80: The 4 Pillars of Building Value with Geoff McDonald

05
Dec

Geoff McDonald is the CEO and President of Geoff McDonald and Associates, a leading injury law firm focused on protecting injury victims and their families from insurance companies. We talk about the results-only work environment, the 20-mile march in business, how businesses can find their core focus.

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The 4 Pillars of Building Value with Geoff McDonald

Our guest is Geoff McDonald, the CEO and president of Geoff McDonald and Associates, a leading injury law firm in Richmond, Virginia, focused on protecting injury victims and their families from insurance companies. Great to have you on the show, Geoff. Welcome.

Thank you, Steve. Thanks for having me.

It’s awesome to have you. I haven’t had anyone from an engineering law firm, so I’ve got lots of questions for you today. But before we dive into the business as such, I’d like to learn a little bit about your entrepreneurial journey. How did you become from an attorney to actually an entrepreneur running a law firm, quite a large law firm in Richmond.

Well, that’s a pretty big question and I’ll try to answer it as succinctly as I can. When I graduated from law school, the economy was not that great. Today, the economy is just booming for lawyers. So if you have any kids or anybody listening that’s thinking about going to law school, please tell them to go to law school because honestly, there really aren’t enough attorneys. People find that shocking because for so many years, they’ve been hearing, oh, there are too many lawyers, you can’t swing a cat without hitting a lawyer.

But the truth is, about 2008, 2009, people stopped going to law school. And so enrollment is probably as low as it’s been in the 1970s. Of course, our population is much bigger. And so now, you know, the few law school graduates that there are, particularly the ones who want to be litigators, I mean, we’re fighting, we’re fighting over them. But back to the original question, when I graduated from law school in 1989, the economy wasn’t that great. There was an old adage that the A students become law professors, the B students become judges, and the C students become millionaire trial attorneys.

And that’s basically true, although that’s all pretty much in the context of working for other people. And I never had an interest in working for someone else. I think most entrepreneurs, they’re just different, and not everybody can be an entrepreneur. I’ve heard entrepreneurs compared to having the same mindset as a juvenile delinquent. You know, juvenile delinquent wakes up and says, man, this world is messed up. I’m not playing by these rules. And that’s how most entrepreneurs are. And I was the same way. My heroes, and I always love to read biographies, people like Gandhi, Nelson Mandela, Abraham Lincoln, going way back. I mean, they didn’t work for anybody.

They just hung a shingle. And all of them, something they have in common is they just weren’t happy with the status quo. You know, most of those folks and most entrepreneurial lawyers, you know, we went to law school because we viewed the law a little bit differently. We saw it as a vehicle for positive change in society. We didn’t, we did not go to law school to keep the world safe for corporate America. And so there’s a difference. And so most entrepreneurial lawyers, you know, they went to law school because they wanted to change things. They wanted to be a force for good. And the question is, how do you do that? Because you don’t know how to practice law.

Because they don’t teach you how to practice law in law school. They teach you about the law, but you don’t learn anything at all about the practice. And so the first thing I did was I hung a shingle and it was in the basement of my apartment. And my first desk was a wooden door nailed to two saw horses and an old-fashioned typewriter with a big bottle of whiteout. And that’s how I started practicing law. And if you had a legal problem, I could help you. And so I tried to teach myself the practice of law. I was blessed with some very, very good and understanding mentors who helped me along the way.

But probably after about 10 years of practicing law, it became apparent that I wasn’t a very good businessman. And so I hired a business coach, and the business coach said, Geoff, you have to start thinking more like a businessman and less like a lawyer. And of course, I said, well, what do you mean by that? And he said, you have to hire a COO to run the place. You need to take yourself out of operations. And you need to hire some young attorneys. And you need to take yourself out of production and hire them.

And of course, my response was what any lawyers would be, is like, I’m the only one who knows how to run this place. And so why should I hire somebody else? And why should I hire young attorneys when I can do it better? And he just stayed on me and said, Geoff, you’d be surprised. There are actually people who are good at running things, and they might even be better than you. And there might actually be young attorneys who are better at this than you are. And so he got me to trust the process.

And it was probably about 10 years into practicing law that I really started thinking more like a business person and more like an entrepreneur. And what he told me and what I believe is true and I’m sure you probably found this as well is that it’s an entirely different skill set involved in growing a business than running a business. And so, I started doing that. So really, while I’ve been in business for 30 years, I’ve only been running my law firm as a professional law firm, an entrepreneurial law firm for the past 20 years.

Entrepreneurs are like juvenile delinquents in society - disruptive yet necessary. Click To Tweet

Got it. So a couple of things that you said, which really struck a chord with me. One is the, you talked about this door desk that you had, which is actually very entrepreneurial. So I just read a book about Amazon and they had door desks. This is how they started. And they probably got the idea from you because they started there in 1996. And it was kind of a symbol of frugality. So they had a door desk for everyone for a few years in the beginning. And the other thing you talked about is how entrepreneurs are like juvenile delinquents in society, which I agree with.

And in fact, there is research to say that it’s only about 1% of the population which is entrepreneurial. And it’s like a yeast in bread, you know. In a small quantity, it really helps the bread grow and great. But if you put too much in it, then it spoils the bread. It’s really good for society not to have more than 1% of entrepreneurs. And maybe the problems in America, you have a lot of immigrant entrepreneurs. You actually have a little bit more than 1% and maybe that creates some chaos sometimes here.

The other thing you mentioned was that that it’s different to be an entrepreneur than to run a business. And in fact, maybe it’s 1% of the population that’s true entrepreneur, but people who can actually run businesses, it’s a lot fewer than the number of entrepreneurs. It’s easy to come up with big dreams, but to execute and to make it happen, it’s much harder. So, to find a great CEO is really a huge, a giant step toward building a company.

I could not agree more with you.

So, okay, so let’s talk a little bit about building your company and your CEO was definitely a big step. What I’m always looking for in this podcast is what I call management blueprints. So frameworks that people use to build their business, something that they picked up from a book or they learned somewhere in a seminar or they figured it out. But do you have a framework or maybe multiple frameworks that you have applied to build Geoff McDonald and Associates?

Yes, absolutely. And of course, your framework for growing your business and running your business, it’s going to be different when you start versus when you’re in your adolescent stage or a more mature stage. So obviously, when you start your business, your business model is going to be focused more on marketing because you don’t have any clients. And so you’re going to be thinking about, okay, how can I eat this week? How many clients can I get? And so I was very blessed. I was able to put my hands on a book called How to Start Your Own Law Firm 101. And that was just a genius book. I don’t know who wrote it. I really wish I still had the copy. But I followed that book to a T.

And one of the things that it said was have a five-pronged marketing strategy. In other words, find five different places or sources of business. And so of course, this being 1990, I looked to the Yellow Pages, I looked to other attorneys, looked to doctors because doctors quite often treated injury victims. I looked at representing labor unions because, you know, they represented lots of blue-collar workers who might need the services of an attorney if something happened to them. And so I came up with, you know, five different things. Obviously, today, that’s just marketing is just one piece of running your business. You know, it might be just 20% of it.

It's not about being just an entrepreneur, but running a business successfully – a feat far more challenging. Click To Tweet

And so today, what I try to do is rip R&D, research and development, or rip off and duplicate. There are a lot of super, super smart entrepreneurs out there, great mentors, world-class coaches. And, you know, I would say that probably the most meaningful book that I read on how to run an entrepreneurial firm and grow it would be Berne Harnish’s The Rockefeller Habits. He had a very simple, straightforward, one-page strategic plan and we probably used that blueprint for about 10 years. The problem that we encountered was the problem that a lot of my peers had was that, you know, we focused primarily on quarterly strategic planning sessions and monthly follow-ups.

What I found in my business is that you really can get off track from quarter to quarter and honestly even month to month. Things start falling off the calendar. If you miss a monthly meeting, it’s two months since you’ve met. A gentleman named Gino Wickman, I think he’s from Detroit. He had the same problem and he wrote a book about how to get back on track. He was a big fan of Vern Harnishes and he talks about Vern in his book and gives ample credit to him. But people were just getting off track and so he came up with a system, entrepreneurial operating system, EOS. He writes about it in his book called Traction.

And what they believe in is, you know, weekly meetings, no more than 50, 55 minutes tops for six weeks, and then you take a two-week break. Obviously, you begin the year with, you know, setting goals, I think he calls them rocks, and you just make sure that everybody’s on track. Since we started having traction meetings about three years ago You know a book came out called Measure what matters by John Doerr and it just blew my mind. I remember where I was when it was given to me it was given to me by I’m not going to say the name of a company But a friend of mine who is a project manager for a company said his supervisor gave it to him and said, hey, read this, we’re going to start using it. And then he never heard about it again.

And I could tell by looking at it that the seal hadn’t even been cracked. I mean, nobody had opened that book. And so he gave it to me and, you know, I took a week off and it was during a conference and in the afternoons we were free and I just sat on the beach and I read that book. And what it contains is it’s the blueprint for Google. They use a system, a goal setting implementation system called OKRs, which stands for Objectives and Key Results. And in the back of the books in the appendix, they actually have the memos and letters that Google used to roll this system out to their people.

I think most people think that companies like Oracle, and I believe this started with Larry Page, I believe was at Oracle, and he’s the one who created these, and John Doerr worked there, and then he actually bought in early at Google. I think he bought maybe 17% or something like that when they were still working in somebody’s garage. But what blows me away is that most people think that companies like Google and Oracle, they were just in the right place at the right time. And it just happened.

They were in Silicon Valley and everything came together for them. But the truth is they had a plan. Well, actually, the truth is they didn’t have a plan until John Doerr showed up and he’s talking to the founders of Google, Sergey and his partner. And they’re like, he’s like, hey, we need a plan. If I’m going to invest all this money, which wasn’t really in the scheme of things, a huge amount, but it was all the money he had at the time. He said, I’ve got skin in the game. I think we should use this. Larry Page came and Andy Grove or Larry Page. I can’t remember. It was Andy Grove.

Andy Grove. Yes. And he borrowed it. Peter Drucker, who came up with the management by objectives and he refines the objects and key results. So, it’s great I just want to reflect on some of the things you said so. So definitely, I talked to him and he told me that he actually And just had a weekly meeting because, yes, people get off track. So, yes, in a month you can definitely get off track but even even during the week you can get off track. So, that’s tremendous. So you’ve definitely been out there and you’ve been trying multiple systems, Rockefeller habits, traction, OK ours. On your website, you talk about a results-only work environment. I’m curious about what do you mean by it? What’s a results-only work environment? What kind of other alternative work environment could there be?

Yeah. So we call it a ROWE, results-only work environment. So what that means is that if you work here, you have goals. We believe that you will miss 100 percent of the goals that you don’t have. And so we believe that it’s important for everybody to have goals, even if you’re, you know, the front office manager or the receptionist, it’s one ring, not two. And our paralegals, who we call case managers, they have a set of goals and we, attorneys as well, and we track them on dashboards, and so teamwork is one of our goals and, you know, when you work together as a team, you could always do more together than you can by yourself.

But we’re not like a little league baseball team. We’re really more like we like to think of ourselves as an all pro football team with you’re always going to have a young rookie nipping at your heels. So you have to stay sharp. What I found is that most people, they like having goals. They like being motivated and you’re always going to have problems when you measure people’s effectiveness. I think there’s something you’re aware of called Goodhart’s Law which stands for the proposition that any metric that you use to measure somebody’s effectiveness becomes meaningless over time because they find a way to gain the system.

Most people, they like having goals. They like being motivated and you're always going to have problems when you measure people's effectiveness. Click To Tweet

And so probably about every five years, you need to throw that out. I think there’s an old saying that says, when a measure becomes a target, the measure becomes worthless. And so, what we’re finding is that, yeah, there are people who will game the system, and so you have to shift your focus to other metrics. And so, all of our metrics are designed to help our clients have a good result at the end of the day. And so that’s something that doesn’t lie. Unfortunately, if you do X and Y, you’re gonna get Z, not part of the time, 100% of the time.

And in our business, if the cases aren’t being closed and the money’s not coming out of the other end for the client, then you’re probably not doing A or B. And so, we take this very seriously. And in our business, we’re kind of like Robin Hood, we take from the rich and give to the poor, but we take very, very good care of our married men and women and so everybody knows that if you work here, there’s gonna be expectations for your performance.

So, what kind of measures, I mean, if that sounds confidential, you can maybe share a couple of them. What kind of metrics do you have where you can measure people on a weekly basis in injury law firm? How can you measure effectiveness and productivity?

Sure, I’m happy to talk about it. I mean, one of the things, what we call a core focus, and the core focus is different from a core value. A core focus is what separates us from the other guys. And one of our core focuses that we think we do better than other people is we build value and you essentially have four pillars in building value, and the first pillar, believe it or not, is client contact, communication. So you want your attorneys to talk to your clients. You want your case managers to talk to your clients. And you know, we ask our attorneys and case managers to proactively call the clients at least every 30 days.

The core focus is different from a core value. A core focus is what separates us from the other guys. And one of our core focuses that we think we do better than other people is we build value Click To Tweet

And so we have dashboards and we’d like them to keep their dashboards at 80%. And when they’re doing that, clients tend to be happy. They’re well informed about their case and that things don’t fall through the cracks. The second thing we ask them to do, and it’s also on their dashboard, is, you know, we expect them to do file reviews once a month. So, a file review in this context in our offices, the attorney sits down once a month with their case manager or paralegal and they go over the case. And so, there’s a meeting of the minds, everybody knows exactly what the status is.

And so, I would say that those two things, which comprise the first pillar of building value in our business, they probably would apply to pretty much any service industry, whether you’re selling an accounting firm or some other type of firm. Client contact is a big deal. It’s a big deal for us because the number one knock on attorneys is they don’t call you back. The number one reason for bar complaints is that my attorney won’t call me back. So that’s the first thing we do. The second thing we do that I think may apply to all businesses and not just law firms is we focus on something called the Pareto Principle.

And so we try to identify the top 20% of cases in our office that result in 80% of our income. I thought probably for about 20 years, Steve, that speed equals profitability. And that’s only half true. Speed equals profitability on the smaller cases that tend to be your loss leaders. You want to move them as quickly as you can and get them through the office. But the bigger cases, the more valuable cases, speed is not so important. You want to build value on the cases. And those are things that we measure as well.

The other two pillars of building value for our clients probably don’t have as much application outside of the practice of law. But the third one is you need to make sure that your client does what the doctor tells him to do. If the doctor says, hey, you need shoulder surgery and you say you don’t want it, the value of your case just went out the window because you’re not a good patient, you’re not doing what the doctor says. And so, we try to make sure they get all the medical treatment they need before their case is over. And the fourth pillar of building value in a case in a law firm is litigation.

You have to be prepared to hold the insurance company’s feet to the fire. And so, that means that if they’re not going to negotiate in good faith, if they’re not going to put a fair offer on the table, you have to be willing to file suit. We have found that the simple act of filing a lawsuit against an insurance company, it gets their attention and right off the bat, it results in an increase of about 24% from the last offer. And then if you go to court and you go before a jury, you can get much more than that. But without the threat of litigation, the insurance companies are not going to take your case seriously.

Well, I can see that. I can see that. That’s very interesting. So, you also talk about striving to be servants. What do you mean by that term?

Well, that’s a good, that’s a great question and it really goes to the heart of who we are and why we do what we do. I mean, our mission is to protect the rights of injury victims and their families. One of our core values is to help other people or service. And in order to be servant-oriented, you have to be humble. And so there’s a concept, maybe you’ve heard of it, it’s called servant leadership and it involves inside the law firm removing obstacles in your people’s way. You hire good people, you train them and you get out of their way. You let them do their job. You meet with them, you meet with all your direct reports and so I meet with my managers once a month.

Servant leadership involves removing obstacles in your people's way. You hire good people, you train them and you get out of their way. You let them do their job. Click To Tweet

I meet with all our attorneys once a month and mostly we meet to see where they are but also to encourage them. We have a policy here at Geoff McDonald and Associates, you’ve probably heard part of this, never criticize in public. Well, guess what? We don’t criticize in private either. What we talk about are strengths and opportunities and quite often when something goes south, it’s not a bad thing. You know, it’s a growth opportunity. When we go to court and the jury doesn’t see the case our way or we get a bad result, you know, we just, you know, we believe it’s justice denied. You know, we appeal it, we fight harder, or we just move on to the next one.

But servant leadership is something that, that, you know, we do our best to practice here. I have a COO who was in the Marine Corps for 23 years, and believe it or not, he’s a proponent of servant leadership as well. And so we really are on the same page with regard to that. But service is something that I think separates us from other law firms. We believe in staying active in the community, because it sounds like you went somewhere, you left, but we’ve never gone anywhere. We’ve always been here, we’ve always been embedded in the community.

We have a non-profit partner of the month, so we raise money for a different non-profit every single month. Quite often these non-profit opportunities enable us to get out of the office. Last month we did Habitat for Humanity, and so half of our firm was out there with a hammer and nails. And so we get to do things like that. We also give one day of PTO for them to work on a non-profit or to volunteer for a charity that’s near and dear to their hearts. And so we talk about it and we also do it, we put our money where our mouth is.

That’s awesome, that’s awesome. So I’ve got a couple of questions, it’s kind of a different topic. You talked about last time when we spoke about your 20 mile march, this concept of regularly hitting your strides as opposed to doing big campaigns. And we are going into the details of where this comes from, this whole concept of the 21 March is basically, but the point is if you can hit your stride on a regular basis, you’re going to grow. And you came up with the 21 March, which few companies actually do. Can you tell us a little bit about what it is and how did you stumble upon it?

Well, again, it’s a concept that I learned about through one of Jim Collins’ books. Collins books and he was talking about the race to the South Pole between a Norwegian led team and a British led team. The Norwegian team, they had this idea that no matter what we’re going to do 20 miles a day. If weather’s good, we might be able to get 50, but we’re only going to do 20. When the weather’s bad, we’re going to still do 20. We’re just going to fight through the adversity. The other team, you know, they, when the weather was nice, you know, they went, you know, 40, 50, 55, 60 miles in a day.

And when the weather was bad, they just hold up until the, until the, you know, the good weather came back. And what happened was, you know, you know the rest of the story. The Norwegian team beat the British team by about 34 days to the South Pole and before they, you know, on their way back, the British team froze to death. And so, how does, what does that have to do with the practice of law or running a business? It means that when you have a good year, you don’t go crazy. You know, a lot of law firms flame out because they have a good year and they increase their marketing budget by threefold or fourfold, and then all these cases come in, but they don’t have the back office or the operational legs under them to handle the cases, and then chaos ensues, and it could really, really cripple a law firm.

And so, you know, what we try to do is, you know, when in good, you know, whether times are good or times are bad, you know, we try to stick to our plan. And so we have, you know, we have marketing goals. We keep our marketing budget, even during COVID, we did something a little bit controversial. You know, we continued marketing. Even though people weren’t driving, a lot of people weren’t working, we didn’t cut our marketing budget. Our idea was that we would, you know, we would sort of leapfrog our competitors, all of whom slashed their budgets during COVID for about three months. Was that a good thing or a bad thing? I think in the long run, it helped us build brand.

Then you have all the real estate and you’re the only game in town and definitely it caught people’s attention. You also mentioned that you figured out that you have to hire one attorney every quarter in order to have this healthy, steady growth. That’s a very good, I think it’s a very good way to articulate how you’re gonna get on your 21 March. So that’s awesome. Another question I’d like to ask you, another strategic question is, can you distill your strategy down to a single phrase?

And a couple of examples here is, you know, Southwest Airlines, they made their fame by keeping planes in the air longer having a quicker turnaround times, their strategies vs up, so it focuses on, okay, what do we do to keep the players in the air, how do we turn things around, no food service and so on. Starbucks, they want to be the third place. So it’s between the whole, and the office the third place. So everything is subordinate to this concept. The ambience, the food, the baristas, try to keep customers happy there. IKEA, flatback. It’s all about being able to package the furniture into a small place where it’s easy. You can put it in the wood, you can keep it in the warehouse and you can have a much bigger selection, so is there a way for you to kind of synthesize your strategy into a single phrase?

That’s a great question. And we do not have a simple phrase to capture our strategy, other than, you know, we believe that, you know, life and business, you know, it’s a marathon, not a sprint. And the turtle always wins. And that’s not very sexy, but I believe it’s true. It’s probably not as inspirational as some of those. We have terms that we use phrases that we use in here that when we’re going on all cylinders, when we’re following our strategic plan, when it’s being executed and implemented accordingly, everything just runs so smooth. I mean, it’s almost like going deer hunting with Uzis. It’s like the other guys don’t stand a chance.

And as far as, you know, one word that sums us up, we probably need to work on that. And so you’ve really given me something to think about today. I know personally, you know, I’ve always liked the idea that I’m third or we’re third. And it may not translate very well into business, but it certainly does in my personal life. And I think it does have some relevancy to work. And the concept of I’m third or we’re third is that first God, then others, and then us. We’re third. We’re here to serve other people. And whether you believe in God or higher power or whatever you want to call it, I still think that if we understand where we are in relationship to the universe, life is pretty good.

That’s great. That’s a great analogy and thanks for sharing that. And great information today about the 21 March, the ROCs, the OKR, the once-based strategic plan and and how you keep you know, you keep your turtle tactic to keep going forward and and out Outlip the the rabbits. That’s pretty cool, so if our listeners would like to learn more about Geoff McDonald and associates your firm your services or yourself then there would you direct them?

Well, you know, our website pretty easy. It’swww.mcdonaldinjurylaw.com and our phone number is even easier than that. It’s 804-888-8888 or if you’re in the Roanoke Valley, 434-222-2222. So, it’s very easy to get in touch with us.

Wow, that’s great.

And we have several hundred blogs on our website, so just feel free to check it out.

That’s fantastic so definitely mcdonaldsandassociates.com is the website?

Yes mcdonaldinjurylaw.com.

mcdonaldinjurylaw.com so please check it out also Geoff is on LinkedIn so you can connect with him there as well, so see you on president of Geoff McDonald and Associates, Geoff McDonald, thanks for coming on the show. And to our listeners, if you enjoyed this conversation, please don’t forget to rate and review us on Apple Podcasts, subscribe on YouTube, and stay tuned because next week I’ll have another exciting entrepreneur come on the show and share their story. Have a great day and great week. Thank you. Geoff.

Thank you, Steve. I enjoyed it.

 

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