In this lawfully creative episode, Matthew Davis, C.E.O. and Owner of Davis Business Law, P.L.L.C., shares how he runs his firm’s innovative Custom Legal Department Program, where they work proactively with ambitious business owners to protect, improve, and grow their enterprises.
You will discover:
– Why productive paranoia is so effective for lasting success
– The most common business vulnerabilities and how they change as you grow
– What a good legal counselor should do and say (and how you don’t want to scale without one)
Episode Transcript
Scott Ritzheimer
Hello, hello and welcome. Welcome once again to the secrets of the high demand coach podcast. And here with me today is the one and only Matthew Davis, who’s an attorney, a heavy metal guitarist and an entrepreneur, who has led his solely owned firm Davis business law through over 1,000% growth over eight years, making it one of the rare law firms ever to make the Inc 5000 list. The firm currently has eight offices from Austin to Kansas City, with over 25 years of experience, helping business leaders with their legal and entrepreneurial matters. Davis now teaches them how to deal with their vulnerabilities so they can capitalize on their opportunities through his firm’s proprietary, strong protected business system. Davis holds degrees from the University of Oklahoma, Cornell University and Cornell College, and he’s here with us today. Matthew just so I want to start here. So one of the biggest challenges that I have in the legal space, with the entrepreneurial space, is that entrepreneurs are kind of up and out. Give me the risk. Let’s get going. And a lot of folks in the attorney space are down in it. Let’s, let’s get rid of the risk. Let’s, you know, mitigate as much as we possibly can. Don’t do that, and it can feel like a wet blanket, even on a cold day. What is the key for getting entrepreneurial thinkers and smart business law people to communicate effectively together?
Matthew Davis
You are right, sir. That is absolutely the tension, because yeah, entrepreneurs think they’re 12 foot tall and bulletproof. That’s, that’s the nature of the game, right? And a lot of lawyers tend to be wet blankets and and they and they don’t, frankly, communicate. Well, one trick that we’ve learned is with our clients that we’re working for, largely as their general counsel about that is we set meetings and we use, I wrote about the business immune system. We use that that’s in my book, The Art of preventing stupid Okay? And what we do is we teach them how to brainstorm about their vulnerabilities, how to be productively paranoid, right? And then they can deal with it. Because if we’re just showing up, being grumpy, going, Well, you shouldn’t do that. Well, you know, they want to grow. And I get that because we run our company as a grass company, the fine was one’s company, and you have to give them the freedom, and you have to show them why we’re being concerned about this, because we view our job as helping them learn to play a little defense so they could play a lot of offense, right?
Scott Ritzheimer
What would you say are some of the most common vulnerabilities that you see the businesses you’re working with overlook?
Matthew Davis
Now that depends on the size of the business. Okay, when you start at startups, real easy. Get your limited liability in place. If you have more than one partner or member in the business, get a really good operating agreement that allows you guys to split sheets. Okay, we just did that with the company down in Austin yesterday, four partners in the business. I’m like, Guys, there’s a reason divorce is Apple, you know, slide. The divorce courts are there. Everybody thinks it’s Wine and Roses, even when they’re starting businesses, guess what? It’s not always. Other things I always press right at the start of the business are get, let’s get a good customer contract, and let’s get a good employee contract. Okay, those are your foundational documents. Now, if you’ve got vendors, let’s worry about that too. Be careful what we’re signing when we start the company. So that’s your startup package. And as your company grows, your needs, your challenges grow, and once your company is a sizable company, you’re starting to think about succession, and you’re starting to think about attorney or not? Well, we think about attorney potential and, you know, and, of course, client retention too. But no, there’s a word we sometimes use sticky, you know. We want to make the company sticky for the employees. Start worry about that. Start put in structures that make that short answer to your question is, is? It depends on the size of your business. And by the way, we’ve got a really good little breakdown of what we sized up as the needs over at our resources tab Davis business law. It’s called the strong open. Protected business checklist. It maps out your main concerns based on the size of your business.
Scott Ritzheimer
I love that. I love that. So a lot of our folks listening are doing so as they’re going through the process of scaling up similar journey and trajectory to yours there at the firm, and they’re growing really, really quickly. And when you do, you go from being like 12 foot tall to 120 foot tall, at least in your own eyes, right? Like there’s this sense of, you know, we can almost do no wrong in that kind of fast or even hyper growth mode. What are some of the things that we are least likely to pay attention to, because we’ll deal with that later, but really shouldn’t be. Really should be paying attention to the most?
Matthew Davis
You know over the years, I’ve identified and then taught people to think, really in three strains about their vulnerabilities. First one is, what are the catastrophes? Where are you going to get sucker punched by the world? Second one is, what are you ignorant? What don’t you know that you need to know? That’s a hard question, right? That’s a hard question, but the people that answer that well do really well. And the third one is, where are you being in that meaning, where are you slacking on? Okay. And the people that want to brainstorm around those three columns, those three strains, are the ones that do really well. And, you know, everybody messes all of them up. It happens, but the people that do the best job of making the fewest unforced errors are the ones that are successful. Yeah, because we all get bad luck, right? It happens. We all get into something. We don’t know what we’re doing, and we all get slack. I mean, yeah, I had to send out three emails this week to my attorneys saying, answer the file, right? We closed more cases in two days this week, after I did that, when we did all last week, answer the file. How hard is that? Yeah, just get them getting slack.
Scott Ritzheimer
One of the places I find it most effective for both the kind of the the attorney mindset and the entrepreneurial mindset is in particular that second when you talked about exploring those things that we don’t know, that we don’t know. The the thing that attorneys do they can drive the entrepreneurial minds crazy is they can poke holes right? What about this? What about this? What about this? And the thing that the entrepreneurial mindset can do more effectively than most of us is come up with creative ways of solving for those problems. And what I’ve found in bridging those two worlds, I’d love to hear your thoughts on this, when we can actually dedicate some time not just to our strategic planning, but to really looking around and saying, Hey, what don’t we know? We we don’t know. And and using those not just as a reason to kind of get scared about what could happen in the economy, but using that as a way of being creative about how we would respond. I found that those two groups start to line up quite a lot. What’s been your experience in that?
Matthew Davis
Well, I kind of a dim view of attorneys, because I went to law school with them, and we spent a lot of my life dealing with them. So I don’t know a lot of them that are able to align in and you sort of hit me a couple questions in a couple dots, which is fine, but there are a lot of attorneys that, as you say, like to poke holes, and they get their jollies, and they boost their ego with poking holes right and pointing out the problems. And then they try and be the hero in the situation by sort of holding entrepreneurs or other clients hostage. Right? What you want is you want an attorney that is recognizes you’re the hero in the story and is alongside you as a challenger and a coach to help you grow, to help you prosper, and who’s also there to help put solutions in place, rather than just point out problems. So, yeah, absolutely. That’s the synergy you want. If you’re not getting it from your attorney, get rid of them.
Scott Ritzheimer
Yeah. So true. So true. You talk, uh, I’ve heard in in a couple of places about this idea between the difference in preventing things versus preparing for things. Walk us through a little of your mindset. How you share that with with entrepreneurs. How should they think about preventing versus preparing?
Matthew Davis
Yeah, and I really talk about that in the nature or in the. Scope of catastrophes. Okay, so look, we did a really bad preparing for one this year. My clo great friend of mine been with us for four years. Was a retired Air Force colonel, and he died out of the blue on january 31, of this year. Horrible deal, right? You know, that’s not something you can really prepare for, right? And, well, I mean, we could have done a better job preparing. We can hold it back, but, you know, we really are big enough to afford two people in that position, but So, but, you know, we obviously couldn’t have prevented that, right? Um, you know, I can look at the idea of, you know, a cat catastrophe for us would be a whole bunch of attorneys leave, right? Let’s say, you know, one, one of our offices just packed up and left. Well, that’s a vulnerability. And so we look at that, we go, okay, what can we do? How can we keep them happy? How can we deal with that. You know, another issue would be, you know, your facilities, what would happen? This is our home office, if it burned down, right? You know, do we have backups of everything? Do we have another place we could work so on? So you identified your main catastrophes that could happen the most likely ones, and you have to weigh in based on likelihood. And you know that one that happened to us, Derek, wasn’t old. He was 57 years old, gray cow. But just have a widow make her heart at him. But some things you can prepare for and some things you can prevent, you know the ones you can prevent you do.
Scott Ritzheimer
Right, right. A lot of teams, as they’re growing, as they’re scaling, will start to start to build kind of the senior leadership team, senior executive team, whatever its name is. And you have the traditional roles, you have a CEO, a COO maybe a CFO, very, very few of the teams I work with have a general counsel or a chief legal officer or anything along those lines. What risks does a growing organization have not having that leadership voice in the room?
Matthew Davis
Well, it depends on who you have on the team, okay? If you have good general counsel that is looking and is aligned for growth mode, that can be great. Now we put a deal on the front page of the Wall Street Journal business section, I guess year and a half ago, right? It’s because we helped him grow. We kept helped him stay on fights, and we, you know, we recognize their vision and we just walk through. But if you have somebody who’s just sitting there poking holes in your boat now, pulling the reins on you, that can be horrible. So it is advisable to get some good legal help. But the issue is, your legal problems are really symptoms of you just being reckless in your business. And if you deal with the basic things, which any good counsel can, I don’t know that you really need them that frequently, unless you’re big, you know, once you’re 510, $20 million you know, on a sliding scale, you probably ought to have a general counsel in some year strap planning meetings, right? Or at least meet with the regular one.
Scott Ritzheimer
It’s very good. It’s very good. So, Matthew, there’s a question that I have I like to ask all my guests. I’m very interested to see what you have to say. What would you say is the biggest secret that you wish wasn’t a secret at all. What’s that one thing you wish everybody watching and listening today knew?
Matthew Davis
And I probably already hit on it, but learn to be productively paranoid. Okay, those are the strongest players on the field, and by the way, from our perspective, they’re the most fun to work with, because we love working with people that are growing their business, right? But if you will deal with those vulnerabilities, you’re not going to be on defense, you’re going to be on offense. And those are the companies that scale fast. They’re the companies that just dominate their marketplace, and they’re the companies that you end and you leave proud.
Scott Ritzheimer
I think it was one of the CEOs of Southwest, if I remember correctly, who prided himself on successfully predicting 15 of the last nine recessions, something along those lines. And you’re right, there’s, there is this. And I love that phrase of productive paranoia, because it’s, it’s not just, let’s go. Head in the sand. It’s not just, let’s be scared. It’s, let’s take the realities of what’s going on out there and be productive with it. Be creative with it.
Matthew Davis
Yeah, and I don’t know that. I’m not sure I coined that. I may have borrowed that from Jim Collins, Great by Choice, which is a follow up to good to great. Think. Andy Grove used a similar phrase, but they might. I may have coined the brace, but I don’t want to take ownership of two great man, there you go, being productively paranoid.
Scott Ritzheimer
So yes, love that. Love that. So Matthew, there are, there are folks listening to this little like, Whittle in their seat, like, oh, man, I got to deal with some of this stuff. And, but they found a voice that they feel like they can actually trust someone who’s not just going to tell them what they can’t do, but can help them know what they need, what they should do. How can they find more out about you? The systems that you guys have there and and the work that you do?
Matthew Davis
Yeah, our website, davisbusinesslaw.com, and we’ve got some great resources on there. We just give them away. Look, we want to help people grow. And then it comes back to haunt us, right? That keep hiring us. And got a book out on Amazon called Art of preventing stupid. I need to get around to getting the next one published, but how we got the tiger by the tail here?
Scott Ritzheimer
That’s fantastic. Anyone listening, I’d highly recommend it head on over. As he mentioned, there’s a couple of great, great resources on there. Check out the Resources tab in particular. And Matthew, thanks so much for being on the show. Just a privilege having you here. Love, love, love. The ability to talk with someone from your world who has a strategic mind. It’s a rare and valuable thing. So thanks for being on the show, just an honor and privilege. And for those of you watching listening, you know your time and attention mean the world to us. I hope you got as much out of this conversation as I know I did, and I cannot wait to see you next time. Take care.
Contact Matthew Davis
Matthew Neill Davis is an attorney, heavy metal guitarist, and entrepreneur who led his solely owned firm, Davis Business Law, through over 1000% percent growth over eight years, making it one of the rare law firms ever to make the Inc 5000 list. The firm currently has eight offices from Austin to Kansas City. With over twenty-five years of experience helping business leaders with their legal and entrepreneurial matters, Davis now teaches them how to deal with their vulnerabilities so they can capitalize on their opportunities through his firm’s proprietary Strong Protected Business System™️. Davis holds degrees from the University of Oklahoma, Cornell University, and Cornell College.
Want to learn more about Matthew Davis’s work at Davis Business Law, P.L.L.C? Check out his website at https://davisbusinesslaw.com/ or get a copy of his book on Amazon at https://amzn.to/4eKRYVS.
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