Are you an attorney who is interested in joining a supportive group of fellow attorneys? In this podcast episode, Jim and Tyson explore the impact of their mastermind group for lawyers.
Are you a lawyer looking to build a million-dollar law firm? Devon Slovsky’s presentation on “Zero to 1 Million” provides valuable insights and practical tips on how to grow your firm. In her talk, Devon emphasizes the importance of having the right mindset and overcoming fear to take risks.
She encourages listeners to implement good standard practices and warns that the bootstrapping early success is not sustainable in the long term, so there is a shift needed to uplevel
Devon also stresses the importance of systematizing processes and improving management skills to serve a wider client base. She advises on two basic tools to build out early in your law firm: a chart of accounts and a firm budget. Having these tools in place, even for small firms, will be essential for future growth and making accurate projections.
Moreover, Devon shares some surprising things that financially improved her business, including hiring a professional accountant and having organized books and financial records. She also encourages paying yourself a market wage and providing benefits like health insurance, short-term disability, long-term disability, and life insurance for your staff.
So, if you’re ready to take your law firm to the next level, take a cue from Devon and start implementing these valuable tips today.
03:54 The importance of being prepared to pay market prices when starting a law firm
06:09 The importance of paying yourself a market salary
07:43 Building a detailed budget and chart of accounts early on
10:53 Finding your firm’s natural billing rhythm
14:12 Hiring an expensive professional accountant
15:07 Market wage and the mindset shift that came with it
15:50 Adding health insurance, short-term disability, long-term disability, and life insurance benefits for your staff
18:06 Starting with new clients to change their expectations
Watch the full video on YouTube here.
In today’s episode, we’re sharing a presentation from Max law con 2020. To keep listening to hear Devin slawinski as we share her talk zero to 1 million, you can also head to the maximum lawyer YouTube channel to watch the full video. Let’s get to it.
Run your law firm the right way. This is the maximum liar podcast, podcast, your hosts, Jim hacking and Tyson metrics. Let’s partner up and maximize your firm. Welcome to the show.
I’m here to talk to you about growing your law firm and the foundation’s particularly people who are in the maybe 100,000 $200,000 range are the steps that they need to implement in order to get themselves on track to build a million dollar law firm. And I’m going to share some hard won lessons that I’ve learned while I grow my firm. I think there’s also going to be a few nuggets in here for people who’ve broken the seven figure barrier as well and some good practices. So let’s get started. So I’ll tell you a little bit about me. So I practice family law and about 95% family law when I don’t get you know, squirrel distracted by something else that seems you know, interesting. I’m in a small Metropolitan Statistical Area in southwestern Virginia, and my firm has what I call 3.1 attorneys right now, including myself, I’m an accidental law firm owner, I’ll tell you a little bit about my story as to where I got where I am today in a few minutes. My goal for you today is to reframe your mindset. Because I will tell you, four years ago, when I started my firm in a kind of unexpected way, I was terrified, I was really scared, I didn’t know if I’d be able to make it. I had other lawyers in my market that I saw were struggling financially. And I had another older firm lawyer who I trusted tell me you will barely make 20 or $30,000 a year out on the streets. And I was scared. So anyways, I want to instill that mindset. With you all that you can do this, if it’s something you choose to do, I also want to give you a couple of tools for the road as well. So we’ll move on from there. So I saw a great movie dune on the way over and I want to take a second I want to talk about fear. So we all deal with fear. I think there’s sort of three personality types when it comes to fear. You know, there are people who just don’t experience fear. Okay? Have you on that Paul? Yolk abiertas, I swear that that man is not scared of a damn thing. You know, he just goes headlong into anything. Then there are other lawyers, maybe lawyers in your Bar Association, lawyers that are, you know, terrified, they’re down on their luck. And they’re scared that they don’t do anything about it. Okay. And then there are other people who are scared, and they act in spite of it. And I think I’m one of those people. And if you’re that kind of person, I want to speak to you today. And I hope I can encourage you if you’re trying to grow your firm that you can make this happen. So I have some good news for you. Okay, this charted territory, you may recognize my title zero to 1 million in parentheses as a play on Peter TEALS. Book zero to one. Peter Thiel talks about revolutionising technology and creating new markets and all of this stuff that you know, you have to do to be successful in his realm of software. As much as I like tech law is different. So many of us need to stop reinventing the wheel and just implement some good standard practices to get where we want to go. Use your creative energy for how you’re going to serve your clients and come up with legal theories. And stop wasting your energy trying to figure out how you’re going to do billing and budget and all of that stuff, get that done, and save your energy to serve your clients. So a couple things I want you to know, as you’re preparing to grow, I want you to understand that this is going to happen. How many people when you started your firm? Did you have a true believer come with you? Did you have a spouse say I’m gonna help you start your firm and I’m gonna take a paycheck cut and I’m gonna come help you. Or you had a secretary come over and they were willing to work for $10 an hour for a while. Or maybe your 15 year old kids is like all the answer the phones in the summer for you? Well, you get booted up, did anybody have a true believer help them out when they started their firm? I had a true believer. I had a great legal secretary come over with me. And three weeks after I started my firm, she had an unfortunate fall and how to brain injury. So fortunately, she’s doing okay right now, but she was unable to work and I lost that person I was really counting on to help me start my firm. So whether it happens sooner or later, the true believers and the special discounts and the really cheap rent that you get as a firm owner, it’s not going to be there. You need to be prepared that you will have to pay market prices. You are not going to win success as a law firm owner by finding a lot of cheap deals to string together. You need to understand that mindset at the beginning so that you can prepare your prices to be able to reflect what you’re going to need to be spending in order to provide the service. So I want you to be really aware of that, because so much of us have early success by bootstrapping our business. And we need to know that’s not going to be a sustainable model in the long term, even though it’s a wonderful way to start your business. It’s what I did as well, you’re gonna have to improve your management skills. This isn’t a talk on management, but you’re gonna have to do that. But something else that I think we don’t realize is another reason we can be so successful as early entrepreneurs, is because we’re so into it. We love what we do. We want to serve our clients, we want to show that we’re better than other attorneys. And the reason for the way we think we do that is by texting constantly with our clients, by emailing and being pinged all the time. That’s not scalable, you can’t run a firm that way. So you’re gonna have to think as to how you’re going to systematize so that you can continue to serve a wider client base, and still get good quality customer service. I want to talk about some financial things to be aware of as you’re growing your firm. So I love Greg Crabtree, if you’re in the Maxwell guild, you’re going to hear me preach Greg Crabtree all day long. But Greg Crabtree tells us that so many entrepreneurs are underpaying themselves. So I asked you what is happening in your business. If you are not paying yourself a market salary, you don’t have truth in your business. Your books do not reflect what’s really going on in your business. You don’t know if you’re running an unprofitable firm, when you are not paying yourself a market salary. So I’d advise you to go and find comparable salaries, make sure that you know what that salary is. And your goal needs to be to get yourself to a market salary. Within 18 months. I waited too long. I waited way too long to do it. But I can tell you magic started to happen in my business. When I started paying myself a market rate salaries like I suddenly took my business more seriously, in a way I didn’t realize thinking about Jim earlier today, you know, we can sometimes be so patient as entrepreneurs to a detriment, you know, well, I’ll catch my salary up later, I’ll catch my salary up later, you need a hard deadline. And I asked you to write that deadline down right now. If you’re not paying yourself a market salary, you’re going to find out what it is. And you’re going to write down when are you going to start paying yourself that salary so you can have truth in your business. You can know if you’re truly running a profitable firm. That means paying yourself a market wage and paying yourself owner distributions. So another reason pay yourself a market wage, even the most people are under paying some of you are not taking w two salaries. And I’m not going to give you accounting advice. But if you’re doing all distributions, you might have an issue with the IRS, it’s going to be expensive to wrap up. So keep an eye out on that. I want to talk about two parts of your toolset to really basic parts of your toolset to build out early. So you’re going to need your chart of accounts and you’re going to need your firm budget. And if you’re at $200,000, and you want to be at a million and you think you know, I’m small, it’s just me right now I kind of know everything that’s going in and out, do it anyways, take the time right now to build out a detailed budget and Chart of Accounts. Because having those tools are going to be things that you build out on in the future. So my budget reviews take a lot less time now than they used to, because they built out a lot of detail. And once you hit about 300k in revenue, you’re gonna be able to start making predictions based on everything that’s gonna go on your phone, you’ll have enough data that it’s just not chaos anymore. We all go through the chaos phase of startup, and you’re starting to be able to recognize patterns when you hit 300k. This is a sample of my chart of accounts. In the speaker notes, I’ve got a chart of accounts in there, I encourage you to have a really detailed chart of accounts, everything that we spend money on is that our chart of accounts. And again, there’s Google links in the notes to my charts of accounts. But you can see these are totally broken out in huge details. Then my bookkeeper knows which expense goes where which expense isn’t mandatory? Or do which is the voluntary bar to why do we have that? Why don’t you bother to break that out? Well, we’re doing well financially, and I’m happy with where we are. But worst case scenario, I know I can cut those voluntary barges if I have to. So we’ve broken everything out we’ve made it really easy for a bookkeeper to work with us and categorize everything properly. We’ve also got codes that tell us whether our costs are variable costs, fixed cost or set variable costs. So we can pull reports and know exactly what’s happening and all the different elements of our business. I’ve put a budget of kind of blurted out if you want to see a real firm’s number, you’re going to have to go to credit golden farms seminar. I haven’t done that. But I’m not ready to show my books to people, but I’ve blurred out my budget. My budget works with my chart of accounts so that I can pull Profit and Loss well, not just profit and loss statements, but my budget ference reports and know how much I’m off based on my projections because my chart of accounts is so detailed. I know one if we’ve missed an expense and forgotten to pay something, but we also know down to the letter where we’re not accounting for things and where we are and we review it every quarter and I update these budgets every quarter, and they end up Being really remarkably accurate and help us make good projections.
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So what I want you to do once you have the tools correct, is I want you to find your firm’s natural rhythm. I asked a bunch of you in the poll how often you bill and the most common denominator was every month. And I think that’s maybe because it’s hard to build. I think that’s maybe why we do that. And kudos to you if you’re billing regularly every month because I think I once when I opened my firm’s shame on me hate to admit it, I went six months without billing. So we don’t do that anymore. But my firm’s natural rhythm is two weeks. And I can tell you why. I think it’s 75% of people who get a paycheck in the United States are paid every two weeks in some states, you have to do that. That’s what gussto does. So that’s what we pay. And we have so much insight into our business when our billing cycle runs with our payroll cycle, your number one expense is you build a firm, even if you’re solo, your number one expense should be payroll, because you need to be getting paid. And you should probably be a W two employee if your that’s what your accountant tells you. So your number one expense should be payroll. So now you have a nice consistent rhythm with your payroll, and your billing practices lining up together. At the same time. I’ve been religiously billing every two weeks, for a year and a half. Now it’s dramatically improved my business. Now we know more quickly when people are behind. You know, I was talking to my husband right before this talk. And you could go $64,000 in the hole on a case if you bill 160 uncompensated hours that 40 hours a week. So we cut that risk in half a little bit by billing every two weeks. So anyways, I highly recommend changing your billing period. Bad billing practices are going to give you bad cashflow people are going to be upset about their bills are going to be higher, we’ve just had so much lower accounts receivable when we bill every two weeks and we know when to get out of a case, we’ve got our eyes on the case every two weeks knowing if it’s time to get out, I will give you a warning. If you’re going to implement flat fees, you’ve got to have a good plan for your cash flow. Because one thing that can happen is you get all that money and operating upfront, you’ve got to make sure that you’re going to have the staff capacity at the end of that case to continue to service the case. So just something to keep in the back of your head. Some attorneys take that money and sort of set it in a fake trust account if it’s considered earned, that they don’t take until the end of the case. But it’s really important. If you’re relying on staff to finish these cases, you’ve got to make sure that you can fund these cases at the end of them. I also highly recommend that what you do is you make a billing goal for every period. Except for my budget. When I think of monthly I think of my revenue goals. My billing targets my marketing goals, I think of them in two weeks sprints, and I have it all charted out. So I know how many leads we’re expecting to get how many consults we’re hoping to book and how many hours we’re hoping to bill every two weeks. And I have that charted out for the whole year. And I highly encourage you to implement that practice. So what do you do to course correct? You know, you’ve charted this course, we figured out how we’re going to cross no man’s land and how we’re going to build a business, not just a law firm, you’re going to have to course correct. So you’re going to get in there every quarter, you’re going to recognize the new expenses, you’re going to correct your Chart of Accounts, and you’re going to protect what’s going to happen next quarter. I will tell you my projections have gotten increasingly more accurate, the more I’ve been doing this, they were thin $10,000 Last year working with my accountant, and then you’re going to do a major budget overhaul every year. So and I think that’s pretty self explanatory. So I want to share with you just a few things that I’ve done that it’s financially improve my business that some were a little surprising. One of the first things I did it I hired an expensive professional accountant who gets it early in my business probably earlier than I needed her but I have very organized books and financial records and I know what my expenses are. My profit and loss statements speak a lot of truth and help me make decisions about my business in which segments of my business are more profitable than others. Your ordinary bookkeeper isn’t going to be able to do this. You need to hire somebody who is not just a rearview mirror accountant. You need to hire somebody who’s front facing And to do your accounting and set you up in a position where you can start making projections. Based on what’s happened in the past, I started paying myself a market wage. And I’m going to go ahead and give you guys a little bonus tidbit to one thing that really changed. My mindset was my husband, who’s here in the back, we rented a house for a really, really long time, even though we could probably afford to buy one. And when we stepped up to the plate and finally bought a house, I think that was a great mindset shift for us, you know, instead of just hiding out and being afraid, you know, will we be able to continue to do this, we stepped into it and said, we’re going to do this, we’re going to make it work. And I think that’s been such an important mindset shift for us. And it goes hand in hand, with paying yourself a market wage. I’ve added benefits, I was terrified to add health insurance, I thought, Oh, my goodness, this is gonna be an out of control costs. What will this do? I did that over a year ago, and I’ve never looked back, you know, it’s always worked out, it’s never been the burden that I was so scared of it being I also ended up adding short term disability, long term disability and life insurance benefits for my staff. And I really encourage you to do so I’ve talked to too many lawyers who have had to make really tough decisions about very ill staff members, and what the right thing to do is and in light of their inability to work, so if that’s one takeaway, I’d highly recommend you doing that for your staff. And then the big plunge I took earlier this year is I hired a highly compensated trial attorney who is going to be our lead trial attorney and hopefully take some cases off my plate, we’re getting my caseload offloaded to him and his caseload really built up. And that’s been a scary investment. But it’s been worthwhile, and it’s finally paying off. So those are my tips for growing your law firm getting yourself $2 million in revenue, there’s a sample budget, I have already filled out your revenue targets, which are at $3,333 a month on the budget. But it’s up to you to come up with what your fill in numbers are to get there in the budget. So there’s a template for you. And I want to point you to some good resources. So we’ve got my Greg Crabtree book, talk about him all the time, simple numbers, just so many words of wisdom, if you can understand the labor efficiency ratio that he talks about in there, it’s going to really help you manage your firm. But that’s a more advanced topic. I did not realize that Brooke was speaking tomorrow. So Brooke lively is here. And she wrote the book panics, profit has some really good KPIs and talks to you about managing data, she actually informed me, they’re giving free downloads of that right now out in the hallway. So anyways, that was a nice, pleasant surprise, you can go get that book in five minutes if you want to. And then I also want to direct you to no man’s land, we are growing companies fail so that you can make sure that you’re building the infrastructure so that your business can scale as you grow, because your business needs are going to change dramatically when you move from solo to affirm that’s more systematized. So thanks. It looks like I’ve got just another minute or so to answer some questions. So right there, you get
a major pain point over service for client happiness. You mentioned about systems that will be there to drive the system?
Well, I think you’ve got to start with a new clients you on board and you’ve got to change their expectations. From the beginning, I think it’s really hard to retrain old Doc’s they don’t learn new tricks, but then you’ve got to invest some time moving forward about how you’re going to communicate with these people. So you know, we have tons of scripted emails in our email system that people can use and reuse. And we’ve even automated some of those things sent out at certain times in cases. And that’s been a huge value, Jordan.
Know, so I mean, it does kind of mess a little bit with the monthly numbers that you look at. And you kind of have to readjust that when you’re looking at your budget, which I’ve not found a way to build a budget in two week increments. But you know, you have 26 periods every year, regardless of you know, even though some months will have three in it.
Give me by paying yourself market wage, I’m
sure. So if you were what I think of a market wage is, I don’t really think of it as what you would pay somebody else to do the management, I think the true substitute is what would you pay another attorney to do high level attorney work at your firm? I think that’s the substitution value
lower than what
I’ve been paying myself much less than market wage. I’ve been, you know, doing the, you know, let’s you know, there’s a time I paid myself minimum wage. So you know, when you don’t have truth in your business when you do that. So all right, well, I will get off the stage. If anybody has any other questions, let me know. Thank you all.
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