The Right Way (and Wrong Way) to Make Financial Decisions as a Law Firm Owner
6 minutes to read
Human beings make thousands of decisions every day — try about 35,000 of them. These range in importance from whether to wear the blue sweater or the red one, what you’re going to eat for lunch, or what you’re going to do with your money.
For law firm owners in particular, the way you decide to spend your money has a lot to do with your overall success.
There’s a right way and a wrong way to make financial decisions as a law firm owner. Keep reading to make sure you avoid common mistakes and set yourself and your law firm up to make the right decisions every time.
1. Smart Investments vs. “Treating Yourself”
When a case closes, the settlement check arrives, and a firm’s cash flow increases, many leaders’ first urge is to spend it on things they want, but don’t necessarily need. Fancy cars, beautiful houses, and fast boats all sound nice, but how are they going to strengthen your organization?
As the CEO of your law firm, you’ve got to set an example for your team. They want to know that you have their best interests at heart, and constantly splurging on unnecessary items could lead to them distrusting your vision, guidance, and authenticity.
A true leader puts themselves second to their team, their clients, and their firm. They fill others’ cups before filling their own.
Instead of that money going toward a luxury item that takes up space in your home, invest it into something that your business will benefit from in the long run.
Take Crisp Founder and CEO Michael Mogill for instance. Growing Crisp into the impactful organization it is today was no simple feat, but through personal sacrifice and wise business moves, he was able to scale quickly and effectively enough to earn spots on the Inc. 5000 list of fastest-growing companies in America for six years straight. As the company grew and earned more income, he took the money he made and reinvested it into his team, operations, infrastructure, and initiatives — not on fancy gadgets and vacations for himself.
Today, Crisp invests over $1 million dollars into the people that work here, making benefits available such as:
- 100% coverage on health, vision, and dental
- A 401(k) with 4% company match
- 5 weeks paid time off, including 7 paid holidays plus the entire week between Christmas Eve & New Year’s Day
- Parental leave: additional weeks of parental leave at 100% salary for new birth and adoptive parents, plus Instacart membership
- Annual company bonus program in a profitable, fully bootstrapped company
- On-time direct deposit
- Ergonomic workstations with high end sit/stand electric desks
- Mother’s room and relaxation room onsite
- Monthly Crisp swag
- A chance for a team member to win a Tesla (Crisper of the Year)
- And so much more
Investing in becoming an attractive place to work means A-players want to join the team. These top candidates become powerful assets who don’t cost the company money, but rather bring in more.
There are two types of leaders. One law firm scores a big, seven-figure case. The owner takes that money, buys a new house, car, suit, and really pampers himself. Another law firm scores the same deal. Instead of keeping the money, the owner reinvests that money into marketing, new technology, and new infrastructure for his organization.
Which law firm do you think will be ahead in five years?
As a law firm owner, the choice is yours: You can either have today, or you can have tomorrow — but remember that there are people counting on you, so choose wisely.
Change Your Spending Perspective
Few people get truly excited about spending their money on things that aren’t considered “fun” — like medical insurance or a cloud-based phone system for the office. But oftentimes, those are the most important things to invest in.
Why? Because they pay dividends in the long term.
Instead of considering the financial decisions you make as a law firm owner as regular old purchases, the secret is to start viewing them as investments.
Take this personal example: When you pay for the doctor, stock up on healthy food at the grocery store, and invest in health insurance, you’re taking care of yourself now so you will live a long and healthy life. You’re mitigating any unnecessary risks or problems you may run into down the line. You’re not just spending money in the present; you’re investing it in your future.
The same thought process goes for your law firm.
Imagine that you never have to worry about where your next client is coming from because they keep coming to you in predictable, repeatable patterns. Imagine your team is full of excellent professionals who are bought into your law firm’s vision and actively strive to do great work every day. It might sound too good to be true, but you can make it happen by making the right investment decisions in your law firm.
Give your clients the value they deserve. If you invest your resources into creating a truly excellent experience for them, they’ll rave about your law firm to everyone they know. The more they talk, the more referrals you’ll get.
One powerful way to leverage this idea is to give back to your community. Instead of taking, invest time, money, and resources into serving those around you — before they need you to represent them. Create a symbiotic relationship where you give of yourself, receive recognition, and reap the mutual rewards for years to come.
A true leader wants to see everyone succeed. They want their team members, their community, and their business to succeed — because they know when they invest in those factors, they will succeed as a result.
Once those things are taken care of and everyone’s cup is overflowing, that’s when you can treat yourself to something that you believe will improve your quality of life — but everyone else must be comfortable before you do that.
All of these things might sound nice, but how can you actually go about implementing them? Are you really willing to put your team and your community first and worry about your own needs last?
Never fear. We’ve got the solution.
The Solution: Start Investing Smart Now
Now that you understand the difference between strategic investments and treating yourself, and you’ve adjusted your spending perspective to value the bigger picture, it’s time to finally put them all together.
If you really want to master the art of making great financial decisions for your law firm, we can help. Crisp Coach is a closed-door community of the highest-performing law firms, and yours could join them.
Ensure that 2023 is your best year yet with the happiest clients, most accountable team members, and most streamlined operations. Apply today!