Third Bridge 访谈讨论美国人身伤害律所 MSO/PE 整合风险，与立昂微无可交易关联

[[00:01:46]]
What is your impression of the headlines around PE-driven roll-ups of US legal firms utilising the unique structure of an MSO [managed service organisation]?

[[00:02:15]]
In general, I just think it's a really interesting thing. I watch the news pretty closely about this because I look at it with a curious mind of I wonder what's going to happen as we continue to see this evolve, as we see the regulations come into effect and people talking about it. I'm just very open to the idea of I think there will be good and bad necessarily, and curious of where it leads our industry and what it means for clients. Are there improvements in service? Is it more of an issue? I don't know exactly where it's going to go, but I think it's a very interesting time to be in our space. It will be growth for us no matter what. We're going to see firms grow because of this.

[[00:03:07]]
If MSOs try to standardise things such as intake, case management and settlement workflows across a number of different heterogeneous firms under their portfolios, which functions do you think would be amenable to any standardisation?

[[00:03:48]]
I think if we're going to talk about that that's going to happen across firms that are not in the same states. Just different firms doing different things entirely. My reaction to that would probably be intake is going to be the least amenable because you have such wildly different criteria of what makes a good case in specific states. There are firms right now that operate in different states but when you're talking about scaling something and you want it to be repeatable, replicable it can look quite different. Also, because of regulations, it can look different of who can even sign. Does it require that an attorney sign that case? Also, as we talk about the regulations with MSOs, again, different states are doing things differently already. Where Arizona has just fully allowed ABS, but most of us don't have that clarity. I think it starts with right intake. I personally think case management and settlement… You have legal judgment that goes into those things, but I think they're going to be a little bit easier to scale, but intake is the one I'm like, "Gosh, it's going to be…" It will be very nuanced with all the different states, all the different jurisdictions of how you would scale that.

[[00:05:17]]
At a first principles level, what aspects of contingency fee legal work make it inherently more difficult to standardise and consolidate than other professional service sectors previously rolled up by PE?

[[00:05:38]]
I think I've heard of dental, and I don't have tons of experience in that, but I've heard of dental. I think of you go to a dentist and you pay the dentist charges. There's basically like a price list. If I go to my dentist, there's a price list of a filling is this and a crown is this. I think just inherently in contingency, that's not the case. Every case really… We use this language. Every case is judged on its own merits. You can't say a car wreck is this. You can't say a dog bite is this. I think that is going to make it a challenge that there is so much variability in these cases of how much they can really make. With that, the same case, you can have one case take one year and it might make one amount and the same case also takes one year and it makes a wildly different amount for better or for worse. I just think that is really going to be a challenge with that variability. It's not so set like it is with some of those other industries that this is the price.

[[00:06:57]]
What would you say to PE sponsors regarding the nature of revenue forecasting in the space and how you look forward as an owner and executive?

[[00:07:34]]
I think it comes down to math, right? It's math. You want to look at the history of a firm. As you talk about that variability, I think many firms… There is the variance, and it's a huge aspect of what we do, but at the same time, you are going to have these averages that the firm typically makes this amount of money. The case typically takes this amount of time. We have to work off those averages while keeping an eye on what I would call the outliers. I know as running a firm, we talk about an 80/20 Pareto rule. Not every firm knows it's going to be exactly that of that 20% of your cases make 80% of your income, but you want to look at it. You want to look at the outliers when they have those big cases, how common is it? Can you really rely on that to continue to happen? What's the history of it? I think it requires pulling out all those spreadsheets and looking at the history of the firm, how much money are they making and what is actually typical and how much those outliers are influencing those numbers and how much you can rely on them.

[[00:08:54]]
If MSO roll-ups were to scale, how stable would the assumptions around contingency cash conversion cycles be when you think about marketing and intake expansion being standardised? Could you share any normalities of what that looks like?

[[00:09:15]]
Yes. I think as you scale marketing, just inherently, you're probably going to see a drop in case values. It just becomes the norm. I think across the industry, as people who work in the industry, most of us know this. Once you start engaging in your traditional marketing and mass marketing, you're probably going to see a decrease in those values. You will also see likely somewhat of a decrease in your client trust, so client retention. You acquire more cases, you have that branding and your name recognition is out there, but the trust and the client retention typically suffers because they don't actually know your firm. They don't know you at all. Many times, when we go back to talk about values, if someone knows they have a high-value case, they frequently are not going to the most mass advertiser. They're going to go to their friend and talk to their friend about who did you use. When we mass advertise, we end up just as a byproduct of getting more of the lower case values. Then we have a harder time retaining those clients because they don't know us. I think as you scale and grow, that's only going to become more of a problem that you will see your settlements lower a bit and you will close more without a fee. It's just a nature of what happens.

[[00:10:50]]
Which components of the unit economics – whether it be customer acquisition, case conversion or settlement realisation – of firms such as personal injury would most likely exhibit the highest variance that PE owners and potential sponsors need to be most aware of and understand?

[[00:11:43]]
I think it's really about settlement realisation because like I was saying, under the marketing, I actually think the more you market, you have an easier time acquiring clients. It's a known thing that the clients go with the brand, who they know, but the settlement realisation, I think, is where you're going to see more of that variance. The dollars of those settlements because if you… Especially as we talk about not just PE, MSOs, but as we run firms as businesses and we implement KPIs and we try to get people to move cases faster, you risk that they're going to move it so fast that they're going to leave dollars on the table. I just think that that's the settlement realisation is where you have the most risk of lowering it unintentionally and losing value in it.

[[00:12:46]]
You talked about leaving dollars on the table. What's the missed value in an expedited settlement process in real-world scenarios for a personal injury firm?

[[00:13:04]]
A lot of it is going to come down to fully investigating a claim. It can be, one, did the lawyer actually look at every single avenue for recovery? It's not always straightforward that just one person or one entity is liable. It is common that you could have multiple defendants, and you could have multiple avenues of recovery. First of all, did you fully investigate every avenue for everything that you could do? That's one. The other is when we talk about the client and an injury, have we fully investigated their injury? If they're still feeling pain months down the road, are there MRIs, are there CTs? Have we looked at everything possible to see what else is going on? When we rush, when we hurry through this to get to closure, we miss those things.

For the client, you risk that you actually miss that they may end up having some lifelong problem, but you also risk leaving those dollars on the table because if it turned out that there's some underlying thing that's been missed, they may need surgery, they may need lifelong care, and those are typically dollars that you can recover for them. When you rush, you risk a few things and you truly could end up settling a case for USD 25,000 that, no lie, one year later could have been settled for USD 200,000. It can be a huge difference. You just have to be very careful when you're trying to go quicker that it's not at the cost of the settlement value and recovery for clients.

[[00:15:03]]
Is there a significant risk from a corporate governance perspective? If you were to shift ownership and 100% decision-making authority from a litigation partner to now having the MSO structures where non-attorneys have leverage over operators, how likely is it that they could miss case nuances and make short-term decisions that overprioritise near-term liquidity, cash conversion, etc?

[[00:15:40]]
I think it's very likely. I know of an instance where… I mean, we are already seeing that likelihood as right now in our industry. It has become more and more common to have non-lawyer executives. I myself, I am a non-lawyer executive. As we have implemented these across law firms, you have this focus on running a law firm as a business. In at least one state, we have seen bar complaints that the employees were being directed by a non-lawyer to rush settlements, and they were missing out on things for their clients. My understanding is the bar did not take action against that firm. The firm is still in business. It still has an executive who is a non-attorney, but it has been raised. I think when we do this at scale, and we have even more that now we have a legal organisation, MSO owned by a non-lawyer and then you have the lawyers separately, I think we're going to see more of this friction happening. I think it is really important to be careful as much as you can that legal judgment needs to stay under the lawyers. The senior person on the legal judgment needs to have an understanding of how cases work and how the value can be captured. We want to prioritise that while prioritising time. It's just a careful thing to really walk, but we've already started seeing people flag it as an issue even before MSOs.

[[00:17:30]]
How do customer acquisition and sales funnel function for regional personal injury firms in the US? What is the risk of consolidating these firms under one banner or brand logo? How does that alienate and strip away goodwill with clients and potential referrals?

[[00:18:14]]
I think right now, smaller firms, many of them do have that goodwill and that perception, but when we talk about the kind of firm that is already so big that has name recognition, really name recognition in a community, I don't know that I think that the average client is going to differentiate between a locally owned firm in that way and the MSO. I think when you have the logo and have the brand, I do really think that that actually does appeal to people. I see it already. I see it right now that some of the big, huge national firms, even local people, they're like, "Oh, it's so and so," and they know that name. The average client really is not actually thinking, "Oh, they don't actually have an office in my town." I think it's interesting. I do think, from a marketing standpoint, for like a smaller firm, it is important to have those connections in your community and to get those referrals and all of that, but by sheer volume, the thing that does really matter is just whether or not people know your name and the average consumer is not digging in very deep to think about that, "Oh, they're backed by somebody else. They're not even local." I don't think that that's actually hitting most people's radar.

[[00:19:56]]
How would the centralisation of marketing systems change traditional referral-based economics and plaintiff law, particularly around CAC [customer acquisition cost], predictability and payback timing?

[[00:20:21]]
I think the great thing about referrals, and I'm going to speak to the referrals as attorney-to-attorney referral because if we're talking about client referrals, client referrals, there's no payback, obviously, we don't pay back our clients for referring them. Those are some of our lowest cost referral marketing. We don't pay anything. Those are free. Attorney referrals are where we are paying each other based on what's allowed within our states. The good part about it is, it's very predictable. You know it from the very beginning. When you take a case, you know that so and so referred it to you and you know what your agreement is that you're going to pay them X percentage. They know that they're going to wait to get that money until you settle your case. Unlike your normal advertising dollars that you have to spend to even acquire the case. In this instance, you don't have to spend those dollars to acquire this case. You actually get it virtually at the beginning for free. You take the case, you work the case, and then they get a percentage at the end.

I think from a predictability standpoint, it's very predictable. What I also think, though, is that as you scale and grow, those referrals will become smaller and smaller. I'm not saying that that's because other firms don't like you as much because you scale but it's just typically, when you talk about a larger firm, that is not going to be the most significant source of their cases. It's going to be a smaller source. It's just the way it works that attorney referrals become a smaller line item of your case referral sources. It's very predictable. You know it. You can plan for it. You can track it as far as income. I think in general, as we're talking about mass advertising, that will become just a smaller item as your types of referral sources.

[[00:22:28]]
In a scaled MSO model, what would most likely be the source of the most significant margin compression – whether that be rising acquisition costs, longer settlement cycles or internal incentive leakage – when it comes to payroll, closing the cases and attorneys' compensation?

[[00:22:57]]
I really think it's going to be the rising acquisition costs. Again, I've said this about a few other things, but I think we're already seeing that. When you put more money into the marketing, it's going to continue to rise. We know this is widely… I feel like every vendor or everyone says this right now, that personal injury keywords are some of the most expensive keywords that you can buy in advertising, already true. As more firms have access to capital to begin to advertise, you will see those costs rise. It's just simple supply and demand. When more people can buy and participate in this, it's going to increase. I go back to my own history as someone growing up that there was one personal injury law firm that was on TV. I still remember their name. They were the only one. Nowadays, there's a lot of them because they have more access to money and they're doing it. As we grow and PE comes backing this, you're going to have even more.

I think we're all going to pay more for those that it's going to rise. It's a thing we're all going to have to watch because already as a personal injury law firm, many of them who are successful are already spending anywhere from 10% to 30% on marketing. As that rises further, it will be a question of how profitable is this to keep going. We're not there yet, but I think as more money comes in, we will see the costs go up.

[[00:24:48]]
Could you describe the structure of the unit economics of firms when it comes to the cost of payroll as opposed to broader HR administrative functions and software?

[[00:25:24]]
Are you looking for more of a percentage of a budget? Are you looking for a dollar? What would be most helpful?

[[00:25:32]]
Percentage ranges would be helpful. You could be looking at various different-sized firms potentially rolled up through these MSO acquisitions or structures.

[[00:25:49]]
Yes, sure. Like we just said on the marketing, you can have 10-30% spent on marketing. In general, what I have seen as far as lumping really all the operational costs together, it's normally less than marketing. It could be anywhere from the 10% to 20% margin of revenue, which is being spent on operations. I'm including everything in there. I'm including the rent, the HR, the software, just everything anywhere from 10% to 20% is very normal. I think when you get over 20% operational, you're probably overstaffed. You're probably a little heavy in some areas. That would be a little unusual, but anywhere in there is pretty typical.

[[00:26:44]]
From a corporate governance perspective, what do you think are the best mechanisms when it comes to allocating authority across finance, marketing and litigators without slowing urgent case-level decision-making on spending? You noted the potential cost of a lot of these cases and how a separate accounting management silo could make short-sighted decisions and prevent significant value from settling or allocating expenses towards that case to help settle it. Could you elaborate on that?

[[00:27:35]]
Yes, it's really interesting. That would be right on the advancing the client cost. On these cases, part of the whole contingency thing, and this is how we all market ourselves and talk about it, is that we shoulder the cost for the clients. The ethical rules allow us to do this. It's basically that we're lending the clients' money, and we're paying for things throughout the case that will help their case, but we are holding that money. We're paying for the things. Then at the end, we get to recoup it, but frequently, those case costs can become very high, especially when we are talking about complex litigation. It is not unusual at all to pay an expert USD 5,000. No one should bat an eye at that as long as the case makes sense to do it, but on very complex litigation, you can have tens of thousands of dollars, if not even more in those case expenses. What I was talking about previously is if you are just an accounting person and you are approving expenses, you might say, "Why are we doing that? Why would we spend this kind of money?"

That's where I think it's really… You have to be careful that someone is looking at this and making sure it makes sense. We also have a duty to the client because it is the client's money… At the end, it would be the client's money. Does it make sense that they really need this expert on this case and that it will bring the value to it? It's just an area that if you strictly had somebody outside of the legal realm overseeing, it's really easy to say like, "If we got to cut costs, we got to cut costs," but those costs are what helped drive the case values. It's a gentle balance between those things.

[[00:29:45]]
How do top firms design internal operating frameworks to prevent decision bottlenecks and preserve attorney autonomy in high-value litigation workflows? What are the best practices here that have prevented such issues?

[[00:30:13]]
The thing that I've seen pretty much across the board is that the end decision maker is the attorney. You do not typically have… The COO, for instance, does not decide whether or not to approve a case expense. You don't have the accountant to decide it. It comes from an attorney. I've seen that across the board on both sides that have been on plaintiff and defence, it is the attorneys' decision of what experts to hire. The attorneys are accountable to the clients because at the end of the day, when that case settles, you have to explain to the client about why USD 20,000 is being taken off the top to pay back client expenses. There's some accountability in that way. Most attorneys do not want to go and spend excessive amounts on experts or records or examinations. They want to keep it low because they know that they're trying to recover the most that they can for the client, but the best practice really is to leave it in the attorneys' hands. Really, in my experience, I've always seen it that way. I've never seen that a non-attorney is the one determining whether or not to move ahead with that case expense.

[[00:31:30]]
How often do you think cases or economics around personal injury litigation cases break down, ie, cost overruns are not justified by the ultimate settlement value of these cases? What percentage of cases would you say have seen that dynamic where the unit economic assumptions hold for them?

[[00:32:05]]
Anecdotally, in my experience, it's very rare, but that is because of things like careful intake. It is being cautious with what cases you're signing, investigating them thoroughly in the beginning and then advising clients because it's in no one's interest to rack up all these case expenses and then find out, "Oh, the insurance companies isn't going to accept liability." That's not in anyone's best interest. I find that it's relatively rare that the numbers don't work. Typically, if the attorneys are ordering these significant case expenses, there is a real value to it, and you almost always are going to recoup those. It is very rare that you want it. The instance where you might see it a little bit more common is when we litigate cases. When we actually go to trial, which for most of us, again, is rare. If you actually go to trial, sometimes then you can get very expensive cases that you lose because there's just this factor at trial that sometimes things go awry and things are left up to a jury. In a jury trial, slightly more common. In general, I think it's pretty rare. I think most of the time the case expenses pay for themselves, but it does mean management from day one of intake and controlling the quality of your cases.

[[00:33:45]]
What KPIs do you look at in your day-to-day while evaluating the health of a business or a personal injury law firm? What operational due diligence KPIs would you immediately want to see in a firm?

[[00:34:26]]
I'll word it like this. If I was evaluating a firm, what I want to know, the very first one, I'm going to say is time on desk. From the day you signed the case to the day the firm is paid, how long is that taking you? That's one of the very first top ones. How long is this taking you? Right next to that one is then how much money are you making for it? We look at time on desk and we take it by the case, the attorney fee. How much money did you earn for every single month that you had that case open? Was it a good amount? Do we have a really long time on desk with really low settlement values? Those two things should play into each other and those economics should make sense from a business point of view that if our cases are open longer, then typically, they are making us more money. That's the way ideally it would work. Again, that's also in the client's best interest. They don't want to wait two years to find out that they're getting USD 4,000. Those are my top two right from the very beginning.

The next one is, I would want to know about, some people call it a net promoter score or a client satisfaction. I would want to know if the clients are happy. That's that client retention. It's client retention, it's just client happiness. Does that feed into your client referrals? Are they saying good things about you? Do the clients feel like the firm is doing right by them? I think it's extremely important. Then in general, also those average settlement values. Again, we talked about them like as time on desk, but what are they just overall, not necessarily by time on desk, but what is that average settlement value? What is your average attorney fee? Then on that one, you're going to want to analyse it. We talked about this a little bit, but how much is that influenced by outliers? How predictable are those outliers? Do you always get big cases, or did you just get a big case one year that raised your average fee? That's not actually representative of the work that you typically do. The average fee is really important.

This is a little more nuanced with the average fee, but to make sure, because people use different things, they mean different… Their definitions are not always the same, but make sure the average fee includes the cases they're not getting a fee on. Looking at that, of the cases that you closed, what percentage of them did you close with no fee? Going back to what we talked about before, I would expect that as you advertise more, you're going to close more cases without a fee. It's totally normal. It's okay, but what percentage are you closing without a fee? Then did your average fee include that the fact that you close cases without a fee? Sometimes firms say their average fee, and what they really mean is their average collected fee, not their actual average fee. They're just different words.

Those are some of those very first metrics I would start looking at to gauge how good is this firm at what they're doing. Of course, their cost per case of what they're paying to acquire those cases. I want to know your cost… A lot of us are going to talk about it in terms of how much I'm paying for a Google ad or how much I'm paying for this, but also just your marketing dollars in general, how much are you spending on marketing compared to how many cases you acquired? What is that cost? What is the ROI of your marketing? You want to see something really healthy there. You obviously don't want to be spending all this money. If your cost per case is as much as your fee, well, then you have a problem. As we talk about marketing going up, marketing expenses going up, there are times that firms are getting really close to those numbers that their marketing dollars are close to the amount of money they're earning on a case.

[[00:38:46]]
What effective percentage benchmarks would you say qualify a firm as being in a healthy state for the KPIs that you described? In terms of a scorecard of an attractive acquisition target, what thresholds should it be meeting regarding case velocity and other factors that you noted?

[[00:39:13]]
A lot of this will depend… I think one of the difficult things, I think, for PE or an investor is that it's going to be very specific to a jurisdiction. It is hard to entirely put out exactly what the KPIs should be across the board nationally. You do have certain jurisdictions where litigation just inherently takes longer than other areas. I want to preface by saying that it is more nuanced than probably what we're going to make it sound because it can be very jurisdictional. In general, in general, if you are talking about what we refer to as pre-litigation, so cases that settle before we ever file a case, that's probably confusing in the way I just said it. We call all of these cases but for many personal injury law firms, they never actually file a case with the court. They settle in pre-litigation. That is very common, super normal. You are going to hope that that time on desk is less than one year. Anything over one year, in most jurisdictions, it would get to be why is this dragging on so long? Why haven't you gone ahead and filed the case? What are we doing? Is it just sitting there? Do we not get our demand out quickly enough? Did we not push for a response to our demand?

Something of that sort, but pre-litigation, most of the time, you would expect that to be somewhere around one year. If it's a litigated case, so they actually file a case, that's where you're going to see this significant variance that I'm talking about. You can have a litigated case close in one year. In some jurisdictions, it could go on for three years. Both of those situations would be okay. It just depends on the jurisdiction and what is the norm. Again, we talk about that case value. If we're litigating it, what did our fee end up being per month? The benchmark that I have personally seen, this isn't me, this is one that I've read in our industry and materials at numerous things is saying that you should hope to make somewhere around 600 to 800 for every month that cases open. Again, that's information that I've relied on that I have learned elsewhere in the industry, but 600-800 for every month that it's open is a normal benchmark. Let's see. We also talked about… Cost per case would be a dollar amount, not a percentage.

I think the cost per case of how much you're paying to acquire cases, again, huge variance that I'm going to give, but I'm going to say anywhere from USD 1,500 all the way up to USD 4,000 is not unusual. That would be pretty normal for a lot of firms right now. That's not a referral fee. That's our cost per case, if we are running PPC campaigns, if we are billboard, TV, that kind of thing. Referrals are going to pay a much larger amount, but your marketing ROI I think anywhere from 3x, 4x, 5x is good. Obviously, more is better. If your marketing dollars, if you're spending so much on marketing that your ROI is less than 3x, I would be concerned by that. I would be quite concerned. I think a 5x marketing ROI is really good, but like I said, more is better.

[[00:43:45]]
If Morgan & Morgan were to accept a PE buyout managed through an MSO structure, what do you expect will be the industry's reaction to that in terms of receptiveness to PE? What would that mean for the industry very broadly?

[[00:44:31]]
It's interesting. If Morgan & Morgan, which Morgan & Morgan has floated some idea, right? That's a public thing that Morgan & Morgan said something recently. I don't remember exactly what they would consider. I think if Morgan & Morgan publicly sells and divides itself into the MSO structure, one, I think there's going to be an even greater fear throughout our industry. There's already this brewing fear of private equity. It's already there. It's already talked about at conferences. People are already having this. In Morgan & Morgan, there's also fear of Morgan & Morgan. They are the giant gorilla. If Morgan & Morgan sells, I think you are going to have this significant fear of, "Oh my gosh, how are we going to afford to compete? Are we going to afford to market ourselves?" That kind of thing. I suspect that will lead to more firms turning to PE because I think they're going to want the capital. They're going to want the investment. They're going to say, "Okay, I have to do this now to compete, too." I think if someone that large goes ahead and does it, it's going to open the floodgates.

Some out of fear and some out of… Also positive things, but you're going to see more firms do it. I also think it will invite the regulation. Right now, we have the one-off regulations happening in different states. We have people talking about it, people considering it. You have things somewhat happening, but if you have a firm on that level because Morgan & Morgan operates in so many states, then I think you are going to have the regulators also rushing to put pen to paper to define how that can look in their state. I think it will set off a flurry of activity if we see something that large. I think that you're just going to go ahead and see more firms turn to this and do it in the way that they feel like they have to do that to compete.

[[00:46:59]]
How do you think the industry will react to the sale of Morgan & Morgan if significant consolidation occurs in one region and necessitates a response from a competitor standpoint of independently owned personal injury firms? What overall transformation would you expect in the space in 3-5 years if a giant such as Morgan & Morgan were to get sold?

[[00:48:02]]
I think the client pricing is an interesting piece. I'll first talk about that, and then we can talk about the other part. Just in general, I don't know if people outside of our industry realise this, but I do not think, I have hardly ever seen a client shop by the price of a firm. It's just not common. In our industry, it is not a set thing of how much we charge, but most of us charge very similar amounts. There's not a ton of variation. I think even on an MSO, there could be a couple of different schools of thoughts of do you undercut a fee and get more, or do you charge more to make more? I don't know. Either way, it's not a mechanism that I see clients make decisions based on. Very rarely does a client shop around based on how much an attorney charges. That is very rare. The client pricing, I think my opinion is probably not going to be a huge factor. I think as you talk about attorney compensation, all of this, and as we talk about that, it's going to become probably more expensive on these cases.

I think you have these smaller firms… They're already having these conversations of how do they differentiate themselves? How do they posture themselves and prepare for this? Do you market to the people who… Do the other attorneys who don't want it, who want to have more individual control and the clients in that way? I think, again, already, these conversations are happening in the industry regardless that no one huge is sold yet, but I think that if and when it does happen, you will see the boutique firms finding creative ways to differentiate themselves. Maybe they're the ones that price cut. Maybe that's what they do. It's just interesting because, again, on the pricing, I'm like, "It's not the way clients shop. Right now, that's not how they do it." Maybe that is a way.

[[00:50:33]]
In a scenario where a PE firm acquires a number of different legal firms through an MSO, what would be the low-hanging fruit around cost out and trying to optimise the unit economic structures of these firms across different regions with different settlement cycles, cash conversion cycles and working capital forecasting dynamics?

[[00:51:26]]
I think, in general, this is more general, but intake… I said in the beginning, intake, you have to be careful because there are different jurisdictions. When you more standardise intake, then… What we talk about as firms right now, in general, in our industry, our low-hanging fruit is that most personal injury firms are not doing a good enough job with intake. Their intake systems tend to be what we call a leaky funnel that many of them are actually getting the kind of calls that they need. They're just missing them. They're not answering their phone regularly. They're not being responsive enough. They're not engaging enough. If they were, they would actually have all the cases that they want if they just did a better job. I think that's the lowest hanging fruit, that if you implement a really robust intake system that is staffed by genuinely caring, empathetic people who are extremely responsive, you're going to increase case volume right from the start.

It is super low-hanging fruit. It's genuinely answer your phone every time it rings. Every time, answer your phone, which that's easier to scale. You can implement a call centre or an intake department who answers the phone for all the different firms. It's really not difficult. When you are a smaller firm, it's an area that easily gets missed because they're so small, they don't have after-hour staff, and they just leave money on the table with cases that they miss. I think that's the easiest one of all is just standardise intake and have a really good intake department, and you would make more money.

[[00:53:24]]
What else do you think is important to understand around personal injury firm economics in the US, industry trends and the role of MSO-driven PE consolidation?

[[00:53:54]]
That's interesting. I think the thing that I'm curious for, and I personally have not yet seen, I don't know what it looks like, but how the division becomes of the MSO, not vs but apart from the actual law firm. As we all understand it, the lawyers would work for the law firm, and then the MSO provides these services. On a more granular level, what about the other staff? What about the case managers, the paralegals, the legal assistants? Do those go over to the law firm? If so, how does the MSO have any influence on the case velocity, the case management, any of that, or do you put the paralegals and the legal assistants and the case managers, do you put them under the MSO and then say that they are supervised by the attorneys? Then if you do that, how does that disconnect work that you have that they are actually employees of the MSO but they report to the lawyers? Again, when we talk about KPIs and people being held to KPIs, how does that actually look in practice across scale? I think on some level, again, many of us experience this as we are running these law firms like businesses. When you have MSO, when you have PE and you exponentially increase the scale, I just think it's going to be really interesting in how you will divide that where the legal judgment lies.

I suspect that that legal judgment and the question of it will be more of the focus of regulators. We talked about a while ago in this conversation, but you can't fee share with non-attorneys. That's pretty much across the board for most of us. In most states, we can't fee share with non-attorneys. I think that's pretty, at the moment, cut and dry relatively. I think the MSO is the way to sidestep it, and I get it. I think the bigger question is going to be how do you retain the legal judgment and how does that work? I will just quickly expand that. I think even regardless of MSOs, regardless of PE, you already have some question of that. if we refer to what people call like settlement mills, there are already law firms that seem to, as the perception, prioritise volume and not prioritise value. That already exists. The perception will be that it will increase with MSOs. I just think the regulatory response to the legal judgment and how you actually divide this legal work is something to really watch. Again, what I said in the beginning, I'm curious to see what happens with it.

[[00:57:07]]
I think that's great for us to close on. Personally and also on behalf of our readership, thank you so much for a really insightful conversation today, filled of really great takeaways. I really appreciate you sharing your expertise with us. I also want to thank our clients for tuning into another Third Bridge Interview today.

[[00:57:34]]
Thank you so much. Have a good afternoon.

Transcription ends at 00:57:38 of the recorded material