Maximum Lawyer

Tyson Mutrux (00:00)
Today's guest, Terrell Turner, has made it his mission to help law firm owners understand the financial side of their businesses without making it feel like an accounting class. He works with firms across the country helping them stop chasing revenue for the sake of revenue and start building businesses that are actually healthy and profitable. Because you can build a firm that's growing every single month and still be losing money. I think a lot of people listening can actually relate to that. So today we're talking about the numbers every owner should know.
Tyson Mutrux (00:28)
The biggest financial mistakes law firms make, why growth isn't always a good thing, and how to know whether you're actually building a business that's worth owning. Terrell, welcome to the show.
Terrell Turner (00:39)
Hey, thanks for having me.
Tyson Mutrux (00:40)
Absolutely. So what do you think? So generally, I guess what's the biggest misconception you see people make when it comes to looking at their numbers?
Terrell Turner (00:53)
Yeah, I think a lot of people tend to just assume that growth means everything is all good. It's like they look at that top line, it's like if we have more revenue, you know, this year than we did last year, then we're good. And they just don't even look at the rest of the numbers on like whether it's their profit and loss or their cash. And I think that's a big misconception of growth doesn't mean that everything is all good.
Tyson Mutrux (01:21)
What scares you most when you look at the people leading law firms? From your perspective, what is the biggest concern?
Terrell Turner (01:32)
Yeah, I mean, I think when people are so top line focused of just like, hey, all we want to do is we wanna be able to say we grew from this year to next. And I think when you take a step back from a macro perspective with all the changes that are going on with technology and there are so many options coming out, if you've only been focused on building a firm that grows top line and grows more and more and more revenue.
Terrell Turner (01:58)
But you never really put any attention to like how healthy is this business. What tends to happen is you go through a period of time where let's say your revenue dips down. Well, if all of your cost and how you operate your business are out of whack, like you're gonna immediately be in this downward spiral of constantly losing money. Now you gotta go out and get short-term loans, which we know those short-term loans are gonna be very, very expensive. And some firms, they never get out of that cycle.
Terrell Turner (02:28)
If they fall into it. And so it really scares me when I hear firms only talking about, well, we did this much in revenue, but how healthy is the rest of your business?
Tyson Mutrux (02:40)
That's one of those things that really drives me nuts. People talk about how much revenue they have, but that number alone doesn't mean anything. Your revenue could be great while you're still losing money. Why do you think people focus so much on revenue?
Terrell Turner (03:00)
I mean, I think part of it is that revenue is a healthy metric if you're looking at it in context. But if it's the only one that you're focused on, it tends to be a little bit of a vanity metric. I mean, it makes you feel good to see that, hey, our revenue went up. And I go to a lot of law firm conferences, and when I'm there and they talk about the business side, they usually just advertise this company does X amount in revenue.
Terrell Turner (03:28)
And that's the thing that consistently gets promoted. And people don't really talk about the other numbers. And so I think it's just created this mindset across the legal industry for a lot of people is, well, I want to talk about the thing that gets celebrated or the thing that gets promoted. And I think that people don't have ill intentions when they start doing it. I think they just never took a step back to learn, you know, like what are the other key numbers you should be looking at?
Terrell Turner (03:58)
And so I think we just stay in this cycle of like people find validation in being able to say their revenue number grew or like, hey, we're a million dollar business or we're an eight-figure, nine-figure, or ten-figure business, like people find validation in that. And I think it tends to hurt you in the long run if you don't look at it in context of everything else.
Tyson Mutrux (04:21)
I think that's hard for a lot of law firm owners because they're entrepreneurs, and we're taught that bigger is always better. At what point did you realize that was not true? Was there a story you can recall, or did you enter the profession already thinking that way? When did your mindset shift?
Terrell Turner (04:48)
So I would say personally for me, like I started my career, you know, as an accountant, doing accounting for, you know, in public accounting. I worked for Fortune 500 companies. And I remember I was working in investor relations for a, it was a $14 billion company. And one of my responsibilities was to help really draft that message that the CEO, the CFO were gonna share with all the Wall Street analysts and the Wall Street banks.
Terrell Turner (05:16)
And I remember that we would get a lot of calls from the bankers because when they're investing like, you know, a hundred-plus million dollars in your company, like they want answers. And I remember being on a call with someone. And what they were talking about, they were like, you know, you guys keep talking about revenue, but what about this? What about how healthy is the business? And what I realized is us not being able to answer those as easily and as clearly.
Terrell Turner (05:44)
It led to some catastrophic changes because what you started seeing is the stock price of the company started dropping because people are just like, hey, stop telling me just about top line. I want to know about the other things. How healthy is this business? Because I'm not gonna keep giving you money if you're just gonna lose it in the process of running your business. And for me, that was a big shift. And I remembered that experience. So when I started working with law firms,
Terrell Turner (06:12)
I would hear so many law firms talking about like, hey, we're growing, we're growing, but are you keeping any of it? Like, and I remember working with one firm where they were constantly talking about how much they were growing, how much they had in revenue. But then when I looked at their financial statements and I went to the bottom line, I was like, you're actually losing money. So yes, you have all this money coming in, but you're not keeping any of it because all of it's going to other people. And at that point I realized I was like, you know what?
Terrell Turner (06:42)
You do not want to be in what I call the death spiral of business of constantly losing money and just on your way to bankruptcy eventually.
Tyson Mutrux (06:52)
Yeah, and this may be the story you're talking about, but you shared a story with us of a firm that had grown to millions in revenue, but they were losing half a million dollars. I don't know if it's the same one or not, but walk us through that meeting with them and what numbers immediately told you that something was wrong?
Terrell Turner (07:11)
Yeah, so when we started working with that company, we looked at their numbers. Well, first I started off asking kind of like what's their goal? Because I like to get a feel for like what's important to this person. And I noticed that for this firm or the partner that I was speaking to, you know, prestige and image was a very big deal to them. And I was like, okay, all right, that gives me a clue of some questions I need to ask when we get to the numbers. And so I was like, okay, tell me, how do you feel about your numbers?
Terrell Turner (07:41)
And the only thing they talked about was revenue. Like, hey, we hit a million dollars, you know, a couple of years ago. We've been seeing this much growth and we're at this point and we want to go to the next level. And we've been working with a business coach who's gonna help us get there. And I was like, okay, cool. This person said absolutely nothing about the rest of the numbers. And so I was like, okay, let's take a look at, you know, your P&L. Their top-line numbers were growing.
Terrell Turner (08:10)
Their numbers were growing, so I asked how much they were spending on staff and their team. Immediately, I could see we were going to have a problem by the time we reached the bottom of the profit and loss statement. As a general rule, I look at whether salaries and wages are more than one-third of revenue.
Terrell Turner (08:38)
When salaries and wages exceed one-third of revenue, that's usually a sign that the firm is very people-heavy and may not have enough money left to cover its other expenses. We also looked at rent. They had moved into a much larger office than they needed, so they were heavy on both rent and salaries.
Terrell Turner (09:08)
And I was like, I kind of already know what this story's gonna be. And when we got to the bottom of the P&L, I said, okay, all right, here's the reality. Yes, you are growing at the top line, but you are not keeping any of it because you're losing, you know, close to $50,000 a month. How long do you think this can last before you're gonna have to file for bankruptcy? And it was a huge gut punch for this person because when they looked at it, they were like,
Terrell Turner (09:35)
I had no idea we were losing this much money. And they were just like, how could this happen? And I'm like, well, you didn't notice because you were using this loan that you took out to cushion you and pay for things, but this entire time, you've been losing money, about $50,000 every single month. And by the time we talked, they were up to about $500,000. And I'm like, this doesn't feel good. If you're a $2 million firm, that is a serious problem.
Terrell Turner (10:02)
But at the bottom line, you're losing half a million dollars. And I'm like, this is not a good scenario. So I'm like, in that call, I will say it was a tough call for them, but I think it really opened their eyes to see like, I need to focus on more than just the top line.
Tyson Mutrux (10:19)
So in that third that you talked about when it comes to the overhead or the salaries and employee compensation everything, does that one-third include owner compensation, or is that a separate category?
Terrell Turner (10:33)
I usually put owner compensation to the side because that's gonna, I mean, that's gonna swing, you know, a lot. Because depending on how you structure your business, because there are some firms, the way that they're structured, the owner isn't included in payroll. They get, you know, their compensation based on the bottom line profit. So if you're in that case, then you know, you're not gonna have owner compensation in your salary number. So I tend to tell them.
Terrell Turner (11:00)
If we set aside the owner's compensation and we just look at what you are paying your team, and I like to include contractors in that as well. So what are you paying your employees and your contractors? And let's see how much of your revenue is going to cover those costs. And then when I see that hey, it's a little bit more than one-third, or like, hey, 50% of your revenue goes to paying your people, I would say that means you're not gonna have that much left over to cover your operating expenses and then still have some left over.
Terrell Turner (11:30)
For the owner at the end of the day.
Tyson Mutrux (11:33)
That firm was losing close to $50,000 a month, and then you helped turn it around to roughly $48,000 a month in profit. What were the first two or three decisions that began to change everything? Was it reducing the workforce or changing the office location?
Tyson Mutrux (12:02)
Some of those changes can't happen immediately. With office space, for example, you may need to wait until the lease ends unless you are willing to break it. What decisions did you make first?
Terrell Turner (12:10)
The first thing we examined was marketing and advertising. When someone is heavily focused on revenue growth, I want to know how much the firm is spending on marketing and how much of that spending is actually working. I asked them to look at the clients and leads they had brought in over the previous three months and identify where those leads came from.
Terrell Turner (12:39)
These leads all came from referrals of people that they knew. So I'm like, none of these leads came from your actual advertising spend. And what we saw is they were spending a ton of money on advertising. So I was like, well, we should probably like right size this because you're probably spending marketing dollars in places that aren't producing results. And so what we did is we started looking at that and saying, okay, all right, where are all the places these marketing dollars are going?
Terrell Turner (13:08)
They were advertising over here. And I'm like, have you ever gotten a client from that place? And they were like, no. I'm like, well, we probably should cut back on that for now. And then what we did is we cut down the marketing budget to just the areas that were actually producing results. And then we said, because you're getting a lot from referrals, I mean, you probably need to just spend more time going to lunch with some of your referral sources, because that's where the bulk of your business is.
Terrell Turner (13:34)
Let's shift your marketing dollars to actually get you new business. And so we made some cuts there. And then when we looked at the salaries, one of the things that we noticed is part of the reason they were heavy on salaries is because they were hiring more and more admin people that didn't actually do legal work. And so one of the things we said is like, all right, we're gonna set a policy in place of
Terrell Turner (14:01)
The next hire has to be someone who can actually produce revenue for the firm. And what we did is we looked at what were some of those admin tasks that they wanted to hire for and said, how can we actually use whether it's your practice management tool or how can we use the technology you are already paying for? How can we use that to do some of this work? And so what we did is we worked with them in kind of shifting some of the responsibilities.
Terrell Turner (14:29)
And then what we had to do is we had to just come back and say, all right, we're gonna keep a very clear tracker on how much revenue each person on the team is producing. And what we need to have is on a weekly basis, let's have a conversation to make sure that each person on the legal team is getting the right assignments. Like we're assigning cases to them that can actually produce revenue for the firm. What we noticed is that the legal team was spending a lot of time doing
Terrell Turner (14:58)
Specifically, they were doing casework on cases that they could no longer bill for or cases that were closed out. They were trying to like clean up files. And I'm like, we need their attention on the stuff we can actually get paid for. And so by shifting those types of things, what we saw is that their revenue increased, their costs went down, and because of the lease, they couldn't get out of the lease. So we were like, okay, all right, we can't change that. Like you said, that's not gonna be an overnight change.
Terrell Turner (15:27)
But right-sizing the marketing and giving the legal team the right targets was the thing that really made the switch for them that in a matter of months, we went from losing $50,000 a month to being able to generate profits as high as $48,000 a month, where I'm like, these simple changes were the thing that really led to a big improvement for them.
Tyson Mutrux (15:51)
So I'm very curious. So let's say I had a stack of financials from multiple firms, right? So 100 firms gave me all their financials, right? And I just pulled a random one out of the pile. I handed you the financials. Okay. And I guess which document would you look at first and which number would you look at first to see the health of the firm?
Terrell Turner (16:12)
The first thing I would grab is the P&L. I want to know the firm's average monthly revenue and average monthly expenses. Revenue minus expenses tells me whether the firm is making or losing money. If it is losing money, the next thing I want to know is how much cash it has in the bank.
Terrell Turner (16:39)
If you're losing $10,000 a month but only have $12,000 in the bank, you have an immediate problem. You have about one month to turn things around before you begin taking on serious debt. I start with revenue, total expenses, and net profit. If the result is a loss, I look at available cash.
Terrell Turner (17:09)
Cash tells me how much runway the firm has. If the firm is around break-even—not losing money but not making money either—then we can look more closely at what it is spending money on. That's where I look at employee ROI.
Terrell Turner (17:38)
Compare staff costs with revenue. Are you spending more than one-third of revenue on your people? If so, understand why. Do you have too many administrative staff members, or does the legal team lack enough billable work? That analysis helps explain why a firm with decent revenue is not profitable.
Terrell Turner (18:07)
Then you can determine whether the problem is expense management or whether the firm simply needs to grow revenue a little more.
Tyson Mutrux (18:14)
I'm fascinated by this. I can't remember whether the term is pre-profit or pre-revenue. Uber went about 14 years before making money; it was not profitable during that period.
Terrell Turner (18:24)
Yeah.
Tyson Mutrux (18:25)
For 14 years. I do not remember whether they called it pre-revenue or pre-profit, but the term reframed what otherwise looked like a path toward bankruptcy.
Terrell Turner (18:38)
Yeah.
Tyson Mutrux (18:39)
They could say, “We are pre-revenue” or “We are pre-profit.”
Tyson Mutrux (18:43)
My question is this: lawyers often say they are spending more on staff, technology, and other resources because they are scaling. I have been guilty of this myself. Is there a point when it is reasonable to lose some money for a year while investing in scale?
Tyson Mutrux (19:10)
Maybe even for two years? Or do you believe there are better ways to scale without losing money for that long?
Terrell Turner (19:18)
I mean, I definitely think there are better ways to scale without losing money, especially when you're a law firm. and even in that example that you brought up about like with Uber, I mean Amazon was a similar way, a lot of publicly traded companies are that way. And part of that is because if you're publicly traded on a stock exchange or you have very large institutional investors, while you're losing money.
Terrell Turner (19:45)
You are spending your investors' money and they can get access to a ton of cash. So I would say is that if you're a law firm, you typically can't just go to the open market and do an IPO for your law firm or at a certain point, banks will probably say, Hey, we're not going to give you any more money. And so what I tend to look at that and say is that yes, if you're scaling, if we're showing a loss for a period of time.
Terrell Turner (20:12)
Let's go back to that example, let's say if you're scaling and now your firm is losing $10,000 a month. I want to know, okay, all right, how much cash do you have in the bank? And then let's say if you have a line of credit, like how much room do you have on your line of credit? Because that's gonna tell me how long you can afford to lose this much money before you run into a serious problem. Now, if you told me, hey, we're losing $10,000 a month.
Terrell Turner (20:40)
But we have $100,000 in the bank. Well, you have a 10 month window. Like whatever scaling strategy you're doing, it better start producing results within the next 10 months or you're gonna be out of cash. And so I tend to look at it that way of saying, all right, if we are losing money, where are we gonna borrow or do we have the cash in the bank to help us survive while we're trying to work out this scaling strategy?
Terrell Turner (21:09)
And then I do like that just the beauty of looking at numbers is that we can kind of pull the emotions out of it because I'm like the numbers are the numbers. It's gonna be, you know, very simple math of if we add this up and ask, hey, if you lose this much money for five months, what financial position that puts you in? Like will you have enough cash to get you through five months of losing? If not, then what we gotta do is we gotta set some
Terrell Turner (21:38)
Realistic goals to say, all right, I know you're losing money today. When do we need to start seeing this scaling strategy actually work? And what I will say is for a lot of law firms, there are typically signs that you can look at to see, is this scaling strategy actually working? And I think that there are some people who say, well, it's gonna take time for us to see. Well, with the law firm, there usually are signs.
Terrell Turner (22:06)
And I tell every lawyer, I'm like, think about when you take on a new client. There are usually signs if a potential client is being dishonest with you or they're withholding information. And I'm like, you have to use that same kind of intuition when it comes down to your business. Because if you're just losing money and losing money and there are no signs that this strategy is working, like you kind of know if you're willing to be honest with yourself about it.
Tyson Mutrux (22:34)
What are some of those signs? I'm very curious.
Terrell Turner (22:37)
Yeah, so one of the things that I would say is if you're in a scaling strategy, and what I would say is if your revenue hasn't moved at all, like it hasn't grown at all, then I would probably ask, like, okay, all right, what are we actually scaling? Like, are we scaling our revenue or are we just scaling our cost? And then even if you say, well, we have a longer lead time cycle, like you know, people don't become clients right away. Okay, cool. Well, if you're in a scaling strategy,
Terrell Turner (23:07)
How many new leads have we seen come in over the last couple months? If we haven't seen any new leads come in, the question I would ask is, okay, what are we actually scaling? Because the whole purpose of scaling is so that we can grow our revenue to, you know, at a certain level or get our revenue to a next level of growth. Well, there should be signs. Either we should see more revenue coming in or we should see more leads coming in.
Terrell Turner (23:36)
We should also see more cases getting started. If revenue, leads, and cases are moving in the right direction, another metric to examine is average revenue per client. For simple math, imagine a business that generates $50,000 a month from 10 clients.
Terrell Turner (24:03)
$50,000 a month in revenue and you have 10 clients. Well, your average revenue is about $5,000 per client. But let's say if next month your revenue goes to $52,000 and you still have only 10 clients. What that tells me is your average revenue per client went from $5,000 to $5,200. To me, that's some small sign of growth.
Terrell Turner (24:32)
That $2,000 increase may not be the ultimate growth target, but it is still a sign that the strategy is moving in the right direction. Those are the kinds of indicators I use to determine whether a scaling strategy is working.
Tyson Mutrux (24:51)
That highlights the differences among practice areas. A personal injury firm fronts costs, while other firms may be more transactional. In 2020 and 2021, we invested heavily in marketing. That produced more leads, which led to more cases.
Tyson Mutrux (25:19)
Revenue was steadily growing, but every new personal injury case also created more spending. We had the people working on the cases, the office overhead, and the case expenses. We self-finance our cases rather than using a line of credit, so our expenses rose quickly and created a cash crunch.
Tyson Mutrux (25:49)
It can take 10 months to see a dollar from that marketing campaign. During that time, you are paying for marketing, people, the office, and case expenses. It kept getting tighter until the 10-month point, when cases began to settle. In personal injury, you sometimes have to get over that hump unless a large case settles earlier and makes the process smoother.
Tyson Mutrux (26:18)
Without that large result in the middle, cash can become tight. It highlights the importance of projecting forward instead of looking only at today's numbers. What advice would you give owners who are trying to forecast future revenue and cash needs?
Terrell Turner (26:41)
Yep. And I would say before I answer that one, I'll definitely say, I mean, I think what you said, I think it is a brilliant point because, you know, even though the revenue hadn't shown up, you guys had the evidence of like, hey, we're getting more leads in, we're getting more cases. It's just a matter of timing. So it's like, if I were your CFO and we were sitting down talking about it, I would look in the numbers and say, okay, all right, we may be in a position where we're losing money, but hey, there are some positive signs because we're getting more leads in.
Terrell Turner (27:11)
We're getting more clients. So this scaling strategy appears to be working. It's just a matter of timing. And I think that is a very real reality for a lot of firms. I would just say is in situations where, let's say if you were in the same situation, but you weren't getting more leads and you weren't getting more cases, I would then say, hey guys, the numbers don't support that this is moving in the right direction. So like
Terrell Turner (27:38)
We may need to look at something different. And I think in your point about, you know, projecting and looking forward, one of the things that really does help with looking at what your kind of average case value is. And I know for any type of case, like sometimes it can be very, very difficult to predict that, especially if you don't do flat fee because you don't know exactly what it's gonna be. Like when you're doing, you know, personal injury, like you
Terrell Turner (28:06)
You don't know exactly what it's going to be. But one of the things that we can kind of look at is like if we look at history, and let's say if we look at the last year of cases, the types of cases that you brought in, like what was the average revenue? And it may give us a ballpark that helps us say, okay, all right, if we stay consistent with what our kind of average case value has been, we can kind of project out, like, hey, you know.
Terrell Turner (28:33)
The average cases we bring in usually produce about X amount of revenue. Well, how many cases do we have? If you multiply those two numbers, you can kind of project out, like, hey, over time we should see about this much revenue with these cases. Now, the timing of it is where the legal mind has to really come in, to where you do have to make a judgment call about based on where we are in this case legally, like when do we think this may come in?
Terrell Turner (29:01)
And especially if you're in a situation like your firm, if the firm is getting tight on cash, like you have to think about that a bit more of like, hey, how close are we to a settlement on this? Because if the legal team came back and said, hey, in my professional judgment, we're about seven months away from actually getting a settlement on these cases. Well, then we look at the numbers and say, Hey, well, if it's probably another seven months and we're already tight.
Terrell Turner (29:30)
That's where we need to start getting smarter about, like, okay, all right, do we need to go get a line of credit or do we need to take out a loan? Like, we need to do something that gives us at least a cash backup plan to get us through those next seven months. Because if we go bankrupt in the process of trying to represent, you know, this client, then you know, one is the client's gonna be in a bad position and the firm is gonna be in a bad position. So
Terrell Turner (29:58)
I do think you do have to make a judgment calls of, hey, historically, what has the average case value been? And then based on what I know about this case, like what's kind of the estimated, you know, timing based on my professional judgment of when we might settle this case so we can start seeing more money coming in.
Tyson Mutrux (30:18)
So we have it's funny you like you mentioned that number because I pulled ours up because I we have it on our dashboard. Because the average fee is our most important number. And so we look at it historically, and then we look at it also our last 100 cases, because the last 100 cases tells us okay, which way are we trending? And, overall, are we are we beating our historical average? Like right now, which is interesting, because yesterday during our leadership meeting, we reported at our leadership meeting every week.
Tyson Mutrux (30:45)
It was above $19,000. Today it is $18,810.75. And we stress that to people so heavily because we stress it to the legal team by saying, Hey, listen, we're dipping. So what's going on? What do we do? Are we under selling these cases? Or okay, we're going up. What is it that you're doing that's making it go up? Because we did have something earlier this year where we were down into the sixteens. And I was like, wait a second, what's
Tyson Mutrux (31:14)
What's going on here? So we looked at it and tweaked some things and we're seeing it go it's gone back up, which is great. We can also explain it to like the leads team. Like, listen, you missed that case, you just missed $18,810.75 to the firm. Like that's one of those things where I always I don't remember who said this, but someone had told me the story. Like, if you walk into the office on Friday and you put eighteen thousand eight hundred and ten dollars and seventy five cents into a drawer.
Tyson Mutrux (31:40)
You come in on Monday and it's gone, you're calling the police because someone stole your money. And I think that's a great example because people gotta know like that lead means money. That means money, that means salaries to people, that's revenue to the firm, that's how we can pay people. So it's really, really important. I do wonder, to you, is that the most important number that you have that you look at? Or is there another number that you look at that you think law firm owners should be focusing on?
Terrell Turner (32:09)
Yeah, I mean, I would say for me, the most important number is are we making money, are we losing money? Because I think that's gonna really shift how we analyze the rest of the business. Because if we're in a situation where we're losing money, then that's gonna tell me, hey, we need to look at, okay, what are the immediate things we can do to right size our cost? And what can we do to really drive more efficient revenue growth?
Terrell Turner (32:39)
And but if you're in a position where you're making money, it's like, okay, all right, then I may spend a little bit more time on all right, what are we doing strategically about growing the revenue or maybe you know the firm owner comes back and some do, they come back and it's like, you know what, I really don't want to grow. I'm happy where we're at. So now what we need to do is we need to make sure that we optimize your costs and we need to make sure we optimize your processes.
Terrell Turner (33:07)
So that you can sustain where you're at. Like you don't eventually go from, hey, I'm comfortable now, but three months later, now we're losing and I gotta get back into the grind again. And so I think it really depends on are we making money or are we losing money? That's where I like to really get to the point of saying, hey, this is the most important thing we're gonna start with. And then after we identify that, if you're making money or losing money.
Terrell Turner (33:36)
Then we can start to get into some of the strategy and say, okay, all right, what do we do kind of moving forward now that we know what the bottom line tells us?
Tyson Mutrux (33:48)
Yeah. I want to shift gears a little bit 'cause I wanna kinda brag on you for a second. Cause you create an incredible amount of educational content and I think you have more than three hundred pieces every month, I think. So it's I mean it's a ton of content. So why have you invested so heavily in teaching this stuff?
Terrell Turner (34:08)
Yeah, so one of the things that I am very grateful for is the opportunity of meeting a lot of great attorneys and a lot of great, you know, different associations. And in talking to so many of them over the years, what I realized is there's a lot of gaps when it comes down to getting quality financial information or insight. Because when I would talk to whether it was with state bar associations or different coaching programs.
Terrell Turner (34:38)
One of the things that I consistently heard is like, hey, lawyers are struggling to really understand what's going on with their numbers. And lawyers would tell me, I went to law school to be a lawyer, not an accountant. Like, hey, numbers make me nervous, they scare me. And so part of my idea was like, okay, all right, I know that if a law firm does not have healthy financials, that law firm is not gonna survive.
Terrell Turner (35:05)
And then also what I know is if law firms start closing because they can't financially afford to stay open, then I think that leads to a bigger society problem because I'm like, hey, you're gonna have less people who can either get access to justice, you're gonna have less lawyers who can actually really work in the legal system to where I'm just like, all right, one of the things we can do, because we can't work with everybody. I mean, we have, I mean, the capacity constraints are very real.
Terrell Turner (35:34)
We can't work with everybody. And so one of our goals and one of our ways of helping the most people possible is how can we produce a lot of educational content, whether that's video, whether that's webinars, whether that's written content, how can we put out as much content as we can to help people at different stages of their life cycle? And at some point when people are like, hey, I understand what you said, I like what you said, but hey.
Terrell Turner (36:04)
I actually need someone to come in and help me implement these ideas. And then that's where like our services can step in and say, hey, if you need help actually implementing the ideas, that's what we're great at doing. We can do that. But if all you need is access to the information, and sometimes I think people just need that light bulb moment. And so we try to put out a lot of content to help people have those light bulb moments. And then when they need that extra support, we're here to help.
Tyson Mutrux (36:34)
All right, so we gotta talk about AI for a second because it's changing everything
Terrell Turner (36:37)
Okay.
Tyson Mutrux (36:38)
From marketing, how we practice law, I mean operations, I mean hiring, intake, everything. So how do you think AI is gonna change financial decision making inside law firms?
Terrell Turner (36:51)
Yeah, I definitely think that, we're living in what I would call an option economy. And what I mean by an option economy is that there are companies out there that are creating more and more things where people feel like they have an option of hey, whether you go to a lawyer to discuss your contract or whether you go to a lawyer to seek their insight or their counsel on a legal matter. Now,
Terrell Turner (37:20)
I personally am still a very big fan of people actually talking to qualified professionals. But I think the reality is that there are a lot of people who have convinced themselves that, hey, AI can replace me actually talking to an actual lawyer. I don't subscribe to that, but one of the things that I do is I take a step back and say, hey, the world isn't framed only by the way I think. There are a lot of people who are
Terrell Turner (37:48)
Looking at AI as an option to seeking legal counsel or seeking legal support. And the more that happens, what that means is that now law firms have to be able to really establish like the value of going to a lawyer, the value of using a lawyer, which also means that there may not be as many prospective customers or clients in the market as it used to be.
Terrell Turner (38:16)
Because some of those people feel like they can turn to AI, which means law firms are going to have to be very, very, well, more efficient in how they attract new clients, how they support the clients that they do have, and how they manage their money internally. Because if the number of potential clients goes down, that could mean that, hey, your revenue isn't going to grow as fast as it used to, which means
Terrell Turner (38:42)
You're gonna have to be a lot more disciplined about how you manage your money, what you spend it on. And you're gonna have to be more disciplined about that so that you don't run into a situation where your expenses are growing faster than your revenue is growing. And I think that there are a lot of law firms that I don't think are really prepared for that because even law firms that I talk to sometimes when I go to conferences, they tell me, like, well, we've grown X percent.
Terrell Turner (39:11)
Year over year for the past 10 years. Well, as AI and technology become more and more adopted, your growth rate may not look the same that it has in the past. You may realize that if you don't make some changes, your firm isn't gonna grow as much as it has in the past. And I think there are a lot of law firms that aren't quite ready for what that could look like.
Tyson Mutrux (39:33)
I agree. Hopefully more people listen to conversations like this and learn what they need to do, because AI is already here. Firms have to get on board or risk getting run over by it. To close things out, what's one financial habit every law firm owner should build before the end of the year?
Terrell Turner (39:59)
I definitely think the easiest thing is to actually look at your numbers. Because the number of lawyers that I know that if you ask them, like, okay, all right, you know, did you make money or lose money last month? There are a lot of lawyers that I talk to that have no clue. Sometimes, like, they don't know how they actually did until it's time to do their taxes. And they're either surprised that they lost money or
Terrell Turner (40:27)
They're completely shocked that they're gonna have this big tax bill. Now, of course, you know, neither is a comfortable thing to get a surprise tax bill or to be surprised that you lost money. And so one of the things that I encourage a lot of lawyers is like, hey, you don't have to be an expert in the finances, but at least just look at the number. Just know: did you make money or lose money last month or over the last six months? Because by knowing that information,
Terrell Turner (40:55)
Your intuition will start to kick in and you'll start to notice like, hey, if you lost money for the last three months, there are some different decisions that you are going to make moving forward. Like there's some different judgment calls, like what you choose to spend your time on might shift or change. Whether or not you decide to hire that next person on the team, if you know you've been losing money, you may think a little bit more strategically.
Terrell Turner (41:23)
About the next decisions that you make. Now, if you know you've been making money, then it's just like, okay, that kind of can inform your decisions as well. So I think the biggest habit, I think, and the easiest one is just to look at the numbers. Just know, did you make money or did you lose money? If you start there, I think your intuition will kick in and help you kind of make better decisions. And then after you do that, then I would say:
Terrell Turner (41:50)
All right, you can dig in a little bit more once we know that baseline thing of did we make money, did we lose money? And then after you get comfortable with that, then you can start digging in, okay, why did we lose money or why did we make money? And that can be kind of stage two habit that you can develop.
Tyson Mutrux (42:08)
I love the simplicity of that because the best things in life are often simple. It's an easy way to start. Terrell, thank you for sharing so much knowledge today. If listeners want to follow you or learn more about hiring you, what's the best way to get in touch?
Terrell Turner (42:31)
The best place to follow me is LinkedIn at Terrell A. Turner, CPA. I respond to messages, although it can take a little time because I receive a lot of sales messages. My email is terrell@tlturnergroup.com, and our website is TLTurnerGroup.com, where we share many of our resources.
Terrell Turner (43:01)
Our free resources include the quarterly magazine, video series, and articles, all available without a paywall. The website also includes our phone number and email address.
Terrell Turner (43:27)
Start with our website. If you want to reach out to me directly, LinkedIn is a great way to do it or my email.
Tyson Mutrux (43:33)
Yep. And for those of you that are listening, I did put on the screen the website there and then we'll also put a link in the show notes as well. But Terrell, thank you so much for doing this, really appreciate it. I've really enjoyed the show.