Blue Collar Culture

Business Results the Old Fashioned Way

Brian Burt | Your Guide To Managing Employees

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In today’s episode, we chat with Brian Burt– attorney at law and an advisor to entrepreneurs who are in the growth stage. Brian advises on all stages of development, from formation to liquidity, and works with businesses such as banks, financial service companies, private investors, and venture capital funds.

Brian chats with us about the common mistakes business owners make, what business owners should know when they’re just getting started, and…

  • Managing field and remote employees (through a legal lense)
  • What to do when you’ve hired the wrong “fit”
  • How to make sure you’re hiring right
  • The types of questions you should ask candidates, and
  • What to think about before you plan to get out of the business

Listen now…

Mentioned in this episode:

Transcript

Ryan Englin: Welcome back to another episode of the Blue Collar Culture Podcast. I'm your co-host Ryan Englin and I'm here with Jeremy Macliver.

Jeremy Macliver: Good morning.

Ryan: Today we have an incredible guest with us. Brian Burt is an attorney and advises entrepreneurs and emerging growth companies in all stages of development, from formation to liquidity. He also represents banks, financial services companies, private investors, and venture capital funds. Brian, thank you for being here with us today.

Brian Burt: Thanks, guys. Great to be here.

Ryan: So one of the things I like to do when we first get started is just have you share a little bit of your story with our listeners. You actually used to be an entrepreneur and you've then became an attorney. So tell us a little bit about that.

Brian’s Entrepreneurial Journey

Brian: Sure. So started out, went to law school, went back home to my hometown of Pittsburgh, practiced for just a short period of time and then left in late 1999, getting a little further back now, to start my own internet company back there. And spent time going through the entrepreneurial process, raising capital, launching a service, bringing on employees and others and kind of going through that.

And so after that wound down, went back into practice. Really enjoyed that experience. Frankly, probably learned more in those years than I did in three years of law school. Just about how things work and so forth and decided I was really interested in kind of living vicariously and helping entrepreneurs of all shapes and sizes kind of work through their not just legal issues, but kind of business issues as well. So over the last, you know, 20 years or so, I have developed a practice that focuses solely on that type of audience.

Ryan: Wow. So you mentioned there's legal issues, there's business issues. And one of the things that we find a lot of times in the people we work with, the people we talk to is that those issues take on so many different shapes and sizes. What are some of the things that you were seeing real early on in your career that you still see today that are pretty commonplace?

Brian: Yeah, I mean, we could probably talk for hours here, but the same things that we see every day are the same mistakes people make. And just to give you a few examples, you know, it really comes down to laying a solid, legal foundation. There's lots of risks as we all know, in starting and trying to grow a business of any kind and lots of those risks you can't control. So we try to do from our end is to help companies and their owners kind of control the things that are within their power. And, you know, setting up your company correctly, bringing on employees and kind of in the hiring process and compensating them, complying with the rules.

Setting up contracts with your, you know, really all third parties, not just internal, the customers and vendors and so forth, kind of getting all those things in place. And one of the biggest ones is really making sure the relationship you have with your partner, whether that's a spouse or it's a co-partner in the business, an investor, you get that foundation really laid carefully, because we see lots of companies end up blowing up and not surviving because the partners end up, you know, kind of at each other after times get tough and they really haven't worked out the arrangement they'd like to have.

They haven't put anything in writing and so, you know, when kind of they hit the fire there, people end up turning on each other and it's not a pretty sight. So again, we see those same mistakes and there's others but those are kind of prominent things that encourage, you know, anyone starting a business or even if they've been in business for a few years and haven't really taken the time to look at those issues, to put in place,

Jeremy: What are some recommendations? Obviously, when somebody starting out a business, they are a risk-taker, you said that, otherwise they wouldn't be starting out on it. And sometimes they're more comfortable with the risk than maybe they should be. What are some of the challenges that they should be aware of when they're setting up the LLC, when they're setting up their business at the very beginning?

Challenges Business Owners Face at the Beginning

Brian: Yeah, I think the, you know, setting up a company I think people don't recognize, as you said, really just don't know the risks are there. So part of what we do is really just quantify those risks and say, Hey, if you don't set up the company correctly, what happens? Well, you put your personal assets at risk so that retirement, that college savings, you know, that house that you struggled so long to afford, all that becomes at risk if you don't set up the entity properly. And the kind of irony with a lot of these basic issues is it doesn't cost a lot to do it right. Doesn't take a lot of energy to do it right.

But people just don't know how to it, or they get guidance on the internet or from a buddy. Again, you know, chatting with your friendly neighborhood lawyer maybe isn't the most exciting part of your day. And so they tend to just kind of want to do it on their own and not aware that the consequences can be personal. Same as if people don't, in lots of industries, you know, get the appropriate licensing or follow certain rules, there can be personal liability. You know, you don't compensate people on an employment side correctly, for example.

Something happens, you know, there can be personal liability, even if you have a company set up properly. Sometimes people will go out and get loans to start the company and they don't understand the implication of that personal guarantee or don't take steps when they can get out of it to make sure that's taken off a loan or paid back. And so those are the types of things and again, lots of others, but just understanding that just because you have a company doesn't mean the worst case is you bankrupt the entity and you go home and you try again. The worst-case could be, you know, much worse.

Ryan: Yeah. One of the things that I've heard you say before, I actually think it might be a good tagline for you. But it's cheaper to stay out of trouble than it is to get out of trouble.

Brian: That's right. That's right. It's exponentially cheaper to do around the front end than it is to try to fix it, if you can even fix it. For example, I was on a call just this morning with a client, super nice guy and, you know, had gone in a different direction to put together some documentation with him and his partner for years back. That relationship they had went sideways. And let's just say, you know, he spent probably, I'd say, a fair estimate would be maybe 20 times already, and we're not quite done yet.

At least 20 times what it would have cost just to get it done right on the front end. So it's just money and time and brain damage that didn't need to be incurred. But, you know, the decision was made to kind of go in a certain direction and those little mistakes and kind of the penny wise pound foolish type approach can really come back to bite you.

So encourage folks to invest a little bit of energy up front. It's typically not nearly as expensive as people think to do that. Sometimes it may cost a couple hundred bucks. And that may mean the difference between, you know, bearing a lawsuit or some regulatory agency coming after you or putting your personal assets at risk. You know, that may mean the difference between those things happening and you sitting safely in your office, you know, focused on your business.

Ryan: The title of the podcast is Blue Collar Culture. And in that we really want to address the things that come up inside of the day to day of a business, especially when the owner of the company or the leaders may have people in the field, they may have people in a remote office, and they're not there all the time. Well, what are some of the things that you see come up from a legal perspective around employees, around field employees, remote employees, what are the things that our listeners should be aware of?

Brian: Yeah, there's lots of issues that could come up. One is just keeping track of making sure they're recording their hours, recording their time and delivering the value. People like to work remotely, particularly the younger generation, and nothing wrong with that. But you need to make sure folks are doing what you hire them to do. That's obviously you know, something on the business side just to figure out how to track that.

And there's lots of tools for doing that. Second thing is making sure they're recording their time, from a legal standpoint, because there's all sorts of requirements, that no matter what state you're in, to make sure that they're doing it correctly and you're paying the appropriate compensation and taxes and so forth. Another thing would be, you know, setting an expectation both from a contractual and legal standpoint, as well as from a business culture standpoint, that folks are going to do the right thing.

They're going to make sure that their interactions with customers are consistent with the company's mission, consistent with the customer service that the company's promising and, you know, that's not going to happen unless people get the proper training. So there's certainly legal component to that knowing what the, you know, the customer contract says and what the warranties say, and so forth, and making sure you honor that. But also from a culture standpoint. I always talk to clients and say, just because you can do it based on your contract doesn't mean you should do it.

Doesn't mean it's good for business. In other words, lots of people put in place agreements that protect the company, which is great, we encourage that. But there's plenty of circumstances where good business practice would dictate, you know what, we don't have to give you the refund or the credit, but in order to build that relationship and kind of end things on a good note or to continue the relationship on a good note, you know, we're going to take some extra steps and, you know, again, kind of investing that into the company and having that mindset among the people is, can really pay dividends.

I guess, final thing would be to make sure, you know, people understand, particularly in today's culture that, you know, you got to behave appropriately. There can't be a kind of harassment or other type of stuff going on in the workplace, whether internally or when you're visiting customers. We see that kind of stuff in the news. It's incredibly damaging to the company and its brand, it's incredibly costly to deal with from a legal standpoint.

And so, you know, for folks listening out there who are, you know, wanting to understand, hey, what can I do? Because, you know, let's say there's some guy in the field and you can't control what everybody does, what you can do is put in place policies and training procedures that can help minimize what happens if that rogue employee does his thing. You can't necessarily stop someone from doing something stupid, but you can insulate the company in large part from liability, or at least help to minimize it if you've got those policies in place, that training in place. So those are the three or four things that you know, we see over and over.

Ryan: Okay. And every state has its own laws and rules on this stuff. And so I don't want to get into that too much because we don't know where our listeners are at right now. But one of the things that I see happen a lot is people hold on to employees, poor performers for way too long. They're either afraid to fire them, they're afraid there might be some kind of ramifications if they do.

Or one of the things that's been in the media a lot the last few years because we're seeing a lot of larger organizations do it is they're no longer dismissing people because they're not a fit with the company. They're staying away from that idea. Like you're just not a fit. You don't mesh well, with the team. We don't feel like you're a team player. What are some of the tips you would have for our listeners around that when it comes to getting rid of employees, how to do without getting in trouble? And what do you do when you've hired somebody and they just not the right fit?

Brian: Yeah, so it all starts with making sure you properly hire that person on the front end and that you have the appropriate documentation in place which includes maybe an offer letter, maybe an employment agreement if you've got an executive you're bringing on it's going to include an employee handbook. So there's some standard documentation that lots of folks simply just don't do.

Again, or they kind of wing it and piece things together from stuff borrowed from a friend or pulled off the internet. And those documents are step one. So it gives you the ability, a state like Arizona, for example, and then you can hire and fire people at will. You can't fire them for discriminatory and other similar type reasons but you can have fairly free ability to discharge someone, get rid of someone who's not performing, not a good fit. You know, maybe even disruptive to the company and its culture.

But you've got to put in place the legal framework to be able to let you do that. And then you've got to go through a process at the back end to, you know, document the behavior, document that you're having conversations and reporting it to the individual and kind of working through that, you know, as appropriate.

And so what people run afoul is that they, you know, they don't have the legal framework on the part of it and all the paperwork in place, handbook etc. And then you know, they end up making kind of decisions on the back end that are kind of last-minute or kind of spur the moment there and say Hey Bob did x so I've got to go in and fire him today and, you know, probably should have done it a while ago but I'm going to just kind of manufacturer a current reason to do it and it's not going to be a big deal.

He should have gotten terminated anyway so I'm just going to get it over with. And what you say or not say in that last conversation, that last meeting, can be the difference between buying the company a claim or not. So what we encourage is, you know, develop a relationship, you know, with an attorney who the company is going to use. You may not reach out to them very often but this is one of those times where a quick phone call may save you, you know, again, lots of brain damage in the company.

We had an example not too long ago where, you know, someone did not put a call in and made a hiring, or excuse me, firing choice and it was a $40,000 issue because they ended up, you know, getting rid of someone who probably, they should have kept on for a number of reasons and they could have maybe let go down the road, but they hadn't, you know, followed the process, didn't know some of the rules that existed here in the state to facilitate that process and just bought themselves a claim. And again, a quick call would have probably saved the day on that one.

Ryan: So you'd said at the beginning of that, and I think this goes back to that tagline that you have, it's easier to stay out of trouble. Hire right. Don't make the mistake by bringing on somebody that wasn't going to be a good fit or wouldn't be a poor performer. What are some of the things that employers can do to make sure they're hiring right?

Methods of Proper Hiring

Brian: Yeah, I mean, you can, and the legal part is pretty easy. I mean, there's an ability to obviously ask questions, to do background checks as appropriate. So that's the easy part. A more difficult part is that we see people just not spend the time to get to know who they're bringing on the team, sometimes even who they're bringing on as a partner in the company. It's not just the lower-level employee, but someone who's going to be a, you know, minority owner or maybe even a 50% owner, and just don't vet folks don't do the diligence, don't take the time to kind of run them through the process.

You know, for example, you know, here at the firm, we bring on new recruits, you know, we typically take them through our summer program, you know, we get to spend a whole bunch of weeks with them and you get to observe, you know, what they're all about, not just the work product, but kind of the fit, which is, you know, big word these days. Is it really a set with our particular culture that we try to have here at the firm and, you know, businesses can't always have a two month kind of trial period but what you can do is set yourself up legally so you have the next best thing.

And it's kind of a probationary period and it allows you to make for termination a bit easier if it needs to come to that. But at the end of the day, there's nothing to replaces kind of doing your homework and getting a sense is this going to be A someone who fits with the culture and B someone who behaves ethically. Because that at the end of the day, if they don't, you know, kind of bring that to the game, you're going to have issues from day one.

Ryan: So what are some real practical things they can do? I get spending time with them, but are there certain types of questions they should ask? Are there certain things that they should be doing during that process?

Brian: Well, it's, I don't know that there's, I mean, you can do a background check. So you can obviously get the, you know, the easy to spot flags, if you will. You've got to be careful. You know, in terms of, you know, there's questions you can ask and not ask. It's much more limited these days than it used to be. But there's really nothing that, you know, kind of replaces doing that diligence, perhaps reaching out to, you know, as many references you can get. Former employers etc.

Again, sometimes they're restricted on what they can say and not say. But just doing your homework as opposed to relying on someone who, you know, through a resume in and looks great on paper, but you didn't take time to really, you know, run them through a few interviews and maybe have a meet more than just one person, there may be a different personality that comes out.

And we see this all the time here we're hiring people, this personality comes out, different facts that come out when they're meeting with you know, one person versus another at the same company and so that, again, taking some time, which as the companies grow, gets more precious. But you know, having people meet company employees and owners and others at different levels, just to get a taste for what, you know, those reactions may be is pretty invaluable.

Ryan: Okay. One of the things that we see with, I think this is just generational. A lot of baby boomers are business owners and they're getting ready, starting to think about retiring, exiting the business what they're going to do for the next step. And I know that that's something that's in your wheelhouse. You're actually quite a bit of an expert in that being able to sell the company prepare it for transferring to kids.

Those kinds of things. And we could dig into a couple things. But one of the things that I want to really want to focus on is the people side of the business. And if you could speak to a little bit about having people processes, having the right people in place, what's that do as you're getting ready to sell the business? Is it important? Is it not important?

Brian: Yeah, it's really important. I mean, the one thing that entrepreneurs typically like about being entrepreneurs is they're the go-to person in their company, right? They're often the face of the company. And if they're not the face of it, they're certainly the go-to person internally. That's why they typically started the company because they want that type of role with it. And when you go to sell the company, that becomes a problem because if you're irreplaceable, what's the buyer buying at the end of the day?

If you leave, and sometimes they'll stay on for a little bit of a transition, but once they're gone, you know what's left for the buyer? And if it's, you know, much less than expected because the company can't function without that one or two individuals at the top, then you're going to end up with an unsuccessful sale and you're going to probably get much less for the company than you hope for.

So really the goal for the owner is to kind of work themselves out of a job, which is, you know, counterintuitive to why they started it. But you see, the most successful sales are those, were the owners, you know, they may still be involved at a high level. Maybe they've on the board. They're overseeing things, but they're not in it day to day as much. They've hired folks to do that. And they're still available when needed, but they've really kind of worked themselves out of the job, as I said. And so when a buyer comes in, there's no one to replace because they've already replaced themselves.

So that's one thing. The other thing is putting in place, you know, incentive programs and so forth for people who you think are key team members. We just did a seminar a couple days ago and we saw that 43% of employees are looking to find a new job in 2020. So when owners transition, particularly if they've been owners for a long time, employees may head for the door saying hey, I love to work with Bob, but not that excited about working for this big new company that's coming in.

And so putting in place incentive programs, both during the tenure of the company to keep them happy and keep them motivated and energized, as well as to transition to the next owner is something that's going to pay some dividends. And you can't do that right before a sale happens because folks get a little suspicious of the intent. They're not going to not take the money, of course, but if it's a part of the culture throughout the, you know, the lifecycle of the company, it's much more impactful and shows that, hey, we, you know, we do care about these folks and we want to see them do well and kind of continue on in kind of phase two here.

But the, other than that, I think the making sure that you're, you know, you're tying down all the issues with folks who were promised to get something along the way, thinking particularly about folks who are promised to get a piece of the equity or some kind of other incentive when the company sells, there's lots of promises made and lots of people work toward that goal and you see lots of startup companies or even more mature companies never put in writing.

And so when a company ends up getting sold or transition, lots of those things become battles because they just didn't make their way to paper. And so having that documented again, it's going to create a much more enthusiastic group of folks who are willing to help you push through the sale and get your payday but also much more likely to stick with the new owner, you know, at least for a period of time to get through that transition.

Jeremy: I see that quite often that the owners, you know, when they're in the trenches or building the business times are tough. They had those few key guys or ladies that are really helping pull for it. And sometimes in those moments of gratitude and thankfulness, they say stuff as leaders that could be misinterpreted as I'm giving you a portion of this business or their sweat equity or your, you know, something like that.

Definitely have seen that get to the end and have a pretty dramatic build up because that person felt like, Hey, I was working and we were part of this and now you're selling it, and I don't get nothing. So, definitely liked it and appreciate those comments because it's a real trap that a lot of leaders find themselves in and didn't realize that they were actually in it.

Brian: No, I think that's right. And we've seen some clients who've been, you know, more generous than they had to be, at least from a legal standpoint, step up and write checks and have no obligation to do so. But to your point, it's better just to, you know, put in place programs and incentives at all levels. I mean, some are going to be more generous than others. Some may take different forms.

But, you know, getting on paper, people know what to expect. I mean, that's really the best way to get everyone to row in the same direction and when a sale comes it's going to be traumatic for lots of people that are not sure whether they're going to have a job, they're not happy about their leader, assuming they like that person leaving. And really just kind of unsure what's gonna take place after the deal closes. And so at least they know, you know, they've got a reward at the end of the process there gives them, you know, some motivation again to get everyone through the thing and hopefully, you know, stick around and help the buyer for the next phase.

Ryan: Yeah, so you mentioned some things about getting ready to sell. What do you recommend is a good time frame to start thinking about the moves you need to make before you want to get out of the business?

Preparing to Sell

Brian: Well, yesterday is really the time. So we, you know, do a lot of these programs and talk to clients about these issues. And the one thing that probably is most tragic, at least my perspective are people who never think about how they're going to get out of the business until it's too late. So we always encourage people when you're starting the business, think equally about how you're going to get out of the business.

And that might mean a sale, it might mean a transition to a family member, it could mean just shutting down the company, which is obviously not the most lucrative approach but that sometimes happens. You kind of run its course. So there's a number of ways to kind of think about it, but people never put energy into it. They're focused on obviously growing the company, generating revenue, the fun stuff and don't want to think about the end. And so they don't do a couple of things.

One, they don't know and understand what the value metrics are. So at the end of the day, most people are building a company to have fun and enjoy it and make some money along the way, but they're also trying to maybe prepare for retirement. That may be for lots of business owners, their nest egg, their retirement plan. Got most of my net worth tied up in the business and when I retire at whatever age, sell it and that's going to be the, you know, what we live off of.

And in order to do that you need to understand what the company ultimately is going to be worth and what it would sell for. Usually, companies sell for multiple of earnings, of profits, and each company, though, is a little different, depending on industry, depending on size, and so forth, sometimes even geography. And so people kind of assume that what everybody got for their tech company that may be sold for, you know, seven times, profits is what they're going to get.

And they find out sometimes too late. We've seen companies who've been around for 20 or 30 years, owners plan on a certain exit multiple, as we call it, only to find out that instead of seven times, maybe there's is two times. And so they've been working literally for, you know, few decades toward the purchase price and planning retirement only to find out at sale they're not going to get what they thought and they have to go right back to work.

And that's a pretty tragic result when they're in their 60s and, you know, think that this is going to be a big exit and turns out not to be the case simply because they didn't have the information they could have probably had, you know, decades earlier but just never found that out. So that's one thing. Second thing is just planning for that inevitable event and kind of talk about being for sale every day. Kind of thinking that, hey, today can be the day and that might happen because someone gets sick. Maybe the owner gets sick and there's some kind of tragedy.

Maybe they get killed in a plane crash, maybe there's some development in the industry, a new competitor, some regulatory change, where they see the trend kind of going on the downswing much quicker than they thought. And so they need to move up the exit date. And so because you don't know what's going to happen, you want to kind of assume your company's for sale every day. What's that mean? Well, it means doing all the things we've talked about so far in terms of putting in place the proper legal foundation, the procedures, making sure that company's culture is what you think it should be.

And all these things are going to add up to a much stronger company and that's going to translate into a much more attractive sale price at the end. No buyer likes to come in and see that there are 25 kind of loose ends they need to tie up. Or there's some litigation or there's other issues, there's people complaining they didn't get their equity. There's people who've been, you know, fired inappropriately and now they're making some claims with the, you know, various regulatory agencies. All these things tend to add up and really, fires even remain interested.

It kind of makes the process more expensive, makes the sale price lower. And you can avoid, you know, lots of that by simply keeping a clean company and doing these things, if not the very front, taking some time today, even if you've been in business for 10 years. Say hey, let's take stock where we're at, let's kind of go through a legal process. Let's figure out what we need to clean up. And let's do that well in advance of what we need to sell. Because some of these things take years to implement.

You can't just go in and in two weeks, fix all the issues. It may take, you know, a couple of years to clean things up, to do some tax planning, to put some systems in place to make some incentive programs. Actually, you know, be worthwhile to those you're giving the, giving them out to the employees you're giving them out to. So the things that, you know, they need to do take time to implement and realize their potential. And so that's why, again, treating it like it's for sale every day is going to, you know, make it a lot more valuable when that time does come.

Jeremy: Yeah, sometimes I, you know, this is what we do all day long, right? And sometimes I'll get some pushback for somebody like, well, I don't plan on ever selling this. I want to hand this off to my kids. I want to, you know, whatever that may be, they have some form of generational type goals. Sometimes you get to the end of that and realize your kids don't even want it.

One of the things I always encourage people to do is to build it to sell and when you get to that point, you might just want to be the buyer. Like if it's running without you and you're enjoying it and it's a great asset, be the buyer yourself. Now you own something that's worth selling. And speaking of buying, I did have a question that I wanted to jump into. And that was looking at this business transaction from the buying side. I was recently talking to a guy that bought a business, he's struggling with it now.

And it really comes down to the fact that he had an entire different value system than the previous buyer. And so now they're having tons of employee turnover. They're having lots of customer turnover, customers falling out that have been with the clients of the company for years. So when you're looking in at the company to buy, do you have some recommendations for how they can recognize if they're the right fit, they're the right buyer for it?

Analyzing the Culture of a Company as Criteria for Purchase

Brian: Now, that's a great question. And I've actually got a friend and client of mine who actually does this for a business and she goes in and analyzes the culture of both companies. Not the legal stuff. Not even necessarily the kind of business metrics, but really the culture to see if there's a fit. There's a statistic, and it's a very high number and I've seen it repeatedly throughout my career that says that most acquisitions fail. And for the reasons, you know, you alluded to there, they did not have a meeting of the cultures. And so, you know, one clashes with the other and people leave.

You know, there's some examples, even here in town where, you know, two well-known companies get together and then folks that, hey, I went into the office six months after they did the deal, and I could tell exactly who was from which company because they act differently. Sometimes they maybe they dress differently, there's different approaches doing their jobs. And so, having that analysis done on the front end, and there's, again, there's folks out there who do this for a living is really an underutilized part of the process. Everyone wants to check the financials, you know, they want to check the legal stuff.

They want to, you know, get together and figure out whether those projections that the sellers making are legitimate and they're going to be able to meet those numbers. But they really take very little time to go in and say, Hey, is this a set. And, you know, for example, here at the firm we grow, we do it very organically and we've passed up a lot of opportunities to bring other firms on emerging firms who just don't fit the culture. There may have been some economic benefit, but it's not a cultural fit.

And so we really, one of the reasons I love being here, we wait until we find that match and, you know, take a lot of candidates into consideration before we think it's a right fit and do it very slowly, very methodically. Most companies, when they're buying others, don't do it. And what we see is the kind of the carnage on the back end when, you know, the buyers unhappy, you know, the seller, most of their employees they work with for years have fled and walked out the door. And sometimes the best indicator is what happens to the old owner.

They might bring him on and, you know, for three year period under an employment agreement, and oftentimes, I don't think I have too many exceptions to the rule I can't even think of, but that person last three months or six months. And we've seen people literally leave millions of dollars on the table, you know, just in the last 24, 36 months, where they sold their company, they had a very lucrative post-closing employment agreement, but they just couldn't match with the culture that the buyer brought in.

And so they left and the buyer lost a key asset in terms of what is acquired. So long story short, that cultural analysis can be done, and there's experts who do it and it's a really good way to figure out whether you're going to buy a company that's going to be a match not just with your financial goals, but the cultural, you know, things that you're importing. And so your deal is gonna be a lot more successful.

Jeremy: And definitely, I see a lot as companies look at this. And one of the issues that they have It's very rare that a company has a very defined culture. They know what it is. They're intentional about it. They've been driving for it. And then they have a way of communicating it. I've heard you mentioned several times here that your culture and your guys's firm's culture. How would you describe your firm's culture?

Brian: Well, it's a, you know, everyone kind of pitches it in the same way. I've been in a number of law firms. And so, seeing everyone kind of have the same tagline, but if you actually follow it, and we kind of ascribe to a no jerk policy. And we actually made the paper a few times because it, you know, it's kind of our short-form way to describe what we promote here. And it's really true. I mean, you come here and you see that pretty quickly. People are collegial. We set up a compensation system to promote that type of approach. And it really encourages folks to work with each other to bring in clients, work on projects.

And we just don't tolerate even, you know, it may be productive from a financial standpoint, just really don't tolerate folks who don't treat others well. And not just the attorneys, but the staff and others who work here. And that's a huge difference. And we also bring people in, which is unique to our firm, and not too many other firms kind of have this approach, we bring people in on the front end, from the attorney level with the expectation that, hey, we're going to hire you with the assumption that you can make partner someday. Y

ou can, you know, grow your practice, you can be here for a lifetime, if you want. And we're not bringing on people to say, Hey, we know that we can really, you know, take three through the system, but we'll bring on 10 and we'll weed seven out. It's not kind of this, you know, this competition that it requires us to weed people out who, you know, otherwise might be good folks.

We bring on everyone with the assumption that, you know, it's kind of yours to lose. We want to give you the resources. We're going to give you the training and mentorship. And we have programs in place for all these things to, you know, organize processes as we talked about earlier. Very organized processes to make sure that people are taken care of along each of the steps. And we have mentor relationships and so it really, you know, some people decide hey, it's not for them so they go in house to do other things.

But for those who decide it is for them, each one of them can grow and, you know, take care of those, get the resources and, you know, evolve their career. So it's a pretty unique culture. I've been here for 16 years now and would never leave because of that. You know, lots of places you can practice but not too many places where you get that kind of a, that kind of a culture. We've been around for over 80 years here in Phoenix as a result of that and people know when you come here, hey, that's what you're getting.

Jeremy: I find that quite often that people feel like values are the soft, fluffy, something that's not important. We got real stuff to do and real results. But I love hearing how you're talking about the longevity because I see when companies really focus in on their values they started attracting a lot better candidates to the table. And then the people that are there, once they finally make it their home, they're like, I'm never leaving.

Just like you just said their compensation could maybe be better somewhere else but this is home, I like it. I'm happy here, I value the same things. I find that the long-term reward on values is very easy to recognize. And you mentioned something that really piqued my interest and that was that the firm has a compensation model that's based around your guys' culture. And I love that because that's really putting, for lack of better words, your money where your mouth is on this deal. So can you share a little bit about that?

Brian: Yeah, man, it's, there's two different ways we compensate people. One is at the associate level and there's one at the partner level. And at the partner level, we have a pretty unique system that was actually in the legal press many years ago because it was pretty unique in the country. And basically, you know, you've got a small group of managers at the top who people elect, partners elect and put them into those slots. And, you know, and trust them with the authority to determine compensation for the partnership, and we have a couple hundred partners.

And in that process, not only they do that, but we don't have any idea what other partners make. So it's a closed compensation system is what we call it. And, you know, there's firms that have variations on that, but lots of firms have the complete opposite, and everyone knows what everybody makes. And it really, and I've seen it because I was in a firm where that was the case and it creates a lot of contentiousness because people, why did this person make you know, X amount more and kind of constantly comparing yourself here.

You know, people either believe they've been treated fairly, which, you know, 99% of them do. If you don't, obviously always have other alternatives. But, you know, people can focus on working together to bring in a new client. You're not fighting about who's getting the credit necessarily, you're not fighting about Well, what do I get to help you work on your project? I'm in a corporate group, you're an IT guy.

Why would I want to help you? You know, what do I get out of it? And you see that in lots of firms where before people even go on a pitch, they're fighting about the credit. And here, it's the complete opposite, you know, whether you're, you know, an associate who brings in a partner to help you land a client or work on a deal or vice versa. There's that culture, where we kind of all help each other out. You know, sometimes we're the one making the request, sometimes we're getting the request.

But we know at the end of the day, the folks who are kind of making those decisions are observing. You know, we let them know what we've been doing during the year and they compensate accordingly for what you've contributed on an aggregate basis. And it's not just based on quantitative data. It's also based on that more subjective contribution. And so that makes for a culture that's pretty unique and you're not, again, kind of fighting tooth and nail with each other. You're saving those, you know, those things for what you're doing in the courtroom or negotiation on the other side of a deal.

I mean, you know, have that kind of interaction when it's appropriate, but don't do it internally. You know, work together to make, you know, for a good client relationship, good work product, good result for the people you're working with. So it's a pretty unique thing. And it's what, you know, people coming in sometimes, you know, don't understand how it's going to play out. Once they do get into it, they become pretty good fans. And to your point earlier, having a culture that everyone knows what it is helps self select out people who wouldn't be a good fit.

There's people who just will never apply to come here and similar to any company that really tells you what it's all about, they say, hey, that's not something I'm interested in so they never show up for an interview. And that really saves kind of a lot of time and effort along the way, because you're not having to weed out as many people who, you know, get into the mix, get hired, and six months later say, this is just not for me. A lot of those folks just never bothered to interview and that, again, I think helps promote and maintain that culture as well.

Jeremy: I love it when somebody, when you communicate your vision to somebody, and then they don't follow through with the rest of the application process. That's a huge win.

Brian: Absolutely.

Ryan: So Brian, I've heard you bring it up a few times. And I think it's great because I absolutely agree that the culture inside of your organization, actually could be one of your greatest assets. And I think a lot of times business owners get caught up on chasing the next client, chasing the next deal. And they forget to look internally and say, hey, we could really create the company we want if we just focused on the right people for our team. And so with that, I want to ask you, for all of our listeners out there, whether they're on entrepreneurs or business leaders, what's the number one piece of advice you want them to have before we wrap up today's session?

Brian: Well, I mean, I think you just said it. It's really, at the beginning of your, you know, entrepreneurial journey or if you're already on the journey, I've certainly seen companies do this and work with companies who have done this is kind of just push pause, and reevaluate, and say, Hey, what do we want to be over the next five or 10 or 20 years? Do we even have a culture?

Do we even have something that we stand for apart from selling widgets? And if you don't, or again, if you're just getting started, figure out what that's going to be because everything flows from that. If the goal is in business, make a bunch of money, and that's the end objective, you may or may not do that, but you're probably not going to have a whole lot of fun along the way. And you're certainly not going to attract people who want to be there for more than the paycheck.

And those people are going to run to the next opportunity that's part of the 42 or 43%. They're going to, you know, look for another job and jump when the next best thing comes along. So really thinking through that and then starting to bring on people beginning with your, you know, your partners, your investors, your others who are going to be kind of your key players and kind of percolating down to the, you know, to the frontline folks, bringing people on who share the value and holding out for people who, you know, fit that bill.

Even when you're in growth mode, it's easy to try to bring on people and, you know, we've seen that happen in lots of circumstances where they just throw those guidelines to the side and say, Hey, we're hitting a growth spurt here, we can't focus on or worry about these, the soft things as you call them, these cultural things. Let's just bring on bodies. And eventually, you have to get rid of lots of those people because they don't work out and they never really understood why they were there in the first place.

So kind of coming up with that, first getting the people who run their own the company to agree on that, and buy into that. And that typically takes the form of written documentation, both from a legal standpoint, but just from a mission statement. And then we've got one here at the firm. And then you from there, you kind of build the processes, the legal paperwork, everything kind of flows through that to continue to maintain it. You know, you're going to bring people on in that fashion, you're gonna let them go if they fail to meet that, those benchmarks and that perspective.

If they fail to live up to that, even if it means getting rid of what might be otherwise financially productive folks of the team if they're not advancing the culture, that may be a tough choice, and probably the toughest choice but in order to keep things going the way you want them to, you got to make those tough decisions. And that, again, if you don't set that up from the beginning, it's gonna be difficult to kind of implement along the way. It's gonna end up being piecemeal and you're going to have a bunch of people who really don't know what the company stands for other than, you know, selling those widgets.

Ryan: Well, and when you've got people on your team that aligns with your value system and they're aligned with the vision, it's just a lot more fun too. It helps get through some of those ups and downs in business when you're all moving in the same direction and you're having fun while you do it. So, Brian, hey, I want to thank you for being on today's podcast episode. How do people get ahold of you if they want to know more about what you do?

Brian: Sure. Best way is probably either phone or email. Email is B Burt, that's BBURT at SWLAW.com. So [email protected]. Or can reach me by phone at 602-382-6317.

Ryan: Awesome. Well, hey, thank you for being here again. Thank you for sharing your knowledge and your wisdom. Really enjoyed it today. And for all you listeners out there, if there's anything that resonated with you around culture, or even just getting some of the legal stuff taken care of in your business because I know a lot of times it's really easy to overlook that, Brian is a wealth of knowledge and I know that he'd be more than happy to talk to you about it. Thanks again, Brian.

Brian: My pleasure.

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