Bad business is bad because....
1. The time spent on bad business takes away from two important things: good business and personal time. You can make up for bad business with good business, but only if you expand into personal time. Very unhealthy.
2. Bad business saps your energy. Squeaky wheels get your grease, and that is the essence of bad business. Squeaking clients, making a noise you can’t escape and have to attend to. So you grease it, and talk to it, and e-mail and meet with it. You travel to court for it and with it. Still, it squeaks. You grease it enough, it starts to quiet down and move along. Eventually, you and the squeak get to your destination, the case ends, and then you realize the third reason bad business is so bad.
3. You lost money. All that squeaking, all that time, your time, and maybe you made $10 an hour. It happens, and if you don’t pay attention, it can happen a lot. And, sometimes bad business gets quiet and slinks away without paying, or makes you chase the fees.
4. Bad business produces bad karma. When you are a solo lawyer, your clients and their cases are your life (We'd all like to deny this, but it's true). When you have cases, you always have a certain “mix”. I realized this one day while talking to another solo. We were having a “can you top this” of problems, commiserating in our misery, when he asked, “Why are you so down today"? Without hesitating I answered “Bad mix right now”. He knew just what I meant and said, “Yeah, that’s a bad thing”. Since then, we start our calls with “How’s the mix today?”
5. A bad mix, that you don't fix, makes you hate your practice. And if your practice is YOU, well, consider where that leads.
Here is my short list of bad kinds of cases, and the reasons they are bad:
a. Residential real estate closings: Very often these have low flat fees with no control over your time; plus clients who are generally not business people, suddenly under intense pressure.
b. Accident cases with minor injuries: You end up working your tail off, spending your own money, and the insurance company fights you. Now, it is true that every so often you hit a home run with an accident case. But sometimes there are no home runs in the mix, just squeaking. I'd also add that, relative to time spent, the most profitable cases in the history of my practice were cases I referred out (and ethically participated in the fees)!
c. Landlord-tenant cases: Unless you do a lot of them, so it would make sense to hang around in Housing Court all day. Hanging around in Housing Court on one case is bad business.
d. Debt collection cases: a percentage of nothing is nothing. Never forget this. Yeah, you can collect once in awhile, but on all the ones where you get nothing, you never get back your time.
e. Purchase and sale of a small business: Unless you are really tough, and a super smart businessperson, and ruthless, and heartless. As a young attorney, you find out right away, that compared to other small business owners, you are a wimp. A nothing. You may be able to do the papers for the deal, but you don’t even know what the deals are really about. I’m not talking about corporate mergers here. I’m talking about representing someone buying a coffee shop. These transactions are WAY more complicated and difficult than you could imagine.
f. Any kind of case you don't know how to do really well, and that you don't have a lot of.
There are rationales and rationalizations for taking bad business. I have heard (and acted upon) all of them:
- I'm building a client base.
- Small fees are better than no fees.
- I'm gaining experience and contacts.
- I'm not busy with other things right now.
If you think these thoughts, and it's natural to do so, at some point you will recognize the many flaws. Hopefully this happens sooner rather than later.
It's easy to market for, and get, tons of bad business. Of course, if you get enough bad business, bad becomes good, you become the specialist, and you are the bad business go-to person. This can and does happen, and on many levels can be an excellent result of learning the lessons of bad business.
Bottom line: bad is bad, but bad can become good. If you don't know bad when you are in it, bad is VERY bad. If you can figure out what good is right away, skip all this bad stuff, and go for good from the git-go.
Comments are welcome!