The Business Side Of Law: Matthew N Davis Of Davis Business Law On 5 Things You Need To Create Or Lead A Successful Law Firm

An Interview With Eric Pines

Systems: You must build out systems that run the business when you are away. Right now, both the Firm Administrator and I are out of the office. We can do that because the systems are in place. We built them with detailed, step-by-step instructions any member of our leadership team can run any report. We also simplified them by color coding them to the “Orange Report” or “Green Report”, so we don’t have to remember long annoying business jargon.

Law school primarily prepares lawyers for the practice of law. But leading or starting a law firm requires so much more than that. It requires the entrepreneurial skills that any CEO would need to run a business: How to manage personnel, hire and fire, generate leads, advertise, manage finances, etc. What does an attorney need to know about the business side of the law to create a successful and thriving law practice? To address these questions, we are talking to successful law firm principals who can share stories and insights from their experience with the “5 Things You Need To Create Or Lead A Successful Law Firm”.

As a part of this series, we had the pleasure of interviewing Matthew N. Davis.

Davis is the sole owner of Davis Business Law, PLLC, which is one of the rare law firms ever to make the Inc 5000 list. The firm currently has eight branches from Kansas City to Austin with plans for further expansion in 2023. He is also the Amazon Bestselling Author of The Art of Preventing Stupid and a sought-after speaker on entrepreneurship.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you ended up where you are? Specifically we’d love to hear the story of how you began to lead your practice.

I planned on becoming an energy lawyer in Washington, DC, and then made a U-turn. After having lunch with a cousin, who was ten years older than me and on the same career path, I looked up at the buildings in downtown DC and said to myself, “I don’t want to do this.” I called my girlfriend, who was a television producer in Los Angeles, and asked her if we could head back to our hometown in Oklahoma and hang out a shingle. She was game and we were there in a month. That was twenty-six years and five kids ago.

I joined a firm on an eat-what-you-can-kill basis and took whatever I could get just to get experience. I did adoptions, felony jury trials, family law, car wrecks, or whatever I could get. I worked hard and developed my skills. Ultimately, I was able to work on a class action for a huge range fire and some qui tam cases for agricultural bank fraud in the federal farm loan programs.

After eight years I was disgusted with the politics, drama, and poor management of that firm, so I left to open my own solo shop. I continued to run a general practice, though I was a known quantity in the market and could cherry-pick cases.

Then seven years later I had a “midlife crisis“ and started Davis Business Law. We set out to be a multi-market, multi-state growth company rather than a traditional law firm. We focused on building the skillsets we needed to meet that goal.

I’m a huge fan of mentorship throughout one’s career. None of us can achieve success without some help along the way. Who has been your biggest mentor? What was the most valuable lesson you learned from them?

I had two, E.B. Mitchell and Ed DeClerk. They were the named partners at the firm I started at. E.B. taught me to be prepared and how to try cases. Ed taught me how to be collegial but firm with opposing counsel.

From completing your degree to opening a practice and becoming a business owner, your path was most likely challenging. Can you share a story about one of your greatest struggles? Can you share what you did to overcome it?

Because I showed up in my hometown with a law license and no real practical skills, my choices forced me to learn how to be a great lawyer the hard way — through experience. But what I learned are things no one can take away from me. I worked persistently and diligently with a willingness to learn and protect my clients.

Can you please give us your favorite “Life Lesson Quote”? Can you share a story about how that was relevant in your own life?

One of my family’s two quotes is “The people you pull up by the bootstraps turn around and screw you over.” The idea here is if you help someone without skin in the game, meaning they do not pay you in advance for legal services or at least provide sound assurance that they can pay you, then you are spoiling them, and they end up feeling entitled to your services for free. These are also clients that will turn on you in a variety of ways. This wisdom taught me to avoid the Drama Triangle, which describes a codependent psychological pathology consisting of a Victim that identifies a Persecutor and in turn seeks a Rescuer from that Persecutor. Many attorneys love this “game” because they get to play the Rescuer and get an emotional payoff rather than a financial one.

This is not easy work. What is your primary motivation and drive behind the work that you do?

I love seeing ambitious business owners build their American Dream. I also love running a company in which our team members can do the same!

What are some of the most interesting or exciting projects you are working on now?

We serve as the general counsel to a lithium extraction company that identified a huge resource in the brine in an old oilfield. We expect this company to sell for the mid-nine figures.

Fantastic. Let’s now shift to discussing the business of law. Can you tell us a bit about the nature of your practice and what you focus on?

We help ambitious small business owners deal with their vulnerabilities so they can capitalize on their opportunities. Some of this is traditional law, but we also run an outside general counsel service.

You are a successful attorney. Which three character traits do you think were most instrumental to your success? What unique qualities do you have that others may not? Can you please share a story or example for each?

I think the three main character traits necessary to be a great attorney are empathy, passion, and diligence. I know many attorneys with one or two of those, but not all three. They remain mediocrities.

With empathy, you must be able to put yourself in your client’s shoes and understand, that they are the “hero” in the story, not YOU! We just walked away from a hire to open an office in Houston because we concluded she did not have this ability. As our first core value says you must “Believe and Protect Their Dream.”

Passion dovetails in here; it is the fire that actively fuels the engine of protection. It is the ability to give sound advice or to go thrash the opposing side if they need it. My right-hand lawyer, Ashely Morey, comes across as one of the most patient, kind, and understanding people you have ever met. But I have heard her say many times, “Well let’s try to work this out, and if not, then we’ll just have to crush them.”

Without follow-through, passion is a flame that flares out. I believe it was Edison that said. “Genius is 2% inspiration and 98% perspiration.” This is particularly true if the opposing party will work a case too. We have a case still going on of this ilk. It has been to the Nebraska Supreme Court, where Ashley characteristically gave them a good thrashing, and is now reset for trial. I just spend a day reviewing the 3,500 pages of exhibits so I would know the case inside and out. That’s what diligence looks like!

Do you think where you went to school has any bearing on your success? How important is it for a lawyer to go to a top-tier school?

I went to the University of Oklahoma, which is a mid-tier school. I hated law school and like most law students, did not get practical knowledge. I do not think you have to go top-tier to be a fantastic lawyer.

Managing being a law practitioner and a business owner is a constant balancing act. How do you manage both roles?

I worked very hard to get out of the day-to-day practice of law and now retain only a few select clients. I recommend reading E-Myth Revisited for business owners on how to get out of the technical work. The trick is to build systems and hire great team members to carry the load.

Can you help articulate the entrepreneurial skills a lawyer needs to run and lead a successful law firm?

Entrepreneurship is a skillset in and of itself, but to run a law firm I maintain that you will fail unless you are a lawyer’s lawyer. I suppose that is the foundational, “Do not pass Go. Do not collect $200” skill. Without that you can lead a mediocre law firm, but the speed of the leader is the speed of the team rings true here.

With that in place, I always go back to the three-part question Jim Collins poses in Good to Great:

• What can you be the best in the world at?
• What do you love to do?
• What can you make money at?

Once you find an answer at the intersection of those three questions, you have a clear idea of where to steer the ship and then you can start building your marketing. I saw a law firm advertisement recently that said something to the effect of, “If you need a lawyer, we have one for that.” I cringed. I guess a full-service firm can be a comforting professional practice, but for our purposes here we are talking about the business of law not building a fraternity or sorority. My point is, that the next skill you must have is the ability to build out a clear marketing vision of what your firm can deliver.

The other necessary skill is to understand the financial numbers including productivity and collection. I read Greg Crabtree’s Simple Numbers religiously the Friday after Thanksgiving to keep my skills sharp here!

As a business owner, you spend most of your time working IN your practice, seeing clients. When and how do you shift to working ON your practice? (Marketing, upgrading systems, growing your practice, etc.) How much time do you spend on the business elements?

I keep one big corporate client that I love working with and four or five general counsel clients. I spend about 30% of my time doing legal work and 70% running and growing the firm. I hired a retired Air Force JAG Colonel to be our COO and his skills allow me to remain engaged that 30% in the law, which I think keeps me relevant to the team of lawyers we lead.

Can you share some specific, non-intuitive insights from our personal experience about how a leader of a law firm should:

• Manage personnel: They are your internal customers. You must treat them like that and when you are hiring them ask yourself if you can be of service to them. If not, walk away.
• Hire and fire: We hire first for attitude and second for skills, this is most acutely important with our attorneys. We must have those traits of empathy, passion, and diligence. Without that, they are non-starters. For firing, I am hair trigger for anyone who does not live our core values. Your company is an organism in and of itself that is your job to protect — you must be the one to speak truth to the BS!
• Generate leads: The better part of digital marketing is putting on a show to impress Google!
• Advertise: Clarify your message- know who you want to reach and what they care about. Also, use SemRush or Ahrefs to see what your competition is up to.
• Manage finances: Use Rolling 12 P&Ls to see what is really going on. This is a concept from Crabtree’s Simple Numbers and remember your all your reports should have as few numbers as possible to tell you what is going on our you get lost in the data. The Rolling 12 P&L brings this to finances.

Ok, thank you. Here is the main question of our interview about the business side of law. What are your “5 Things An Attorney Needs To Know In Order To Create A Successful And Thriving Law Practice”?

I suppose it is expected that a lawyer will split hairs and parse words. That said, I think a law practice, a law firm, and a law business are entirely distinct things. I am going to focus on the latter, which is the most complex, the most profitable and the most rewarding.

1. Systems: You must build out systems that run the business when you are away. Right now, both the Firm Administrator and I are out of the office. We can do that because the systems are in place. We built them with detailed, step-by-step instructions any member of our leadership team can run any report. We also simplified them by color coding them to the “Orange Report” or “Green Report”, so we don’t have to remember long annoying business jargon.
2. You Deal in Vulnerabilities: It took me twenty years to come to this realization. Our core job is helping clients deal with their vulnerabilities That epiphany became a common thread in how we market, how we treat our clients, and how we recruit. Some are active. We call that a case. Some are latent and if you can help your clients spot and deal with those, you will develop lifetime loyalty. Once I got a client to up their insurance coverage from $2 million to $10 million based on their risk. That coverage paid out a $7.5 million claim that happened six months later.
3. Build a Tribe: I constantly rage about law firms that go around “Collecting anyone with a bar card and a pulse.” In contrast, we recruit people that match our core values and fire those that do not continue to follow those. These practices build a team that understands each other and works like it! We go on full firm retreats twice a year for three days and very importantly we bring spouses and significant others. A couple of years ago we were at a dive bar at two in the morning doing karaoke. The bartender asked if we all grew up together. I told him we did not. He said, “You all party like you did.” That’s what a tribe looks like.
4. Know Your Numbers: Lawyers tend to be a creative lot, but if you do not know your numbers you are never going to have a great business. The financials are one thing, and I am a fanboy of Crabtree’s work. You also must track productivity, which really boils down to the attorneys getting their time recorded, ensuring that time is billable and then that it gets collected. We use Clio as our management platform. It calls these Utilization, Realization, and Collection. We measure all three and I get a report each week. Utilization was just shy of 100% this month so far based on the report I got this morning!
5. Have a Why: Know why you do what you do. Your team and your clients want to feel your driving purpose and be inspired by it. If not, you are just chasing dollars, and that is not what you were put on this earth to do. I suppose this part of Collins’ question about “What do you love to do?” If you love what you do, it is not work. A couple of months ago one of our attorneys and I were driving back from a client meeting and he asked if I was building the firm to sell it. I told him that I was building the firm so I could come to Wichita and hang out with him so we could help clients. He got my why!

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

My mother was the only woman in her med school class of 1963. She was an iconoclast and a pioneer in many ways. In her practice she was an early leader and advocate for breast cancer screening. She saved thousands of women’s lives. I know I still live in our hometown and they, their husbands or their kids remind me all the time.

I am passionate about bringing that kind of proactive screening to business law so that companies can excel and not make unforced errors. That’s what I teach all the time and what my first book, The Art of Preventing Stupid, is all about!

How can our readers further follow your work online?

Our website is www.davisbusinesslaw.com and I am also on LinkedIn as Matthew Neill Davis.

This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!

About the Interviewer: Eric L. Pines is a nationally recognized federal employment lawyer, mediator, and attorney business coach. He represents federal employees and acts as in-house counsel for over fifty thousand federal employees through his work as a federal employee labor union representative. A formal federal employee himself, Mr. Pines began his federal employment law career as in-house counsel for AFGE Local 1923 which is in Social Security Administration’s headquarters and is the largest federal union local in the world. He presently serves as AFGE 1923’s Chief Counsel as well as in-house counsel for all FEMA bargaining unit employees and numerous Department of Defense and Veteran Affairs unions.

While he and his firm specialize in representing federal employees from all federal agencies and in reference to virtually all federal employee matters, his firm has placed special attention on representing Veteran Affairs doctors and nurses hired under the authority of Title. He and his firm have a particular passion in representing disabled federal employees with their requests for medical and religious reasonable accommodations when those accommodations are warranted under the Rehabilitation Act of 1973 (ADA). He also represents them with their requests for Federal Employee Disability Retirement (OPM) when an accommodation would not be possible.

Mr. Pines has also served as a mediator for numerous federal agencies including serving a year as the Library of Congress’ in-house EEO Mediator. He has also served as an expert witness in federal court for federal employee matters. He has also worked as an EEO technical writer drafting hundreds of Final Agency Decisions for the federal sector.

Mr. Pines’ firm is headquartered in Houston, Texas and has offices in Baltimore, Maryland and Atlanta, Georgia. His first passion is his wife and five children. He plays classical and rock guitar and enjoys playing ice hockey, running, and biking. Please visit his websites at www.pinesfederal.com and www.toughinjurylawyers.com. He can also be reached at eric@pinesfederal.com.