Know Your Breakeven: Building an 8-Figure Firm Without Sacrificing Profit or Cash Flow (Ep. 157)
In the world of law and business, understanding the balance between revenue and profit is crucial for success. On this episode, Eric Gros Dubois, founder of EPGD Business Law, shared invaluable insights on how he navigated the challenges of starting his own firm and the strategies that propelled its growth. Here’s a breakdown of his journey and the lessons learned along the way.
Section 1: The Importance of Profit Over Revenue
At the heart of Eric's philosophy is the belief that profit, not revenue, is the true indicator of a business's health. "Profit is what you're gonna put in your pocket and support your family and live your best life," Eric emphasizes. He acknowledges the common misconception that high revenue equals success, stating that many businesses struggle with low profit margins despite their revenue figures. This distinction is critical for any entrepreneur aiming for long-term sustainability.
Section 2: Building a Diverse Law Firm
Founded 13 years ago, EPGD Business Law has grown to include 30 attorneys specializing in various sectors, including business law, real estate, and intellectual property. Eric mentions, "We think of ourselves as a business law firm... we consider both sides of the coin," indicating their dual focus on transactions and litigation. This well-rounded approach allows the firm to cater to a wide range of client needs, enhancing their reputation and client loyalty.
Section 3: The Role of Mentorship and Relationships
Eric credits his success to the guidance of mentors and strong partnerships. His relationship with his partner, Oscar, exemplifies a healthy business dynamic where disagreements are resolved amicably. Eric recalls, "I can say this honestly, we've had two disputes... and both times we've respectively apologized to the other person." This level of trust and collaboration is vital for any business, especially in the competitive legal landscape.
Section 4: Understanding Your Break-even Point
One of Eric's pivotal strategies was to understand his break-even number from day one. For him, it was a modest $5,000 a month. He explains that knowing this number allowed him to focus on profit rather than getting lost in annualized figures. "People get bogged down thinking about annualized numbers. That's just fake," he asserts. This practical approach to financial tracking is essential for maintaining business health and making informed decisions.
Section 5: The Power of Personal Connections
A key takeaway from Eric’s journey is the significance of personal connections in business. He emphasizes that most of his firm’s work comes from referrals and word-of-mouth recommendations, stating, "There are no clients at your kitchen table. My life is out in the world." While digital marketing has its place, the value of building relationships cannot be overstated. Eric’s experience highlights the need for balance between modern marketing strategies and traditional networking practices.
Conclusion: Key Takeaways
Eric Gros Dubois’s journey with EPGD Business Law serves as an inspiring example of how understanding profit, fostering relationships, and maintaining a clear financial strategy can lead to success. For aspiring entrepreneurs and established business owners alike, these principles are vital in navigating the complexities of the business world. Remember, it’s not just about how much you make, but how much you keep.
Resources:
Unreasonable Hospitality by Will Guidara (Book)
How do you measure succcess? | Q+A by Simon Sinek (Talk)
Connect with Darren Wurz:
Connect with Eric Gros-Dubois:
Email: eric@epgdlaw.com
Linkedin: Eric Gros-Dubois
Website: EPGD Business Law
About Eric Gros-Dubois:
Eric Gros-Dubois founded EPGD Business Law in 2013 and is the current head of the firm’s corporate, estate planning, and tax practice, and manages the firm’s Miami office. With a JD and MBA, and a specialization in finance, Eric is able to step back and view the legal world through a commercial lens while also acting as a trusted business advisor for his clients. He does his best to be solutions oriented, and tries to think like a business owner, not just a lawyer. When asked to identify his thoughts on practicing law, Eric answers without hesitation: “People aren’t hiring us to solve legal problems, they’re hiring us to solve personal problems.” With his hands-on approach, Eric works to build strong client-attorney relationships and finds himself intimately involved in each of his cases even after they’ve been resolved.
While a partner at a prominent firm located in Washington, DC, his path led him to Miami where he handled commercial transactions and business litigation. As a law student, Eric worked at a non-profit organization, a private equity group, and the Federal Tax clinic representing taxpayers before the U.S. Tax Courts, laying the foundation for the future of EPGD Business Law.
Eric does his best to be an outstanding member of the community. Finally, his hobbies include marathon running, cooking, chess, tennis, and sailing.
Community Involvement
Elected to Coral Gables Community Foundation Board of Directors
Chair of Trustee Council, Executive Committee Member, Board Member of the Coral
Gables Chamber of CommerceElected to Board of Coral Gables Museum
Former president of the Rotary Club of Brickell
Former president of BNI Coral Gables
Former president of his homeowner’s association
Member of Coral Gables Bar Association
Merrick Society Member of Coral Gables Community Foundation
Member of Coconut Grove Sailing Club
Former member of the International Affairs Coordinating Counsel for the Sister-Cities of
Coral Gables on behalf of the Chamber of CommerceFormer member of the board of directors of Global Ties Miami (formerly the Miami
Council for International Visitors)Sigma Chi Fraternity (Southern Methodist University)
Beta Gamma Sigma honor fraternity (Kogod School of Business)
Supporter of many fundraisers devoted to the community
Schools
Washington College of Law. Juris Doctor (JD)
Kogod School of Business. Masters in Business Administration (MBA)
Southern Methodist University. Bachelor of Arts (BA). Sigma Chi Fraternity
Jesuit College Preparatory School, Dallas
Goldman Sachs 10,000 Small Businesses
Bar Admissions
State of New York, 2008
State of Maryland, 2008
State of Texas, 2020
District of Columbia, 2008
State of Florida, 2010
Federal District Court for the Southern District of Florida, 2010
Federal District Court for Maryland, 2008
U.S. Tax Court, 2008
Lectures & Presentations
CLE Lecture: “Franchising 101 – The Essential Guide for New Entrepreneurs.” May, 2024
CLE Lecture: “The Corporate Transparency Act (CTA)” March, 2024
CLE Lecture: “Estate Planning 101” Feb, 2024
CLE Lecture: “Trademarks 101 – Everything an Entrepreneur Needs to Know.” November, 2023
Featured Speaker at The SelectUSA Investment Summit 2022, “Various Corporate Structures Available in the U.S and Which Might be Best Suited for Your Business.” June, 2022.
CLE Lecture: “Piercing the Corporate Veil.” March, 2021
CLE Lecture: “Grow Your Firm with Great Law Clerks” November, 2020
Featured Speaker: Palm Beach Startup Week 2019, “5 Legal Things Every Business Owners Needs to Know.” June, 2019
Key Note Speaker: PT Now Annual Physical Therapist Conference, Cancun, Mexico. “Legal Points Every Franchisee Should Know.” June, 2019
Featured Speaker: Guayaquil, Ecuador. “Business Law in the U.S.” May, 2019
Featured Speaker: Bogota, Colombia. “Doing Business in Miami.” May, 2019
CLE Lecture: “New and Emerging Topics in Employment Law.” May, 2019
CLE Lecture: “New DOL Guidance on Tip Credit.” May, 2019
CLE Lecture: “Corporations v. Partnerships Top Tax Pitfalls to Avoid.” March, 2019
CLE Lecture: “LLC, C-Corp, S-Corp, New Tax Cuts and Jobs Act of 2017.” March, 2019
Featured Speaker: Medellin, Colombia. “Migracion, negocios y inversiones en Los Estados Unidos.” February, 2019
CLE Lecture: “Corporate Tax Planning and the Tax Cuts and Jobs Act of 2017.” December, 2018
Featured Speaker: Polanco, Mexico, D.F. “Migracion, negocios e impuestos en Estados Unidos.” October, 2018
CLE Lecture: “IRS Form 1099: New Requirements.” September, 2018
CLE Lecture: “Issues with Employment Status: Salary vs hourly, independent contractors vs employee, Non-competes and legal discrimination.” August, 2018
CLE Lecture: “Piercing the Corporate Veil and Reverse Piercing Fundamentals (2018 Edition).” August, 2018
Featured Speaker in Panama City, Panama. “Migracion, negocios e impuestos en Estados Unidos.” July, 2018
CLE Lecture: “Law Firm Management: Different Types of Engagement Letters, Referral Fees, and Trust Accounting.” July, 2018
CLE Lecture: “The Intersection of Employment Law and Business Immigration.” July, 2018
CLE Lecture: “The New Tax Rules for Mergers and Acquisitions.” June, 2018
CLE Lecture: “Employment Law 101: Independent Contractors versus Employees; Hourly versus Salary; Restrictive Covenants and Discrimination.” June, 2018
CLE Lecture: “Piercing and Reverse Piercing the Corporate Veil 2018 Update.” May, 2018
Featured Speaker in Bogota, Colombia. “Migracion, negocios e impuestos en Estados Unidos.” April, 2018
CLE Lecture: “Law Firm Management – Engagement Letter Variations, Referral Fees, Trust Accounting, and Law Firm Financial Management”.
CLE Lecture: “Fundamentals of Form 1099: New Requirements!”
CLE Lecture: “Accounting 101 for Attorneys (2018 Edition).”
CLE Lecture: “Corporate Tax Planning and the Tax Cuts & Jobs Act of 2017”
CLE Lecture: “Piercing the Corporate Veil and Reverse Piercing Fundamentals.”
CLE Lecture: “Law Office Accounting: Managing Trust Accounts, Retainers, Billable Hours & More.”
CLE Lecture: “Major Mistakes to Eliminate in Forming & Operating LLCs.”
CLE Lecture: “Accounting 102 for Lawyers.”
CLE Lecture: “EB-5 and Beyond: Counseling the Foreign Entrepreneur on Immigration, Business, Tax, & Legal Considerations.”
CLE Lecture: “Starting and Running a Small Law Firm.”
Featured Speaker at Universidad de La Sabana in Chia, Colombia and Club de Bridge in Bogota, Colombia. “Migracion, negocios e impuestos en Estados Unidos.” May, 2016
Panelist at 2016 American Immigration Lawyer Association’s Las Vegas Symposium on Law Firm Management. June, 2016
Featured Speaker at Jornadas Asia Pacifico Conference in Santiago, Chile. July, 2016
Featured Presenter at Microsoft Startup Institute, “5 Things Every Entrepreneur Needs to Know.” September, 2016
Featured Speaker at III Regenerative Medicine Symposium in Buenos Aires, Argentina. “Tax Concerns and Foreign Nationals.” October, 2016
Featured Speaker at SCORE at Venture Café Miami. “5 Legal Issues for Every Startup.” January, 2017
Featured Speaker at Ibague, Colombia, Business and Immigration Law Conference. “Coming to, and Doing Business in the United States.” July, 2017
Featured Speaker at Impact Seminar for Coral Gables Chamber of Commerce. “The Entrepreneur Life Cycle.” July, 2017
Featured Speaker at American Immigration Lawyer Association’s Miami Roundtable: “Financial Bootcamp for Law Firm Owners and Immigration Attorneys.” August, 2017
Featured Speaker at OWIT, Organization of Women in International Trade: “Doing Business in the United States.” August, 2017
*Courses are available online through myLawCLE
TRANSCRIPT:
Darren Wurz [00:00:00]:
Most law firm owners obsess over revenue, but today's guest built a 30-attorney, 8-figure firm in Miami by obsessing over one number that most owners don't even know, and it's not profit. All right. And we're here with Eric Gros-Dubois, the founder of EPGD Business Law in Florida. Welcome to the show, Eric.
Eric Gros-Dubois [00:00:25]:
Darren, thank you very much. It's good to be here. And It's relatively sunny Florida this morning and it's finally started to warm up. We had that cold front.
Darren Wurz [00:00:37]:
Yeah, it's a very mild one by my standards, I think. But hey, you know, cold is cold, right? If you're not used to it.
Eric Gros-Dubois [00:00:44]:
65 degrees, people pull out their puffy jackets and their boots.
Darren Wurz [00:00:48]:
You know, it's funny, I remember being in San Diego in December and it was like 65 degrees. And being an Ohioan, I was in shorts. I'm like, this is great. Everybody was in parkas, literal parkas.
Eric Gros-Dubois [00:01:01]:
So I went to college in Dallas, Texas, and all the kids from the north would be running around in shorts and t-shirts, and we'd all be bundled up and, you know, got our hats.
Darren Wurz [00:01:11]:
Funny. Yep. Yep. Okay, Eric, so which is more important? Tell me, is it revenue or is it profit? What's your take?
Eric Gros-Dubois [00:01:20]:
I mean, the answer has to be profit, right? Profit is what you're gonna put in your pocket and support your family and live your best life. So I know a lot of people that have high revenue and low profit, and that's, you know, I, I think that's a bad formula. What somebody said, uh, there's billing, then there's revenue, and then there's profit, and, and the profit's the only one that's real.
Darren Wurz [00:01:44]:
Yeah, 100%. You know, and that's such a big topic. We're talking about that all year long, really diving deep into profitability. But before we dive into that too much, tell us, tell our audience a little bit about your law firm. How many attorneys do you have? What do you guys focus on? You know, give us the lay of the land here.
Eric Gros-Dubois [00:02:04]:
Sure. So we're a baby law firm that was, it's 13 years old. So I guess we're going to be a troubled teenager. We're coming up on our 13th birthday actually. It was conceived on the 26th of February.
Darren Wurz [00:02:16]:
Oh, great.
Eric Gros-Dubois [00:02:17]:
Created. It wasn't born until June 3rd. But we are 30 lawyers down in Miami, Florida, covering all of Florida. And then in certain practice areas, we have attorneys barred in other states. And then there's certain things that we can do. For example, my wife does immigration law. That's everywhere. That's a federal practice.
Eric Gros-Dubois [00:02:38]:
But the reality is probably more than 90% of our business is South Florida, which is primarily Miami, but then also Broward and Palm Beach. And I will say this, the county below us is Monroe, which is Key West. In 13 years, I have never had a case that would take me to court in Key West. And that's all I've ever wanted. I just wanted to schedule a hearing on a Friday so that I could write off a weekend and go to Key West, which is a 4-hour drive down the road.
Darren Wurz [00:03:06]:
Absolutely. Yeah. Well, We'll hope that that happens for you here at some point. Great. Great.
Eric Gros-Dubois [00:03:15]:
And just sorry to cut you off, but to more specifically answer, we think of ourselves as a business law firm. We service mostly business owners and we consider both sides of the coin. So we have the attorneys that do the transactions, that write the contracts, that do the M&A work. And then we have the attorneys that do the litigation, the breach of contract, when things go sideways. And then stuck in the middle, we have an estate planning and asset protection group, a real estate group, and an intellectual property group. And for those, it's, again, it's both sides of the coin. It's doing the deal or when the deal goes south, helping with controversy.
Darren Wurz [00:03:54]:
Yeah. Fantastic. So, I mean, you've done a lot in 13 years. You've grown a really incredibly successful firm. To what do you owe that? Like, is that just your own business genius or what has helped you get there?
Eric Gros-Dubois [00:04:10]:
So, I was blessed to have some really good mentors. I have some excellent partners. My partner Oscar and I are coming up on our 10th anniversary and I can say this honestly, we've had 2 disputes and I wouldn't even call them fights. And both of them were resolved with, okay, I trust you. I don't agree with you. But if you feel more passionately than I do, then I'll go with it. And both times we've respectively apologized to the other person and been like, hey, you were right, I was wrong, sorry about that. But I did have a business background.
Eric Gros-Dubois [00:04:41]:
I got an MBA, which it's funny, it ended up working out really well for my career, but it was actually just me procrastinating getting a real job and kicking the can down the road one more year. But when I started the firm, which was never my intention, I wasn't one of these kids who grew up with an entrepreneurial family. I didn't have a father who had his own business. In fact, my father was in corporate America, and I thought success was vacation days and stock options. And to his credit, he did really well. He was able to retire at a young age and cashed out all those stock options really nicely. But I never thought that entrepreneurship business ownership was in my future, it kind of was, I hate to say I didn't have many options. And one of my mentors was, he said it matter-of-factly, he said, well, why don't you just start your own law firm? Now the alternative was, it was 2013.
Eric Gros-Dubois [00:05:36]:
I don't know if you guys remember the job market, but the legal job market had not recovered from the Great Recession. And what's really scary just to do a sidetrack is I have all these kids that are 2 L's in law school. So they're 23 years old. I'm like, so how old were you in 2009? And then I, I, scary to find out the answer. So, so they were 6. But in any case, in 2013, a recruiter literally told me that there were no jobs out there. I had a job and he said, my professional advice is that you learn how to suck it up.
Darren Wurz [00:06:11]:
So, oh wow.
Eric Gros-Dubois [00:06:13]:
I still see him all the time, so I like to remind him of that story.
Darren Wurz [00:06:16]:
Yeah.
Eric Gros-Dubois [00:06:17]:
But my mentor said, hey, why don't you start your own law firm? And I have an extra office and I'll rent it to you. And I always knew two things. I always knew what my breakeven number was, which in my mind is a monthly number. So, you know, people get bogged down thinking about annualized numbers. That's just fake, right? It's like when you hire an employee, you're not promising them a year's salary. You're promising them a paycheck every 2 weeks. That's—
Darren Wurz [00:06:44]:
yeah.
Eric Gros-Dubois [00:06:44]:
So, um, I always knew my breakeven number from month 1. So month 1, by the way, that breakeven number was $5,000. It was like $5,000 to pay my cell phone bill and my mortgage and eat ramen soup, and that's what I needed to stay alive. Um, I share what that number is now, but it's much, much, much, much, much higher. Um, but I always knew what that was so that in the month.
Darren Wurz [00:07:07]:
Yeah.
Eric Gros-Dubois [00:07:08]:
When I hit that number, I was like, oh, okay. Like, all right. So everything from here on out is profit. Um, my second thing I always knew was never to work from home.
Darren Wurz [00:07:19]:
Mm-hmm.
Eric Gros-Dubois [00:07:19]:
I know there's a lot of people out there who work from home. I, my wife loved COVID. She absolutely loved it. She loved being home the whole time. Um, and I knew that because there are no clients at your kitchen table. That, uh, my life is out in the world. We don't rely much on internet marketing. And so the majority of our business is word of mouth, and that comes from relationships, and relationships are out in the world.
Darren Wurz [00:07:43]:
Yeah. Yeah.
Eric Gros-Dubois [00:07:44]:
I'm sure that there are successful business models where people— I know, in fact, I know there are. There are law firms that are completely remote. I, you know, all, all the power to them. I wish them all the best. But for me, I knew that I— and by the way, during COVID my partner and I came to the office every day. Every single day.
Darren Wurz [00:08:02]:
Yeah.
Eric Gros-Dubois [00:08:03]:
We were one of, you know, I don't know what it was like in Ohio, but in Florida, we were one of the first. In fact, we never were closed. And I'll tell you why. They somehow said that lawyers are an essential service.
Darren Wurz [00:08:13]:
So whoever, probably a lawyer.
Eric Gros-Dubois [00:08:20]:
But those were the two things I always knew. I always knew my breakeven number. And I always knew that I needed to get up every day. And if you'll indulge me, I'm sitting there in month 1, month 1, this is June 2013, and I had nothing to do. I was sitting at my desk at the office wearing this. It might have even been this suit. And my, my officemate, my landlord, if you so to speak, he's walking by. He's like, oh, I didn't know you were here.
Eric Gros-Dubois [00:08:47]:
I'm going out to grab drinks with some friends. Do you want to go? Had I been at home in my gym shorts, A, he probably wouldn't have called me. But even if he had, I probably would have made an excuse.. But instead I was like, well, I'm here. I'm not doing anything. I'm dressed like an adult. Let's go. I signed up a client that night.
Eric Gros-Dubois [00:09:04]:
Wow. By small talk with new friends and somebody's like, oh, you're a business lawyer. Can you help me maybe with this? And I signed up that client. Yeah. And that was, it just confirmed what I knew.
Darren Wurz [00:09:16]:
You know, this is, oh, go ahead.
Eric Gros-Dubois [00:09:19]:
Sorry. No, no, no. I was just gonna say, and if my first boss who I'm still dear friends with is listening, he sent me down to Florida to open a practice for his firm. And 2 and a half years later, I was a fantastic remote employee. And guess how much business development I did? Almost none. Because I wasn't, I wasn't doing what you need to do. I, I was not walking into rooms full of strangers and just having the confidence to walk up to them and be like, hey, my name's Eric, what do you do?
Darren Wurz [00:09:48]:
Yeah, yeah, you got to do that. Um, and it's, it's so interesting because I'm seeing this as a recurring theme from so many of the very successful law firm owners that I've spoken with, it's— they will tell you majority of their business comes from referrals, word of mouth, repeat customers. You know, so many people are throwing so much money at digital advertising and you need to do some of that. That's important, but it's never going to replace the personal connection. And that's so critical. So I'm glad to hear you say that. That's really interesting.
Eric Gros-Dubois [00:10:27]:
So I've— it's interesting. You know, I was talking about this this morning with actually one of my coaches, and he specializes in sales and marketing coaching. And he said that for the first 20 years, all he did was word of mouth, right? And that recently he's been pivoting because I have the numbers actually written down on my desk for some reason. He said he spent $8,000 on digital marketing, got 240 leads, and each lead could be in his business $100,000. I'm sorry, each, each client that he closes could be $100,000. So if he signs up 20 of them, you know, 20 out of 240, that's a fantastic return on investment. Now the flip of that is I will never stop the, the relationship marketing, which is what I like to think of it as. Um, and I— and, and maybe you could do both, right? Yeah, where you could do the digital marketing to get the leads, but then once you get those leads, you can nurture those into actual relationships Sure.
Eric Gros-Dubois [00:11:21]:
To get the repeat business and the word-of-mouth business.
Darren Wurz [00:11:25]:
Absolutely. Yeah. But it's just interesting to see that that is a common theme among some of the very successful law firms like yours. I want to dig a little bit more into that break-even number. How do you use that in decision-making? You know, like practically on an ongoing basis, what does that look like for you?
Eric Gros-Dubois [00:11:46]:
Sure. Okay. So first I start with my framework. So my framework is I want to hire attorneys to work at the firm, right? And I want to pay them based on a rule of 3. So it's a third to the attorney, a third to the overhead, and a third to the profit. Now that's obviously the goal. The goal, the North Star is 30%. Yeah.
Eric Gros-Dubois [00:12:06]:
And so, so let's just use round numbers. I hire the attorney for $100,000. I tell them, listen, in order to justify your salary, you need to bring in $300,000. Now we can do hourly rates and I can tell I can't tell you how many hours that is. I know that a lot of law firms are worked on hours, but let's not kid ourselves. It's hours times hourly rate, hopefully equals billing, then times collection percentage equals revenue. And then what I try to— okay, so that's the profit center part of the firm. Then the cost center part of the firm, I try to keep my costs to less than a third, or I should say less than half of whatever I'm paying the attorney.
Eric Gros-Dubois [00:12:42]:
If the attorneys are getting paid $100,000, then my staff needs to be getting paid $50,000. And then if you do the math, the attorneys bring in 3 times. Hopefully the math adds up and we're— no, and by the way, you're never going to get it right. You're sometimes you're over— and this is actually something that happened to us. We were overstaffed, but for the first time, all the attorneys were happy, right? We had too many paralegals, but for the first time, they weren't complaining about the paralegals.
Darren Wurz [00:13:09]:
I bet they weren't.
Eric Gros-Dubois [00:13:10]:
Yeah. We either cut back on paralegals or we grew attorneys and then all of a sudden we were profitable again, but then the attorneys kept complaining about not having enough staff. So it's always, you know, this balancing act. But going back to that break-even number. So that break-even number, really what it is, it's all your overhead. And then in that number, I break out attorney salary. So I, and I treat that as a separate category within my, all my overhead because all the rest of the overhead is costs, rent, internet, Westlaw, marketing, you know, all the things we pay for, all the people that work here that don't bill, receptionist, office manager, collections person, marketing person, they don't bill. So all of those go in that other bucket.
Eric Gros-Dubois [00:13:59]:
And I try to keep an eye on those kind of like compartmentalized numbers, the attorney salary. Yeah. The fixed overhead, so to speak, and then the revenue goal.
Darren Wurz [00:14:12]:
Okay. Okay. Makes sense. Now, you know, ever since you've been tracking this breakeven number, you've, you've been above it. It's been great, right? There's been no problem.
Eric Gros-Dubois [00:14:21]:
I missed it one time.
Darren Wurz [00:14:23]:
Really? Okay.
Eric Gros-Dubois [00:14:24]:
I had to ask my mom for a loan. And I know that my mom's not going to listen to this, so I can tell you the truth. My sister, I'm pretty sure, even though she's been happily married for a long time, is still having my mom help her with her credit card bill. And I asked my mom for $1,000 and within a week my mom was like, when are you going to pay me back? And that $1,000 was to meet payroll for my receptionist because of course we get paid last, right? So that month I did not pay myself.
Darren Wurz [00:14:53]:
Okay. Okay. So other than that one time, there really hasn't been any times that you've been below that breakeven and needed to make adjustments?
Eric Gros-Dubois [00:15:01]:
I've been very blessed.
Darren Wurz [00:15:02]:
You know? Yeah.
Eric Gros-Dubois [00:15:04]:
Okay. And what I've always kind of known intuitively and, you know, you know, there's the— I have it written right here on my dry erase board. There's 3 types of lawyers, right? Yeah. The finders, the minders, and the grinders. And so the finders are out there finding the work. The minders are managing the cases and managing the people, and the grinders are doing the work. And so I have a partner. I won't say his name because I have a couple.
Eric Gros-Dubois [00:15:29]:
And he's a very high performer. He's a high performing lawyer. And he and I have never had this debate, but I know it's like a debate I've had in my head. Who's more important, the rainmaker or the grinder? Right? Because without the rainmaker, the grinder doesn't have anything to do. But without the grinder, the rainmaker has nothing to sell. So it's always been this tension. But for me, I always knew that marketing came first.
Darren Wurz [00:15:55]:
For me. Yeah. Yeah. That is interesting. I think a lot of law firm owners sometimes struggle to grow because they're concerned about if I bring in attorneys, I'm just training my competition, right? But you need both roles. You need someone who's going to go out and find the business. You need someone who's going to do the work. And the people who are the finders don't necessarily want to be the grinders.
Darren Wurz [00:16:19]:
And the people who are the grinders don't necessarily want to be the finders, you know, right? You all need each other.
Eric Gros-Dubois [00:16:25]:
We do all need each other. And for me, a real turning point in the history of my firm was I was 3 years in and I was doing well. I had a couple of associates, a couple of admin. We'd grown and, you know, we were, we were a self-sustaining business. We had health insurance. And my mentor, my best friend, he, he who actually was my landlord, he says to me, he's like, you know, Eric, I don't want to grow anymore. 'Cause if I grow, that just means more clients and that means more cases and that means more employees and that means more square feet and that means more. And he's like, I'm just happy where I am right now.
Eric Gros-Dubois [00:16:58]:
I can put my kids in private school and go on 2 vacations a year. And I was like, all right, Brian, well, that's great. Well, I want more. And so then when I reconnected with who became my partner, Oscar, it was the perfect marriage. 'Cause in his perfect world, he's in court every single day. In my perfect world, I'm never in court ever again. So we divided it up. The world, it was like, yeah, I don't think he's ever been to a networking breakfast.
Eric Gros-Dubois [00:17:22]:
I go to 2 a week.
Darren Wurz [00:17:24]:
There you go. Yep.
Eric Gros-Dubois [00:17:26]:
Yep.
Darren Wurz [00:17:26]:
You need, you need those people to complement each other.
Eric Gros-Dubois [00:17:30]:
Yeah.
Darren Wurz [00:17:30]:
In this breakeven framework, is it, I'm assuming it's not, and tell me how you use it. It's not probably just backwards looking, but I assume you're also kind of forecasting. How does that look for you? How do you do that?
Eric Gros-Dubois [00:17:44]:
So, You know, I'm an hourly billing model. It's not a feast or famine type law firm where we're waiting on big contingency hits. We bill hourly. So it's actually pretty easy to create a prediction model based on how many attorneys, what their salaries are, what their individual goals are. Because remember, the goals are tied to the salaries, right? So if I tell, if I hire 10 people at $100,000 each, a year, obviously, then that means that's $1 million of payroll for those 10 attorneys. And then I tell them they need to bill 3 times that. So I always look at billing as forward-looking and collections as backward-looking. And it's always funny because everyone always goes on vacation in December.
Eric Gros-Dubois [00:18:28]:
So I feel the pain, revenue dips because they don't bill as much in January and February. But then by March and April, our revenue is fantastic because they all came back rested from their vacation.
Darren Wurz [00:18:42]:
Yeah.
Eric Gros-Dubois [00:18:42]:
And they were grinding in January and February.
Darren Wurz [00:18:45]:
Work extra hard. Yeah, absolutely.
Eric Gros-Dubois [00:18:47]:
And we have the same two dips. It's not— I don't really have a cyclical business. We're not like an accounting firm where we have tax season. Um, because quite frankly, people set up companies and sue each other all year round. Um, but it's more tied to when do my attorneys go on vacation.
Darren Wurz [00:19:05]:
Interesting. Okay. And for your attorneys, how do you, as much as you're comfortable sharing, how do you incentivize them? Is it just, you know, you bill more than you get paid more? No, it's— is there a—
Eric Gros-Dubois [00:19:17]:
okay. So we do quarterly reviews and we do the math formula together. Like we do the formula. I tell them 3x or I guess it's the other way around. So it's whatever your collections are divided by 3. That's what the goal is for. That's you know, annualize it because we do quarterly reviews. But of course, I look at monthly numbers.
Eric Gros-Dubois [00:19:36]:
So a quarter is 3 months and then we can annualize any number. But then so what I'll say is I'll say to this person, okay, here I got my calculator. All right. So historically, you— I'm going to call you Bob. Bob historically have been collecting at 90%, right? You've been working for me for 3 years. And by the way, I believe that collections percentage is directly tied to customer service. So you take two lawyers, identical law degrees, identical law school, whatever, whatever, and pay them the same amount. The one who has the higher collection percentage is because they are better at updating their clients.
Eric Gros-Dubois [00:20:14]:
They're better at, you know, because even though we're a business law firm, it's still a people business. Yeah. People decide when they want to pay their bills. I mean, I know how it is. True. So in any case, so I'd say $100,000. Oops, here we go. $100,000.
Eric Gros-Dubois [00:20:30]:
Multiply that by 3 because we're working on the rule of 3. That's $300,000. Now you, Bob, you have a 90% historical collection percentage. We're going to divide that by 0.9. All right. That's $333,000 a year in raw billing. That's your billing goal. You are billing at $300 an hour.
Eric Gros-Dubois [00:20:51]:
So that is 1,111 hours is your billing goal. Now I don't think in hours because we all know that hours are a fake construct because I could spend an hour doing pro bono work, an hour watching a CLE, an hour billing for a client that never pays their bills, or an hour billing for an amazing client that always pays their bills. Like which one of those hours is the more valuable hour? Mm-hmm. Now I'm not talking about hobbies. Like my father used to pick weeds 'cause I think he liked it. He was more than successful enough to hire a guy to pick weeds, but he likes going out in the yard with the dog and throw the tennis ball and pick weeds. All right. So back to my number, $333,000.
Eric Gros-Dubois [00:21:29]:
Now I'll divide that by 12. That's $27,700. Okay. So I want to make that in a quarter. That's $83,000 a quarter. So I say to Bob, I go, okay, Bob, I'm paying you $100,000. So your floor goal, your goal to keep your job is to have raw billing of $83,000 at 90% collection over the next quarter. And I write that on a piece of paper.
Eric Gros-Dubois [00:21:52]:
And then I say, all right, Bob, would you like to get a $10,000 raise? So I go $110,000 times 3 divided by 0.9. By the way, the 0.9, what if Bob increases to 0.95 because Bob does better customer service? And what we found in real life is you're either at 95% and all your clients love you, or you're at 70%. There are very few people that are at like 82 or 89. It's either high, high customer service or low customer service. And it's really hard, by the way, to talk to lawyers who've been told their whole life how smart they are, that they're in the sales business.
Darren Wurz [00:22:31]:
Oh, yeah.
Eric Gros-Dubois [00:22:32]:
Now you're in sales. No, I'm not. I didn't go to law school for sales. I'm like, yeah, think about it. You gotta sell your partner, sell your coworkers, sell your clients, sell your judge, sell your opposing people. You're in sales all day long, but they don't look at it that way. All right, so now back to my numbers. I say to Bob, I go, all right, Bob, it was $27,000 to keep your job.
Eric Gros-Dubois [00:22:54]:
It's $30,000 to get a $10,000 raise. That's $30,000 a month. So times 3, so that's $91,000. So at the next quarterly review, 90 days from now, hopefully you get to keep your job, but more hopefully, hopefully you hit your goal and I'll put it in writing right now and we're gonna sign it and we're gonna scan it and put it in your file. And then at your review, cuz we do quarterly reviews, I'll pull it up and say, all right, Bob, let's look at the numbers. And I'm like, well, Bob, you did great. Your collection percentage went up and you passed your billing goal. Here's a $10,000 raise.
Eric Gros-Dubois [00:23:26]:
Now let's set the next goal to get to $120,000. Okay. And so I've had a lot of attorneys on our team who have had 4 raises a year consistently. Mm-hmm. What happens in real life is they plateau at the point where they don't want to, like, where their work-life balance kind of like matches capacity, which then they say, well, Eric, I'm at, just use round numbers, I'm at $180,000, but I don't really want to work any harder than this. Like, this is about as much grinding as I can do. So how else can I make money? And yeah, talking about originations and origination bonuses. Okay.
Eric Gros-Dubois [00:24:00]:
You pay 20% on anything that they bring in. Okay. So go join the Rotary Club or the Toastmasters or the PTA or whatever, the church group, and start bringing in work.
Darren Wurz [00:24:12]:
Yeah, absolutely. Well, thank you. Thank you for giving us that kind of insider's view into how you handle the numbers. That's very, very helpful.
Eric Gros-Dubois [00:24:21]:
If I can just add to that real quick, the most important thing is you have to know how to evaluate and measure the performance of your team. And I'm saying that because I know a lot of lawyers who don't have a system to measure their performance, right? And if you're just using hours, but if the hours don't correlate to revenue, or, you know, I know people that work in flat fee industries, a lot of immigration lawyers, estate planning lawyers. And even though we do a lot of flat fees for our estate planning, we still make them bill hours, even though, let me be clear, I judge them based on revenue, not on hours. So at the end of the day, whether it's you did 3 $10,000 flat fees this month, or you billed 100 hours at $300 an hour this month, I'll compare apples to apples by looking at the revenue collection.
Darren Wurz [00:25:11]:
Yeah, still a very important metric to track for other reasons like efficiency and stuff like that. And I want to like just pause here for the listener. Like, I think one of the biggest takeaways is that you as the law firm owner need to be close to the numbers. I think if you can take anything away from Eric's story, it's like Eric has been super dialed in to the numbers from day one and look at the result, right? You grew the firm without taking on debt. You know, keeping your, your breakeven number, maintaining your profitability. And that isn't easy because a lot of law firms try to grow and then profitability takes a dive.
Eric Gros-Dubois [00:25:57]:
So it's not, it's not easy for sure. Um, and by the way, we've never acquired a firm. Um, this has all been organic. So, um, yeah, little, little tip talking about numbers. I used to ask my associates, I'm like, on a level of 1 to, on a scale of 1 to 10, how stressed are you? And I was, what I was trying to do is take a gauge. And when I had more like a critical mass of them saying that they were like at an 8 or 9 or a 10, then I knew it was time for me to hire. However, they all learned that the answer was 9. The answer's always 9.
Eric Gros-Dubois [00:26:31]:
How stressed are you? Oh, I'm at a 9. And there's a funny Seinfeld episode where George Costanza, in order to look busy at work, he just looks angry. His boss walks by his office, he's like, oh my gosh, good work.
Darren Wurz [00:26:50]:
Yeah, absolutely. Well, yeah, that's a great question to ask. Good feedback from your employees. I have a couple rapid-fire questions here for you before we wrap up. What advice would you give a million-dollar law firm trying to become a $5 million law firm without losing margin?
Eric Gros-Dubois [00:27:17]:
Don't be afraid about hiring.
Darren Wurz [00:27:20]:
Hmm.
Eric Gros-Dubois [00:27:23]:
Okay. It's interesting you say that. I think you can run a $5 million law firm the same way you run a $1 million law firm. In fact, I'll tell you that after 5, I think that's where you need to start going outside and getting help. You might need a coach, you might need a fractional CFO, you might need somebody else. You might need to bring on a partner just because of all the responsibility that's on your shoulders. So I think you can get to 5 all by yourself if you're a solo, you know, obviously building a team. And we haven't really touched on that.
Eric Gros-Dubois [00:27:52]:
The key is the team.
Darren Wurz [00:27:54]:
Yeah.
Eric Gros-Dubois [00:27:54]:
You don't want to be an onion shop. That's Congratulations, you and a virtual assistant can probably get to $750,000 a year, but then you're gonna burn out and your wife's gonna divorce you. So you have to be able to trust and you have to build. And it's like one of our presidents said, trust but verify, right? So I hire, I trust, and obviously when the trust is lost, we might replace them. But anyways, sorry, I know it's rapid fire questions and I—
Darren Wurz [00:28:21]:
No, no, that's good. That's good. And you know, Kind of, let's ask a follow-up here. Like, with trust, how do you promote trust between you and your team members? What do you do specifically in your business that helps engender kind of a culture of trust?
Eric Gros-Dubois [00:28:41]:
So, I never like to be micromanaged personally. I thought it was insulting. And so, I've tried to foster a culture here of empowerment with support. So I give people a lot of responsibility and I let them know that there's people behind them, people that they can rely on, doors always open, there's no silly questions. And, but with that comes great responsibility, right? And so the responsibility is to do your job ethically and to the best of your ability. And you're not going to be perfect and you're not going to be perfect at hiring. You're not going to be perfect at training. You're not going to be perfect at promoting.
Eric Gros-Dubois [00:29:17]:
And there's a great Simon Sinek video. Was it Trust and Performance? And if you guys go out and watch it, it's on YouTube. He says the worst person on the team is the toxic high performer because they keep getting promoted because their numbers are good, but they are bad for the office culture. And I've had to make some really hard decisions where you fire an otherwise on paper profitable person because of negative influence on the rest of the team.
Darren Wurz [00:29:47]:
Wow. Yeah. Okay. We'll, we'll find that video and we'll put it in the show notes for everybody. Um, Eric, what in your opinion is the biggest waste of money in law firms these days?
Eric Gros-Dubois [00:29:59]:
Oh, that's a great question. Um, you know, well, biggest waste of money is turnover with lawyers.
Darren Wurz [00:30:09]:
Mm. Okay. Tell us about that.
Eric Gros-Dubois [00:30:11]:
Losing a lawyer. How many clients are they going to take? How many clients are going to be disillusioned? You know, you get that email. I don't want to be billed for somebody else to get up to speed on my file. So hiring the wrong people can, can have— it's by far the most expensive thing. You know, it's funny, I was quibbling over the cost of a pen, right? We're spending $2.40 or $2.50., but then I realized that I have a $130,000 lawyer who's not doing his job. Like, which one should I be spending my energy on? The $1,000 a year I'm going to save on pens or the $130,000? Uh, not to mention, so that person, if I'm paying them $130,000, they're supposed to bring in $390,000, right? That's an opportunity cost. Right, right. And so, you know, again, nobody's perfect.
Eric Gros-Dubois [00:31:00]:
We actually created a third step to our hiring process. Where we have to take them out for a beer.
Darren Wurz [00:31:07]:
I love that.
Eric Gros-Dubois [00:31:07]:
We call it the beer test. Um, you could call it out to lunch, but you got to see how these people interact socially when they're not on their best performance at the job interview. Interesting. We had this guy, I won't say his name, we hired him, and in the first week we were like, whoa, like he freaked us out. He was, he, he was a weirdo.
Darren Wurz [00:31:26]:
And it was—
Eric Gros-Dubois [00:31:27]:
oh no. Yeah, we were— we made unfortunate jokes about him going postal.
Darren Wurz [00:31:33]:
Well, that's a great insight though, hiring, because that's kind of like a phantom cost. You don't really see it, but it's there. It's a real cost, the turnover and maybe not hiring the right people. So, that's really, really good. Okay. What would you say is the best financial decision you've ever made?
Eric Gros-Dubois [00:31:55]:
Best financial decision. That's a great question.
Darren Wurz [00:32:02]:
I would say bringing on a partner. Okay. And how about the worst?
Eric Gros-Dubois [00:32:12]:
I guess I'd have to go back to when we hire the wrong people. But yeah, I don't choose to live with regrets. Yeah, absolutely. You know, we actually have a philosophy, a management philosophy of making lots of mistakes. Because it means that we're open to acknowledging our mistakes and trying something new and trying things in the first place, right? We're not a type of firm that's doing something just because that's the way it's always been done. We don't— yeah, there's a famous story that Carlos, my sales coach, used to tell about during World War II. The British Army was trying to figure out why they were shooting so many less artillery shells than the American Army. And so the American Army guy says, okay, can you show me your process? And the guy goes through this whole elaborate process.
Eric Gros-Dubois [00:32:57]:
And one of the steps was he had to step 2 steps to the left. And the American guy says, why are you doing that? He goes, I don't know. It's the way we did it. That's the way we were taught. Turns out they were doing it that way because that's when they used to have to step around the horse.
Darren Wurz [00:33:12]:
They were just doing it that way.
Eric Gros-Dubois [00:33:14]:
Oh my goodness. So Oscar and I, you know, listen, we've made a lot of mistakes and we're quick to acknowledge them. And, you know, I can remember I, without comparing apples to apples, which I highly recommend all of you out there who have health insurance, go to a broker. There are brokers for health insurance and they can show you like a spreadsheet with like 10 different options and you can see the actual cost based on your overhead and your payroll and whatever. I didn't know that. And so we switched to the most expensive PEO without really knowing it. Now, they had all the bells and whistles, and they did a fantastic sales presentation, and the girl was really beautiful. Yeah.
Eric Gros-Dubois [00:33:56]:
But a year later, we were like, hey, let's look at the numbers. We— when we changed, when we just made that change, we saved $350,000 in the next year by switching from— wow— to another one. Um, so, okay, there's a lot of brokers out there for a lot of different services.
Darren Wurz [00:34:13]:
That's a great one. Thank you for that. Yeah, you know, And we're actually talking about that in our next or upcoming masterclass is negotiating your expenses and shopping them. I mean, so often, we kind of let these things go without really digging in and examining the alternatives. You can really save yourself a lot of money. Okay. Last question, Eric. What book are you reading right now that you're really excited about?
Eric Gros-Dubois [00:34:38]:
Can I tell you the nerd book first?
Darren Wurz [00:34:41]:
Sure.
Eric Gros-Dubois [00:34:41]:
All right. So, it's not even a book. I, well, first of all, I just discovered YouTube. I know that sounds really weird, but I went down a rabbit hole of people talking about like, and it's almost like fan fiction of Game of Thrones. Like, oh, okay. And, and they talk for hours. They talk for hours. But, um, I am reading a history of ancient China.
Eric Gros-Dubois [00:35:03]:
So I'm on the, um, interesting spring and autumn, uh, spring and autumn era. Which is like 700 BC. It's crazy. But the book I'm reading that I'm excited about is Unreasonable Hospitality.
Darren Wurz [00:35:22]:
Okay. Yeah. Yeah. A lot of people are excited about that book lately.
Eric Gros-Dubois [00:35:27]:
Because we are all in the customer service business. Again, it's like, I've got to say to these lawyers, I know you're really, really smart, but, you know, if I can give a fair warning and thank you for not asking me about AI. AI is going to change all of our jobs, and that's great. Yeah. Just like every other technological transformation since the wheel, by the way. Like, the wheel put a whole lot of people that just carried things out of a job. The car put a lot of people making horseshoes out of a job. The computer put a lot of typewriter people out of a job, right? And so on and so forth.
Eric Gros-Dubois [00:35:59]:
So what's going to be the differentiator now more than ever is going to be human touch. Yeah. And, and by the way, yeah, I agree with that. Your client, your opposing counsel, and the judge are all using AI. That's great. And you should too. But what's your bedside manner?
Darren Wurz [00:36:16]:
Yep. That, that know, like, and trust factor, that's gonna be even more important.
Eric Gros-Dubois [00:36:22]:
Yeah.
Darren Wurz [00:36:22]:
I agree with you. Yeah. Well, Eric, uh, it's been great chatting with you. Anything else you wanna leave with our audience or you can tell our audience where they can go to learn more about you? Sure.
Eric Gros-Dubois [00:36:33]:
So, the firm is in Miami, Florida. It's EPGD Attorneys at Law. My marketing director, Karen, is very excited that we're redoing our website. We are shifting from an emphasis on entrepreneurs to an emphasis on enterprises, which is actually something else I was talking about with my coach this morning where— what did he say? He said, when you're dealing with consumers, it's all about minimization of regret. When you're dealing with enterprises, it's minimization of blame, which is a whole philosophical thing for me to wrap my head around.
Darren Wurz [00:37:06]:
Interesting. Very cool. All right, Eric, well, thanks again for being on the show today. It's been great chatting with you.
Eric Gros-Dubois [00:37:12]:
Thank you.
Darren Wurz [00:37:12]:
Thank you, Darren. A huge thank you to Eric Gros Dubois for joining us today. You can find Eric and his team at epgdlaw.com, and all the links and resources mentioned, including the book Unreasonable Hospitality, are in the show notes. You know, this conversation is one that I wish I could hand every law firm owner I meet because Eric just laid out the financial operating system behind a firm that has grown from one guy in a borrowed office to 30 attorneys with no outside debt and no acquisitions. That's amazing. Knowing your breakeven number isn't just an accounting exercise. It can be the lens through which every hiring decision, every expense, every growth move gets evaluated. That discipline is what separates law firm owners who build wealth from those who just keep busy.
Darren Wurz [00:38:10]:
And here at The Lawyer Millionaire, this is exactly the conversation, the type of conversation that we live for, because profit isn't a happy accident. It's a system, and that's what we're talking about all year long. And, you know, we help law firm owners build the financial clarity and wealth strategy they need to grow their firms intentionally without sacrificing margins or sanity. If you're making good money but still feel like it's slipping through your fingers, we should talk. The link is in the show notes. And by the way, Join us in the Lawyer Millionaire Community where law firm owners just like you are having these conversations every single day. Don't miss out. Head over to community.lawyermillionaire.com and join us today.
Darren Wurz [00:39:02]:
Well, that's it today, friend. And remember, if your law firm isn't building you wealth and freedom, what the hell are you doing? Can I get an amen up in here? I'll see you next time.