July 9, 2026 • 28 mins
Law firm capacity planning is how US family law firm owners stop coin-flipping hires and start forecasting them.
Learn the exact four-box system to predict when to hire, protect margins, and hit 25% yearly growth without burning out your attorneys.
This staffing model fixes attorney caseload management, sets your paralegal-to-attorney ratio, and holds labor cost percentage.
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📄 CHAPTERS
0:00 - Law Firm Capacity Planning: Whether And When To Hire
2:04 - The Core Metrics: Average Case Value Calculation And Case Length
12:47 - The Two Levers That Move Your Law Firm Hiring Forecast
15:13 - Finding The Window: When To Hire An Associate Attorney
19:22 - Protecting Margins: Labor Cost Percentage And The Financial Dip
28:34 - Live Demo: The Law Firm Capacity Planning Calculator
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
The first step is really understandingwhere we are and how healthy we are,
(00:05):
so we can make good adjustmentswithin the firm and then make really good
hiring plans based on where we areand where we can
This is kind of how you avoid the pitfallsof hiring way too early
or avoiding that,like not making the higher
and it's understand your firm's healthand the model so that you can
then make good educated decisionsthat are really well
(00:25):
calibrated in data.
All right.
This is not a lecture.
What we are showing youtoday is the exact hiring Model
that we run inside of our law firm.
It's the same model that took usfrom two people to now over 80,
which is kind of wild to thinkabout how far we've come.
My name is Tyler. Dolph.
(00:47):
I am the CEO of Rocket Clicks.
We are a hyper focused, family law firmonly marketing agency
that was built out of Sterling Lawyers.
So very excited to be here.
With me today is Tony Carl's,who is the co-founder of Sterling Lawyers.
He built the waterfall, the operatingsystem that has grown sterling to over
(01:07):
$20 million in revenue and the enginefor this whole hiring process.
So he's going to teach us step one today.
And then Todd Clower,we pulled our CFO out of the day
to day of of the businessand the law firm.
We forced him to presentto all of you today.
So we got to give Todd lots of lovefor agreeing to be on this with us.
(01:29):
Today is about whether you can hireand when you should.
Right.
So the first two boxes are checkand forecast.
That tells uswhether we should hire at all.
And then the last two boxes are Findand Protect.
That tells us when againthis is the exact system that we use.
So step one is all aboutchecking your firm's health.
And I'm going to hand it over to the guythat built the system, Tony Karls.
(01:53):
Thank you for being here.
Take it away.
yeah, the first step is we gottawe have to identify where we are
at the firm.
So before we kind of jump intolooking at the waterfall a little bit,
I want to kind ofthe most important figures
that if you're not tracking,we need to start tracking.
This is going to givegive you an unlock for you.
(02:13):
The the downstream impactof being able to forecast
from from using the waterfall methodthat we we've talked about in the past.
And there are several important metricsthat you need to be tracking.
So the first one is monthly revenue.
It's pretty basic.
So these are the way we built these ishow do we how do we create this.
So that anybody who is buildingany size firm can operate this easily.
(02:38):
So we don't want to make this overlycomplicated.
What is my monthly revenuetarget that I'm trying to hit.
So it's a really important numberfor you to be able to identify.
What are you tryingto accomplish each month of the year?
Second one iswhat is your average case value?
How much is the actual value of the casefrom a lifetime value perspective.
So not what's your retainer?
(02:58):
It is how much is the caseactually worth on average.
So that's all of your cases.
So if you do $3 million a yearand you did 100
cases, your average casevalue would be $30,000, right.
So like that'skind of what we're looking at.
What is your average case value.
And then how long does it takeyour average case
to get through from start to finish.
(03:20):
That is your case length.
What is your average case length.
So those three numbersare really important to start
identifying what your forecast modelis going to look like,
because it's going to be used to predictwhat is your how many cases
are flowing into your system.
How long will would they be there and how.
And then the fourth metric ishow many total active files
(03:40):
can your team handle at any given time.
So this is not the files on the board.
Typically in familylaw you're going to see between 40
and 60 is what an averageattorney can typically handle.
That would be their full on the boardcaseload.
But how many active files do they arethey actually working
and what is their actualindividual capacity.
(04:02):
Because whatwhat we're trying to identify is what
how many files are going to becoming into the system that we can sustain
in a good way, because that's goingto help us identify our capacity number.
And if we can identify those four metrics,our monthly revenue,
our average case value, our case length,and then our active file
(04:24):
count per per attorney.
So like how busy can they all get?
We're going to get a capacityutilization rate
that's going to help us identifywhen we should start hiring.
And then the triggers are builtbasically off of the waterfall within
the hiring process, which iswhen should we start posting the job?
(04:44):
When should we start recruitingand expecting to do interviews?
How long is it going to take us to onboarda certain type of attorney versus
others in termsof like their talent and experience?
So this is everything is waterfallin my world, and this is kind of how
we've built built the system is likewhat are what are our triggers.
So Tyler talked aboutour Moneyball webinar
where we really went through the waterfallmethod,
(05:07):
and it's what everything's based off of.
So it's it'sthe overall health of your firm.
What is your lead flow look likeand how many of those how many of you?
How many of the users that are interactingwith your brand in the marketplace
are turning into potential conversations,whether those are phone calls
or web leads?
What's the qualityrate of those interactions
(05:27):
that's going to dictatehow many sets you can.
You can set on any given interaction.
Then how many show how many of thoseshows turn into actual quotes
that we can deliver to clients,and how many of those actually close?
That's going to give us reallya health health scorecard
So this was part of the toolkitfrom the Moneyball webinar.
(05:49):
This is an expanded toolkitthat we're going to deliver to you
after we kind of go through and teach thisa little what it's going to show you
is here's the monthly targets that we aimfor at the firm.
Those are all the black cells.
And they identify what are whatwe've identified as kind of industry
standard benchmarksto aim for, for each of those throughput,
throughput itemsthat I mentioned on the previous slide.
(06:10):
So how well are we doing that?
So you're going toyou just have to enter two numbers.
The first one is your monthly revenue,which we just talked about.
Second one is your average case valuewhich we just talked about.
And then that's going to output for youall of the targets
for all of those other numbers.
How many usersshould I have on my website.
How many inbound calls should I beexpecting if I'm performing to target?
(06:32):
And then you can input your actualswhere you actually are performing and see
where your opportunities are for growthand optimization with your current,
with your current flow,without spending any additional dollars.
Just how where are opportunitiesto optimize so that we can grow our firm
without spending more money,just having intentional effort.
So those are those are really the first.
(06:54):
The first step is really understandingwhere we are and how healthy we are,
so we can make good, good adjustmentswithin the firm and then make really good
hiring plans based on where we areand where we can go.
Because if we're really overperforming in one of these metrics,
say we're say we're closing really,really well over the last four months,
but the rest of our waterfall isn'tnecessarily performing in a great way.
(07:18):
If we decide to make it higherand then our closing dips,
we might have the exact same numberof case files coming into our firm.
And then we just made a really bad hire.
So not knowing where our firm is froma health perspective or where we're like
way over indexingand it would be a bad assumption
to assume it's going to continue that way.
This is kind of how you avoidthe pitfalls of hiring way too early
(07:41):
or avoiding that,like not making the higher
and it's understand your firm's healthand the model so that you can
then make good educated decisionsthat are really well calibrated in data.
So Todd's going to kind of take us throughkind of what we do next with this.
Awesome, Tony. Thanks.
You know, I'll just echosome of the things that Tony said.
I mean, it's super important for youas a firm and me
(08:03):
as a, as a CFO to understandwhere the business is.
Right.
And that's a key metricthat you have to know.
And the waterfall is a fantastic way to doThat's one thing, though.
Actuals are the past, its history.
It is what it is. Right.
What I'm going to talk about a little bittoday is where are you going.
Right. What's your forecast look like?
(08:23):
How are we going to take this businessto the next steps. Right.
What do you want to do better.
What do you want to do?
You know more efficiently,more effectively and specifically today.
How do you determinewhen you're going to hire people?
So I'm going to run through a coupleof key slides that talk about
some of these forecast variables,and then we'll get into a quick demo
(08:44):
of how it works and what the levers arethat we can pull in it.
So if we go to the next slidewe can kind of see the
the three main things that we look at inthis forecast model.
Number one is caseload right.
What is caseload.
Caseload is split into a couple differentformulas.
And I have those here at the bottommonthly case.
(09:05):
Well monthly total case files fundedagreements times your average case link.
So Tony talked about thosewhere we have to know those couple inputs.
We get that.
That gives us our monthly case filescaseload capacity.
Kind of the flip side of this right.
How many attorneys do we have.
How many active case filescan they each do. Right.
That'll give uswhat our total case load capacity is.
(09:27):
So if we know those two, those arethe main things that we have to know
in order to determine what caseloadis from a people perspective,
those metrics that we just talked about oncaseload will tell us
how many attorneys do we need, right.
If we have more casesthan we can handle with our average
attorney caseload file,that tells us that we got to hire, right?
(09:50):
So we got to hire an attorney.
What do we have to do for paralegals?
Right.
Obviously, paralegalssupport the attorneys
very well and very,you know, substantially here at Sterling,
we say two to maybe three attorneysfor each paralegal.
So if I'm hiring one attorney, I'mprobably not going to hire a paralegal.
(10:10):
I'll probably waittill I hire that second one.
But it's somewhere in there. Right.
And it depends on the type of attorney.
If it's a, you know, a high performingattorney, maybe you're only going
to have two attorneys to that paralegal,but you might also have three.
Next one is intake.
Intake is truly based on call volume.
So all those metrics that Tonikind of pointed out on the waterfall
(10:33):
kind of show, hey,how many calls am I going to get right?
How many interactions am I going to have?
What we tend to do islook at that on a monthly basis.
You divide it by the workdays, right?
Say 20 days in a in a month,and then divide by about 25
ish calls or interactionsthat an intake person can handle.
The, the, the output of that.
(10:55):
That'show many intake people I have. Right.
So that that also drives off of allof those same metrics that we talk about.
The fourth category, specialized support.
So this is peoplethat support the paralegals.
So it does not include paralegals.
It includes people like, you know, backoffice accounts receivable billing,
you know, HR, all that kind of stuffthat kind of support the entire team.
(11:18):
There's a there's a metric herethat we kind of use to write for each
two paralegals that you hire, youprobably need to hire something
in a specialized support area.
It's really hard to saythat it's exactly this kind of a person
or this kind of a person.
It depends on your firm makeup,how you're doing it.
But think of itfrom that perspective, right?
(11:39):
So to go back to the beginning, if we hirefive attorneys, we're probably going
to have to hire at least two paralegals.
That would obviously be driven by intake.
So we'll have additional intake hiresand then we'll have specialized support
or additional support items.
So it's kind of like it's a waterfall.
It's the same exact waterfall that we kindof use throughout this whole process.
(11:59):
That's the people side.
If we look at capacity.
So this is a key one two because you know,if you think of an individual,
what do you wantyour attorney to be 100% utilized?
Right.
Everybody wants to be 100% utilized.
Well guess what?
The world is not a perfect world.
Nobody is 100% utilized.
We use as a goal somewherebetween 90 to 95%, right?
(12:23):
If we start getting the 99, 95%or more, it starts to raise the flags
that are current.
Team can't absorb the caseload, right?
That is super importantbecause what does that lead to?
Leads to burnout leads to turnover.
You get turnover all of a suddenyou're hiring even just to keep
where you areright, versus hiring for growth.
(12:45):
So that's a key metric.
And keep that in mind.
The 95% utilization.
Right.
That's where we really want to say,hey it's time to start hiring.
Right.
And I'll talk a little bit moreabout what that means from a start.
Hiring concept.
Because it's not thatI want to start hiring there.
It's I want to have a person in the seatdoing the job.
So if we go to the next slide,Tony talked about six numbers, right,
(13:09):
that are really importantto this forecast.
He walked through the first four of them.
I'm going to talk a little bit right nowabout the last two lovers.
And they really are loversbecause you as you're
as you knowyour firm better than anybody else, right.
You will be ableto affect these two numbers
and they do have an impact on the forecastokay.
(13:30):
One is growth rate.
How aggressively do I want to grow right.
At Sterling we start with a with a 3%per month growth factor right.
Doesn't sound like much.
But 3% a month consistentlyis a really significant growth.
If you want to be super aggressiveand you're saying, hey,
I'm at the early stages and I can growmy firm 5% or 10% per month.
(13:53):
Awesome.
Keep in mind, it's not a feeling, right?
You got to trust it, right?
You can say that you want to grow 10%anytime you want,
but unless your numbers in the waterfalland Moneyball process
tell you that you're actually doing that,that's where the actuals come in.
It's really hardto just focus on feelings, right?
So trust the numbers,watch your numbers and trust your numbers.
(14:14):
The second one that you can changeis the seasonality,
particularly with small firms.
You definitely feel peaks and valleysokay.
Certain months, certaintimes of the year are going to be stronger
than others and certainare going to be weaker than others.
As you get to be larger and larger,that may smooth out a bit.
(14:35):
But even at sterling's current state,we feel a couple valleys.
It's really one valley and that's in theNovember and December time frame, right?
So we see that our our casevolume slows in November and December,
a whole bunch of reasons for that.
And we can go through all the history of,of what that is.
(14:55):
But the point of this is you have toor you should try to build
in some seasonality in your forecastso that you don't react to a blip.
Right?
You don't want to react to a blip.
You want to react to trends. Right?
That's the key thing.
And that's what that second bulletkind of points out.
So reallythose are the two key additional factors
(15:16):
that we want to watch and leversthat we can I'm going to now jump
in a little bit to actuallywhat we call finding the window.
It's step three of the metricsof the forecast process.
And what we've done is we've highlighteda section here that's in amber.
And it kind of says, hey, this iswhen you have to have people in the seats.
(15:37):
So we'll go through the demo shortly.
But basically we filled out someinformation, it pulled out and it said,
well, geez, you're in the yellow.
So or the amber in this case, it'sprobably you got to have some more people
because you're going to burn people outand you're going to experience turnover
and you're going to have a wholenother issue.
What this means is not when you hireor when you start hiring, it's
(15:58):
when that person is fully productive.
So what does that mean?
There's two types of attorneys that I liketo think about that you can hire.
You can either an experienced familylaw attorney who's been there, done
that, knows exactly what they're doing,knows how to handle a case,
knows how to build, knows how to,you know, you name it, right.
There's also fresh unicorns and they find.
(16:22):
Is that right?
They are much harder to fight.
So that's actually another point thathow long does it take to fight
each one of these pieces.
But yeah, you're right.
Everything that I'm going to talkabout today, the rest of the as
we go through this modeland the demo is not,
hey, it's time for me to startthinking about hiring somebody, but it's
that person needs to be in the seatand actually producing.
(16:44):
Okay, so that's super key to rememberand keep that in mind.
This is truefor kind of almost any firm right.
It doesn't matter how big you areor how small you are, you're going to have
these exact same issues or opportunities.
Right.
And experienced attorneyanywhere isn't going to be better
at one firm versus another.
They're going to come inand it's going to take them a couple
(17:05):
of months, but they'll be ready to gofresh graduates the exact same way.
So that's super So if you think backto our our four points
right check forecast find and protectthis is that protect piece.
This is where you have to takea little bit of risk right.
Because you need to build out a forecastfor your business.
(17:26):
You need to learn that forecast.
You need to trust that forecast.
And once you trust that forecastthen you can say, hey,
as long as I'm within these windowsor this range, I'm going to be able
to go and hire that next person, right?
I'm going to make the decisionfor my business tomorrow, today,
which might be three months in advance.
It might be eight months in advance.
(17:47):
Here's the key metric that we watch.
It's labor as a percent of revenue okay.
So and by laborI'm really specifically talking
about attorneysparalegals intake and support.
Right. It's those four groups of people.
And when we set metrics,we try to keep with
(18:08):
at about 60% of revenue as our labor cost.
Again, it'sjust a metric that you got to keep
in the back of your mind to know, hey.
Am I overspending?
And it's not going to mean that you'regoing to continue to spend that 65 or 70%.
You want to get that numberback down to 60 and kind of keep it
around that 60% number, okay.
(18:30):
That's super important for the businessand super important for you to make sure
that that you're hiring peopleat the right time and for the right time.
If you can show that your confident in it,and you can show that your actuals
actually reflect what your forecastis, your team's going to see
that your team's going to trust you.
(18:51):
They're going to see thatyou just hired an attorney,
but they're going to know there's a reasonthat you hired that attorney, right?
It's not to take work away from them.
It's to plan for the future. Right.
And that cultural payoff is huge.
You can't even put a number on it. Right.
Because it eliminates or really lowersyour turnover.
Because turnover is a wholenother issue with with a law firm,
(19:12):
you lose an attorney,you're way behind the eight ball, right?
Not only do you not have somebodyin that seat, but you've got to go find
somebody and take 2 to 4 monthsmaybe to get them ready to go.
So keep that in mind.
You have to be willingto take that financial dip.
But with the with the forecast model,you have the confidence
that you can do thatand you will recover from that
very quickly.
(19:33):
Just one thing to add.
Yeah.
One thing to add is as it relatesto the forecast because like it
mightit might sound daunting and like maybe,
maybe you understand itand but your team doesn't.
So like part of part of your jobas the leader of your firm is like,
bring them along through the processso that you can get the cultural payoff.
(19:56):
So one thing Todd does reallywell is every two weeks,
we review the forecastwith all the departments
within the organization,and we review what how have we performed?
What is how is the trending?
Is there anything that we need to knowto adjust the forecast.
And we do it as a team.
That way the team understandswhat we're doing, the team understands
(20:16):
how we're making decisions and likethat's really what leadership looks like
through through forecast is how are you?
How are you communicating this to the teamand essentially teaching them
how this worksso that they can participate.
And then they'rethey're less likely to feel
on an island when they're,you know, at really high capacity numbers,
or they're going to start understandinghow the business flow works, and you're
(20:38):
going to have a very different cultureas a result of being open
and sharing the information and talkingto the team through how it works.
It's,you know, we're a significantly larger,
significantly larger organizationthan we were when we started.
And the more we've done,the more we've done that and done it well,
(21:01):
the better the firm has performedversus being more closed off
and less informative.
Those years we performed less,we perform worse
in at at a lower leveland the culture was more difficult.
So like there's thatthat might sound like a small nuance,
but it's actually one of the biggestmagical pieces of this is like, how do you
(21:23):
how do you bring the team along in itand have them help Owen
own it and drive it and participate?
Because that's where that'swhere magic happens culturally.
All right.
So we've talked a little bit about the,you know kind of what the inputs are.
And you know what.
You know what's important to us.
One of the key things I want to talk aboutis how this model kind of works.
(21:48):
So you'll see the two key metricsthat are there with zeros right now
are that monthly revenuetarget in the average case value.
And these arethe things that Tony talked about.
And let's for now let's put inI think we said like a $4 million firm.
So say $300,000 a month.
That would get you about threeand a half to $4
million average case value, I think.
(22:09):
Let's put in like $8,500.
I think it depends on your case mixand all that kind of stuff.
But let's just throw an $8,500 in there.
So then look what happens, right?
It calculates the targets for you. Right.
As Tony mentioned.
And you walk through soand then you put your actuals in there
which we've got some actualskind of plugged in here.
And you see.
Hey how am I doing. Right.
That's awesome.
(22:30):
That's that snapshot.
That's that point in time. That's that.
You know here's whatwhat what here's what we're doing today.
Here's what we've done yesterdayand here's what we're doing today.
Now we're going to talk aboutthe forecast piece. Right.
So let's jump into the next tab.
And this will show us it pulls forwardthat monthly revenue target.
It pulls forward that average casevalue the 300,000 in the 8500.
(22:53):
Let's put an average k length in here.
You can obviously do thisbased on what your case types are
and what your caseyou know, your case history is.
Let's put ten months in therejust for for now.
And then, you know, active files whichkind of said 45
is kind of a decent number to start with.
So that's 45 in there.
(23:13):
Those are all kind of the keyfirst metrics.
The next two lines here that you see hereare the growth rate and the seasonality.
Right.
And you know I've we've kind of frontand loaded these.
We just kind of 3% growthkind of throughout the the the year
a little bit less in in January.
And then seasonality is the next one.
(23:35):
You look at seasonality.
And we basically got one for seasonality,which means there's really no ups
and downs until you get to the Novemberand December timeframe.
These are levers that you can switchat any point in time
with that you want, right.
If you wanted to say, hey,I'm going to grow 5%
for the first three months of the year,and then I'm going to go down to 3% later.
(23:57):
You can do that.
And this will automatically go backand recalculate the numbers.
And ultimately what you'll see at the endhere is kick out.
Here'show many attorneys I have to have. Right.
So if we do thatwe just hit that one section.
Let's go and change the growth ratejust for kicks right in April.
Right now take just kind of focus on thatApril column and change that to 5%.
(24:21):
See all those numbers change.
Actually it was probably 500.05because or
yeah because otherwiseit'll look really big.
But you saw how the numbers changed,right?
That's the key thing that I wanted topoint out is this is an interactive model.
So if you feel like your business,you want to be more aggressive
and you want to grow faster,go ahead and put that in.
So let's undo that that change here.
(24:42):
So we get back to the 3%.
And then you know we can seehow that then moved back to where it was.
So the step ones are really the checkyour current health right.
We're not going to spend any more timetalking about those.
What I want to talk about is the steptwos here that you'll see there's
some hidden columns or hidden rows herethat will and hide these
kind of one at a time and kind of walkthrough them a little bit.
(25:06):
What this is doing isthis is your forecast.
So where do I think I need to be?
Where do I think I'm going to befrom a total monthly case perspective,
that's what that first section is.
That's your caseload.
Second onethen talks about how many people.
So I want to have that many cases.
And I have,you know, six attorneys in this case.
(25:27):
What happens.
Look at what happens in the Maythrough the August timeframe.
Everything turns amber or read writemy utilization.
That final number in that bottomrow is over 100%.
What does that mean?
That means that youryour attorney is more than 100% utilized.
(25:49):
Guess how many attorneys like that?
The like it for a short period of time,but they aren't going to like it
for a long period of time, right?
So this is where the strength of thismodel comes in, where it says, hey,
by that month, by month of May, I'mgoing to start burning out my attorneys.
So think back to our modelof the unicorn versus the new grad, right.
(26:11):
If I'm going to go higher unicorns.
And that's just what I want to dobecause I'm at that stage in my firm,
I got to hire somebody 2 to 4 monthsin advance of that.
Right?
So I'm probably starting to hirethat in January,
if not February at the very latest,so that I can get that person on board
and let's say in March.
And, you know, they learn my firm,they learn our processes, whatever.
(26:33):
Through March and AprilMay, they're hitting the ground running.
And I can say, yep.
Now I've got seven attorneys. Right.
And that would change my numberssignificantly.
So that's the power of this model isit tells you when you have that issue.
But it indicates thethe key key thing to keep in mind
(26:55):
is it doesn't say start hiringthen because every firm, every area
of the country, every, you know,you name it, they're all different.
Right?
It might take me two monthsto find somebody in Illinois, but
it might take me six monthsto find somebody in Nebraska or whatever.
Right.
So you have to understandthat process of of who you hire and,
and how it takes to hire.
(27:18):
So those are kind of the key things.
That's the power of this model.
You know, the thethe inputs that you have are very small.
Right.
It's really, really small inputs.
We talked about six things right.
You put those in.
You make sure you get your your growthrate, what you want to kind of focus on
and how you want to get there.
And then I'll get you to the,you know, to the right
(27:40):
magic number of here'swhat I need to hire.
This isn't going to work day one, right.
It's not going to be like,oh wow, I know all the answers, right.
It's going to take a while, right?
Because you're going to learnhow your business works.
You're going to really getyour seasonality knocked down.
You're going to understandyour growth rate.
As you get better understandingsof all of those things.
(28:01):
This becomes like the crystal balland it really stops.
You know, that coin flip, right,that Tyler was talking about.
And you don't have to just say,what do I feel like today?
Should I hire or shouldn't I hire?
You can go back to here and you can go.
I love when,you know, I get a request from our team
that says, I need to hire an attorney.
(28:24):
And we go back to thisand we say, well, should we?
Yeah.
Looks like all of our metrics are showingthat we're in the right spot.
Therefore. Yeah,we needed somebody yesterday.
We should hire somebody yesterday.
Gentlemen, thank youso much for presenting and being here.
Everyone is on the calltoday. Really appreciate your time.
I hope it was valuable.
Sounds like it was.
If you have any questions,please reach out to us
and we will see you on the next one.
The first step is really understandingwhere we are and how healthy we are,
(00:05):
so we can make good adjustmentswithin the firm and then make really good
hiring plans based on where we areand where we can
This is kind of how you avoid the pitfallsof hiring way too early
or avoiding that,like not making the higher
and it's understand your firm's healthand the model so that you can
then make good educated decisionsthat are really well
(00:25):
calibrated in data.
All right.
This is not a lecture.
What we are showing youtoday is the exact hiring Model
that we run inside of our law firm.
It's the same model that took usfrom two people to now over 80,
which is kind of wild to thinkabout how far we've come.
My name is Tyler. Dolph.
(00:47):
I am the CEO of Rocket Clicks.
We are a hyper focused, family law firmonly marketing agency
that was built out of Sterling Lawyers.
So very excited to be here.
With me today is Tony Carl's,who is the co-founder of Sterling Lawyers.
He built the waterfall, the operatingsystem that has grown sterling to over
(01:07):
$20 million in revenue and the enginefor this whole hiring process.
So he's going to teach us step one today.
And then Todd Clower,we pulled our CFO out of the day
to day of of the businessand the law firm.
We forced him to presentto all of you today.
So we got to give Todd lots of lovefor agreeing to be on this with us.
(01:29):
Today is about whether you can hireand when you should.
Right.
So the first two boxes are checkand forecast.
That tells uswhether we should hire at all.
And then the last two boxes are Findand Protect.
That tells us when againthis is the exact system that we use.
So step one is all aboutchecking your firm's health.
And I'm going to hand it over to the guythat built the system, Tony Karls.
(01:53):
Thank you for being here.
Take it away.
yeah, the first step is we gottawe have to identify where we are
at the firm.
So before we kind of jump intolooking at the waterfall a little bit,
I want to kind ofthe most important figures
that if you're not tracking,we need to start tracking.
This is going to givegive you an unlock for you.
(02:13):
The the downstream impactof being able to forecast
from from using the waterfall methodthat we we've talked about in the past.
And there are several important metricsthat you need to be tracking.
So the first one is monthly revenue.
It's pretty basic.
So these are the way we built these ishow do we how do we create this.
So that anybody who is buildingany size firm can operate this easily.
(02:38):
So we don't want to make this overlycomplicated.
What is my monthly revenuetarget that I'm trying to hit.
So it's a really important numberfor you to be able to identify.
What are you tryingto accomplish each month of the year?
Second one iswhat is your average case value?
How much is the actual value of the casefrom a lifetime value perspective.
So not what's your retainer?
(02:58):
It is how much is the caseactually worth on average.
So that's all of your cases.
So if you do $3 million a yearand you did 100
cases, your average casevalue would be $30,000, right.
So like that'skind of what we're looking at.
What is your average case value.
And then how long does it takeyour average case
to get through from start to finish.
(03:20):
That is your case length.
What is your average case length.
So those three numbersare really important to start
identifying what your forecast modelis going to look like,
because it's going to be used to predictwhat is your how many cases
are flowing into your system.
How long will would they be there and how.
And then the fourth metric ishow many total active files
(03:40):
can your team handle at any given time.
So this is not the files on the board.
Typically in familylaw you're going to see between 40
and 60 is what an averageattorney can typically handle.
That would be their full on the boardcaseload.
But how many active files do they arethey actually working
and what is their actualindividual capacity.
(04:02):
Because whatwhat we're trying to identify is what
how many files are going to becoming into the system that we can sustain
in a good way, because that's goingto help us identify our capacity number.
And if we can identify those four metrics,our monthly revenue,
our average case value, our case length,and then our active file
(04:24):
count per per attorney.
So like how busy can they all get?
We're going to get a capacityutilization rate
that's going to help us identifywhen we should start hiring.
And then the triggers are builtbasically off of the waterfall within
the hiring process, which iswhen should we start posting the job?
(04:44):
When should we start recruitingand expecting to do interviews?
How long is it going to take us to onboarda certain type of attorney versus
others in termsof like their talent and experience?
So this is everything is waterfallin my world, and this is kind of how
we've built built the system is likewhat are what are our triggers.
So Tyler talked aboutour Moneyball webinar
where we really went through the waterfallmethod,
(05:07):
and it's what everything's based off of.
So it's it'sthe overall health of your firm.
What is your lead flow look likeand how many of those how many of you?
How many of the users that are interactingwith your brand in the marketplace
are turning into potential conversations,whether those are phone calls
or web leads?
What's the qualityrate of those interactions
(05:27):
that's going to dictatehow many sets you can.
You can set on any given interaction.
Then how many show how many of thoseshows turn into actual quotes
that we can deliver to clients,and how many of those actually close?
That's going to give us reallya health health scorecard
So this was part of the toolkitfrom the Moneyball webinar.
(05:49):
This is an expanded toolkitthat we're going to deliver to you
after we kind of go through and teach thisa little what it's going to show you
is here's the monthly targets that we aimfor at the firm.
Those are all the black cells.
And they identify what are whatwe've identified as kind of industry
standard benchmarksto aim for, for each of those throughput,
throughput itemsthat I mentioned on the previous slide.
(06:10):
So how well are we doing that?
So you're going toyou just have to enter two numbers.
The first one is your monthly revenue,which we just talked about.
Second one is your average case valuewhich we just talked about.
And then that's going to output for youall of the targets
for all of those other numbers.
How many usersshould I have on my website.
How many inbound calls should I beexpecting if I'm performing to target?
(06:32):
And then you can input your actualswhere you actually are performing and see
where your opportunities are for growthand optimization with your current,
with your current flow,without spending any additional dollars.
Just how where are opportunitiesto optimize so that we can grow our firm
without spending more money,just having intentional effort.
So those are those are really the first.
(06:54):
The first step is really understandingwhere we are and how healthy we are,
so we can make good, good adjustmentswithin the firm and then make really good
hiring plans based on where we areand where we can go.
Because if we're really overperforming in one of these metrics,
say we're say we're closing really,really well over the last four months,
but the rest of our waterfall isn'tnecessarily performing in a great way.
(07:18):
If we decide to make it higherand then our closing dips,
we might have the exact same numberof case files coming into our firm.
And then we just made a really bad hire.
So not knowing where our firm is froma health perspective or where we're like
way over indexingand it would be a bad assumption
to assume it's going to continue that way.
This is kind of how you avoidthe pitfalls of hiring way too early
(07:41):
or avoiding that,like not making the higher
and it's understand your firm's healthand the model so that you can
then make good educated decisionsthat are really well calibrated in data.
So Todd's going to kind of take us throughkind of what we do next with this.
Awesome, Tony. Thanks.
You know, I'll just echosome of the things that Tony said.
I mean, it's super important for youas a firm and me
(08:03):
as a, as a CFO to understandwhere the business is.
Right.
And that's a key metricthat you have to know.
And the waterfall is a fantastic way to doThat's one thing, though.
Actuals are the past, its history.
It is what it is. Right.
What I'm going to talk about a little bittoday is where are you going.
Right. What's your forecast look like?
(08:23):
How are we going to take this businessto the next steps. Right.
What do you want to do better.
What do you want to do?
You know more efficiently,more effectively and specifically today.
How do you determinewhen you're going to hire people?
So I'm going to run through a coupleof key slides that talk about
some of these forecast variables,and then we'll get into a quick demo
(08:44):
of how it works and what the levers arethat we can pull in it.
So if we go to the next slidewe can kind of see the
the three main things that we look at inthis forecast model.
Number one is caseload right.
What is caseload.
Caseload is split into a couple differentformulas.
And I have those here at the bottommonthly case.
(09:05):
Well monthly total case files fundedagreements times your average case link.
So Tony talked about thosewhere we have to know those couple inputs.
We get that.
That gives us our monthly case filescaseload capacity.
Kind of the flip side of this right.
How many attorneys do we have.
How many active case filescan they each do. Right.
That'll give uswhat our total case load capacity is.
(09:27):
So if we know those two, those arethe main things that we have to know
in order to determine what caseloadis from a people perspective,
those metrics that we just talked about oncaseload will tell us
how many attorneys do we need, right.
If we have more casesthan we can handle with our average
attorney caseload file,that tells us that we got to hire, right?
(09:50):
So we got to hire an attorney.
What do we have to do for paralegals?
Right.
Obviously, paralegalssupport the attorneys
very well and very,you know, substantially here at Sterling,
we say two to maybe three attorneysfor each paralegal.
So if I'm hiring one attorney, I'mprobably not going to hire a paralegal.
(10:10):
I'll probably waittill I hire that second one.
But it's somewhere in there. Right.
And it depends on the type of attorney.
If it's a, you know, a high performingattorney, maybe you're only going
to have two attorneys to that paralegal,but you might also have three.
Next one is intake.
Intake is truly based on call volume.
So all those metrics that Tonikind of pointed out on the waterfall
(10:33):
kind of show, hey,how many calls am I going to get right?
How many interactions am I going to have?
What we tend to do islook at that on a monthly basis.
You divide it by the workdays, right?
Say 20 days in a in a month,and then divide by about 25
ish calls or interactionsthat an intake person can handle.
The, the, the output of that.
(10:55):
That'show many intake people I have. Right.
So that that also drives off of allof those same metrics that we talk about.
The fourth category, specialized support.
So this is peoplethat support the paralegals.
So it does not include paralegals.
It includes people like, you know, backoffice accounts receivable billing,
you know, HR, all that kind of stuffthat kind of support the entire team.
(11:18):
There's a there's a metric herethat we kind of use to write for each
two paralegals that you hire, youprobably need to hire something
in a specialized support area.
It's really hard to saythat it's exactly this kind of a person
or this kind of a person.
It depends on your firm makeup,how you're doing it.
But think of itfrom that perspective, right?
(11:39):
So to go back to the beginning, if we hirefive attorneys, we're probably going
to have to hire at least two paralegals.
That would obviously be driven by intake.
So we'll have additional intake hiresand then we'll have specialized support
or additional support items.
So it's kind of like it's a waterfall.
It's the same exact waterfall that we kindof use throughout this whole process.
(11:59):
That's the people side.
If we look at capacity.
So this is a key one two because you know,if you think of an individual,
what do you wantyour attorney to be 100% utilized?
Right.
Everybody wants to be 100% utilized.
Well guess what?
The world is not a perfect world.
Nobody is 100% utilized.
We use as a goal somewherebetween 90 to 95%, right?
(12:23):
If we start getting the 99, 95%or more, it starts to raise the flags
that are current.
Team can't absorb the caseload, right?
That is super importantbecause what does that lead to?
Leads to burnout leads to turnover.
You get turnover all of a suddenyou're hiring even just to keep
where you areright, versus hiring for growth.
(12:45):
So that's a key metric.
And keep that in mind.
The 95% utilization.
Right.
That's where we really want to say,hey it's time to start hiring.
Right.
And I'll talk a little bit moreabout what that means from a start.
Hiring concept.
Because it's not thatI want to start hiring there.
It's I want to have a person in the seatdoing the job.
So if we go to the next slide,Tony talked about six numbers, right,
(13:09):
that are really importantto this forecast.
He walked through the first four of them.
I'm going to talk a little bit right nowabout the last two lovers.
And they really are loversbecause you as you're
as you knowyour firm better than anybody else, right.
You will be ableto affect these two numbers
and they do have an impact on the forecastokay.
(13:30):
One is growth rate.
How aggressively do I want to grow right.
At Sterling we start with a with a 3%per month growth factor right.
Doesn't sound like much.
But 3% a month consistentlyis a really significant growth.
If you want to be super aggressiveand you're saying, hey,
I'm at the early stages and I can growmy firm 5% or 10% per month.
(13:53):
Awesome.
Keep in mind, it's not a feeling, right?
You got to trust it, right?
You can say that you want to grow 10%anytime you want,
but unless your numbers in the waterfalland Moneyball process
tell you that you're actually doing that,that's where the actuals come in.
It's really hardto just focus on feelings, right?
So trust the numbers,watch your numbers and trust your numbers.
(14:14):
The second one that you can changeis the seasonality,
particularly with small firms.
You definitely feel peaks and valleysokay.
Certain months, certaintimes of the year are going to be stronger
than others and certainare going to be weaker than others.
As you get to be larger and larger,that may smooth out a bit.
(14:35):
But even at sterling's current state,we feel a couple valleys.
It's really one valley and that's in theNovember and December time frame, right?
So we see that our our casevolume slows in November and December,
a whole bunch of reasons for that.
And we can go through all the history of,of what that is.
(14:55):
But the point of this is you have toor you should try to build
in some seasonality in your forecastso that you don't react to a blip.
Right?
You don't want to react to a blip.
You want to react to trends. Right?
That's the key thing.
And that's what that second bulletkind of points out.
So reallythose are the two key additional factors
(15:16):
that we want to watch and leversthat we can I'm going to now jump
in a little bit to actuallywhat we call finding the window.
It's step three of the metricsof the forecast process.
And what we've done is we've highlighteda section here that's in amber.
And it kind of says, hey, this iswhen you have to have people in the seats.
(15:37):
So we'll go through the demo shortly.
But basically we filled out someinformation, it pulled out and it said,
well, geez, you're in the yellow.
So or the amber in this case, it'sprobably you got to have some more people
because you're going to burn people outand you're going to experience turnover
and you're going to have a wholenother issue.
What this means is not when you hireor when you start hiring, it's
(15:58):
when that person is fully productive.
So what does that mean?
There's two types of attorneys that I liketo think about that you can hire.
You can either an experienced familylaw attorney who's been there, done
that, knows exactly what they're doing,knows how to handle a case,
knows how to build, knows how to,you know, you name it, right.
There's also fresh unicorns and they find.
(16:22):
Is that right?
They are much harder to fight.
So that's actually another point thathow long does it take to fight
each one of these pieces.
But yeah, you're right.
Everything that I'm going to talkabout today, the rest of the as
we go through this modeland the demo is not,
hey, it's time for me to startthinking about hiring somebody, but it's
that person needs to be in the seatand actually producing.
(16:44):
Okay, so that's super key to rememberand keep that in mind.
This is truefor kind of almost any firm right.
It doesn't matter how big you areor how small you are, you're going to have
these exact same issues or opportunities.
Right.
And experienced attorneyanywhere isn't going to be better
at one firm versus another.
They're going to come inand it's going to take them a couple
(17:05):
of months, but they'll be ready to gofresh graduates the exact same way.
So that's super So if you think backto our our four points
right check forecast find and protectthis is that protect piece.
This is where you have to takea little bit of risk right.
Because you need to build out a forecastfor your business.
(17:26):
You need to learn that forecast.
You need to trust that forecast.
And once you trust that forecastthen you can say, hey,
as long as I'm within these windowsor this range, I'm going to be able
to go and hire that next person, right?
I'm going to make the decisionfor my business tomorrow, today,
which might be three months in advance.
It might be eight months in advance.
(17:47):
Here's the key metric that we watch.
It's labor as a percent of revenue okay.
So and by laborI'm really specifically talking
about attorneysparalegals intake and support.
Right. It's those four groups of people.
And when we set metrics,we try to keep with
(18:08):
at about 60% of revenue as our labor cost.
Again, it'sjust a metric that you got to keep
in the back of your mind to know, hey.
Am I overspending?
And it's not going to mean that you'regoing to continue to spend that 65 or 70%.
You want to get that numberback down to 60 and kind of keep it
around that 60% number, okay.
(18:30):
That's super important for the businessand super important for you to make sure
that that you're hiring peopleat the right time and for the right time.
If you can show that your confident in it,and you can show that your actuals
actually reflect what your forecastis, your team's going to see
that your team's going to trust you.
(18:51):
They're going to see thatyou just hired an attorney,
but they're going to know there's a reasonthat you hired that attorney, right?
It's not to take work away from them.
It's to plan for the future. Right.
And that cultural payoff is huge.
You can't even put a number on it. Right.
Because it eliminates or really lowersyour turnover.
Because turnover is a wholenother issue with with a law firm,
(19:12):
you lose an attorney,you're way behind the eight ball, right?
Not only do you not have somebodyin that seat, but you've got to go find
somebody and take 2 to 4 monthsmaybe to get them ready to go.
So keep that in mind.
You have to be willingto take that financial dip.
But with the with the forecast model,you have the confidence
that you can do thatand you will recover from that
very quickly.
(19:33):
Just one thing to add.
Yeah.
One thing to add is as it relatesto the forecast because like it
mightit might sound daunting and like maybe,
maybe you understand itand but your team doesn't.
So like part of part of your jobas the leader of your firm is like,
bring them along through the processso that you can get the cultural payoff.
(19:56):
So one thing Todd does reallywell is every two weeks,
we review the forecastwith all the departments
within the organization,and we review what how have we performed?
What is how is the trending?
Is there anything that we need to knowto adjust the forecast.
And we do it as a team.
That way the team understandswhat we're doing, the team understands
(20:16):
how we're making decisions and likethat's really what leadership looks like
through through forecast is how are you?
How are you communicating this to the teamand essentially teaching them
how this worksso that they can participate.
And then they'rethey're less likely to feel
on an island when they're,you know, at really high capacity numbers,
or they're going to start understandinghow the business flow works, and you're
(20:38):
going to have a very different cultureas a result of being open
and sharing the information and talkingto the team through how it works.
It's,you know, we're a significantly larger,
significantly larger organizationthan we were when we started.
And the more we've done,the more we've done that and done it well,
(21:01):
the better the firm has performedversus being more closed off
and less informative.
Those years we performed less,we perform worse
in at at a lower leveland the culture was more difficult.
So like there's thatthat might sound like a small nuance,
but it's actually one of the biggestmagical pieces of this is like, how do you
(21:23):
how do you bring the team along in itand have them help Owen
own it and drive it and participate?
Because that's where that'swhere magic happens culturally.
All right.
So we've talked a little bit about the,you know kind of what the inputs are.
And you know what.
You know what's important to us.
One of the key things I want to talk aboutis how this model kind of works.
(21:48):
So you'll see the two key metricsthat are there with zeros right now
are that monthly revenuetarget in the average case value.
And these arethe things that Tony talked about.
And let's for now let's put inI think we said like a $4 million firm.
So say $300,000 a month.
That would get you about threeand a half to $4
million average case value, I think.
(22:09):
Let's put in like $8,500.
I think it depends on your case mixand all that kind of stuff.
But let's just throw an $8,500 in there.
So then look what happens, right?
It calculates the targets for you. Right.
As Tony mentioned.
And you walk through soand then you put your actuals in there
which we've got some actualskind of plugged in here.
And you see.
Hey how am I doing. Right.
That's awesome.
(22:30):
That's that snapshot.
That's that point in time. That's that.
You know here's whatwhat what here's what we're doing today.
Here's what we've done yesterdayand here's what we're doing today.
Now we're going to talk aboutthe forecast piece. Right.
So let's jump into the next tab.
And this will show us it pulls forwardthat monthly revenue target.
It pulls forward that average casevalue the 300,000 in the 8500.
(22:53):
Let's put an average k length in here.
You can obviously do thisbased on what your case types are
and what your caseyou know, your case history is.
Let's put ten months in therejust for for now.
And then, you know, active files whichkind of said 45
is kind of a decent number to start with.
So that's 45 in there.
(23:13):
Those are all kind of the keyfirst metrics.
The next two lines here that you see hereare the growth rate and the seasonality.
Right.
And you know I've we've kind of frontand loaded these.
We just kind of 3% growthkind of throughout the the the year
a little bit less in in January.
And then seasonality is the next one.
(23:35):
You look at seasonality.
And we basically got one for seasonality,which means there's really no ups
and downs until you get to the Novemberand December timeframe.
These are levers that you can switchat any point in time
with that you want, right.
If you wanted to say, hey,I'm going to grow 5%
for the first three months of the year,and then I'm going to go down to 3% later.
(23:57):
You can do that.
And this will automatically go backand recalculate the numbers.
And ultimately what you'll see at the endhere is kick out.
Here'show many attorneys I have to have. Right.
So if we do thatwe just hit that one section.
Let's go and change the growth ratejust for kicks right in April.
Right now take just kind of focus on thatApril column and change that to 5%.
(24:21):
See all those numbers change.
Actually it was probably 500.05because or
yeah because otherwiseit'll look really big.
But you saw how the numbers changed,right?
That's the key thing that I wanted topoint out is this is an interactive model.
So if you feel like your business,you want to be more aggressive
and you want to grow faster,go ahead and put that in.
So let's undo that that change here.
(24:42):
So we get back to the 3%.
And then you know we can seehow that then moved back to where it was.
So the step ones are really the checkyour current health right.
We're not going to spend any more timetalking about those.
What I want to talk about is the steptwos here that you'll see there's
some hidden columns or hidden rows herethat will and hide these
kind of one at a time and kind of walkthrough them a little bit.
(25:06):
What this is doing isthis is your forecast.
So where do I think I need to be?
Where do I think I'm going to befrom a total monthly case perspective,
that's what that first section is.
That's your caseload.
Second onethen talks about how many people.
So I want to have that many cases.
And I have,you know, six attorneys in this case.
(25:27):
What happens.
Look at what happens in the Maythrough the August timeframe.
Everything turns amber or read writemy utilization.
That final number in that bottomrow is over 100%.
What does that mean?
That means that youryour attorney is more than 100% utilized.
(25:49):
Guess how many attorneys like that?
The like it for a short period of time,but they aren't going to like it
for a long period of time, right?
So this is where the strength of thismodel comes in, where it says, hey,
by that month, by month of May, I'mgoing to start burning out my attorneys.
So think back to our modelof the unicorn versus the new grad, right.
(26:11):
If I'm going to go higher unicorns.
And that's just what I want to dobecause I'm at that stage in my firm,
I got to hire somebody 2 to 4 monthsin advance of that.
Right?
So I'm probably starting to hirethat in January,
if not February at the very latest,so that I can get that person on board
and let's say in March.
And, you know, they learn my firm,they learn our processes, whatever.
(26:33):
Through March and AprilMay, they're hitting the ground running.
And I can say, yep.
Now I've got seven attorneys. Right.
And that would change my numberssignificantly.
So that's the power of this model isit tells you when you have that issue.
But it indicates thethe key key thing to keep in mind
(26:55):
is it doesn't say start hiringthen because every firm, every area
of the country, every, you know,you name it, they're all different.
Right?
It might take me two monthsto find somebody in Illinois, but
it might take me six monthsto find somebody in Nebraska or whatever.
Right.
So you have to understandthat process of of who you hire and,
and how it takes to hire.
(27:18):
So those are kind of the key things.
That's the power of this model.
You know, the thethe inputs that you have are very small.
Right.
It's really, really small inputs.
We talked about six things right.
You put those in.
You make sure you get your your growthrate, what you want to kind of focus on
and how you want to get there.
And then I'll get you to the,you know, to the right
(27:40):
magic number of here'swhat I need to hire.
This isn't going to work day one, right.
It's not going to be like,oh wow, I know all the answers, right.
It's going to take a while, right?
Because you're going to learnhow your business works.
You're going to really getyour seasonality knocked down.
You're going to understandyour growth rate.
As you get better understandingsof all of those things.
(28:01):
This becomes like the crystal balland it really stops.
You know, that coin flip, right,that Tyler was talking about.
And you don't have to just say,what do I feel like today?
Should I hire or shouldn't I hire?
You can go back to here and you can go.
I love when,you know, I get a request from our team
that says, I need to hire an attorney.
(28:24):
And we go back to thisand we say, well, should we?
Yeah.
Looks like all of our metrics are showingthat we're in the right spot.
Therefore. Yeah,we needed somebody yesterday.
We should hire somebody yesterday.
Gentlemen, thank youso much for presenting and being here.
Everyone is on the calltoday. Really appreciate your time.
I hope it was valuable.
Sounds like it was.
If you have any questions,please reach out to us
and we will see you on the next one.
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