192: Case-Level Financing Strategy for Lawyers with Dr. Howie Golden, Capital Financing CEO

So you mentioned you disrupted the industry. You want to explain that in a little bit

Dr. Howie Golden: more detail, yeah, to focus more on the case expense financing side, nobody had really tapped in or challenged the status quo of the contingency model. Lawyers felt like it was their fiduciary obligation to cover their clients case expenses, because that's the way they've learned it their whole careers. And the American Bar Association, no Bar Association, requires that their clients don't expect them to cover their case expenses. Their clients don't expect them to do it for free, and their clients don't expect them to take the risk. So when we started looking at this business model and looking at the flaws in it, we came up with a model that allowed us to not invest in the firm, but actually invest at the case level, and then also do something that nobody had even tried. Is doing it non recourse, meaning that if the case went south in trial, we would not recover, just like the lawyer wouldn't whereas, if a lawyer has their own money in their cases, they would lose it. If they borrowed money with a line of credit, same thing would happen. They would lose their money as well, because that is a recourse personal guaranteed loan that the firm would take.

Well, good morning, good afternoon, good evening. Welcome to the 10 Golden Rules of Internet Marketing for Law Firms podcast. Great guest today, Dr Howie Golden will meet him in just one minute. As the regulars know, I always do a short commercial for a 10 golden rules product. And 10 golden rules is an Internet Marketing for law firms digital agency, and we built a technology that we call tgr boomerang. If you're watching on video, you can see here my background, there's a little yellow Australian toy boomerang. And the way it works is you throw it out and it comes back to you, and you catch it, and that's a boomerang. So we call this product Boomerang, because some of your leads go out and they don't come back to you, but by adding the technology Boomerang, those leads come back to you. The way it works is a lot of people call you and they hear the recording, particularly if they're the Google calls, like local service ads. LSA calls Google screen calls, they hear the recording and they hang up five to 10% of your leads. You're missing those calls, and LSA even marks those as missed calls. Now you don't get docked for it, but technically, those are leads that are going away. So with tgr Boomerang, we grab the phone number in the name, and 90% of the time Google's got the phone number, we text it to your intake team and you can call them right away. Hey, were you calling such and such a law firm? We'd love to help you with your case. Another way boomerang works is when people fill out the form on your website a lot of times. People check their email a couple times a day, and they call those people back. Well, that's too late, because people, if you don't jump on those form, leads within like, five minutes, the quality of that lead degrades because they're just going to call another law firm. Boomerang grabs the name, phone number from that form lead again. Text it to your intake team. They call them right away, and we convert those leads at a

much higher rate. One of our technical products is tgr boomerang that helps our clients convert at a higher rate. Add over Dr Howie, golden capital financing. Welcome to the 10 golden rules podcast. Thanks for

Dr. Howie Golden: having me, Jay, happy to be here.

The question I ask people off the top is, tell us a little bit about your journey. How did you get into the legal financing business? And then what I want you to do is give me the legal financing 101, because for me, I'm always confused, like, are you financing the firm, are you financing the injured party? But you're going to explain all that after you tell us your journey. Yeah, my

Dr. Howie Golden: journeys was quite unique. I love speaking of it. I was a doctor for 18 years, so I have no financial acumen. I didn't have any business or financial classes. I can't even do a spreadsheet. And I'm the CEO of a financing company. I started another company through my practice and through finding out treating personal injury patients, and start doing MediCal funding, traditional medical funding back in 2006 and it was rather groundbreaking at the time, and everybody's well aware of that. Refactor receivables, 2010 I got introduced by lawyers to plaintiff financing, and that was the beginning and the birth of capital financing. And I came out of the box and wanted to do something to disrupt the industry that didn't it rubbed people not too well. Where I capped the interest at 12 months, which nobody had done. It was the Wild Wild West, and I was told I'd be out of business in six months. And was not well received. And I'm proud to say, 16 years later, 30 plus states, I'm still doing the business model. And so now we run a rather large financing company, and I retired from practice in 2014 to focus solely on my businesses today that I'm having, that I'm currently going to talk about today.

Awesome. That's cool. So why don't you try and break down law firm financing one on one in particular person? Injury, because I know that's where there's a lot of cash flow issues, but you can talk about it other practice areas and dumb it down, like assume that me and some of the other listeners are a little bit confused on how financing works for law firms.

Dr. Howie Golden: Well, I mean, there's been a status quo in this industry and contingency law for 50 plus years, different than a traditional law firm practice where lawyers get retainers from their clients. Contingency lawyers are the only ones, the only legal profession that does not so they're subject to financing their cases, either through their own money called an operating account, or if they can get a line of credit, which not everybody can receive, just for various reasons, history of the firm, credit, different issues they may have, size of their firms, they can use a line of credit. A line of credit gives more flexibility where that particular line could be for operating, it could be for marketing, could be for case expenses. You know, law firms can leverage financing for their firm through institutional capital, such as a line of credit, or they end up having to use their own money, which has its own complexity to it and challenges.

So again, I need it like super simple guy gets in a car accident, okay, badly injured hooks up with a law firm who needs money, who gets the money? Where do they get the money? And very simply, what's it called,

Dr. Howie Golden: the plaintiff or the lawyer? Are you talking about in financing?

Obviously, it's expensive to try the case. There's not going to be the insurance company's not going to cough up any money for 612, 18 months. Guys injured needs bills paid. Firms try the case is going to go to trial. Firm needs funding for resources to pay their lawyers, because they aren't getting any money for 612, 18 months. So where does the financing come from? Who gets it? What is it called in whether the law firm get some money, or the injured party gets the money, gotcha.

Dr. Howie Golden: So. So capital financing does two of those scenarios. So we do plaintiff financing, where a plaintiff that's having issues with paying their expenses, they would seek out our services, either on the internet or through their lawyer. That was our introduction to the industry. So we would advance cost to the client, wait for the case to settle and help them out to allow and which allows the lawyer to gives them more time on a case if necessary, but also helps their their clients from possibly going homeless or not paying their bills. On the flip side, there's the lawyer side, where the lawyers would seek financing for their cases, to cover their case expenses. Some seek that. Some just use their own money. That was my example of a line of credit, or using their own money. Those are the really two options that they have. And that's the dumbest down way I can say it, is that they either finance their own money, their own cases themselves, or they're going to borrow money from an institution like a line of credit. And then there's something that we do.

Okay, great, so you mentioned you disrupted the industry. You want to explain that in a little bit more detail, yeah, to

Dr. Howie Golden: focus more on the case expense financing side, nobody had really tapped in or challenged the status quo of the contingency model. Lawyers felt like it was their fiduciary obligation to cover their clients case expenses, because that's the way they've learned it their whole careers. And the American Bar Association, no Bar Association, requires that their clients don't expect them to cover their case expenses. Their clients don't expect them to do it for free, and their clients don't expect them to take the risk. So when we started looking at this business model and looking at the flaws in it, we came up with a model that allowed us to not invest in the firm, but actually invest at the case level, and then also do something that nobody had even tried. Is doing it non recourse, meaning that if the case went south in trial, we would not recover, just like the lawyer wouldn't. Whereas, if a lawyer has their own money in their cases, they would lose it. If they borrowed money with a line of credit, same thing would happen. They would lose their money as well, because that is a recourse, personal guaranteed loan that the firm would take.

So that's pretty significant jump in the industry, right?

Dr. Howie Golden: Massive? Yeah, the non recourse is certainly sought out. Not everybody can qualify for a line of credit, and that's another problem too. The industry is flawed, because he who has the most capital wins, right? When David is fighting Goliath, and they have all the time and all the money, and law firms don't it puts a lawyer at a significant disadvantage, and there's a lot of implications when law firms don't have a lot of resources and capital, and it impacts the case in many ways. So disrupting the industry was really looking at. This business model and saying, Where can we do something better that can impact every law firm? So I don't have benchmarks or issues with providing my services to every level, law firm, new law firms, established law firms. It doesn't matter. So we've been able to solve a problem that existed for years, and mostly it caused cash flow problems. So disrupting the industry allowed us to really tap into a really dark, you know, two words, cash flow. And a lot of law firms are experiencing that, and we're really working on helping and changing that for the industry.

So let's do some basic math and talk about like a personal injury firm. I'm going to use as rounded numbers as possible. So let's say the firm signs 20 cases a month, and let's say those cases typically take 12 months on average to settle or go to court and get resolved. Let's say each each each case, on average, I'm going to use again, as round of numbers as possible. A lot of firms do better than this, but let's say the $30,000 cases, on average, a firm is going to make $10,000 so that's 200,000 a month that these cases should net them in 12 months. So 20 cases, they're going to net $10,000 in final fees. The injured party is going to get $20,000 because each case is worth 30. Lawyer gets a third just to keep the math simple, so when you sign those cases, let's say you have a really good marketing month. You sign 20 cases, or you start a new firm. You leave a firm, you start and you sign 20 cases. You've got $200,000 coming in 12 months, but you've got to run your law firm for the 12 months. That's the simple math we're talking about, right? Sure. And if you hired a new agency like 10 golden rules, and you had a really when we first turned on local service ads for some folks in the very early days, we got our clients approved really early on, and sometimes they get 10 or 15 more cases than their regular case flow that they used to get from referrals. And maybe we do a few other things, like their SEO starts working better, and they're getting like 20 more cases a month. Now you've got 40 cases a month in your case inventory, but again, that money's not coming for 12 months. So that's exactly where you guys come to the

Dr. Howie Golden: party, right? It would be very generous to say that case is settled in 12 months. So if we went on that algorithm, which is not really the case, but if we did that, yeah. I mean, where we can come in, more or less, is, if you're asked, Are you asking me how what I can do can impact the marketing for a law firm?

Or more? Yeah, that's where I was going to go, was the marketing. Because, you know, a lot of times we run into that with clients, where we'll start working with them, we'll have six or eight months, you know, get things going, and then after a couple months, something like the LSA is kicking, or paid campaign, or sometimes there's stuff that's broken on the website, we fix it. And it just like, it's never magical. But like, between that and working on some content, some video, and fixing the Google Map setup. They'll be signing 810, 12 more cases a month than they were. But the good news is, they've got these cases, but the bad news they've got to hire a paralegal, a lawyer, and they don't have the money to put back

Dr. Howie Golden: into marketing. Yeah. So there's a lot wrapped into that. Let me tie in finance to marketing, and this is an interesting way to approach this. So with your example, yeah, the lawyer may be netting 10,000 a month, but one of the things that we don't ever consider is obviously there are operating costs, general operating costs that could be any arbitrary number. Then there's the marketing cost as well. So we got to throw that in there too. But then what we didn't do also is those cases didn't just evolve and happen without them putting their own money into the cases as well. And the more cases they have, and more cases that go into litigation, those law firms are investing more money in those cases. So there's not necessarily a lot of money windfall coming in, as you would assume when you really look at the business model, and they're all not settling in 12 months. So how we approach it is, when a law firm is putting their own money in cases, they tie up their capital in cases, in the case expenses across all those cases. So the more marketing that you're doing and the more cases you're bringing in, that's a wonderful thing, but that creates more intensive financial burden on that law firm, while they have to put the money in the cases. So lawyers accumulate. Law firms accumulate 10s of 1000s, if not hundreds of 1000s, if not millions, of their own dollars. Dollars that they have tied up in cases for months, even to years, and it's an actual the crazy thing is, it's an interest free loan that they're giving to their client. And none of us, you, I, we wouldn't take hundreds of 1000s of dollars put it into a Wachovia savings account that didn't earn us any interest. It doesn't make any financial sense. So what happens is, that these law firms are strapped. Their money's tied up, and from somebody like you, Jay, that are looking to their clients to to invest more money to get a better outcome, to continue to invest in marketing over a

period of time. Because I think you would agree, attrition is a big problem in your industry, because if they don't see results within a certain period of time they stop now that could be also they don't have enough money in their market. I'm in Atlanta. They may not have 50,000 100,000 a month to put into their marketing. So for somebody like you, how I would approach that, or for the law firm, is this very simple. If your money is not tied up, you can use it to market with Jay you can take a $25,000 budget and raise it up to 50 now, all of a sudden, you're going to get more cases, and you're not going to strap your money in cases any longer than I call dead money. You can't get it back until the case settles. So what we do in our approach and how we communicate in our strategy to law firms is we would identify the law firm their pain points, and one of them is the more money they have in their cases. Let's talk about how we can get the money out of the cases before the case settles. We have a strategy where we will reimburse a law firm at the case level, not the firm the case level, and reimburse the firm money that they have tied up in the case. So if that law firm has 50,000 tied up, we can review the case and wire money and reimburse that firm, Jay they have that money to use for operations, to add for more paralegals, more staff, to have the volume or to put it into your marketing budget. Game changer right there. And no one has ever looked at ways to do that. So again, when we talk about disrupting it's really thinking outside the box in ways to solve this really flawed business model of contingency law that has been around for so long. So I hope that answers your question in an interesting way to tie financing and marketing.

I love it. Another thing you mentioned in our previous conversation was about tort reform and how it's kind of changing the game. You want to riff on that one? Yeah, it's a

Dr. Howie Golden: problem Florida, Georgia, Michigan, Texas, so many states are going through it. Tort reform impacts everybody, the insurance companies. You know how, like I said before, they have all the time and all the money, but law firms do not, and with tort reform cases, more cases are being filed into litigation. More cases that go into litigation means that they're not settling in 12 months. They're going to take a lot longer to settle. And the fight starts, and the fight continues. And the more cases that go into litigation, the more financial impact it has on the law firm, because that's when costs go up. And the more cases that you bring them, it perpetuates the problem. It never goes away. And tort reform is definitely extending the length and the time in which cases are settling through mediation or trial, and that alone impacts cash flow. So if a law firm is not having to use their own money, and they can borrow money, that reduces and removes the impact that they have on the length of time these cases take to settle because it will prevent the cash flow issues that they're typically going to see that they probably already had before. I always say that, you know, restaurants that went out of business during covid, most likely already were having problems. Covid exposed the problems when you have cash flow issues, which most, eight out of 10 law firms that I speak to do, even really successful, well known lawyers, believe it or not, so when you have tort reform, it can really magnify this cash flow problems even more.

Yeah, if you push the average case time out 612 months, it pushes your cash flow shoot to the point of really stress, right?

Dr. Howie Golden: Yeah. I mean, I got we don't have time today, but story after story about these scenarios and why people are calling me and asking me for help. There's so many stories behind it. But again, we

definitely have time for a story. And I love a good story. So you can, for instance, a market and a PI firm like you don't have to name the firm, but please go ahead.

Dr. Howie Golden: Sure got referred a very well known lawyer in Georgia that I've known. Know his name for years. Knew he was the top of the top echelon of what he does. I never met him before, but he was referred to me by somebody else, and said, you need. To speak with how he capital financing. He was going through a divorce, and it really impacted him. He has a very low volume of cases, I think it's around 30. He focuses on high damages cases in the med mal, birth trauma, wrongful death. Area of law uses a line of credit that was capped and tapped out at a very high interest rate that was depleting his cash flow every month at a very high 18% per annual interest rate. He's going to pay that interest every month on that very large line in the millions, and then he had 500,000 of his own money tied up in cases that he wasn't making any money on. When you have 30 cases that are really large damages cases, and they don't settle off, and there's no volume of cases settling, it can really put a big damper. Now, what was the big issue in this call? He couldn't make his overhead that month never happened before in 20 years. So he needed money that day to be able to get back into his firm to make his overhead and pay his staff. So what he did with us was he sends a ledger of a case of all the costs that he's invested in that case. We would review it based on the case facts, and if we like the case, we can invest in this case, we would reimburse him the money that he had in the case, we did it in a 24 hour period, wired the money to him, saved the day the next day, three more different cases of ledgers, of different cases, of all the costs that he had put in. And he's like, game on. This is a game changer. Never seen this before. So our goal with him, and how we approach it, is low hanging fruit. Let's get all of his 500,000 back in his pocket so he has breathing room. There's no benefit of him having all of his money tied up in these cases any longer, when I can do

it for him. And then then we're going to chip away at the line of credit, and we're going to as we do that, it's going to ease the monthly cash flow issues for him. And because of my relationships in the industry, and the relationships I try to attain with my clients, I'm not just going to leave it there. I take it to the next level. I'm introducing him to other banking institutions that I know that will not only probably give him a line, they're going to give him a bigger line at half the costs of 18% so a full scale win for this one law firm. And this was just this week, earlier this week, and that's just a great story about the problem and the solution are all tied together, and what if I wasn't there? Jay, what if this model was not existence? That's why what we're doing is disrupting the industry, because we're really solving a problem that nobody has talked about, but it's real. And by the way, the reimbursement model, which is one of the models that I use within my case financing, and I love it. I talk about it because it's such a cool model. It was developed three or four years ago when a lawyer from Houston was referred to me that could not make his overhead. Also he had been practicing for 25 years, and he's like, I heard you were really creative, and you think outside the box, can you help me? And I said, Well, I said, Well, I don't have contracts to do this, and I've never done this before. We can do it on a handshake, but send me a case, or cases that have an aggregate of the amount of money that you need to pay your payroll this month, which is what he did, and that was the birth of a reimbursement, because I reimbursed him a large sum on one case, and that actual case settled in 45 days for three quarters of a million dollars, and that changed the trajectory of my company four years ago.

Love it. Yeah, I normally ask this question last or second last, but I'm going to ask it now. What's a great introduction for you? If we know of someone who's going through these things? Who should we send your way?

Dr. Howie Golden: Gosh, you know, I get asked who is the kind of client you want to work with? And I always thought at the very beginning, the smaller law firms that were just starting out that didn't have the capital, the cash flow, and then I really started to recognize that I'm working with a lot of volume firms that have 1000s of cases, because I'll do this, I'll do what I do as as as long as the case has $1,000 as minimum as of $1,000 I can work with that firm. I can pay invoices on the front end that they get, or I can reimburse their cases, their their capital. When you're dealing with firms that have a lot of volume, and they have 1200 500 1500 in cases, and they have 1000s of them, or hundreds of them, you don't think about it, they can write checks for $1,000 all day long. But when you take the magnitude of the aggregate of all the cases, it's a massive windfall for that. My strategy when I first speak to them is. To get them to I have to deprogram lawyers in the way they think. Some are very easy and it's just green light go. Some of them you have to really work on. To me, the first call is a strategy call to first understand their firm, ask questions, act like a consultant, be like a consultant, find their pain points, and then figure out where we can find our what we do in our niche to solve their problems. The goal is this is getting a law firm to understand that it's not your fiduciary obligation again to have to tie up your money. You don't have to do that anymore. No one's requiring you to do it. Nobody suggests you have to do it. And we have to tell you and teach you that there's a better way of doing it. And if you buy into the idea that your money can be protected by using it somewhere else and worked out. You know, it's lost opportunity when it's stuck in cases. I actually say it's almost like a Ponzi scheme. It never goes away. Your case is settled. You put it in your in your firm, and then it goes right back out into

another case, and it never ends until you settle the practice. And the more Jay helps with his marketing, the worse the problem gets because you're not only costing them more money in marketing, but they're getting more cases, and those cases are not going to settle for a while. So it's a strategy call, figure it out, but small firms, large firms, single lawyer firms, 20 lawyer firms. It doesn't matter, but how we operate with each firm is different because you can't work with the how rapid and how fast a high volume firm or a bigger firm with a lot of cases, operates as a more nimble, smaller boutique firm. So we have to kind of customize our model to work within them, to make it stressless, and to be clear, so people would understand that. Watch this. It's very easy too. It only takes three to four minutes of a law firm staff time to send us what we need to do this. This is not a weeks long or months long process. It's a very quick turnaround process to do this, which really is helpful for the staff. So it's not a negative impact. It's not a it's not brain damage for them.

Great. Now I can go through the rest of the quick one liners. Go ahead. Do you have any personal productivity apps or techniques that you use that you could share with the rest of us?

Dr. Howie Golden: I'm not a big techie, so I don't use any personal stuff to kind of guide me along with personal technology kind of stuff, but I'm learning the AI world right now. So if

that you know, helping me out. How about productivity? Like, obviously, you probably move a lot of paper in a day. How do you keep yourself organized and prioritized?

Dr. Howie Golden: I use Salesforce. I live by my CRM. I live by my tasks. I ventured into Calendly. It's been a game changer for people I live in. People just book with me, and I don't even know who they act they are because they got an email. My schedule gets filled up and it's crazy. I got to leave some some free time during the day sometimes, because it gets crazy. So you gotta leave work blocks, right? Work blocks, that's right. So I would say to you, those make me really productive. And I will tell you that teams, calls, video calls, have changed my business because we're all over the country. To be able to do intimate, personalized calls like this, I don't have to go and have meetings, and, you know, face to face, locally or nationally. So I love it. Game Changer. Game Changer.

I know the answer is yes. What is your personal wellness and fitness routine?

Dr. Howie Golden: So I have a 15 year old daughter. She just became a workout partner and started driving. So pretty, pretty cool couple of weeks that we've experienced. I'm in the gym around three times a week. I started doing intermittent fasting in probably the last four or five months, and it's been unbelievable with shedding some some small pounds that I needed the dad bod. Not too bad. I'm pretty trim right now. I'm an advocate play competitive softball, fast pit softball till to this day, and I golf avidly. So I'm active, and I do walk a lot now, and I have, if it makes you smile at all. My advice is carbs, bagels and pizza only on the weekends. Now, so the Cheat Day is a cheat weekend. That works. That's it.

Now, who's your NFL or sports team?

Dr. Howie Golden: I should lie. I'm a little embarrassed. I'm not sure if you can. If your viewers can see in the top left corner of the screen, maybe it's the right corner, you may be able to see the Jets emblem up there the football helmet. So I'm a Jets fan. I've lived in Atlanta.

Congratulations. You're recycling your quarterback.

Dr. Howie Golden: It's a, it's a, you know, nothing surprises the jets with the Jets. But, you know, I live in Atlanta. I've been here 32 years. People always ask me, Why am I still a Jets fan and not an Atlanta Falcons fan? And my joke is, is the Atlanta Falcons are the jets of the south so it's it's a lateral move. Why even do it? The heartache is the same. No matter your second team, though, I root for them because they're local. They don't compete. Yeah, I stayed local. I stayed loyal to the northeastern teams where I'm from, New Jersey.

Well, speaking of quarterbacks, I moved to South Florida, and it wasn't until. Intentional. I was just an NFL fan, but when you're here and you know, you sign a guy in the draft, then you get a new coach, I became a Miami Dolphins fan. So I'm happy to report that we're going to recycle to a taglia boa, our quarterback to the Falcons. So you'll have an equal mess, I'm sure. I mean, maybe to light it up again. It'd be great.

Dr. Howie Golden: Well, like I said, the Falcons are the jets of the South only. They would do something so bad with a quarterback that already has a lot of health problems and bringing somebody else that can't stay on the field. And I'm glad that the Jets didn't bring to a to their team. Let's leave it at that.

Yeah. I mean, I guess to us, kind of like your superstar backup. That's pretty good, because the dolphins have to pay them like $80 million or something.

Dr. Howie Golden: Yeah. Again, even with Geno the league minimum, stuff makes sense for these teams. But anybody the jets would bring in was a bridge quarterback for next year's draft, where they're loaded. So that was the the ultimate plan all along. The question is, who is the perfect fit for a short term plan, and we'll see last question.

Where can people get in touch with you?

Dr. Howie Golden: Email Howie at injury financing.com how we H, O, W, I, E, injury financing.com Our website is injury financing.com and for the lawyers that are there, I invite you to go to the attorney page. I have other podcasts that I've been on, and they're all very different, and they all cover different subjects and how I approach our business. And then I've written probably 30 to 50 blogs for the industry, even including how case financing and lawyers using their own money in cases, is impacted by IRS taxes, which most law firms don't even realize the tax implication. So happy to send you any blogs with my email. Just send me an email, and I'm happy to with your permission, I'll send it over to you.

Howie, this is great. Thank you so much, and I know I'm going to refer a bunch of my clients to this podcast

Dr. Howie Golden: and directly to you, Jay, thank you for having me. This was actually really a lot of fun, and you do a great job, and I look forward to working with you and more of your clients as we've now become friends and getting to know each other. So thank you so much. Awesome.