Episode 11 - Verne Harnish

[00:00] In this episode of the your Law Firm success podcast I talk with Verne Harnish. For those of you who haven’t heard of verne, he is a world-renowned author speaker keynote speaker leader of a number of businesses which are all connected with successfully scaling up and growing your own business, I actually first came across it and when I read scaling up the book which contains a number of very practical examples as to how you can Implement practices to grow your own business what I didn’t realise at that time was actually the second book in a series the first one being mastering the Rockefeller habits although this episode we don’t isn’t focused specifically on the workings of a law firm it does contain a number of very handy practical tips and changes that you can Implement in your workplace to grow your Professional Services firms it’s done in a slightly different style and I was on holiday and Verne wanted it to do it immediately so it was done over teams so the sound and picture quality isn’t quite at the standard of what we’ve done previously but I hope you enjoy it nevertheless Verne thank you very much for taking the time to speak to me so i can to talk to you. I found your book scaling up to be invaluable I a fairly intensive book with a lot of practical assistance but I’ve referenced it a number of times in LinkedIn and when I did so you came back to me and said that legal sector was one that you were potentially interested in or potentially interested in doing a a similar book on is that right yeah we are in fact we’re doing a book scaling up for law firms but it’s really Stephen going to be based more on my first book mastering the Rockefeller habits which by the way was re-released literally today really yeah the 2024 Edition I’ve updated it it’s the 22nd anniversary edition it’s a book I think that’s more appropriate for Professional Services firms and it really gets at the fundamentals of what it takes just to organize people to get stuff done and that’s why all the organizations at some level are the same because we’re just trying to get people kind of organized to deliver a service in this case legal service to a client and it’s three principles just the importance of setting priorities making sure you’ve got the data that’s necessary to know that you’re running a you know well-oiled Professional Services firm and then most importantly that you’ve got this meeting rhythm of communication that is in place primarily so that you serve the customers better and more quickly and that’s something everybody wants the everyone’s time crunched right now and most folks believe that the Professional Service firm they’ve hired is doing nothing on their case doing nothing today on whatever it is that we’ve hired you to do and the daily huddle really helps the clients understand that the professional law firm is really on top of what it is that they need you to do whether it’s commercial or legal or criminal and so what was it about law firms that you felt deserved and approach to certain extent of its own well you know it’s something that’s common Stephen with All Professional Service firms is that there’s really nobody actually running the place um, it’s really can be just a collection of individual practices as opposed to a law firm that’s scaling so I’ll give you a couple examples we had an early client a law firm out of Dallas and when we did our face tool our function accountability chart I said all right who’s the head of the company and they put all five principles you know in that box they each own 20% of the practice but I said look you can’t have five people as the head of the organization from a operational standpoint so I said all right who’s going to make sure all the rest of these boxes are filled out who’s handling marketing who’s handling operations making sure it works you know just some of the basics of running the company and four of them pointed to the fifth and said you’re it and he knew he was he was the one that had kind of the skills and interest in handling that so all we really did was spend time trying to get legal work off his plate so that he could actually scale the business which meant our best legal client was actually, out of Atlanta besides shine lawyers which is a the one of the first law firms to go public B in Australia and I think the reason why that law firm did so well is the founding partner did no legal work really made sure that he was working on the business instead of in the business and at least finding the time during the week to do that even if you’re just a soul kind of practitioner yeah it’s something that’s come up a lot in the previous podcast episodes that were had is that those firms that appear to have been most successful have recognized from an early stage or certainly they’ve had a principle who’s recognized from the early stage the importance of not being on the tools but that can become quite a difficult issue for some firms to recognize particularly around that size that you’re talking about where there are five principles because they feel that to a certain extent yeah they can’t afford for somebody to be carved out entirely from the fearing in the practice you how do you discuss that well that’s where at least you make sure and that’s where your meeting rhythm is critical that you’ve set aside the time during the week to work on the practice so you know my early doctor Dr Hugh won you know he was the lone practitioner in his clinic but one of the first things did was set aside Thursday from 4:00 to 5:00 to have a weekly meeting with his team I’m telling you a lot of professional practices don’t even have that weekly meeting and he treated it as if he was in surgery you know you’re not going to be interrupted if you’re in surgery and he needed to do surgery on his business at least an hour every week and structuring that weekly meeting so that they could everyone felt heard they could get at the issues that needed to be resolved was critical the second was then the daily huddle and I’ve always liked to use the LA law you know television series as an example but the importance so I’ll give you I’ll give you a related example we have a PR firm out of Chicago so you know similar Professional Services firm and they would actually invite new clients to come visit the law firm at 9:00 because at 9 9 was their daily huddle and that’s whereas a firm they would review all of their clients projects just like La law would get in the room meeting room there and let’s review what we’ve got you know on the docket today and by going around in about 10 minutes and reviewing you know what’s up with that project of anything today what are any of the metrics primarily coughs Associated that were going to spend on the project that day and most importantly where is anyone stuck in being able to move this case this project this you know contract forward and reviewing those stocks every day first of all when clients saw that that was their biggest sales engine they said wow you’re on top of our case every day even if there’s nothing that’s going to happen today I know you’ve thought about us and number two if there’s anything that’s got you guys stuck in the next 24 hours let’s get a result now instead of waiting till we find out a week or weeks from now that there was just a misunderstanding or miscommunication so that fundamental meeting rhythm is what really allows you to run an effective organization and that just takes an hour plus another 40 minutes so something just under two hours a week you add to that then an hour for marketing and that was the big thing Regis Mckenna taught Steve Jobs Intel Genentech and me when I had just started the association of Collegiate entrepreneurs to set aside an hour at mine’s 10 o’clock Eastern every Monday to really focus on what are the things we’ve got to do to Market our because we run a Professional Services firm as well and so just setting aside those fixed times that you protect in your schedule is really that’s all that’s necessary even if you’re a sole practitioner in being able to move the organization forward you’ve got to invest those few you know way to think about it Stephen it’s the old stephen Covey sharp in the saw you know you’re walking away at the tree for four hours you got  

[10:00] to stop for a few minutes and sharpen the saw so the next four hours or eight hours are going to be much more effective and so if that’s all that’s required you’re under selling your book somewhat what’s that if that’s all that’s required is basically to have a meeting a regular meeting rhythm in Daily huddle then you’re under selling your book out somehow I mean I think well but when you’re assault when you’re a very small Law Firm you don’t have a lot of people you know it’s a different Dynamic if you have eight total employees versus 80 or 800 like sign lawyers again is a client of ours from way back when they’re public company Public LawFirm in Australia with offices all over the country that’s a different scale than having one office and you’re a sole practitioner so that’s why I like to start everybody on mastering the Rockefeller habits it’s really book one and then if you feel like you’re ready to graduate go to scaling up which is rockfeller habits 2.0 and so for those who it’s been it’s been interesting because in every single episode that we’ve done so far I think we have covered a number of books yes and we’ve talked about traction by Gino Wickman which is interesting thing come by and the myth Revisited and by Michael Garber which is a very interesting book which you know at the outset in terms of the people talks about what you mentioned there which is that people go into these businesses particularly Professional Services businesses as technicians as practitioners and then they’ve also to become the entrepreneur as well as the as well as the manager yeah and I think within smaller law firms that’s you know is definitely a major issue for growth so the Rockefeller habits we can now add this to our book list that we could recommend could you give me just a quick outline of that and why yeah why you’re really releasing it and what it would mean to the one to the owner or manager of a small Law Firm yeah well by the way gin Wickman who wrote traction was an early client of ours within his previous company using the Rockefeller habits to scale he then became one of our Rockefeller habits coaches right so  is just water down Rockefeller habits except he claimed to simplify by getting rid of the daily huddle the one thing EOS deemphasizes is the importance of the team taking a few minutes every day and sinking up but if you want to move faster you want to pulse faster and if you can uncover the constraint in the next 12 hours then it’s less likely to get bigger issue a week from now at your weekly meeting and so the three original Rockefeller habits really got at if you don’t feel like you’re achieving everything that you thought you could achieve it’s one of three things one priorities you’re working on too many or you’re working on the wrong priority and you haven’t been clear when you wake up this morning what is the most important thing everyone on the team needs to accomplish today that was what Ivy Lee taught John de Rockefeller Charles swab and all of the great Titans of industry is that fundamental and you can’t wait weekly it’s something you’ve got to do daily the second is the only way for you to know what it is that we need to work on next is to have the data for instance do we really know the profitability per you know client that we’ve got do we have accurate accounting we find out the second biggest weakness in all these firms is accounting they have a statement at the end of the month but they really have no idea where they’re making money and not making money and when you don’t have good data it’s hard for you then to make great decisions and then it’s you can have the data but if you don’t get in the room and talk about it you know I think what’s interesting is homo sapiens we’ve been around for a couple hundred thousand years we’ve had the spoken word for 100,000 years we’ve only had the written word for 5,000 we’ve only had Excel spreadsheets for 50 years so I know what we’re much more highly developed if we want to Survive and Thrive and that is to talk things through and the more you can up the talk time even if it’s that eight minutes every morning looking at the data that matters then everybody’s going to make better decisions so those are the three Rockefeller habits now in there we have our one-page strategic plan that we’re well known for we have our function accountability chart that has all the functions that a business must have even if you’re Outsourcing it even if you’re the long practitioner it’s your name in every one of those boxes and all you’re trying to do is figure out which one you’re going to give away next that you can delegate to somebody better than you so we still have all this people strategy execution and cash conversations in there but those are the three fundamental Rockefeller habits okay and so in terms of applying then to Legal sector yeah the priorities they’re different depending on whether it’s client priorities or business priorities the data depends on the information that’s been put into the keys management or practice management system that’s right and the talking and increasing the talk time is dictated to a certain extent by what you’ve agreed in number one the thing that we often find with and I and I’d be interested in in knowing a bit more about this in relation to where you work you know in North America primarily is does the bell of below feature as much as it does in the UK in terms of pricing yeah well by the way I’m broadcasting here from Barcelona Spain so I live in Europe oh do you yeah we have 273 Partners on six continents so we’re working on all six continents in any one day right and so idea yeah that’s why I mentioned shine lawyers out of Australia you know what’s interesting there is law firms can actually go public and we feature them quite prominently as well as a few other law firms and scaling up as well but ask me your question again about the UK from a pricing perspective in in the UK and one of the one of the subjects that comes up a lot is the billable hour yes and pricing and billing and measurement done on the basis of time and the sort of Leverage of human capital in many Industries that’s not the case and professional Professional Services is one and particularly Legal Services is one which it remains a real strong feature which I imagine makes it quite different from some of the areas that you would work in because of that unit of time yes how do you find that impacts the ability of firms to prioritize both in terms of their clients but also in terms of their business yeah well again at the end of the day you have billable hours but I hired two law firms one is a very well-known Law Firm but at the end of the day they got no results so I went with a smaller firm that had a better reputation who could bill me higher hourly rates but actually got me out of the lawsuit where the other law firm you know big powerful I know because they were not communicating internally that they totally messed my case up and so billable hours is just a piece of and my maintain you can charge more as the law firm did that’s smaller but in Orlando than the big powerful Law Firm because they again got me the results that I needed and that’s what I was looking for so all of those other techniques that we’re talking about really get at the quality of the work that you’re doing and to the extent that the quality of the work actually allows you to You’ll effectively charge more and makes it easier less expensive for you to get clients because that’s a real cost marketing is a real cost yeah then your margins are going to be considerably greater and one of the things that we’ve learned Stephen about creatives whether they’re Architects or lawyers or dentists or doctors is part of what you want to share in that daily is what I call show and tell did somebody discover something learn something today that might be helpful for everybody else to hear and so whoever can get up the learning curve faster wins but if you don’t have a daily and you don’t have a weekly that provide those opportunities to do that information sharing particularly rapid information sharing you’re not going to be up to learning curve as quicker 

[20:00] as quickly as your competitor who is doing those kind of meeting rhythms so how you structure and what you discuss is a very important part of that decision but again Michael Porter I mean Michael Gerber just says get systems in place he really doesn’t describe and he’s a good friend of mine he’s you know he I give him credit for the idea that we need to work on the business not just in it even if it’s for a few hours every week and then EOS bastardized our stuff and got rid of the most important which was the daily communication which means you’re up the learning curve faster than your competitors who are not doing the daily because that’s it because I think we always had a daily scrum we didn’t call it how the daily scrum and then we it became particularly useful during Co you know it was a real way of communicating with one another seeing each other’s faces and recently it’s something that’s dropped off together with the weekly of Team away meeting and I’m really thinking right we need to get back into doing that because you’re right it allows you also to get a sense of how people are feeling how people are feeling about their business how people are feeling about their jobs Etc or their work shine you know in the UK we have a number of examples of publicly traded companies publicly traded law firms as well yeah what examples do you think you can take of shine doing things particularly well that resulted in their growth that other smaller firms could adopt more readily or seem and maybe seem reluctant to do so yeah well let me go back by the way to the Daily on one thing we’ve learned is to shut the video off off on Zoom you know the most important thing is for people to hear and to speak those are the two most powerful senses that we were given as humans much different than other animals and what they’ve learned is that when video’s on unlike sitting around a table where I see you sideways here we’re looking face to face and it’s actually quite threatening to most people yeah and so there were some real again powerful research that we’ve reported on our competitors are unaware of just the subtleties around zoom and so our daily even our weekly we don’t have the video on we were using Zoom way before you know the pandemic because we’re quite a remote based company anyway and that really helps people to be more open not worried about what they’re wearing not worried about what the background’s going to be is the lighting going to be any good all of that kind of stuff really creates constraints or boundaries to just the rapid communication that’s necessary in in order for us to move forward so I I bring that up because Shine lawyers will tell you the daily huddle was the big difference in their ability to scale fast and to be able to share information because part of the promise of a larger firm is that you’re going to get the collective intelligence of that larger firm working for you when in fact for most that’s not existent it just means they’ve got a hundred small practices if they have a 100 lawyers then if they have 10 lawyers and it’s 10 small practices and so that’s been a big part of it and then number two the focus on marketing you know it’s again what Regis McKenna taught Steve Jobs and all of us is that is the most important function if you want to scale but it’s not going to happen if you don’t set aside again re just recommended an hour and the key question is who are the influencers you know who are the opinion leaders who are the folks that are going to be your key referral sources and are you actively I’m going to suggest the most important thing if you want to scale how many breakfasts coffees lunches afternoon teas I’m not big into dinners is the principal partner how many of those is he or she having on a weekly basis if you want a very important kpi so make the list and work that list of influencers and that includes being in touch with your clients and your team to just pick up the subtle issues that might be Brewing so because man you mess up something and your reputation can be lost quickly yeah and it’s a business professional service firms it comes down to our reputation yeah I think was a f that we close to and the you know they sort of they assess the likelihood of Partners meeting p Blind by their expense account which to a certain extent is similar to what you’re talking about around coffees and meetings I mean we’re really wanting and we’ve got it down to we know that in order to hit our targets we need to have our cly Business Development direct needs to be having 24 conversations a month yeah and we actually, work with an a with an agency Network called agency nomics and they have a 42-marketing plan based on the sort of Nest principles which are networking events speaking and thought leadership yes which is you this to me forms part of that overall Network do you get much push back from Partners around the daily huddle around I don’t have time for that I need to build my clients or I need to be Fee earning I need to be doing what often lawyers call real work yeah well that’s again why we’re talking about 8 to 10 minutes I mean I’m going to guess nobody’s billing every 15 minutes that exists in an 8 10 or whatever day that you’re looking at it’s that time where so I’ll give you an example so it’s outside your industry Michael D who I’ve known his SE since his second year of business Michael could assemble a computer in one minute in his Factory yeah every four hours not once every eight but once every four hours he would shut the factory down for 5 minutes and there were teams of seven four teams of seven made a cell of 28 and they would stop and sharpen the saw hey what’s coming down the line over the next four hours anything that we need to know special about that how did we do the last four hours and what more importantly were there any things in our way of being effective that we need to improve on the next four hours and look Michael wouldn’t shut it down for five minutes that’s five computers per person that he could have been producing but he knows the next three hours and 55 minutes are going to be extremely more valuable if you take time to sharpen the saw so but again if that meetings run poorly it’s why our coaches will get on with that daily huddle we’ll coach it make sure that we’re sharing specifics not generalities that people are sharing names just the fact that I’m sharing names and that I’m stuck because I haven’t heard back from so and so in a particular situation that’s going to trigger maybe somebody on the team who’s got an idea or by hearing a string of names you start to identify maybe we shouldn’t be doing business with that person you pick up patterns and remember all AI is pattern recognition and all that the daily does is up your own pattern recognition and gut feel for the business now going back to those lunches I love that what I’d call a Moneyball stat they’ve figured out that hey how big the expense account is actually correlated to how well the firm is doing I love when you can discover things like that what’s key is to be very proactive in knowing who we should meet with because we know if we go back now to strategy the key to strategy is saying no more than yes you know people who don’t have a strategy say yes to everything people who don’t do have a strategy say no a lot more than they say yes to opportunities to potential clients to people they hire and so that’s when you know you’ve really become a professional is when you know what to say no to not what to say yes to yeah you know I think it’s very important but just and I’m conscious of your time here time but just one last thing around this common wisdom or the common approach to zoom or the video conferencing would be for people to have their cameras on yes now you’ve explained why you like having the cameras off because listening and talking as opposed to the  

[30:00] visuals and the threatening aspect of the way we look on camera yes can you just highlight that again or maybe EMP emphasize that a bit more because I think that’s a really really important point to go to then for firms to begin reintroducing that daily huddle or daily Zoom but without people feeling obliged or that feeling that others are being rude by not turning their camera on good What the research specifically show Stephen is that with cameras on you’ll reach a decision much more quickly but you really decrease people’s willingness to challenge you reduce their creativity and you reduce their openness so by the way with that what our coaching Partners have been doing is you know we leave these quarterly sessions with our clients we’re saying because travel’s gotten a lot more expensive twice a year the annual and six Monon let’s do face to face where we have a chance to share meals and chat and be creative and all of that and since we’re only doing two face Toof face we can spend more money and make it a nicer experience and then what we’ll do in the other two quarters is we’ll do those over Zoom where we just need some quick decisions made we don’t really need a whole bunch more creativity and all of that stuff we just need to get down to business and make some decisions and so understanding that aspect of facing each other or being side by side and knowing when hey we’re just needing to do some quick sharing let’s get let’s get those cameras off in those in those situations so okay cameras on face to face is particularly threatening to underlings they’re less likely to be open about a situation that needs to get surfaced and remember as the leader you’re always the last one to know with cameras off we’re willing to be much more open and we’re going to hear what folks are saying better okay BR thank you very much you got it thank you very much thank you very much for your time and we look forward to reading if if scaling Up’s coming out again with more Professional Services sector but we also I’ll be putting in the notes around the Rockefeller habits and it’s re-releasing I’ll certainly ordering the copy yeah again out today literally it’s the Edition all right best of Lu thank you so much thank you very much here by so thanks very much for listening to today’s episode I hope you enjoyed it I hope you’re enjoying our content we’ be delighted to hear any feedback that you have you can find out more about the your Law Firm success podcast at mltdigital.co.uk/podcast Please Subscribe please share with your friends please share with anyone who you know that you think would be interested.