TRANSCRIPT 🔗
WEBVTT
00:00:00.160 --> 00:00:06.959
Welcome to Judicial Dollars and Cents, brought to you by Anders virtual CFO services team from all across the United States.
00:00:07.120 --> 00:00:15.279
I'm John Scott, and in each episode, we'll shine a light on the financial side of the legal world, turning law firm numbers into impact-driven stories.
00:00:15.439 --> 00:00:23.280
From taxes and profitability to practice growth and leadership, we sit down with law firm innovators who are shaping the future of the profession.
00:00:23.519 --> 00:00:26.960
Let's dive in right here on Judicial Dollars and Cents.
00:00:28.879 --> 00:00:34.799
Hey, welcome back to Judicial Dollars and Cents, the podcast where we dive into the business side of running a law firm.
00:00:34.880 --> 00:00:47.439
I'm John Scott with Anders Virtual CFO Services for Law Firms, and each week we talk with industry experts who help law firm leaders think differently about growth, profitability, and performance so they can build practices that last.
00:00:47.759 --> 00:00:49.280
Today we welcome Don Fode.
00:00:49.920 --> 00:00:52.960
Don is the founder and managing partner of Fode Law Group.
00:00:53.039 --> 00:01:02.399
It's a Houston-based law firm focused on complex litigation, including employment class action, wage and hour disputes, and significant personal injury matters.
00:01:02.640 --> 00:01:08.640
It's a firm widely recognized as a national authority on wage and hour laws and fair labor standards acts.
00:01:08.799 --> 00:01:15.920
Also, Don has served as class counsel in more than 100 wage in hour class cases and collective actions across the United States.
00:01:16.079 --> 00:01:21.920
Throughout his career, courts have repeatedly recognized his skill, experience, and success in employment litigation.
00:01:22.239 --> 00:01:23.840
Don, welcome to the show.
00:01:24.159 --> 00:01:25.599
Thank you for having me.
00:01:25.920 --> 00:01:28.719
Hey, I love to hear people's origin stories.
00:01:28.799 --> 00:01:34.239
So tell me how you came from a finance degree at UT into what you're doing today.
00:01:34.560 --> 00:01:40.560
Yeah, so it's kind of a, it's not, you know, the most interesting story, but I was studying finance at the University of Texas.
00:01:40.799 --> 00:01:53.120
And I think like most college students, when they um are about to complete their undergrad, the choice is either, hey, I graduate from college and I get a job, or uh I go to graduate school.
00:01:53.359 --> 00:01:59.200
And I think it was uh my mother who kind of pushed me towards uh going to law school.
00:01:59.359 --> 00:02:06.640
Um my older sister at the time was in medical school, and so she, you know, basically kept saying, Well, I need a doctor and a lawyer in the family.
00:02:06.799 --> 00:02:08.080
So it's time for you to go to law school.
00:02:08.719 --> 00:02:10.479
So your mother's your mother's set now.
00:02:10.639 --> 00:02:12.159
Yep, exactly.
00:02:13.360 --> 00:02:14.879
Well, that's awesome.
00:02:15.120 --> 00:02:24.000
And at your firm, we we like to set cash targets for firms, and we say between 10 and 30 percent of annual revenue is the target.
00:02:24.080 --> 00:02:28.240
And and the difference being between those two goalposts is your risk.
00:02:28.479 --> 00:02:38.159
Now, when you're doing class action suits and PI work, those are higher risky uh areas, so your cash needs are greater.
00:02:38.400 --> 00:02:44.240
How do you handle feeding the investment that you need for those cases?
00:02:44.560 --> 00:02:47.680
Yeah, so you need to have sufficient cash flow to run the firm.
00:02:47.919 --> 00:03:13.360
Um so unlike a law firm that bills by the hour and gets paid monthly by their clients who simply pay their hourly billables, when you're running a complex litigation firm, um, your cash flow could be great one month, low another month, or it could be low for a few months until your case is settled because you don't get paid until the case is until there's a recovery on the case.
00:03:13.439 --> 00:03:16.080
And that's when you get that's when the attorney's fees come in.
00:03:16.400 --> 00:03:22.639
So you could go months at a time um running a contingency fee practice, which is what we do.
00:03:22.800 --> 00:03:24.800
We run, we we charge a contingency fee.
00:03:24.960 --> 00:03:30.240
We get paid a percentage of the recovery if the client if we achieve a recovery for the clients.
00:03:30.479 --> 00:03:35.520
So you could go months at a time without having any income coming to the firm.
00:03:35.759 --> 00:03:52.000
So you need to have sufficient cash reserves on hand to pay your bills, to uh pay any marketing expenses, to pay your employees, as well as pay for uh what's called the litigation expenses of uh of the cases you're handling.
00:03:52.319 --> 00:04:07.919
So when you're in a contingency fee practice, you uh not only get paid when the uh when there's a recovery, but you also have to front in advance all the litigation costs uh that are going to be incurred in the case.
00:04:08.159 --> 00:04:12.159
So every time there's a deposition that's taken in the case, that costs money.
00:04:12.479 --> 00:04:15.919
Every time you need to hire an expert, that costs money.
00:04:16.160 --> 00:04:22.240
Every, you know, uh filing fees cost money, service fees cost money, ordering records cost money.
00:04:22.480 --> 00:04:34.639
So all of those expenses that are needed to litigate a case, to gather the evidence to prove the case, those expenses typically are fronted or advanced by the law firm.
00:04:34.800 --> 00:04:44.240
And so you need to have sufficient cash reserves on hand to estimate the cost for litigate the litigation cost, as well as to pay your operating costs.
00:04:44.560 --> 00:04:46.720
And as John Morgan says, that's his money.
00:04:46.800 --> 00:04:49.439
So then in this case, that's your investment in those cases.
00:04:49.680 --> 00:04:49.920
That's correct.
00:04:50.160 -->
Load full transcript
00:04:54.319
And of course, that sits on your balance sheet, and when the case settles, you're gonna get that money back.
00:04:54.480 --> 00:05:04.959
But we're working with a firm in the southeast right now that uh really had a great year, but their case volume has been growing and their prepaid case costs went up$700,000.
00:05:05.279 --> 00:05:16.240
So when we looked at income in December and said, hey, you had a great year, income and cash flow are two different things because they've got$700,000 of additional dollars tied up on the balance sheet.
00:05:16.399 --> 00:05:20.399
And so when we look at distributions, they go, how come we don't get the bigger number?
00:05:20.560 --> 00:05:21.839
Well, you're going to get it.
00:05:21.920 --> 00:05:23.920
It's just a question of when those cases settle.
00:05:24.000 --> 00:05:24.160
Right.
00:05:24.319 --> 00:05:26.879
And if you continue to grow, it's just going to get bigger and bigger.
00:05:27.040 --> 00:05:27.279
Yep.
00:05:27.360 --> 00:05:27.519
Yeah.
00:05:27.600 --> 00:05:27.759
Yeah.
00:05:27.839 --> 00:05:32.560
Your litigation expenses, that could be a significant uh uh that could tie up a lot of your cash.
00:05:33.920 --> 00:05:38.399
Do you ever use uh a line of credit or any other debt structure to finance?
00:05:38.720 --> 00:05:39.519
Yeah, we we do.
00:05:39.600 --> 00:05:40.800
The firm does have a line of credit.
00:05:40.879 --> 00:05:41.920
I think that's helpful.
00:05:42.000 --> 00:05:44.959
Um, we don't charge the interest on the line of credit to any of our clients.
00:05:45.120 --> 00:05:47.279
We eat that, we eat that cost ourselves.
00:05:47.519 --> 00:05:53.040
Um uh but yeah, I mean, uh it's helpful to get that additional cash flow.
00:05:53.199 --> 00:06:00.079
Um, but yeah, you have to set aside cash, I mean, you really have to have set aside sufficient cash reserves to basically run your firm.
00:06:00.399 --> 00:06:07.519
I know some mass tort firms, and I suspect some class action firms do it as well, have access to non-recourse debt.
00:06:07.680 --> 00:06:15.920
And so you have investors that will take bets on these large mass tort cases, and they get a nice kicker when the case is won.
00:06:16.079 --> 00:06:20.480
But if it's not won, then the debt's forgiven and there's no no harm, no file.
00:06:20.720 --> 00:06:26.720
But you know, there's always a payoff and and real cost when when that money does come in and get paid.
00:06:26.959 --> 00:06:31.680
Yeah, that's um, yeah, that's you know, the the term for that is litigation financing.
00:06:31.920 --> 00:06:36.879
Um I know Georgia just passed a law banning all litigation financing.
00:06:37.040 --> 00:06:40.319
So some qu some states are cracking down on that.
00:06:40.399 --> 00:06:50.160
But yeah, generally speaking, the collateral for the debt that you for for for the the cash that you receive is the right to recover on those cases.
00:06:50.480 --> 00:06:56.000
So um the the you know um that could be you know useful to a firm.
00:06:56.160 --> 00:07:02.000
It may not be useful to a firm because um they do come with significantly high interest.
00:07:02.160 --> 00:07:03.519
I mean significantly high interest.
00:07:03.839 --> 00:07:12.879
Well, and not only that, because it's non-recourse, if you do happen to not prevail and you don't have to pay it back and you've spent that money, right?
00:07:13.199 --> 00:07:18.319
Now you have what really is phantom income because that debt is forgiven and it's it's problematic.
00:07:18.560 --> 00:07:18.959
Right.
00:07:19.199 --> 00:07:27.120
Um with your finance background and in a contingent environment, it's easy to forecast in an hourly billing firm, right?
00:07:27.199 --> 00:07:30.480
It's I charge hours, I send out bills, I collect money.
00:07:30.800 --> 00:07:37.920
How, if at all, do you try and forecast revenue and cash in a contingent environment?
00:07:38.240 --> 00:07:41.279
Yeah, so I have cases that are basically in three stages.
00:07:41.519 --> 00:07:45.120
I have cases listed that are in stage A, which is we just file those.
00:07:45.360 --> 00:07:50.720
I have cases listed that are in stage B, that is in uh those are cases where we're in active discovery.
00:07:50.959 --> 00:08:00.399
And then I have cases that are in stage three, which is we're in active settlement talks, or the cases have settled, but we've not uh received approval of the settlement.
00:08:00.560 --> 00:08:04.399
So most of my cases involve class actions or collective actions.
00:08:04.560 --> 00:08:12.480
And when one of those cases settles, we have to submit the settlement agreement to the court and have we have to go through a court approval process.
00:08:13.040 --> 00:08:21.680
And that court approval process could delay receiving, uh, could delay the law from receiving payment on the case for six months to a year.
00:08:22.319 --> 00:08:33.440
So we have essentially we have several of those cases that are in that, hey, they've we've settled them, we've reached an agreement in principle with the defendant, but we've not received court approval.
00:08:33.919 --> 00:08:51.840
So having cases that are in that are in that bucket C where they've settled, they're in the settlement approval process, or they're in some part or they're about to settle, that enables you to, hey, I can forecast that within 12 months I will I should be receiving X dollars on those cases.
00:08:52.080 --> 00:08:56.879
And then you can forecast, okay, now let's look at the category B cases of those category B cases.
00:08:57.039 --> 00:09:07.440
Which of those, based upon what you've done and what you've learned in the case, are realistically going to settle within the next 12 to 18 months, maybe 24 months, and you can kind of forecast your revenue from those cases as well.
00:09:07.600 --> 00:09:19.360
So you can you I think you can, if you handle it right, you can forecast, you know, expected revenue within, you know, for the
next year to 18 months pretty confidently.
00:09:19.840 --> 00:09:23.600
I love the fact that that's your thought process because we go down the same path.
00:09:23.679 --> 00:09:30.480
It's like you know the types of cases you'll accept, you know what their values are, and the values could change over time.
00:09:30.720 --> 00:09:32.080
You also know those milestones.
00:09:32.159 --> 00:09:37.840
So you can build out a framework or a spreadsheet and say, okay, here's where the buckets of cash will come in.
00:09:37.919 --> 00:09:44.480
And all it really takes once it's built is someone looking at it on a regular cadence to update the amounts or the timing.
00:09:45.360 --> 00:09:56.639
Um once you get a settlement in a class action, I mean, your work is not even near complete because now you have to calculate the payments to all the parties in the class, right?
00:09:56.960 --> 00:10:06.799
Yeah, I mean, the the the biggest component, you do have to calculate um, you know, either my law firm will do the calculation or there's a third-party administrator who'll do the calculation.
00:10:06.879 --> 00:10:08.960
But you're right, that that's definitely one component of it.
00:10:09.120 --> 00:10:12.320
The the the bigger component of it is uh the court approval process.
00:10:12.399 --> 00:10:14.639
So you have to draft all the settlement documents.
00:10:14.799 --> 00:10:16.320
That could take a month or two.
00:10:16.559 --> 00:10:20.960
Then you have to draft um the motion for approval, that could take some time.
00:10:21.039 --> 00:10:23.360
Then you have to submit all that information to the court.
00:10:23.600 --> 00:10:33.519
And the court, um, depending on the type of settlement, whether it's a class action or a collective action, if it's a class action, you have to go through a two-step process.
00:10:33.759 --> 00:10:39.600
You have reached a preliminary, you have to have to ask the court to grant preliminary approval of the settlement.
00:10:39.679 --> 00:10:43.440
So the court reaches a decision, we're gonna preliminarily approve the settlement.
00:10:43.600 --> 00:10:48.320
Then a notice has to go out to all the class members advising them of the settlement.
00:10:48.559 --> 00:10:50.960
That's usually 60 to 90 days.
00:10:51.600 --> 00:10:55.679
Then, if there's any objections to the settlement, you have to address the objections.
00:10:55.759 --> 00:11:11.759
And then you have to go through a final approval process where the court considers all of the information that was gained from the preliminary approval process, the notice process, and then consider all of that final approval to decide whether or not uh the court is going to uh grant approval of the settlement.
00:11:11.840 --> 00:11:17.360
And then after the final approval, that's when you have to wait normally around another 30 days, then you can get paid.
00:11:17.519 --> 00:11:28.960
So it's uh yeah, so uh the reaching the settlement, that's just you know, that's good that
you've reached it in principle with the defendant, but you're just uh you're still about middle of the middle of the way there to getting paid on that case.
00:11:29.200 --> 00:11:35.440
It's like that old ad where the old man's got the fishing pole with a dollar tied to it and it's hanging there and he pulls it back.
00:11:35.600 --> 00:11:36.639
Oh, you got to be quicker.
00:11:36.720 --> 00:11:38.960
So you you get the settlement, and then you've still got to go through all these.
00:11:39.279 --> 00:11:40.480
You still have to go through the process of getting it.
00:11:41.440 --> 00:11:41.600
Right.
00:11:41.840 --> 00:11:43.360
Hey, let's switch gears a little bit.
00:11:43.519 --> 00:11:46.960
Um, you know, the last few years, AI has been all the rage.
00:11:47.039 --> 00:11:51.600
It it first came out, and attorneys were like, oh my God, this is going to be the ruination of the profession.
00:11:51.759 --> 00:11:56.879
I still think there's a few people that feel that way, like the civil defense guys, they feel that way.
00:11:56.960 --> 00:12:05.840
And probably rightly so, because the insurance companies are putting a lot of pressure on them even before AI to charge less time, charge lower rates.
00:12:06.080 --> 00:12:11.360
Um, but how, if at all, is your firm using AI in what you do?
00:12:11.840 --> 00:12:16.639
So we are not using AI to supplement any actual legal work.
00:12:16.879 --> 00:12:20.000
So we don't use AI to draft our briefs.
00:12:20.320 --> 00:12:23.360
We don't use AI to draft, frankly, any legal document.
00:12:23.519 --> 00:12:26.480
Where we use AI is mostly on the administrative front.
00:12:26.720 --> 00:12:33.519
So um, and I've talked to a lot of lawyers who use AI to, hey, help design your website.
00:12:33.840 --> 00:12:45.440
Or, hey, um, you know, uh create sort of administrative summaries, you know, keep you know, what are all the cases that have been on file for six months that have not settled?
00:12:45.519 --> 00:12:47.440
And AI can pull a report on that.
00:12:47.600 --> 00:13:03.919
You know, so a lot of the administrative uh functions that a law firm needs to run, that's where AI can come in, but as just a as a replacement to a lawyer doing their legal work, drafting the necessary motions, presenting the arguments of the court.
00:13:04.080 --> 00:13:05.279
No, that's we don't use that.
00:13:05.360 --> 00:13:06.799
We don't use AI at all for that.
00:13:06.960 --> 00:13:15.840
And and I think the lawyers who have used AI to replace actual legal work or to supplement their own legal work, they've gotten in trouble with the courts.
00:13:15.919 --> 00:13:17.360
I mean, AI is not perfect.
00:13:17.600 --> 00:13:37.279
AI has a lot of glitches, and you know, um lawyers who follow up with the legal news uh have inevitably seen lawyers who've gotten sanctions for submitting briefs to the court with where AI has cited fake cases or fake quotes or made up stuff.
00:13:37.519 --> 00:13:50.240
Um so I think if if a lawyer is out there using AI to basically do the work, the legal work for them, you run a big risk that it's gonna make a mistake and you're gonna get trouble.
00:13:50.399 --> 00:14:01.519
And there's actually there are several courts that I'm aware of that have issued standing orders that said you cannot use AI to help you draft any legal documents, and you have to certify that you do not use AI.
00:14:01.679 --> 00:14:10.240
And in fact, in our we just recently amended our employee handbook to specifically say you cannot use AI to do legal research or drafting documents for you.
00:14:10.559 --> 00:14:16.960
But you can't have it, it's not it's not being used uh for legal work, but that doesn't mean administrative work.
00:14:17.279 --> 00:14:21.919
Purely administrative work, that's non-legal work, AI can't supplement and AI can't be important.
00:14:22.080 --> 00:14:26.399
I think that's where AI can uh can provide some benefits and some efficiencies.
00:14:26.639 --> 00:14:26.879
Right.
00:14:26.960 --> 00:14:39.200
And I think that's a great use case to create those efficiencies to allow folks to do higher level legal work in the firm because you're you're taking repeatable processes and you're automating them, letting AI do that.
00:14:39.360 --> 00:14:44.720
It's not the legal work, but that frees up the time for folks to focus on more complex legal matters.
00:14:44.960 --> 00:14:45.200
Yep.
00:14:45.360 --> 00:14:55.440
Yeah, I think we had uh we had um we had a PDF document that we got produced in Discovery, and um for some reason we couldn't OCR it.
00:14:55.679 --> 00:15:02.320
So we had uh AI take the data that's in the document and just add it to a spreadsheet, and it did that, and it did it pretty easily.
00:15:02.480 --> 00:15:12.159
So normally it would take a paralegal several hours to type manually type in the data from a PDF document and manually put it in a spreadsheet.
00:15:12.399 --> 00:15:13.840
AI did in a matter of minutes.
00:15:14.000 --> 00:15:21.679
So those kinds of efficiencies I think uh you can get from AI, but as pure replacement for lawyer work, absolutely not.
00:15:21.840 --> 00:15:30.879
I think that's that that I think lawyers want a real uh a real risk of um of AI doing it wrong and and lawyers getting in trouble.
00:15:31.200 --> 00:15:32.000
Completely agree.
00:15:32.080 --> 00:15:37.120
And anytime you're rekeying something, you have the tendency to fat finger something, make a mistake, right?
00:15:37.279 --> 00:15:40.559
Or AI can do it automatically, and then you can spend your time proofing it.
00:15:40.799 --> 00:15:41.120
Right.
00:15:41.360 --> 00:15:41.600
Yep.
00:15:41.759 --> 00:15:46.799
So what uh case management system does your firm use to track cases?
00:15:47.600 --> 00:15:49.600
So we use uh Smart Advocate.
00:15:50.000 --> 00:15:55.679
It's um yeah, it's a it's it's a litigation uh heavy uh case management system.
00:15:56.080 --> 00:16:00.320
So back to my uh theme
about not re-keying things.
00:16:00.720 --> 00:16:03.679
How does that integrate with your accounting function?
00:16:03.840 --> 00:16:06.960
Does it feed right into your accounting system?
00:16:07.600 --> 00:16:13.600
It actually, well, no, it doesn't, but you know, that's probably something that what that that we can improve upon.
00:16:13.840 --> 00:16:19.120
Um most of the accounting is just is done, you know, the old traditional way through QuickBooks.
00:16:19.279 --> 00:16:21.120
We have manual entries in QuickBooks.
00:16:21.200 --> 00:16:32.720
We have journal ledgers that keep track of every single transaction, every single credit card payment, um, every single inflow and outflow um is tracked and recorded.
00:16:32.879 --> 00:16:34.320
So, but we do that.
00:16:34.480 --> 00:16:36.159
We do that kind of the old-fashioned way.
00:16:36.240 --> 00:16:43.519
We have an accountant uh who's who's on staff who basically has every single transaction documented and recorded in QuickBooks.
00:16:43.759 --> 00:17:04.559
Well, I'm gonna suggest another use case for AI in that it you find an AI person or an AI product that um will write the code that will go into the APIs of your case management system and then create a bridge to QBO because that will cut down on the fat fingering of errors and the entry that you have.
00:17:04.880 --> 00:17:05.200
Yep.
00:17:05.359 --> 00:17:07.039
Yeah, that's a great idea.
00:17:07.359 --> 00:17:11.599
So, hey, class action lawsuits are often misunderstood by the public.
00:17:11.839 --> 00:17:17.920
From from your perspective, what are some of the biggest misconceptions people have about employment class claims and wage claims?
00:17:18.240 --> 00:17:23.680
Yeah, so so my firm uh primarily focuses on on class actions that involve workers.
00:17:23.920 --> 00:17:39.440
So uh when I talk to people about uh class action, like worker class actions, the biggest misconception is uh they assume it's kind of like a consumer class action where they're gonna get either a coupon in the mail or they're gonna get you know 50 cents in the mail.
00:17:39.680 --> 00:17:41.599
And that's not what these cases are.
00:17:41.759 --> 00:17:48.960
These are cases involving real dollars, uh workers who were denied wages, and there's real money at issue.
00:17:49.200 --> 00:17:58.000
So I've seen cases, I've I've I've there have been class actions I've been involved with involved with where the average payment has been$12,000 to the class member.
00:17:58.079 --> 00:18:05.680
So now you've got a person who gets a check in the mail for over$10,000 because they were involved in the class.
00:18:05.839 --> 00:18:14.880
So that's that's that's a lot different than hey, you open up your notice and you're getting a coupon because something was misrepresented to you uh when you when you bought an item.
00:18:15.119 --> 00:18:19.440
I laugh a little bit at that because we'll get that thing in the mail says, hey, you can be in this class.
00:18:19.519 --> 00:18:21.519
And my wife says, Should we sign up for this?
00:18:21.599 --> 00:18:23.759
I'm like, no, we're gonna get a Valvelline coupon.
00:18:23.839 --> 00:18:25.200
And you know, no, I don't want that.
00:18:25.440 --> 00:18:33.599
Yeah, and so the misconception is class actions always result in, you know, uh coupons or or or just or or you know, small pennies.
00:18:33.680 --> 00:18:37.039
But no, when it when it involves workers, there's real money at stake.
00:18:37.119 --> 00:18:46.160
Uh, there's real money that's owed, and we do our best to try to recover um, you know, the maximum amount we can on cases so that these workers can get paid with a road.
00:18:46.640 --> 00:18:54.720
So what are some of the things that uh what are some of the claims against employers that are typical that would create a class actionable class?
00:18:54.960 --> 00:18:56.799
Yeah, there's there's there's lots.
00:18:56.960 --> 00:18:58.720
I mean, this is uh the whole area of the law.
00:18:58.799 --> 00:19:00.720
Let me just give you just a couple of examples.
00:19:01.039 --> 00:19:06.319
So um uh let's say, well, I'll just give you, you know, a real life example.
00:19:06.480 --> 00:19:07.599
So COVID happens.
00:19:07.920 --> 00:19:10.319
COVID happens, you know, in 2020.
00:19:10.559 --> 00:19:21.359
Uh we get uh you know countries under lockdown, and we've got um COVID mandates in in the states.
00:19:21.759 --> 00:19:38.079
So companies like Amazon and Walmart, uh they stayed in operation, but they require their workers to, and you know, Amazon in particular require their warehouse workers to uh pass a COVID screening before they clock in.
00:19:38.400 --> 00:19:48.240
So they're on the premises of the employer, they're required to go through a COVID screening, they're lining up, and one by one they have to go past a COVID screening.
00:19:48.559 --> 00:19:57.200
So that's you know, time every single day for every single worker during the entire period where these COVID screenings happen that they weren't being paid for.
00:19:57.440 --> 00:20:11.119
So that was a class of action that we brought saying, hey, you should reposition the time clocks at the front of the line so that they're clocking in while they're waiting in line and going through the COVID screening, as opposed to after they pass it, and then they have to go walk to the time clock.
00:20:11.279 --> 00:20:12.640
So that's a real case.
00:20:12.799 --> 00:20:20.160
Uh another case, another another real case would be um uh workers who they're paid a salary.
00:20:20.559 --> 00:20:26.559
And a lot of times uh workers uh believe that, hey, if you're paid a salary, you're not eligible for overtime.
00:20:26.720 --> 00:20:29.519
Well, that's not that's not as uh actually true.
00:20:29.839 --> 00:20:41.200
So uh to be exempt from overtime under most exemptions, you have to be paid a salary of a certain amount, which is a guaranteed amount, and you have to do certain job duties
that qualify for an exemption.
00:20:42.000 --> 00:21:07.359
And so if there's a position in a company that's a salaried position, but the workers in that position don't do the job duties that qualify for the exemption, well then you could bring a class action or collective action, arguing that the workers in that position are being misclassified as exempt from overtime when they really should be paid their overtime.
00:21:07.519 --> 00:21:08.559
So that's another example.
00:21:09.119 --> 00:21:20.559
So really the HR department that's not doing their job in writing those job descriptions and applying them so that because they're lazy or don't not aware, are putting the company at risk for a litigation.
00:21:21.359 --> 00:21:27.440
Well, I mean, you know, uh it's that could happen, yes.
00:21:27.599 --> 00:21:35.920
Uh it could be um it could be that they just really haven't updated their uh their job descriptions.
00:21:36.480 --> 00:21:59.759
So let's say the job description was written 10 years ago, but the what the day to day functions of the job have changed, and they haven't actually looked into what these people are doing on a daily basis with changes in software, changes in technology, um, you know, uh changes in the workforce, what the what these workers are doing on a day to day basis, maybe HR, which is in one state, doesn't know.
00:22:00.079 --> 00:22:09.200
What these workers on the ground are actually doing in another state, and they don't get that feedback and they don't do regular audits to find out whether these workers really should be classified as exempt or non-exempt.
00:22:09.359 --> 00:22:10.720
Um, that could be an example.
00:22:10.880 --> 00:22:29.599
Another example could be, and this this is pretty common, where uh employers, um uh some unsophisticated employers, say, Hey, I can avoid paying overtime by simply calling all my workers independent contractors, when really under the law, they should be classified as employees.
00:22:29.680 --> 00:22:31.680
And if they're employees, they're entitled to overtime.
00:22:31.759 --> 00:22:33.920
So that could be an example of a case.
00:22:34.160 --> 00:22:36.400
Um so it just depends.
00:22:36.559 --> 00:22:43.599
There's lots of these cases that there's lots of legal issues that arise when um when you're uh dealing with the wage and hour laws.
00:22:43.839 --> 00:22:54.640
Well, you're so right, and I see that when companies merge, um, and all of a sudden you you're bringing on a bunch of new people who are in different states, and then post-COVID, people work remotely.
00:22:54.799 --> 00:23:10.480
So you didn't think you had the issue because you're based in Oklahoma, but now you've got employees in California, and so the the rules about PTO are different there, you can't cap it, and you really have to be a sophisticated HR department to handle those remote employees and mergers.
00:23:10.720 --> 00:23:11.759
Well, let me give you another example.
00:23:11.839 --> 00:23:13.759
I think that and this is this ties into AI.
00:23:14.000 --> 00:23:23.279
So let's say you have a lot of companies who are now adopting AI programs, and now a lot of the decisions that used to be made by humans is now being made by AI.
00:23:23.359 --> 00:23:27.839
So it's AI that makes the decision, it's AI that's deciding whether something should happen.
00:23:28.319 --> 00:23:34.160
And so um there's an exemption from overtime for a salaried worker called the administrative exemption.
00:23:34.319 --> 00:23:43.519
And one of the requirements for the administrative exemption is that hey, the worker exercises independent judgment and discretion regarding matters of significance.
00:23:43.680 --> 00:23:53.920
And let's say the worker did do that before AI, but now that there's AI, that uh judgment and discretion is gone because the AI program is making it.
00:23:54.000 --> 00:23:57.759
Well, now that worker may not qualify for the exemption from overtime.
00:23:57.839 --> 00:24:01.359
You got to pay overtime to that worker now because his job has essentially changed.
00:24:01.680 --> 00:24:03.920
Wow, there's landmines everywhere here.
00:24:04.880 --> 00:24:22.720
Hey, before we get to the end here, um, I want to I want to ask you about Texas football and how your experience is in has it been a welcoming experience in the SEC or and let me before you answer, let me give you my background.
00:24:22.880 --> 00:24:24.799
So I went to the University of Missouri.
00:24:24.880 --> 00:24:37.519
We've been in the SEC for a while, but we had this great conference called the Big Eight, and you played seven games a year against the same opponents, and you had a big part of your schedule where you could play other good teams.
00:24:37.680 --> 00:24:41.119
I mean, in the late eight late 70s, we played Notre Dame, okay?
00:24:41.440 --> 00:24:54.240
And then it expanded to the Big 12 with the addition of Texas, and then the Big 12 kind of blew up, and we ran to the SEC, happy to be there, and all of a sudden, Texas and Oklahoma are back.
00:24:54.400 --> 00:24:57.039
So, what's been your experience with the SEC?
00:24:57.279 --> 00:24:58.319
Well, I will say this.
00:24:58.480 --> 00:25:08.240
Uh, I think everybody, um, uh there was a there were a lot of people who didn't go to Texas who did not like that Texas was moving to the SEC.
00:25:08.880 --> 00:25:14.960
And, you know, I heard from everybody that Texas is not going to be able to handle the SEC.
00:25:15.119 --> 00:25:20.160
They're gonna get steamrolled when they play all those all those teams with those great defenses.
00:25:20.240 --> 00:25:24.720
And I'll say this, I'm happy with the way uh Texas's football team has been looking.
00:25:24.880 --> 00:25:26.799
You know, down year last year.
00:25:27.200 --> 00:25:28.640
We certainly responded though.
00:25:28.720 --> 00:25:30.480
I mean, you didn't embarrass yourself.
00:25:30.640 --> 00:25:31.039
No, no.
00:25:31.119 --> 00:25:35.119
I mean, the first year that we played in the SEC, we were in the SEC championship game.
00:25:35.279 --> 00:25:35.759
Right, right.
00:25:35.920 --> 00:25:39.920
So, I mean, you can't, you can't uh I mean, come on now.
00:25:40.000 --> 00:25:42.240
I mean, that's uh that that's that's pretty good.
00:25:42.480 --> 00:25:44.799
Now um what what's going on with Arcs though?
00:25:44.880 --> 00:25:52.559
I mean, he was the tail of two quarterbacks, so all of a sudden he looked like he was confused and dazed, and then all of a sudden he looked like what we expected.
00:25:52.799 --> 00:25:54.319
Yeah, so he started off really slow.
00:25:54.400 --> 00:26:09.839
You know, I was actually at the Ohio State game, the first game of the year, and I think it's a I think it's a lot of pressure for a young quarterback um to start, and your team is ranked number one because Texas was ranked number one at the time, and they were playing the number two team in the country, Ohio State.
00:26:10.000 --> 00:26:14.880
And then you got to go to Ohio State to go play your very first game that you start.
00:26:15.039 --> 00:26:21.279
I think that's a you know, that's a lot for a young quarterback uh to take on and to handle.
00:26:21.359 --> 00:26:24.000
And we and Texas only lost by seven points at that game.
00:26:24.319 --> 00:26:35.759
So um, look, I think uh, you know, the first half, you know, he uh I think he wasn't sure of himself, and I think he was making poor decisions just because he was overthinking it.
00:26:35.920 --> 00:26:40.799
And I think at uh you know in the second half he turned into a completely different player, and I think we're gonna see that carry over.
00:26:40.880 --> 00:26:42.720
I think Texas is gonna have a really good team this year.
00:26:42.960 --> 00:26:44.240
Well, Sark's a good coach.
00:26:44.400 --> 00:26:45.599
Arch is gonna be good.
00:26:45.680 --> 00:26:47.680
You know, I think you'll we'll have a good year.
00:26:47.759 --> 00:26:49.759
And I'm I'm happy to have you in the SEC.
00:26:49.839 --> 00:26:57.680
I think it is the best conference, even though the Big Ten is eating our lunch right now with all their NIL money in Indiana.
00:26:57.839 --> 00:26:59.759
That that's a flash in the pan.
00:27:00.480 --> 00:27:01.519
Yeah, Indiana.
00:27:01.599 --> 00:27:03.279
I mean, they just they came out of nowhere.
00:27:03.519 --> 00:27:06.079
Well, Mark Mark Cuban money helped that too.
00:27:06.240 --> 00:27:06.559
Yeah.
00:27:07.039 --> 00:27:10.559
Hey, before we wrap up, how can folks get a hold of you and your firm?
00:27:10.799 --> 00:27:15.119
Uh they can go to my website, which is www.fodilawgroup.com.
00:27:15.200 --> 00:27:17.119
Fodie is spelled F-O-T-Y.
00:27:18.000 --> 00:27:24.480
Um, and they can uh obviously they can all always call us, 713-523-0001.
00:27:24.799 --> 00:27:36.720
And um, you know, if there's a worker out there who has questions about their pay records or questions about something that happened at work, or they just can't even understand what's written on their pay records, they can give us a call and we can see if we can help them out.
00:27:37.039 --> 00:27:38.400
Well, thank you so much, Don.
00:27:38.480 --> 00:27:41.200
And thank you all for tuning in to Judicial Dollars and Cents.
00:27:41.519 --> 00:27:45.839
If you enjoyed today's episode, be sure to like, follow, and subscribe wherever you listen to podcasts.
00:27:46.000 --> 00:27:48.559
It helps us grow and ensures you never miss an episode.
00:27:48.720 --> 00:27:51.039
We'll see you next time on Judicial Dollars and Cents.
00:27:51.440 --> 00:27:52.000
Thanks a lot.
00:27:52.079 --> 00:27:52.960
Thanks for having me.
00:27:53.440 --> 00:27:58.559
Thanks for joining us on Judicial Dollars and Cents presented by Anders Virtual CFO Services.
00:27:58.720 --> 00:28:03.839
If you found value in today's conversation, be sure to follow or subscribe wherever you get your podcast.
00:28:04.000 --> 00:28:10.960
To learn more about how Anders helps law firms strengthen their financial foundations and drive growth, visit AndersCPA.com.
00:28:11.119 --> 00:28:15.519
Until next time, keep making smart decisions that make perfect sense.