Search
  • ea7114

Podcast – Starting & Running a Law Firm

Stefan Angelini is Joined by Daniel McDonald to discuss investing into yourself and starting a law firm. Do you know how to market a law firm or professional services firm? Are you an entrepreneur? Do you think starting a career in law in your 40s is crazy? How would you brand a personal sevices business? These are the things we go through


Stefan Angelini

Hey, folks, for everyone that's out there. Good day. I'm Stefan Angelini. I'm the host of the Investment Types Podcast. Also run a financial planning practice Angel Advisory, sitting here talking to Daniel McDonald, about starting a law firm and running a successful law firm. Daniel, thanks for joining me today mate. Really good to have you here.


Daniel McDonald

Thanks Stefan. Thanks for having me. It's great to be here.


Stefan Angelini

Where are we? We're in Melbourne. We're in lockdown lockdown. 2.0 still going strong. For anyone of you that is watching this video. I apologize in advance for my offensive haircut. My hair was getting out of control. I felt like I looked like one of the Beatles. So I got my wife to cut it.


Daniel, you know what I what I'm what I realized when she was cutting it, I realized I'm a very patient optimistic person. I always thought she was going to do a good job. She's a very pessimistic person she was she knew she was stuffing it up. I realize she was stuffing it up when she finished. But also realize that I've just cut my hair off because I'm slowly going bald.


Daniel McDonald

Well, I actually think she's done a terrific job. So it looks great from the front so and really, in this particular day and age and the way we're doing business in Melbourne, looking good from the front is all that matters.


Stefan Angelini

That's all that matters. The back, the back is chopped up, but I won't show everyone.

Mate so look starting a law firm running a law firm running a law practice. I could imagine it'd be an emotional thing to do. But could you tell me why did you first get involved in law? And tell me a bit about your history?


Daniel McDonald

Well, yes, how did I get involved in law, I was one of those people who did not have good enough uni scores to get into law when I was young. And so I got into IT strangely enough, and started my career as a software developer. And from there, I I started doing some consulting work and got involved with a very large ITT company, and started designing satellites, believe it or not, so I'm working in that space. And eventually I got into management just due to the fact I didn't want to travel around the world anyway.


Stefan Angelini

Yeah.


Daniel McDonald

I thought, what's the thing I can do now and you know I'd tell you where I can actually stay home. And the only thing that presented itself was management. And as a result of that, I found I had quite a unique skill set for management. And I was quite personable, I was quite empathetic, I had a good mind for business. And Business Management suited me quite well.


So I did an MBA and moved my life through various membership, not membership management business channels, until I kind of found myself working as a as a director at very, very large global company. And then from there, I took various C level roles as a CFO, the COO and CEO. And as a CEO, I got to the point where I felt from a management perspective, I probably had reached the pinnacle of my career. And obviously, various more CEO roles are probably gonna present themselves and before me, but I actually was felt feeling completely unsatisfied as a CEO. Believe it or not. and although I was quite skilled at it. And it just wasn't really doing for me. And I got to a point where I just reflected back on my life and thought to myself, at which point in my career was either happy, what type of work was it that I was doing? Where I was actually getting a lot of job satisfaction from?


And you know, the answer that kind of presented itself to me was consulting, now's the time, and I was out there, having face to face contact with people and solving their problems. That was where I was most fulfilled from an employment perspective. And, and it was at that time that I thought to myself, I am now going to see if I can get myself back into some sort of consulting role. And then I was faced with the dilemmas. I've been out of the IT space for so long, my skills are all kind of redundant in that area. And where could I offer consulting?


And as I started going through the various options that I had based on my own skill set, and obviously, you know, been leading companies for four or five or six years at the highest level. So the obvious choice was probably to perhaps be a management business consultant, to be honest with you. I couldn't think of anything worse.


Stefan Angelini

Yeap, yeap. yeap.


Daniel McDonald

So you know, that's why, I can't do that. I just could not be sitting there telling people how to run their business. And I was so I'm faced with this dilemma about what it is that I'm gonna do with my life and I'm in my 40s, right, I'm having this sort of career midlife crisis. And I was actually having dinner with a with a lawyer from Slater and Gordon's and I started shared with him the dilemma that I was I was dealing with personally. And, and you know, there are a lawyer, I happen to say to them, you know, it's just unfortunate the way my life has gone, because I would loved to have started my career like you as a lawyer. And and she turned to me and she said that, why didn't you get into law? And I said, Well, I didn't have good enough grades, you know It just wasn't ever going to happen. And she goes, hey you've got a master's degree business, right? And I said, Yeah, yeah, yeah And she goes, that'll get you striding. Why don't you just apply for law now? You get in. You've got that massive grades. It's just a walk in the door. And I'd never heard this before.


Stefan Angelini

You haven’t studied law


Daniel McDonald

Yeah. Yeah. So could it be taken a back. So I thought to myself, yeah you know I was 42 or something, I said, well, is that too late to start a career well I could be as good you need business and commercial skills. And if I decided to go down a part of commercial work, I would probably add value to that. So the next day, I went down to RMIT. And I enroll to do the Juris Doctor Course. I was working full time at the time as a COO and a CFO for a global services business. And I started studying full time. And three years later, I finished my degree.


Stefan Angelini

You are crazy.


Daniel McDonald

Yeah, it was crazy.


Stefan Angelini

To hear from software design, to management, running companies, and said, no, you know what, I'm taking new direction. I want to get back into consulting, I want to deal with people, I'm gone. I'm going back to school. And I'm gonna study while I'm working and got a kid.


Daniel McDonald

that's right. And I'll tell. That’s exactly you the thing that

Yeah, yeah, yeah, you're absolutely right. But I'll tell you the thing that was extremely attractive to me for doing that. And this is the thing about IT consulting, which was actually a dilemma that I was dealing with is one of the reasons why I chose lawyers.


Lawyers is one of those careers right. And there's very few industries like this, where the older you get, the more people have confidence in me, which is the complete reverse, you know in IT, right like you know, if you've got a computer problem, you don't want a 65 year old, IT guy showing up at your door, to sort it out at all. Like nothing, nothing puts you in a fear of terror, and having a 65 year old IT Guy. And my apologies or 65 year old, IT guy had there, I'm sure they're brilliant, but from a confidence perspective.


Being that old in that particular sector, you really have got to absolutely bring your own game to the table for people that actually believe that you can resolve their issues. But in the legal fraternity, it's completely different. The only the more confidence you have. And and so I thought to myself, you know, actually starting something at 40 is probably not too bad a thing, particularly in the legal industry, because I can potentially work 95 years old, and probably hit the pinnacle of my career at 95. So yeah, that's a silly decision.


Stefan Angelini

I love the word working on your 95 already prepared for it, Dan you got to turn your other speaker off, because I think I can hear me twice over which I don't want to do not want to hear me too much. Obviously working hard studying, study and practice. I think we're put a good now. Starting your own practice, getting involved finding business, so was the hard part. As people going to start their own business, they're like, alright, well, what direction I’m going to take obviously, you didn't have a legal background.


So you wouldn't have had the clients their any clients to bring across across from a different firm. How important to your business is was marketing in the business and actually bringing in I guess conversations about about about work and what you do for work. How important marketing been to your business over the say the last what, two and a bit years you've been running the practice?


Daniel McDonald

Well, I had some experience running a law firm. So I was prior to starting my firm I was the CEO law firm for a few years, which put me in good stead for understanding how a law firm operates. I, I've, you know, my salary my first company when I was in my 20s, you know, and I've had a series of other enterprises since then I think, as an entrepreneur, and it's almost like a disease, once you get the bug, you know, it's very hard to walk, like, you know, the ideas come and you start thinking about how you can manifest these ideas and actually do some sort of commercial outcome.


So I'm running it running a law firm put me in good stead to understand what was required to get the firm going. But you're absolutely right, from a marketing perspective. You know, I started the firm, I didn't bring any clients over with me, I obviously hadn't worked as a lawyer for for very long in the space. And I did have the dilemma of having to obviously get customers very quickly in order to keep my business cash flow, positive, and kicking myself in food and everything else with kids and braces and all that sort of stuff. That as the dilemma that anyone has, it's easy to start a business when you're sort of in your 20s. And you have no commitments you can live, Mom and Dad are in the car, who cares. But starting a business in your 40s, you know, your life is mature, it's at a very different place. And usually your cost overhead structure is significantly higher than it was in 20. So that's the dilemma.


Now, that was actually the dilemma that caused me to start my own law firm, because I knew I couldn't survive on great wages. Right? I mean, you know, 40 50 grand a year though, employed grand, I couldn't do that I wouldn't. I just couldn't, couldn't sustain myself. So in many ways, starting a law firm was very much a necessity as opposed to a to a dream. But back to your point about marketing, one of the interesting things and marketing. So obviously studying marketing at university, we understand it's all about push and pull strategies and, and brand recognition. And knowing who your market is, and knowing how to communicate with the market, starting your law firms quite challenging because you don't know any of that, right, you don't know who your market is, you don't know where they are, you don't know how to communicate them. And coming from my CEO role on the other law firm, which was very old then the marketing really was quite a challenging scenario, for a number of reasons.


Stefan Angelini

We don't see much law firms doing any sort of marketing.


Daniel McDonald

a lot of its by stealth, but, but there actually is a lot out there. And I think now that you've said that, you're probably going to see it, you'll start seeing it everywhere. That's a good start. But for example, I ran a Google AdWords campaign for a law firm, we're in Melbourne and the cost per click to try and capture that footprint around the Melbourne CBD was significantly high. And a lot of the calls, there was one inbound calls that came from about cost per click of up $6 $7 click in some stages, it was extraordinarily high.


Stefan Angelini

Yeap.


Daniel McDonald

And get a lot of people just ringing around for you know time wasters and what free advice, they're ringing around for a price, you know, you're paying six bucks to give free advice. And you know, occasionally two or three of them a month might turn into an actual matter. And then you're constantly faced with this dilemma of factoring in the cost you're paying for them to to reach your business, and then the return you're getting on the investment overall. And I drew the conclusion very early on, particularly after about a six month period, that I probably could have taken the money I've spent on AdWords, taken it outside, put it them right I'd set it on high, and I probably would have had just about the same outcome. And I realized very quickly looking at it, after the sort of the dust had settled on the investment was done in the return just wasn't there that in the particular Melbourne CBD that cost per click, you're absolutely competing for that advertising space. And I looked on Google, it has this tool that tells you how many people are in the area 250 law firms within a five kilometer radius from right here.


Stefan Angelini

Yeah.


Daniel McDonald

I walked away from this very, very concerned about, you know, how do you actually present yourself online and market yourself online when there's that much competition buying for that real estate. And so I was very much burned by AdWords and I started looking at very traditional ways of marketing, you know, referral people. Just cold calling, sometimes getting myself to those kind of events where I could be connected with people who particularly got a legal issue, everything but chasing ambulances down and hanging around outside of court. But it was it was it was on the agenda, right. You know If I had I was going to be down in emergency, are you okay? happen in the workplace. So interestingly enough, I actually moved the office from Queen Street in the city down to Altona. And I found, this is a great tip for founders out there.


I found, you know, when I scheduled configured Google, so I have my office down there. Even if you type my business name in after I'd moved in, it wasn't coming up on the first page. And I thought this is a really, this is a real dilemma, you know, because I was the only lawyer in Altona, pretty much no one could find me. So I actually engaged a marketing company and give a point point out to them thrive marketing, and said to them, cause I knew this fact I knew that Google AdWords pushes you up on the first page, or just the cost per click, because you're always there, it just, it automatically starts improving your search engine optimization.


So I said, Look, I'd like to run a really cheap and cheerful ad, just in Altona, just to push me up a bit for a month or so. So people can find me, I had no confidence in Google AdWords at all right. But I just needed to get up there. And I had no problem. So good people thrive marketing set it all up for me. And I think they turned it on at about 10 o'clock in the morning. And by 11:30. And I accumulated something like four and a half thousand dollars worth of market in an hour and a half, it was just extraordinary. And it just continued along that line. Right? Cause really was the only lawyer in Altona and there was a sort of local.


Stefan Angelini

Just targeted suburb.


Daniel McDonald

Yeah, just targeting a suburb. And that was quite extraordinary. It was a huge learning experience, 'cause all of a sudden, I wasn't out in the Melbourne CBD and competing, the likes of Slater and Gordon, everyone else, Russell Kennedy, they're all there. I was just this the lone guy out of Altona. And we expanded that footprint like Yarraville, Brooklyn all the way through Werribee and became my client buddies and my business just absolutely went gangbusters. And so much so that, you know, I've always been a firm believer, as you grow your business in line with your revenue, never, you know, a real bootstrapper I've always been a bit of a startup guy and you know being in the legal tenants are very expensive to have because insurance and stuff is quite costly.


So I started just chipping up my marketing spend online. And and then, you know, I really, really captured that area, and then I'm gone and then just done it again. I started targeting Brighton all the way up to to Frankston. And so what I've sort of done is I've looked for those hotspots around Melbourne CBD, where there's not so much competition for the real estate. I'm getting a lower cost per click and and that's how I've been picking up our customers we've caught on in Altona anymore where we ended up with an office in Altona, one in Brighton one in the CBD Now we're, we're all in, I was still in Altona, but were in St. Kilda right now.


Stefan Angelini

It's online marketing scares the shit out of people in professional services like me. Because there's so many stores that doesn't work like your original one, it doesn't work. But I guess if you do target an area and you become the only person there, it's almost like when you go to a local football club and everyone's talking about you because well the you're the only financial planner, they are you you're the only mortgage broker, they're the only lawyer that everyone knows. With Google, if you're the first one that pops up and they keep seeing you, I guess you're gonna establish a pretty good reputation. And then of course, you have to deliver.


Daniel McDonald

That's right, you have do deliver


Stefan Angelini

Deliver the wheels don't keep turning. Tell me so fews more now you would have come across some pretty interesting cases I could imagine. Is there anything that sort of sticks out in your mind as something that people might like to hear about? I know, there's been a few cases where you've had that we've had to lock up the court, go to court the next day, totally unprepared 'cause someone's called you in and you had a few wins. Tell me something, just just something might be a bit funny. If you're allowed one if you're in the allowed as a lawyer.


Daniel McDonald

I guess I'm not gonna mention any names. I think the thing about and this is the thing, this is the dilemma of any small business person is cash flow, right? it's great to kind of have this business and start actually deciding what it is you're going to do. Right? You know, there's so many customers in a particular sector, that I'm just going to specialize in that and that's what I'm doing and you've got an established brand and people know you for that and they keep coming to you but obviously starting your own. You're not known for anything. And so you really do find yourself in this dilemma of saying well, you know, you've got to pay the bills.


You've got to keep the lights on and you in particularly the early stages, you'll jump in anything that earns a buck, you know the outside. I pretty much particularly in the in the first year of the practice was, was doing every possible out of the came in the door, which really for the long isn't the greatest thing to do. And I'm grateful that and if anyone starting a law firm needs to make sure that they've got good supervision in place, and that's a confident person that, that you can go to bounce ideas off, you know, we, another thing we do in the law firm, is, we got matters when the skill set is a little gray, we have barristers that we can reach out to brief out to and get advice on that sort of stuff.


So there are sort of checks and balances in place to kind of protect us. But yes, you're right. I mean, I had a call on a Sunday night asking if I could attend a matter in the Supreme Court just to adjourn it off by another law firm. They told me it was just a directions hearing, which is a pretty informal hearing in the Supreme Court. I showed up in the morning. Now one of the things about the Supreme Court you depending on the type of matter that's going on there, you are meant to be the traditional robe.


So you probably say everyone seen a black robe and so those type matter needs to be robe, but a directions hearing usually not you know, you can just wear a suit. I've showed up for the dressing had no information about the case. And have arrived just to find out that actually wasn't a directions hearing I was incorrectly brief that I should have been robe. And I wasn't robe. And, and I've got in and I've got sue to do it. Right. So I mean, just my apologies to everyone. It's like showing up naked for something, you know, that's badly and see you that in the court. And I my adjourn was, was declined. And I found myself in a full blown trial with nothing.


So that was probably the most extreme scenario found myself it's every lawyers worst nightmare. Find yourself in the Supreme Court unrobed leading a trial with no information and we got through, we got through it


Stefan Angelini

Just leave him out into the ocean, just drop him off the edge of the boat and just make let him try and find his way back.


Daniel McDonald

You know, I am where am I application to adjourn was denied. I had this moment where I was sitting at the bar table looking at the barrister next to me. And it could have been a key safe for an hour and the judge up there and I looked at the door. And I thought to myself, what would happen if I just run out of here, right?


Stefan Angelini

It wouldn't have been the most silly thing to do.


Daniel McDonald

No, probably not out finally but.


Stefan Angelini

Oh well.


Daniel McDonald

Yeah.


Stefan Angelini

We don't have wished upon your worst enemy. But some people go through a main you're the unlucky one that did. So we spoke about a few things when it comes to investor types. I mean, we talked about all investing into yourself and investing into your business, it's a pretty big hit to the pocket. Because if you kept working and making an income, I mean, everything just keeps turning over, you're able to keep doing your investment. But when you go and start a new career or start a new practice, it takes a lot of money.


And you've got, as you said, you got to focus net cash flow, you got to be resilient, you got to try and find new ways to make money. What do you think come from your perspective, obviously been through it and the firm getting to a really good point now, what are some personality traits you think people need to encompass when it comes to running a business but especially running a law firm as well?


Daniel McDonald

Well, I think that the most important skill set for anyone starting any particular services type business, and I'd probably the first years the most fun you're ever going to have. After that, you know, you've got to deal with staff and, and issues around growing and everything else. But you are the product that, that that that is the important you are you are the product really and you've got to always remember in everything you do, you actually are the product.


So how you conduct yourself, and how you have and how you deliver is all you've really got. And I think the most important skill and whether it be a law firm or anything else, the most important skill to have is the ability to sell yourself because if you can't sell, you're absolutely dead in the water, particularly if you started most people sell off law firm start as a sole practitioner. And if they're unable to actually sell their services to convince people and build that confidence with customers, and they're dead in war. And, and unless you're absolutely got so much cash that you can employ somebody to go out there and sell you on behalf of you. And that's probably the most fundamental skill and important skill to have. It's absolutely important paradigms that you can, you can actually sell your services out there

Stefan Angelini

You are the product, you are the product.


Daniel McDonald

That's right you are the product. I think the other thing is, is and it's like this in any professional services, you need to understand know your client and understand their needs, and manage their expectations and over deliver where you can particularly, you know, like,a lot of people struggle with the quandary of over delivery, you know, coming from the IT space, project managers who usually are customer facing or always drilling down on individuals or over delivering, right, how you gonna keep this profitable, you're over delivering, you know, it's outside of scope, what are you doing, so you know, the profit margins are going down, or projects and the customer satisfactions going up.

And there is the tension, right.

And I think, I think that's what a good law firm does, is over deliver well, and does it in a way that exceeds a client's expectation. The profit is another scenario all together. And it's very difficult in a law firm, when you're selling time to manage over delivery, like in any business and over delivery can sort of be construed as scope creep. It's, it's usually it's not billable. It's high value to the client, great customer satisfaction, but it really drives your profits down. And that's where it's sort of setting up your organization is important.


Now, obviously, starting out, my business has been I over delivered as much as I could, everywhere I could, I wanted my clients to walk away, and not just satisfied but absolutely ecstatic over the experience. And I talked about experience, not the outcome. And that's really important as a lawyer, I cannot control the outcome. It's just too many variables is quite often other people making the decisions. I cannot control the outcome.


Remember, I have a mentor of mine, a few years ago was talking to me were selling business. And he said to me, he asked me the question, Daniel, what is a brand, right? And so what is a brand? A brand, you know, it's a logo, you know, it's a logo, right? It's a logo, maybe it's a tagline. It's how people recognize you. And your business. You know, it's something that embodies what you do. He does no, no, that's not what a brand is. And I said what is a brand there? And he goes, well, tell me about Coca Cola. I said, Well, Coca Cola it was a drink came from Coca Bean. It was invented in 1890 or something. It's now I think it originally had cocaine in it. That's where there the coke gets life coming on.


What is it about a coke you're like? I said, Well, I like it, because it tastes like coke. And here's what it does. It never tastes like anything else. And I said, No, it always tastes like Coke. Because so the thing you like about Coke is every time you open up a can of Coke. It always tastes like Coke. And I said, yes, yes, it always tastes like Coke. I know what I'm going to get. That's why I love Coca Cola, it always tastes the same. And he says to me, Daniel, that's what a brand is. The brand is a promise of an experience, right. And that's why people come back. And I think that's a really important thing to think about, you know, whether you're starting any type of business, but a particularly service type business. And one way you can always like a law firm control the outcome.


Thing is, I can't guarantee to a client, that you're going to win a case, I can't guarantee a client, that they're going to get the outcome there, I cannot do that. It just it just doesn't happen. But what I can and what I do have a degree of control over is the experience they have all the way through from the moment they start engaging with my company till that moment that outcome is delivered, whatever outcome it is, and I hope to walk away, whether they're dealing with me or any other lawyers in the firm. That's how we didn't really get the, the outcome I was after, but I just had an extraordinary experience all the way through, they over delivered to me, they communicated to me I knew what happening every step of the way.


They manage my anxiety, we deal with some highly emotive people, we deal with some people that are in some really, really terrible and tragic situations. Sometimes, it's really important role that we're able to take them on a journey and I hate saying the word journey, but it is a journey when you're in the legal system, and actually manage not just their expectations, but some of their emotional needs as well.


That's where it's, it's another element of what we do. But we're dealing with people who are quite often in very highly emotive state. And it's really important, they're actually there for them through the whole process. So when you know, when I talk, when I talk about the business with my team, you know, over delivering and making sure that we only manage customer expectations, we understand their wants and needs, and we communicate as much as we can to them at any time during the process and fundamentally, probably the most important thing in our products


Stefan Angelini

Not being about the the hourly billable rate, being about the client experience so important, and that's a build a big and long lasting firm. Yeah, it might hit the profit margins a little bit. But it's gonna it's gonna bring it goes later on, can do some great things for the business.


Daniel McDonald

Yeah, that's right. And you know, outside of the dealing with the over delivery is really an operational issue. So it's when you're selling time, it's very difficult to build scale into a business, right? Like you can't make widgets.. It's quite complex. And so traditionally, law firms have been able to do that by introducing efficiencies where they can, so quite often, large law firms, particularly with some of the older generation, obviously, IT has poured a lot of efficiency into the legal sector. But you know, back in the early days dictating and secretaries talking letters was, was one way to start pumping the workout, you know, and start getting that, you know, which, usually a taker, an old lawyer, an hour and a half pump out letter at full whack, you know, someone's buying, that's just not official, that's not customer satisfaction.


So the ability to dictate and have lower cost resources, do some of this work, and kind of builds that over delivery, that meeting customer expectations, keeping the price down to delivering on that tension. And, you know, through various levels of, of staff legal staff working in the business, and obviously, the introduction of technology, with further further looking at ways of not only establishing efficiency, but also introducing economies of scale into the business where we can over deliver without negatively impacting our cash flow and profit, and sort of still achieving that customer satisfaction. And, and that is the the biggest dilemma that we face every day.


Stefan Angelini

That's some good advice for any people out there that are looking to start some sort of a service based business. Focus on the customer. Be resilient at the start. Yeah, you might have to take whatever you can at the start if you haven't got regular clients coming to you already. But it just goes to show that it can really pay off if you stick to it if you stick to your guns if you do what you believe in and you really focus on the client.


Daniel, that's it for today, mate. I think that's been fair, some fantastic insights into you what you've done the business you're, you're an amazing man. Thanks so much for coming on and having a chat to us.


Daniel McDonald

Thanks Stefan. Thanks for having it's been great to be here.


Stefan Angelini

Thanks a lot for everyone out there. Thanks for listening. Bye


0 views
  • Black Facebook Icon
  • Black Instagram Icon
  • Black LinkedIn Icon

© 2019 by Angel Advisory

Stefan Angelini and Angel Advisory Pty Ltd are Authorised Representatives of Synchron, AFS Licence No. 243313.

The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Click here to view Synchron's privacy policy