100: Proactively Protect Your Business with Matt Davis

10
Apr

Matt Davis is the CEO and Owner of Davis Business Law, a group of business lawyers dedicated to helping companies and entrepreneurs deal with the complex vulnerabilities in their business. He is also the author of The Art of Preventing Stupid: How to Build a Stronger Business Strategy through Better Risk Management. We talk about the business immune system report, how constant improvement always leads to success, and the difference between ignorance and ineptitude in business. 

—

Listen to the podcast here

 

Proactively Protect Your Business with Matt Davis

Our guest is Matt Davis, the CEO and owner of Davis Business Law, a group of dedicated general counsel and litigation experts to business clients of all sizes. And he’s also the author of The Art of Preventing Stupid. Matthew, welcome to the show.

Hey, thanks for having me. It’s a great day. I’m excited to be on the show. I’m a big fan of your stuff, as we call it.

Thank you. The excitement is mutual. So we always have this show with the origin story of each of our entrepreneur guests. So what is yours, Matt?

Well, I like to joke that I had a midlife crisis and started a law firm, and I’m kind of joking, and I’m not. I was, I practiced law. Really, at one point, I just practiced out of my house, and I had a really great clientele. I had a very, fair quote, sophisticated marketing strategy in that I wasn’t in the phone book, I didn’t have an internet presence, and I was just busy as I could be. I could stay busy 24/7 if I wanted to, and I had some friends working for me.

And I realized it was just too much, and it was wearing me out. And I was the sole breadwinner, and I have five kids. And so I realized, hey, I’m really vulnerable here. And I went out and started Davis Business Law and over seven years we’ve grown from me to 13 lawyers now and 23 employees and we’re just scaling from here. So, we’re in I guess six markets right now and we’re about to add another one.

So, what’s the difference between running your law firm and then one day have a midlife crisis or whatever, actually making a decision that, okay, I’m still an attorney, I’m still going to practice law, but I’m going to now create a company out of this. So is this a gradual shift or is this kind of a dramatic mindset shift?

Now, I ran into a company called How to Manage a Small Law Firm, and they were pretty instrumental in that paradigm shift in my mind and just suggested, hey, why don’t you do this? And I was a member of their group for three years, and I highly recommend them. And I just said, okay, let’s do it. And I went and I called my paralegal who was working at the bank and called her and said, hey, let’s go start a law firm. She said, let’s go. We bought the building we’re in now. And literally just within three months, we’re down here up and running and then just started hiring people. And so it was, for me, it was a pretty dramatic shift. I mean, it’s kind of what is Gerber who wrote-Michael Gross. Yeah, David Gerber calls it a entrepreneurial spasm. And that’s pretty much what I had and just took off running with it.

So other than buying the building and hiring people, which is kind of easy to do, maybe expensive to do, but it’s easy to do, what did you start doing differently from that point?

Well, we started marketing and we started building systems and we started measuring things, trying to figure out where our clients were coming from, where our opportunities were from, and then we kept working on getting me from working in the business to me working on the business, as again Gerber says, and it’s common. And now we’re at a point now where I can work in the business or work on the business rather, really as much as I want. I still handle some cases because I’m in a lot of ways still the lead lawyer, although we have really great lawyers. And so I like to keep a couple of clients active because it keeps me sharp, it keeps me in the business.

Yeah, it’s your personal laboratory, what’s working, what’s not working. So what, did you succeed from the get-go or you had some stumbles and some tweaking to do in order to make this a business?

Oh, we, you know, the thought that comes to my mind all the time is, the guy, what’s his name, he wrote Eat with The Sharks Without Getting Eaten Alive, Harvey Harvey McKay. Harvey McKay. He always, this line makes me, has been my salvation. He said, “I can’t believe how stupid I was two weeks ago.” Every week, I walk in every Monday, I walk in the office and go, I can’t believe how stupid I was two weeks ago because I am constantly learning something, constantly challenging something, constantly finding something we can do better.

So there has been no smooth sailing. Everything has been rocky seas and we’ve been successful, but we’ve been successful because we’ve built a good team and we’re willing to try things, willing to make mistakes. And, you know, for some reason, God smiles on us. Yeah, I think he likes Jamie or somebody in the firm because I don’t know why he would like me but there you go.

Okay, so you said the image on obviously was a big inspiration for you which was a big one for me as well. I call these systems management blueprints image for the first one. you came up with a process to prevent STUPID. How does that work?

Okay, now this will be fun because I love this. Now, ultimately we call it the Business Immune System Report. And that’s part of what we do because guess what? We keep getting better year after year after year. The idea behind the Business Immune System Report is that there’s, and this is what the Art of Preventing Stupid book is about. There’s seven systems in every business. And in effect, these are the word problem of what makes your business run. We’ll talk about word problem a lot today, or some today, because I like to talk about that. And the idea is that all of the things we need to accomplish in life are really one of those word problems that we hated in school.

So, but the seven systems are your management, your personnel, your employees, you could say that, your production, meaning the work you do, the plant or facilities, and some people have mobile plants or facilities, the measurements or metrics that you’re doing, the marketing of how you’re getting the prospects. And that’s different than sales because sales is ultimately how you convert those into paying work. And so we take those seven systems and then we juxtapose those with the three sources of all business failures, which are catastrophes, you could call them sucker punches.

They’re just where you get hit out of the blue from things you can’t control. And or ignorance, what you don’t know. And or ineptitude, and you can say ineptitude is where you’re slacking off, meaning you know what you’re supposed to be doing and you’re not doing it. And so the idea is, and let me do this by contrast. So I’ve been in numerous business planning sessions where they’ll use what the SWOT announces, which is draw charts, strength, weaknesses, opportunities, threats.

Okay, we focus on threats or vulnerabilities because that’s our specialty. Whereas Steve, you would be more of a strategic thinker. We would be worried more about the negative of what can go wrong. Because, and the reason we have strength in that area is lawyers are the ones who get the call when all hell breaks loose, when it hits the fan, right? But, so the idea is how do you get ahead of your vulnerabilities before they become problems? And we think, now going back to the SWOT, just has you ask, okay, what are our weaknesses or what are our threats?

It’s very general, not specific enough.

Exactly, and that’s where we, and that’s where this business immune system and or the heart of preventing stupid teaches people to ask and to brainstorm much better questions. So I’m looking over my camera here and I have a blank business immune system report up. And, okay, so the first category would be, what could be a management catastrophe with my firm? And the obvious answer is, I could die in a truck wreck today, right? That’s obvious. You know, I could look at marketing ignorance. And so, you know, what are we ignorant about marketing? And one of the things that we’re getting better at, but the better we get at it, the more ignorant I understand we are, is about Google SEO. And that’s important to us.

And so basically just to repeat how I understand it. So you have this business immune system report, you’re probing the business around seven areas, which is management, personnel, products, process, metrics, marketing, and sales. And you are looking at them through three lenses. What could be catastrophic here? Could there be ignorance or ineptitude? And essentially, you then have a diagnosis around these 21 different areas through the number of questions that you have and then you have a report and then you get to work on Fixing all those problems that you come up with.

Absolutely, and just picking a brainstorming with that structure is so much more powerful Than asking what are our threats? What can go wrong? it’s so much more powerful to have the structure to that. And then what we do is we use basically a modified Eisenhower matrix. And the Eisenhower matrix is what is urgent, what’s important. And we add a little bit of likelihood to it in the sense that, okay, well, yeah, I could get run over by a car, but that’s not very likely.

And so we use that to help ultimately prioritize the work. And this is coming out in my next book, which is called the Strong Protected Business. I’m trying to decide how to publish it. We ultimately figured this out, that number one, when we come up with things to deal with, or with vulnerabilities to deal with, number one, you’re gonna have the easy list. And you just punch them out, you just get them done. Okay, they may not be very serious, they may not be very likely, but if they’re easy and you can do them in five minutes, just get them done. That number one gets them done, but number two, it builds momentum for everything else.

Number two, you’re gonna have what Stephen Covey called rocks. You’re going to have projects that you need to work on. So for instance, one of our weaknesses right now is we ditched the Enneagram as our personality profile because we just weren’t getting anything out of it. It was too complicated. And so one of my rocks right now is figuring out what new behavioral index. I’m looking at the predictive index right now. I might look at Disc too. So that’s one of My Rocks this quarter at one of the projects.

Now, the third thing we figured out is, and this should come as no surprise, but I think it’s lost a lot, is when we’re ultimately coming up with what we call the strong, protected business plan, it’s got those three parts. It’s got the easy list. It’s got the rocks or projects. Those will be quarterly projects. And then we got to get to habits. Okay. And habits has been is something that’s been talked about a lot lately from, you know, books like the power of habit or atomic habits. And we look at things. This is what you need to do, this is what you need to stop doing, because those show up, you know, glaringly in people’s vulnerabilities.

Love this. You know, I’m thinking about this framework, the easy list, the rocks and the habits and the framework that we, my co-author Greg Cleary, we created the last year, the Pinnacle framework, we also have these three execution elements, which is rocks, you call them projects. We’ve got the action items, which is the easy list, perhaps, they can be knocked out in a week or two. And then what you call habits, we call metrics. So, how can we ingrain those habits using metrics to make sure that they are really being followed. So that’s very nice. Now, you mentioned the two of the three lenses, ignorance and ineptitude, that you are looking for. What is the exact difference between ignorance and ineptitude? I mean, someone can be inept because of ignorance as well, right? Or what is the exact difference?

There is obviously some gray area between the two. The main distinction is meaning you know it. So here’s a good example. We understand pretty well how to use landing pages to pick up traffic from Google. And so we understand that. And we’ve built pretty good landing pages. We’re happy with them and we’ve tested them, we know what converts and whatnot. Now, last week, we figured out that our Wichita reviews were not, because we self automatically populate reviews to our landing pages.

We missed the fact that our Wichita was just in the tanks. That was on us, that was complete total ineptitude on our part that we messed that up. We knew what we were supposed to be doing, we didn’t do it. We had a failure of execution. We ran our audit, our website audit, we got it fixed, but you know, scouts honor, I’m an Eagle Scout. We were pretty sloppy there, and it cost us, right? Now, ignorance is where you just don’t know what you’re doing. And ignorance can be hard to figure out.

You don’t know what you don’t know.

You don’t know what you don’t know, and I acknowledge that, but the trick is, you have to ask yourself, what don’t we know? What are our challenges? Where are our learning curves? Where we have to, and sometimes you’ll know you’re on a learning curve. And sometimes you don’t even know it’s there. And you know, you asked me earlier, has it been smooth sailing? No, we’ve hit learning curves all the time and we still hit learning curves. And any business that is growing and vital and really wants to go somewhere is constantly going to get learned. Now, the other issue is the solutions are different.

The solutions to ignorance are always found in education. And, you know, that’s something you need to learn. It’s a skill set you need to learn or what mainly skill set or a lesson and, you know, look Steve, the things, the resources, for instance, you and me talking and teaching people about this, that are, they’re so wide open. I mean, when we were kids, you used to have to go to the library and pour three books, now we got the internet, we can just get on the internet and learn things. The fix to ineptitude is generally better systems.

Better systems and better habits.

Exactly.

So, I was thinking as you were explaining the ignorance factor and we don’t know what we don’t know. So this is why we need people that we can brainstorm with, advisors, coaches around us because they have seen a lot of other businesses, so they will have a lot of other questions that they will ask us based on their experience than we may have asked ourselves because we have not done, not built other businesses, not seen other businesses in other industries. So I guess this is where you come in. You can ask these questions. You already have your checklist of questions. So you can surface those ignorances that are holding businesses back.

Yeah, absolutely. And we do not hold ourselves out as strategic planners or as business coaches, but very frequently we will end up at our clients scaling up or EOS sessions and work through them. And by the way, our scaling up sessions with them. And we’re like, wow, you guys, by picking apart your vulnerabilities, move really quickly because you don’t make many unforced errors. And so just having a really insightful session, and of course, having a strategic coach there to walk through your vulnerabilities just adds an extra element of power to what you do.

So, what is the practical application? So you go through your immune system report, you identify all those potential catastrophes, ignorance, areas of ignorance, areas of ineptitude. You then create that, you know, run it through your eyes and our metrics, what’s important and urgent, focus on the important big ones. Maybe they become rocks at some point. The easy list, knock them out, creating awareness around the habits. And then you have a strong, protective business plan. So how does these elements come together into a business plan? What does this business plan look like? Is this a business plan like typical business plan where you have a one year plan. These are the rocks we’re going to accomplish this year. These are habits you’re going to ingrain or does it manifest in a different way?

The answer is, it depends on the business and it depends on the speed at which the business wants to move. A static family business that’s just going through the motions will end up with the three columns, the easy list, the rocks, and the habits that need to change. You can do that once a year, once every couple years with them, and they’re sufficient. And frankly, a lot of companies like that, they don’t do anything anyway, because they’re just kind of satisfied and resting on If you’re working with a company that is a fast-growing company, really wants to move places, what we love to do is work with a EOS implementer or a scaling up coach and plug in as support just adding to what EOS or scaling up is doing.

And again, we’re taking the whole SWOT analysis and adding just a much greater depth because one of the taglines we live by is, if you deal with your vulnerabilities, you can capitalize on your opportunities. Another lesson I teach is, look, you’re either in the problem zone or the opportunity zone. It’s that, I mean, it’s a binary choice. And our job as lawyers by teaching proactive protection is to keep them in the opportunity zone. So when they’re working with their strategic coaches, they’re not dealing with stupid problems that they could have and should have prevented.

If you deal with your vulnerabilities, you can capitalize on your opportunities. Click To Tweet

Yeah, I love that. This makes a lot of sense. You want to give people the peace of mind that they’re not going to make a stupid mistake. They’re not going to take an undue risk. Their downside is covered, and then they can focus their energy to their upside, to taking advantage of their opportunities and sleep soundly at night and basically have all the energy driving them to grow the business.

Well, thanks. And again, the reason that we’re, I think, particularly skilled or particularly prepared and us, my firm in particular, because we’ve done the background work of sorting out where things can go wrong. We have some other resources too that we work on internally that we’re working to also get out to the media in general. And my CFO is working on that right now. But yeah, we see the problems. And I’ll tell you, Steve, I feel it really in my gut because this, just on a personal level, my mom was an OBGYN. And she was, my mom was just tough as nails. She was the only woman in her med school class of 1963, was a real pioneer.

And she came back to our hometown, which I chose to do professionally too. And it’s a small city and I had, it’s been a real privilege to practice law here, although of course I’m spread out now. And I can’t tell you how many people said to, have come up to me over my professional career and said, hey, your mom saved my life because she was a pioneer of breast cancer screening. And that was a change, a paradigm shift in medicine of let’s get ahead of that problem. And that profoundly affected me because as a lawyer, that’s not something we’re taught. We’re not taught to get ahead of people’s problems. We’re taught to deal with, and in law school, to deal with issues when they come up. Well, what if we dealt with them before they became a problem?

Prevention is the cheapest form of medicine. Click To Tweet

Prevention is the cheapest form of medicine, right?

Absolutely, yeah.

That’s awesome.

I’ve got my mom’s picture over here and she’s smiling everywhere.

I’m sure she would be very proud to hear you talk about that. So, Matthew, I’d like to switch gears a little bit because I’m really fascinated about what you have done with Davis Business Law. You built a one-person owned law firm, which is quite rare in my experience. Most law firms are partnership, structured as partnerships. And there’s a good reason for it, because the individual lawyers are the ones who cultivate the business, and it’s their personal clients, rather than the firm having the clients.

So how did you, but then it’s not a scalable model, those law firms are really hard to turn into a functioning or organization or enterprise, because basically it’s just a bunch of partners working under the same roof. So how did you flip that on its head on this concept and how do you actually build a scalable law firm? What does it take to build a law firm with known partners?

Wow, and I knew this question was coming and still I’ve got like so much to unpack about it. First of all, I had a really bad example with the law firm that I started out with. And I love a lot of those guys, but law firms tend to be run like fraternities and or sororities. And I’m saying that as an outsider because I was never a member of one, but they’re run like clubs and they’re just not run incisively and with direction. And so I have that experience, then I have the experience of just working A, by myself or B, I office with a friend of mine.

So I’ve got a broad experience in the law and the trick to building a law firm that is scalable is first of all, to have a good marketing message because we are very aggressive marketers. So we are able to generate clear messages that attract a lot of business. And we can do that in any market we choose to go into. And the other aspect is our recruiting is very incisive. We know who we’re looking for and some of that we discovered by error. There’s some lawyers at WorkFirst that are great people, but they just weren’t fit for what we do.

And we have some big businesses that are our clients, but the core of our business is small businesses, mom and pops, startups, businesses from one to 10 million in size. And again, we have a few bigger than that, but guess what? There’s a whole lot more businesses of that size than there are businesses over 10 million. And so that’s our playground. And we find lawyers that have the heart of a service, of a servant, that have the, you know, first of all, as well, are not afraid to go pick a fight for our people. Because, you know, we don’t hire people that in our trade, we just call desk lawyers.

We hire people who can look at anybody messing with our clients and go, okay, we’ve got to go to the courthouse and teach you some manners. We’ll be happy to do that. And our clients really appreciate that. But so ultimately that’s part of it. And this goes to the next point, which is we have to serve our attorneys like their internal customers. We have to make them a great place to work. And whereas big firms will just take these young lawyers, chew them up, make them bill 2,000 hours a year, which means they’re working 12 to 16 hours a day. We don’t treat our people that way and we give them a great work-life balance.

But also, when you just have a management team running the firm, it’s run a lot better. So our collections rates on our cases are 12 to 15% higher than the national average that I’ve seen published. And so, that’s why it’s a good model for me. I mean, I’m still practicing some law, but in effect, I’m getting paid to run the law firm better than the committee of partners would. And then we reflect that down into the compensation of the attorneys. And likewise, we have various bonus structures.

So when our attorneys are getting to where they’re not relying on our marketing, and we can track that, we compensate them just like we’re not paying for marketing. So they’re getting 8 to 10 percent more of every case and that adds up over the year. And so that was a long-winded answer because there’s, it is very doable in a lot of professional things. I have a client who is an archeologist and we talk, I work with him all the time because I love working with him. He’s fascinating to talk to.

But he’s built the same company I have. And I’ve got a friend that runs a veterinarian marketing business, and all of his clients have the same model that I have. So, but you’re exactly right. Professional services have traditionally been a partner-based business structure. And from my experience, both on the negative end, where I started out and on the positive end with what I’m doing now, it’s a very scalable deal if you handle it correctly.

So that leads me to the last question I want to ask you is this idea of synthesizing down your strategy into a single phrase. On a couple of example, your MasterCard, the credit card company, they came up with this idea that the biggest opportunity in the market is the areas where people are still using cash rather than going after the other credit cards like Visa, MasterCard and American Express. If they attack those markets, which are cash markets and find a way to convert them into credit card payment, that’s going to be their success.

So they call this strategy kill cash. That’s the phrase. put the furniture into a flat pack and design it in a way that people can take it home, it fits into the boot of the car, they take it home, they can assemble it and they don’t have to pay for shipping, they can have it immediately, pick it in the store, then it’s going to make them successful. They’ve been dominating the furniture industry for the last four years. So they call this flat pack. And there are other examples, Starbucks, the third place between the home and the office. So if you would want to synthesize the Davis business laws strategy to single phase, what would you say it is?

Proactively protect. It’s that simple. Now, let’s unpack that a little bit. So as lawyers, we deal with one thing. We help people deal with vulnerabilities. People don’t come see us because they want a cup of coffee. They don’t want to come see us because, you know, because they’re happy. We help them deal with their vulnerabilities. And sometimes vulnerabilities are active. That’s a case, right? That’s when things are bad. So we help them proactively protect their business.

Proactively protect your business—because vulnerabilities don't take vacations. Click To Tweet

Now, by the way, sometimes it’s really hard to get businesses to do that, and get them to slow down and go, hey, and so we still do a lot of litigation, we still deal with a lot of active problems. But when we get to work with our clients, when we can reel them in, say, hey, let’s slow down, let’s proactively protect this business. Because what that does for us is they take off. And by the way, as they take off, because they’re growing, and these are the ones we love to work with, it’s just creating more work for us, by the way. So that’s maybe part of the dirty little secret. But guess what? We’re adding value and we’re helping them because now they’re capitalizing on their opportunities instead of dealing with their vulnerabilities.

And they know that there’s someone having their backs. So that’s great. So Matthew, I think I really liked your concept. So proactively protect your business with Davis Business Law. It’s a good idea. So if people would like to learn more about how they proactively protect themselves or generally your approach or want to connect with you, want to have a conversation, where can they find you?

Yeah, the firm’s website is davisbusinesslaw.com. Again, davisbusinesslaw.com. And I’m on LinkedIn as Matthew Neil Davis, because Matthew Davis is so common. Neil is like O’Neill, N-E-I-L-L. We just, we’re Irishmen. We just lost an O across the name. So that’s where we are, and we’d love to help anybody out. And again, we’re, I don’t know, it’s not an again, we’re limited to what we can do by our markets that we’re operating in and where we have bar licenses. But if anybody just wants to talk or wants to get some ideas, I’d be happy to share. We’re a big open book because we believe rising tides lift all boats.

Okay, well, that’s great. Thank you, Matthew, for coming on the show and sharing this idea of preventing stupid mistakes, coming up with this business immune system report, and looking at the seven systems through the three lenses. These are very useful ideas. And for those of you out there, our listeners who enjoyed learning about this framework, stay tuned because next week we’re going to have another entrepreneur come to the show and share their bag of goodies with us. Thank you for listening. Thanks Matthew for coming to the show.

 

Important Links:

This entry was posted in . Bookmark the permalink.