Beyond the Numbers: Redefining Profit

How profitable is your law firm compared to mine? To protect your sanity, I would encourage you to be prepared with an answer to this question.

How profitable is your law firm? And ask yourself this question every day before someone else does.

Keep in mind that depending on who is asking, the question, of course, could have a very different meaning.

For example, when another lawyer asks, how profitable is your law firm? They often mean compared to their own.

Or they could mean, should I buy it? Or they may be feeling you out to find out if you might consider coming to work for them.

When a prospective lender is asking, how profitable is your law firm? They probably want to know if you will be a good customer who will borrow lots of money from them and pay it back on time.

And when your spouse or significant other asks, how profitable is this law firm? They are probably looking for some reassurances that all of the sacrifices you and your family have made will be worth it.

But the most important opinion about the profitability of your law firm that you must be concerned with, of course, is your own.

And here is where it gets a little bit tricky because as the owner of the business, we must, at least we should, take into consideration more than what is conventionally understood to be profit.

As entrepreneurs who built our firms from nothing and who wake up every day and do it again, we must ask ourselves a deeper question.

Compared to what? So look, it can be a lonely place for the owner of a highly successful professional services firm because it requires the courage and strength of conviction to turn your back on conventional wisdom.

This is why I asked you to be prepared with your own definition of what it means to you for your law firm to be successful.

There is no place on the balance sheet for the freedom of getting to live life on your terms.

So before we get to the real point of this chapter, I just want to encourage you to take a moment now away from your bookkeeper, away from your accountant, and anyone else who might think that the only way to measure the profitability of your business is on a balance sheet.

And consider how else you are going to measure how profitable your business will be for you.