Why do I need to scale my law firm to a million dollars?
The truth is, you don’t. You can set any goal your heart desires.
But this episode is for you if 2022 is going to be your year—the year you finally commit to scaling your law firm business and creating not only wealth, but freedom. Listen as I walk you through:
- The three critical pieces you need to put in place (today) to scale your law firm business
- Is a million-dollar law firm profitable? I’ll tell you when it is, when it isn’t, and how it can be for you.
- Why setting a challenging wealth goal is the fastest way to move the needle forward both in your law firm business and your life (and can land you more time at the beach without your laptop)
- And much, much more!
Mentioned in this episode:
- Wealthy Woman Lawyer® League
- Wealthy Woman Lawyer® website
- Davina on Facebook
- Davina on Twitter
- Davina on Instagram
Davina Frederick: Hello and welcome to the Wealthy Woman Lawyer podcast. We believe all women lawyers deserve to be wealthy women lawyers. Our mission is to provide thought provoking powerful and practical information to help you in creating your own sustainable wealth generating law firm without overwork or overwhelm so you can live your best life. I’m your host, Davina Frederick. Let’s get started.
Hi, everyone, this is Davina Frederick, of Wealthy Woman Lawyer. We help women law firm owners scale their law firm business to and through a million dollars in annual revenue with total ease. So the question I want to address today is one from a law firm owner, who wanted to know, why do I need to scale my law firm to a million dollars? Why is seven figures so important? The short answer is you don’t. The longer answer is you’re free to choose whatever goals you’d like to choose $1,000,000, seven figures, eight figures is just a goal. That said, I want to tell you why I think the million dollar mark is an important one. And it’s not just about money. Although I think that is important too.
When you set a goal to scale your law firm business to a million dollars in gross annual revenue, it forces you to do three things. Number one, hire more people to support you, which then requires you to uplevel your leadership and management skills. You can make a whole lot of cheddar with just you and a good paralegal. But until you’ve scaled your business to the point that you can be away from it for weeks at a time while it still makes money for you, you still do not have true time freedom. You do not have wealth, because wealth is really about the time, as much as it is about money. As high achieving women, we are accustomed to forging our success by our sheer will and persistence. Scaling requires you to have a team, there’s just too much to do for you to continue functioning as the Lone Ranger.
You’re not going to be able to micromanage all the details of that size firm. If you want to evolve as a person, cultivating, managing and inspiring a team is one of the best actions you can take. Because it will challenge you in more ways than you ever thought possible. And you’ll be better for it. So number two, it forces you to create and optimize your systems, processes and procedures. So in a million dollar law firm business, good systems are no longer optional, they’re required. You must have them if you want to continue to operate not only smoothly, but sustainably over a long period of time. Again, if it’s just you, as the only attorney and maybe a couple of staffers, you likely can move up to that high six figure range. But you really risk burnout in the process, you could find yourself, you know, winding up in a hospital bed because you’re so burned out or you may just quit altogether. And there’s a better way to do that.
You know, there’s really only so much one person can do and still have any free time and have a life and, and have all those relationships that we want to have in our life and all this other self care things that we love to do. So the third thing that it forces you to do when you scale to a million dollar law firm business is to create a saleable asset. Your law firm is not going to be much of a saleable asset, unless you create a business that does not require you specifically to be present daily, or to be the face of the firm or to make every decision. The value is not necessarily in making a million dollars in revenue in one year. It’s about creating a wealth generating machine that can be used by you to make money while you’re on vacation, or working in the business if that’s what you’re wanting to do. Or it can be sold eventually to another lawyer or law firm and still produce profits long after you’ve retired to beach in the Maldives. Or you’re starting your second or third non law firm business or whatever it is that makes you happy. Whatever dream is you’re pursuing right?
If your ultimate goal is to create not only well but well with time freedom, then setting a goal of reaching a million dollars in gross annual revenue is just it’s just a terrific place to start. So some people might ask but Davina what good is a million dollar revenue generating law firm business if it is not profitable? Well, who said a million dollar law firm business isn’t profitable? Are there some people who scale their law firms and don’t make a profit? Sure, but that doesn’t have to be you. You absolutely can scale your law firm to a million dollars or more in revenue while still enjoying profits of 30% 45% 50%. I’ve known some attorneys who’ve gotten up to 65% profitability over an annual profit. So whatever it is that you desire, you have the option.
When people tell me they scale their law firm, and they’re not profitable, it tells me that either A, they’re using their firm to buy as much as they can within the IRS code limits to deliberately reduce their tax liability. So they might show a little bit less profit. But the firm is providing a lot of for a lot of their personal needs through legitimate strategy. So this is a legitimate tax strategy. Or B tells me they weren’t keeping track of anything other than revenue. So they weren’t monitoring needless expenses. They weren’t monitoring return on their investments, they weren’t monitoring profit margins, they were neglecting their other duties as the CEO or owner or operator of a business. Or C, they may have chosen to reinvest in their law firm business to gain more market share, anticipating that reinvestment would then create a much more significant return on their investment in the future.
I mean, it used to be common knowledge among business owners that businesses are not profitable, until the third, fourth or fifth year in business. And nowadays, everybody wants profitability immediately out the gate. And you can have that you can certainly use something like the profit for a system to set yourself up that way. But some of those can I call false false profits, because what you wind up doing is taking the profits, putting them back in and reinvesting in the firm. So it’s really not a profit to you, it’s a reinvestment, if you want to continue to grow. Okay, so profits are a choice, just like everything else. If you want a certain level of profitability, you need to make the right decisions to get you there.
At Wealthy Woman Lawyer, we not only help our clients scale their law firm businesses to the size and the value that they desire, but also do it in a way that’s profitable. Because at the end of the day, that’s what it’s all about. As for the million dollar goal, it’s just that. It’s a goal. It’s one that you may have, and one you may not have. We believe many attorneys decide not to pursue it as a goal and maybe make up excuses why it’s not a good goal. Because they fear on some level, that it’s not a goal that they can achieve. Or maybe they can get to the million, but they can’t figure out how to do it in a way that’s profitable. Our clients say otherwise. I’ve been working with women law firm owners for the past eight years, and a lot of clients, you’ve had tremendous success in scaling to a million and doing in a way that’s profitable.
If the thought of having a sizable personal income and time away, where you don’t have to take your laptop with you when you go to the beach. And you know, your law firm is still going to run without you while you’re on a trip vacation, spending time with your family, then I encourage you to set a challenging wealth goal for yourself. Whatever that may be, whatever rings your bell. It is my sincere belief that once you hit the million dollar mark, and you’ve created a profitable sustainable law firm business, you’ll see endless possibilities for your business and your life. I hope you’ve enjoyed this episode of the Wealthy Woman Lawyer podcast as much as we’ve enjoyed creating for you.
If so, please leave us a review. We really appreciate them. If 2022 is going to be the year that you finally commit to scaling your law firm business to a million dollars and beyond, then I invite you to join us in the Wealth Woman Lawyer League. In the League, I not only teach you the exact framework I’ve used to help hundreds of other women law firm owners grow their own wealth generating law firm businesses. But we also provide weekly live support so you can get all your questions answered. And you can be in a wonderful community of like minded women law firm owners who are on a similar journey and share resources and ideas above and beyond what we provide for you in the group.
So if this sounds like something that might create more for you, then I invite you to visit www.wealthywomanlawyer.com/league. l e a g u e. wealthywomanlawyer.com/league. We will have that in the show notes for you. And you can visit that, get more information and if it feels like a good fit. Enroll now. Now’s a great time because we’ve got some special bonuses for you just for this time of year. Thanks so much for listening, and I really appreciate the opportunity to bring these episodes to you and I hope to see you in the League.