“While you may be a bold, independent thinker when it comes to the practice of law and in other areas of your life, there’s a very good chance that you’ve been thinking a lot like a lemming when it comes to the profitability of your law firm.” – RJon Robins, author of Profit First for Lawyers
In this episode we revisit a crucial topic from season one that deserves a fresh look, especially if your accountant or bookkeeper has been pushing back against Profit First. For deeper insights, take a look at Chapter 8 from the Profit First for Lawyers book about why GAAP was not meant for you.
In a clip pulled from the original 2021 livestream recording, RJon challenges the conventional wisdom of GAAP (Generally Accepted Accounting Principles). He explains why blindly following rules created in the 1930s by 18 accountants trying to appease Wall Street regulators may be preventing your law firm from reaching its full potential. The fact is, GAAP was not designed with your small law firm’s profitability in mind.
Key Takeaways:
- GAAP was designed for publicly traded companies in the 1930s, not for small independently owned law firms
- GAAP solves problems you probably don’t have and uses criteria you may not share
- Your bookkeeper or accountant should not dictate how much profit you’re allowed to keep from your business
If you’ve been accepting “that’s just the way it is” as an answer when it comes to your law firm’s finances, it’s time to challenge that thinking. The status quo was not designed for your success.
Take Action:
- Schedule one hour this week to review your numbers and ask yourself: “What would happen if I decided today how much profit I was going to keep?”
- Take control of your financial system. Stop letting your bookkeeper or accountant dictate your profit. Design a system that puts you, your family, and your profit first.
- Read Chapter 8 of Profit First for Lawyers: RJon outlines the practical specifics of GAAP’s intended purpose and why you can choose to opt for a Profit First system instead.
Resource: Profit Leak Assessment
The Profit Leak Assessment is a practical, on-demand course to help law firm owners find thousands of dollars in potential profit leaks. Karli teamed up with Evelyn Aucoin, Financial Literacy and Strategy Expert with How To Manage A Small Law Firm to create this resource for law firm owners. Click the link below to start plugging the profit leaks in your firm. Your future self will thank you for it!
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