Episode Notes

When the Oakland As needed to find a way to compete with the high-dollar salaries of other teams, they focused on new KPIs (getting runners on base) and the ideas in Moneyball were born. In this episode, Stephanie talks with Jeff Krause about how lawyers might take a similar approach with their law firm. 

Links from the episode: 

The Compound Effect by Darren Hardy  

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  • 09:00. How Moneyball fits with lawyers
  • 20:30. The formula of producing revenue
  • 26:26. What levers are you going to pull?



Welcome to The Lawyerist Podcast, a series of discussions with entrepreneurs and innovators about building a successful law practice in today’s challenging and constantly changing legal market. Lawyerist supports attorneys, building client-centered, and future-oriented small law firms through community, content, and coaching both online and through the Lawyerist Lab. And now from the team that brought you The Small Firm Roadmap and your podcast hosts 


Zack Glaser (00:35): 

Hi, I’m Zack. 


Sara Muender (00:36): 

And I’m Sarah Muender. And this is episode 474 of the Lawyerist Podcast, part of the Legal Talk Network. Today, Stephanie talks with Jeff Krause about Moneyball for lawyers. 


Zack Glaser (00:47): 

Today’s podcast is brought to you by Posh Virtual ReceptionistsNetDocuments  & LawPay. We wouldn’t be able to do the show without their supports. Stay tuned and we’ll tell you more about them later on. 


Sara Muender (00:58): 

So Zach, by the time that this podcast episode airs, we will have been coming back from our Affinity/Lawyerist all team hands-on retreat here in Atlanta, Georgia, where I’m at. 


Zack Glaser (01:13): 

Yeah, yeah, it’s actually just a little bit of a drive for me in Memphis, Tennessee right now. And yeah, it’s going to be a little different for us, especially because we coming from Lawyerist where it’s been an under 10 person team to now we’re 90 or so, but we’re going to get to see all the people that are all over the country just everywhere. We’re a remote team, well say we’re a remote team, 


Sara Muender (01:40): 

Mostly remote. 


Zack Glaser (01:41): 

Yeah, we’re mostly remote. Lawyerist is definitely remote and distributed all over the country. And then a good portion of Affinity is remote, but we do have some offices and so that’s kind of interesting, but I haven’t met in person, the vast majority of the people on the Affinity team. 


Sara Muender (01:58): 

Me too. And for those who need to get up to speed January of this year, Affinity and Lawyerist merged. And so we’ve brought the best of the Affinity Consulting Group experts and the Lawyerist team experts together to provide a tremendous amount of value to our law firm owners in helping them build better, healthier law firms. And so this episode in particular is we’re highlighting one of those experts, and that’s Jeff Krause and he comes from the Affinity team. And what’s so cool is we’ve brought some of those consultants and implementers from the Affinity team into the Lawyerist team and now our Lawyerist followers get a lot of the expertise and knowledge and experience from Affinity. And Jeff Krause in particular is now coaching for us here on the Lawyerist team. And to be honest with you, Zach, I don’t know much about what Jeff Krause does, and that’s one of the things I’m looking forward to at the retreat is getting to know him and many others more in person. But I do know that he provides a tremendous amount of value here in Lawyerist Lab. 


Zack Glaser (03:07): 

Oh yeah. Every time I’ve talked to him. But I think that is one of the things that I’m looking forward to at this retreat, and obviously we’ll be done with it by the time this airs, is kind of finding those, I know people hate this word, but finding those synergies and actually running into people and going, oh, well, your knowledge and your expertise can help the people that we coach, the people that we talk to over the internet, over the airwaves and all that in many different ways. 


Sara Muender (03:34): 

One of my favorite type of conversations to have with people in networking or people that I’m just meeting is bringing the idea of what kind of value can I bring to them and what kind of value can they bring to me and the people that I help. When you approach that kind of conversation, so many beautiful things come out of that. And my stepdads, who’s in the TV business has always told me it’s all about who. And so if you are affiliated with Lawyerist, if you’re in our lab program or you’re followers of us and you tune in, you are going to get a wealth of just value from now a much bigger team, including Jeff. 


Zack Glaser (04:13): 

Oh yeah. Oh yeah. And so now that we know Jeff, let’s listen to Stephanie’s conversation with him. 


Jeff Krause (04:22): 

Hi everybody, my name is Jeff Krause. I’m happy to be here today. I am one of the coaches at Lawyerist. Happy to be working with Labsters there. Also spend some time doing DMS projects at Affinity Consulting. So very happy to be here talking about moneyball. 


Stephanie Everett (04:37): 

Yeah, we’re happy to have you. And we’re going to veer off our normal thoughts today because talking about baseball, so how did this come about, Jeff? 


Jeff Krause (04:48): 

Well, we’re talking about baseball, but in the context of the Moneyball movie and book before that, and it’s not all about baseball, that’s the thing. There’s so much so that any business, including law firms can learn from the concepts that were put forward in Moneyball, and of course visible in the movie. You can see them at work throughout the film. 


Stephanie Everett (05:13): 

So let’s break it down for folks. Maybe if you haven’t seen the movie, it is a fun kind of entertaining little movie, but this all came about because back in the day, the Oakland a’s sucked at baseball. Is that fair to say? 


Jeff Krause (05:25): 

Well, they sucked butt -actually Moneyball came about, they had had a couple of very good seasons, but they couldn’t compete money-wise with some of the other teams in particular, the Yankees and the Red Sox. They had a payroll that was three times that of the A’s, so the A’s just couldn’t afford to keep their best players. And they had made the playoffs two years in a row and in the second of those years, they were basically two games away from making the World Series. But what had happened, they of course lost those games and then three of their best players were simply bought away in free agency. They lost them and they couldn’t afford to keep them. They had a payroll of around 40 million, whereas the Yankees at the time were about 130 million, and the Red Sox were like 128. So they just couldn’t afford to keep their best players. 


Stephanie Everett (06:18): 

Got it. So tell us what shifted in their mindset and then we’ll tie this back into law firms. 


Jeff Krause (06:24): 

So what shifted was that they realized they could simply not compete in the same old way. They just simply didn’t have the money. If they looked at players and just said, okay, who is this highest priced free agent who hit the most home runs last year or the most RBIs, they know that they can’t afford that player. They couldn’t even afford to keep the players that they had, so how are they going to go out and get new players just using those same old numbers? Basically, they looked at it as it was an uneven playing field, and there are a lot of reasons why teams like the Yankees and the Red Sox had more money. It had a lot to do with the TV markets in those areas and so on, but there was just no way that they could compete the same old way. They had to do things differently. 


Stephanie Everett (07:16): 

And so as I recall, one of the things they did differently was they started to really value hits and runs and things that maybe not just looking at home run hitters, but who can get on base and who can advance the ball. 


Jeff Krause (07:31): 

So they looked at it and they said, look, it’s not, it’s partly about hits, but it’s not all home runs batted in to get a run batted in, you have to have someone on base. So certainly it was partly about hits, but in their mind a walk was just as good as a hit or somebody who was faster who could maybe get that little extra base in there, even if their batting average was a little less, if they could sometimes leg out some of those hits, but they could also turn a single into a double sometimes. And what they really looked at was on base percentage who can get on a base the most, and then who bats well with runners in position to score, because again, if you had a really high batting average but always seemed to be bad at hitting when somebody was on second base, well you’re not getting those runs batted in. They look for people who were kind of those clutch players, but statistically clutch players, not just like they seemed to be pretty clutch. It was nothing like that. It was always who literally has the highest batting average with runners in scoring position. They started looking at things like that. 


Stephanie Everett (08:42): 

And so I watched this movie and thought it was entertaining. You read the book and watched the movie and you said, huh, I think there’s some lessons here that lawyers could use. So let’s shift now and talk a little bit about you started to make some connections when it comes to law firms and how they run their business. 


Jeff Krause (09:00): 

So initially the first time I was asked to do a presentation, it was called Moneyball, basically using data to create a major league firm. That was the topic I was given and I was given it by one of the major legal technology providers back in the day as about 10, 12 years ago. The first time I was asked and they said, look, what we want you to do is focus on some of our reporting tools. We want to talk about how if you run these reports, you can use that data to run your firm better. And that was true, and I did that initial presentation relying on some of the productivity reports and other things that software was capable of producing. But I was then asked to do it again by someone else. And it struck me that Moneyball was not about just using data as we already talked about. 



It was looking at the data in a different way. I mean, everyone looks at data. So in baseball, everybody looked at home runs and RBIs and so on, batting average, if you’re looking at the same data but can’t compete in some other way, you have to look at either different data or look at it differently. That’s where I started to just develop some other things. It wasn’t just about running a productivity report. It wasn’t just about running a report that said how many new clients you had generated last year. It was digging into that and just like the a’s had to look at how does a run actually happen? How do you get a one on the board and get somebody around the bases? I started looking at how do you actually manufacture clients? How do you manufacture revenue? How do you manufacture profitability? And what else goes into that? So different data, but also looking at some of the data that you had in a different way, and it just turned into this presentation that I’ve been doing for 10 years and I get a lot of great feedback on it. It is so different. 


Stephanie Everett (11:00): 

So why don’t you walk us through the first step in the formula and how we might start to think about that data differently. 


Jeff Krause (11:07): 

So I always like to preface when I talk about what I call this profit formula, I always like to say I have no idea who came up with it. Alright, I’ve seen it named several different ways. All I can say is that it was taught to me by a former business coach of mine back in the day, and basically what he taught me was that you just don’t pull- in my case, it was customers, law firms were my customers, but you don’t just kind of pull clients or customers out of a hat. They come about through working on two things. So the first part of this formula is how many leads you can generate, how many people express interest in your business working with you? The phone book is not a book of leads. How many people actually use the phone book to call you or that billboard? 



Everybody who drives by it is not a lead. If it generates interest and somebody calls you, that’s a lead. And then what you do with those leads, that’s conversion rate. So what percentage of the leads that you generate do you actually turn into clients? And if you simply take the number of leads times the conversion rate, you have the number of clients. I’ve worked with law firms now for 25 years and I hear them say things like, if I just had more clients, I’d be doing so much better as if it’s just a magic thing that anyone could help them with. It’s not like that you have to generate interest in your firm and then you have to do the job of closing that lead. That second piece is sales, which I think a lot of lawyers see as a dirty word, but conversion rate is all about closing the deal. And the crazy thing too is that’s so many simple things that could go into that. Everything from having better coffee when people come into the waiting room or a nicer receptionist, somebody who answers the phone a certain way, that’s all first impressions, but that will go a long way toward turning those leads into actual clients. 



So again, I found that people were just looking at the wrong data all along. It was what are you doing to generate leads? Where are you generating them? Which leads have a higher likelihood of getting converted because they’re more in your target client group. They were just looking at the wrong things and that was the beginning of the formula. 


Stephanie Everett (13:25): 

We talk about this in our book as well, and we say, if you have a lot of leads coming in but they’re not converting to clients, then you have a sales problem, right? On the flip side, if the clients who call you, you’re converting them, but you just don’t have, maybe you don’t have enough leads coming in, then you have a marketing problem. So I hear you. It’s really looking at the data a little closer to figure out where are the issues and the opportunities to turn more people into those clients, 


Jeff Krause (13:53): 

And there’s certain leads that just have a higher likelihood of becoming a client in the first place. If you dig into that data further, what pieces of my marketing are generating those really good prospects that turn into clients? Again, there’s so much hidden there that just was never really looked at by too many firms. 


Stephanie Everett (14:13): 

Yeah, no, that makes sense. And that will tell you where you should invest more money. Just like I guess if we take it back to the movie, they realized they wanted those players with higher on base average. On base percentage. Yeah, very good. I was close. We want to invest more money in those marketing activities that are getting us those higher value leads that we know are going to be more likely to sign with us and have higher value cases and be just better clients all around. 


Jeff Krause (14:43): 

Because again, you can repeat the things that work once you know what works, you can repeat it. I had someone say to me once, if you went through the bank and you put a 20 in the little tube and sent it over and they sent you 25 back, how many times would you just drive around the building and keep doing that? And yeah, you just repeat what works. 


Stephanie Everett (15:03): 

I wish my bank did that. 


Jeff Krause (15:04): 

Right? It was a perfect analogy just in a way because well, yeah, who wouldn’t just do that over and over again once you know what works. 


Stephanie Everett (15:13): 

Yeah. I think for a lot of folks, they’re struggling. They have either have some data and they don’t know what they should be looking at, or maybe worse, they just don’t have the data and they’re guessing, so they don’t really know which activities they should be repeating. So I think that’s the first message is make sure you’re getting the right information so that you then know what levers you should be pulling. 


Jeff Krause (15:36): 

And that’s a big piece of where the movie and baseball tie into my Moneyball presentation, and that’s, if you watch the movie, the best scenes are always the ones where they’re in a room and the scouts are kind of giving them the feedback because these scouts have this way of doing things that they’ve 100 years scouts have been doing these same things and they’ll be like, we should draft him. He has a beautiful swing, and Brad Pitt, who’s playing Billy Bean, the manager of Daisy’s like, but can he hit- the scouts would say, well, we could coach him. He’s got a beautiful swing, there’s natural talent there. We can coach him. Can he hit? And he just keeps asking that. And then finally, one of the- using it very affectionately, one of the geeks who’s in the room says, well, no, we should actually draft this guy. And the scouts are like, who are you talking about? I’ve never even heard of this guy. Why would we draft this guy we’ve never heard of? And it kind of simultaneously Brad Pitt and it’s actually Jonah, 


Stephanie Everett (16:35): 

Jonah Hill 


Jeff Krause (16:36): 

Jonah Hill, right? Jonah Hill, they kind of simultaneously say because he gets on base and they end up drafting that player much higher than the ones that the scouts wanted. You can’t do things the same old way and you have to sometimes drop these preconceived notions and that to me, my favorite parts of the movie are always the where they’re in the draft room and the old timer scouts are kind of arguing with the Harvard grads who are into all the staffs. So it’s just the best part of the movie to me. 


Stephanie Everett (17:04): 

Alright, I’ll share my favorite part in a second. Let’s take a quick break and hear from our sponsors when we come back. I’ll tell you my favorite scene. 

Zack Glaser: 

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Stephanie Everett (19:31): 

Alright, I’m back with Jeff. We’re talking Moneyball for lawyers, not just baseball. Quick side note though, one of my favorite scenes is Brad Pitt’s character makes Jonah Hill’s character fire somebody from the team, let him go and it’s going to be so painful and we’ve all been there where you have to have those hard conversations and his advice is like shoot straight with him. It’s simple, it’s short and sweet, you can’t work here anymore. Go to this guy. He is going to take care of the details. And I just think that’s great advice for managers because I know how much we dread those hard conversations and you just got to lead with it. Don’t lead the person on cut to the chase, tell ’em what time it is and get on with your day. Right? 


Jeff Krause (20:15): 

Yeah, there are many great scenes in the movie. 


Stephanie Everett (20:17): 

So we’ve talked about some marketing and sales data that folks might want to start paying attention to differently. The next part of the formula really starts to focus on firm profitability. So maybe let’s walk through that. 


Jeff Krause (20:30): 

And before we even get to profitability, the next part’s more about revenue because the second thing that I hear firms always say is, if we just had more money coming in, we could afford this other associate, get some of the work off my plate. I could take better clients. There’s all kinds of reasons why they think revenue then is something that would help ’em out. But just like clients, it’s not just magic. I mean the formula is kind of magic, but it’s not magic in how you produce revenue. You get clients to come back more often. Number one, I refer to that as number of transactions. Not every area of law lends itself to the client coming back more than once, but many do. And a lot of it is about keeping in touch with them. Part of it is also about just doing a good job with the clients you have because they’re more likely to come back, but every time you get a client to come back, first of all, it’s not a new lead you have to generate. 



You don’t have to work as hard, but every time they come back, it’s another transaction for your firm. So I refer to that one as number of transactions and then the other component of that is dollars per. So every time they come back, how much do they spend on average? So when you take the number of clients that you have and you multiply it by the number of times they come back times the amount they spend each time, you’ll end up with the amount of revenue that you have. It’s again, simple formula, but no one ever looks at it that way. It’s how do I generate more revenue? Well, it’s actually not that hard. First of all, generate more clients. That helps, but now get them to come back more often and then get them to spend a little bit more. And there are a lot of ethical ways to get them to spend more. 



I mean, well first of all you can raise your rate, but often getting them to spend more is about you listening correctly, right? Because when someone comes to you and has a problem, they might think, yeah, I need a will. But what they really need is a full estate plan, which means you can generate more money from them during that transaction and give them the best result anyway. So when you take all of those together, that’s where you come up with your revenue clients times dollars per times number of transactions, gives you your revenue, and now you get to profitability because once you have your revenue, there’s a certain percentage of that that you get to keep, right? You have overhead in terms of salaries and rents and utilities and all these things, but in the end there’s a percentage of that total revenue that you get to keep. 



I’ve always just referred to it simply as margin. What percentage of that revenue do you get to keep and take that revenue times that percentage and you have profit. I can run some simple numbers past you if you’d like, but if you have 100 leads and you turn 25% of them into clients conversion rate of 25%, you have 25 clients, 25 clients times two transactions each times $5,000 if that’s what they spend on average with you, gives you 250,000 in revenue. And if you get to keep 40% of that, you have 100,000 in profit. That’s the simple formula. But what’s so wonderful about it is if you just make minor and easily accomplishable improvements in any of those five things I talked about, so let’s just increase everything by 10%. That would be 110 leads times 27.5% of a conversion rate, and you now have just over 30 clients. 



So you take those two things that you increased by only 10% each, and it actually gives you more than a 10%. It’s like a 21% increase in the number of clients. And then if you increase the number of transactions, again, this is an average, so 2.2, so up to 2.2 10% and you increase your dollars per to 5,500, again, 10%, you’ve increased your revenue to 366,000 from 250,000. And now if you just increase your margin a little bit, so instead of 40%, it’s 44, that 366,000 in revenue turns into 161,000 in profit. So you’ve essentially accomplished a 61% increase in profitability by just working a small change in each of those five things. 


Stephanie Everett (24:54): 



Jeff Krause (24:55): 

That’s the magic of it. And who can’t generate 10 more leads in a year? I mean, it’s the type of thing that can be accomplished by anyone. One of my other favorite books is The Compound Effect by Darren Hardy and he talks about this same thing, just little changes consistently over time really add up. So you pull those two concepts together in that formula and you just see where that number can increase. 


Stephanie Everett (25:20): 

Yeah, everything you’re saying resonates with me and we talk a lot in our book and on the show about the idea of relentless incrementalism and how can we just get 1% better each week, each quarter, each month, whatever that is. So many law firms are either just stagnant or maybe even declining that it doesn’t take much for you to really pull ahead in your market and really capitalize on that, but you just got to put in the effort and make the small changes. 


Jeff Krause (25:48): 

And a big part of it is just goes back to the whole premise of money while they’re looking at the wrong things. They are saying, we wouldn’t have the Moneyball book if the a’s back in 2002 wouldn’t have said, or if they would’ve said, we can’t possibly compete with the Yankees, so we’re not going to do anything. Instead, they looked at things differently and focused on some of those different things. You can’t hope to get a different result doing the same thing over and over again. Too many law firms are stuck on this notion of, I have to get more clients, but I don’t know how, so therefore I do nothing because there’s way too much of that. 


Stephanie Everett (26:26): 

Or similarly, and I was just on the phone with someone right before we recorded this and she was like, I know I need help. I know I need the perspective and I need to make changes, and I’m so busy that just, I don’t even know when I’m going to do this. It’s such a frustrating thing for me to hear over and over again because I know that with that attitude, nothing is going to change. So you have to make changes. You have to give yourself the time and the space to decide which, and then I think this is part of the key message you’re sharing with us today. Which levers are we going to pull? You don’t have to pull all of them, but which ones should we focus on first? And we start pulling at that and we see some results, then we can go to the next one. We pull on that and we see more results. And then you really start to see the benefit of what you’re talking about, the compounding effect and the chain reaction. And these things start growing very quickly. But if you just stay stuck in your head of, I’m too busy to change or I don’t have time to focus on these things right now, then you’re right. Nothing is going to change and you’re going to stay in overwhelmed forever. 


Jeff Krause (27:33): 

One of the, I know we may turn this into a bit of a series, we’ve already talked quite a while here. One of the other things then is when you are armed with that formula, you can start looking at things now in a different way because you go back and look at those profitability reports and start to realize which attorneys are most profitable, most productive, which clients are, you can start looking that and you’re seeing it in a whole new light. These clients are the ones that I’m most profitable on. Where did they come from? Where can I find more like that? What did I do to convert them? What was the magic thing when I asked them why they decided to work with us? What did they say? When you’re armed with that information, you can see everything under a new light. There’s so much more you can start to do when you start looking at it differently. 


Stephanie Everett (28:23): 

Absolutely. And I know that that’s part of what you and I love so much about our job is as we get to help our clients understand the data, look at it differently, and then figure out that path forward so forward, if all this Moneyball talk is overwhelming, you don’t let it because it can be fun. It’s actually, and there’s help. 


Jeff Krause (28:42): 

Yeah, it can be a lot of fun. And there was this trend in the past decade or so of this whole gamification. So ties into that a little bit too. It becomes a bit of a game and you can relate it back to a game. So there’s a lot there. 


Stephanie Everett (28:58): 

Last question for you as we wrap up, put you on the spot a little bit as one of our core values for our team is stay curious. I am curious, what are you learning right now or personally, professionally, what are you working on or improving? 


Jeff Krause (29:13): 

I personally am improving on how can I communicate some of these ideas about Moneyball and using data and using it the right way, how I can communicate it better. I am used to doing this presentation, but that’s more of a lecture format. So I’m working on communicating it more one-on-one and trying to make it very relevant for the individuals that I’m coaching. That’s where it needs work as far as I’m concerned, because I think I have the right stuff here in terms of the right ideas and the right information to present. But presenting it one-on-one is a little bit different than doing it in a format to a group of 300 people or so like I’ll sometimes do this. 


Stephanie Everett (29:52): 

I love that example, because also it’s a good reminder to lawyers. You probably have a speech that you go give at CLEs all the time too, and how can you think about that material differently and repurpose it and use it? And I love that you’re now using this model with members of our lab community and learning how it can help them see their business differently. So that’s a great example. So Jeff, thanks for being on with me today. Of course, we’re going to have you back and so excited to see how the Moneyball for Lawyerist formula is going to start really helping our Labster as well. So thank you. 


Jeff Krause (30:26): 

Thank you. 



The Lawyerist Podcast is edited by Britany Felix. Are you ready to implement the ideas we discuss here into your practice? Wondering what to do next? Here are your first two steps. First. If you haven’t read The Small Firm Roadmap yet, grab the first chapter for free at Lawyerist.com/book. Looking for help beyond the book? Let’s chat about whether our coaching communities, are right for you. Head to Lawyerist.com/community/lab to schedule a 10-minute call with our team to learn more. The views expressed by the participants are their own and are not endorsed by Legal Talk Network. Nothing said in this podcast is legal advice for you. 

Your Hosts

Stephanie Everett

Stephanie Everett is the President of Lawyerist, where she leads the Lawyerist Lab program. She is the co-author of the bestselling book The Small Firm Roadmap and is a regular guest and co-host of the weekly Lawyerist Podcast.

Featured Guests

Jeff Krause Headshot

Jeff Krause

Jeff is part of Affinity’s document management team. He specializes in corporate legal department deployments and workflow design and efficiency. He more recently joined Lawyerist as a lab coach. Jeff practiced law for two years after finishing law school in 1996, but decided technology was a better path for him. He began working for a pioneering legal technology consultancy called MicroLaw in 1998. In 2003, Jeff started his own legal technology consultancy, which he ran until 2016, when he joined Affinity. Jeff’s superpower is patience, and his favorite part of his job is the satisfaction of helping someone solve one of their business problems.

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Last updated November 8th, 2023