For five years, I owned and operated my own small law firm, but for most of that time, I had no idea what I was doing. I learned how to run a business, step-by-step, based on what I thought was most important at the time.
The first thing that was most important to me was learning how to attract and engage clients, because without revenue, I would really be up a creek.
It took me two-and-a-half years to develop a streamlined system and process for getting my phone to ring and converting those phone calls into money in the bank.
Lawyering in the dark
During that time, I was really doing business in the dark. There was no real business behind my business. I blindly delegated my bookkeeping, insurance, taxes, and even the legal parts of my business. I was not even a business until 2007, because someone told me that lawyers do not need to incorporate, and I believed them without investigation.
In those first years, if something did not have to do with earning revenue, I ignored it.
The importance of LIFT
Little did I know that it is the legal, insurance, financial, and tax systems of a business that make the difference between a real-deal serious business and one that is on the edge of crumbling. It began to hit me in 2007 that I had trouble on my hands.
By then, I was into my second year of making a 7-figure revenue (I got really good at that part) and I started to see the ramifications of not having a solid LIFT (legal, insurance, financial, and tax) foundation beneath what I had built. One of the first indications came at tax time in 2007, when I found out two days before taxes were due that I had a 6-figure tax bill. Yes, I owed $106,000 in taxes and had not set any money aside.
That was a very bad day.
Fortunately, I had done one thing right: I had a great relationship with my local business banker. So I called him up and asked for help. Because it was 2007 and the banks were lending money to anyone with a social security number and a credit score over 700, he could. Within 2 days, the IRS was paid and I was the lucky owner of a lot of debt.
That was just one of the ramifications of not having LIFT in my business. There were a number of others that ranged from an employee lawsuit that I had to settle because I did not have the right insurance in place, the sale of my business to the wrong person, and many other sordid tales.
Built a foundation with LIFT
I discovered that you can be a great lawyer—and even a great business person from the revenue-generation standpoint—but if you do not have your own legal, insurance, financial and tax systems in place, your business is built on a house of cards.
Most lawyers I have worked with over the past few years have little to no awareness of these issues.
As we go into 2010, make a commitment to yourself, your family, and your clients to get a LIFT foundation in place in your business. It is time to do business with your eyes wide open. If you are not sure where to start, listen in on my LIFT audio program.
Make a decision and get started. Your law practice deserves it.