You’ve done it. You’re starting your own law firm. But wait, have you put in enough effort now to make a huge difference moving forward?
In this episode, Darren Wurz will give you critical suggestions on starting your own practice and building it from the ground up and how a little effort now in the beginning can lead to a big pay off later. You will also learn some important strategies for personal and business success.
- How to start a practice with the end in mind
- Why the name of your practice matters
- How to manage the ups and downs of running a business
- The easy mistake of mixing your business and personal finances
- And more
Connect With Darren Wurz:
- 30 Minute Chat With Darren
- Wurz Financial Services
- LinkedIn: Darren P. Wurz
- LinkedIn: The Lawyer Millionaire
- Twitter: Wurz Financial Services
Transcript:[00:00:00] We are on a mission to help lawyers and law firm owners maximize wealth and achieve financial independence. Welcome to the Lawyer Millionaire with Darren Wurz, from Wurz Financial Services. In this podcast, we will help you build wealth, minimize your tax and plan for retirement with money management strategies designed for the legal profession. Join us in this journey where we help you manage your money so you can make the most of your future. Start feeling confident in knowing you are well-prepared for retirement and on track to financial independence. Now onto the show.
Patrice: You’ve done it. You’re starting your own law firm. Congratulations. Uh, but wait, have you crossed all the T’s and dotted all the I’s in setting up that practice? making the effort now could make a huge difference going forward.[00:00:56] Your host, Darren Wurz, makes some critical suggestions in this [00:01:00] episode. I’m Patrice Sikora, and Darren. I love your first point. Start with the end in mind. What do you mean?
Darren: Yeah, absolutely. I mean, this is great advice in general. When you start, if you’re launching out on your own to start your own practice, start thinking about what that practice is going to look like 20 years from now, um, you are building a business.[00:01:23] So, and I know that, you know, when you, when you initially start out, you’re just thinking about trying to make a buck, you know, where’s my first client gonna come from. You know, trying to keep the lights on and that sort of thing. And that’s really important, but you need to do some strategic planning. Uh, when I do strategic planning for my business, I do this once a year, I sit down and I think very specifically about where I want the business to be five years from now and 10 years from now. [00:01:49] And that’s really important, but the other really important thing is you are building a business. And that business is an asset. [00:02:00] You know, you’re not just a, this isn’t just another phase of your career, although it certainly is, you know, and, and there’s a lot of. That’s attractive and working for yourself. [00:02:10] I know that firsthand, um, having that flexibility, being able to set your own hours, working as your own boss, you know, those are really attractive things, but you are actually investing in something. You are building an asset and one day. You might be able to sell that asset. You might be able to sell your law practice and get some value for all that hard work and, uh, money that you put into building it. [00:02:39] So think about that. Think about the possibility that one day you may actually sell this practice as part of your retirement. And that could be a really big part of your retirement strategy, you know, in, in selling the practice or maybe selling your share of the practice. [00:03:00] It’s what, from what I, when I talk with attorneys, I don’t find that that’s something that a lot of people are thinking. [00:03:06] But it is really critical. And there are some things that you can do early on as you’re starting this business that will enable you to sell it. So you, as you’re thinking about your business, as you’re getting started, there are some things you can do that will strategically position you in the best way to be able to sell that practice. [00:03:28] One of those things is your, your name. The name of your firm. So think very carefully about the name that you choose for most attorneys, they choose a name that has their name in it.
Patrice: Why what’s that? Why not?
Darren: Absolutely. Why not? You know, and, and this is something that I did myself. So my business is where it’s Wurz Financial Services, you know, and that’s just what I thought was best at the time.[00:03:57] And that may work very well. [00:04:00] Um, for attorneys, sometimes it’s even more specific, you know, if I was starting a law firm, it might be something like, uh, Darren Wurz attorney at law, you know, something like that. Okay. So think about this, Patrice, how do you sell a business? That’s called Darren Wurz attorney at law when Darren Wurz retires?
Patrice: Very good points. And, and you’re going to have to go through, wow. Not just changing the name, but you’re gonna have to re-educate everybody who uses.
Darren: Right. So there’s a, you’re going to have to maybe rebrand right. Change your whole name. And that’s, there’s a lot of work. That’s going to go into that. That’s going to be very difficult to do.[00:04:39] So maybe start with something that’s a little bit more generic. Now there are some places in the country where you can use a, um, Uh, a trade name. So it could be, you know, Covington attorneys or, um, you know, family law, something, you know what I mean? It could be something that’s more [00:05:00] generic, uh, something that is doesn’t include your name, but that’s not the case. [00:05:04] Also. That would be what I would recommend first is that you, you pick a name, that’s going to be fairly generic, but you’re going to describe what you do and maybe not have your name in it. So. It is something that is more easy to sell. Someone might be more interested.
Patrice: But don’t you want to stand out?
Darren: Well, yeah. So, then think about your branding. So. You know, what kind of, how does that name relate to your branding? You know, it could be, um, what, you’re good at, what you specialize in, um, what really makes your firm unique. There are a lot of things that make your firm unique other than your name.[00:05:43] So think about those kinds of things in determining what kind of name you want to have for your brand. And then. Yeah, and that’s going to be something that someone is going to be more interested in purchasing. Now, if you are in a jurisdiction where maybe you can’t use a trade name and there are certain [00:06:00] places in the country where you have to use your name, well, there’s some ways that you could get around it, you know, maybe just use your last name. [00:06:08] So maybe my firm would be called Wurz and associates or something like that, you know, that has my name in it, but it has the potential to be a little bit more generic and maybe a little bit more.
Patrice: What if you put a tagline in there where it says, you know, attorneys at law specialty or, you know, the people you want to come and talk.
Darren: For sure. Yeah, definitely. You know, um, and, and that ties into my next point, which is, think about the branding. So, you know, don’t just start with trying to get your clients, but think carefully early on about what kind of brand you want. And don’t be afraid that brand can evolve over time and it can change.[00:06:51] My brand has changed over time. You know, I started with the tagline plan with care, live with courage, and then that kind of morphed into [00:07:00] The Lawyer Millionaire. And so, you know, that’s okay, but changing your name later on down the road and rebranding can be a very difficult and tedious process. So, think about how do I want to name it and brand it. So it can be an asset that someone in the future wants to buy.
Patrice: That is key because as you say, that is the end that you have in mind. But now this is a, this is a business that you’re setting up. You’ve got to run it like a business. It’s not a mom and pop operation. It’s a business. Talk about that.
Darren: Yes, indeed. Yeah. You know, I started my career as a teacher, as I’ve shared before, and teachers have kind of a unique, uh, feeling about the profession in that they want to be viewed as professional. And I think the same thing is very true of attorneys.[00:07:58] Attorneys want to be viewed as [00:08:00] professionals and they very much are viewed as professionals, but sometimes attorneys are a little bit scared of operating as a business, you know, for the purpose of maximizing profit, you know, it doesn’t feel right that I should run my law firm with the purpose, the goal of maximizing the bottom line. [00:08:20] Right. I’m a professional. I. And am trying to do something that’s maybe a little bit more elevated, but I want to encourage you. There’s nothing wrong with running it like a business. There’s nothing you need to feel guilty about. Doctors run their practices to maximize profit and they’re professionals too. [00:08:41] So. Don’t be afraid of making that your aim and doing everything you can to make your business efficient, to make it profitable. And you know what, by doing that, you’re going to be doing the best by your clients. You know, if you have an efficient [00:09:00] well-run business that serves, it’s going to serve your clients better, your clients are going to be happier. [00:09:04] They’re going to have greater satisfaction. You’re going to have greater outcomes, greater and better results. The other thing, as you’re starting your business, you deserve to get paid. So just know that, you know, and, and believe that you deserve to get paid for the work that you do. Uh, don’t work for free, make sure you’re charging what you’re worth, make sure you’re charging. [00:09:27] What you feel is the value that you bring to your clients and operate your business like a firm, operate your firm like a business. I made this mistake myself early on. And that’s easy to do, you know, in a financial planning business is very similar to a law practice. You’re trying to obtain clients. [00:09:46] And so maybe there’s some services that you offer for free. Maybe there’s a free financial plan or something like that to try to get clients in the door. And some of that’s okay, but you’ve got to be careful that you’re not giving away too much. So run it like a [00:10:00] business. There’s no shame in that and maximize your profits.
Patrice: You say, charge what you’re worth. How do you know. What you should be charging?
Darren: Well, that’s a really good question. Yeah. Um, you know, think about what the value is, uh, of, you know, your time and, and charge accordingly. You know, attorneys are very good at this because they. Keep track of time. You know, you keep track of how much, how many hours you spend on a project on a client and you can know what your billable rate is and things like that.[00:10:31] And if you’re starting a practice later in life, you know, maybe as a, as a later move in your career, um, or a mid career move, you know, you know what that rate is. So you know what you’re supposed to be charging, uh, look at the competition, you know, Uh, look at what other attorneys are charging, you know, and see what’s out there in the landscape. [00:10:54] Be competitive. But make sure you’re charging enough. And we have this thing called [00:11:00] inflation that’s happening right now. So attorneys everywhere need to probably be raising their rates to keep pace with inflation. So think about that. You know, your, your rates actually should increase over time. [00:11:12] You’re becoming a better attorney over time. You’re gaining more experience and. The value of a dollar is going down over time. So naturally your rates should increase over time.
Patrice: That is a hard thing to do. I would expect. It can be, yes. All right. So you’ve got your business, you’ve set it up. You’re running it like a business, but do you have the proper form of business? Is it an LLC is an S Corp, a C Corp. Talk to me about the differences that can make.
Darren: Absolutely. So there’s a lot of different types of businesses that you, uh, business structures that you could choose. The simplest type of structure is perhaps a sole proprietorship. Um, but there are more advanced structures and if you can [00:12:00] start off the right way, then you don’t have to go through the difficulty of changing things around later on.[00:12:05] So, uh, be careful about how you set up your business. I think for most firms. That’s going to be an LLC filing as an S-corp. Usually that’s going to be the best type of arrangement for you. And a lot of law firms are arranged that way. There are, um, sometimes restrictions on what kind of business form your firm can take. [00:12:29] In some jurisdictions, they have to be a specific type of firm. Sometimes that’s a PLLC or an LLP, um, something like that, but Those are similar to the LLC in that they operate kind of the same way. And then you can file as an S Corp. And there’s a really powerful reason for that. If you operate as a sole proprietor, you pay what’s called self employment taxes, which means you pay twice the Medicare and social security [00:13:00] taxes. [00:13:00] So the way Medicare and social security tax works is usually you pay half and your employer pays half. When you’re self-employed you pay the whole kit and caboodle and it’s like 15, some percent. So that’s a lot, that’s a big chunk of change. So, what you can do is if you’re filing as an S Corp, you can pay yourself a salary of say a certain amount of your income, and then any income over and above that you can pay yourself as what’s called a distribution. [00:13:34] Now, the beautiful thing about that is you’ll only have to pay social security and Medicare taxes on your salary, and you will not have to pay those taxes. On the distribution portion. So basically you can shield a portion of your income from those self-employment taxes. And that becomes a really nice strategy.
Patrice: And this is a reason to have a financial advisor.
Patrice: All right. You’ve got, I think this is a mistake that a lot of people who have their own business make, they make. They’re dollars. They mix their finances, business and personal. Talk to me about how you really should not be doing that.
Darren: You are absolutely correct Patrice.[00:14:18] This is, um, a very easy mistake to make. Thankfully, you know, when I started my business, I was pretty good about keeping things separate. And I think that really helped me, uh, logistically to keep things, you know, in the right space and my brain. Yes. There’s a lot of reasons for this. And it’s really, really important. [00:14:38] Um, you know, it can be tempting to just jump right in and worry about those kinds of things later on how you’re going to do your accounting and things like that. I know you want to be profitable. You’re trying to hit the ground running. You’re trying to get clients, you’re trying to run a business. [00:14:52] You’re trying to do your work. And you’ve got a lot of things on your plate, but you know, You’re going to save yourself a huge headache. [00:15:00] Now, if you separate those business and personal finances from the start, so what does that look like? Well, what you want to do is you want to have separate bank accounts. [00:15:11] It’s probably the most basic thing. Have a business bank account separate from your personal bank account. If you use a credit card for buying things for your business, have a separate credit card for the business. There’s a lot of reasons why this is smart. Number one, you know, just in your brain, making sure you’re understanding things. [00:15:32] You’re not going to know if you’re profitable, if everything’s mixed together. So it, it helps you really understand. If things are being profitable for you. And then, and then you. Do your accounting a lot more easily, you know, instead of at the year, going at the end of the year, going through all of your personal transactions and trying to separate everything out, which is just a Royal pain, you know, if you already have them [00:16:00] separated, you already are a mile ahead of everything. [00:16:03] So, and actually what you can do is you can use a program. To track those expenses. Um, I use mint for my personal stuff, and then I use a program called wave apps for my business, or maybe use Quicken or something like that. And that way you can just keep track of things as time goes on in real time, rather than, you know, looking back at it at the end of the year, the other really critical thing is. [00:16:32] You know, you have to establish some discipline early on in paying yourself. This is really important. Especially because in the legal profession, you have these huge ups and downs. Potentially in your income, you know, you have a great month and you have a terrible month. And so what happens is you get this sudden inflow of clients and money, and then you spend [00:17:00] a lot of money and. [00:17:01] You know, then all of a sudden you’re like, oh no, where’s all the money. That’s a very real problem. And I was actually talking with an attorney last week who’s who has just started his own practice. Um, he’s about, he’s a couple of years in and he’s in that boom and bust cycle and it’s really, really tough, uh, to manage. [00:17:22] And, and so my, I recommended to him, Hey, have a separate business banking account. And then from that bank account, pay yourself a steady income instead of, you know, as soon as you get income, paying yourself, set up an automatic, here’s what I get paid. Even if that’s a small amount to try to establish that regularity for yourself. [00:17:47] For me, I started paying myself weekly and by paying myself weekly. It helps me to have discipline in my personal finances. And that way I don’t get too far ahead of [00:18:00] myself. I know I have X amount of dollars to spend. This is how much I paid myself. And it really helps me stay on track of things. It’s going to really help you stay away from racking up those credit cards and getting in that bad cycle.
Patrice: Absolutely. I, I, I certainly agree with that whole a hundred percent. I have found being a, an independent contractor here. I got into the whole, oh, the money’s here. I can do this with it. No, no, no, no, no, no. I learned the hard way. Don’t do that. Discipline is so important now. So. Uh, young lawyer or middle-aged or whoever they are, they’re just starting their practice and they’ve gotten into the bad habits.[00:18:42] How do you pull them back and say, no, no, no, no. You got to think about it this way.
Darren: Yeah. That’s hard to do, you know, you have to start by just kind of drawing a line in the sand, you know, maybe you’ve been using your credit cards to manage that cycle. So you just say, okay, here’s the deal. We’re just going to [00:19:00] stop using the credit cards and maybe we’re going to start using the debit.[00:19:04] Because that way I’m only spending money that I know I have. And I’m not going to charge any new expenses to the credit card. So that way you keep yourself kind of from going into that negative cashflow and increasing that credit card debt, and then you can. Sort of set up a certain amount that you’re going to pay on those credit cards as part of that budget. [00:19:29] And that way you can just kind of slowly pay those down over time and not add to them. That’s the problem, right. You know, you’re trying to pay your credit cards down, but you’re adding to them at the same time and that’s a really tough thing to do. So if you’re really struggling, pay yourself weekly, a certain. [00:19:47] And then just use your debit card or just use cash. And there is a very psychologically important reason for this in that we’re a lot more reluctant to spend real money that we [00:20:00] actually have. It’s something about, um, we, we, we are more averse to losing. You know, then we are to gaining. So losing something that I actually have, that that really is a lot more fearful than gaining something else. [00:20:19] So people are really when they have real money that’s involved. And you’re really thinking about it in terms of actual dollars that are mine, that are leaving my bank account. That helps you a lot. Psychologically you are giving away something that is yours. Whereas if you have a card and you just put it in the reader, bingo, you don’t feel anything. You don’t say anything. I don’t need to worry about it. I can pay it later. You know?
Patrice: Exactly. Well, all right.[00:20:56] This is great for yourself, for your budget for your every day [00:21:00] for your food, your gasoline, but we haven’t talked about investing.
Darren: Yes. You know, as, as important it is, as it is to pay yourself regularly and set up your business the right way early on from the beginning, you want to commit to putting money away.[00:21:21] And I know that’s hard, you know, you’re starting out, you know, you don’t have the money to put away. You’re like what money? You know, you’re just trying to make sure you don’t end up adding too much to your credit cards. So it’s important though, that you get started putting some money away early. You know, there’s a very real, uh, power in investing called compounding. [00:21:52] And you don’t want to miss out on that. And you know, the earlier you start with investing the better, you know, that’s really, the key to [00:22:00] investing is to get started early. And that time, the amount of time you have in the market, that’s the only thing you can do. That’s how long you’re invested and how early you get started. [00:22:11] You can’t control what the stock market does. You can’t control those kinds of things, but you can control how early you begin. You know, the stock market is going to do what it does, you know, from here on out, you can’t change that, but you can change when you begin. And a lot of times people are scared because they’re like, well, I don’t have any money to invest. [00:22:31] Just start small. You could be ridiculously small. I don’t care. I had a client, you know, he keeps pulling money out. And I said, okay, you need to just commit to putting money in. And I don’t care how much it is. $10 a month. I mean, I really don’t care. You just need to establish that discipline because guess what? [00:22:55] You put $10 in and before, you know, it, you don’t even know that $10 was [00:23:00] there to begin with. You’re not missing it anymore. It’s just part of your cash flow. And then you can slowly increase that over time. But it can be very tempting to skip that completely. And I made that mistake myself, starting my own business. [00:23:17] I didn’t, wasn’t putting, you know, Hey, the financial planner needs to take his own advice. Right. But I think the mindset of a new business owner to, yes. You know, you’ve got one thing on your mind and that is survival. You know what I mean? So, but you really have to start that discipline because if you don’t, it’s going to be that much harder to start it later on, the more you put it off, the more you’re going to put it off. [00:23:41] And then before, you know, it it’s been years and years and years, and you haven’t put any money in your retirement accounts. So you’ve got to get it going, even if it’s just a small amount. Now here’s a cool thing you can think about. With the attorneys I work with, um, when they’re just starting out or they’re in this kind of [00:24:00] position, I tell them just, don’t worry about, you know, whether it’s an IRA or Roth IRA or 401k, or you don’t worry about all that. [00:24:09] We can figure that out later, just set up a standard taxable brokerage account. And add money to it. You know, we can worry about what kind of vehicle we want to put it in later, but just have some money going in to something. And there’s some cool things about a standard taxable brokerage account. One big thing is that it’s completely accessible. [00:24:36] You know, unlike a retirement account, you can go and get your money out if you need it. So if you really do have a true emergency. You can take it out if you really need it, but, you know, so it gives you some of that peace of mind, but it’s going to maybe help you have the courage to go ahead and get started. [00:24:56] So that’s a very simple way to get started. And I know you’re, you know, you [00:25:00] might be very busy with other things on your mind, so you can just start there. Very simple, very easy. And then we can add sophistication later.
Patrice: I like that thought. Add the sophistication later on. Just get the dirty work done first.[00:25:14] Come on, people. Darren, are there any other thoughts here that we haven’t touched on? You’ve gotten some great information out in the open here. Uh, is there anything else though that we might have missed?
Darren: No, I think that’s really the meat of it. You know? Um, this may not be the technicals about, uh, you know, from a legal perspective, how to start a law firm, but for your own, uh, success for your own personal financial success.[00:25:42] These are some things that you really need to think about, you know, starting with the end in mind. Making sure you run it like a business, set it up right. With the right business form and make sure you’re separating those personal and business finances from each other. And then making sure that you commit to paying [00:26:00] yourself a regular salary and adding to your investments. [00:26:03] I mean, those are really some of the keys that are really going to set you up for success. Um, later on, you know, some of the other things are marketing, you know, and making sure that you’re doing a lot of the right marketing strategy. This is not necessarily a podcast on marketing, but my dad has always said the key is just activity, making sure that you’re staying active, that you’re, uh, getting out there in the community and networking, making sure that you’re meeting folks and doing all of those things. [00:26:33] You don’t know where your business is going to come from. You just got to get out there and meet folks and make sure that you’re, you’re doing that. And that can be a really, um, Making sure that you keep that marketing cycle going, can be a very good way to maybe help save yourself from that boom and bust cycle. [00:26:51] So I know it’s easy when, when a business is flowing to cut back on the marketing. To cut back on your networking and [00:27:00] things like that, but you got to keep doing it because you’ve got to maintain that pipeline of new business that’s coming in. So, um, that would be my other thing is, is don’t neglect, marketing when things are going well. [00:27:12] Um, oh, and, and one other thing really key. You’re going to go through some rough patches, you know, with your business, you know, starting out, you’re going through a rough patch, probably. So. Build up some emergency reserves for not just yourself. That’s very important, but also for your business, um, you know, you get that sudden inflow of cash. [00:27:35] Don’t be so quick necessarily to spend it a or pay down all your debts, put it aside and make sure you have that rainy day fund, uh, available to you, not just for yourself, but also for your business, because likely you going to need it.
Patrice: How can listeners reach you, Darren?
Darren: Well, the easiest way is just to go to the website that’s wurzfinancialservices.com.[00:28:00][00:28:00] And if you scroll to the bottom of the page, you’ll see a link to my calendar and you can set up a time to talk with me, or you can just give my office a call at 859-291-9879.
Patrice: And your book, what’s the latest on the book? The Lawyer Millionaire.
Darren: Yeah. So very exciting. The Lawyer Millionaire is out now and available for you to purchase very exciting news and it is available right now, only at the American Bar Association, uh, at their bookstore.[00:28:29] So you can check out the link in the show notes and go and get your copy.
Patrice: I want my signed copy, not just a copy. I want a signed copy.
Darren: For sure. It’s on the way.
Patrice: Follow this podcast. It’s also called The Lawyer Millionaire and share with friends and colleagues.[00:28:50] I’m Patrice Sikora. And let’s talk again later. [00:28:57] Thank you for listening to The Lawyer Millionaire, [00:29:00] click the follow button below to be notified when new episodes become available. This content has been made available for informational and educational purposes only. This content is not intended to represent investing or tax advice. Always seek the advice of a qualified investment or tax advisor with any questions you may have regarding your own financial circumstances.