Could outside expertise and capital help law firms grow without taking control of legal judgment? This episode explores how MSOs may transform law firm operations—and why choosing the right partner matters.
In this episode, Steve Fretzin and Frederick Shelton discuss:
- Legal MSOs and law firm back-office operations
- Rule 5.4 and protecting lawyers’ independence
- Platform firms, bolt-ons, and deal economics
- Business development and high-value networks
- Homelessness, personal setbacks, and giving back
Key Takeaways:
- A well-structured MSO can support a firm’s business operations while leaving legal judgment and client decisions to lawyers.
- Choosing an MSO requires careful attention to its incentives, governance, and willingness to stay within its role.
- Firms with room to improve operations may be especially attractive partners when those improvements can boost profitability without simply adding staff.
- Strong business development depends on building and maintaining relationships—not just marketing or technology.
- A difficult personal experience can become a lasting source of purpose and service to others.
“MSOs look for what they call levers, and these are things that they can do to improve profitability without adding more manpower.” — Frederick Shelton
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About Frederick Shelton: Frederick Shelton is the Chief Executive Officer of Shelton & Steele and a leading national authority on law firm mergers, acquisitions, and Legal Management Services Organizations (MSOs). Bringing over 25 years of operational and legal industry experience—including serving as a CMO, patent boutique Executive Director, and Director of Legal—he specializes in advising firms on private equity integration, deal structure, and strategic growth. Widely recognized as a legal industry futurist who accurately predicted the rise of virtual lawyering and legal AI, Frederick is a frequent author and media commentator featured in The American Lawyer, Bloomberg Law, and PitchBook, and is an active philanthropist and USTA-competing tennis player.
Connect with Frederick Shelton:
Website: https://www.sheltonsteele.com/frederick-shelton
LinkedIn: https://www.linkedin.com/in/frederick-shelton/
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LinkedIn: Steve Fretzin
Twitter: @stevefretzin
Instagram: @fretzinsteve
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Email: Steve@Fretzin.com
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Call Steve directly at 847-602-6911
Audio production by Turnkey Podcast Productions. You’re the expert. Your podcast will prove it.
FULL TRANSCRIPT
Steve Fretzin [00:02]
Hey everybody! Before we get to the show, I want to just share another quick LinkedIn recommendation from my client and friend Blake Stroudon’s in the Be That Lawyer community. He says, “What impresses me most is the community he’s built through the Be That Lawyer. It’s not just another networking group or coaching program. It’s a group of accomplished attorneys who openly share ideas, successes, challenges, and support one another. The relationships, insights, and accountability that come from being part of a community are invaluable. I want to thank you, Blake, for being a great leader in the community. I hope you guys can check it out at bethatlawyer.com/community. Check it out, and we’ll see you soon and enjoy the show.
Narrator [00:46]
You’re listening to Be That Lawyer: Life-Changing Strategies and Resources for Growing a Successful Law Practice. Each episode, your host, author, and lawyer coach Steve Fretzin will take a deeper dive, helping you grow your law practice in less time with greater results. Now here’s your host, Steve Fretzin.
Steve Fretzin [01:08]
Hey everybody, Steve Fretzin here, and welcome to the Be That Lawyer podcast. If you’re new to the show, welcome. Appreciate you with checking us out. Hopefully you’re going to get a lot, lot out of today, and certainly go back over 650 episodes that we’ve done, and if you’re a longtime listener, twice a week we are here to continue to bring in incredible guests and and give you you know what’s going on in legal and what’s going on and growing your law practice and all the different opportunities that sit there. And then I meet all kinds of interesting people. I’ve got Frederick waiting in the wings; he’s certainly interesting, and we’re going to have a really engaging conversation. How’s everything down in Mexico?
Frederick Shelton [01:42]
Things are great down here. Thank you for asking.
Steve Fretzin [01:44]
Yeah, you were just like spouting off about all the incredible things and healthcare and everything, and I’m just sitting here stewing because I know the Chicago winter is approaching, and you’re going to be down there having. Are you on the coast or are you internal?
Frederick Shelton [01:56]
No, we’re right in the middle of the country in the mountains, and in winter, you know, it does get down in the 60s here. So just so you’re aware, my audience. 60s.
Steve Fretzin [02:06]
Oh my God! All right. Well, I’m gonna start crying some some tears for you. No, I’m gonna be cursing you with my fist in the air. Is what I’m probably gonna do. Well, everybody, we’ve got an incredible show planned for you today. We’re gonna start off as we do with our quote of the show, not by someone that you would ever know of, like a you know like Maya Angelou or or whatever, but this is better. This is from from Frederick’s mom, Gay Shelton, and here we go. When you become successful, I’ll throw in son. Don’t pay attention to how people treat executives. Pay attention to how they treat secretaries, waiters, and valet that will reveal their true character. So, welcome to the show and tell us about your mom and that incredible quote.
Frederick Shelton [02:48]
Sure, my mom, like me, had humble beginnings and had jobs like waitress, etc. and then overcame all that and worked her way up to become an incredibly successful real estate agent. Won all kinds of awards and things, and and really lived a very very good life. But she made very clear when we would go out to eat or whatever, we all treated the waitress or the valet or whatever as importantly as we would treat the CEO of a company. And she made sure that I would never forget that.
Steve Fretzin [03:21]
Yeah, you know my dad. I interviewed on my people are sick of me talking about my dad, Larry the lawyer. Everybody, but he would treat his multi-millionaire clients and companies exactly the same as you know a South Side, you know Chicago lady who it couldn’t rub two nickels together, and he would advocate equally. It didn’t matter. He never judged people that way, and you know I don’t know if it’s because he grew up in the projects of Chicago and had nothing, or just his sort of his value system. But it but it really imprinted on me. You know how people you need to treat people.
Frederick Shelton [03:54]
Absolutely, yeah,
Steve Fretzin [03:56]
incredible, incredible. Well, listen, everybody, we’re in for a ride today. We’ve got Frederick Shelton, CEO of Shelton Steel, and this is going to be a topic most people aren’t expecting. But but give us your background, and then we’ll dive into what’s all about MSOs and what that means and everything. So tell us about those humble beginnings.
Frederick Shelton [04:15]
Sure, actually, I’ll just start with my professional career. We can sure talk about my greatest mistakes later, but for 30 years I’ve owned a legal recruiting firm. I started it because the first firm I worked at would just send a resume everywhere, and anybody who got back to us was suddenly the greatest firm in the world to work for. And it didn’t take long to realize that I was full of crap for a living. That a lot of these firms were not great places to work. That my bosses were only concerned about the commissions. So I started a firm and I said, “Look, mr. Law Firm, you know, big law, M law, mid law, whatever. You’re going to pay my fee, but we’re going to advocate on behalf.” The candidate, because a lot of these attorneys have never switched jobs before. They don’t know what questions they ask. They, you know, they don’t know what to do. Fast forward a few years, we started doing law firm mergers and acquisitions, and again, we told the law firms the same thing. Look, DLA Piper and Skadden does not need Frederick’s protection or advocacy, but these founders have never sold their firm before, and so you know they need our help. We would bring in attorneys and consultants and accountants and that kind of thing, and really make sure that they got a good deal. I started doing predictive analysis a few years ago, and I predicted that virtual law firms and virtual lawyering would be the next big thing. And then a year later, COVID hit, and it made me look really smart.
Steve Fretzin [05:45]
I guess good fortune for all the you know people that got COVID and yeah,
Frederick Shelton [05:49]
but there we go. You know, so and and plus by that time we were working with all these firms and developing virtual platforms. So guess who was way ahead of everybody when it came to all of that. Same thing with artificial intelligence. I wrote an article that actually pissed off a lot of my attorney friends, stating that AI would do a lot of things that attorneys used to do. And then a while later, ChatGPT was released, and I wrote a follow-up article that said, “I told you. Okay, maybe it said more than that, but that’s the short version. That was the short version, you know. And then we developed an AI practice for for law firms. And then two years ago, and all last year, we predicted that legal MSOs, management services organizations, would be the next big structural change for the practice of law. And since we had a track record, people started taking notice and you know really paying attention to this. Since then, we have been approached by over 70 legal MSOs who are seeking to invest in law firms, and we have turned down over 60 of them because most of them are not going to be good partners for the law firms, but the ones that we are working with are going to completely level the the playing field between small and midsize law and big law, and it’s going to change the profession forever. Yeah, that’s incredible. And people don’t you mentioned you know manage managed service organizations and things like that, but what what does that actually entail? Like, what’s the nuts and bolts of a firm bringing in an MSO to work alongside them? Yeah. So there are two things that happen in most cases. One, there’s a capital event. So this is something that lawyers have never had before. They would work their whole lives, and then at the end, maybe pass their book of clients along to the next generation or whatever it is. Right now, we are getting the people who have built firms millions, 10s of millions. We’ve got one client we’re expecting close to a billion dollars in valuation for, and so attorneys could not get that kind of thing before. And what happens is they buy the back office of the law firm, so they stay away from the practice of law. They stay away from legal judgment, from client selection, all these things when the MSO is properly structured. Now there are some bad ones out there, and I can tell you somebody is going to do it wrong. But the ones that we’re working on, what they take over things like tech and marketing, you know, at infusing better resources like AI and that kind of thing, and so they run the back office so that the managing partner doesn’t have the privilege and pleasure of dealing with an HR emergency on the weekend at his kid’s birthday party.
Steve Fretzin [08:38]
So ultimately, I’m not saying this is a workaround for Rule 5.4, but it sounds like a a workaround to get law firm to the next level. So let’s say lawyers generally are bad business people, or they don’t really know, they don’t really learn in law school how to grow a business, and then there’s this company that knows exactly how to do that that would essentially partner and that gets around 5.4 because they’re not handling or working or buying an equity in the firm they’re just handling the back end. How does that split up and work in a way that that is legit and above board? Yeah,
Frederick Shelton [09:15]
yeah. A lot of people ask us that question. As a matter of fact, one of the firms that we’re representing right now, the managing partner said, “Look, the first question we all have is, ‘Is this even legal? Right now, and so to put their mind at ease, this is not a new movie. This is a remake. This happened in healthcare with physician practices, doctors. I one of my favorite sayings is, “The only reason lawyers aren’t the worst business people on earth is because doctors exist. Okay.
Steve Fretzin [09:47]
Yeah.
Frederick Shelton [09:48]
So doctors were notoriously bad business people, and to have them relieved of all the things they were never trained for began over 40 years ago, probably close to 50 years ago. Then it went into veterinary, dental, and then it went into accounting, which is, in my opinion, and wealth management. And in my opinion, those are most analogous to what’s happening with legal right now. The key there is picking the right MSO, making sure that you don’t get in bed with one of these private equity bros who thinks he knows everything and you know is going to surreptitiously start running the front end or selecting clients or that kind of thing. I’ve actually had one of these guys have a meeting with me and say, “Look, we we don’t want to run the practice of law. We just want to guide the attorneys on which clients and cases are going to be best for everybody. And like, well, that’s adorable, you know. That’s that’s called running the practice of law, and you’re going to get someone sanctioned or worse, and you know, and and it’s just going to be a real clown show. And a lot of the players coming into this space are really going to try to do things that they should not be trying to do, but the ones who are good, the ones we’ve spoken to, they’ve got you know deep experience in accounting, wealth management, other professional services. They go out of their way. I’ll never forget our first MSO meeting. We attend all the meetings with the attorneys so that if there’s anything said that they don’t understand, we can meet with them afterward and explain everything. Okay, so the operators, the general partners of the MSO, one of the first things they said is, “Look, you’ve built a successful practice, and you know more about running a successful law firm than we do, and we do not want to interfere with that in any way, shape, or form, we’re betting that we know more about great tech and AI, and marketing and things like that than you’ve got time to do because you’re practicing lawyers, and that’s where we think we could help you. That law firm got their deal late last year or early this year, and the managing partner contacted me. She actually wrote a testimonial. She’s all she’s doing is the thing she loves the most. She loves giving speeches. She loves working at you know working her network and that kind of thing. And that firm has had their three most profitable months, three months in a row in their 30-year history, and she told me this is the best decision she’s made in her entire practice. She’s never enjoyed being a lawyer more.
Steve Fretzin [12:30]
All right, so let’s just let’s break it down a little bit further because I love everything you’re saying. And for for law firms where the managing partner’s hair is on fire, or they’re just cultures and issue marketing. They’re like they’re not doing anything right yet. They’re still successful because they’ve been doing it a while, and they’re excellent lawyers. This MSO is coming in, taking over their tech, taking over marketing, taking over bookkeeping, taking over whatever they’re. You’re going to list that all the things are taking over to run for the for the law firm. Now the law firm and the lawyer is getting like a capital. They’re getting money up front for this, like allowing them to buy, allowing them to come in, and then they’re paying a fee for the MSO, like in a like an ongoing basis. Is that they’re not getting equity, but they’re just getting this this contractual fee every month. Is that sort of how it works?
Frederick Shelton [13:19]
You’re close. You’re close. So let’s take a sample transaction, if you will, and then let’s also talk about the importance of picking the right MSO because that’s just critical. Okay, we have a client who is a young man. He’s a real go-getter. He has increased his firm’s profitability and revenues every year, year over year. He’s got a good, strong growth history, and if you have a good, strong growth history and you want to be that grower, you want to be the tip of the spear, not just tucked in under someone else’s. You know, you mean
Steve Fretzin [13:54]
you mean to be that
Frederick Shelton [13:57]
lawyer? Okay, so there are two types of law firms that do these deals to be that lawyer? Yes, exactly. Don’t forget what show you’re on,
Steve Fretzin [14:04]
my friend. Don’t forget what show.
Frederick Shelton [14:06]
Okay, yes, he wants to be that lawyer. He wants to be the tip of the spear, the the main firm. Okay, so there is a platform, and there are bolt-ons. The platform is sort of the starting firm, and that’s the firm that’s definitely going to make the most money. Okay, a platform. Let’s say you’ve got a $5 million profit, and that includes all the partners’ salaries. All right, a platform might get paid. Let’s say there’s four partners, and between the four of them, they’ve got you know $5 million in in profit every year. Okay, they might get a valuation somewhere between 30 and 40 million, so somewhere between you know seven and 10 million a piece would be their valuation. Okay, part of that money is paid up front. So let’s say it was 40 million, maybe they get 30 million up front. They each get seven ish million dollars. All right, 10 million. Then goes into equity in the MSO, so they own the MSO along with the private equity firm. Okay, as their firm grows, that back end MSO grows with it. So let’s say they go from doing 5 million in profit, and maybe they did 15 million in in top line revenue. Let’s say they go to doing 20 million in profit over the course of several years because they’ve added in some new firms to their firm. They’ve you know
Steve Fretzin [15:30]
gotten better tech, new systems,
Frederick Shelton [15:32]
you know things like that. Okay. Well, now their interest in the backside has gone from 10 million to 40 million. Okay, it could easily go to 80 million, giving them a $20 million a piece payout at what is called the exit or the second bite of the apple. Okay, so if you’re the platform, if you’re the first mover, then you could walk away with 10 million upfront and $80 million payday if your firm’s only doing 5 million in profit. By the way, okay. If you’re the firm that waits until next year or later, and you come in under the umbrella of that first firm, your second day payday is probably going to be more like $8 million instead of $80 million. Which still, for an attorney who has been making you know a million dollars a year to get an $8 million payout,
Steve Fretzin [16:26]
Bernie Darnabi thing, you know,
Frederick Shelton [16:28]
yeah. So if a firm doesn’t really want to grow, if they’re kind of happy with status quo, you know, status quo, but they they’d like to have the back end office taken over, they’d like to get some capital, they’ve got junior partners who will take over after they retire. Whatever you know, some certain things are in place. Yeah, then they should be they should wait. If the firm wants to grow and they want the great big payout, then they should move right away.
Steve Fretzin [16:55]
Yeah. Okay. Wow, that’s that’s crazy. And how does this play in and out of the the states in the U.S. that have sort of abandoned Rule Five Four, or at least they have workarounds to it. For example, you know Las Vegas and I think Arizona, D.C. Right? They’re so states so they
Frederick Shelton [17:14]
Utah, yeah. So they don’t need they don’t need the
Steve Fretzin [17:17]
MSO. They can just bring in a business person or a private equity. I think KPMG did that, right? So they they in
Frederick Shelton [17:24]
Arizona, yeah,
Steve Fretzin [17:25]
right, right. So MSO is different because they’re not getting any any partnership on the front end. They’re just they’re just they’re just getting partnership on the back end.
Frederick Shelton [17:33]
Yeah, MSO is better in my opinion. Okay, tell us why. Infinitely better in my opinion because there are there are a couple things. One, three states have recently passed state legislation that restrict private equity and their involvement in law firms. That’s California, Colorado, and Illinois. Three states-Arizona, Utah, and Washington state-all allow non-attorney ownership in law firms. But here’s the thing: my experience has been that lawyers should run the law firm, the legal practice. That, for example, one of the equity partners we’re working with, he has a social security disability income practice that is not very valuable. It’s not very profitable, but it does a couple things for him. Number one, it allows his personal injury attorneys to get excellent training because they’re in hearings every single day, so they get more quote unquote quasi court time than they would in years in this practice. And number two, it lets them fight for the little guy. It lets him make a decision not based on overall profitability or operational efficiency or any of the terms that you’ll hear private equity bros use all the time, but it lets him do what he feels is right. It’s like doing pro bono work. Yeah, and so the benefit of an MSO is that you can refer work to anywhere in the country, and it’s going to be a long time before everybody says, “Okay, lawyers can own or non-lawyers can own law firms. And number two is that it keeps everybody in their lane. The business people who are experts at tech and marketing and these kinds of things are doing that and that only. And the lawyers who sit with these clients for hours and and oftentimes, you know, hold their hands tearfully as they’re going through things, or guide their small company that they grew and it’s become their baby through some sort of major transaction. You know, this kind of thing. It lets them stay, you know, Atticus Finch instead of somebody out of St or something.
Steve Fretzin [19:39]
Yeah, yeah. You know, I hear so. This is this is a question that’s that’s maybe selfish in in my asking, but so I spend every day, all day, working with lawyers at big law, mid market, small solo, helping them on business development. Now we can use the word or term marketing business development. They’re not the same. A firm that has a. Marketing department, or for a marketing agency, they’re running Google Ads. They’re doing all this backend website stuff, and they’re doing the marketing, which is legit. I’m in the trenches helping the actual lawyers learn business development to bring in the right clients, to bring in bigger clients, to grow their practice in the firm. Ultimately, are MSOs helping with that? Do they need my help with that? How does that? How does is that a part of it, or is that real? Yeah,
Frederick Shelton [20:24]
absolutely. Okay. So private equity will be the first people to bring in someone like you.
Steve Fretzin [20:30]
Okay.
Frederick Shelton [20:30]
Lawyers are often the last. I I don’t know why, because we’ve done an awful lot of rainmaking consulting ourselves, and I mean just teaching them the basic nuts and bolts about developing and more importantly maintaining a high value network and keeping in touch with a high value network is something that is so foreign to so many attorneys because they don’t teach this stuff in law school. I used to lecture on it at the University of San Diego Law School. We couldn’t get a big enough room. I was astounded that they didn’t teach it at law school. Okay, business people know the importance of client development, especially if it’s a corporate law firm that does intellectual property and tax and corporate transactions and that kind of thing. I’ll give you a perfect example. I needed a trust and estates attorney once upon a time, and after asking around, it eventually got back to me that one of the members of my tennis team at that country club was a trust and estates attorney.
Steve Fretzin [21:33]
Sure. Why? Why wouldn’t he be or she?
Frederick Shelton [21:36]
Well, of course. I mean, in a country club, you can’t throw a rock without him. I mean, yeah,
Steve Fretzin [21:40]
you see a lawyer at Country Club. It’s never happened.
Frederick Shelton [21:42]
Yeah, yeah, but why he would not tell us that he did trust in estates was confounding.
Steve Fretzin [21:49]
Yeah,
Frederick Shelton [21:50]
I mean, everybody on the team needed the services he provided, right? But he wasn’t trained, and he thought it was unbecoming of a lawyer to mention what he does. Well, I call it something else, like say colossally stupid. And so, but there’s
Steve Fretzin [22:07]
there’s a nice way to do it too. You know, like I’m the doctor, I’m the I’m the doctor. No, no, no, yeah, the just estates guy, or I’m the you know. No, and you don’t want the guy electoral is a
Frederick Shelton [22:17]
brochure in his hand or that kind of thing. Yeah, no, there’s another. There’s a
Steve Fretzin [22:20]
nice way to do it,
Frederick Shelton [22:21]
yeah, exactly. You know, over drinks after a round or whatever, something like that. Sometimes you go and you do, but yeah. So private equity actually realizes the value in multiple types of consultants. Now, to dispel a misperception, bad private equity will come in and they’ll start chopping heads, and we’ve seen it happen. And you know, in the name of operational efficiency, they’ll replace people with AI and this and that. A good MSO will come in, and they will not fire any of the existing staff. As a matter of fact, we put in what are called reserved matters and and governance issues that can prohibit them from being able to do so until certain things happen, or unless certain things happen, or whatever it is. So what they do is they come in and they want to look for everything that the lawyers are doing right, and that the back office is doing right. And then they’ll say, okay. For example, the woman who loves giving speeches, now she gives twice as many speeches, and they invest in her having better placement at the conferences and you know these kinds of things, so the return on the investment is way better than it was before because not only is she speaking, she’s the first speaker or the last speaker, and she’s right as you walk into the booth or whatever, and you know these kinds of things. So they’ll look for what the the firm is doing well and try to put that on steroids, really infuse some capital into it, and see that it can be done even better. Then they’ll take a look at things like, okay, you’re using Clio five versions old, costing you some time. Yeah, it’s costing some effort, some some energy. Yeah, we’re gonna upgrade you to the latest, which includes AI. This will make living in six-minute increments so much easier, and you know whatever for you, it’ll save your firm 100 attorney hours a week. Now think about how much more money your firm could be making if those attorneys weren’t battling with your tech, you know that kind of thing.
Steve Fretzin [24:21]
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Frederick Shelton [26:03]
Sure, we’ve got something for everybody. So personal injury got all the attention for a while there, because the thesis or business plan of the private equity companies was nobody ever actually needs Glenn Lerner or Morgan & Morgan or whatever, so we’re buying a brand, and if partners leave, they’re not going to take all the clients with them. So we’re safer. Okay, that may be true, but having known enough personal injury attorneys, I would say that the devil is in the details, and in this case, they sometimes lack what I call fiscal discipline.
Steve Fretzin [26:41]
You have a way. with words, Frederick. Give away with the word. I do
Frederick Shelton [26:46]
my best, you know. I had a friend call me and try to rationalize a purchase by saying, “But Frederick, it’s a used jet. You know, like
Steve Fretzin [26:57]
gently. It’s a gently used jet. There we go. Grandmother just took it from from her home to the grocery store and back.
Frederick Shelton [27:04]
There we go. You know, he went on. He’s like, it’s a dessault. It’s not even a Gulfstream or a Learjet or something. And I’m like, you know how many people even know what a dessault Falcon is, my friend? You know, like we live in Vegas, so there’s everyone has it yet. You know, whatever. But at that time, so right,
Steve Fretzin [27:20]
right.
Frederick Shelton [27:20]
But anyways, whereas business attorneys tend to be not as big of personalities, more stable, you know, what have you, and if the deal is structured properly, you don’t have to worry about the rainmakers walking out the door. So I think what your listeners and viewers should be more concerned about when they look at MSOs, there’s a good MSO for every practice area. It’s just, are you going to be the tip of the spear or the add-on? If you want to be the the main guy, you can’t go to 90% of the MSOs out there because they’re not talking to anybody who isn’t doing at least $40 million a year, 30 40 million a year in revenue, and 10 million a year or more in in EBITDA, which is private equity’s favorite phrase for profitability, whereas we have MSOs that a firm doing say 2 million a year in profit could actually be a platform. Firm doing 5 million a year in profit could actually be the platform, and those are the people who get the $80 million checks instead of the $8 million checks that they’re all?
Steve Fretzin [28:24]
Yeah, I got two more questions for you, and then or one more, and then I want to get to our to our final. So this sounds like it may not be for a firm that’s struggling with the back end to make a profit. So they’re they’re they’re you know they’re they’re not really as pro. They could be incredibly profitable because of the back end being so they have no systems, bad tech, all these things, and and and they’re just running, running you know 10 different directions. That may not be
Frederick Shelton [28:51]
- That’s actually the ideal firm. It is. It is. It is. Yeah, because then
Steve Fretzin [28:55]
the MSO gets a sweet sweeter heart deal because the profit is low, low. But no,
Frederick Shelton [28:59]
no, it’s not that. It’s MSOs look for what they call levers, and these are things that they can do to improve profitability without adding more manpower.
Steve Fretzin [29:09]
Maybe they could predict how much better it could be with their backend, so they know then like what it’s could actually exactly. Okay.
Frederick Shelton [29:16]
Now, additionally, there are MSOs out there that don’t take any equity at all. For example, there is an MSO called Federate Legal, and what they do is they come in, they look at your back end operations, and they’ll say, “Okay, if we can’t improve them and make it the same cost or less, then we don’t have a deal. But if we can make everything run smoother for you for the same or less cost, then we’ll take over your back end. If you don’t like us, you can fire us at any any time. We’re not equity investors, and it’s a great sort of a stepping stone for firms that are like that. Okay, if you’ve got a firm that back end is impeding profitability, but somehow they’re still managing to grow, so they’ve gone from say a million in profit to a million. Two to 1,000,007. Okay, so they’re not exploding. Yeah, that’s another firm that would be an ideal candidate for an MSO. Same with great big firms.
Steve Fretzin [30:08]
Nice, nice. Yeah. All right. Well, you may or may not have known it was coming. I think you do, and that is what’s Frederick’s big mistake.
Frederick Shelton [30:15]
Yeah, the biggest mistake that I’ve made in my life was when I was younger. I thought I could just go out and conquer the world, and so had an invitation to go live with a friend, and I was going to get a job, and you know everything was going to be great. And within a short period of time, I ended up homeless as a teenager. Quit high school, you know, 16 years old, living on the streets. Too much damn pride to just call home and say, you know, hey, I screwed up, and and ended up there for about a year before a minister took me in and said, look, you can stay with us for a while until I was old enough to join the military. So that was a pretty harsh mistake, but the upside was that I have spent my entire life giving back to the homeless. I have rolled up my sleeves and fed over 400 people an hour at St. Vinny’s in San Antonio. We have donated. We have been, you know, active on boards and all kinds of things, and we’ve just made our corporate motto is “All ships rise with the tide. We will be the tide. It’s certainly given my life a lot more meaning and purpose than buying one more luxury car or whatever it is that people do.
Steve Fretzin [31:34]
Yeah, absolutely incredible. And most people don’t have that type of of insight because most people that that you know are listening to the show, or they’ve never had that anything close to that kind of an experience, so it really can be a game changer to go to go through those kinds of challenges and then come out the other side and know what what really matters in this world. It’s people. So fantastic. All right, man. Well, listen. Let’s take a moment. Thank our incredible sponsors. Of course, our friends at Rankings.io, Lawyer.com, and Lex Reception all great backend friends and people want to get in touch with you Frederick they want to hear more about MSO MSOs they want to you know engage you to talk about it maybe for their own firm what are the digits
Frederick Shelton [32:15]
yeah so my direct phone number is 70880. I’m the CEO of Shelton and Steel, so they just Google my name or the firm name. All of our contact will be there. And we, by the way, we are different than investment bankers or broker dealers in that we do not charge law firms for consultations. We do not charge retainers, and we do not even charge them the success fee. We charge the MSOs for everything.
Steve Fretzin [32:45]
Yeah, get it from the money guys.
Frederick Shelton [32:48]
There you go. Yeah, they’ve got enough.
Steve Fretzin [32:50]
Well, it sounds like you’ve done. You’ve made your a big part of your life about taking care of lawyers and law firms and making sure that they’re whether it’s in recruiting or in with dealing with MSOs that they find the right one, that you’re sort of really in in their corner, which is which is perfect for this show. Be that lawyer. So, thanks, Frederick, man. Thanks for coming on, sharing your your wisdom. Want to give a shout out to Reese Morrison who put us together in one of the networking groups that was the connector in general and chief. And and thanks much, man. I appreciate you.
Frederick Shelton [33:19]
My pleasure, sir.
Steve Fretzin [33:20]
Yeah, and thank you everybody for hanging out with us for the last 30 and change. Listen, this is not you know just business development or marketing or some of the topics that we cover. This is this is everything around you know the legal world that you’re in, and whether you’re you’re just starting out or you’re deep in as a managing partner with 50 people, this is good insight, good information to know, and and things you may not have even realized existed. So you heard it maybe first here on the Be That Lawyer podcast. We’re helping you build your book, grow your future, and be that lawyer. Thanks, everybody. Take care. Be safe and well. We’ll talk again very soon.
Narrator [33:57]
Thanks for listening to Be That Lawyer: life-changing strategies and resources for growing a successful law practice. Visit Steve’s website, fretzin.com, for additional information and to stay up to date on the latest legal business development and marketing trends. For more information and important links about today’s episode, check out today’s show notes.
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