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Description

In the last episode, Luke interviewed Brooke Lively, President and Founder of Cathedral Capital. We heard about Brooke’s life story and how Cathedral Capital came to be.

This week’s conversation highlights Cath Cap and what they’re all about. The goal of this conversation between Brooke and Luke is to help listeners like you understand if what Brooke’s company has to offer is something that would benefit you or someone you know.

Listen in to Luke and Brooke’s conversation as they discuss who Cath Cap is best suited to help, who they really aren’t good for, and why a law firm may or may not want to hire them.

Transcription

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Luke W Russell:

Welcome to Lawful Good Powerful Partners. This is a series about interesting and caring folks that we know and trust, whose journey brought them to collaboration with the legal community. I’m your host, Luke W Russell. I’m not a journalist, I’m not an attorney. I’m trained as a coach, I love human connection and that’s what you’re about to hear.

Luke W Russell:

Today, I’m chatting with Brooke Lively, one of our Lawful Good Powerful Partners. The goal of this conversation between Brooke and I is to help listeners like you understand if what Brooke’s company, Cathedral Capital, has to offer is something that would benefit you or someone you know. If you haven’t already listened to my interview with Brooke about her life story and how Cathedral Capital came to be, you can hear that and so much more in the previous episode. Join me as we listen in to a conversation where we’re discussing who Cathedral Capital is best suited to help, who they aren’t really good for and why a law firm may or may not want to hire them. And, by the way, if you decide to reach out to them, please let them know you heard about them on the Lawful Good Podcast.

Luke W Russell:

So, Brooke, let’s say I’m a lawyer. I’m not, but let’s pretend that I’m a lawyer. And I’m thinking, “Hey, I heard Brooke’s interview, it was fascinating. I’ve heard about this Cath Cap company. What exactly can they do for me?” What would you say to that person?

Brooke Lively:

So we built a team of a CFO, an analyst and an accountant who doesn’t do your books, that is there to help you become more profitable. We do this with our ability to dig. So we can look at your financials and we can dig down, identify the problem and find the root cause, and fix it. We help streamline things in your law firm. How are things functioning, are we set up properly? Are we using our people efficiently? Are we using our software efficiently? What do we need to change, whether it is the way we operate or the tools we use, to become more efficient because efficient is profitable.

Luke W Russell:

Yeah. Are there different tiers of service? If a person’s like, “Hey, I’m interested,” what’s that look like? And, how much access do you all have to have in order to be able to do really great work?

Brooke Lively:

We have a couple of different things. Most people know us for our CFO services, and that was what I was talking about with the CFO and the analyst. And, that’s really to help you with the strategy and the profitability. We also do have accountants and bookkeepers that will do your financials for you, they’ll do your bookkeeping.

Brooke Lively:

As far as how often, when we are talking about the bookkeeping, we do what’s called continuous accounting, which means that we touch your books every single week. There are some people that are like, “It’s the 20th of the month and I haven’t gotten my financials from last month, and it looks like they haven’t accepted anything.” We don’t ever want to be in that situation, so we touch your books every week.

Brooke Lively:

When we’re talking about the CFO services, we have what I’m affectionately calling Option A and Option B and it’s 100% dependent upon what is happening in your law firm and how fast you want to move.

Luke W Russell:

Yeah.

Brooke Lively:

Option A, you usually meet with your CFO about every other week, twice a month, ish. If you have more going on, if you want to move faster, then we set up a weekly standing call.

Brooke Lively:

Now, the firm’s that do the weekly standing call are generally a little larger. It is rarely the owner of the firm that’s on that call. There’s a practice manager, or if you’re running on EOS there’s an integrator, or someone like that, that’s usually spearheading the project.

Luke W Russell:

What type of thought process are they in or what kind of experiences maybe are they having, that typically is a good sign that you are someone who can come in and actually help with their frustration?

Brooke Lively:

We get some people that … Can I cuss a little bit here?

Luke W Russell:

Yeah, whatever you want.

Brooke Lively:

They’re having that, “Oh shit,” moment.

Luke W Russell:

Yeah.

Brooke Lively:

“How am I going to make this work? I’ve got bankers talking to me, using language I don’t understand. We’re trying to finance these cases, or we’re trying to do whatever.” And so, they’ll call us. We have firms that are growing really quickly, that just realize they may have a bookkeeper, they may or may not be on staff, they may be remote, I don’t know, but they just realize that that bookkeeper’s not giving them advice.

Luke W Russell:

Yeah.

Brooke Lively:

And, especially when you’re growing, you do often outgrow the capability of your bookkeeper to do everything you need them to do.

Luke W Russell:

Yeah.

Brooke Lively:

They will always be able to accept transactions and reconcile your accounts. But the larger you get, the less able they’re going to be able to really give you good cashflow forecasting.

Luke W Russell:

Yeah.

Brooke Lively:

Really good, we don’t like the B-word, budgets. We like profit plans. But, it’s that looking forward, it’s the planning, it’s the what’s going to happen next year, how are we going to finance it, how are we going to get through. And, how are we going to get the owner paid through all that?

Luke W Russell:

Yeah.

Brooke Lively:

Because that’s important to us, the owner should be getting paid.

Luke W Russell:

Yeah. For the owner who hears this, and maybe they’re just thinking, “Oh my gosh, the books, the numbers, it just feels so overwhelming.” Or, maybe a pain. What would you say to that person, to say well, here’s the fun part of what we’re aiming for in all of this?

Brooke Lively:

Well, let me just say we get that attorneys went to law school because they were promised no numbers and we don’t want you to look at numbers.

Luke W Russell:

Yeah.

Brooke Lively:

That’s not your language. Your language is words and that’s great. Let’s talk about your financials in terms of words and pictures, so we do a lot of what’s called visualizing the data. So we’ll give you a chart or graph, that’s a lot easier. Get rid of this whole, “Oh my gosh, I have to learn the … ” No, you don’t have to learn the numbers. We’re not going to make you do that.

Brooke Lively:

We do the hard analysis, we do the deep dive. And, especially when we’re talking about CFO services, it’s that strategy. Most of the attorneys who own their own firm that are listening to your podcast are probably pretty entrepreneurial.

Luke W Russell:

Yeah.

Brooke Lively:

So it’s having that partner to talk about the dreams, and where you’re going and what you want to do. We’ll do the nitty-gritty, you do the fun part.

Luke W Russell:

I’ve worked with y’all for I think two and a half years now, and I think what’s interesting is, as I’m listening to you talk about and I think about all the different ways that … I get very different advice from you all then I get from, whether it’s a business coach or something else, and how you all have built us tools for analyzing, making use out of certain data. And to be like, “Oh look, this is going well. This, I thought was going well and isn’t, and maybe I need to give up my emotional attachment to it.” Or, we just recognize that money goes in and doesn’t come out. That’s why we have an EOS coach, is because of you all. It’s been interesting to look back and see the wide range, beyond just looking at where we are in terms of where money’s going, where it’s coming in.

Luke W Russell:

I have seen and experienced that wide range of hey, for us … We’ve had a variety of custom built spreadsheets for us, that allows us, specifically for our business … Of course, we’re not a lawyer and stuff, but specifically for us and that’s been where we’ve been able to see a lot of value because it’s really tailored to our business.

Luke W Russell:

How does that play out for a lawyer? What challenges are they overcoming that they’re not going to get a benefit from just a QuickBooks report, that they’re going to get from you?

Brooke Lively:

Just like we’ve built custom things for you, we build custom for everybody. And, it’s all about forming a partnership, not a legal one, but becoming partners, inviting the client to be a member of our team and we become a member of the client’s team. And, it’s working within that to design whatever it is the client needs when they need it.

Luke W Russell:

Yeah.

Brooke Lively:

You know, do we spend a lot of time reinventing, not reinventing, tweaking the wheel? Yes, absolutely, all the time. Is it worth it? We think it is because we think that every client deserves exactly what they need. We don’t want to stuff people into a box. We don’t want to say, “Oh, no, no, no. This is the only way we do a cashflow, or this is the only way that we look at this piece of data.” Which, if you think about QuickBooks, that’s what it does.

Luke W Russell:

Right.

Brooke Lively:

And, there’s some other consultants out there that do that. We’re like, “What do you need in your firm today?”

Luke W Russell:

Yeah. Who are you not good for? Who are you like, “You know what, this is not going to be a good fit for you?”

Brooke Lively:

People who don’t execute. If you are paralysis by analysis, if you are one of those people whose first reaction to everything is no … And, I like that.

Brooke Lively:

I had a sales call with a guy one time. And at the end of the sales call he’s like, “Oh my gosh, how can I work with you all?” I’m like, “You know, I don’t think we’re the right fit for you.” He really pushed me on that and I finally said, “I have given you seven things you can fix on this call and you have said no to all of them.”

Luke W Russell:

Ooh.

Brooke Lively:

Yeah. We have what’s called the Yes, But Rule. If a potential client says, “Yes, but,” three times on the sales call, we won’t work with them because they’re not going to execute.

Luke W Russell:

Right.

Brooke Lively:

People ask us, “Who are the clients that do well?” And it’s the ones who are open to doing things that they haven’t thought of before and actually do them.

Luke W Russell:

Yeah.

Brooke Lively:

When we do that, you see progress, you see improvement, you see change.

Luke W Russell:

Yeah. I was actually referred to you by someone else and I was not looking for anything like Cath Cap. I imagine there are probably some people who there’s maybe just a struggle, I think some of us just don’t really get how you help us actually get where we want to go. It just seems like, I think some of us just don’t get it so we’re like, “It’s not that big of a deal, right?”

Brooke Lively:

I think it’s a couple of things. I think, first of all, if you think about it, every single thing in your business, whether it’s marketing, law firm, a doctor’s office, whatever it is, every single thing that happens in your business has an impact on your numbers. So from the other side, when we look at your numbers, we can see everything that is happening in your business.

Brooke Lively:

So I’m constantly having conversations with people that are like, “Whoa, whoa, whoa, why would you talk about my marketing?” I’m like, “I can’t fix your marketing, I can tell you where your marketing is broken and you bet your bottom dollar I’m going to talk to you about your marketing because it’s dollars.”

Luke W Russell:

Right. Yeah.

Brooke Lively:

If your people aren’t producing what they need to produce, yeah I’m going to talk to you about giving everybody a billing goal. I’m going to talk to you about the conversation you have every single week, to keep them accountable to that billing goal. And I’m going to talk to you about the consequences of people not making their billing goal because it touches your numbers.

Luke W Russell:

So, there are other fractional CFO companies and different ways people use contracted CFOs. What do you think makes you all particularly valuable within the legal space?

Brooke Lively:

I think it’s a couple of things. 80% of our clients are from the legal industry so we know it deeply. However, we don’t hire people from the legal industry. We hire people that have a big range of experience and that have done all kinds of things because we don’t want to be stuck in that legal groove of, “This is how it’s always been done.”

Luke W Russell:

Yeah.

Brooke Lively:

I can teach you everything you need to know about a trust account, fairly quickly. But, I want someone who has done different things, who has had different jobs so that they can bring a lot to the table. I think that makes us different. I talked about the team earlier, that you’ve got a CFO, and an analyst and an accountant.

Brooke Lively:

We don’t just work with the owner, we work with your whole team. We’re there as a resource. And, we have found that the more people we involve in the team, the more happens, the more gets done and the more profitable you become, because it’s less about the owner. And this happens a lot and, Luke, I know you’ve seen it. The owner has an idea and they take it back to the team. And the team’s like, “Yeah, yeah, yeah, whatever. This too shall pass.”

Luke W Russell:

Yeah.

Brooke Lively:

Or, “Why are they making me do this? This is dumb.”

Brooke Lively:

I don’t know, I think that really it goes back to that customized customer promise. We’re going to be part of your team and we’re going to support your whole team.

Luke W Russell:

Yeah. What are some common things you see amongst lawyers, before they work with you … Or, I guess maybe a different question is, is there a common theme of things that you see as quick wins for maybe not all but many law firms that you work with?

Brooke Lively:

I think one of the quickest wins we have and that we almost always look at is collections.

Luke W Russell:

Yeah.

Brooke Lively:

According to Clio in the 2020 Legal Trends report, the average collection rate in the US is 86%, which I think is total BS. I cannot figure out how they came up with that number. And I’ve talked to a number of other people in the industry, we think they’re including PI attorneys in there, who have 100% collection rate.

Luke W Russell:

Got it.

Brooke Lively:

We think the average collection rate is between 75 and 80%.

Luke W Russell:

Wow.

Brooke Lively:

That is a car dealership giving away every fourth car for free.

Luke W Russell:

Yeah.

Brooke Lively:

Yeah, I want to be the fourth person that walks on the lot. Or, it’s like telling your employees that you’re hauling them into the office four days a week for a reason, and the fifth day you’re just basically making them sit there for no reason.

Luke W Russell:

Right.

Brooke Lively:

I think one of the early quick wins is, like I said earlier, we want to dig down and find the root cause.

Luke W Russell:

Yeah.

Brooke Lively:

AR is created the first time you meet your client, it’s created in the sales call. So we go all the way back to the sales call, we help with language there. But really, what we do is we rewrite your fee agreement, and then what happens from there and the way you get paid. Our clients consistently collect over 92%.

Luke W Russell:

Wow. Wow.

Brooke Lively:

Just going from an 80% collection rate to a 92% collection rate, I’m going to do that on $1 million because I can do that math, it’s $120,000 a year.

Luke W Russell:

Yeah. Yeah.

Brooke Lively:

It didn’t cost you any more, it’s straight to the bottom line, so we see that.

Brooke Lively:

We see people that are consistently paying too much for their people. And it’s not necessarily that the people are overpaid, though that could be part of it. It may also be that they don’t have billing goals, they’re not accountable for their billing goals. It could be that it’s flat fee work that’s mis-priced. Or, it could be that we’re billing people out at rates that are too low.

Luke W Russell:

Do you know why people who reach out for a sales call but don’t hire you, what are the common reasons people choose not to go with you?

Brooke Lively:

Some people aren’t ready for the change, because it’s change.

Luke W Russell:

Yeah.

Brooke Lively:

If I’m going to rewrite your fee agreement and change the way you collect money, there’s something in that. We have some people that say, “I just can’t afford you right now,” which I get that.

Brooke Lively:

We have a client that gave us the best quote ever. She said, “I couldn’t afford to hire you, but I couldn’t afford not to.”

Luke W Russell:

Yeah. Yeah.

Brooke Lively:

I am sure there are people that just don’t like us, and that’s fine. We’re not perfect for everybody.

Luke W Russell:

Yeah. Why did that person who said that she couldn’t afford to hire you, but she couldn’t afford not, what for her was that, “I need this?” What was driving her?

Brooke Lively:

I think it was just that she didn’t understand anything about the financials in her firm. She had a partner that was retiring, so they didn’t have a partnership agreement so we had to find a good way to buy that partner out, to wind up that particular version of the firm. The soon-to-be ex partner owned the building. What were we going to do about the lease? The soon-to-be partner had one exit date then she had a different exit date. Okay, well what’s the payout look like?

Luke W Russell:

Yeah.

Brooke Lively:

And then, just making her more profitable. We went in and we really did work with what people were billing, and collections and changed that, and that paid for us and enabled us to help dissolve that partnership. And yet, got to retain the name, the full name of the law firm. And, every client’s different.

Luke W Russell:

Yeah. I’d imagine for some people, especially if they’re like me, there’s a certain overwhelm with numbers, and just not sure how to read it and make sense of it, but they feel more just in the way, and the difference of a budget versus your language about profit plans. Do you have many people who ever start with you who are just a little skeptical? They’re obviously bought into this idea, “There’s something good here for me.”

Brooke Lively:

Yeah. We do client reviews. One of the things that we ask is, “Did you get what you bought?” I have heard, on more than one occasion, “We didn’t know what we bought but you’ve surpassed our expectations.”

Luke W Russell:

Yeah.

Brooke Lively:

I get that, it’s hard. We have this customized customer promise. I can’t tell you, “This is going to happen in month one, and this is going to happen in month two, and this is going to happen in month three,” because what firm A needs in month one and what you need in month one are totally different. I think there is a little bit of a leap of faith there, but at least they’re telling us we totally exceeded their expectations when they didn’t know what they bought.

Luke W Russell:

On your website, it says that you’re perfect for the owner who delegates not abdicates the details.

Brooke Lively:

Yes.

Luke W Russell:

Talk to me about that.

Brooke Lively:

I think that one of the hardest skills for an owner is leadership. And, there are a lot of people, I watched my father do it, I’ve done it, I think all of us have been guilty at some point, of giving somebody just enough information that we think they need and dumping it on them, and expecting them to succeed. We probably haven’t given them enough information, we haven’t trained them, we don’t go back to make sure they’re not struggling. And then, when they don’t get it done, we blame them.

Luke W Russell:

Right.

Brooke Lively:

That’s abdicating the responsibility for that project, as opposed to delegating it. “Here’s what it is, here’s why it’s important, here’s where it fits into the greater structure of the business, here’s how you do it. Let’s do it together. All right, let me come back and check on you. How is it going?” That’s delegating.

Luke W Russell:

Yeah. Yeah. Now, talk to me about From Panic to Profit, your book.

Brooke Lively:

My book? Yes. Right here, I have my book.

Luke W Russell:

Yes. In your subtitle, I think that’s what you call it.

Brooke Lively:

Yeah.

Luke W Russell:

How Six Key Numbers Can Make a Six Figure Difference in your Law Firm. Yeah, talk to me about this book and what somebody whose maybe interested, intrigued by Cath Cap, why should someone read the book?

Brooke Lively:

The book came out of a conversation I had. I’m in a group called EO, Entrepreneur’s Organization. I was in Denver in a meeting. I think this is a common question, there’s been lots of books. But, I happened to be sitting in the room and the guy said, “Imagine you’re on a fabulous desert island at a five-star resort. There’s no phone, no internet, no TV. The only way you get information is the supply boat that comes once a week, that drops off food and alcohol, new guests and it takes departing guests. The captain can hand you a piece of paper with three pieces of information, that lets you decide whether you’re going to stay on the island for another week or not. What are they?”

Brooke Lively:

I sat in the room and I’m like, “Three? Well, is it five, is it 12, is it 40?” I took it back to my team and I said, “What are those numbers? What are the numbers that we think a law firm owner needs to know to have their finger on the pulse of their business? That, with a few quick numbers can make a decision about staying.” This book was the result. These are the six numbers. We divided a law firm into six different pieces, or sections, and we put a number to each section so that you can see what’s happening and see if you can afford to stay.

Luke W Russell:

Yeah. How practical is this? To take this and implement it.

Brooke Lively:

It’s incredibly practical. I made this, I wrote this using really simple language. And, I did this so that people can take it and implement it today. I didn’t want anything to be too difficult.

Luke W Russell:

Can you give me, without saying names, but could you give me a transformational story of a law firm who brought you in, and how you solved major challenges in them and they were able to both maybe have a little bit more enjoyment in life and also a few more-

Brooke Lively:

You mean, besides the attorney that called me, I saw him recently, and said … I had been working with his wife, I stopped working with his wife. He called me, he was like, “Oh my gosh, you’ve got to take Maria back on.” I’m like, “Why?” He’s like, “Because she keeps waking me up in the middle of the night, to talk about business stuff.” Sure, Andy, I’ll give her a call.

Brooke Lively:

But, Heather’s a great example. We believe in the Rule of Thirds. About one third of your revenue should go to your people, about one third of revenue should go to overhead and about one third should go to owner benefit. Heather was way over on her people. She wasn’t at 30, she was probably at 70 or 80 percent.

Luke W Russell:

Yeah.

Brooke Lively:

Your overhead’s your overhead, so when you’re spending 70% on your people and 30% on your overhead, guess who’s not getting paid?

Luke W Russell:

The owner.

Brooke Lively:

The owner.

Luke W Russell:

Yeah.

Brooke Lively:

We went through and we did a couple of things. The first thing was is that we made sure that everybody, that all of her billable people were productive, that their billing goals were three to five times what it cost us to employ them. We had to do some rejiggering of some people’s agreements and she was still over. Then we said, “All right, we need to go further and we need to go into accountability.” So we redid everybody’s billing goals, we designed a weekly agenda for a meeting that she has with each of her billable people. And we said, “OK, this is how you do it,” and she started doing it. And in three weeks, her production went up 40%.

Luke W Russell:

Wow.

Brooke Lively:

Here’s the best part. It’s probably four years later and her people are still producing at that high level. It’s not like it was a one-time, “Oh look, this month they billed 40% more.” No, it’s consistent. What can she do? Her boys are in private school, she’s not worried about paying tuition. She said a member of two country clubs, she lives a beautiful life. She can give her children what they want and need. She herself no longer does client work, which means that she’s spending all of her time out building her business and looking for new clients.

Brooke Lively:

So you hear people talk about working on the business or working in the business, she doesn’t work in her business anymore. She works on her business. It’s been very different, from when we first met her and she was working six days a week, 12 hour days.

Luke W Russell:

Yeah. I think what’s interesting is how, again, to restate what you’ve already said, is how much you’re looking at this firm going, “What’s going on in your firm? What are your goals?” And then, look at the numbers with those goals in mind and figure out, what do we change? I feel like a lot of us probably think of hiring some sort of business coach to facilitate that process, and instead you’re saying, “Well, maybe a CFO can actually do this for you.” I think it’s just something that some of us, maybe I’m the only person who’s clueless in the world but I don’t think I am. But I think there’s some of us who just never thought of, “Wait, a CFO could actually give me the strategy to help me get my business to where I want it to be.”

Brooke Lively:

A CFO really is about strategy, and what’s coming down the pike, and what can we take advantage of what do we need to change quickly. You’re right, it is all about achieving goals.

Brooke Lively:

We talk to each client. “What is it you want?” We have some people who want their firm to run and they don’t want to have to be there. We have other people who want their firm to run because all they want to do is be in trial.

Luke W Russell:

Yeah.

Brooke Lively:

If we told them they could never go to a courthouse again, they would die and fire us on their way down. There’s some people that, if we said, “You never have to step foot in the courthouse again,” would do the dance of joy. What does everybody want?

Brooke Lively:

We’ve got some people who say, “We want to sell in three years.” Great. That looks different than somebody who says, “I want to grow 50% a year, every year.”

Luke W Russell:

Yeah.

Brooke Lively:

We’ve talked about some of the results. I think the biggest result, the one that I hear most consistently is, “I’m not alone, you’ve got my back and I can sleep better at night.”

Luke W Russell:

If people want to learn more, we’ve got your book, From Panic to Profit.

Brooke Lively:

Yeah.

Luke W Russell:

People can find that on Amazon, you’ve got your website, which is cathcap.com. If people want to reach out, do they just go to there and fill out the contact form?

Brooke Lively:

Yeah. You can go there, fill out the contact form. You can email me directly, brooke@cathcap.com. Brooke has an E on the end.

Luke W Russell:

Yeah. I was going to say, B-R-O-O-K-E. Awesome.

Luke W Russell:

If you’re thinking, “Yeah, I’d like to speak to this Cath Cap team,” or want to check out more information on the work that they do, go to www.cathcap.com. And if you do reach out to Cath Cap, please let them know that you decided to contact them after listening to the Lawful Good interviews. By doing so, you help support the podcast and the work we’re doing in the world.

Luke W Russell:

Thanks so much for listening to us this week. This podcast is produced by Kirsten Stock, edited by Kendall Perkinson and mastered by Guido Bertolini. A special thanks to the companies that make this project possible, Russell Media and the SEO Police. You can learn more about these groups by visiting our website, lawfulgoodpodcast.com. I’m your host, Luke W Russell and you’ve been listening to Lawful Good.