Stop Lying to Yourself

Allison Williams: [00:00:11] Hi everybody, it’s Allison Williams here, your Law Firm Mentor. Law Firm Mentor is a business coaching service for solo and small law firm attorneys. We help you grow your revenues, crush chaos in business and make more money.

Allison Williams: [00:00:26] Hi, everybody, it’s Allison Williams here, your Law Firm Mentor, and on this week’s episode of The Crushing Chaos with Law Firm Mentor podcast, we’re going to be talking about one of my favorite topics, which is money. Money is such a wonderful gift that we have that we can create in our businesses. And there’s so many times when we as business owners don’t fully appreciate all that money opens us up to. And I think there’s a lot of negative money stories that are out there when we start talking about what we want to create in business. In fact, one of the things that recently, that kind of spurred me to to record this podcast was that I was watching an exchange on Facebook. I was in a Facebook group, and the question was posed, how do you compensate associates? And there were probably 70 or so responses on the thread by the time I saw it. And I’d say of those 70, there had to be at least 50 different ways of attorney compensation. Right. And I always hate to see those questions to some degree, because, you know, when you, when you cherry pick this is how I compensate a particular person. There’s a whole lot that’s left out of that discussion, including things such as how you compensate other people in your office.

Allison Williams: [00:01:43] Right. The way that you compensate your associate may be in part based in how you’ve compensated staff, how much staff you choose to have. Are you more tech do it yourself type firm, or are you somebody that facilitates work through a team? Do you have a particularly competitive environment where you’re in an expensive area where high billable hours are necessary in order to even reach high profit? Or are you in Ma and Pa Shop America where there’s two law firms. You’re one of them and the cost of living is very low. And so basically, just by virtue of you being a lawyer and being able to charge what lawyers customarily charge, you’re able to immediately scale revenue relative to other people. Like there’s a lot of different things that go into how we choose to compensate. Right. And the compensation system of your business needs to make economic sense for you to compensate your people well, as well as to generate profit. And if you don’t think about both ends of those with the entirety of your compensation system and you just pluck out, here’s how I’m compensating my associates, you’re going to typically run into trouble where you’re either going to have to cut back on something crucial that you shouldn’t, like necessary staff to keep you ethically compliant or you’re going to overcompensate and receive an under-delivery of service in your business, which can cause a whole host of customer service issues which lead to grievances and malpractice suits.

Allison Williams: [00:03:11] OK, so I don’t like to have the conversation in a vacuum, but I do like to read what people are doing. And I’m often, often curious about when people say, Oh, this is how I do it. I’m most curious about the responses of others. Right. So there’s a whole lot of nasty judgmental, I would never do that or I can’t believe you do that, or this is way too much or way too little based on kind of an esoteric sense of value of money that people ascribe to compensation. But I remember this one particularly obnoxious exchange where someone said that they, that they give their associate 50 percent of all dollars collected. And so the person had a responsibility to build and collect during the workday. No real, no requirement. Just kind of come to work, work hard and go home. And whatever you bill somebody the firm collects and you get half of it. So that would instinctually give a certain level of incentive for an associate who’s an employee. Wow. That’s a nice chunk of change. The problem with that is that several people expressed was, well, if you’re giving them half of what you collect, how are you able to keep enough of what they collect in order to generate profit for the business, in order to compensate yourself? Because you’re taking the risk of owning a business in order to, in order to have sufficient revenue available to hire team members to facilitate the work.

Allison Williams: [00:04:55] And so those kind of questions came at this person. The person became very defensive. And I understand from the tone of the questions why the person became defensive. But the conversation quickly devolved into a value judgment of, well, I don’t work people like slaves and I’m a good person because I expect that people are going to work hard for me and then I’m going to pay them. And this is not slavery and all sorts of things like that. Right. As if lawyers that would only pay two hundred thousand dollars instead of half of the revenue stream are somehow running people into slavery. And there was just like there was such a vitriol around the conversation. I was I was really, from a psychological perspective, that’s kind of one of my, one of my side gigs, if you will, as a child abuse attorney for now, going on two decades. You know, I’ve read a lot of psychological reports, and at one point I was actually pursuing a minor in psychology in school. And psychology has always just been an interest of mine. So I love kind of getting under the under the hood of why people think about things the way that they do. And money is such an emotionally laden topic. That this particular thread really, really brought that out.

Allison Williams: [00:06:13] Right. But what was amazing to me was that at no point during the conversation did people ask questions about what was the economic structure of this law firm that was paying half of collected dollars to the associates. Right. There were just kind of the the generic assumptions of, that’s too much. You get nothing for taking the risk. You’re not requiring any hours for the person. Do you have a lot of work to give them? Maybe you do. Maybe you don’t like there was a lot of assumption and not a lot of questioning. And in that form, you kind of understand it just by virtue of how it works. But I’m always curious about how people approach the topic of money. And what I definitely saw as a theme in that conversation was that people were approaching the conversation of money from a perspective of value judgment. Right. There’s, there are the good people that do this with their money. And then there are the bad people that have the audacity to keep it for themselves. And no matter how you look at that particular conversation or any number of other conversations that touch upon money as a polestar of compensation, the one thing that’s very clear that I am unabashedly determined to share with the world to those that don’t already have this belief system. And I know a lot of you that follow this podcast actually do already have this belief system. So I may be preaching to the choir to some degree, but I want you to share it with other people. Right. And it really is this idea that money makes life better.

Allison Williams: [00:07:45] OK, now I’m going to talk to you about five different ways that money makes life better in law firms. But I want to start with that general premise, because for the people that have an anti capitalist anti money attitude and believe that there is something inherently wrong with seeking money, I want you to come over to the dark side, the dark side being this school of thought that money makes life better, but not just for you. It makes life better for everyone in our ecosystem. And as much as professional services organizations, bar associations have a professionalism value over money and somehow believe that we do this for the love of serving community, love of serving society, not for our own economic interests. The reality is that human beings are driven by a desire for more money. And I talk about this, you know, I’ve talked about this from a, from a perspective of sharing resources with you guys in the past. One of the books that I was first introduced to, introduce to when I started working with a business coach was The Science of Getting Rich. And when I heard the topic, I was like, huh, that’s an intriguing title. Like, what’s that about? But one of the things that starts off this book is that you can’t live your fullest, most expressed life without money.

Allison Williams: [00:09:14] And it’s true for all the people that have said, you know, I grew up in a middle class household and I grew up in the South. And I remember, you know, different times my parents would say things like, well, we have our family, we have each other. That’s what is the value of life. We aren’t people that are all about going out and getting money. We give love and respect and appreciation. And we go to church on Sunday and we have potlucks and all of these things that were seen as somehow superior to creating money. But the older I got and I obviously have become very financially successful, the more I realize that even though my parents afforded me a great lifestyle for what they could economically afford and they provided me with love in that lifestyle, which is a necessary and necessary component of life, there’s also a truism that comes with the fact that if I were to have a child right now, I could provide a greater exposure to all that life offers because I have money, right? And by greater exposure, I don’t mean that I could buy them more toys or put them in designer clothing. I mean, yes, that’s a part of it. But the more significant part would be that I could show them the world by letting them travel and I could afford to pay a private tutor if we were in the world of covid and they needed to be educated, and I was not the person best suited to do that because I needed to be working to make money for them, or I would be able to take time out of life, out of the day to day grind of life, to just be with the child. I could expose the child to going to zoos and parks and things like that, that over time do add up to quite a bit of money. And I would be able to do that without a fear that I would have to trade necessities of life like food, shelter, gas, etc. in exchange for all of the things that would give enjoyment to life.

Allison Williams: [00:11:20] And I’ve thought about this also from the perspective of myself as a young attorney, because, as we all know, attorneys do not start out rich. Right. A whole lot of lawyers that have a desire to go to big law firms don’t get the job at big law firms because there’s only so many. The vast majority of lawyers when we start are starting with lower paying jobs and jobs that will feed us and give us enough money to pay our student loans for those of us that have student loans. But we certainly aren’t living rich. Right. And I remember the first few years of my legal career. You know, I had to defer my student loans because I couldn’t afford to pay them.

Allison Williams: [00:11:57] And when I was first starting out, I moved to New Jersey as a law clerk. And as a law clerk, I was making at that time thirty five thousand dollars a year. And by the time I got my net dollars, it ended up being about two thousand dollars a month. And out of that, more than half went to rent and then less than half that was left over went to everything else. So everything else included gas and food and all of the, all of the necessities of life. I’m not going to, like, kind of bear out the poverty story because I wasn’t in poverty, but I definitely was living close. And there were times where I said, OK, we’re my my my Sunday activity was the, was the gift that I gave myself of eating at the local diner. And I oftentimes would go there at breakfast and I would stay through lunch, drinking coffee and leave early afternoon. And sometimes the diner owner would be nice enough to feed me an extra meal just out of kindness. But I didn’t have the money to pay for it. And I would tell them that maybe like, no, no, no, just go ahead and order it on us. And there is a there’s a different experience of life that you have when you are scraping up your pennies to make everything fit versus when you are spending as you desire and whatever you have is available and is more than enough.

Allison Williams: [00:13:23] Right. So there is just a certain difference of lifestyle and a difference of emotional energy that goes into that. And luckily, I knew that I was on a path to create more. So I didn’t wallow in the sadness of being that being in that existence. But I think if I had stayed in that existence for a long time, I definitely could see myself being broken by that. Right. So I share that as kind of the way to start this conversation, not because I want everyone to want to be uber rich, but because I want to really give you a thought process about money and how seeking money is actually not a negative thing. Seeking money is not just about lavishness for yourself. It really is about the self preservation that comes with you being your best self as a result of not being in economic distress. OK, so there are several things that come to mind when we think about law firms and the ways that money makes life better. So the first thing is, of course, talent, right? In a professional services firm, you are selling bodies. You are in a body shop. I remember when my Vistage Adviser, Mark Taffet, he’s a great guy and he said that to me. And I was like, really? You’re going to reduce the law firm to a body shop?

Allison Williams: [00:14:45] And then I thought about it. I was like, well, you know, he technically is right. Right? People come in, they need my service. They need a body to deliver the service. And if it’s not going to be my body, it’s going to be somebody else’s body. Right. And yes, we’re also selling brains and solutions and all those things. But the more people are delivering the service, the more money you’re making, because you’re selling more of the service. So you have to think about at some point in time, you’re going to need to get better talent, not just another body, but a higher level thinker in your business. And that thinking at a higher level contributes in a multitude of ways up to a certain point. Right now, I say up to a certain point, because I have I’ve had this conversation philosophically with some older members of the bar and probably the last couple of years. And it’s always an interesting aha moment when I kind of shed light on this. But it’s something that I think is kind of like the dirty little secret that we don’t really talk about. Right. So when you, when you reach a certain point in your career, you’re prime talent. Right. When you are eight to 10 years out, you can independently run files.

Allison Williams: [00:15:57] You can generate a lot of clients because you know enough to be able to practice law without a whole lot of study. And you can go out and start networking and you can be intentional about marketing. When you’re at that stage of your career, you earn enough that you are certainly more expensive, if you will, quote unquote, than a baby lawyer or a three to five year lawyer. But you’re not practicing so long that you’re eating most of the profit that would be generated from your labor. Right. So you’re at that kind of sweet spot, that senior associate into into junior partner level. When you start getting above that, the contribution that you make is not in so much scalability of billable hours or scalability of more efficient flat fee work. There’s only so much efficiency that you can ever put into a system of generating law. So the real question becomes, at what point is it not worth it to get the the 20 year rock star versus the 10 year rock star? Right. And normally the 20 year rock star has to contribute something beyond just being a good lawyer. It becomes training younger associates and it becomes contributing toward infrastructure. And if you don’t know how to properly value those things, you can grossly devalue a lawyer who has more experience and has more years and thus would command a higher salary, even though that higher salary actually is compensation for value that you may be missing.

Allison Williams: [00:17:31] Right. So one of the things that you have to think about with buying better talent is what are you buying? Right. You’re not just buying more legal work, you’re buying contribution toward your culture. And if you are designing a law firm in a way that is sustainable, you need people who can deal with ethical challenges and who can deal with challenging clients and who can deal with emotionally laden problems in a way that someone with 10 years of life experience from adulthood or from from when they became a practicing attorney really doesn’t have. So in other words, there’s a place for all of it. But you get to actually afford that talent when you have the money generated in your business in order to create it.

Allison Williams: [00:18:17] If you don’t, you’re creating it around yourself, which means you’re working more hours, which is something we help you avoid here at Law Firm Mentor. All right. Number two, money makes life better by. The fact that less stress will inherently make you a better lawyer. OK, the practice of law is a stressful career. We deal with people’s problems, right? People don’t come to us unless something is wrong, with rare exception. Yes, there are those people that something is wrong by virtue of I’m not legally the parent of this child. I want to adopt my child and I need your help with that.

Allison Williams: [00:18:53] But the vast majority of human beings, when they encounter a lawyer, are coming with their problems and they’re laying their problems at our feet for us to think about and strategize around and and bear the the brunt of the weight of our choices for how to navigate these problems. And it’s a stressful experience because people are looking to us and almost like a godlike fashion to navigate systems that are often outside of our own control. We don’t usually get to choose our judge and we don’t get to choose what they decide and we don’t get to choose who our adversary is going to be. So when we have these stressful exchanges of being a lawyer, the thing that we will oftentimes neglect to consider about our lawyering is, that stress that is outside of lawyering, stress that’s associated with business, with our physical health, with our emotional health, with our personal relationships. That stress is greater in our control than the stress of being a lawyer, right? Yes, you can certainly ameliorate some stress in lawyering, by being a highly systematized law firm, by choosing your clients wisely. There are things that you can do to reduce stress in the law, but you have a lot more control over who you choose to marry, who you choose, whether you choose to be a parent, whether you choose to have economic success or or economic constriction, than if you are deciding whether or not a judge is going to decide a certain issue a certain way for a client, that has a lot to lose.

Allison Williams: [00:20:31] OK, so the more that we focus on bringing money into not just our possession but into a systematic way of consistently generating predictable recurring revenue in our business, the less stress we have. Right. If I know I’m going to have a thousand dollars next week, I can make plans with that thousand dollars. If I know I’m going to have fifty thousand dollars next week, I can make plans for that fifty thousand dollars. If I have no idea whether it’s going to be a one thousand dollar week or a fifty thousand dollar week, all that I can do is hope and pray and opt not to spend money and make sure I have as much available credit as possible while I’m biting my fingernails, praying for the fifty thousand dollar week. And that over time creates emotional, physical, psychological and intellectual stress that erodes your energy, your creativity and your ability to show up as your best self for your clients. You are a better lawyer when you are reducing stress in your life in all areas. And money is one of those great, great stress reducers. Right. I’ve heard this thing. More money, more problems. I will tell you, getting more money has taken away the vast majority of the problems that I ever encountered. Now, when I have a problem, I have the ability to pay someone to deal with it.

Allison Williams: [00:21:58] Now, when I have a problem, I have the ability to either outsource it or to take time away from other money producing work so I can solve it myself if I want to, or to be able to go out and buy the solution to the problem. I’m not robbing Peter to pay Paul. Right. And there’s a freedom that comes with that. Right. Logging on to the IRS website and transferring a few hundred thousand dollars because its quarterly tax time is a lot easier than wondering whether or not I was going to be able to pay my taxes this quarter because I have so many expenses coming in and I don’t know where my next dollar is coming from. And so I’m holding on with constriction. Right. That existence is much more stressful than just going on and paying the few hundred thousand dollars. Very, very different experience. And when you get to a place where there’s consistent recurring revenue in your business, you’ll start to experience how much more freeing it is. All right. Next up, money makes life better because you create less risk of trust account violations. Now, I am saying this not to those of you that would be inclined to dip into your trust account. Right. If that is where your mind is, if that is where your ethics and your morals are, this is probably not the podcast for you.

Allison Williams: [00:23:17] But I will say this. The vast majority of lawyers who get in trouble for trust account violations are not rampant thieves who are out to steal money from their clients. That myth is very convenient in a society that does not value lawyers for all that we contribute to society. But the reality is most lawyers that get into trust account violations, if you just look at statistically across the office of attorney ethics in every jurisdiction, what you’re going to find is that trust account violations typically come from sloppiness or they come from economic desperation. Right. And not the economic desperation that says I’ll steal from my client and hope they don’t figure it out. It usually comes from coming up so short, so often, so many times that they decide, OK, let me just quickly transfer this money before I issue a bill to a client, because I know I’m going to issue the bill next week when I get around to it, but I need the money today. So I’m going to move over the money today. And then you’ve got a violation that’s technical that maybe no one ever finds out about. Right. And it becomes a part of the robbing Peter to pay Paul mentality, not because you’re a bad person, but because in a moment of desperation, you took a desperate act that you thought wasn’t going to harm anyone. And somehow we found out about it.

Allison Williams: [00:24:32] Somehow a check got bounced on the trust account or somehow a client needed funds that weren’t immediately available. Whatever it is, if you have more than enough coming in, that that risk is not there. Right. The risk that you will take, take into account, your business account. Money from your trust account a little faster than you should have, does not happen when you don’t need in the first place. Right. Because your need is being filled by virtue of consistent, recurring, predictable revenue. And then you’re making choices that will always allow you to have a cushion and always keep money fluidly available to you, separate and apart from your trust account. OK, next up, money makes life better because it facilitates better attorney client relationships. Now, this really goes to the heart of stress. We’ve talked about stress before. I’m not going to belabor it, but I will say this. When you are stressed, that client who comes into your office crying and screaming and being histrionic and combative about nonsense is a lot harder to take when you are not in a place of managing your own emotions, when you are triggered by the emotions of your client, being able to take a deep breath in and let out all of the negative feelings and thoughts that are stirred up by your client becomes a lot easier than when you are in a traumatic stress state, when your body is over-engaged in the day to day, moment to moment experience of whatever the problems are of that day.

Allison Williams: [00:26:13] When you live in that state, when your mind is constantly reeling with problems, you are not your best self. And that means you may still earnestly care about your clients, give them empathy, give them advice and counsel all the things that they need. But when they have a bad moment, you oftentimes don’t have the patience necessary to deal with it. Right? You don’t have the energy to deal with it. You don’t have the wherewithal to deal with it. And a lot of times when people become challenging, those people were challenging even before. But when you’re not being paid a lot because you don’t have a high respect for money, so you’re not charging enough and then what you are charging, you are not insisting on collecting, and then when you are collecting it, you’re not banking it and planning it out so that you know that it expands over the time that you have that client. Instead, what happens is you become resentful of your client and you’re like, you know, you don’t pay me enough for this shit. Right? That’s the thought that comes to mind when that challenging person comes into your office. Right. And when we are in a state of persistent economic distress or we are simply not earning the lifestyle that we want. It doesn’t have to be that you’re impoverished.

Allison Williams: [00:27:28] You can have a nice, mild, low six figure income and still feel like you want a lot more. And when you want a lot more and the opportunity would be there but for your difficult client or but for your collections problem or but for your accounts receivable or but for your pricing structure. And you intellectually know on the other side of solving those problems is the economic lifestyle that you desire. But you aren’t stepping into it for a whole host of negative money stories that we talked about at the beginning of this podcast that oftentimes will be borne on your client in terms of the stress that they bring you and the way that you deal with them because of how you feel about what you are and are not being paid. All right, number five, money makes life better because it allows you to afford yourself more time off, OK? Now, if you are lawyering, there is a direct relationship between time off and economics, right? Even if you are a flat fee lawyer. Right. Because I’ve heard a lot of people that are proponents of flat fees say, well, I shouldn’t have to worry that I’m not going to get paid because I took a vacation. If I’m billing hours, I’m making less when I’m on vacation. And intellectually, that’s true. But the same way that you should be structuring your billable hours and collected dollars in a way that takes into account that you’re going to be on vacation.

Allison Williams: [00:28:55] Similarly, the number of flat fee cases that you bring in and handle should take into account that you’re going to have time when you’re on vacation. Right. You should take that into account, whether you’re doing the lawyering, or someone else is doing the lawyering. But whoever is doing the lawyering, if you are the owner of the firm, ultimately you’re responsible for getting the legal work done. Ethically and even morally. But once you start to conceptualize the idea that if money is fluid and coming in and you are of such abundance with it, that you can plan your time away. Planning that time away gives you a certain level of freedom that you don’t have when you’re economically tied to the amount of work that you’re doing. Right. So in other words, if there’s more than enough, planning to not work, becomes psychologically easier, than if there’s not enough and planning not to work actually restricts the amount of money that you’re bringing in. All right. Today we have covered the topic that money makes life better. And I want you to really think about this as to how you are approaching your law firms, because if you allow yourself the freedom, the beauty of seeing the the life that you actually can create and that you owe it to yourself to create for your law firms, it becomes a lot easier for you to consistently create more money and more free time in your law firm.

Allison Williams: [00:30:16] And if you want help to actually put in the policies and practices into place and to shift your mindset in a way that allows you to consistently and repeatedly generate recurring revenue in your law firm, and to do so without eating up more time and to in fact create more free time for yourself. We’re always there to help. At Law Firm Mentor. You can reach out to us. The link is in the show notes to this episode. I’m Allison Williams, your Law Firm Mentor. Everyone have a great day.

Allison Williams: [00:31:01] Thank you for tuning in to the Crushing Chaos with Law Firm Mentor podcast. To learn more about today’s guests and take advantage of the resources mentioned, check out our show notes. And if you own a solo or small law firm and are looking for guidance, advice or simply support on your journey to create a law firm that runs without you, join us in the Law Firm Mentor Movement free Facebook group. There, you can access our free trainings on improving collections in law firms, meeting billable hours, and join the movement of thousands of law firm owners across the country who want to crush chaos in their law firm and make more money. I’m Allison Williams, your Law Firm Mentor. Have a great day.