Welcome to Cerius Business Today, powered by Cerius Executives. I’m Kristen McAlister, and I am joined today by independent executive Kurt Obermeyer. Kurt, thank you for joining us.
Thanks for having me, Kristen.
Kurt, one of the biggest questions we get from executives or from CEOs is, “How is it that an executive that is top-level, who can come in and help me solve my problems, is available to step into my company or organization and then step out? If they are any good, they’re already working. They’ve got a job.” That’s the thought process, and we hear that quite a bit. I’d love to hear a little bit of background on how and why you became an independent executive, because most don’t understand why someone would choose this kind of role.
Right. Well, honestly, I’ve always thought the same way: if you’re worth your weight, you’re probably in a position where you’re holding your weight. And, I never planned on opening my own firm. Through my career path, I always looked for doors that opened and used my experience and looked for what things would keep me passionate.
Independent executives back in the day, compared to what they are now, are vastly different, in my opinion. But a big key is you have to have the experience. You have to have a variety of experience. You have to have a perspective. And we’ve talked about that before. Perspective to me is the key in all of this, because if you come in and you just have your little bit of experience, you’re going to look at it from that simple perspective and you’re not going to really be able to give the client, in my case, law firms, any options of what they need to do.
Now I was either fortunately or unfortunately always taking over positions where there was somebody that was limited in their capacity where they had grown tired in their job, or there were just things that needed to be done with technology or morale or wherever it was, and I always felt that was a blessing afterwards because I’ve learned to accept change and getting lawyers to change is a quite a different thing.
But if you have that perspective and you can come from a variety of background, from multiple firms – in my career, I’ve worked with over 60 different law firms, some projects, some budgets, some as their C-level consultants, every type of thing and anywhere from 2 or 3 attorneys up to 300.
But the one thing I don’t ever take for granted is the culture of that firm. I think there are too many or were too many, executives that were independent in the past where they came in, thinking I’ve got the answer, I’ll solve your problems, you can’t do that.
And I think when you have the experience and the variety of experience, you can come in and say, “You are a different firm. So, while you may run the business, very similar to every other law firm out there, which they are a different monster but they do run similarly, you have to take into account the culture and the management, the partners, what they’re looking to do, their growth strategy.” All of those things have to be bundled and reviewed. So, if you have that background, you really need it. And an interesting thing is the people that are in these seats for a long time, the people we talk about, “well, if you’re worth your weight,” they tend to get to a point where they’re not growing professionally.
That was one thing for me, that really changed my outlook on wanting to start my own firm: being in these big firms where I really wasn’t growing, I was maintaining. And for me, I wanted to grow. I wanted to have a variety of experiences and keep it fresh and keep my passion there. So, I think that’s where an independent executive really can bring something different to the story.
So let’s back up a little bit and not necessarily go back to childhood or your first job, but let’s talk about what were you doing? How did you get into doing independent executive work, and why you specialize in law firms?
Well, I started my career in city management. That was my goal. I thought it was something that was interesting, that you dealt with different things every day, you saw your work being produced out the window every day, and you had to deal with different personalities. And I thought that was fresh. It keeps you going, it keeps your energy there.
While I was young, I was a finance director for a city, became assistant city manager, was kind of the next guy up. And, a law firm came and watched one of my council meetings and the managing partner of this 200-attorney firm said, “We’d love to have you because we need somebody with that perspective, somebody with that background, but more importantly, somebody with the personality to be able to come in and do what needs to be done, but not ruffle feathers.”
And I at first dismissed it. But I realized how important that was. And in city management, if the city manager retires or is terminated or whatever it may be, the recruitment process takes a while. And so, they usually bring in an independent executive, which is somebody retired that does the independent executive work well. They have their vast experience of understanding what’s going on. And they’re not afraid to say what’s needed to be said to make things better before that new person comes in.
It wasn’t until years later when I started my firm that I recognized how important that was. I had worked as a COO for a law firm up in San Francisco then became a CFO for a large regional firm in Los Angeles. I moved back and then saw that these mid-sized firms that I was being pulled into, and one, I became their executive director, were growing and they needed that experience. But the limitations of the people out there that they could find – it was tough. And I had to grow, and I had some experiences because of that fortunate ability of having to be a change agent, in multiple levels. So, I realized how important it was. Then, when I started my firm, I understood that piece, that perspective I bring, whether I asked for it or not is, is a good thing for my clients – that I can come in and bring that perspective to them.
And like I said, I think you put a pause button: “Let’s take a breath here, everybody let’s see what’s going on before we just charge along with the same old route we’ve been doing. Are there some things we need to make changes to? And, do I have some input on that?” Because a lot of times partners don’t even know, especially law firms – the old adage, “you don’t know what you don’t know,” is so true. You will carry on with what you know until it’s just done.
So, when you have that perspective, I think it makes a key. And that’s why I really enjoy it from that level, when I can come into a firm and give my perspective, understanding who they are and their culture – it gives me a great energy and it usually wakes them up to, “this is great, this is what we need,” and it gives you a different perspective and what they really need as far as that person is involved with going forward.
So if you can explain in a little bit more detail as to when you come in and you say you hit that pause button, what’s generally prompting someone to reach out to you and say, “Kurt, I could really use your help to come in.” And then what does that look like? Are you coming in as a fractional COO? Are you doing it as an advisor and you’re doing an initial assessment? Help paint the picture.
Well, it’s changed. When I started my firm, it was to be an outsourced CFO/COO for mid-size law firms. And that was it. It covered everything. And quickly I realized, I can do a little bit of everything, but I have my expertise, but if there’s somebody you need from marketing or IT, or a bookkeeper or whatever it may be, I’ve got vendors that I recommend.
But when I started realizing I can come in as your fractional CFO, whether that’s once a month just overseeing a budget and strategy and what you’re doing, from a more, “Hey, I’m out here, I’ll assist your administrative staff,” which by the way, I don’t really try to take over anybody’s position. I’m more of an assistant to them and they understand that very quickly.
But when I come in, even at that level, even when they say, “we need some help with our finances,” I’m still going to come in and look at the entire picture. And so, they may have an administrator on staff, but I want to look at their entire team. I want to make sure who’s doing what, because if they’re not successful, then over time, things are going to fall apart. And so, the day to day is so important. So, that ability to do that from my level as a C-level consultant helps me be on their team. And it becomes the same thing as an independent executive.
You come in and you have to be honest with these clients. You have to give them the ability of understanding, what are you really doing here?
I had a discussion with the recruiter the other day, and she has a firm in San Diego that’s going through a process of finding people and they’ve had a very hard time because their job description was so lengthy. I don’t think I could do everything they wanted me to. And so, we were joking about it and I said, “Let me come in and I can help. At least we can bundle this down into what is doable and hire that person. And then we’ll figure out the rest. And a lot of it can be done in a pretty efficient manner.”
We see that quite a bit and unknowingly, you just hit my soap box there: that job description of what ends up being everything in the company that isn’t being done by someone else, that kitchen drawer that you just throw everything into, and it’s tough to find. You’re also trying to hire for today, tomorrow, and the unknown. So, when you look at that approach that you just explained, to be able to decouple it and say, “What’s the expertise that’s on here that we’re more easily able to hire for and pay the right rate for it? And what are the items that maybe, Kurt, you can do?”
In that situation, or when someone’s walking in, there’s a lot of heavy lifting to be done. There are things to be fixed or things to be built, and maybe that’s a little more appropriate for an independent executive to do, and then help find the right person once it’s stabilized.
Absolutely. Part of that is recognizing the team, right? So, when I come in and one thing I’ve learned is a team is best. It’s not just a few people that are in the office. I’m part of the team and hopefully a big part of that team, no matter if they see me walking the halls or not.
But there’s a process to how a firm runs, how the business end of these laws are run. And let’s be honest, I’ve worked with my alma mater, I’m creating a curriculum for lawyers because when lawyers are in law school, they’re not taught how to run a law firm. They just aren’t. There are very few places that even have a few classes. And if their classes are there, they probably blow right through it and don’t think about it, but lawyers are not trained on how to run their firms or run a business. No matter if they’re going to do a solo shop or midsize, they’re all just going to go to a thousand-attorney firm and not have to worry about it. But, someday they will and they’re going to have to understand management.
Part of that team that does it doesn’t have to be all full-time people in an office. It can be how you work in software and technology, how you work in vendors, your accounting manager may be doing things that your bookkeeper can do with vast more experience that costs not even much more, and then they can concentrate their jobs elsewhere.
And my big key is these day-to-day administrators – a lot of them are pulling their hair up because they’re asked to do everything, and they get burnt out and they start looking for other gigs or they want to leave or whatever it is. I think the key is understanding what that term “team” is and then really slicing the pieces where they need.
So, if we’re looking at the pie, if I can take some weight off that I’ll deal with strategy and oversight and vendor approval, all those things that need to go through, I can do that. Now it allows that administrator to concentrate on the things that really need to happen. And then it’s just a trickle-down effect.
That’s when the partners really realized, “Now I don’t have to be the IT manager. I don’t have to be the finance partner, I don’t have to be that marketing partner. I can just be the attorney who makes the decisions on how we get there.” So that team analysis is so important when it comes to understanding how firms work.
Now with COVID and this new normal that we have, it’s even more so. I think before this happened, the idea was, yes, we could do this remotely, but very few firms are pulling that trigger because they didn’t want to have to deal with the oversight and how that worked. So now that this is happening and now that we’re almost a year into it, the planning for 2021 is that, yes, we can continue this, and now we can look at that team in a different light than we did before. So, I think going forward that that’s a, that’s a key aspect.
You hit on something that I want to go back to: in so many cases, we see it in non-law firms as well, where the CEO is the CFO, the COO; One of the managing partners is managing the team, managing paralegals or managing the office manager and doing some of that CFO/CEO, work to where we say to CEOs, you’re overpaying your CFO. If you’re doing the work, you’re overpaying them. How do you work through to help understand if they really are the best person to be doing that work or if it should be handed off to someone else?
Well, I’ll always remind these partners, “When I come into a firm, if you hire me, do we sit down and sign contracts? And Greg you’re our fractional CFO, or you’re oversight, our budget guidance is going to come down once a month and it’s minimal, but you’re overseeing strategy.”
I always tell them there should never be a month where I don’t get paid for in your time, ever. I am never going to be an expense because the time you spend as the partner and I don’t care what level it is, add up your hours per week, per month at your rate. And then even cut that down. There is no way you aren’t going to pay for what I did. So, let an expert do it.
And I do the same thing when we look at an employee that’s coming in: why are you going to hire somebody that’s not going to be able to do the job? And now you’ve said, “well, we’d like this person, but they can’t do this and this,” but you know what? Brett and Sally and I will take over those roles. And all of a sudden, that’s what it becomes. It’s got to be where that administrative non-billable time is efficient. And yes, you’re going to have to spend some time on that, but the number of hours should be something you’re looking at because it’s key and how you move forward.
If your time becomes – and I’ve seen this in big firms with managing partners. They took over just as much as everybody else but billed a fraction of time because they called themselves a managing partner and they spent too much time in administration. I just thought that was a waste; let the people do what they should be doing in that position, and then you follow up.
You have to be able to budget your time on billable versus non-billable so you can do what you’re trained for. And that’s being an attorney. The widgets we sell in a law firm are ours, unless there are different contracts, but the hours are widget and we have to keep those hours going out the door to clients so we can get paid.
So, we make sure that those people that can’t bill administration are being paid for in that time. And so that’s a key part is to understanding where the partner, even if they get it, even if they’ve been doing this for 10 years, because they’ve had their own firm – you have to pull them back and say, “I’m going to budget your time because I need you to get back to what you do so you don’t run out on the people that are working for you.”
And I rarely know a CEO or managing partner who has ever said, “No, I don’t want you to take the finance off of me. No, I don’t want you to take the operation.” Generally, that’s a really easy conversation, so I can see that you’re able to come in and assess, do we have the right talent where we needed? Are we operating officially? And then can lay out a roadmap and then you can either kind of, from an advisor level, stay involved a little bit and help provide some guidance as needed to the team that’s there, or actually step in as a fractional or interim COO or CFO.
Right. And on the note of that, I’ve just finished a contract with a firm where it took 10 months to find their CFO because there was back and forth with what they needed.
I created a budget. I redid their financial reports, I gave strong recommendations on what they needed to do, and because of COVID and all the other things, we kind of halted on making changes. But I’ve talked to that current CFO three or four times this week, after my contract’s done, just because we want to go back and forth on the things we think need to happen.
And it’s key. It’s key that you continue that communication because, and she understands, she’s got to pull that big weight off of the managing partners’ shoulders. And so it’s nice to be able to have that communication afterwards.
I can see that. We see clients, when you bring in the independent executive to do some of the heavy lifting, put things together, it really does change the perspective of who you’re looking for in the longer term and helps you know that someone is in there who’s doing the role to help with the interview process, help make sure that we’re getting the right person, they’ve got the right skill sets, and then do a handoff.
Now you had mentioned we’re now almost a year into COVID here. Looking forward with 2021, what would be a couple of key pieces of advice that you would give either owners, managing partners, and managing directors of law firms as they start to get into 2021.
I’m sure most of them have done some [00:18:00] strategic planning or are doing it now. I know a lot of us are only doing it three months at a time. What are some key pieces of advice that you’re giving?
Well, I think especially at this time, I’m finalizing 2021 budgets and we’re approving them and going through this and that’s a 12 month budget, it’s not just a piece.
I think a big part of last year was reactions, right? We didn’t know what was going to happen at all. Every firm I worked for had different thoughts of what revenues were going to do, what we should do with expenses, what contracts we should renegotiate. Should we do this? Should we do that? But it was a vast unknown. We had no idea.
As the PPP loans were going out, I was on calls all day long, going through paperwork with bankers and trying to figure out who’s doing what. This isn’t going to end any time soon, but I think the idea is now we can stop reacting blindly, and it’s really, “let’s plan for what we’re doing now and carry that forward.”
What we’re going to do in 2022 is off. That doesn’t mean we’re not going to start thinking about it, because if it has to do with how we’re utilizing building leases or how we’re utilizing benefits or different things for your clients or for the administration at the firm, that’s fine. But I think now we can really be proactive on what we’re going to do as a firm, going forward.
COVID has been just a nasty reminder for all of us of what’s going on in the world and things we have to be careful of and all that. But I think some good can come from it. I think good can be, “Look, this is where it all changed. This is where our perspective changed.” I don’t think change is a bad thing. I’ll tell firms that all the time that bring me in and go, “Look, I know you’ve had this firm for 10, 15 years. You’ve been doing it the same way. You guys are doing a very good job and everybody’s happy. You’re making money.” But, shifting it down, hitting that pause button, taking a look at the horizon, which now is vastly different than it was a year and a half ago and saying, “what’s the best way we can get there?”
Growth doesn’t mean we need to grow in offices or a number of attorneys, which is the basic thought of growth. Growth is just continuing down the road and making sure we’re as efficient as possible. So anytime you get that opportunity to look at what’s in front of you and the positions that are there, all the better. And I try to make it that way so they don’t think, “Hey, he’s coming in here, just changing everything.” We’re not there to change anything unless it needs to be changed. And then we’ll have a plan on how to do so.
So I think for 2021, my recommendations in my discussions with clients have been, we know now more than we did before, so let’s continue to plan down that road and analyze it every single month. We will go through this and start understanding, depending on what practice group they have within the firm, let’s see where we’re going to be and every month get ready for some kind of rebound here. But does that mean we’re going back to what we were doing last year at this time? No. It gives us an opportunity to look at something different.
Having some outside expertise come in as either from rebounds and some have had exponential growth over the past six to nine months, kind of a common thing I’ve been having is, yes, we grew or yes, we made money, but does it have to be that difficult? The answer is no, it does not have to be that difficult. It doesn’t need to be occupying you 24/7. There is a relief valve. And one first step in that relief valve, I think for a law firm is working with you, Kurt. That’s how I see you, as that relief valve for management and owners to take a little bit of the weight off and invest in a, as you said, a hundred percent guarantee; they’re going to get an ROI on that investment.
Right. And I think it’s not the same old, same old. I say this to partners all the time, “You left a firm, that’s 300 attorneys and seven of you left to form your own practice because you were tired of the administrative stuff, the billing rate pressures, all the other things went on and you realize you can do this on your own. Let’s go.” That small firm was set on the big firm’s stage, the same way I’m doing administration. The same way of marketing, the same way of billing everybody the same, same, same, same.
This has reminded them even more. The same isn’t the same anymore. Now you have people that are looking at different ways of working. You can have remote attorneys that are responsible and will continue their hours no matter where they’re working from. So that changes our perspective.
There’s so much that goes on here that I think utilizing that, and then when you have somebody from my experience to have somebody that can come in and say, “Here’s what I’m seeing out there with all the other firms I’ve worked with or what I’m hearing from vendors or whatever’s going on, here’s what we can do.”
Again, you don’t know what you don’t know. And then once you know it, then you make that decision. And I think that’s changed everybody’s perspective. If you’re in the big firms, with your base, you’re kind of held into the concrete of what you started with, but these mid-sized firms going forward, they can change. And this has given us the ability of reminding them of that, and then making that actual change and going forward.
So, I think it’s really going to be a very interesting time, coming forward this next year or two, is how people will grow with their firms, what things they’ll make changes to and how that will affect how we as executives deal with this going forward. I’m very excited.
We may have to do a series here and do a six month check-in as we look back and see how true are the projections here on what happened?
Well, thank you so much, Kurt, for joining us today and sharing insights. You certainly have a unique perspective. We interview a lot of independent executives, but specializing with law firms and in one industry – it’s highly focused. I appreciate the unique circumstances that you’re then able to bring in that expertise to help them either grow their practices or spend a little more time with their families.
And one last note on that, I tell my sons, who are 22 and 18, I tell them all the time, “What I’ve planned to do as a career for my life took different turns because I was open to options. I was open to what would keep me passionate.” And what I find with attorneys, in general, is that they get so busy into what they do that they forget about that. And this gives them the ability to back up and say, “Hey, what am I really passionate about?” And by the way, the administration of this firm is not that.
So, if I could bring in somebody else to do that and get back to what I got into this work for, all the better. And that’s what I try to do with all my clients is take that weight off their shoulders, as you said, and give them that perspective back to their passion.
Well, thank you so much, Kurt, for joining us on Cerius Business Today. And to find out more or to get connected, just contact us at [email protected] or click the link in the podcast or blog. Again, Kurt, until next time. Thank you.