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Video

Known informally as “the godfather of law,” Ed Herman is Managing Partner at Brown & Crouppen. Based in Missouri, the firm has grown to a team of more than 250 legal professionals who have served thousands of clients and recovered over $1 billion for them.

In this video, and the recap below, Ed shares how you can end your love affair with the top line, and instead focus on the bottom line to positively impact your law firm operations and performance. While tempting to focus on handling as many cases as you can or hiring as many employees as you can afford, the most important growth your personal injury firm can focus on is growing profitability.

“For years, we defined growth differently at the firm. But this exercise was one of those breakthroughs in our business that was so effective and was such a lightbulb moment for us,” says Ed.

💡 Want to unlock more best practices from the top minds in plaintiff law? Sign up for the Plaintiff Masterclass to learn from the best in the business — from optimizing marketing ROI to increasing case values and outcomes.

1. Find your Pareto point

What is the Pareto Principle? Applied to your legal practice, the Pareto Principle (also called the 80/20 rule) states that roughly 80% of your revenue comes from 20% of your cases. It’s about figuring out where your profit is actually coming from so that you can focus on the cases that truly drive profitability.

This exercise teaches you how to look at the casework you’ve done and identify where your profit came from:

  • List your settlements and rank them from your highest fee all the way down to the lowest fee. You only need to focus on the cases that get settled with a fee. You have your own process for investigating claims and closing files without a fee, and this exercise doesn’t account for those decisions.
  • Remove your outliers. Again, it may be tempting to leave these in, but they’re the really valuable unicorn cases and they’re just not the typical case. If you leave them in the calculation, you’ll just end up a little nervous about the number of cases you’re eliminating. If you remove the outliers, you can build a little conservatism into the analysis.
  • Break down your cases into 10% increments. As a simple example, let’s assume that you resolved one thousand cases after removing the outliers. The top one hundred cases are 10% of the inventory you settle. Look at the total feel in that top 10%, and continue looking at each increment until you get to 80% of your revenue.

As you review your own numbers, a sweet spot will emerge — the Pareto Point. It’s going to be different for every firm, but it’s the percentage point of cases that you would feel comfortable cutting from your caseload because they produce such a small portion of your revenue.

“When we ran this exercise, we found that the top 55% of our cases generated 90% of our revenue — in just one department within the firm,” says Ed.

2. Identify your criteria for a winning case

Once you find that sweet spot and figure out what a case needs to settle for in order to make it into your top percentage, it’s time to identify your criteria for predicting what a “winning” case looks like. You need to be able to identify on the intake call whether a case is likely to make the cut because if you wait until you’re six months in, then the savings are lost.

For Brown & Crouppen, the challenge was in soft tissue. Which soft tissue cases were they going to keep? And which ones were they going to let another firm handle on their behalf? Ed and the team found that they would keep soft tissue cases in the following situations:

  • Commercial Defendants
  • Concussions
  • Aggravating Circumstances

If a soft tissue case met one of these criteria, they would keep it, and if not, they wouldn’t — no exceptions. Well, there may be some exceptions because there are certain situations where making an exception is both strategic and beneficial. This might include former clients, companion cases, friends and family, or third-party cases.

3. Build your referral network

You probably guessed where this was heading. If you’ve identified which cases you’re going to keep in-house, what are you going to do with the other files? You need to build a good referral network. In the early days, all you need is a handful of attorneys that you can trust and that you know are going to value those cases.

Wondering what makes a good referral partner? Here’s what Ed recommends:

  • Choose partners with the resources and bandwidth to take on your cases effectively.
  • Look for attorneys who have recently gone solo or small firms aiming to build their contingent fee practice. They are often more motivated and offer favorable fee splits.
  • You want strong communication skills and responsiveness. A good partner will regularly update you and ensure smooth case management, maintaining transparency throughout the process.
  • Ensure your partner understands that your firm is still viewed as the “supervising” entity and will uphold respect for your firm’s reputation.
  • They must carry sufficient malpractice insurance to mitigate risk for both parties.
  • And finally, choose partners with the utmost integrity in both personal and professional matters.

An additional advantage of building out your referral network is unlocking all-new revenue streams. At first, Brown & Crouppen was just focused on working with firms on the cases they didn’t want to handle in-house. But it got to the point where they started receiving phone calls about employment law or worker’s compensation cases, so they added new practice areas into their referral mix. Now through their referral network, every type of case has the potential to be profitable.

4. Reduce your overhead

Honing in on your top percentage of cases also has a major impact on your overhead costs. When you streamline your operations, you reduce waste — and by focusing on fewer and more valuable cases, you may realize you can do the work with less staff, office space, software licenses, insurance, equipment, and more.

“Once we reduced those investments, our net impact was more than three million dollars from the work we used to think was there to keep our lights on,” says Ed Herman.

The bottom line

Ed’s final piece of advice? Just run the exercise. You have to know where you are in your practice and there is no harm in running it just to ask yourself — is all this worth doing the extra work for an incremental amount of extra money coming in that may not even be profitable? For Brown & Crouppen, the answer was clear:

“We first did this exercise in 2008, and it changed our practice forever. We should have repeated it much sooner than we did but after finally repeating it in 2024, our practice will be changed again forevermore going forward,” says Ed.

💡 Get insider access to the top minds in personal injury as they share how they’re growing case volume, increasing case value, and maximizing profitability — and all with a winning culture. Sign up for the Plaintiff Masterclass and become an insider today.

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Video

Maximize Profitability In Your Personal Injury Firm With Ed Herman

Known informally as “the godfather of law,” Ed Herman is Managing Partner at Brown & Crouppen. Based in Missouri, the firm has grown to a team of more than 250 legal professionals who have served thousands of clients and recovered over $1 billion for them.

In this video, and the recap below, Ed shares how you can end your love affair with the top line, and instead focus on the bottom line to positively impact your law firm operations and performance. While tempting to focus on handling as many cases as you can or hiring as many employees as you can afford, the most important growth your personal injury firm can focus on is growing profitability.

“For years, we defined growth differently at the firm. But this exercise was one of those breakthroughs in our business that was so effective and was such a lightbulb moment for us,” says Ed.

💡 Want to unlock more best practices from the top minds in plaintiff law? Sign up for the Plaintiff Masterclass to learn from the best in the business — from optimizing marketing ROI to increasing case values and outcomes.

1. Find your Pareto point

What is the Pareto Principle? Applied to your legal practice, the Pareto Principle (also called the 80/20 rule) states that roughly 80% of your revenue comes from 20% of your cases. It’s about figuring out where your profit is actually coming from so that you can focus on the cases that truly drive profitability.

This exercise teaches you how to look at the casework you’ve done and identify where your profit came from:

  • List your settlements and rank them from your highest fee all the way down to the lowest fee. You only need to focus on the cases that get settled with a fee. You have your own process for investigating claims and closing files without a fee, and this exercise doesn’t account for those decisions.
  • Remove your outliers. Again, it may be tempting to leave these in, but they’re the really valuable unicorn cases and they’re just not the typical case. If you leave them in the calculation, you’ll just end up a little nervous about the number of cases you’re eliminating. If you remove the outliers, you can build a little conservatism into the analysis.
  • Break down your cases into 10% increments. As a simple example, let’s assume that you resolved one thousand cases after removing the outliers. The top one hundred cases are 10% of the inventory you settle. Look at the total feel in that top 10%, and continue looking at each increment until you get to 80% of your revenue.

As you review your own numbers, a sweet spot will emerge — the Pareto Point. It’s going to be different for every firm, but it’s the percentage point of cases that you would feel comfortable cutting from your caseload because they produce such a small portion of your revenue.

“When we ran this exercise, we found that the top 55% of our cases generated 90% of our revenue — in just one department within the firm,” says Ed.

2. Identify your criteria for a winning case

Once you find that sweet spot and figure out what a case needs to settle for in order to make it into your top percentage, it’s time to identify your criteria for predicting what a “winning” case looks like. You need to be able to identify on the intake call whether a case is likely to make the cut because if you wait until you’re six months in, then the savings are lost.

For Brown & Crouppen, the challenge was in soft tissue. Which soft tissue cases were they going to keep? And which ones were they going to let another firm handle on their behalf? Ed and the team found that they would keep soft tissue cases in the following situations:

  • Commercial Defendants
  • Concussions
  • Aggravating Circumstances

If a soft tissue case met one of these criteria, they would keep it, and if not, they wouldn’t — no exceptions. Well, there may be some exceptions because there are certain situations where making an exception is both strategic and beneficial. This might include former clients, companion cases, friends and family, or third-party cases.

3. Build your referral network

You probably guessed where this was heading. If you’ve identified which cases you’re going to keep in-house, what are you going to do with the other files? You need to build a good referral network. In the early days, all you need is a handful of attorneys that you can trust and that you know are going to value those cases.

Wondering what makes a good referral partner? Here’s what Ed recommends:

  • Choose partners with the resources and bandwidth to take on your cases effectively.
  • Look for attorneys who have recently gone solo or small firms aiming to build their contingent fee practice. They are often more motivated and offer favorable fee splits.
  • You want strong communication skills and responsiveness. A good partner will regularly update you and ensure smooth case management, maintaining transparency throughout the process.
  • Ensure your partner understands that your firm is still viewed as the “supervising” entity and will uphold respect for your firm’s reputation.
  • They must carry sufficient malpractice insurance to mitigate risk for both parties.
  • And finally, choose partners with the utmost integrity in both personal and professional matters.

An additional advantage of building out your referral network is unlocking all-new revenue streams. At first, Brown & Crouppen was just focused on working with firms on the cases they didn’t want to handle in-house. But it got to the point where they started receiving phone calls about employment law or worker’s compensation cases, so they added new practice areas into their referral mix. Now through their referral network, every type of case has the potential to be profitable.

4. Reduce your overhead

Honing in on your top percentage of cases also has a major impact on your overhead costs. When you streamline your operations, you reduce waste — and by focusing on fewer and more valuable cases, you may realize you can do the work with less staff, office space, software licenses, insurance, equipment, and more.

“Once we reduced those investments, our net impact was more than three million dollars from the work we used to think was there to keep our lights on,” says Ed Herman.

The bottom line

Ed’s final piece of advice? Just run the exercise. You have to know where you are in your practice and there is no harm in running it just to ask yourself — is all this worth doing the extra work for an incremental amount of extra money coming in that may not even be profitable? For Brown & Crouppen, the answer was clear:

“We first did this exercise in 2008, and it changed our practice forever. We should have repeated it much sooner than we did but after finally repeating it in 2024, our practice will be changed again forevermore going forward,” says Ed.

💡 Get insider access to the top minds in personal injury as they share how they’re growing case volume, increasing case value, and maximizing profitability — and all with a winning culture. Sign up for the Plaintiff Masterclass and become an insider today.

Move gallery to the right
Back to Resources
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