Investing in the Growth of Your Law Firm with Jim Farrin
Nov 10, 2022
Being a lawyer who handles cases and being a law firm owner who runs a business are two different things. That's why deciding to start a law firm is never an easy decision to make. It's a journey filled with taking risks and learning from mistakes. But unless you gather the courage to take that first step, you'll never know how big the things you can do are. Failures are part of the process, and overcoming them is the key to building a successful law firm.
In this episode, James “Jim” Scott Farrin, President of the Law Offices of James Scott Farrin, joins us to discuss how he grew his firm to run like a business. He shares the risks he took from the firm’s early days and how he overcame failures along the way. He lays down the most crucial aspects to pay attention to when growing a firm and how to navigate investment decisions. Jim also talks about the case management software they developed called GrowPath.
If you want to adopt the winning business principles that will help you grow your firm, this episode is for you.
Here are three reasons why you should listen to this episode
- Understand the place for debt in building a business.
- Learn the importance of having a proven concept before taking any investment risks.
- Discover how to navigate the biggest challenges in the growth stage of your firm.
- His father's background as a businessman and his mother as a social worker led him on his journey in law.
- He had always thought of working at a big law firm, but he hated it when he got there.
- By accident, he joined a friend to do personal injury work. There, he found his calling.
- He started his firm with only one employee in 1997. His initial goal was to support himself by doing something meaningful, but he got promising results.
- His goal changed to building the most successful plaintiffs law firm in North Carolina. His firm recently celebrated its 25th anniversary with almost 300 employees.
Jim: “My goal was not to make as much money as possible in a given year but to build a business. And so, I always believed in reinvesting and increasing the marketing budget.”
The Early Days in His Journey
- Jim has been married for 15 years in his second marriage.
- He has two daughters and two stepchildren. One of them is going to law school.
- He had been out of law school seven years before launching his firm and had already made some money.
- It was only after around two years of running the firm that he felt secure financially.
Starting a Law Firm with an Employee
- It’s tempting to keep expenses down at first and do everything yourself, but it hinders productivity.
- Investing in a staff frees you up to do higher-end work and generate more revenue.
- Jim’s philosophy is on always adding people and building for the future.
- Measuring your earnings at the end of each year and getting urged to trim expenses will only hurt in the long run.
Jim: “So, for me, the mentality has been, let's make sure we're profitable, and we can pay the bills and have a comfortable life. But beyond that, let's reinvest, and let's build more for the future.”
How Jim Founded and Grew His Law Firm
- His partnership with a friend at another personal injury law firm didn't work out. Many of their clients opted to go with Jim when he started his firm.
- He invested around $30,000 of his savings to get through the firm's first year.
- A big case they resolved in 1999 brought a major change to how they ran the firm. To scale, Jim decided to run a TV advertising campaign.
- He funded the first four months of the campaign out of the case’s revenue. At that point, he had come up with a proven ROI concept.
- From that, his parents helped him continue funding the campaign by pledging out their retirement security for a bank loan.
Moshe: “The only way to overcome fear is to actually take the action, it’s to try it. Because what's the worst that can happen is it doesn't work, and you have a failed investment.”
The Place for Debt in Building a Business
- Many people are afraid of taking on debt.
- But borrowing money can fast forward development if you have a proven business concept.
- With a proven concept, the ROI rate can significantly exceed borrowing costs.
- You can be aggressive at using a line of credit to jumpstart your growth.
TV as a Marketing Tool
- Jim’s firm reaped the benefits of TV advertising in the early 2000s.
- TV remains a powerful medium; it creates brand awareness and strengthens other channels.
- Their Internet responses are better in markets where they’re well-branded from TV.
The Lessons from Jim’s Biggest Mistakes
- The first attorney Jim hired had the idea of complementing personal injury with a traffic ticket practice. They parted ways because the margins were not the same.
Jim: "I think we're judged by our successes, not our failures, as long as we learn from our failures kind of quickly."
- He considers the decision to sue the North Carolina State Bar after taking back approval for one of their commercials his biggest mistake.
- They lost the case, which is still utilized in legal ethics classes in law schools. The lesson is not to sue your regulator if you want to be successful in business.
- The second biggest mistake was going all in for a class action involving diet drugs thinking they were after something big. The case took five years without much ROI.
- Don’t borrow from your core when going after something’s potential. Always pay attention to what’s working and paying the bills.
The Biggest Challenges in the Growth Stage of Business
- First is building systems and processes that would scale.
- Second is ensuring you hire people with the right skills and with whom you share the same values and beliefs.
How to Motivate Staff to Meet Objectives
- Be relentless in communicating. Be transparent about your plans.
- Jim conducts quarterly all-hands firm meetings to review vision tractions and tackle issues.
- He also holds a monthly brown bag lunch at their firm, where he answers employees’ questions.
- They send out firm-wide monthly reports and stories about each department’s greatest success story.
- Reinforce positive behavior. Listen to the full episode to learn how Jim's firm does it!
Jim: “I think people want communication. They want to understand where they're going. They want to be appreciated. And that’s where this positive reinforcement recognition comes in. If you do those two, I think that goes a long way.”
Navigating Marketing Investment Decisions
- Set the appropriate marketing budget.
- See what is working in your responses when deciding to bring in-house marketing.
Jim: “There's no area that's easier to waste money in than marketing—spending money in the wrong way. ”
- You can also measure responses by asking people directly what made them call.
- It’s best to bring your marketing in-house when you have the budget and the right person.
Developing the GrowPath Case Management Software
- Their existing case management solutions turned out not adequate for their needs.
- They decided to build GrowPath after concluding the high data volume of the black farmers' case.
- GrowPath is strong at providing data management. They commercialized it after realizing the value it could add to firms.
- GrowPath is a separate company from Jim’s firm. He brought in an outside CEO to run it.
The Legacy Jim Wants to Leave
- Jim turned 60 this year. What motivates him now is the legacy he’ll leave after he’s gone.
- He wants to avoid situations that undermine his and his firm's legacy and reputation.
- He’s working on setting up the firm for long-term success, honing another generation of leaders.
Jim: "It's not about me anymore; it’s about us, and the legacy, and continuing to do things the right way."
- His biggest tip is to find a coach that will help you achieve your goals.
James “Jim” Scott Farrin is the President of the Law Offices of James Scott Farrin, the largest plaintiffs firm in North Carolina. The Law Offices of James Scott Farrin is one of the lead law firms in the Black Farmers Discrimination Litigation case. In 2011, he was honored with a Citation of Excellence Ebbie Award from the North Carolina Advocates for Justice. He has also been listed on the National Trial Lawyers Top 100 Trial Lawyers from 2013 to 2021.
Jim’s passion is using business principles to provide the highest quality legal services for clients. He is a member of various legal and advocacy organizations, including the American Association for Justice’s Leaders Forum, the North Carolina Advocates for Justice, the Public Justice Foundation, and the North Carolina Bar Association.
If you wish to get in touch with Jim, you may connect with him through his email, website, and LinkedIn.
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