Episode 178 – The Dos & Don’ts Of Starting Your New Law Practice

Tracy Merda (Client Care Counselor Speakeasy Authority Marketing) interviews James Baer – Partner at BAER & TROFF LLP.

Jim goes in great detail about how he and his partner both came from big law firms and decided they wanted to start their own boutique firm instead. He talked about about starting a new law practice and growing it. He also talked about the difference between the large law firm vs. small law firm. More on this in this podcast. Make sure you subscribe to the podcast and post a review.

 

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Tracy: Okay. This is Tracy Merda with Speakeasy Authority Marketing. And today, I have a wonderful guest with me. It’s Attorney Jim Baer of Baer & Troff also a counsel at Glaser Weil in California. Thanks for joining me today, Jim. I really appreciate it.

Jim: My pleasure, and thank you, Tracy and thank you Speakeasy.

Tracy: Jim, you have an interesting background in that you’ve came from a large firm and decided to open your own practice. Tell me a little bit about Baer & Troff and who are the players, what got you started?

Jim: What got me started, Tracy, was the search for sophisticated law but also having a balanced approach. Coming out of the big law firm environment, there is high overhead and very little flexibility with respect to try to raise a family and have a balance. And I have always been somebody who has tried to deliver high quality legal services but at the same time, I did not want to miss my children growing up and I wanted to have an opportunity to kind of make the world the better place and do some non-profit work as well. So I found the “Big Firm” environment as opposed to the small firm environment less flexible.

Tracy:  What areas of the law does Baer & Troff LLP handle?

Jim: So, we specialize in what I would call the middle market corporate law as well as sophisticated business litigation but what we grown into is kind of the one stop place for the middle market, meaning what we try to do because we are big firm trained experienced people is we try to partner with our clients and essentially solve their business challenges. So when I meet someone and I have a relationship, for instance, grafted for years, I don’t want them feeling that I am not their first call. So if they have a business challenge, whether or not if they want to buy a company, sell a company, raise financing or they want to collect money from someone that owes them money or they want to defend a lawsuit they’re in, or if they are going to a restructuring and they need to figure out what is the best way that we start or shut down their company, I want to capture that business because I have got the relationship and because I am an expert in those areas, I want the call. So whether or not it’s through Baer & Troff or my relation with Glaser Weil, which is a middle market high-end law firm that does high-end litigation and real estate work as well as corporate for bigger things, or CMBG Advisors, Inc., which is a restructuring company that I also run. I want that call so that I can essentially what the person or company needs and how I best can help them.

Tracy: And Jim, I mentioned that both you and Attorney Troff started with major larger law firms, correct?

Jim: Eric and I met together the first day in law school and I went to Gibson, Dunn and he went to Musick Peeler and we essentially collectively had years in the big firm environment. And coincidentally, we got to a point in our lives where we wanted to combine forces and take that knowledge and essentially build a middle market firm.

Tracy: So, how did that background that you both came from, how did that really shaped your vision for starting your own private practice?

Jim: I think that what I realized in the corporate world is that you are dealing often with very complex, challenging situations and it’s not one size fits all. So for instance, if you need a heart surgeon, you don’t look at a billboard on the freeway and call 1800 heart surgeon whereas if it’s a slip and fall, you may call that PI that’s advertising. I realized long time ago that marketing in the old traditional way does not work because people don’t want somebody to kind of it’s just a one stop shop cramming in there. People want IQ and they want experience. And so Eric & I learned from the big firm experience that there is no substitute for rolling up your sleeves and knowing what the heck you are talking about. But by the same token, if you surround yourself with bright people, manage your overhead, you can keep your rates down and attract sophisticated clients but they essentially are more cost conscious.

Tracy: So, tell me a little bit about your career path and sort of the pros and cons of practicing law with the large firm versus a small firm of your own?

Jim: Well, first of all, lawyers are typically risk averse, so one of the advantages of a big firm is you have a sense of security. You get a paycheck, you get a paycheck from a big firm, you don’t have to be a rainmaker, you get up in the morning, you go in, you get given work typically and if you bill your hours and keep your head down and you are smart and you work hard, that’s all you have to really do. And that’s an oversimplification but that’s the key. When you go out on your own, you really kind of eat what you kill and you are responsible for your destiny. But having said that, I am not reportable to anybody. I am accountable to my clients but at the end of the day, I have more flexibility. But if there is no money in the bank account, I am not getting the paycheck. So you have to be willing to live with that uncertainty and so I think it does take a little more faith.

Tracy: And starting any business of course is usually a pretty tough and risk venture. How did you guys survive the early months?

Jim: The key is, and this is true for small businesses, the number one thing to kill small businesses is underestimating your expenses and overestimating your revenue. And so you have to know realistically what you can count on from clients and of course there is a leap of faith. But you need to talk to your clients and know who will come with you and who won’t and you have to figure out what kind of overhead you can realistically afford. For instance, do you work at a home for a period of time, do you need a fancy office? I don’t think people need fancy offices in this virtual world. I am sitting here right now looking out over the pacific and yes, we have nice offices but it’s really more for me than my clients and at the end of the day, for years, I didn’t have this nice office. So you have to manage your overhead and manage expectations and really kind of know which clients are going to come with you and which ones won’t so that you kind of don’t get overextended.

Tracy: So real quick, what are dos and don’ts of starting a law firm?

Jim: Good question. The do’s are as we talked about having a realistic vision and really not being naïve about what goes into it. So having some experience, throwing your back pack over the law meaning you have to be commit to it but really doing your home work, having a budget, knowing are you doing it by yourself, are you doing it with the partner; and if you are doing with the partner, you’re only as good as the ethics of the partner. It’s like a marriage. You really have to know who you are getting into bed with and so do your homework with your partner, make sure it’s somebody that really doesn’t have addiction issues that has integrity that really is going to be there for you in the same way you candidly would pick a spouse or a significant other. So I think you really have to do your home work. In terms of the don’ts, I think it’s kind of the reverse to that. You jump in without doing your home work, you associate with people that you shouldn’t be associating with and you essentially overestimate your revenue and underestimate your expenses. So go in with a vision in a plan, find out what malpractice insurance is going to cost, find out what rent is going to be, find out who is going to join you and who isn’t, find out what lawyers you are going to — what clients are going to follow you and which ones won’t. And so do your home work and don’t jump in impulsively, do your home work.

Tracy: Jim, you touched on this earlier just a bit but how did you start in finding good clients or how did they find you?

Jim: When I first started at Gibson, Dunn in 1983, I was filled with entrepreneurial zeal and I met with two very, very successful businessmen because I was concerned that maybe I didn’t want to be a lawyer, maybe I wanted to go off into the business world, and they said, “Kid, anybody that could go to law school for 3 years go to Gibson, Dunn & Crutcher is not particularly entrepreneurial. So keep your head down, be a lawyer and get over yourself”, and they said, “The reason going to Gibson, Dunn, the good thing is think about headhunters. They can pick up the phone and call somebody and in 5 minutes get a million dollar check and that life is all who you know”. And so going to Gibson, Dunn, whether or not you are there for a month or you are there for 20 years – and I was there for 9 years – is less important than kind of “Learning your preps and getting to know people”. So at the end of the day, after being at Gibson, Dunn for 9 years and after being at Katten, Muchin, which is another national firm for 5 years, after 14 years of contact, I had people to call when I went out on my own.

Tracy: How important are ethics in running a successful law firm?

Jim: Well, without putting politics on the table, I suppose it depends on who you ask. From my perspective, they are very important but that’s because I want to look in the mirror and like what I see in the morning. I know people that make good livings that are not ethical. But on the other hand, from my perspective, what goes around comes around and at the end of the day, I don’t feel we are serving our clients well if we are unethical, we are not serving our maker if we are not ethical, or we are not serving ourselves if we are not ethical. And so at the end of the day, Shakespeare said, “Take all the lawyers and throw them to the bottom of the ocean”. From my perspective, we have an opportunity to set an example and serve people or we have an opportunity to be someone that lowers our profession. And so from my perspective, ethics are extremely important.

Tracy: Jim, what have you found are some of the characteristics of successful leaders and law firms?

Jim: I would say that hard work and consistency are the most important. And you know this again, I didn’t say ethics in the sense that there are people presumably that make a good living, that yell at their employees and they probably over bill and do things although often that catches up with them, there are probably examples of people where they do get away with it. But I don’t think there is any shortcut when it comes to hard work and consistency at least if you are not going to be “The person putting it out on the 4 or 5 freeways that says ‘slip and fall, call me”. If you are going, as I said, go back to the heart surgery analogy, I always have been a marketing oriented lawyer and I always did more than the next guy but I looked around after being a lawyer for 10 or 15 years and I realized that those people that really were good, good hardworking lawyers were actually more successful than I was. And I said to myself, “Wait a second! I am this really marketing oriented lawyer, I am a smart lawyer, I am a good lawyer but why is it this other lawyer has more business than me? And the answer is at the end of the day, you can start out with flashy marketing, fancy business cards, and great office, take a lot of people to dinner, take a lot of people to lunch and you can sometimes even get work that way. But whether or not you get repeat business is whether or not you “Exceed” a client’s expectation. People go out of their way when they are paying large legal bills to come back and/or refer their friends when you have exceeded their expectations, not met, exceeded. You cannot do that without hard work and consistency.

Tracy: So on the flipside, what are easy mistakes that people make when they are trying to lead a law firm?

Jim: I think seeing people as commodities and not treating people with respect, I think it’s looking for shortcuts, I don’t think there are shortcuts. I think that it’s over promising and under performing and it’s essentially not taking the time to control the client’s expectations because you can’t exceed someone’s expectations if you have over promised. So I think people often under communicate and miss deadlines. There are certain things I learned from Gibson, Dunn that I think are priceless. One, you always return a phone call the same day, and number two, Frank Wheat, one of my mentors at Gibson, Dunn, said to me, “You check the name three times. Once, twice, three times”. Tracy, people do not want their names pronounced wrong and they don’t want them spelled wrong. And people have egos and people want to be seen. And if they are paying you X dollars and hour and you don’t spell their name right, it doesn’t go over well and they don’t want you to calling back 3 days later because they realize they are not important. People want to feel important, they want to know they matter, and at the end of the day, the mistake people make is they see people as a commodity and they get arrogant or they get complaints and they don’t pay attention to those little things. I’ll give you one other thing that I learned at Gibson, Dunn which I thought was extremely important, and that is, when you go into a meeting and somebody is paying thousands of dollars for an answer, there are no problems, there are only challenges and when you go into that meeting, you say to them when you don’t know what the heck you are talking about, those are excellent questions, we will get answers for you, we’re in this together, we will work this out. You don’t start sweating, you act like solely landing that airplane on the Hudson, and you exercise great under pressure. And again, I have had an amazing opportunity to work with people like Patty Glaser who is not only consistent, hardworking, extremely bright but she does all of that and then she goes out to dinner at the end of the day and it doesn’t matter if the client is a peer or the client is a first year lawyer, Patty is genuinely interested about in that person and their life and ask meaningful questions and so even though she is probably one of the top 5 lawyers in the world, she cares about people. And she works hard, she is consistent and she cares about the little person. And those types of things make all the difference in the world.

Tracy: Jim, how did you define or create your firm’s culture at Baer & Troff?

Jim: One of my heroes is a guy named Stephen Covey who wrote a book called the 7 Habits of Highly Effective People. And I felt like the principles that he’d been teaching in business school that he was trying to kind of get businesses to follow were things that I thought could be utilized in a law firm setting and so thinking where we went starting out with his principles, I first seek to understand and then be understood and essentially most of the principles we are talking now about, balance, synergy, think win-win, think out of the box, all of those things come from that book 7 Habits of Highly Effective People.

Tracy: What do you think has made Baer & Troff so successful?

Jim: Hard work, consistency and following the 7 Habits of Highly Effective People.

Tracy: Sweet and simple, right?

Jim: Yes, keep it simple.

Tracy: Are there any final words of wisdom you would like to share with other attorneys who might be either starting their own firm or may be they already have one and they are in a little bit of trouble and looking for some help?

Jim: There are no dumb questions. Be willing to learn from everyone, whether or not it’s the person in the elevator or it’s a mentor like Patty Glaser. Surround yourself with the best and the brightest, like John Kennedy did, and essentially have the humility to ask questions and know what you don’t know and to have the confidence to go for it. But I am only as good as the people that work for me and I did figure out a while ago that having hardworking, extremely bright, dedicated ethical people around me makes me affective. I am absolutely only as affective as the team I have and I think that if you look around, I have traded up and I would not substitute anyone in for one of the people that work with me because they are part of my family and they make me look good and so you literally are only as good as the people you associate yourself with. So if you look around and there is a weak link in your team, that’s a problem. And there is no “I and team”, you have to build the right team.

Tracy: Especial thanks to my guest Attorney Jim Baer of Baer & Troff LLP with offices in Brentwood and Pasadena as well as Jim has also come from Glaser Weil. Jim, if someone would like to reach out to you with their legal matters, what is the best way to reach you?

Jim: I would say that the best way to reach me is one of two ways. They can email me at jim@btllp.com, or they can email me at jbaer@glaserweil.com, or they can call our office 310-802-4200 and that would be the easiest way to get in touch with me.

Tracy: All right. Thank you so much for your time today, Jim. I wish you a good one.

Jim: Thank you, Tracy.

 

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