I’m Melissa Shanahan, and this is The Law Firm Owner Podcast Episode #258.

Welcome to The Law Firm Owner Podcast, powered by Velocity Work, for owners who want to grow a firm that gives them the life they want. Get crystal clear on where you're going, take planning seriously, and honor your plan like a pro. This is the work that creates Velocity.

Hey everyone, welcome to this week's episode. Today, we are talking about how to navigate those periods when the business is experiencing its new normal in terms of level of business. If you've ever seen the S-curve, this is very, very, very much tied to that illustration and that shows the growth of a small business in phases. So, there's this initial slow growth, then there's expansion, and you can see the line go up into the curve, and then eventually it levels off as the market saturates.

Now, there are many ways to look at this; it depends on the length of time you're looking at. Because when you first start your law firm there is this initial slow growth, and then word of mouth gets out, you start to actually get more business so there's expansion, and then you get yourself to this place where you are humming along and you have a real business. It's not a startup anymore, it's a business. And you're handling it all.

You will have another curve like that. Because you'll be chugging along with this new normal that you've created within your business, and then you'll decide to actually do a different marketing campaign or bring in new business a different way, whether it's through the same practice areas, introducing a new practice area, whatever it might be.

But you're going to push at the market again, you'll experience this growth, and then it'll start to plateau. And we think a plateau is a bad word, but this is a very natural cycle of business. When business is like this… There are a couple of things I could say about this, but I need to remember to stick to the point of this podcast… having those plateaus is extremely healthy. And it's not really just a plateau, that makes it sound like a negative thing, it is not.

After you've pushed, you've experienced some growth, and then it starts to level off again. Those periods are important for the longevity of a business, and it doesn't mean you're going to stay there forever. You could absolutely affect that growth again. But it is a really healthy sign for the business to be able to have the cycles that we're talking about right now.

When it's just straight up and to the right, your growth, that is where… and I've done a podcast on this recently. Where people think that's what they should want, they think that that's what they want… it can cause a business to implode. Because everything is moving so fast, there is no period for adjustments for the business itself. You start to build a house of cards. Things are messy, things are chaotic, etc.

Anyway, I just want to make sure that we know that this S-curve, the cycle of that, the nature of that, is actually very healthy. It just is what it is. And if you understand it, then you know how to deal with it.

So, on this podcast, what we're going to talk about is the top of that S curve. Where the business grew, and now it's starting to level off. You’re really happy with the business growth, and there are a few things that tend to happen at these peaks, so to speak.

It's not just one peak, again, there are multiple cycles of this. So, it's sort of the peak of that S-curve. And then there's going to be another peak, the next S-curve you have. And so, when you hit these peaks, so to speak, there are some things to keep in mind and that's what I'm going to cover today.

This is going to be my observations over a very long time of doing what I'm doing. Just as a reminder, so that you understand where I'm coming from. I have been doing this work for nine years. And what that means is that quarter over quarter over quarter I lead these strategic planning retreats, these full-day strategic planning sessions.

I have done multiple over every quarter. So much so, that now I am just under 500. Actually, I might be over 500. I just want to be conservative, just in case. I don't have the count in my head, but just under 500 of these. For five hundred days over the last nine years I have given to this practice and this framework and honing it and learning about businesses, and there's nothing I haven't seen.

There's nothing that rocks me when I'm in a retreat, in a day. It's all to me very navigatable… I know that's not a word. I've seen so much, and I've experienced owners experience their own businesses so much. And so, what I have to offer today is based a lot on that. Not just conceptual understanding that I've read from books, no, this is put into practice. These are observations I've seen.

That's why I'm sharing it here with you today, because it is stuff to look out for. It is stuff that you can implement to prevent any sort of suffering, or frustration that you could have prevented had you just known, had someone just given you the nuggets to think about. And so, that's my hope today, is that I'm giving you some of that so you can think about how you are going to handle those peaks of the S-curve.

How you're going to handle those times where the growth has happened, and the growth starts to taper off. And then, what do you do at that point? Until you decide to push again, or until the growth kicks in again, etc.?

So, here's how we're going to go into this conversation, which is a little different than what I normally try to present. A lot of times, I try to start with the “why”. I think for this episode, I need to start with the “what”, and then you will start to see why, and I can then explain why. So, that's how we're going to approach this.

When we think about the “what”, what is most important at these peaks, it comes down to two things. Two qualities that if, as the owner, and also high-level team, key team members, but most importantly the owner or owners, make sure that two characteristics are at the forefront of how they're thinking and how they're operating.

The first is honesty. When I say “honesty”, I really mean that. Not fooling yourself that things are going to keep going up, or that you can spend more cash than you have right now because you've just experienced a whole bunch of growth so you think you're going to do it again. Really getting down to facts, not feelings.

Also, being honest about the state of the team, of the company, of the infrastructure, of all of it. Just being willing to be honest. And that sounds so straightforward, where people would think, “Well, yes, I tend to be an honest person. I think I wouldn't have a problem with that.”

But I have seen this time and time again, where people get to these peaks, and depending on the peak that they're on, there's an ego that takes over. There is an ego that is involved, becomes involved, that wasn't involved in getting to that peak. Maybe it was slowly forming over time.

But the problem is, if you have an ego that gets inflated, it distorts reality and it hinders honest assessment. And that's what I mean about honesty. Just being willing to honestly assess the state of things from different angles. And there's something about, sometimes, with these peaks, especially if you're hitting a peak that you never thought was possible for your firm, there's a time where your ego can be inflated to a point that it hinders honesty and it distorts reality.

We are all susceptible to this. This is a very normal thing to happen. This is not people who are typically dishonest. Of course, they're going to have an ego, “That's not me.” No. No, it happens. There may be a time where you have grown to a point that blows your mind. It is your new reality. You have a business at this level that you never thought you would have.

That is where the susceptibility comes in, just thinking, “Oh, okay, I am capable of this. I'm capable of anything. Look what we've done.” It's like an over focus on the positives of where you are, and that's it. That's all that's being looked at. It's all that’s being celebrated.

And look, it should be celebrated. Absolutely, it should be celebrated. But when your head is in the clouds of the winds, stuff happens behind the scenes. This is what I mean. There's an ego that's taking over, it sort of distorts your reality. Yes, there's a lot of good going on, but there is not a company on this planet that does not have stuff that needs to be looked at under the hood. And people forget that at these points because it feels so good to be on top.

And so, the first trait, the first quality that you've got to keep up front is honesty. We'll dig into more of that in a minute.

The second one is curiosity. Being interested in “what else?” What's going on under the hood? What does need improvement? We have a little space where the growth is not happening as aggressively, so we're sort of tapering off. Let's adjust to this, this new phase, this new normal for us. And that way… This is something that else that happens, I was going to say… so that way we can keep this new normal.

Because what can happen is, if you keep your head in the clouds or your ego takes over, which is hindering honest assessments, then what happens is you will start to have a decline. Not just a plateau, a decline. There are all sorts of reasons for this, but it all stems back to how you treat those peaks.

If you treat the peaks in a way that allows you to keep the new level, the new normal that you have, then you know what you're doing. That's a mature way of handling that growth. But if you don't, you will experience a dip. I don't know how far down; it depends on a lot of things. I have seen it dip dramatically, and I have seen it take a bit of a dip, when that's enough to be a wakeup call to the owner or owners and the people at the helm.

So, this is… I guess I should have said that at the beginning… part of the S-curve is that if you get complacent at the top… that's the word that's used oftentimes with this S-curve… When you get complacent at the top, you will start to feel a dip. And so, the idea is, and the advice that you'll read in business books, etc., is do not get complacent.

Yes, I agree with that, but it's almost over simplified. I have worked with lots of people who do not think that they are complacent, they're just riding the wave and they are focused on all the good and where they're going and where they're growing. They're focused on half of what they should be focused on, instead of fully what they should be focused on. And they will experience a dip. They don't identify with the word “complacent”.

So, yes, that is a way that often describes the phenomenon that happens at the top of the S-curve. But here, I want to break it down differently and give you a way to think about the top of that, because complacency is the result of a lack of honesty, and a lack of curiosity or interest in some of the unsexy stuff inside of your firm. So, that's what we're going to talk about today.

Alright, when it comes to honesty, you have a really unique opportunity. When things just feel like they're humming really good; the growth has tapered off, you're on the top of the S-curve; you have an opportunity to take the space that's given, or the less craziness that is happening, and shift your focus to the internal stuff inside of your firm; the systems, the people that work at the firm, maybe adjusting how you decide to measure performance and culture. How is culture in your firm?

It sort of gives you a way to be able to focus on that, and in a way that produces sustainable change that you'd like to see in your firm. And when we're running really hard and when things are really cranking, so when you're going up on the S-curve, it can be very tough to do that. It's not impossible, and you can have help in doing it, you can hire support to do it. But you have a gift.

If you're at the top of this S-curve, you've got a gift. Because now things are not quite as insane and there's some space that you have. Even if you don't feel like there's a lot of space, it is more. This is part of being honest. You're not running as hard because the growth is not hitting you as fast. So, you do have more space than you did have. And what are you going to do with that space?

Deciding to dig in to the systems and the processes, and the people and customer feedback, and all of the things that create a healthy company, a healthy firm, that's your chance is to do that, to have a look. One word that… My company is actually in this stage right now, which is not why I'm doing this podcast, but it is interesting that it's timed similarly. One of the words that we're really focused on right now is “honed”.

We need to home in on things right now. We need to take this opportunity. I gave a whole discussion about vision and where we're going, but what is important right now is honing in on everything. Take this opportunity to cross our t's and dot our i’s. To do some of the customer development and feedback now. Learn as much as we can. This is where the curiosity comes in, as well.

And really get honest. Because some of this stuff, by the way, when you start digging in it, you're not going to like what you see. There's going to be stuff that you don't like what you see. You do it anyway. And it's about being honest, it's getting honest.

Imagine if you don't do it, you dig in and you look at things, you don't like what you see, whether it's feedback from a customer, whether it is a process that is not at all as tight as it should be, or it's not being followed or whatever, there's something you're not going to like when you dig in. And people don't do that.

Can you imagine turning a blind eye to all of that stuff and just keep on trucking? You can imagine how you’d start to build a house of cards over time. You have to use the space. You have to dig in in a way that you don't have just the opportunity to do in the phases that are heavier growth periods.

Another element, when I think about honesty, and I'm thinking about the people that I've worked with… I take a page from the experience that I have in seeing what I've seen… is that sometimes there's a lack of honesty about how you, as the owner, have been showing up. We have expectations of our team around us, and we do not act in alignment with those at all.

Now, there are some exceptions. When you're the owner, you do get to choose what you do what you don't do. But if there is a standard that you're holding other people to, but you are not abiding by that standard, the culture is messed up in your firm. Make no mistake. It doesn't mean it's not fixable, but it's out of whack. And having an honest reckoning with some of that can be really important.

Another thing to be honest about, that people don't get honest about, is capacity. For real. John Grant talks about the honest reckoning with capacity, and having the space and doing what it takes to dig in and figure out, what is your capacity? The way that things are set up right now, what does it mean you can handle? Are you over capacity right now, or not? And if you grow, what does it mean? What is that going to do? How do you want to support the growth?

Just having conversations about all of that, this is fundamental stuff. It's not stuff that we're taught. And listen, I'm not an expert on capacity stuff, either. But I am curious enough to dig in. I know all of you listening to this are similar to me, you have the same trait, that you will figure it out. You made it through law school, for God's sakes, and you started a business. You definitely have that attitude, and you will figure it out. You know, you can.

And so, it's the curiosity and being interested in digging in to figure out, “Hmm, how do we determine our capacity? I think we're over capacity, but is it just because we have some things that aren't running very well inside? And if we did tighten up some systems or improve some workflows, maybe our capacity would shift. We would experience the work that we have differently.”

It's really just about being curious. And being honest, when something is just not there. It's just not where it needs to be. Being willing to be honest about that. Not making it mean something about you. This is not meant to be emotional. It's facts, not feelings. Digging in and taking the opportunity to dig in here are really important.

I can kind of hear some of you, I feel like in my mind, what might be coming up for some of you is that, yes, even though it's not quite as insane, when you're at the top of the S-curve in terms of growth and incoming, it still is not enough space to be able to dig in in the ways I'm talking about. This is another thing, that this is part of being very honest with yourself. Sure, it's not being handed to you, but it is your job to take it. No one is going to hand you a bunch of space.

You have to look at your calendar and how you're spending your time. And if this is a priority, and at the top of the S-curve it needs to be a priority, I am telling you, I am telling you. If it is not made a priority, you will be sorry later. I don't know how sorry; I have seen people that are super freaking sorry.

And I have seen people that are like, “Damn, that was an opportunity. And now I’ve got more work on my plate at the top of this S-curve,” or in the middle of the next S-curve, “because things are breaking. Because they aren't good enough to handle the next level of growth. I didn't address things the way I should have back where I had a little bit of reprieve from everything. I should have been a little more ruthless about taking the space to dig in.”

I’m just saying,  if that is the voice in the back of your head, just stop being at the whim of the world. This is your opportunity to say, “You know what? We did experience some growth. I am going to make sure to focus X amount of hours per week on digging in, and having a look.”

“I'm going to recruit a team member or two to be my partners in this. We are like a committee, almost. We are going to home in on things. We are going to make sure that we fix what's not quite right. That we are listening and looking under the hood. So that when we hit the next phase of growth we're going to be able to withstand it in a healthy way.”

Okay, wait. I should say this, too; hit the next phase of growth so you can withstand it in a healthy way, but also, if there is a dip you can withstand it in a healthy way. I mean, this is part of what I've seen. I'm not going to give examples, because I don't want anybody to put together who this might have been. It's for confidentiality, I'm not going to give specific examples.

But I have seen, in my history, when something goes wrong… Let's say they kind of hit this new level, this new normal, and they do not dig into things… When something goes wrong, or when an investment didn't shake out the way it should have, or when all of a sudden… Which this doesn't happen all of a sudden, but… when team members turn against you, when the culture is not right, and there is a windfall that happens because of that, stuff happens in your business.

And if you haven't done this work that I'm talking about, it makes it so much harder to recover from the stuff that you wish wouldn't have happened. When it happens, it makes it very difficult to recover. Someone getting ill... It's not all things that are your fault, it could be things that are literally happening to you or to the business.

But if you didn't do some of the things I'm recommending that you do at the top of this S-curve, when you have this peak, and this new kind of level of success, this new normal, and you just keep carrying on and you're just really reveling in the adjustment to this new normal, this new influx of regular cash flow, all this stuff that feels so good, and you stay in that, and you don't get honest, you don't dig in, you don't hone things, you don't turn to the internal workings of the business, it's going to make the future harder, period. Good or bad, it's going to make the future harder.

Something else you'll see often at the top of the S-curve, when you get a little more space and you feel like you can breathe, there's a temptation to put your foot on the gas with new things; new marketing initiatives, new hires; that you haven't really done the math on. There's no spreadsheet set up for this hire, to figure out if this was a smart move at this time. Depending on cash flow, and what this new hire will enable the firm to be able to produce, bring in more money.

Even if it's an admin cost, if they're taking things off of a producer's plate so that the producer can produce more... So, an attorney, a paralegal, in some cases a legal assistant… if work is going to be able to be pushed out more quickly, or you actually bill for time, and that's going to be a win, then yeah, maybe the admin makes perfect sense.

But you need to have a spreadsheet. You need to dig in on some of this stuff. So, there are times where it's like ‘bring in the new’. It feels tempting to do that. And what I want to say is, this is your chance to slow down to refine your infrastructure. to ensure that details and consistency is a thing in your processes and in your systems. To have a look at where something or anything is broken in the firm; it's not healthy, it's not functioning the way it should be functioning.

And having an honest look at that, instead of putting money into some new marketing initiative, or effort or time, resources of any kind, your resources should be going into your firm. It should be an investment back into your firm to make sure that everything is humming the way it should be humming. So that when you do make that investment in that marketing initiative, so when you do bring on that new hire, things are in shape enough to be able to handle what it brings.

So, there's temptation all around. And listen, listen, not only do I have experience leading many people through these realizations and navigating these peaks, and navigating dips, and all the things, but I am also a business owner. I know what this is like. I know the temptations that arise. I know the offers that are made to you, as an owner, that are promising and tell you what's important right now and tell you what to do. But those offers are people who have their own businesses that are also trying to make money. So, you have to be very discerning.

In periods like this, it's easy to let your guard down and just say yes to things that actually are not in the best interest of the firm. They could be in maybe just a few months, just a few months. You don't have to say no forever, but it needs to be on your timeline.

This topic that we are talking about right now, needs to be in your timeline too. You need to have periods where you're going to hone versus just let new in. And that is tough, because it's very shiny object syndrome or it feels super promising.

I recently had someone give me a proposal for some marketing work, where it is very easy for me to justify that we should do. Very simple, fundamental stuff that needs to be done, and there's a whole bunch of things that feels super exciting. I think, “Yes. We should be doing those things. Yes, whatever.” But we just came out of an insane growth phase. So, no. The answer is no, not right now.

And here's how I know if it should be a yes or it should be a no. If I feel in a hurry, or if I feel pulled to say yes, then it's not the right move. My moves and your moves should be calculated. They should not incite a bunch of excitement. It's not that you're not supposed to ever have feelings about your business, but you don't make decisions based on feelings in your business.

And so, if I am making a decision, and it's accompanied by a ton of emotion, like excitement, it's a no. That clearly tells me I'm not ready. It feels like a very immature move. And I try to help my clients understand that, as well. So, these periods are… I understand. I understand the temptation, and it is not sticking with the fundamentals if you choose to go the route to accept people's offers, to make your life better, and to infuse this new thing into the firm.

No, the best thing you can do in those points is to sit still, to go internal, to have a look at things, and decide what needs your attention. There may be a lot that you don't like what you see, but you need to pick the biggest thorns that need to be addressed.

One question I ask myself often, and I ask our clients too, is, “Okay, you're looking at a bunch of things. You don't like a bunch of these things here. But what are the things that if you don't take care of them now, it's going to cause the biggest problems moving forward?” It surfaces what needs your attention.

It's not that you can't make headway on the other things, but these go first. These go first, and then you're ready for more. So, hopefully this helps you think about your new normals that get created in the cycles of business, and how to look at these things and think about these things, and how to be ruthless with your time and attention in these spaces.

That may mean, for example, having a small window of time where you don't accept new matters or new cases. To some people, that just sounds totally asinine. But you have got to protect your own business. It may seem counterintuitive to think in this way, but actually saying no to some cases is protecting your business.

You have to stop and think about it. If you are not willing to stop and consider that it might be the best thing for your business to stop accepting new matters for a couple of weeks or a month… you get to decide your timeframe… then you are not being honest. Being honest is willing to look at everything. Look at all sides, and then make a decision based on facts, not feelings, to the best of your ability.

If you're not willing to entertain a certain idea, what does that say about your level of honesty? Be willing to be honest. So, let this episode serve as a reminder, maybe as a lesson, if this is your first time hearing some of these concepts and some of this stuff, it's your responsibility. As the owner, this is you. You have to make these calls. No one else inside of your firm is going to be able to tell you, “Hey, you know what? We should take this time and look into the business.”

They're looking to you, and you do drive what happens in the firm. You drive the focus. So, what do you need to drive here? Where do you need to point people's attention? What do you need to say is going to be the thing for the next few months?

And if you're not in this phase yet, if you were just in a hyper-growth phase, okay. But it's going to start to taper at some point. And when it does, when you even have just a glimmer of reprieve, you need to use that, take that, and realize that you need to force that open even more if you're able to take a breath.

If you don't have a ton of room to focus on the stuff we've talked about today, that is your opportunity to open up more space, more time, and figure out how you're going to do it. Again, people think that they don't, they can't. They tell themselves, “I can't, I don't have the time.” That is not true. You get to choose what you do with your time.

And honestly, if there was a gun to your head, you would figure out how to take the time and make it okay for your business. So, figure it out. Right? Don't keep being at the whim of the world. Don't keep being powerless and saying, “I don't have time. I can't do it. I can't make this happen. It's not there for me. I don't have a choice.” Yes, you do.

Okay, I think we’ve covered the big things I wanted to cover. You have to be honest, and you have to be curious. And I'm going to give you one exercise that John Grant taught us, that I think is probably a good way for you all to step into figuring out, when you do take the space, figuring out what to work on.

It's called “a retrospective”. Essentially, you could put three areas up on a whiteboard, or three huge Post-it’s on the wall. One of them says: What's working well? Another one says: What's not working well? And the last one is: How can we improve? So, it's like ideas.

You have your team, they get some sticky notes, and you pose those questions to each of them. Every sticky has one item. So, with “what's going well?” they'll write one thing that's going well on a sticky, and then set it to the side. The next thing that's going well on a sticky, set it to the side. You do that for each of the Post-it’s. “What's not going well,” there's a sticky for each. And then, ideas for improvement, that's in the last set of stickies.

Also, if John's listening to this, I might be botching the way that he describes that third Post-it, about ideas for improvement. But I did look up a few articles about retrospectives, and that seems to be a common question for the third one; I can't remember exactly how he phrases it.

But those three prompts are really useful, and it helps you see what is going well from all angles. As the owner, you only have one view of the business. Where as an assistant has a very different view of what's going well and what's not working, in a way that you could never see.

So, this is really helpful to get people communicating, and so that you all can see the things that need to be addressed, what's not going well. That can lead you down the path of figuring out ‘what we need to do here, what we need to focus on.’ I'm not explaining this exercise thoroughly. You can look up “retrospective” online. But it's the three big Post-it’s, and each person writes down an idea. Essentially, you have them walk up and stick their small stickies on that big sticky of ‘what's going well.’

And you can start to kind of clump together the themes. People will have themes that will pop up. You can kind of clump some stickies together that are theme oriented. It lets you really surface the things that need to be addressed. So, that's an exercise you could do to start to dig in.

But no matter what, take the space. Stay so honest. Do honest assessments, and stay very curious. I'm going to end with telling you about a conversation I had with a law firm owner who voiced that they really wish that they would have been more willing to dig in to the business at these points on the S-curve.

It was a really cool conversation. They admitted to basically just having complacency, yes, but it's more about what we're talking about. Where it's just riding the wave, feeling really good, everything is swimming. Things may not be perfect, but who cares? Everything's going up. It was almost an unconscious unwillingness to look at what's not quite there, and what could be better.

Because it just felt like getting things to perfect. This person is not a perfection kind of person, so they just weren't interested in perfecting anything. But it's not perfecting things. This person has experienced quite a bit of strife.

We were talking about the dip, and there's been a lot of things that have happened that have made recovery super hard. That there's a chance that some of that dip wouldn't have happened if they would have dug in in a different way at the top, at the peak. And the stuff that would have happened anyway, they would have been able to recover faster from.

This is an honest reflection for someone who's been through it. They've been through many peaks, and now, for the first time, they've been through a pretty massive dip. That's honest. But it's unfortunate that it took that to create that level and the willingness to be that honest. So, can we do it at the top, guys? Can we do it at the top?

Alright, everybody. Have a wonderful rest of your week. I'll see you here next Tuesday.

Hey, you may not know this, but there's a free guide for a process I teach called Monday Map/Friday Wrap. If you go to VelocityWork.com, it's all yours. It's about how to plan your time and honor your plans. So, that week over week, more work that moves the needle is getting done in less time. Go to VelocityWork.com to get your free copy.

Thank you for listening to The Law Firm Owner Podcast. If you're ready to get clearer on your vision, data, and mindset, then head over to VelocityWork.com where you can plug in to Quarterly Strategic Planning, with accountability and coaching in between. This is the work that creates Velocity.