Ep 7 Amplifying Your Law Firm's Success: Strategic Investments and Value-Based Pricing for Growth

Get ready to unlock the potential of your law practice with the insights Todd Whatley and Ian Weiner, bring to the table. Our personal journeys have taught us the transformative power of reinvesting in your business, and we’re here to share how this approach can amplify your firm's financial health. We'll show you why it’s crucial to view every expense as a strategic investment, capable of yielding significant returns. Plus, we dissect the often overlooked benefits of continuing legal education and how a simple change, like upgrading to a high-quality scanner, can revolutionize your firm's efficiency and profitability.

Gear up as we scrutinize the important metrics of customer acquisition cost and lifetime client value—concepts that are vital across different industries but particularly impactful in the legal field. You'll learn from our in-depth discussion why understanding and leveraging these figures is the key to scaling your business effectively. We also tackle the lucrative shift from hourly billing to value-based pricing, and why the predictability of investments can trump the ups and downs of public markets. With a focus on the tangible returns from continuing education, specialization, and professional coaching, this episode is packed with strategies to cultivate recurring revenue streams and elevate your professional practice to new heights.

Transcript

Speaker 1: 0:01

Welcome to the Lawyer's Money Show with your hosts, todd Wattley and Ian Weiner, where finance meets the legal profession. Here we dive deep into the economics of law practice, from managing your firm's finances to optimizing personal wealth strategies for legal professionals. Every episode we bring you insights, strategies and stories from leading experts to help you navigate the financial landscape of the legal world. Stay tuned as we uncover the tools and tactics needed to help lawyers make the right money moves so they can grow their career, manage their practice and optimize their wealth, so they can focus on enjoying the life they've worked so hard to build. For more resources, visit us at wwwlawyerstotalplancom.

Speaker 2: 0:44

That's right this is the Lawyer's Money Show and my name is Todd Wattley and we are so glad that everyone listens and downloads and subscribes. If you haven't subscribed, we would love for you to do that. That way, you get noticed every time we do one and it just kind of helps us know who else is listening out there. So thank you so much. I am here with my co-host today, ian Weiner.

Speaker 3: 1:08

Todd, this is going to be a fun one. I think I probably said that at the beginning of every episode.

Speaker 2: 1:13

But we don't pick boring stuff, okay. We pick things that inspire us and things that we deal with every day and things that we think are actionable. Yeah, yeah, we're not just talking heads up here who talk about it and don't do it. We're doing this every single day, and particularly what you're talking about today. I've done once and am now doing again Not once, but I did. I've implemented what you're going to talk about today and grew my practice to be fairly large. So did, and now I'm doing it again. And so today we're going to talk about investing in your business, and so typically, when you think about investing the pure term of investing it's like, oh, I'm going to invest in Apple stock or Microsoft or Tesla. Yeah, I'm going to write a check and I'll see it there and I'll hopefully see it grow and eventually I will get something back from that. I will get more money back in the future. That's great. That is investing, but you should also invest in your business.

Speaker 3: 2:25

And think about it that way.

Speaker 2: 2:27

And think about it as an investment. You know you go to a continuing legal education course. You think I got to do it to keep my license, but I did a blog post this past weekend talking about the importance of investing in continuing education more than just the legal requirement to actually improve yourself and let your clients know that you do so. That's just one example and I'm sure you have a ton of others.

Speaker 3: 2:58

I've got a lot of thoughts on this.

Speaker 2: 2:59

I bet you do.

Speaker 3: 3:01

About investing and you know it's interesting, we don't talk about investing a ton when we are on the radio or in, and it's almost a joke that we make that we do in financial planning. The other stuff is really, really important and sometimes in my practice it's the opposite of most people's advisory practice, which is they only do investments and we do investment. But there's other places where you know if we, if we push, we're going to get a bigger, bigger impact, and so we'll do a series on investing. This is one that I want to use to tease that series that's coming up, but to start to build kind of a framework for thinking about investing.

Speaker 3: 3:41

And I think this is this is really important when, when you're investing, you're you're putting a dollar somewhere with the expectation that you're going to get more than a dollar back.

Speaker 3: 3:53

Sure, that's the idea, you know, and really that concept goes a little bit further to say that when you invest, you're putting that dollar at risk and when you get a return on that investment and ROI, what you're getting is you're getting a return on the risk that you're taking with that dollar, and the more risk that you take, the larger you should expect your investment to be or the return to be, I should say so. This is so obvious, it's so glaringly obvious, but I feel like I need to state it in those terms because I want you to think about it that way. Think about, ok, where can you put a dollar and expect to get more than one dollar back? And in a lot of cases your business is going to be one of the some of the best ROI that you can get. And especially if you're in that growing phase, you know it's hard to put in a dollar into something else and get as big of an impact. If you do it thoughtfully.

Speaker 2: 4:51

And I think the thing about a business is it's a roundabout way to get your money back. So I'm just sitting here thinking about it. I think one of my scanners is about to go bad and so I use a Jitsu scanner. That's about 600 bucks. It's small, sits on your desk and I'm like how is me investing $600 in this scanner when I could probably get one for 120? But I spend 600. How do I get that money back? Well, I do, because it does a fantastic job. It really does last a long time.

Speaker 2: 5:33

So I'm not spending more money on more scanners later on. It saves time. It saves a tremendous amount of time. I can put a 80 page trust in that thing. In 12, 15 seconds later it's done. It's in my computer. It has scanned it well. If there's anything on the back pages, it catches that it just does a great job. And so with a cheaper scanner I might have to do it two or three times. It might take 45 seconds to a few minutes to do that, and that time is valuable to me. I can do it. I can go on to doing something that truly is going to result in money for me, rather than sitting in my desk waiting for 80 pages to go through a scanner.

Speaker 3: 6:21

Yeah, I mean, that's a great tangible example of that and there's going to be a process for people. As your business grows, you're able to do different things and think about it differently. One idea that I think is exactly that is buy nice, cry once and don't cry again.

Speaker 1: 6:39

Sure, I like that.

Speaker 3: 6:41

My briefcase is made by a company called Saddleback Leather. I've got a handful of their things. Their slogan is they'll fight over it when you're dead, and they come with a hundred year warranty. And so I got it. I mean, they're expensive, but I've run over it, no problem.

Speaker 3: 6:58

I mean you know, buy nice cry once, and so you know. One thing that I want to say is, if you're listening to this and maybe you work in a practice that you don't own, yeah, I want you to recognize that, as an attorney, you are the business. Whether you own the practice or not, that's true. Your selling is you and your time and your expertise, and so, even if you don't own the practice, you can build your skill to be able to charge more for your time, whether it's more complicated matters, different types of matters that you work on, maybe even transitioning into a different area of law but if you look at yourself as the business, it changes the way you think about things In his job security.

Speaker 2: 7:44

You may not make more, but you might get to keep your job when other people don't.

Speaker 3: 7:49

Yep, I mean, the education does not stop, and I think the people that are most satisfied in their work are the ones that are interested in learning more and staying up to date. You know, and so that's an important thing. You know, there's this concept of when you're investing, you want to get the best return for your investor. You know, and there's a period of time in people's lives where, yeah, it's important to contribute to the 401k or the, you know, depending on what plan that you have with your employer, with your business. You know, we want to get, get money into, into public markets and real estate.

Speaker 3: 8:27

But looking at your, looking at your practice whether it's you personally as the practice or your business as the investment opportunity I think is really really critical, because if you get to the point where you start to track your numbers, start to track your metrics, you can figure out how many dollars or how many cents it takes to make a dollar.

Speaker 3: 8:51

You know. And so there there are attorneys, there are business owners who have their systems so tight that they know if they spend $10,000 on marketing, they're going to get $50,000 out of it, because they have the numbers and the reporting. Now I think it's hard to get perfect, you know, in the practice of law, just because there are so many variables and so many things that can come up. But the more that you build the system to track, you know the money that comes in, the money that goes out and the processes that you have, you can figure out what your return on those dollars is. And for business owners, your ROI should be probably higher, at least to a certain point, than what you would get in public markets or real estate.

Speaker 3: 9:41

And this is the financial planner saying this to you Okay, interesting, and look, that's a. That's a challenging thing, but it's not not every dollar forever, but there's a part of your gross curve where that's the case. You know, if you put, if you invest $4000 a month into marketing, whatever that the channel is, if you can make $20,000 worth of business from that, you know that's. That's five to one.

Speaker 2: 10:08

Well, I just got into a new office when I still had about nine months left on a previous lease, yeah, and I'm paying about twice as much. So you know, let's just say I'm paying $6000 a month. I see that as an investment in. I am more visible, it's a nicer office and the second month I was here I did three times my budget. I brought in three times what I needed to.

Speaker 3: 10:38

Yeah.

Speaker 2: 10:38

So $6000 turns into $80, that's a pretty good. I don't think Apple stock would have done that for me.

Speaker 3: 10:46

Look, I, I, I help a lot of folks invest in public markets, you know, and there's a time and a place for that. I mean there's there are different, there are different tradeoffs that happen. Sure, you know, as your business scales to a certain point, the amount of profit that you can squeeze out of incremental investments going to go down, sure, that's just real and so. But you've got to know your numbers is the idea and what does it cost to acquire a client? I mean, that's a, that's something that you know. I think the software guys do really well. I say guys, software people.

Speaker 3: 11:18

You know, in the, in the software business, that's a big metric that they focus on. What is the customer acquisition cost and the ones that are good, they know exactly what it is to the dollar and they know what is the lifetime value of a client. You know, and I think, depending on your practice in in a lot of fields, you know it can be a significant value for a client. You know, I mean the value and financial planning. It can be a big, it can be pretty big too. But if we know that over 10 years of working with someone, whatever the, you know let's just say that you would work with a client for 10 years and over that period, you know you will you will bring in $50,000 of revenue. It's just we're making up the number, sure, okay, well, how much would you spend to bring that client in?

Speaker 2: 12:08

45, pretty much yeah.

Speaker 3: 12:11

Yeah, yeah. And so if you know what those numbers are, those are levers that you can pull and that you can play with. Yeah, you know, and of course, we want to get that customer acquisition cost number down. But the bigger you, the more you're thoughtful about building systems and processes, doing marketing that is predictable and building your reputation in your community and in your, in your area. You know that customer acquisition cost goes down and the lifetime value of a client, depending on your practice, can go up, and so when we're investing these are some of the things that we need to think about is okay, what? How predictable is it?

Speaker 3: 12:54

And I think one thing that that shies people away from investing in things like public markets is the volatility of that investment. You know and there's a lot of education we can do on that that can, that can help to build an understanding of why that volatility matters, but that uncertainty of what you're going to get out can make it hard to invest, and so what we want to do is we want to remove some of that uncertainty in your business, but that requires bringing in some structure, and some of that means knowing what you price things at. You know, we talk about getting away from hourly billing. The sooner you can do that, the more effectively you can do this other stuff.

Speaker 2: 13:35

Oh, absolutely so yeah, if you call us and want to work with us and we look at your business and analyze all these different things, we may very well come back and say, how about spending 10,000 bucks on this? But we think if you did, it would result in this and it's.

Speaker 3: 13:55

it's hard to look at it yourself Because the money is emotional. Oh yeah, it's your money. I mean, I know that attorneys don't have any emotion whatsoever in the way that they think or work, right? No, but humans do have bias and we have emotion and that gets, that, gets built into this process, you know.

Speaker 3: 14:15

So having a third party that can come alongside you and see things differently than you see and also, you know, encourage you to think through things a little bit differently, in a systematic way, is, I think, really important to growing, to growing your business and your practice. And maybe maybe you're an attorney who works for another practice and you're like, okay, well, how do I do this then? Because I can't, you know, necessarily put you know money into the, into the practice. Well, you can invest money in marketing yourself and your services. Continuing education is a huge thing, adding some, adding some specialties. I mean coaching is a huge value add that we need to have a whole conversation about, because you know the absolute best business people in the world, the top attorneys, the top business people they all have coaches and multiples of them and the ROI is incredible in that.

Speaker 3: 15:12

But there's a lot of work that that you got to do.

Speaker 2: 15:14

When that's the case, yeah Well my coaching program costs about $15,000 a year, and that is one crisis Medicaid case. And one and you should be doing at least one per month and probably with some decent staff you could do two or three per month. Is spending 15,000 to bring in 15,000 two or three times a month worth it? Pretty good investment.

Speaker 3: 15:44

That's a very straightforward ROI and that's why I wanted to tease that here, because this is a perfect example of that. You know, you can add a, you can add a specialty to your, to your business. Now you got to know what you're doing. That's what the coaching is for to help you know what you're doing.

Speaker 3: 15:59

Right, but now that's a recurring revenue stream, essentially for people. Maybe I should say reoccurring. But you know you, you paid once and that could make someone have millions of dollars over their career talk, I mean, that's an incredible ROI. Yeah, it's not complicated.

Speaker 1: 16:19

Yeah.

Speaker 3: 16:20

But it does require work, it does and it does require that investment, investment.

Speaker 2: 16:25

Yeah, you've got to take the time and effort to do that. So good topic.

Speaker 3: 16:34

I'm hoping that people can begin to think about things just a little bit differently here. You know, yeah, we want to be invested in, you know, in public equities, things like real estate, because they're not correlated to our business. You know, and at a certain point liquidity is really, really important and hopefully you don't want to, you know, spend your every single moment of your life at your desk. You know Some people do, but you know, maybe we're not for you, right, but you know that allows for some liquidity and there's some other advantages of that. There's some tax advantages to that that we'll talk about.

Speaker 3: 17:09

But remember that for a lot of folks, the best place to put the first dollar that you're ready to invest is back into your business, and I think a lot of financial planners don't. Well, a lot of financial advisors can't have that conversation because they only get paid if they sell you something. This is such an obvious conflict of interest. And yet I would imagine that a lot of folks listening to this have an investment person that's never talked to them about reinvesting in their business, and for a lot of my clients, that's the first place that we're going to look. Wow Is reinvesting back into the business. Because if I know that if you put $20,000 back into your business and it makes you $400,000 over the next two years, if I have a fiduciary duty to you to recommend the best thing in your best interest, that's what we need to do, even if it doesn't put more money in my pocket. Sure, but that's the kind of stuff that we're talking about. That's the kind of approach that we bring to planning.

Speaker 2: 18:02

Very well said, exactly, exactly. All right, so I hope you learned something I did. I mean, just us talking about this and just thinking about it differently means a lot, and so if you're an attorney and you, particularly if you own your business, but even if you don't, I think we can still talk, and still talk about things you can do personally and personal finances, things like that but particularly if you own your practice, then give us a call, let's have a conversation, let's run some reports for you, look at some things, get some information in your hands.

Speaker 3: 18:42

Start figuring out these numbers in your own practice.

Speaker 2: 18:45

Track them, things you've probably never seen before and probably never thought about. But if you have thought about it and just haven't seen it, we can do that for you. We can put these reports in your hand that will show you exactly how you're doing, what you could be doing. I mean just a lot of information. And so, ian, how can they get in touch with us?

Speaker 3: 19:06

You can email Ian at lawyerstotalplancom or Todd at lawyerstotalplancom. Probably email Ian because Todd is really good at delegating and may not see it as quickly which is great.

Speaker 1: 19:20

I mean, I love that?

Speaker 3: 19:21

Yeah, that's true, and we have way too many emails. We're getting that problem solved. We'll have a whole episode about that, or call 479-485-1911. We can have a conversation, get to know your specific situation and how we can help. And our website Our website is lawyerstotalplancom. Okay.

Speaker 2: 19:41

All right, thank you all very much. Please subscribe and we will see you next time.

Speaker 1: 19:48

Thank you for joining us on the Lawyer's Money Show. We hope today's episode has provided you with valuable insights and actionable advice to enhance your financial well-being. For more information, to access show notes or to explore further, please visit our website at wwwlawyerstotalplancom. We look forward to guiding you through your financial journey. You can give us a call at 479-485-1911. Until next time, keep striving for excellence in both law and finance.