Episode 15: The Ferrari and Rolex Can Wait
Pratik Shah (00:06):
Hi everybody. Welcome to another episode of Bootstrap Solo. I am Pratik Shah, your host, and today we’re going to be talking about the good, the bad, and the ugly about running your own practice. This podcast is for those that want to know what it’s really like to start, run and grow a practice. Today’s guest is very special. His name is Danny Abir. He runs a 70 person practice in LA that focuses on bad faith insurance, personal injury, and I think you do quite a few other areas, right Danny?
Danny Abir (00:38):
Yeah, we do. We handle anything from insurance-
Pratik Shah (00:38):
But I think the main one that I know you for-
Danny Abir (00:44):
Yeah, go ahead.
Pratik Shah (00:45):
Sorry. Sorry. The main ones I know you for are personal injury, bad faith, but please go ahead, elaborate for me.
Danny Abir (00:51):
So we handle property damage cases on a first party basis. We do construction defect, we do medical malpractice, we do sexual assault cases, all sorts of catastrophic personal injury including product liability cases. We do a fair amount of business litigation and we also do employment. So there is pretty much… Oh, and also bullying cases.
Pratik Shah (01:15):
Danny Abir (01:18):
We cover [inaudible 00:01:19] cases [inaudible 00:01:20].
Pratik Shah (01:21):
Yeah, he runs a 70% practice, runs the gamut of areas and he started his practice personally 23 years ago, but started the current firm, ACTS, about eight years ago and has been growing strong ever since.
Danny Abir (01:36):
15 years ago. 15 years ago.
Pratik Shah (01:38):
Oh, the 15 was total, so it was 15 years ago.
Danny Abir (01:43):
Yeah, it was 15 years ago when I started.
Pratik Shah (01:46):
Got it, 15 altogether, so seven on your own.
Danny Abir (01:47):
You want to try that again?
Pratik Shah (01:49):
Yeah, let’s do that again. Let me run that again. We’ll just start from the top. Welcome everybody to another episode of Bootstrap Solo. I am your host, Pratik Shaw, and today we’re going to be talking about the good, the bad, and the ugly about running your own practice. This podcast is for those that want to know what it’s really like to start, run and grow a practice. Today’s guest is very special. His name is Denny Abir. He runs a 70 person practice out of Los Angeles that handles a myriad of cases including bullying, sexual assault, personal injury, bad faith insurance, property damage, and more, as we’ll hear from today’s podcast. He started on his own about 15 years ago and seven years in, started his current practice, ACTS and has been growing strong ever since. Danny, welcome to the show.
Danny Abir (02:38):
Thank you. Glad to be here.
Pratik Shah (02:41):
No, thank you so much. Danny, you and I have known each other for some time now and I was really excited to get you on. I’ve been trying to make this work with your schedule because I’ve seen you speak at a couple of events and I thought that the ideas and the discussion points that you had at those talks were very refreshing and very different than a lot of other people. I felt they were raw and real and that’s what we’re all about here on Bootstrap Solo. So I’m excited to have you on and I’m excited to hear about everything you did, but let’s start kind of at the beginning. So you have your current practice, ACTS, for about the last eight years, but seven years before that you started your own practice.
Danny Abir (03:19):
Correct. I started my own practice about 15 years ago. My last job where I was an employee, I was with KPMG, which is now a big four accounting firm. I was approached by one of my clients, which was a Fortune 100 company shoe manufacturer who said, “Come on board and be in-house,” and at the time I was being billed out at $550 an hour and I told them, “How about we do something else? I will go start my own practice. I will charge you half of what you’re paying for my time right now, but I’ll have my own practice,” and they were very happy to do that. So with that, I started my own practice.
Pratik Shah (04:03):
That’s really exciting. For a lot of people that work at big firms, I’ve got some friends that work at big firms and the dream is always to have one of your clients invite you to come work in-house counsel, and it sounds like you were offered the dream and said, hold on, I got a different dream.
Danny Abir (04:19):
Yeah, the idea of going in house would’ve meant that I would have to work only on their account. I was doing international tax planning at the time and it would’ve been monotonous and the same thing, and doing tax law is not the most exciting thing in the world.
Pratik Shah (04:36):
Danny Abir (04:39):
I figured that I had a lot more potential than go work for somebody.
Pratik Shah (04:42):
That’s amazing. How did you come up with the idea to even say that to them? Was this a multi-day conversation? Was that on the spot? How did that come up? How did that happen?
Danny Abir (04:53):
It was something that I sat down and I did the math for myself. I was a finance major before law school. So the way I looked at it is that I had the option of starting my own practice and the cash flow from what they would pay me, listen, at $275 an hour, it’s still a lot of money, especially for somebody who was at the time making I think about $100,000 a year. So relative to that, it was a lot of money. I was getting about, I think billing about $15,000, $20,000 a month just with them.
Pratik Shah (05:27):
Danny Abir (05:28):
So it was a lot of money that was going in my own pocket and I used that to start doing marketing for myself and start branding myself as someone who did asset protection planning and tax planning and estate planning, which was all related to what I had done before or what I had studied before. So it made it a lot easier to build that practice.
Pratik Shah (05:48):
It is very unique because a lot of the firm owners we’ve spoken to, a lot of them when they started their firm, it’s right out of practice with no money, no client working these really tough cases, but it’s really different to start off with a Fortune 100 client. Now obviously when you were at KPMG, you had tons of resources. You had staff, you had whatever you needed, you had brief banks, you had all the stuff and people that you could rely on. How were you able to give a Fortune 100 client the same level of service that you did at your old firm?
Danny Abir (06:23):
That’s a good question. Actually. I didn’t have that. So what you’re talking about in terms of when I was with a big four accounting firm, I was the widget basically. I had a secretary, but the work that had to do with my level was being done at my level, me and myself.
Pratik Shah (06:45):
Danny Abir (06:45):
I had a partner overseeing the work, but it was pretty much me, and that’s the reason they wanted me to go in-house to do that. So it made sense to be able to handle it myself and to the extent that I need secretarial work or something like that, I would have them use the secretaries at their headquarters to do the work for me. So it made it a lot easier and they don’t have to pay for anything. It was very much win-win.
Pratik Shah (07:13):
That is a huge win-win, and it’s hard to find those with especially a Fortune 100 client who’s used to doing things a certain way. A lot of those Fortune 100 clients, they’ve got shareholders to respond to, and that’s part of the reason they hire some of these bigger companies, KPMG, et cetera, because for them to respond to their shareholders, if something goes sideways, they can say, “Well, we hired one of the top four accounting firms, what do you want me to do? It’s not my fault. That’s all I could do,” and they can kind of cover themselves that way. That’s them taking a risk saying we’re doing Law Offices of Danny Abir, and if something goes wrong, that person that made that decision, they took a real chance on you.
Danny Abir (07:51):
So they didn’t quite do that, meaning they didn’t replace KPMG with Danny Abir. The work that I was doing as a manager on their account, I continued to do on my own.
Pratik Shah (08:05):
Danny Abir (08:06):
They still had KPMG as the accounting firm that did their audit work, did their tax planning and everything like that. So KPMG would tell them, “Okay, we’re going to do this. They need somebody to help implement it,” and I was the one in-house, relatively speaking, was going to do that. I spent about two to three days a week in their headquarters, but it still gave me about two days a week that I could do on my own and work on my own basically.
Pratik Shah (08:31):
Danny Abir (08:32):
That’s the way I started. It’s also a little bit different because most of the folks that you and I know do contingency work and contingency work, you don’t get paid, even if you start out with something, you don’t get paid for easily if you’re lucky nine months, maybe a little longer. So this was hourly work, which was very different than what you and I are familiar with.
Pratik Shah (08:57):
All right, Danny. So you said that you kind of always had that business instinct, but you also mentioned you were 10 years into your career as an attorney. So I know you worked KPMG, I know you worked at Deloitte, you worked a lot of these big, big companies. Did you always feel like you always wanted to go on your own or did that come up as you started getting closer to the 10-year mark? How did that happen?
Danny Abir (09:25):
I don’t think it had anything to do with the 10-year mark as much as it just had to do with when I felt comfortable. Even the first job I had, which was right out of law school at Deloitte, not out of law school, out of the LM program, was at Deloitte. At Deloitte, I was looking to get clients for Deloitte and Touche, which is hilarious considering our first year associate bringing in business. One of the partners I actually reported to once told me, “I’ve never had anyone at your level bring in business,” especially Deloitte and Touche. I mean, the kind of clients that they had. So I had that instinct to begin with and it’s just part of it, and I always felt like this is a firm that I’m a partner in, not necessarily a inky dinky first year associate. So that mindset was there, but the reality was not. It would’ve taken many, many more years in order to get to any level where I would reap the benefits of that kind of a mindset. So I think that had a lot to do with it as well.
Pratik Shah (10:27):
Understood. Understood. Okay, so 10 years in, you step out, you’ve got this Fortune 100 company, you’ve got money coming in, and you do the smart thing. You don’t go out and buy the Ferrari. I’ve realized that, and you don’t go out and buy the Rolex and you say, “I’m going to reinvest into my business.” You reinvest into your business, you’re playing the long game, you meet a friend that’s doing mass torts. Just mass torts or mass torts and personal injury?
Danny Abir (10:55):
Personal injury and mass torts. Primarily a mass tort firm, but there were single event personal injury cases as well.
Pratik Shah (11:01):
Okay, and that kind of introduces you to the personal injury world of what’s possible, what’s out there, what makes sense, what doesn’t. Now the reality of the situation is, and maybe you felt this too, or you saw this, when you work at these big firms and you kind of are in that space, there is a stigma with personal injury.
Danny Abir (11:23):
Pratik Shah (11:23):
Did you ever hear that or feel that from your colleagues in the big firms that although attorneys that do personal injuries, they’re this, they’re that, et cetera, et cetera?
Danny Abir (11:33):
100%. I mean, it’s something that even in law school, listen, the defense bar and the big corporations always spread that from day one, that personal injury lawyers are ambulance chasers, personal injury lawyers are this and that. You get that put into your head so much that you never even think about it, the fact what the reality of it is and why this is being spread the way that you would think or why everybody thinks that way or is saying these things, and until I actually got into it and realized what the truth is and what the reality is. One of the reasons I actually went after doing taxation was because I was going to go as far away from personal injury as possible. It’s funny that I ended up doing personal injury work years later.
Pratik Shah (12:28):
So my thought is, you must have either kept an open mind or your friend must have really brought a great creative argument to you because if this has been fed into your mind, it happened to me too, stay away from personal injury, personal injury’s shady, it’s this, it’s that, and your friend says, “Hey, come look at my personal injury practice,” your initial instinct must have been, “No man, I got an L11 taxation, I’m not doing personal injury.”
Danny Abir (12:55):
I actually have an L11 international law as well. So it was basically as far away from what I had initially thought to begin with, but it didn’t start like that. He first said that, “You’re very good at marketing, so why don’t you get,” back then they had just started doing Vioxx. He said, “We’re suing Merck for Vioxx for the injuries that it’s causing and the heart attacks. Why don’t you get me Vioxx cases since you’re so good at marketing and I’ll give you a percentage back?” I’m like, “Okay.” So I got 120 Vioxx clients once I started doing that, and then he said, “Okay, why don’t we do Paxil together?”
So I did Paxil, and then after that he said, “Why don’t you come work out of my office so the clients that you’re bringing in feel like you’re part of the firm and you can manage the firm and I won’t charge you rent.” I’m like, “Okay.” So it just evolved into why don’t you now manage the firm and I will handle the litigation. Again, it’s really interesting because once you realize this side of it coming from the other side, there’s a lot that you can bring to the table, understanding the business side of things when it comes to running a contingency practice. I think that’s what I brought with me from the other side of the [inaudible 00:14:18] basically.
Pratik Shah (14:18):
So you joined this firm, well you don’t really join them, you’re running your own practice, but you’re running it out of their office. Is that accurate?
Danny Abir (14:26):
Pratik Shah (14:27):
Okay. So it’s still Law Offices of Danny Abir?
Danny Abir (14:30):
Pratik Shah (14:30):
You’re now inside of this person’s office, and how long were you outside and then join them?
Danny Abir (14:36):
Pratik Shah (14:38):
Six months on your own.
Danny Abir (14:38):
About ix months.
Pratik Shah (14:39):
Joined their company about six months or run your office out of their office after about six months. Then how long were you in that firm?
Danny Abir (14:49):
Altogether, about four and a half years.
Pratik Shah (14:50):
Wow. So that relationship lasted a while.
Danny Abir (14:54):
Yes, it did.
Pratik Shah (14:55):
Was it just the same thing on repeat, you would run the marketing, you would bring in the cases, you’d hand them off to them, you’d do it on the next one, et cetera?
Danny Abir (15:02):
No, when I joined him, I think it was him with four lawyers, if I’m not mistaken, another four or five staff. Built that to a 100-person practice in downtown, and that’s at that point when I left and started consulting actually, funny enough.
Pratik Shah (15:24):
So you really got to see how a firm can grow and what it needs, what the pitfalls are, what the positives are, what the negatives are, and how to kind of work around all that stuff. I mean, what a learning experience, right?
Danny Abir (15:39):
The learning experience was incredible, and the other thing is I also learned exactly what you said, the pitfalls, all the things to stay away from because I didn’t have as much control in that environment. Even though I was recruited as a partner, I wasn’t a partner in that capacity where I can make as many decisions as I would’ve liked or do things the way I wanted to. I did learn a lot about what not to do as much as I learned about what to do, and I think that became very important.
Pratik Shah (16:09):
This podcast is all about learning what not to do, and I think that’s important to hear. So I want to dig into that. Can you give me maybe the top three things you learned, what not to do during that time period?
Danny Abir (16:20):
Do not borrow at very high interest rates. That is just number one, number two, number three, stay away from and don’t overspend. One of the things, it’s interesting because I came from the world where finance and percentages and everything is really important. So when these lines of credit at 20% interest they use for basically mass torts, my first inclination was, okay, this doesn’t make any sense because you’re paying 20% interest, and for all intents and purposes you have a equity partner because the interest rates are so high. His response to me was, “No, you don’t understand this business. You will make so much money that this becomes nothing.” I kept fighting it for a while and then I realized that I can’t. My say doesn’t change anything, so went along with it, but I was right. That 20% interest, 25% interest, it’s ridiculously backbreaking, especially when it’s your firm and you use that 25% interest to satisfy your lifestyle, which is not how you want any business loan that you get.
You want to use your loans or use loans for your cases and for your case cost and for your firm, not necessarily to pay for yourself a high salary, and that’s the other aspect that I would highly, highly, highly tell people to stay away from. You should always have a line of credit if you’re running a contingency practice, but regardless of whether that line of credit is high interest, low interest, or even no interest, you want to use that line of credit for your firm, not to satisfy a lifestyle or not like what you said, go buy yourself a Ferrari or buy yourself a Rolex watch. That’s not what it’s for.
Pratik Shah (18:17):
It’s easy to get caught up. I mean we see it all the time. We see it year in and year out, and you’ve been in the industry a long time. You’ve seen it more than I have. We’ve seen a lot of people have a little success in the beginning, they established a certain lifestyle and then they got to maintain that because they feel like they don’t want to look to the outside world, that they’ve taken a step backwards.
Danny Abir (18:39):
Yeah, the outside world, themselves, I mean it’s hard. The other thing is particularly trial lawyers have to have a certain level of ego in order to be successful in law school, in the courtroom. You have to have a certain amount of ego in order to be successful in the courtroom. So it’s just like a closer in baseball or a kicker in football that if you miss the game winning kick, you have to come back the next game and kick again, or if you take the loss in a baseball game and you come back the next game and you have to close out again. The trial lawyer has to do the same thing. If they lose a trial, they have to come back and win the next day, and they have to think that they’re going to be able to do that day in and day out in every case.
That ego comes with a certain amount of certainty that you feel like you have in all of your cases. So you think you’re going to hit home runs every single one of them. Reality is very far away from that with the exception of a few, and even those few still take losses. So what you have to do is you have to spend. You can’t start spending your lifestyle on something that hasn’t happened, and that’s the one thing that I think a lot of people lose track of is exactly what you just said. You have success in the beginning and you say to yourself, “I’m going to do this again and again. I’m sure it’s going to come.” What are you going to do when that year you have a bad year or even cases that you thought you were going to hit home runs on, you may hit home runs, but it just gets pushed back.
With mass torts that very easily happens because you have a settlement today and you still may not get paid for another three years because you have to go through so much paperwork and try to get people to opt in, and then once they opt in, you have to resolve so many liens and it takes a long time for you to finally get paid. And that’s basically a time period that you have to try to figure out how you’re going to make your ends meet. That’s the thing.
Running a contingency practice, running a plaintiff’s practice like a defense firm is the biggest kiss of death you can do because there’s a reason why defense firms spend the kind of money they do. There’s a reason why defense firms or the big law has a first year associate being paid $270,000, as a first year associate who doesn’t know anything about anything. That’s because they’re making money on that first year associate’s time. We don’t have that luxury, so we can’t spend that way and that’s something else that we need to keep aware of.
Pratik Shah (21:22):
Yeah, no, that’s exactly right. I mean I think the financial management side of the practice is so foreign to so many people. Like you said, that’s a business instinctual thing that you’ve had and with your educational background that came kind of not naturally to you, but that’s where your education lies. So other than the stay away from these predatory lending practices, don’t overspend, it seems like all of the advice you were giving of the top three things not to do are financial related.
Danny Abir (21:56):
100%. It’s funny, when I started consulting for a while before we started ACTS, I was trying to figure out why so many lawyers are very poor at business, at running a business, and the answer I came up with is that most lawyers have some sort of liberal art background, whether it’s history, English, poli-sci, and then they go to law school. So in undergrad there’s no business thought. Sorry, there’s no business thought or it’s not something that you’ve learned anything about management of the business. Then you go to law school. In law school, they barely teach you how to be a lawyer, let alone run the law firm. So you don’t get it there. Then you get out of law school and you have one of two choices. You either go start your own practice or you go work for somebody. If you’re working for somebody, you’re not running a business.
So you’re not learning the running of a law firm from somebody else or running a business from somebody else. You’re just an employee who’s basically doing what you’re told to do or what you’re supposed to do. If you go start your own practice at that point you’ve started a practice without any kind of a business teaching or learning or anything that has to do with business in all the years that was before you starting your own practice. That’s what’s missing. That’s what most people, unless they have parents that are in some sort of a business, unless they have it by instinct, unless they have it by, like my partner Boris, he had a textile business before he started going to law school. The reason he went to law school, funny enough, is because he was being billed so much by his lawyers, he wanted to understand what it is that he’s being billed for. So he started going to law school at night.
Pratik Shah (23:50):
Danny Abir (23:50):
Only after he sold the business and had a non-compete, he started practicing law. That is different because he’s someone who actually ran a business, he understands financial statements. He actually, funny enough, understands financial statements better than I do. That is something that you don’t learn in law school when you’re taking history or we’re taking poly sci or English or something like that. So I think that’s what the difference is. The one thing that I would say you want to keep in your mind, aside from all the financial stuff, your law firm is a business, the one that you started on your own or the one you’re a partner in or the one you’re an associate in, it doesn’t matter. It’s a business. While we are in the business of providing a service, it still needs to be run like a business.
Not any different than Starbucks, not any different than any other business that needs branding and marketing, that needs a HR function, that needs a financial function, knowing what’s coming in, what’s going out, have expectations of cashflow, have an idea of what your exit plan is. You’re not just starting a law firm that you’re going to keep for a couple of years. Assuming that this is going to be a long term, what are you going to do 20 years down the line when you want to retire? All of that are things that you would do with any other business and there’s no reason not to do it with your law firm.
Pratik Shah (25:18):
Understood. Now for those of us, for the rest of us who don’t have that business background, who have never run a textile business, any of those things, are there books or seminars or anything like that that you would suggest that give a good background?
Danny Abir (25:35):
There are a lot of books out there now. Funny enough, when I started doing consulting, there weren’t books. There weren’t people who actually taught this. There weren’t seminars on it. Right now, crazy enough, over the past few years there’ve been a lot of conferences and a lot of seminars on how to run a law firm, how to do marketing for a law firm. What are the pitfalls? I’ve actually, like you said, I’ve spoken on a few panels about this. So now there’s a lot more added.
Our good friend, Reza Torkzadeh, has a book called The Lawyer As a CEO. When I read it, I’m like, I could have written this myself too, because we think the same way. I actually went to Reza and I said, “This is incredible because it’s like you are spot on and everything is instinctive.” There are things that you can do in order to make yourself better, but most importantly you have to make sure that you don’t get caught up in the success because there’s always success with failure, and you have to strap your belt and make sure that you’re ready to be able to handle the downside of it and just spend on things that you have, not things that you don’t have.
Pratik Shah (26:52):
There is a key to that and a lot of that is, I see this a lot, maybe it’s being self-aware or maybe it’s controlling your own ego or maybe it’s just having a stable emotional reaction to both good and bad because you see it both ways. You see people that have a bad day or a bad week or a bad month and they shut down shop when if they had just powered through, they might have been okay, and you see it on the other end where you see people that have a great week, a great month, and a great year, and then they get into financial ruin because like you said, they assume it’s going to keep happening. So how do you maintain that emotional kind of levelheadedness, I think is the right word, to ride the positives and ride the negatives through?
Danny Abir (27:44):
I think you always have to be conscious of it and it’s a conscious thinking that this is the reality and always be cognizant of the fact that what goes up can come down at least. One of the ways that we grew ACTS was through acquisition, and one of the firms that we took over management of, somebody came and told me there’s this trial lawyer who’s very, very good at what he does; however, he just filed for personal and firm bankruptcy after having a mid eight figure verdict. I’m like, how in the world is that possible?
Pratik Shah (28:21):
Danny Abir (28:23):
But he was in bankruptcy. His creditors were after him, the bank was after him because just like he had a mid eight figure verdict, he had blown something like $10, $12 million on a case that he thought is worth over $100 million. That’s the flip side of it. So unless you’re able to manage that, unless you’re able to be conscious of the fact that some cases are good, some cases are bad, and even the cases that you think are really, really great may not pan out the way you think, but you don’t have to risk it. Just spend what you need to spend on those cases and manage it correctly in order to get there.
The other thing is when you look at somebody who’s about a mid eight figure verdict should not be handling trials in the five figures. I always say you don’t a Ferrari on a cobblestone road. Somebody who was able to get that kind of a verdict should no longer be working on a five figure case, and that’s the other thing that he was doing. He came to me after we took over asking for $30,000 to go handle a trial that his maximum upside, according to him, the best result would’ve been an $80,000 [inaudible 00:29:40]. I’m like, “You’re going to spend $30,000 to get $80,000. What’s the client going to end up with?”
“Oh, I was going to discount our fees.” Why are you in there to begin with? So those are the kind of things that we need to be conscious of. Again, if you are running a business, if you’re running a widget business, if you’re selling newspapers, and one of the things I heard that I loved was John Morgan say that when he interviews people, he’s always looking for someone who was a paper boy or a paper girl when they were a kid. He explained the reason is because they understand business, they understand hustle and they understand trying to make it. That’s what you have to think about. The lemonade game when you were a kid or the paper route that you used to run when you were a kid, those are the kind of things that you have to think about. Your law firm is not any different.
Pratik Shah (30:38):
Yeah. So you start ACTS. You have your own firm for about seven years and then at some point, you decide to start the firm ACTS, and that’s Abir, Cohen, Treyzon and Salo, right? How did you make that decision? I mean, it sounds like your firm was doing great, you had a great kind of money coming in from the mass torts side. You were doing your estate tax planning, all this stuff and sound like you had a good system going.
Danny Abir (31:04):
No, I stopped my own firm. Abir Law Firm stopped in that context about a year into that mass tort firm. Once that mass tort firm came in, I had to dedicate 100% of my time to the mass tort firm.
Pratik Shah (31:21):
Danny Abir (31:23):
So it was no longer my firm. I went and started doing consulting after that, about five years into that, and one of my old friends, Alex Cohen, who was running a property damage insurance coverage practice, asked me to come take a look at his practice. At the time, I think he had about 23 active cases, and he had one employee. The interesting thing was, I said, “How do you get your cases?” He said, “Word of mouth, friends, family, previous clients.” To know Alex is to love Alex. He’s one of the most charming, amazing human beings. I could understand why he was able to get cases without any kind of marketing or branding, and it’s also a niche. It’s a very unique skillset that he has. So he said, “Can you help me grow this?” I said, “I can do this with my eyes closed.”
It’s not PI, it’s not employment. All I have to do is spread the gospel that if you have damage to a property, commercial, residential, Alex Cohen is the person you want to call because he really knows how to handle a case from A to Z. Within I think nine months, we turned his 23 cases into 75, and then he wanted to grow some more. So I’m like, “Okay, now I have to hire for you.”
So we hired an employee or two. At 90, when he said he wants to grow some more, I said, “Okay, now you need infrastructure. Now you’re getting to a point when you need the lit department.” I spoke to Boris Treyzon and Renata Salo at the time, I explained to them my vision as to what I’m thinking we could do with Alex’s practice. They both bought into it and they saw the potential. So the four of us became partners, and to his credit, Boris, in a matter of a year, got himself up to speed to the point that by the end of the year, before the end of the year, he was handling insurance bad faith trials and successfully. So actually what we did year one was almost six times what Alex had done in his last one, and then we doubled that and doubled that, doubled that, and year to date, eight years later, 2022 year to date, we have had over $155 million in settlements and verdicts so far.
Pratik Shah (33:53):
Wow. That’s amazing, and you’ve been growing the business. I mean, we mentioned at the top of the show that you’re up to 70 people and a lot of that, as you mentioned, was your growth of finding good people has been through acquisition, people that are either running their firm, maybe they don’t have the business knowledge, maybe they started their firm and they realize this isn’t what I thought it was. It’s not for me, and you’ve given them a good home. I have several friends that work for you and have worked for you and all say positive things. What do you think is the hardest part about building a business to that kind of size?
Danny Abir (34:29):
Signing checks. They say one of the most stressful things in business is signing checks. I sign dozens daily, so it is stressful. Listen, I think for me, it actually comes very naturally, and I’ll tell you what my ideologies with regards to that, that is not difficult. I think if you do what you love to do and you’re good at and just do that, nothing else, first there’s that old adage that you’ll never work for the rest of your life, but assume you do something you love to do day in and day out and nothing else. You’ll become better and better and better at it, and kind of like Groundhogs Day, if you remember the movie, he wanted to learn how to play the piano. Day one, he’s going like this, and day two, day three. By the end of the movie, he was a concert pianist because he was doing that every day until he got the hang of it.
Same thing goes with us. If you are the trial lawyer in the firm, and all you do is try cases, if you’re a good law motions person and all you do is law motions, if you’re good at technology and all you deal with is technology and all you deal is marketing and so on and so forth, you become better and better at it, and you’re very happy at your job. So what you’re doing is something that you love to do and you become very good at it. I think that creates success. The other part of it is, again, to me, I don’t find difficulty in it, so I can’t tell you what is the most difficult part of it other than the stress that you are responsible for [inaudible 00:36:14] families. That is something that I take home with me. Doing something right, we are doing it without the need to use a line of credit in order to do that. I do have a line of credit with Esquire Bank. The interest rate is very manageable, but much to their chagrin I [inaudible 00:36:39].
Pratik Shah (36:41):
It’s one of those things that you want to have it because you just never know. We touched on a couple of things, and even when I was running my own firm with Arthur, as we grew the practice, we got to a point where we felt comfortable investing what we felt were significant sums into our cases. Nothing like $10 million or anything like that, but we had already had, at the end of the year, at the end of every year, we had an agreed upon amount, which was if we need to invest more than let’s say six figures into a case, we need to start talking to co-counsel because you have to invest what’s necessary to get the proper result, but you don’t want to risk your firm on one case. That’s where the plaintiff’s community comes in, where you can easily say, look, I’ve got $250,000 into this case.
Anything more than that’s going to be real trouble for me. Let’s figure out a split that works. Whether it’s give me money and I want to litigate and I’ll give you a percentage back or whether it’s let’s work on it together and use resources, but that’s an important thing is a lot of people get a big case and they say, “Well, I don’t want anybody to touch this. I’ll just put the money in. I’ll borrow, I’ll steal, whatever, I’ll do whatever, I’ll beg, borrow, and steal to fund this case myself, because there’s going to be a huge payday at the end,” and it just doesn’t always work out.
Danny Abir (37:59):
You are very unique in your way of thinking and very wise, and I’m not just saying that because you’re my friend.
Pratik Shah (38:06):
Well thank you.
Danny Abir (38:09):
I call it penny wise and pound foolish. I prefer joint ventures and co-counseling than taking 100% risk on something. Not that we don’t do it. There was one case that we spent, it was funny enough, a product liability case, I think we were in for $750,000 and we settled it for $4.5 million, but $750,000 is a lot of money to be in for one case. That is something that we have had and I would prefer not to. I prefer to have shared the risk and share the profit because yes, like you said, you’re not putting all your eggs in one basket until you’re at a point that you know what, you can digest even those losses or you learn how to avoid those losses if you can, which is also doing it. If you do things, I mean in eight years, I can comfortably count on one hand the number of zeros we’ve had on cases. In eight years, that’s a lot. That’s not a lot.
Pratik Shah (39:27):
That’s not a lot.
Danny Abir (39:28):
Yeah. Five cases is not a lot. Considering we handle currently, I think we have probably about 500 cases in the office altogether, so five in a matter of eight years, ending up at zero is not significant.
Pratik Shah (39:44):
No, and so I have to ask you this question because we’re all about the hard hitting questions here. What was a moment in that eight years, which was your biggest financial hit?
Danny Abir (39:54):
Our biggest financial hit was a $73 million settlement for AAF, which I believe when you talked to Jonathan [inaudible 00:40:07], I think he probably brought it up. That’s our biggest hit. Next to that, we’ve had on product liability cases, we’ve had one product liability case where we’ve had over $20 million in settlements so far, and we haven’t been able to finish the trial because we started the trial and they wanted to settle. We also had a single event case that came to us in February of this year with a $4 million offer. We settled the case after rejecting an $11.5 million mediator proposal. In May, we settled it for $15 million.
So one thing that most people don’t factor in is your ROI or your return on investment. Getting a case in February, resolving it in three months, that’s a significant return on your investment and your time, both for the client, both for the referring attorney as well as for the attorney that’s handling the case. We got a case that the highest offer was $10,000 or $15,000. We settled it for $125,000 in three months. That is incredible return for the attorney who referred the case over because just think about the ROI. I mean in three months it made it 40 times higher. So I think that’s the one thing to think about is that’s what the success is. Sometimes you work on a case for two, three, four years and you get a huge result, but you’re not factoring in how much time and effort and investment went into getting that result, and that’s the part of it that would be missed if I just tell you what was the greatest success.
Pratik Shah (42:00):
Yeah, no, absolutely. The opportunity cost is something a lot of people don’t think about. What I really meant to ask is now I’m going to flip that, is what were the biggest financial losses that you’ve had in eight years, the ones you talk about that are on one hands and hey, you invested X amount of money. What were the hard days?
Danny Abir (42:21):
Two of them. One of them, we got a verdict and we got Jay [inaudible 00:42:24] on the verdict. We had spent $150,000 on a case and we got an $8.3 or $9.3 million verdict against the city. The judge, Jay [inaudible 00:42:40] and that we lost on the appeal. So that was one. We lost on a case that we tried, this is about four years back. We had a trial. We had spent $250,000 on a case and the injuries were significant, significant TBI and the jury found, they had a theory of liability that even the defense did not put into their head. They just that thought that a cat may have or a dog may have crossed the road and caused the accident, which I have no idea where in the world [inaudible 00:43:13].
Pratik Shah (43:12):
Was there even a mention of a dog in the trial?
Danny Abir (43:16):
No, no. I mean, I’m telling you, when we pulled the jury and the defense, the face, you had to see the defense counsel’s face. It was just in shock, but he was happy. Nobody had even brought up a dog and there was no dog. It was in the middle of a freeway.
Pratik Shah (43:35):
Oh my god. That one hurts worse because it’s not even like lost to some logical reason.
Danny Abir (43:41):
It does. You know what it is, but that is the perfect example of the fact that sometimes the best cases do not necessarily end up where you think it would end up because you’re putting it in the hands of a jury. One of the things that Boris does not like that I bring up a lot, I tell him I hate verdicts. He’s all like, “Why do you hate verdicts?” I said, “Verdicts are really for marketing because you can hit it.” I mean, the fact that you can hit verdicts is a great marketing tool. People would have you try their cases. The reason I’m not a big fan of verdicts is because from a business’s point of view, your client’s point of view, you hit these giant verdicts, they don’t necessarily get paid on.
I spoke to Mike Alder once and I said, “What was your best year?” and he gave me a number and I’m like, “This can’t be. You’ve had eight figure verdicts, many mid eight figure verdicts.” He said, “Yeah, but collecting on them is a completely different point of view.” That’s the thing is you hit a $35 million verdict, you don’t necessarily collect a $35 million result. Not all the time. Most of the time. This year, one of the other cases, the funny thing was we went to trial, $4,$250,000 of insurance, and the night before closing arguments, they offered us $10 million.
Pratik Shah (45:15):
Danny Abir (45:17):
Boris called me and I said, “Accept, accept, accept, accept.”
Pratik Shah (45:21):
Danny Abir (45:22):
He said, “Listen, I’m doing very well. The jury can come back with a lot more money.” I said, “Accept. Talk to the client, it is better for him to take it.” So he was right. He called me the next day and he cursed me and he said, “When we pulled the jury, they would’ve come up with $25 to $30 million.”
Pratik Shah (45:43):
Oh my gosh.
Danny Abir (45:44):
Hold on. This is a lesson. We’re talking about business, right? So let’s talk about business. A four and a quarter policy limit, which means first of all, your $30 million verdict would have been appealed. The verdict itself, with a year and a half to two years for that appeal. Once you succeed, then they’re going to challenge you on whether the policy was open. Remember four and a quarter policy, $30 million. Then you’re going to have to litigate that side for God knows how long, and then the appeal of that litigation for God knows how long. This client would not have seen a penny of the money for years to come. Here, you got $10 million today. You can start working on getting yourself better today without having to deal with litigation for the next five to eight years. God knows at what point you’d cry uncle and say, “Okay, give me that $10 million, we’ll be done with this.” So that’s why I think verdicts are not necessarily what runs your business. It is wise settlements and settlements that you handle at the right time.
Pratik Shah (46:59):
I think when you really sit down with the biggest names in trial law, trial lawyers, you sit down with the biggest names of those guys and gals that have been hitting for big verdicts, I think in the private conversations, they all agree with you, that at the end of the day you need those verdicts because you have to be able to show the insurance companies that you can get there and that they know that they’re taking a risk if they take you to trial, and you need those verdicts for marketing for when you’re getting cases to say, “Look, I can do this. I can get it for you. If push comes to shove, I’m there,” but of course all businesses, all law firms, excuse me, not all businesses, all contingency fee law firms have to make their money from settlements because if every single case, if every time you needed to make payroll, you had to get a verdict, you’d be out of business.
Danny Abir (47:51):
Pratik Shah (47:56):
I can’t even imagine. I ran a little small practice with Arthur about, I think we were up to 13 people at one point, and we would see that payroll come through every two weeks and it would be like a punch in the gut every two weeks. We know it’s coming, but you’re still like, well, those settlements didn’t come in. Why does this payroll got to hit? I can’t even imagine what that’s like running a 70 person practice.
Danny Abir (48:24):
Yeah, it’s a pretty big nut. It really is a big nut.
Pratik Shah (48:28):
That’s not counting marketing.
Danny Abir (48:31):
That’s not counting anything. I mean, remember 70 people you need space for. You have rent. That’s one of your biggest spends and your salaries are the other spend, and just the case costs alone. That in itself is a lot of money that it takes to… I mean, you have 350 cases in litigation. You spend an average of $50,000 a case, just do the math. It all adds up, but having the right people around you is really important. Having the right people in your firm is really important. Making people feel like they’re working as a family, they have a goal together to hit is really important. I did something earlier this year that I’m thinking twice about now. I put a bogie and I said, “If we hit this marker by the end of the year, we will take everybody and their significant others and their children to Cabo for a trip.” That’s over 150 people we have to take to Cabo.
Pratik Shah (49:39):
Well, congrats on hitting the number.
Danny Abir (49:41):
Thank you. We’re taking them. We’re taking them, but I mean you had to see the way people responded to it throughout the year. We use Slack as a form of communication. Whenever there’s a settlement, there’s a flag of Mexico underneath the settlement that people put saying they’re looking forward to it and they’re accounting it and they’re looking at it. I think that’s a significant showing of how people work together. Somebody just said to me, teamwork is dream work today, and it is true. If you work as a team, you’ll accomplish a lot. So my role is to make sure that they don’t have to worry about their paychecks, they don’t have to worry about case costs. They don’t have to worry about being able to pay the experts and so forth, and to try to bring in the kind of people who are like-minded and can help to the success of the firm. Their job is to make sure that they just do what they’re here to do, and I think it helps to be able to like and enjoy who you work with.
Pratik Shah (50:43):
I love that. I mean, I think that’s a great place for us to start wrapping this up, and one of the questions I always like to ask people is, if you could go back in time and talk to the young Danny Abir, what would you tell him?
Danny Abir (50:58):
That is so funny. I wish I could show you the goosebumps I just got from this question. A while back, about three years ago, I fell asleep on the beach in Hawaii and I dreamt that I went back to my second year of law school, and I woke up on the beach in Spain and it was a total back to the future moment. I started talking to myself, telling myself that I should buy, you’re going to buy Netflix stock. Trust me, you’re going to love this. You don’t know what Netflix is, but you’re going to buy the stock. I started telling myself, do this, do this, don’t do this, don’t do that, and then at the end of it, I realized for a second, what am I going to do if I don’t get to my wife and kids? The shock of it woke me up and I looked around and there they were.
I said to myself, I’m never again going to say I wish I could have done something different, and I don’t. There isn’t one day that I live my life and I go back and say I would’ve done something different. Everything we do in building our practices lead us to that. So I have nothing that I go back to change, but the one thing that I would say to anybody listening to this who’s trying to start your own practices and build it, you have to look at yourself and see what it is that you want to do and what you enjoy doing and do that because building your practice means you have to do every single thing yourself.
Meaning you’re the managing partner, you’re the accountant, you’re the marketing person, you’re the lawyer. That’s how you start at least. Until you build something, you’re going to have to do all of that and then you have to bring in people, but you have to figure out what it is that you love to do. For example, if you just want to be a trial lawyer and you don’t want to deal with anything else, just find a home with a place that will appreciate you, appreciate your skill and help you do what you got to do, and sometimes that’s better than starting your own practice.
Pratik Shah (53:03):
Yeah, I think that’s a wonderful way to say it. I think that starting your own practice or running your own business is not the right solution for everybody because it’s all about what is right for you as an individual, and it’s not a negative. There’s a lot of people that go on there and they say, “Oh, I’ll never work for anybody,” and it’s like, don’t look down on people that work for other people. They’re happy there. Whatever you are happy with is what you should do. It doesn’t matter how anybody else sees it.
I think that is a wonderful place to end and a wonderful message to put out there. Danny, I want to thank you so much for taking time out of your busy day, of running a 70% practice to talk to me. I appreciate you very much. You’ve been supportive. You’ve been a big supporter of mine, you’ve been a big supporter of Esquire Tech, and so I’m very, very grateful to you. With that, everybody, thank you for listening. Thank you for watching Bootstrap Solo. And just remember that just because guys like Danny Abir make it look easy, it doesn’t mean that it is. So thank you very much, and for all of you that enjoyed this and got some value out of it, please do me a favor and share this and spread the gospel of Danny and have everybody listen to what he had to say. Thank you very much.