Episode 10: 5 Keys to a Profitable Law Firm with Justin Hill

Justin Hill is a trial lawyer whom has been representing individuals and businesses in and around South Texas since 2007. Justin serves as an advocate for those who have been injured or those who have lost loved ones as a result of a drunk driver, he is an active supporter and participant in the activities of the South Texas chapter of the Mothers Against Drunk Driving, and performs many hours of pro bono services for the Rape Crisis Center in San Antonio, Texas.

In this episode Casey talks to Justin about what he names as the five keys for a profitable law firm.

Prefer to read? Read The Transcript Below

Interview Transcript

Casey Meraz:

Hi, everyone. I’m Casey Meraz with the Lawyer Mastermind Podcast. Joining us today is Justin Hill. He’s a San Antonio personal injury lawyer here. Thank you for joining me today.

Justin Hill:

Well, thank you for having me.

Casey Meraz:

Absolutely, Justin. First off, tell us a little bit about your law firm, where you’re located, what types of cases you take and just give us a little rundown.

Justin Hill:

Sure. We’re a San Antonio based personal injury law firm, a small law firm, just me and a couple of staff. We focus on personal injury, but we do some product liability personal injury. We do trucking. We do car wrecks. In Texas, nobody’s really doing med mal anymore or worker’s comp so we don’t do that. We do a little bit of environmental work, but for the most part, general PI.

Casey Meraz:

Okay, got it. Awesome. How long have you been at the firm?

Justin Hill:

I’ve been solo since 2012 or 2013. Before that, I worked for a big plaintiff shop, Mikal Watts’ law firm. Now, he’s well-known all over the nation. But, I’ve been solo for about five or six years now.

Casey Meraz:

Okay, awesome. Well, that’s a decent amount of time. I think for a lot of attorneys going out on their own, usually those first couple of years start really being that determining factor of how they’re going to do. What did you find out? Was that your case as well?

Justin Hill:

Yeah. I have this conversation with a lot of friends of mine that are thinking of splitting off and starting their own law firm. You really got to humble yourself for one. You’ve got to be willing to go ask people. In our world, the whole ball game, a lot of times, is getting the cases. Because when you go out, you can’t afford advertising and all that. Early on, I went out, approached some advertising law firms and said, “Hey, can you peel off any work and let me work on some of your cases on a referral basis?” Where I had come from, I was not used to that but you have to humble yourself. You’ve got to live really lean. You’ve got to have an office that’s really lean and then a lot of luck, a lot of things after line up.

Casey Meraz:

Sure. Yeah, definitely. A large percentage of people that go off on their own don’t make it after a couple years, so it’s impressive that you’ve already been doing this for five or six years. What were some of the challenges when you first got started?

Justin Hill:

I think the biggest challenge is capital. Right? First, you’ve got to be able to fund your operation. So, I didn’t start off just myself. I did have staff. I did have an office. On the plaintiff side, you’ve got to be able to fund your cases as well. So, I think one of the biggest hurdles is having sufficient capital to be able to work your cases. Because look, we invest our money into a case and that case might not settle and we might not get our expenses back out of it for a year or two years. So, there’s a lot of capital outlay at the start and I think that’s one of the biggest hurdles for somebody opening a personal injury practice.

Casey Meraz:

Got it. How long would you say it was after you got started until you reached a level of profitability for the firm?

Justin Hill:

You know, we got lucky. I had a really good first year. When I say good, I mean we were profitable. It was no big time. But like I said, I went and approached people and worked on smaller cases and did a good job and got a good amount on some of the cases. But also at the same time, I kept my overhead insanely low. I paid on a bonus, performance bonus based system. I had an office that was a small room in another law firm’s office, which I think they charged me 200 bucks a month or something. I kept my overhead super low and I had a few things turn right. So, it’s a lot of luck and it’s a lot of being able to keep your overhead low.

Casey Meraz:

Got it. We got the luck and the bootstrapping. It sounds like you paid close attention there, which is really important. If somebody wants… I think everybody that starts a law firm, they’re like, “Hey, I want to go out. I want to do this.” Maybe they have dreams to make a ton of money or whatever that is. The very least, everybody wants to be profitable, but running a business is also completely different than being an attorney. What’s your experience with the differentiations of those two?

Justin Hill:

The biggest learning curve for me is learning how to run a business. You either have a passion for it or you don’t. I have a passion for being a lawyer. Because of that, I have to run a business. But, I’ve got friends that they love the business side and being a lawyer is secondary. So, there’s a huge learning curve to being a lawyer that owns your own business because you’re not taught QuickBooks or accounting when you’re in law school. You’re not taught HR or office morale or office culture or how to train employees. So, there’s all of these things you just have to learn as you go. That’s been a really big learning lesson for me. I’ve learned how to basically offshore some of that, literally some offshore, literally some just to handling my books. That’s not in-house anymore, I found a contractor to do it. So, lots of mistakes were made. Now, I think we’ve got a system that works for us.

Casey Meraz:

That’s awesome. Sometimes, unfortunately, mistakes are the best way to learn. I guess it depends, maybe not the best way, maybe mentor-

Justin Hill:

Some may not be able to stay.

Casey Meraz:

… but definitely a way to learn for sure. I appreciate you sharing that with us. Today, one of the things I really wanted to touch on are five keys to a profitable law firm. In your opinion, what’s the number one thing you need to be paying attention to if you want to run a profitable law firm?

Justin Hill:

Keep your overhead low.

Casey Meraz:

Okay.

Justin Hill:

I can’t overstate that. When I started my own law firm, and you said it a second ago, a lot of people start a law firm. They want to make a bunch of money. I think in the personal injury game, you have the guys with the jets and all that, so you have this attitude or personality that comes with this type of practice. Or, People start their own firm and they want to live large. They want to be flashy and they want to show off. A lot of them open their firm with too much of that on the front end.

Justin Hill:

My first office was an office in another law firm. My second office was a second story and my first story was a lady’s apartment. There was no great shakes at what we were doing in terms of flashy. I told my clients I don’t have a nice office, but I’m going to do a really good job on your case. I’m putting my money into your case, not into my office or not into this, or not into my car or anything like that. So overhead low, I just don’t think it can be overstated.

Casey Meraz:

Got it. And then with that, just talk about when case settles and you get that money. I guess, also not spending all of that right away too, huh?

Justin Hill:

Yeah. A buddy of mine here in San Antonio who went a similar path as me, he told me, “Look, invest in yourself.” We were talking about what’s he doing. He was older than me. Are you buying property? Are you doing this? He was like, “Invest in your own business.” That’s been my take on it too. As I’ve made money, I have improved our processes. I’ve hired more employees. I’ve done some marketing to get more cases. The better cases require more money, so we’ve invested in our own law firm. We think that’s been a really successful route and a smart move.

Casey Meraz:

Awesome. What’s your work week like hours-wise?

Justin Hill:

That’s a funny question because I’m a big believer in it’s not about the hours.

Casey Meraz:

Awesome.

Justin Hill:

There are weeks in which I’ll work 70 or 80 hours. Running up to trial, we were getting real close to a big trial in February. It was not uncommon for me to be in from 5:00 AM to 8:00 or 9:00 PM. That is not normal though. If everything’s slow and you’ve got a lull, I’ll probably get in, in an average week, 8:30 to 5:30.

Casey Meraz:

Okay.

Justin Hill:

We normally try to work normal hours for the staff here. They all voted. They work 8:30 to 6:00 everyday and get off at 3:00 on Friday. So, I let them pick that.

Casey Meraz:

Okay, nice. That’s awesome. Yeah. I’m a huge fan of not overworking but really just based on outcomes. How much of your time do you think is spent running the firm versus working on cases?

Justin Hill:

I think probably if you put the marketing side into it and things like that, it’s probably 30% business and 70% work in a normal week. But look, if we’ve got a lull in the legal work or deadlines hit and hit deadlines go, and so maybe I’ll put more into the business side to get ahead of it. But during the shutdown, nothing was moving on the legal side, which gave us a lot of time to do a lot of work on the marketing side, on our website, on our social media, getting our books caught up, and all those things that we do but we had extra time. Why waste it?

Casey Meraz:

Exactly. No, I love that. I’m glad that you took the bull by the horns and kept doing things that are right for the business, so that’s awesome.

Justin Hill:

Right.

Casey Meraz:

As far as the second most important thing for running a profitable law firm, what comes to mind for that?

Justin Hill:

I think you’ve got to surround yourself with really good people. A lawyer cannot do everything on their own. They have to be able to get assistance from their staff or from other counsel if the case needs a co-counsel or a local counsel. So I’ve always told people in our profession, don’t be so greedy to not involve others where it’s needed, don’t be greedy so that your employees don’t feel motivated to work. We are a big bonus structure here. So, our pay is what our pay is, which I think is market. But if we have a big year, everybody’s going to benefit from that.

Justin Hill:

I think you surround yourself, whether it’s your own staff or you bring in co-counsel or you bring in a contract worker. I have a case right now that I know is going to be really legal, briefing, heavy. I brought in a briefing lawyer. He’s going to get a piece. That comes out of my chunk of the case, but I know the case will be better for it. I know it will take some time off of my plate. So, you surround yourself with good people and understand that those good people should be compensated as well. I think that really changes the ball game for what you produce in terms of work product.

Casey Meraz:

Sure. I think surrounding yourself with the right team, obviously that’s important. I really want to touch a little bit more on your bonus structure there because, well, not everybody’s motivated by money. If they have that hanging in front of them, I feel like that is going to consistently bring a higher quality of work. Is that what you found?

Justin Hill:

Yeah. You can read the HR magazines and stuff on that. A lot of them are kind of iffy on whether people are really motivated by money. What I think it does is it makes sure that you retain talent. I don’t know if people work harder because I don’t really have any way to compare it because I compensate the same way the whole time.

Casey Meraz:

Sure.

Justin Hill:

I don’t see my employees going to monster.com and trying to find another job because our success has been good. And so, they’ve been paid well. Now, we’ve had years where it hasn’t been as good and their bonuses have been way less. They understand that we’re taking a ride together. It’s good for me. It’s good for them. If it’s not good for me, it’s not good for them. Really, that comes from my first law firm where my old boss gave a carve-out piece of a firm’s profitability, went to a bonus pool, and however bring that pool got, that pool got big or it didn’t. But I remember one year, that firm had a big year and some of the bonuses were insane. I thought that was fantastic. You don’t run into many lawyers that believe that people should be bonused, whatever they get bonused. A lot of the time, well, not more than this. We don’t have that philosophy. If the office does great, everybody should do great.

Casey Meraz:

That’s awesome and that’s great. That’s got to do wonders for your culture too. I don’t know about you, but one of the hardest parts of running a business that I found is always the people. If you have people that are going to stick around and be productive, you want to keep them and you want them to not be on Monster looking for jobs because that could throw a wrench in things.

Justin Hill:

Yeah, that’s right. Another thing that I’ve decided, I prefer, is I prefer people that don’t have a long, extensive history with other law firms or in the legal industry. I want people to come in, look, I’ve dealt with it before, where you get the person who comes in, who’s done it at another place. And then, you’re always dealing with, well, my old boss did this or the old office did that, or you should do this. Sometimes, that’s really productive and effective and it helps us get better processes. But sometimes, you end up swimming upstream against your own practices and your own culture. You have a staff member who’s rigid in the way they want to handle it.

Justin Hill:

My longest running employee right now, she was working as a night manager at a not very nice motel by the airport here in town. She answered an ad for a receptionist. She’s now the head paralegal here. She is fantastic, but she’s learned everything she’s learned on the job. She’s still learning, but that desire to learn, I can’t overstate how important that is in employees. I’ve realized that all of the successful for ones that I’ve had have all had that desire to learn.

Casey Meraz:

That’s awesome. I think that’s hard to find, honestly.

Justin Hill:

Yeah, I think so. So many people think their job is making a widget, that they’re going to come and they’re going to stamp a box every single day. They don’t really care what it looks like. They don’t really care what it is. If somebody has the passion to learn, they actually care what they’re doing and that’s why they want to learn. It just indicates a desire to produce a better product, I think.

Casey Meraz:

Yeah, no doubt. That’s awesome. That’s great advice. Okay. Let’s talk about number three then for running a profitable offer.

Justin Hill:

Number three, I think it could be number one. It could be number three. But, your legal work has to be outstanding. You can have low overhead and you can have that. There’s a lot of firms that I believe are productive and profitable. I don’t think their legal work is topnotch, they’re a mill. So from my perspective, I think number one, two and three are clumped really tight together. But, your product in a law firm is your legal work and your results. And so, you can have all the other things in spades. If you don’t have that, it doesn’t matter. Now, you might say profitable for a little bit, but that’s going to catch up with you. The online reviews and the online reputation and just the word of mouth and all of that is so pervasive now in how you’re able to get and retain new clients. But if you don’t produce a good product, you’re going to slowly wither and die.

Casey Meraz:

Yeah. That’s interesting. Do you think that firms that haven’t adapted it or maybe forward customer service have been or will really suffer now?

Justin Hill:

I think they are. You look at some of the old institutional law firms in a city and I think it probably, every city you go to, you look at some of the ones that were slow to adopt technology, slow to adopt a website or social media or any of that, and they’ve never really paid any attention to reputation management. In this city, you have seen some of them slowly just start falling down the line in terms of prominence and probably that equates to their bottom line as well. I don’t know because I can’t see their books. But, you look at some of these firms that were well-positioned to just dominate the internet and dominate reputation management because they were so early on a big mover and player, and they just didn’t, and now it’s too late to catch up, I think, for a lot of them.

Casey Meraz:

Yeah. That’s an interesting perspective. People, with the internet now, can, like you said, just leave an online review just from a bad phone call or even if they’re not even your clients.

Justin Hill:

Yeah, some of that’s crazy. But, that’s true.

Casey Meraz:

Yeah. I have seen a lot of the firms that are thriving these days really focused on that customer first and provide maybe a level of experience that wasn’t typical in law, in general, forever until pretty recently.

Justin Hill:

No, you have to. Because you’re right, if we’ll get a call for case that we clearly don’t take, if you look at our website, we’re not going to do your divorce. There’s no way you could think we will. You can get a call from a client who asked you to do the divorce and you’re like, “We don’t do that type of law.” And then, you’ll get a review that said they won’t take my case and it’s a one-star review. There’s really no way around that. So our take is, hey, even if it’s not the case we do, you listen to them. You treat them wonderfully. You apologize that it’s not the type of work we do. And then, you give them some sort of direction. So, San Antonio has a San Antonio Bar Association, they do referrals.

Justin Hill:

We always try to make sure that even if we can’t do it, we give them direction. Because today, you do not want an angry person, especially when you didn’t do anything other than your job, which ethically we can’t take cases that we’re not qualified to take. So, we don’t want to get a bad review for doing what we’re supposed to do.

Casey Meraz:

Or, answering your phone.

Justin Hill:

Right.

Casey Meraz:

That’s funny. Wow. Okay. I think we have time for two more tips here for running a profitable law firm. Really, I guess, they don’t have to be in any order, so just the next one that comes to mind.

Justin Hill:

Sure, processes. Find your processes, whatever those are. That’s been really hard for us to winnow down. We’ve had ones we like, then you start realizing this one and that one is stepping on the toes of each other, or these two are duplicative. So, we are constantly trying to figure out how to narrow down our processes so that everybody’s on the same page, and so that we’re not doubling up work. And then, I think at the end, if you want to have a profitable law firm, you have to understand that you personally are building something. I think you have a lot of lawyers who think the law firms, they’re piggy bank and take and take and take. And then at some point, if you’ve got a bad year or a bad quarter, all of a sudden you’ve got problems.

Justin Hill:

It’s been important to us to not run on a lot of credit or anything like that. We want to know that we are financially stable. When COVID and the shutdown happened, I told my employees that have been with me longer than three months, I said, “You all are not going anywhere. We are positioned for this. We have prepared. We have our own rainy day fund. Unless this goes on a year, you all are safe.” That’s important because I need them when we get out of this. If you’re not positioned or prepared for a rainy day, you might lose all your great talent.

Casey Meraz:

Yeah, no, absolutely. That’s really good advice. I don’t think we’ve even seen the beginning of what that fallout is going to be. Maybe some firms were able to get PPP money, but they were cutting it too close. Now that that’s going to be at an end, it’ll be interesting to see what happens here. The cash of game.

Justin Hill:

Exactly. If you’re a bloated firm, this is not a good time for you.

Casey Meraz:

Yeah, for sure. Wow. Okay. Well, that’s good. And then the last tip, number five.

Justin Hill:

Oh, I think I combined the two. Don’t use it as a piggy bank and have processes.

Casey Meraz:

Okay, got it. Yes, that’s right because I did skip over the processes. But, I did want to talk about that real quickly too because process is a thing that I think a lot of firms struggle with. I struggle with it. Do you have somebody that handles that? Do you all work together to create those?

Justin Hill:

I think I have created all of them. And then, we collaboratively keep changing them and fixing them and making them better. Early on, it was checklists and then it was forms. And then, those forms became digital. And then, those digital forms got incorporated into a document and file management system. So, we’ve got that workflow. I’m not going to say perfect, but it’s getting a lot better every single day. We’ve got it to a point we’re pretty comfortable with it. We actually had a big sit down two weeks ago on a big portion that we realized was duplicative. And so now, we’re combining the two. It’s a never ending process to make your processes better. But if you’re paying attention, it’s not hard. It just requires a lot of upfront effort and then a lot of commitment to them.

Casey Meraz:

Got it. I’m assuming that allows you to get consistent results as well.

Justin Hill:

Consistency across all things, so not just in your cases but in the way you handle phone calls and the way you handle assignments within your own law firms. So, all of it is affected and all of it should hopefully allow for everybody to have more time to work on what they’re hired to do.

Casey Meraz:

Okay, yeah. No, that’s great. I think that’s, again, just one of the areas that a lot of firms struggle with, creating process and then sticking to it. But the successful ones, the ones that figure it out and around long term, that becomes a core part of their business. So, that’s great. What advice would you give to somebody who’s looking to start their own firm right now in today’s climate?

Justin Hill:

I’ve just been having these conversations with people to… First of all, the climate is a terrible time to do it, so I told a buddy of mine, “Don’t do it. This is just not the time to do it.” Intakes down, we’re in a world where we represent people who get injured on the job or injured in vehicles. No one’s driving and nobody’s working right now, for the most part, so it’s not a good time to do it. Save and accept for people that are leaving and are bringing a docket of cases with them from an old firm or somebody is going to provide them with a docket of cases. With all that said, keep your overhead low, borrow office space at first. Your first step should not be I’m going to go do advertising. That should not be your first step. Your first step should be building your firm, building your processes and having some cash flow available so that you can use that for marketing if you decide to do that.

Justin Hill:

I would say overhead low, choose very wisely on what you need in terms of staffing. If anything, if you’re going out on your own right now, try to do it with one person and that one person’s going to be doing everything to start. And then finally, be able to humble yourself, be able to go to people that can help you and say, “I need help. I’ve never done this before. Or, do you have any extra work? Or, can you guide me on marketing or preparing for a depo?” Whatever the answer is, but be able to humble yourself and ask for advice. Too few of people are willing to do that and I just think it’s so much to their detriment.

Casey Meraz:

That’s a good point. Having that humility really allows you to learn faster and not make those mistakes and learn the hard way, so I think that’s solid. Justin, is there anything else that we didn’t talk about that you wanted to convey to the listeners today?

Justin Hill:

No. Right now, it’s a funny time. If you are not paying attention to all the free, wonderful CLEs that are available out there that keep popping up and are free for everybody, you are missing out. That’s my only advice. I’m telling all my friends that, too. There are these great CLEs because all these conferences got canceled, so they’ve just, I guess, gone free with it. I’ve had some of the most productive learning Zoom meetings I would have ever imagined. People are sharing their documents and sharing their presentation. So if you’re on shutdown and you’ve got a little spare time, start digging to see what free CLEs are out there because I’ve run into some just fantastic ones.

Casey Meraz:

That’s awesome. Well, Justin, thank you so much for joining us today. I really appreciate it. I look forward to catching up in the future.

Justin Hill:

All right, man. Thank you very much for having me on. I appreciate it.

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