seth: Well, I think, if you look at business at large, if you look at companies, today especially. Companies have come to realize that the way they affiliate themselves has an impact on their bottom line. So cause marketing, where companies affiliate themselves with causes, makes a difference. There has been a number of significant studies on this, and consumers would prefer to buy a product from a company affiliated with a cause that they may care about, more than one that isn’t. This is not lost on these companies. So companies are more and more getting engaged with non-profits and causes that they think that they’re customer base might relate to in some way. Because it drives sales. They also want to be perceived as a company that cares about their constituency, and that cares about the environment, that cares about social issues. They want to be perceived as good guys, and so you’re seeing a lot more of that going on. In fact, Richard Branson started a thing call B team for large corporations and companies like Proctor, and Gamble, and Virgin, and a number of others, signed onto a pledge that they will operate in a responsible manner based on the tenants of this B team group. So it’s kind of a B lab on steroids for large companies. So we’re seeing a lot of that, which for us is great because it drives business our way. That’s the area that we work in. That’s our sweet spot.
Michael: Well, okay. I can see how as a marketing message it can have an impact on consumer behavior, but I’m also curious about does it impact the employees in those organizations because they feel like they’re working towards some greater good, other than just making their numbers? Or maybe a better way to ask the question is, can you see factors that work that impact when that is more so or less so the case?
Seth: Well, I can speak from my personal experience. So our firm works in the area of philanthropy. Our tag line is “Empowering our clients to change the world”. We are able to attract really top talent. Even though we don’t pay as well as a lot of other law firms that are probably more profitable than we are. But we get people who are really interested in doing the kind of work that we do. Plus they get to deal with philanthropy, they get to deal with people who really care about a cause. They get to deal with making what they perceive to be the world… Make a better place out of the world, and I think that as a result we have people who have been here very long time. We have a lot of really talented people that want to come to work for us. It’s been great for the business. Because I’m a firm believer that any company, I don’t care if you’re in law, dentistry, or garbage collection, you’re only as good as your people, and we’ve been lucky to get great people.
Seth: Because we’ve been lucky to have a choice of really great people.
Michael: Right, right. So well, let’s see, how many attorneys do you have now? How many employees total? How’s the company growing since those early days?
Seth: Right. So we started as two people, and we now have 14 attorneys, about 25 or so paralegals. And then a support staff 10 or so. We are approaching that magic sort of 50 number.
Michael: Right, right. So the other thing I wonder about is, were there inflection points where the way you operated had to change as the number of people in the building grew? Was there any key inflection point?
Michael: What was it?
Seth: I think, Michael, that’s an excellent question. I’m a strong believer in the inflection points. So what I’ve found in working for doing this for 30 something years is that there are distinct inflection points, and they really revolve around the number of people that are working in the enterprise. I don’t care what kind of enterprise it is. when you have ten or a fewer people, there’s a certain way of operating. Changes once you get past ten. It changes again when you get past 25. The systems that you put in place to handle an enterprise of one to ten people is different than the systems you put in place when you grow beyond ten and it get to 25. Once you hit the 25, it changes again and you have to change your systems. Some are for the good, and some are not so good. It becomes less personalized obviously with a larger group, you’ve got to put more rules in place, and so forth, and so on. But you really need to evolve your systems as you grow. And there are distinct… I think there are distinct inflection points. I think 10, 25. I think it’s between 25 and 75 or 100. I haven’t got there.
Michael: Haven’t gotten to the next one. So can you tell us a story of maybe that first inflection point? You know, going from 10 to greater than 10. And you know, what was the pain you were suffering? And what sort of things you have to wrestle with to turn the corner?
Seth: Well, I think the biggest thing for us was the administrative structure underlying the firm, the foundation of the firm. We had the lawyers, they knew how to lawyer. We had legal assistants who knew how to be legal assistants. But we once we hit 10 people, we couldn’t really do the administrative stuff using the legal assistants, maybe an admin or something. We had to take some money, we had to sort of elevate them to a sort of manager position. And initially, we had a young woman that we’ve taken out of a local high school, who wanted to do something for the local area. She was turned out to be quite good, and we made her sort of our office manager. And that worked for a while until we hit about ten people, and then we realized that we needed to up our game a little bit. We were growing pretty quickly at that point. So we went out and found ourselves what we thought was a professional office manager. That worked for a while, but as we continued to grow, we realized we needed somebody who was really an executive director type, more than just an office manager. Who had the skill set to handle an organization and build the foundation, the IT, the office policy, the personnel policy, do the HR work, interface with our vendors, our benefits consultants, and that sort of thing. So we went to a higher level first. We hit another inflection point later on when we got to about 40 people. We realized unless we had a true star in that position, it was really… I felt that the administration as a firm could be better handled by a senior leadership team, as compared to an individual. We got away from the hierarchy of a single person. And what we developed over the last number of years was basically a team, and we called it our directors team. And we have a person who is a director of finance, and we have a person who is a director of HR, and marketing, and operation. We have a director of operations, who handles the IT and the operations. We have two offices, so it makes it more difficult. We have an office in Arizona. And we have our person who handles our director of compliance. And what we did was we spent a lot of time and effort bringing in consultants to train the team to work together. And this happened a couple of years ago, and it has evolved into just a really fabulous system. It’s just much, much better. But certain people didn’t survive that change over, we had to get rid of some folks. We just couldn’t really operate in that sort of an environment.
Michael: Right, so do those four people…? I think I counted four of those, four different directors. Do they report to you, or do they report…? Is there someone who is in a lead amongst that team?
Seth: No, the we purposely set it up so there is no leader. They’re a team, they all have their own responsibilities. But they meet together regularly, and they do report back to the partners. And we hold the team responsible for every one of its members. So we have a weak member, it’s going to affect everybody. And we were pretty clear about that from the beginning. So that creates an interesting environment, because they don’t want to see a weak link, and they will the first to fetter out that weak link. We’ve had that happened. They made it very clear that one particular individual was just not up to the job, and they were tougher on that person than I ever would have been. Because when you give people that kind of autonomy… And I think the key is autonomy. Autonomy is what really drives people. I mean, people are interested making money, but I think ultimately they’re more interested in feeling they have some power and control over things. So we gave them that, and we said, “But you’re all responsible for your team, and if there is a weakness there, it’s going to be on all of you.”
Michael: Yeah, that’s really interesting. I jotted down autonomy, but I was also thinking impact. That that people want to do work that they can see the results out in the world, or within the walls of the organization they’re building. That’s a really interesting model. Have you ever sort of had two folks who were sort of co-leads? Or was it four right from the beginning?
Seth: No, we went from one. There is a natural… I suppose an interaction in human beings, it’s natural that one person will sort of take a sort of leadership role, even when you tell everybody they’re all equals. And we sort of had that a little bit, I mean some people stand up a little more, the others sort of follow that person a bit more. Maybe because that person is older, or they are more experienced, or is just more of a leader. But we don’t give that person any more money or power, we try to stay away from the hierarchy. They’re all equally important, and they’re all equally responsible to the team.
Michael: You know, one of the things that comes to mind too given the structure… You know, I’ve seen over the years… The firm that I managed had multiple offices, and so each office could sort of become its own culture. And so I had the opportunity to observe differences in leadership style. Hierarchical perspective, or sort of open, free flowing. And I wonder if you have any thoughts about pros and cons of…? I mean, you’ve intentionally set it up so it’s not hierarchical, so I presume you’re more inclined towards an open style, but why is that?
Seth: Well, let me put this way. I mean, there is some hierarchy, right. So there is a director’s team, below the director team we have other folks, maybe we call them managers, that answer to the directors. So what we’ve done is taken out the hierarchy within that upper level. And there is a real difference in cultures and leadership styles. So we’ve had significant issues with that. The person who runs our other office has a very definite style that is not quite the same style that we have. And that person is on site day-to-day, and has created a certain personality in that office that is difficult for us to change or modify. This team is helped do that to a certain extent, because they’re constantly in touch with each other, and they discuss these issues, and they’ve been pretty honest with each other where they see issues. For instance, that office is operated much more formally than my office here in New York, because that person has a much more formal style. I find that a little oppressive. That’s just the way they operate, and we’ve tried to sort of wean them away from that a bit. That’s in their nature. We’re getting there, but it’s difficult.
Michael: You know, a lot of times those sort of perspectives come from maybe the early career experiences that people have. So if you work at a place and it’s very formal, then that becomes your set point of what is appropriate, or what reality is, and everything else is a deviation from that.
Seth: I think that to a certain extent, but in this particular case, the empirical evidence would prove to be different because this particular person came out of college right to our firm, and has been with us for over 15 years, and sort of worked her way up from receptionist position to this director position. Because she is very talented, extremely hard working, and extremely organized. And I think it really goes back to who she is as a person. And so I really think it goes back beyond, I think it’s really a lot about how you grew up, and even just who you are. I mean your genetic make-up.
Michael: Right, okay. So obviously, as you’re building the practice you’re working with clients, you’re the expert because of the book, and because of sort of being the visible face of the firm. And then meanwhile you’ve got this whole team growing up around you. You know, what are some of the challenges that that maybe created? Sort of being out doing client development work, and just you get busy. Do you have any sort of reflections on lessons you had to learn, or changes you had to make as the firm grew because of that dynamic that was in place?
Seth: Well, absolutely. I think, it’s particularly challenging in law firms today, as I imagine partly you realize. You have a lot of other things that occupy your time, you have to service your clients. You’re not there full-time running the firm. You’re not managing the enterprise, your primary function is to service clients. Even if you’re a managing partner in a large firm you’re still going to have some client’s, right? So that’s a real challenge. So what you tend to do is leave a lot of that to other people to handle for you. And what I’ve discovered is you can’t be too hands off. You’ve got to really deal with situations as they arise, and you have to deal with them quickly. You can’t let things fester, and you have to pay attention to what’s going on. You can’t just assume that the person that you’ve hired to oversee the operations of the firm and everybody within it, other than the lawyers, is doing the right job all the time. And I think that when somebody is not working out, you have to take the steps pretty quickly to get rid of that person. I mean, there’s an old saying about, “Hire slow and fire fast.” And unfortunately, I’ve learned that that is very true. And one of the big mistakes that we’ve made over the years is to assume that we could fix somebody. If we put enough effort and time into them, that they could come around. I think it’s worth putting some effort and time into people, but you really got to know when to stop, and when to move on.
Michael: Yeah, there’s a saying that I’ve heard. Actually, it’s maybe a little different. But it is around this idea of you want to sort of take your time, and make sure you’re being fair, and whatever is going to… The saying that came to mind is like, “By the time you know, everybody else around you already knows.” Or “By the time you’ve made your determination…” I guess. Like everyone on the team already knows that this relationship is not working. So I was going to ask about… So that’s one thing. If you’ve got a team member who is not performing and it’s evident to you, then you need to move quickly, but what are the mechanisms that you have in place to just simply be hands on with effective team members, because that’s part of the equation too, right? If you just leave people alone, they’re just going naturally veer off in the wrong direction.
Michael: So what are the mechanisms, or the sort of the structure that enables you to do that without spending your whole day on management issues?
Seth: Yeah, I mean, it’s a real challenge. It’s tough. I mean, the thing about it is you really have to spend the time to sit, meet with people, and you’ve got to address issues as they arise, and not wait for them to ,again, fester. It’s… I don’t want to compare people to dogs, but it’s kind of like a dog. I mean, if you don’t catch him in the act, you deal with the situation at the time, you can’t punish them and teach him a lesson later on because as too much time has gone by. And that’s really true with people as well to a certain extent. So it’s important to stay involved. One of the mistakes that we made in the past was not staying involved. We just sort of handed it over, and trusted that they could deal with it, and that was a big mistake. And especially when you’re handing it over to somebody who is dealing with other people who work in the firm, and it’s their decision whether or not the person needs to go. So we’ve had another situations where we had people that clearly needed to be let go, but we were leaving it to somebody else to deal with, and they just didn’t deal with it. Because that’s… Oh, I mean look. There is no question, firing people is one of the toughest things there is. There’s lots of implications both for the person you’re firing, and for yourself. So.
Michael: You know, it’s funny. I was just thinking one of the biggest lessons I’ve learned as a manager is so obvious, but it’s basically if you address a problem in a straight forward manner, then that problem has a reasonable probability of resolving and being entirely solved, therefore out of your life. Whereas, I would notice things and be frustrated by them, but not take the action, and then be surprised when they emerged again. And boy, the day that I kind of turned that corner was a big day for me, you know? Just because, it’s like, “Hey this thing can be resolved. How cool is that?” So.
Seth: You know, I think, it’s a tough lesson to learn. Maybe takes a lot of experience. It’s really about being authentic. That’s kind of the word that I like to use. If you’re authentic with people, you’re much more likely to resolve the issues more quickly. I think people respect you for being real about what it is you’re telling them. If you’re actually telling them how you feel, and doing it in a… Look, there is different ways to tell things to people, right? You need to do it with some heart. You always need to have that as sort of the underlying landscape where you’re working from. It might have to be hurtful but the same time it has to be authentic and real. And it’s going to be better for them, and it’s certainly going to be better for you to tell them what’s really going on and how you feel. If you spot a problem, I don’t think… You don’t lambaste them, you don’t embarrass them in front of other people. You speak to them about what the problem is and you do it quickly, and either they’ll get it, and they’ll change, and they’ll wont make that mistake again, or they won’t and you’ll know what you have to do. But at least you’ll know you were authentic about dealing with the issue.
Michael: So you know, I was also kind of wondered, with a strong admin team in place, do you encounter issues where the maybe the admin folks are telling attorneys what’s what. Maybe that’s too strong a way to put it, but… And does that create you know, conflict or tension? And do you have sort of philosophy on how those types of issues need to resolve?
Seth: Yeah, that is difficult. I mean, there’s always… Especially in law firms, which is sort of different beast than other types of businesses. It’s a bifurcated system, to a certain extent. You have the lawyers, and you have everybody else. And the lawyers are your bread and butter, they’re the one’s that earn the money, but they can’t do it unless they have a good team underneath them. And so we do have situations where the director’s team may assert more responsibility or authority than they really have. And sometimes you have to temper that, but at the same time you don’t want to discourage them. So you know, tempering and discouraging is a fine line. And it can become very, very difficult.
Michael: Right, so that really emphasizes the importance of your being in the mix on a regular basis, because that’s the role of the leader, you know, the partnership is to sort of keep both sides aware of… Everybody has got a good intent, but they do have different perspectives.
Seth: Right, they do. Which is part of the reason that we spent so much time building this directors team, because we really spent a lot of time on dysfunctions of team. Their teams go awry, where they make mistakes, and they start to fall apart. What we didn’t spend a lot of time on, I’m finding , is how the team itself interacts with top management. And that’s been a sort of work in progress. And so it’s true, and we even empowered them. If we empower them too much, I don’t believe so, but again, it sometimes leads to some conflict. I mean, we’ve had some interesting statements come from the director’s team. When we were as partners pretty heavily criticized for not doing what they thought was awkward, and that’s been interesting. And actually I welcome that. It’s constructive, it’s criticism, and I can always deal with constructive criticism. I can’t deal with somebody is saying, “This is wrong.” And not giving me any sort of alternative. Figuring out a way to make it better.
Seth: And that’s been their charge, is to make it better. And we try to talk to all the lawyers in the front about that. I mean, our primary purpose in doing all this… And we are not a huge firm, I mean, we’re essentially 50 people. But it’s been important to me, as I approach my eventual retirement, that I build a strong foundation for this group to grow. And whether they stay at this size, whether they grow to a hundred or whatever, I want to have a foundation upon which they can do that. And I think that’s important.
Michael: Yeah, that makes sense. And you know, that’s one of the things that I’ve observed too is that sometimes the size of your admin team is related to the future size of the firm, not just the current size.
Michael: Because admins are the folks who are doing the work of building the next wing on the building as it were.
Seth: Absolutely. I mean, especially, you have a director of marketing. That person is crucial to the future of the firm. As is, to a certain extent, the operations person. IT has become such an important part of law firms these days. You don’t have the right IT structure in place, it gets to be extremely problematic.
Michael: Has that been an area that you’ve sort of tried to implement into your competitive advantage? I’m curious what sort of like, you know, if there is anything cool in IT that you guys are working with?
Seth: Well, yeah. I mean, there is. I mean, the largest expenditure that we have ever made as a firm was made over the last four or so years in developing a CRM system that would help run our registration and compliance division. So basically it’s a contact relational management system. We do a lot of form filing. We’re still like immigration lawyers, or securities lawyers doing blue sky filings. We file these registrations in the state. It’s been a lot of time, effort, and money building a software system that can handle most of that. It’s been extremely hard. I mean, I’m not a coder. I don’t know that world. I’m dealing with people in that world, and when they tell me something is complex and expensive, you know, I don’t have the ability to go out and ask five other vendors. I have to choose the vendor that I ended up going with, and assume that what they’re telling me is correct. And it’s been extremely expensive and time consuming. And you know, we started four years ago, and we’re just now implementing that system. That’s how long it’s taken to build. So.
Michael: So is this sort of custom created? Or did you take something off the shelf and then put a lot of energy into configuring it?
Seth: Right, so we started to custom create. This was why it has taken so long. And you know somewhere around a third of the way through we realized, “This is probably not the best idea. Maybe, we should use that sort of off the shelf product and build from there.” And that’s what we did. So at least we know the basis of the thing is grounded in a major software company, in our particular case Microsoft. You know, it’s going to be around, and is relatively secure. And then we customized it from there, but even that is extremely expensive. And that was a big investment on our part. We also, again having two offices and having the backbone structure to handle all that. I mean, it’s not only building the software, and then you have all the hardware considerations, and enterprise server to consider. I mean, the cost just gets crazy these days. I don’t have to tell you, I suppose. It’s the amount of money you spend on IT is just incredible, so. Maybe we’ve gone overboard with it, but I think it’s going to pay off mostly.
Michael: Right, well are you seeing an impact on work flow already? Or is it still sort of pre-implementation?
Seth: It’s still too early to tell but everybody believes it will. I mean, we were in a situation where we were having a difficult time raising prices, so the only way to be able to make more money was to raise productivity. And so what we built this thing to do is make each individual much more productive.
Michael: Yeah, that’s nice.
Seth: And we’re trying to… And then we also changed the system we used to do the work. So, yeah, it’s been interesting. I mean, if you like sort of team dynamics, it’s interesting to be in this area. I feel as though I spend more time dealing with team dynamics that I do with the law, these days.
Michael: Do you have any tips for managers, or really law firm leaders, managing attorneys who are just now starting to experience those initial team type conflict issues? Any sort of perspective tips, I mean, you mentioned already, don’t let problems fester, address them quickly, and authentically. Anything else comes to mind that has helped you?
Seth: Yeah. I mean, I think it’s important that if you’re going to a team approach, and I think team approach ultimately is better, I think… If you’ve got the right team, each individual within the team will make the others better. And you’ll have a much more effective group of people who work. But, if you’re going to go that route, don’t think you can build it on your own. I really strongly recommend bringing in somebody who knows what they’re doing to help you build the team initially, like through the initial training to get people up and running. And get people that understand what their roles are, how they should best interact with each other, and how to spot dysfunction. Dysfunction in a team can really destroy a team. Understanding what those dysfunctions might look like really helps everybody understand where the problems might crop up. So I strongly recommend that you look outside.
Michael: Okay, so at first when you were saying that, I thought you were talking about people with technical expertise to train them in the technical aspect of their job but that’s not what you’re saying.
Seth: that’s not what I’m talking about, I talking about team builders. I’m talking about sort of people who can facilitate the learning process required in building a team.
Michael: Okay, so what’s an example of a dysfunctional behavior that, absent this sort of expert intervention, might have persisted? And speak generally, I don’t mean to call anyone out, but…
Seth: Well, I think that one of the big issues that crops up is somebody doing something that everybody else resents, and nobody saying anything about it. You know, you could have a team of four or five people. One of them could be acting completely inappropriately, destroying the fabric of the team, and nobody addresses it. And so the real issue is how do you address that without making the other person, or the person who is allegedly creating this dysfunction, become defensive. Because once they become defensive and get back on their heels, you’ve lost them, and you’re not going to get anywhere with them. So it’s… There’s lots of instances that occur, but that’s the basic concept. Everybody needs to understand that there are rules to dealing with that. And when it happens, there’s a certain sort of behavior that everybody is expected to comply with that they know about ahead of time so they understand what’s happening.
Michael: I can see how the outside person is the best person to sort of introduce the language of that conflict resolution to a team. This is how we handle this and you have to listen when this person is saying this to you because they are sharing their truth with you.
Seth: I mean, there is lots of books on this, and there is exercises that you can run through. And so, you know, we built this initial team, and now we’re going to sub teams, and we’re not bringing in the consultants forever. They learned the lesson. We’re using that team to help train the other teams. And they feel like they understand how it works. They’re becoming teachers when they were students, and that’s great.
Michael: Yeah, that’s really cool. Well, I appreciate your, lots of great insight. Maybe just a final question. Anything that I didn’t ask you but just sort of general concept of, you know, helping law firms leaders grow their firms… Any other kind of key things come to mind for you?
Seth: Yeah, I think that one thing that we’ve also learned over the years that since neither myself or my other partner actually worked in a… I might have worked for a large firm for a short while, but we weren’t overly involved… Is we didn’t really know how to develop attorneys. And one of the things that we’ve learned is how important it is to have some sort of formalized mentoring process in place for young attorneys, and stick with that. It really makes a difference, even sometimes when it seems like it doesn’t. It really does.
Michael: What are the key elements of that? I presume training for brand-new attorneys.
Seth: Right. Well, I think obviously there’s legal training, but they’re going to get that anyway. You know, just working, working with more senior attorneys, they’re going to learn. I think what’s really key is regular scheduled meetings. We really sit down, and talk about what’s going on. Trying to get them to focus on their own personal development goals. “What am I going to do to increase my knowledge of a certain area? What am I going to do to get myself known out there? What’s my plan for speaking, writing? Getting involved with associations, networking groups? How am I going to market myself?” And I think, it’s not just about you know learning the finer points of intellectual property law, it’s about, “How do I get out and become known in this?” And, “What can I do?” And I think that that’s a constant sort of mentoring process. And, “How do I interact with partners?” And “How do I…?” You know, I mean, there is a lot that goes into it. But I think if you don’t have the regular face-to-face meetings, even if some of those meetings might seem like nothing really happened, I think it’s a mistake.
Michael: Well, you know, there’s a lot of firms that have that requirement, that intention at the highest level. But it’s the… Sort of those attorneys in the mentorship realm, call them the mid level folks, who can kind of push those things off. Because they’re busy man, they’re doing…
Seth: That’s right. They don’t want to be bothered with, you know, I guess for now, with this person. You’re right. I think it’s a discipline you have to sort of enforce. And I’ll be honest with you, we’ve had a lot of trouble enforcing it. I’m constantly on folks to say, “Have you met? Have you been keeping these meetings? What’s going on?” You know, often I’ll find that they haven’t. You’ve got to keep on them. “You need to do this. This is important.” So, it needs to be somewhat formalized, and it needs to regularly scheduled. And the folks at the top have to enforce it, and they have to enforce it by showing that they do it too. You’ve got to lead by doing.
Michael: Yeah, that makes sense. The other thing I wonder about, have you ever encountered, or heard sort of evidence of sort of young attorneys feeling like they don’t want to have to do those things? Or maybe by doing those things they’re maybe enriching the partnership, but how are they benefiting? I mean, is that part of the conversation, about why they benefit as well?
Seth: Yeah, I think it is. I mean, you know again, we are a very team oriented sort of firm. We make it pretty clear that, “Look, we all work for each other. The better the firm is, the better it is for everyone, including yourself. You’ll get paid more money. You’ll have a more rewarding career. You’ll advance more quickly.” But you also need to understand that, I think this is important, that some people just better at some things than others. Some people are great grinders, but they’re not going to get out there and network. You try and force them to do it, but you can’t force people to make small talk. And some people are just not really good at that. Some people are not comfortable getting up in front of a crowd, but they’re great writers. So you have to play to people’s strengths, and you have to sort of make them to understand what their strengths are. And so to get everybody on the same plan, doesn’t always work. I think, you really… Everybody has a different plan, and you need to recognize that. And that takes a little while to recognize.
Michael: Well, that’s fantastic. Seth thank you so much. Really great.
Seth: Michael, it’s my pleasure. It’s been interesting to do this.
Seth: I don’t usually get to spend the time to think about all this, this is great.
Michael: Yeah. Well, thank you so much.
- Seth’s Firm: Perlman+Perlman LLP
- Book by Seth Perlman and Betsy Hills Bush: Fund-Raising Regulation, 2 Volume Set (no longer in print)
- International Network of Boutique Law Firms (INBLF)
- B Labs and Certified B Corporations: https://www.bcorporation.net
- ”Be the guy who wrote the book. If you’re the guy who wrote the book, everybody believes that you’re the expert.” [4:00]
- Should attorney authors fear others will steal business after they write about their area of expertise? [7:35]
- Seth often recommends that others write about a niche topic in their field to become recognized as an expert [10:25]
- How to find a topic in a field that’s well covered by existing legal treatises [11:00]
- Perlman+Perlman’s areas of expertise today [12:50]
- Benefits of working with the International Network of Boutique Law Firms [13:30]
- Obtaining the Certified B Corporation designation from B Labs [16:40]
- Serving a social mission has enabled his firm to attract top talent [21:04]
- Key inflection points as the size of the team grew: 10 employees, 25 employees, 40 employees [23:20]
- Relying on a four-person team of directors for the firm’s administration [26:45]
- Different styles in different offices of the firm [31:55]
- Staying focused as a manager in a busy and growing firm [34:45]
- Hire slow and fire fast [35:45]
- Resolving issues with authenticity [39:30]
- Striking a balance between a strong administrative team and autonomy among the attorneys [40:50]
- Building the framework for the firm to grow after his eventual retirement [43:34]
- Using IT as a competitive advantage [44:45]
- If you want to create a team to administer your firm, be willing to bring in people to help you build your team—don’t try to go it alone [48:48]
- The vital importance of overcoming team dysfunction [49:20]
- Example of dysfunctional behavior and how it can derail a team [50:00]
- The importance of professional development for attorneys [52:20]