The 6 Worst Financial Mistakes That You Can Make as a Lawyer 484

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Let’s talk about running a law firm but instead of talking about running it the “right” way — let’s talk about what NOT to do and the mistakes that Jim and Tyson have made. 

Here are six mistakes that cost them financially that they wish they could go back and fix. Hopefully you find this helpful and hopefully you can shortcut some of these mistakes to save yourself the financial headache. 

Mistakes of: 

➡️ Starting your own firm and not knowing your first hire

➡️ Riding a financial roller coaster ride of “rich” to “broke” 

➡️ Confusing people with your marketing message 

➡️ Hesitating with hiring a team 

➡️ Being the #allthethingslawyer

Episode Highlights:

2:57  Set up your books and hire a bookkeeper on day one … DO NOT WAIT! 

5:48 Niche down as much as you can as early as possible

8:18 Let go of the niches that your heart is not in, it’s not worth hanging on and screws up your marketing with mixed messages about what you do

11:26 Waiting too long to hire a team of people to help move the firm forward 

15:26 Know your numbers. What numbers are important? What numbers aren’t important?  What do the important numbers mean to you and your firm, both in the short term and the long term? 

18:16 Not paying yourself a salary 

Jim’s Hack: Read a book called Stillness is the Key by Ryan Holiday. 

Tyson’s Tip: Need a pump up of motivation? Go to YouTube and search “I Want More Levels with Kevin Hart.” 

🎥 Watch the full video on YouTube.

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Transcript: The 6 Worst Financial Mistakes That You Can Make as a Lawyer

Speaker 1
Run your law firm the right way. This is the maximum lawyer podcast, podcast, your hosts, Jim hacking and Tyson metrics. Let’s partner up and maximize your firm. Welcome to the show.

Jim Hacking
Welcome back to the maximum lawyer Podcast. I’m Jim hacking

Tyson Mutrux
and try some new tricks. What’s up, Jimmy?

Jim Hacking
Oh, Tyson, I think there might be a day of mourning for half of my team. On the day we’re recording this, Argentina played Saudi Arabia at four in the morning in the World Cup. And the anticipated number of goals that Saudi Arabia was supposed to score was point one, four, and they score to a one two to one. Ooh, ouch.

Tyson Mutrux
Well, you know, I mean, I’m not a big soccer guru. I don’t really know a whole lot about soccer. But it does not seem like us. Tying Wales was probably a good result. But maybe I’m wrong about that. Do you know if that’s a good thing or a bad thing?

Jim Hacking
Well, it draws better than a loss, you do get one point for a draw. So as long as the United States beats Iran, and the normal course of things happen with Wales in England, meaning England when the goal is to be second, England should go and we should be second to get out of this first round. But Argentina, I mean, that’s one of the hugest upsets ever in the World Cup.

Tyson Mutrux
And Argentina seems like I’ve heard them a lot in the World Cup. So did they win it a couple of like the last World Cup?

Jim Hacking
No, last time was France. They have won it many times. But I don’t know. They’re one of the they in Brazil, or certainly the odds on favorite.

Tyson Mutrux
This shows how little I know about soccer. I know very, very little but anywho,

Jim Hacking
I was gonna say I know something you know a lot about and that’s running a law firm. So let’s talk about that instead.

Tyson Mutrux
Yeah. So let’s, let’s rock and roll. So today, we’re going to talk about our three worst financial mistakes. So it’s, it is a, it’s a really positive one for this week. But I you know, I think the ones we’re going to talk about, I do think they’re going to be helpful for people. I think that it’s funny because I chose different ones from you, even though mine probably would have overlapped with yours a little bit more. But I chose some additional ones. But I think yours is the number one for either one of us. So you want to start with that.

Jim Hacking
Yeah, and just so that everybody understands, the reason we’re doing this is, you know, obviously, you learn a lot by hearing what Tyson and I do well, and we love to pound on our chest and point out all of our wins. But to me, there’s just no substitute to hearing the mistakes that people made. And hopefully you can shortcut some of these, especially this first one. And so I was glad to put it on the list. Because if there’s anybody listening to this episode, before they’ve started their firm, to me, this is like the number one thing whenever anybody gets in the big group and Facebook and says, Hey, I’m getting ready to start my own firm, what’s your best piece of advice, I always lead with this. And it’s from my biggest mistake, which was not setting up my books, and hiring a bookkeeper on day one, this has caused me untold amounts of discomfort, pain, whatever you want to call it. But not having the book set up at the beginning, I am not in any way shape, or form and attention to detail kind of guy. And so you know, I could keep it up for a while because I treated it like I had my checkbook. But after a while, you know, we were missing categories. We weren’t keeping track of our spending. And the biggest thing was, it’s that little, you know, refund a 53 cents, or the one little thing that is off, that just totally screws up your books moving forward. And you’ve got to set it up properly at the beginning, so that you’re really ready for success.

Tyson Mutrux
No question. And it’s even more important, whenever you’re doing things like taking, you’re doing a retainer, and then you’re billing off the retainer, it’s extremely important. If you’re doing personal injury, it’s extremely important that because you have to track all these different accounts. And so each one of the clients gets a separate account, and it gets really, really complicated. And as your firm begins to grow, it gets even more and more complicated. And the longer you delay, the more complicated it’s going to be. And the more expensive it’s going to be for you to hire that bookkeeper, because they’re gonna see your tangled mess, and they’re gonna have to untangle it, and it’s gonna cost a lot of money. So just bite the bullet now. And over the long run, that’s gonna save you 10s of 1000s of dollars, probably, wouldn’t you say Jimmy? 10s of 1000s of dollars, if not more,

Jim Hacking
yeah, and it’s not going to cost you that much to get it set up properly at the beginning. We have a bookkeeper now who’s very strict. And you’re right when she came in to try to clean things up. It was a huge mess. And she’s done that for many members of The Guild and of regular maximum lawyer, but it’s much easier to hire her or someone like her to set it up properly at the beginning. And then the next part is making sure that you attribute things properly. You’re absolutely right about you know, you have you don’t have one bank account. You have your trust account. You have your operating account, but then you actually have an account for every client, right and so just say with like You’re cases where you’re getting big settlement checks, and you’re paying money out if you get off 16 cents or $16 or $1,600. You know, that’s a big thing. And then of course, do you ever bounce a check out of your trust that’s causing you an automatic bar inquiry right out of the bat?

Tyson Mutrux
Yeah, that’s obviously something no one wants. So if you’re just starting out, especially just spend a few $100 to get the bookkeeper, it’s totally worth it. There are plenty of virtual bookkeepers that you can get. There are plenty of options. Even QuickBooks now online, they don’t work for Persinger firms, just so you will know. But they do have a built in service that does the bookkeeping for you. And if you’re a smaller firm that has like just does criminal defense, I think it might work for you or family law. So something to look into, for as an option for you that might be a little bit cheaper. Let’s get to number two, Jimmy, and it’s mine. And mine is not focusing on personal injury sooner. I’ve it was a huge financial mistake, because it is cost me I don’t know how many injury cases over the years because I became known as a criminal defense lawyer very early on, even though I knew way more about personal injury, because my background was in personal injury. And even though whenever I did get rid of criminal defense, it was a huge revenue stream that it just cut off. I’ve made way more money to recoup those losses since then, and by done it sooner, I would have been known as a personal injury lawyer for 12 years as opposed to now probably seven years because there’s a lot of people that viewed me as a criminal defense attorney that were just sending me criminal cases and they weren’t sending me injury cases. But now they are the moral of the story is niched down as much as you can, as early as possible. And we understand they’re the people that want to, you know, have a few different practice areas because of the you know, you want to bring in the revenue. But I promise you, everyone I talked to you, the more you niche down, the more money people make. And Jim yours is similar to that on your are number three, it’s very similar. So I don’t know if you want to roll into that as well. Or if you want to add on to number two, let’s go

Jim Hacking
back in our time machine. Tyson nutrix, he’s humming along he has his criminal defense practice. He’s trying to start a personal injury practice. What was the biggest hurdle or hurdles that kept you from letting go at that particular time?

Tyson Mutrux
Golden handcuffs? No question. Because we were early on paper clay for criminal defense, it was like shooting fish in a barrel. There were not a lot of people in St. Louis doing it whenever I first did it. So I could pick up clients. In no time, it was very easy to get criminal defense clients, even from an SEO standpoint, it was pretty easy. So I was getting we had a very steady stream of revenue that were that was coming in. And what it was doing, it was strangling the injury practice, I had plenty of injury cases, but I wasn’t able to move those cases along. So if they if I were to pinpoint one thing that prevented me from doing it was just golden handcuffs. And I what I was doing was I was blinded, my long term vision was being blinded by that money, it was being brought in up front. And it happens all of us were like, Oh, this is fantastic. This is good. But my at the time, my vision was not locked down. It was not as strong as it is now. And so I just saw the money. And I was like, Oh, this is great. And it prevented me from really moving forward when it comes to my long term vision.

Jim Hacking
So we’re going to start calling these 345. And six, just to be clear, because we keep bouncing over who’s first, who’s second. So for me, our third collective mistake. And that’s the opposite of what you did. And that is that I kept doing PII longer than I should have. So maybe it’s sort of the same thing. It’s just the different practice area. But my heart wasn’t in personal injury, I did not like doing discovery, I did not like doing depositions, it was keeping the lights on. And I wasn’t really good at it. And I didn’t have good systems, I wasn’t able to develop those systems. Because back then in stage one, we were just trying to keep the lights on. And it made it really hard for me to focus I remember, somebody came to see me his father had died in a truck accident. And I should have just referred it to Gary or to you or to or to John Simon. And instead I tried to sign it up, and then I didn’t have any credibility. It was a case way too big for me, I wouldn’t have had the resources even to put into it. So I just wasn’t doing anyone a good service by keeping on to that. I realized sort of doing soft tissue stuff, that I could make the same amount of money on a soft tissue case in a immigration case that I could systematize and that Adela could do most of so it really hindered my ability to make the firm the way that I wanted and more importantly, no one was beating down their door to hire Jim hacking to be their personal injury lawyer right like immigration. There was what Gary Halbert would call a starving crowd. There was a need there was the phone was ringing. There were people that had been helped by us that wanted to recommend us to other people. It was just it was just so hard for me to let go of it. And it just affected so many things. My marketing was off because I was trying to market One things and my website was a mess. And it just for so many reasons holding on to that for as long as I did really led me down to some bad financial places, and it was only the desperation of Boy, this isn’t working like I need to do something differently. And that was to niche down and focus. I did it out of desperation, more than than anything else.

Tyson Mutrux
Yeah, the marketing is a big one, I struggled really big time with the marketing because it was really easy to shoot a criminal defense video and then shoot a injury video, and then criminal defense blog posts and the injury blog post. And it was really sure it’s very confusing for people, whenever we put it on social media, like what does this guy even do? You know, here’s something else you just said. And like you, you as the immigration lawyer, Jim, you can handle a soft tissue case and get, you know, the same amount you’d get for whatever other kind of case you get you handle, right. But if you had referred that same case over to me or Gary, we would have gotten substantially more money for that case, and you would have probably gotten the same amount of money for doing no work. And that’s, that’s one of those other things where if you just refer the case out, you, let’s say you don’t get a referral fee, you’ll get more referrals. That’s that’s another part of it, you’ll get more referrals on your practice area. But if you’re referring at the injury stuff, you’re gonna get paid just as much probably as if you would have just held on to the case yourself. So like, let that sink in. Because what Jim’s getting it was getting on soft tissue, we’re getting way more than that. And so that’s another lesson for people. Alright, let’s get into number four. And this is one, I went way too long with this one, and it’s waiting too long to hire a team. Alright, I’m not saying hiring, I’m sorry, I’m talking about actually focusing on a team of people that will help move the firm forward. And I went for the longest time you know, just me and a legal assistant or a paralegal, whatever you want to call them, in one way too long with that, and we weren’t able to move cases. And then we hired two legal assistants. And it still was not enough. But once I started, okay, I’m having an office administrator with time we call them an office manager, we’re going to have a triple C, we’re going to have a case manager, we’re going to have all we’re gonna have a receptionist having all these people. Once I figured that out, our growth just it rapidly happened. And they’re having a team so focusing on the team, not just hiring an individual or two that have an actual team in place. Really, really important to grow with if you want to grow into a stage 234 type of buffer.

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Jim Hacking
You know, I’ve never really heard you or anyone else put it that way, the difference between hiring one person and building a team like and it’s so funny because so many of our members Guild and otherwise get hung up on just hiring that one person, when they’re not even thinking about what could a team do? Like? Like maybe just people should just put to the side the money involved? And I know that’s easier said than done. But think to yourself, if I had a team, what would it look like? And what would they do? And how would it make things better? You know, so often when we hear people talking about building a team or hiring people, it’s always about the cost. It’s always about how much it’s going to cost instead of thinking about what is this investment going to do for me, you know, if you look at somebody like Paul, Yoko bitis, who, you know, knew right away, what he wanted to do what he didn’t want to do, and started building that team early on, I think those that experienced the growth, it’s always the building of the team first than the growth even though that sounds counterintuitive.

Tyson Mutrux
There’s another level to this too. And I woke up to it whenever Ryan Anderson spoke at max law Con this year. And it was last year, when he was talking about the executive team building a rockstar executive team. Now you’re I mean, you’re in that’s something that we’re working on now is building out the executive team. It’s no longer just the team that you’re building, because we’ve got the teams built out. But now you’re talking about a team that is a team of high performers, that it’s going to be like throwing gasoline on to the fire. And that that really motivates me right now. But that’s that’s an advanced step. But frankly, I think if I were to put sort of a four B on this, or for a, it would be waiting too long to hire the executive team. Because hiring the executive team, we’re already sort of shifting into that. And I can see the benefits of that already. So if you’re at that point, if you’re saying, Oh, well, I already have my team, well focus on the executive team because you’re going to start to propel your firm even faster.

Jim Hacking
We just promoted to our team members up to the leadership team. So now we’ve gone from three to five and it’s been Huge brings up more issues, but it also brings up more issues. Right? Like so it’s, it’s a good thing, it’s a good thing and, and, to your point, I’m really feeling like, unbelievably there needs to be another layer in our firm, right? Like, we’re about to have a, they’re gonna they’re gonna have teams that they’re running in a in a serious way and, and it’s pushing me to be a better law firm owner and to develop new skills.

Tyson Mutrux
I love it. Alright, so let’s get to number five Jimbo.

Jim Hacking
All right, so anyone who talked to me the first 10 years I owned a firm, they would hear me sort of giggle he, I’m not a numbers guy, I don’t really know my numbers, he, I don’t really look at my books, because, you know, I’m a history major, they don’t teach you numbers in law school. And, and I don’t really like to look at the numbers, and I don’t really understand it all. And I just want to go sign up more cases, or I just want to go help more people. That is total bullshit. Like saying that to yourself, is irresponsible. It’s actually irresponsible. And I would say immoral to the people that are relying on you that if you aren’t willing to educate yourself, and to develop those new skills, and to learn what numbers are important, what numbers aren’t important, then you’re really setting yourself up for failure. But more importantly, you’re letting your team down. Because if you’re not looking at the numbers, and you don’t have someone and I’m not saying you have to actually do the mechanical work of tracking the numbers, I’m just saying, You need to understand what the numbers are, what the important numbers are, what the important numbers mean that you and your firm both in the short term and the long term. And you’re abdicating a tremendous amount of responsibility for the health and safety of the firm. If you’re not willing to learn the skills that you need to run a business.

Tyson Mutrux
I remember long ago and ever used to say, Well, I’m not a numbers guy. I’m not a numbers guy, I always made me cringe. Because like, at the top level, it’s all numbers. It really is all numbers. It’s the revenue numbers. It’s the profit numbers. It’s those numbers, right? But it’s also like the KPI numbers, you know, like, What’s your average fee, things like that, that are really, really important. And so I’m glad that you’ve come around. I don’t know what what moment you finally came around to this gym. But I do remember early on you billing Well, I’m just not a numbers person. I’m not a numbers person. But at some point, it did click. And it’s funny because like I have seen the way you talk about your firm change substantially because it’s numbers and you’ve seen your growth. Let me actually let me ask you, since you started to shift and focus on the numbers, what kind of growth Have you seen since you’ve started that?

Jim Hacking
So that was back in 2012, when I had no money left in the bank, and I talked about this at max law con a few years ago, and I had to tell them money that we didn’t have any money, and that I hadn’t really been doing a good job of paying attention to the numbers. And she came to the office every Friday for a year and a half while we sorted out the numbers. Right. So that’s so now you’re talking 2014 2015, that’s when he really started seeing traction. That was the entree to her actually joining the firm. And since then we’ve had you know, 100% or more growth every year since then.

Tyson Mutrux
I love the use of the word entree, right? That’s really good. Nice. i Let’s get to number six, which is not paying myself a salary. I went a few years and did not pay myself a salary. You know, those, those criminal defense checks, they’d come in those injury cases would come in, I’d deposit that and I’d pay myself a big chunk. And I would just strangle my firm and the cashflow roller coaster was real. The ups and the downs and oh my gosh, where’d all my money go? Okay, I’ve got I’m rich. I got a bunch of money. Oh, my gosh, where’d my money go? Oh, my gosh, I’m rich. Where’d my money go? And then but once I started to pay myself a salary, everything started to level off. It was way, way better. Once I adopted Prophet first, it was even way better. But it’s one of the things where if you’re not paying yourself a salary, I know. I asked. Well, that’s one of the first questions I asked whenever people are in the hot seat. Now, Jimbo, and I don’t know if you’ve noticed that by asking quite a bit. And I asked this of young lawyers all the time, like are you paying yourself a salary. And there’s a lot of experienced lawyers that to this day who are not paying themselves a salary, they’re just taking drawers. And it is a huge mistake, because you’re it’s a huge cash flow problem. So you need to start paying yourself a salary if you’re not doing that. For those

Jim Hacking
of you who are not in the guild, twice a month, I sit and I do what’s called a hot seat where someone can come and sit and present their issues that they want to try to improve on. And we sort of go into when we tried to keep it pretty intense and pretty. Like we really want to dig in and get to core issues. We don’t try not to talk about like SEO strategies or things like that. But for the last, I’d say five or six months, at least once of the one a month of those hot seats. There’s this moment where Tyson started nodding, and he’s not thing. And he’s like, and you can see it in his face. Oh, yeah, I figured it out. And it’s usually that people are starving their firms by treating their operating account like an ATM. And there’s very little discipline. I mean, you and I used to take pictures of cheques and fat stacks of cash and send them back to each other, I would send those to Imani all the time to tell her how great I’m doing, right. But if you’re really doing great, you’re paying yourself a salary, you’re treating it like a business. It’s not an it’s it’s not a financial extension of your personal bank account. And you probably even need to think about making it hard to transfer money from operating to your house fun just so that you are mindful of it. But it’s just so easy when you don’t have any checks or balances. And you don’t have anybody looking over your shoulder to just do whatever the f you want. And that’s really just not a good way to run your firm, and especially your firm finances.

Tyson Mutrux
Love it. Hi Jimbo, we do you need to wrap things up, I want to remind everyone to join us in the big Facebook group. Lots of great just information be shared always there. And then if you want a higher level conversation, go to the guild go to max law guild.com. We would love to see you there. You’ll get to experience all of our trainings all of our maximum lawyer and minimum time course, we hope you will join us and then while you’re listening to our tips and our hacks of the week, if you’ll give us a five star review, we would greatly appreciate it to help spread love to other lawyers that need some help. Jimmy, what’s your hack of the week hack of

Jim Hacking
the week is that you should read a book called stillness is the key by Ryan Holiday. So Ryan Holiday is a Tim Ferriss guy, he spends a lot of time talking about the Stoics and ancient philosophies and sort of applying them to modern day. So now he’s just taking issue by issue, things that the stoics read. Yeah, he wrote the daily stoic and the stillness is the key is really good. Because it talks about especially now in 2020 to 2023 when life is so hectic that the need for stillness. And there’s a chapter that I really enjoyed. And it told the story of Napoleon Bonaparte. So Napoleon had a rule that his assistant couldn’t open his mail for three weeks, the assistant couldn’t open the mail for three weeks. And the reason for that is because three weeks later Napoleon like to look at the mail and laugh at about all the suppose it problems that had solved themselves, while he ignored the mail. Now, we get those letters now, in email form, all these emergencies of the day, where they’re probably clamoring for Napoleon or you to jump in and fix. And obviously, there’s a certain category of things that have to be fixed. I’m not saying that. But what would happen if you didn’t look at your email for three weeks, right? Like, I mean, I don’t look at my email at all now. But if you if you didn’t look at your email for three weeks, how much of the things that are in there would solve themselves? And if not, if not, then that that’s probably a tell that you’re doing too much inside your firm.

Tyson Mutrux
It’s great. I like that, you know, Jim’s not advocating to ignore your email, just have someone check it for you. So just a disclaimer for you there Jimmy, you get somebody complaining, hey, I ignored my email for three weeks. And now I get sued for not saying that. All right. So mine is and by the way, there’s the daily stoic, I recommend it. I’ve got it right here on my shelf, and I just grabbed it. And there’s every day there’s a new quote that he lists and then he interprets it. And my tip of the week is I just want people to google or Go to YouTube or go to Tik Tok and search. I want more levels, Kevin Hart. And it is I love it. It’s a he’s being interviewed by Joe Rogan. And he’s talking about how, like, once you change your mindset, new levels are opened up. And then when you change your your mindset, again, new levels open up and you can you can get more levels if you just change your mindset. And I love it so much. I’ve been listening to it every single day, it will pump you up. So if you need to pump me up and go check it out. I promise you, you’ll like it. It is so good. It’s a 32nd clip, but I just like listened to it on repeat. It’s so great. And he’s Kevin Hart. Don’t people know don’t know this. Like he’s obviously a comedian and an actor, but he does a lot of things business wise. And he’s doing some big things. He’s kind of like the rock, just on a smaller level. I meant that on purpose. Because He’s so tiny. But anyways,

Jim Hacking
that’s an awesome tip. I’m gonna go find it reminds me there’s a little clip of Arnold Schwarzenegger where he’s talking about how no one ever believed in him. And he goes, I never listened to those losers. And I listened to that I never listened to those losers all the time. Like it just I listened to it like four times a week. It just makes me Wow,

Tyson Mutrux
it’s so that’s so good. I’m gonna check that one out now. All right, Jimmy. It’s been good. I will talk to you later. Have a good one, everybody. Peace.

Speaker 1
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