Jon Groth:
Six months from now, the limits could have been $25,000. So what you thought you were going to get a fee of $166,000 is actually a fee of $8,333.
Chris Dreyer:
Welcome to Personal Injury Mastermind. I'm your host, Chris Dreyer, founder and CEO of Rankings.io, legal marketing company the best firms hire when they want the rankings traffic in cases other law firm marketing agencies can't deliver. Each week, you get insights and wisdom from some of the best in the industry.
And speaking of the best, I've got some exciting news to share with you. This September at PIMCon in Scottsdale, Arizona, we will be joined by none other than my favorite comedian David Spade. You know him from classic movies like Tommy Boy and Joe Dirt, and of course, his unforgettable run on Saturday Night Live. It's going to be a blast happening with us. So, say goodbye to FOMO and get your ticket to PIMCon now.
In today's episode, we're diving into the world of law firm acquisitions with a true expert, Jon Groth, the founder of Groth Law. What started as a solo practice in his basement back in 2010, is now expanded to three offices across Wisconsin with a team of three attorneys and 14 staff members. Groth Law has staked its claim in the personal injury space, taking the cases ranging from car accidents to vaccine injuries. They've secured numerous six figure and seven figure settlements and verdicts for their clients, cementing their reputation as a firm that fights tirelessly for justice. But here's where it gets interesting. Jon recently acquired another Milwaukee law firm, expanding Groth Law's reach and capabilities even further. And he's here to share his insider knowledge on how to make a law firm acquisition work for you. He'll be diving into everything from crunching in numbers to getting smart about branding and protecting your firm's reputation. Here's Jon Groth, founder of Groth Law on how he came to open his own practice.
Jon Groth:
Boy, what inspired me? I have a long story, I'm not going to get into it, but what inspired me was just running the numbers and looking at what I needed to provide for my family. At that point in 2010, I had a five-year-old and a two-year-old with one on the way. So you're looking at this and it's like, well, what do I need to provide for my family, and then also, give me the potential, I'll say independence or the ability, to just be with my kids and have that time alone with the family, so I wouldn't have to work 10-hour days or do this or do that. And that's really what inspired me to go out on our own. And I started in the basement and had a dog overhead and kids running back and forth. And luckily, now we've progressed to 14 years later and we're here.
Chris Dreyer:
That's amazing. So, you kept the facilities costs low. Those early days, what were you doing to hustle to originate cases at the very beginning?
Jon Groth:
I think one of the first things I did was I had postcards, and I sent those out to a bunch of attorneys across Wisconsin saying that I'm available, call me with a week's notice, two weeks notice, whatever, before trial, I'll come in and I'll try the case for you. But I would go to different attorneys across the state and say, "Okay, what do you have in litigation or what do you need to be put into litigation? You don't have the time, you don't have the experience. I'll be your guy." And I camped out in different attorneys' offices all across Wisconsin, looking through files and trying to find cases that maybe they didn't want to handle or they didn't think that they had the time or the money to finance.
Chris Dreyer:
That's the first time I've heard the postcards. I know for example, in North Carolina, mailers are really popular there. And I also appreciate the hustle of going to the firms and saying, "Look, I'll litigate." Because a lot of firms don't litigate. They're getting those low case averages. So, that's amazing that that's what you did. You've got some things that are different. I'd like to dig into some of the catchy slogans and memorable lines. You've got, "One click, that's it."
Jon Groth:
Oh boy. Yeah, that cost me some money. There was some litigation behind that. But yes, yes.
Chris Dreyer:
I'm thinking of Morris Bart and Lerner. Actually, I don't know if they had a conflict or something. I think they had a, "One call, that's all." You took the more digital, "One click, that's it." And I like that. Tell me about that and how you found that.
Jon Groth:
It goes back to my kids. We would go on vacation and drive down to St. Augustine or Atlanta or Cincinnati, wherever we were driving. And you see all the billboards, and there's, "One call, that's all." Certainly, every state has the licensee of, "One call, that's all." And I think it is Morris Bart who has, "One click, that's it."
I went back and looked online at the US Patent Trademark Office, and it's like, "Oh, well, some of these people have given up on their usage of their slogans." So I called an attorney buddy of mine and said, "Hey, can you help me put this together? Because it looks like they've given up." And we couldn't go specifically, "One click, that's it." So we are, "One click, that is it." And then we got a little pushback from an attorney in Pennsylvania, Edgar Snyder maybe, who has "One click, that is quick." There was a pushback because we were too close to that. And then, after we fought him for a while, then finally we prevailed and were able to use, "One click, that is it." It's something that... How do you differentiate yourself? How do you have some memory in somebody's brain cells out there? And that's one of the ways.
Chris Dreyer:
That's amazing. And it does have that simple social proof, been there, experience built into it, even though it's a short phrase. It has that implied and you feel that. You have another unique differentiator, so you have an unique area law. I like talking about these kinds of... I haven't had anybody in the show where you have vaccine injury cases. That's super unique. What is the National Vaccine Injury Compensation Program, and what is this area law? Tell me about it.
Jon Groth:
Now, we probably say the word vaccine more than we ever did because of COVID, right? For good or for bad, we purchased another law firm right in the very beginning of COVID, and that law firm had a very large practice area that was the Vaccine Injury Compensation Program.
Vaccine Injury Compensation Program deals with vaccines that are administered mostly because of and for kids. So like a flu vaccine for children, and it's something that adults can also get the same vaccine. If these vaccines are for kids and they're in the program, then there's this big fund that's billions of dollars that pays the victims.
And if we win, when we win, it pays attorney's fees. It's the best case scenario because we know that we're going to get a happy client because... You can look at the case and understand what the schedule is. They're going to get all the money themselves. And then after the fact, usually months or months later, we're going to get all of our attorney's fees because we petition the Special Masters in the US Court of Federal Claims to get our fees paid separately. So, it's not a contingency fee. The client's not getting $10,000 less a third for attorney's fees. The client's getting to whole 10 grand. And then thereafter, we're getting our attorney's fees later on.
It's kind of like a worker's comp kind of feel where there's a schedule. If you have a vaccine on X date and you have treatment, pain, problems, a doctor's visit within a certain number of days thereafter, and treatment, pain and problems for six months or so thereafter, then you fall within the schedule. And you're on the table, it's called. And you're able to get compensation for your medical expenses, your pain and suffering and such.
I call it a international practice. We have clients who were all over the world. They may have gotten a vaccine on a military base, or they may have gotten a vaccine at a protectorate or somewhere else, or certainly in Alaska, Hawaii, the 50 here.
But other than that, it's a really unique practice because there's one court, the US Court of Federal Claims, that looks over all these cases. They're in charge of administering with their Special Masters and their attorneys, the handling of tens of thousands of vaccine cases. And there aren't many lawyers that do it. There's maybe, I don't know, 1000. Looking at Morgan and Morgan and they have just 1000 lawyers for their firm, for all the vaccine lawyers in the nation, maybe there's 1000 or so who are actively handling vaccine cases.
Chris Dreyer:
Incredible, incredible. I think, from my hometown... So I went to SIU School of Law. Literally, there's two celebrities. There is the guy from, let's see here, Better Call Saul and I can't think of his name. And there's Jenny McCarthy. Jenny McCarthy was the one that was always in the news for vaccines. How has this additional current events played into the volume and visibility for this area law?
Jon Groth:
It was overwhelming initially, because I didn't know what I got into, because who thought COVID was going to happen? Every other call to our firm was some media person asking us to give an opinion on COVID. It's like, "Well, okay. On our website, it says we do vaccine injuries. This is different. COVID is not on the table." It still isn't on the table. We're just listening to some testimony last week about putting COVID into the program, but it's still not on the program.
But that was... Boy, calls every single day, email submissions every single day from people who were getting fired because they didn't want to get a vaccine or they had some religious opposition to it or whatever else it was. And they had some concerns, so they called us to help. And it was really tough because I spent hours upon hours of days and weeks with people, trying to answer their questions. And I didn't know what the answer was. I knew there were lawyers who maybe would look at these cases and handle them, but a lot of the times it was an employment lawyer that they needed as opposed to a vaccine injury lawyer.
Getting into this, it was overwhelming because there was so much information that really no one knew the answers to. And it was really triaging and trying to figure out how do we maintain their information so if there is a case in the future, we can contact them and tell them, and get them to somebody who can hopefully help them because they're really stressed out at this point.
Chris Dreyer:
When it comes to expanding your firm, you got a couple of options. You can start a new branch from scratch, build it up by brick, by brick. Or, you could take the route that Jon did and acquire an existing law firm. Going the acquisition route has quite a few advantages. You're not starting from zero, you're getting a turnkey operation with an established client base, experienced staff, and a track record of success. That can save you a ton of time, money, and headaches compared to trying to build something from the ground up. But it's not just about the practical benefits. Acquiring a law firm can also give you a major boost in terms of market share and brand recognition. You're essentially leveraging the acquired firm's reputation and relationships to catapult your own growth. It's like getting a headstart in the race, you're miles ahead of where you'd be if you began at the starting line. Of course, acquiring a law firm isn't without its challenges. There's a lot of due diligence and integration work involved. Jon explains how he approached the acquisition process and what lessons he learned along the way.
Jon Groth:
It was a long process. Because we had, I guess, a business broker who approached me and said that we have some attorneys who were thinking of retiring and they're trying to figure out what the succession plan is. I got that call one day and I was like, "Well, we need to expand, need to grow. What's one way to get good staff, good people, and then potentially additional cases in a different part of the market with different people that wouldn't know us otherwise? We can market to them and remind them that if they need an attorney, we're here." That's where the starting blocks were, is they approached me.
And then, we went through months upon months of looking at books and signing confidentiality agreements and letters of intent and looking at what exactly their practice was. In personal injury, everybody knows this, you could have a case that you think is a half million dollar case. And in Wisconsin, you don't have to know what the limits are, insurance doesn't have to tell us. So, we can guess that the limits are X. But six months from now, the limits could have been $25,000. So what you thought you were going to get a fee of $166,000 is actually a fee of $8,333. So, that really changes the analysis of how you're going to buy that practice because their inventory is much different.
And with us, the vaccine practice was totally new to me, where I had to learn what that meant. What's the time on desk exactly? What's the average cost per case? What's the average fees per case? Those kinds of things were very interesting to really dive in and understand a whole another way in which a personal injury practice is managed. And then, how is that going to work with our personal injury practice? Because we do things the same, but there's certainly differences with how you manage cashflow and things like that.
Chris Dreyer:
We've had Jeremy Pook on the show before, and he does a lot of succession planning for attorneys, finds replacement. I've had lunch with him in St. Louis and he told me the same thing. He's like, "Look, a lot of them don't have a succession planning." So these firms that need these really experienced senior litigators, now they want to work for someone else. They don't necessarily want to hang their own shingle because they're later in their career, but they just want to put their head down and do what they do.
When we're looking at professional services and you're looking at the processes, all the advantages to buying, right? Maybe there's some HR and you cut some admin expenses, so you gain some profitability there. The thing that I've always found confusing is, how do you value? Like you said, because you don't know the caps and things like that. In my space, look, if you're that three to five million mark, you're looking at maybe a one million EBITDA. You might get a 5x multiple, depending upon if you got retainers or not. And then once you hit a certain EBITDA number, where you're at like four, maybe it jumps up to a seven or eight if you've got a really well run business. So, I guess it's not valued on EBITDA. How did the valuation process go? It's a bit different in the legal space.
Jon Groth:
The nice thing with us is, we've been on, this is a shout-out for Filevine I guess, we've been on Filevine for a while, since 2017 or so. So when you're looking at what our numbers are with the cases that come in and how we identify a case and then the cost per case and then the fees per case, we somewhat have that dialed in. A general dial. It's certainly not precise, but it's general. Where, if you look at the fees per case is, we have a general idea. So you could just, very broad strokes, look at, "Okay, they had 100 files. For 100 files, if our average fee per case is $10,000. Well, okay, now we know it should be approximately that." And then you start really digging into it and seeing, which are the bigger cases, and how they staff people, who just looked at those bigger cases. And now, can we confirm what's going on with those, to see that, "Yes, this is a semi-case." Therefore, we know the limits are at least 750 or X, Y, and Z. So, it's a different kind of analysis.
First off, you did the broad strokes, 100 cases times X fees per case, and now we know approximately what the income's going to be. We know what the staff costs are. And you have a general idea. And you look at, in the marketplace, those clients, if we service them well, we're going to get referrals from those clients. What's that going to be? What's the tail going to be on that? And that was just the extra sauce at the end, that's the garnish on top. Because we knew that that was going to happen, that we're going to have these clients who are dedicated to the firm and will contact us and refer other victims to us years over years. So, it was certainly lots of trust and lots of hope. But luckily, we had the numbers because of how our system is set up to really trust but verify.
Chris Dreyer:
The decision of a house of brands, like a one entity... Well, no, I guess that would be decentralized. Keeping the firm separate versus the merger, how did you think about the pros and cons there? And then ultimately, what did you do? Super loaded question, sorry.
Jon Groth:
Yeah, no, no. Right now, what we're still in the process of doing really with the brands is... The Samster Konkel & Safran brand, those attorneys names have been in Milwaukee for a very long time. Jonathan Safran passed away tragically. He's one of the nicest best guys that you'll ever meet. He passed away a couple of years ago. But his name was really synonymous for police brutality. And to this day, maybe three or four times a week, we get people who contact us with police brutality questions because of all the SEO juice out there in the ether, all these articles that are written in essence about his cases and it goes back to their website. So, that's still there. We aren't handling those cases, we're referring all those cases out.
What we're really trying to do, and this again is a work in progress, is have Samster Konkel & Safran be the vaccine division of our practice. And then, Groth Law Firm will be the single event portion of the practice. And we can differentiate those for other reasons, because I'm always weary when it comes with vaccine and you have a website that talks about vaccines. If somebody doesn't like how you're saying vaccines, Google might say that your website's cut off or whatever. I know we had a hard time, for a while, running ads on Google for our vaccine practice because the terminology was wrong. And I just am weary of having everything under one silo or in one silo because of the politics behind it. That's why we made the conscious decision to make Samster Konkel & Safran, vaccine, and Groth Law Firm, everything else.
Chris Dreyer:
I think that's super interesting. The topical maps, the site relevancy, even with this new Google helpful content algorithm update that just finished rolling out a couple of weeks ago at the end of March, what we've seen is the hyper-relevant topical sites weren't as penalized as the ones that covered a variety of topics. Maybe we're thin on some layers. So, I think maybe Google's pushing more to that area. I don't know for certain, right? But it would make sense when they're trying to organize the web, to organize it around topics as opposed to one entity being all topics.
Jon Groth:
Interesting. So you're saying that if you're more specific and you've niched down, you're going to get an SEO boost because that's what Google wants, is people who are experts in their area of expertise talking as opposed to being a master of all.
Chris Dreyer:
Yeah, I think so. I will say this. That's on the organic and the content marketing side. There's going to be overlap on the Google Ads side. I'll use myself as an example. If I bid for SEO for lawyers, that's going to cost, let's say anywhere from $20-50 a click. But if I just bid on just SEO, I'm going to get overlap for all industries. So, there's kind of an overlap play there. It's a bit different on Google Ads. But I think from an organic content marketing perspective, the topical separation is super smart. You went through the process once, are you ready to do it again? Did you say, "Okay, hey, I would've done this differently." How does this play into your kit in terms of growth?
Jon Groth:
Yeah. Last year, I think I changed my LinkedIn phrase to say, "Always hiring, always buying," or something. So every year we have an annual meeting. We bring everybody in. We fly people who are VAs or who work remotely, fly them into Milwaukee, and have our annual meeting to talk about what our goal is for the year. And this year is, hiring and expanding.
We just went through a number of interviews for HR business professional, hiring more paralegals, hiring more case managers, and talking really heavily about the VA aspect in other countries. But that's where we're at is, what's that expansion going to be? It's something that we've certainly talked about. I've had other attorneys... Maybe two or three weeks ago, I had somebody approach me about their practice. And we're looking at that. I think it's something that, you have to always be able and have that option open. I tell my kids, "Don't close any doors. Even if it's a crack, keep that door open." Because you don't know what's going to happen. There could be an opportunity out there that if you close the door, you're going to lose that opportunity. So right now, our goal for this year is expansion internally, and we're looking externally too.
Chris Dreyer:
All right, you all, let's go over the pinpoints, a recap of the key takeaways from today's episode. Crunch the numbers. If you're thinking about buying another law firm, you got to do your homework. Case management systems can offer a clear picture of the other firm. Focus on case volume, fees and time on desk. It's all about figuring out how much money you can make by taking their cases and their clients.
Jon Groth:
If you look at what the fees per case is, we have a general idea. So you could just, very broad strokes, look at, "Okay, they had 100 files. For 100 files, if our average fee per case is $10,000. Well, okay." Now we know approximately what the income's going to be, we know what the staff costs are, and you have a general idea. And you look at those clients. If we service them well, we're going to get referrals from those clients.
Chris Dreyer:
Get smart. When you're taking on another law firm, you got to get smart about branding and marketing. Look for ways to make the most out of the other firm's existing reputation and connections. It might make sense to keep the acquired firm as a separate division, especially if they specialize in a specific area of the law. That way, you can target your marketing more effectively. And don't forget about the potential to cross-sell your services to their past clients. The key is to have a game plan on how you align and integrate your brands over time.
Jon Groth:
The Samster Konkel & Safran brand, those attorneys' names have been in Milwaukee for a very long time. And to this day, we get people who contact us because of all the SEO juice out there in the ether. That's still there.
Chris Dreyer:
Protect the neck. Acquiring a new firm doesn't mean that you have to roll practice up into one. If the firm you're requiring handles any controversial cases, Jon recommends keeping them under a separate brand. Keeping different practice areas separate can also give your website an SEO boost by making them more focused and relevant. Hanging onto acquired firm's branding can also help you catalyze on your existing market presence and snag referrals from their past successes. Bottom line, protect your firm's reputation while reaping the benefits of the acquisition.
Jon Groth:
I'm weary of having everything under one or in one silo because of the politics behind it. That's why we made the conscious decision to make Samster Konkel & Safran, vaccine, and Groth Law Firm, everything else.
Chris Dreyer:
For more information about Jon, check out the show notes. Before you go, do me a salt and smash that follow button to subscribe. I sincerely appreciate it. And you won't want to miss out on the next episode of Personal Injury Mastermind with me, Chris Dreyer, founder and CEO of Rankings.io. All right, everybody. Thanks for hanging out. See you next time. I'm out.
