Latest / Wealthy Woman Lawyer Podcast, Helping you create a profitable, sustainable law firm you love / 192: Darren Wurz | The Lawyer Millionaire

Transcript

192: Darren Wurz | The Lawyer Millionaire · Wealthy Woman Lawyer Podcast, Helping you create a profitable, sustainable law firm you love

• 0:00
  Darren: The earlier you can put the money to work, the more money you'll have. And when I do retirement planning with people, we look at, okay, when do you want to retire? What variables can we manipulate to get you there? If I'm dealing with somebody who's 20 years old, we're gonna change in the software. We're gonna play around with how much money they're investing.
• 0:21
  And when we look at the program, investing a little bit more money makes a huge difference. But then when I'm dealing with somebody who's 55 and wants to retire in ten years, investing more money, they have to invest a lot more money in order for it to make even the smallest amount of difference, and that is simply because of the power of compounding.
• 0:45
  Intro: Welcome to the Wealthy Woman Lawyer Podcast. What if you could hang out with successful women lawyers, ask them about growing their firms, managing resources like time, team, and systems, mastering money issues, and more. Then take an insight or two to help you build a wealth generating law firm. Each week, your host, Devina Frederick, takes an in-depth look at how to think like a CEO, attract clients who you love to serve, and will pay you on time, and create a profitable, sustainable firm you love. Devina is founder and CEO of Wealthy Woman Lawyer, and her goal is to give you the information you need to scale your law firm business from six to 7 figures in gross annual revenue so you can fully fund and still have time to enjoy the lifestyle of your dreams.
• 1:32
  Now here's Devina.
• 1:36
  Davina: Hi. This is Devina. And before we jump into today's show, I'd like first to introduce you to some of our sponsors. Over the last four years, Noble Marketing has tracked more than 250 law firms and discovered 60 to 80% of new client calls were generated through Google My Business and Google Ads. Basically, you need to be on Google.
• 1:59
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• 2:24
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• 3:04
  Optimize My Firm does SEO the right way, delivering meaningful results with geographic exclusivity and no contracts. Contact them today at optimizemyfirm.com or click the link in the show notes. Hi, everyone, and welcome back to the Wealthy Woman Lawyer Podcast. I'm your host, Devina Frederick. And today, I'm here with Darren Wertz.
• 3:25
  Darren is a fee only financial advisor and co owner of Wertz Financial Services. It's a family business that he runs with his dad and his younger brother. I have many questions about that. He's a certified financial planner, and he's earned his master's degree in financial planning from Golden Gate University. I especially wanted to have Darren on today because he has written a book.
• 3:49
  It's called The Lawyer Millionaire. And so this is a book just for us folks. And I'm excited to ask him all kinds of questions about what's in his book and also what's on his podcast, The Lawyer Millionaire Project. I have listened to it. It is great.
• 4:03
  If you don't have that in your podcast rotation, you should get it there. So welcome, We're so happy to have you here.
• 4:09
  Darren: Well, you so much for having me Devina. I'm excited to be here.
• 4:12
  Davina: Good, good. So why don't you tell us, first of all, kind of your journey to being a financial planner? You say it's a family gig, but I don't think that's where you started, right?
• 4:22
  Darren: You're right. That is not where I started. Initially, I didn't want really anything to do with the family business. I wanted to do my own thing and go off and be a teacher. So I got my bachelor's degree in education, and I was a science teacher for five years.
• 4:38
  Wow. And it's great work. It's fun work at times. It's also very stressful work. And, you know, my dad was constantly poking and prodding me like, you should come join my business.
• 4:49
  A lot of teachers have made great financial advisers. So, you know, after a few years, I was kinda getting burned out with teaching, and I decided to explore that option. So I went back to school to get my master's in financial planning. And my family's all in the Toledo, Ohio area, and I had been living in Cincinnati. And since I had been living there, I decided I would kinda launch out and start my own office, basically, as part of the family business down there in Cincinnati.
• 5:19
  So that was quite a journey. You know, coming from an education background with no idea how to start or run a business, no idea how to do marketing, you know, or any of those things, I just kinda hit the ground running. And, well, you know, here we are. See, how many years has it been? Seven, eight years later?
• 5:37
  Wow. Things are going well. Absolutely.
• 5:40
  Davina: I have so many questions about all of that. We probably won't get into them all today because I know we wanna focus on kind of the contents of your book and helping our audience with that. But two things. One is that I imagine teaching in this country has become more and more challenging over time. So I can imagine your desire to make a switch.
• 5:57
  I'm impressed that you're a science teacher. That's awesome. Because not being a science y person myself, that impresses me. But, also, the challenge of sort of joining a family business. I can only imagine I love my family dearly, but I really don't think we could be a business together.
• 6:13
  So that probably has a lot of nuance to it. But I think that's how a lot of people start businesses is they often do it with family or they come up and join a family business. What was that like for you working with your dad and your brother, especially since they'd already sort of been in it? You were kinda coming in.
• 6:30
  Darren: Yeah. Actually, I was the second one in, and then my my brother came in after me. I know I couldn't have done what I did if my dad hadn't been there to help me and guide me, you know, and give me some knowledge and use his experience and wisdom to kind of get started. Because it's not difficult to become a financial adviser. You know, you take your securities licensing tests, and you get licensed and so forth.
• 6:55
  I wanted to have some extra credentials. That's why I did the master's degree program. But, yeah, you know, launching out on your own, that is tough. That is hard work. You know?
• 7:06
  So I can kinda relate to attorneys who are, you know, solo attorneys and have gone through that or who are trying to do that. It's not easy, but it is definitely a pathway to wealth to start your own business. And I knew that. I knew that eventually this was gonna lead somewhere. I knew there were gonna be a few really lean years where it's gonna be tough, and there certainly were.
• 7:27
  But, yeah, you know, it was great to be able to lean on my dad's experience and wisdom. And, you know, it was kinda nice to be down in Cincinnati on my own because I could kind of experiment and kinda create my own brand and do some of those things. So I was able to do a little bit of that, have that freedom to be creative. It was really a great experience.
• 7:49
  Davina: What did you do since we're gonna talk about wealth and money today? Knowing going into it, knowing there were gonna be lean years, were you sort of prepared for that, or did you just say, let's just jump in and see what happens kinda thing?
• 8:01
  Darren: More of the latter. I think I wasn't prepared for how lean it was going to be. I kind of thought it would be a lot easier to get started. You know, I thought it would be a lot easier to get clients. You know?
• 8:14
  I would call people, and people would just sign up. You know? I didn't think realize I'd have to overcome objections, and I would have to sell myself, and I'd, you know Yeah. I'd have to do all of this stuff. You know?
• 8:25
  So in education, you're paid on a twelve month series, but you have the summers off.
• 8:31
  Davina: Right.
• 8:31
  Darren: So my plan was, when I finished that last year of teaching, I would have a few months in the summer where I was still getting paid, and I could ramp up my business in about three months. Well, three months is not enough time to ramp up a business. Yeah.
• 8:47
  Davina: Surprise. Surprise.
• 8:49
  Darren: Yeah. So, thankfully, I did have my teacher retirement, and this is a huge no no. This is a huge no no. You know, I tell people, do not withdraw money from your retirement fund.
• 9:02
  Davina: And that's what you did.
• 9:03
  Darren: I did it. I've been there. I know what that's like. I understand. I have compassion for being in that situation.
• 9:10
  I know what that's like. I know when you want to draw money from your retirement, you know you shouldn't, but you believe in yourself, and you know that you're going somewhere. And you know that even though I'm gonna be penalized, I'm gonna pay taxes, and this is what every financial advisor should tell you not to do, I know that on the other side of this, I'm going to be able to save even more money. You know, I did reach a point, but there does have to be a cutoff point. And that's very, very difficult because I deal with clients all the time who are in this situation where we're trying to build a business and we need some funds from our retirement.
• 9:45
  And once in a while, you know, that's okay for a little while, but you've got to reach a point where you say, okay, I'm drawing a line in the sand, and this is it. And I'm going make it or break it. And I did that. About a year, maybe two years in, I had been sipping on my retirement funds as needed. And I just reached a point where I said, Okay, this is it.
• 10:06
  You know, I'm not taking another dime out of my retirement. I am going to make it happen. If I have to work harder, if I have to put in more hours, you know, we are just going to do what it takes, and we are going to make it happen. And I did it, and I made it happen. So, you know, I have that experience too.
• 10:26
  You have to reach that point where you're gonna be serious with yourself and you say, okay. I could withdraw from this retirement fund, but I know that's not gonna last forever. Right? So have to reach a point where I'm like, okay. This is it.
• 10:38
  From this point forward, we're just gonna drive, and we're gonna make it happen. If I have to have some credit card debt, that's okay. I can pay that down eventually, but we have got to just kick this into gear and make it happen.
• 10:50
  Davina: Right. Right. I often tell people that comfort is the enemy of growth. I mean, comfort really when we keep ourselves sort of in that state of comfort and comfort doesn't mean life of luxury. It just means, you know, it can mean different things for different people.
• 11:06
  But a lot of people growth stops because they just get comfortable where they are, and they don't have that hunger to make it happen. So for you, it sounds like you're kinda cruising for a while, giving yourself a little bit of a kush, and then you reach a point where you're like, I've got to get hungry for this. And when it comes to I've owned several small businesses, and my husband has. And I'll tell you, hunger is the thing. It's that hunger for success, for more, for all of those, and not being satisfied with kind of where you are that makes the difference.
• 11:38
  And I know you're gonna tell us that those retirement funds, they're not a cushion for us. They're for our future. You know, they're paying the future bills. Right? So let's talk about how you came to work with attorneys specifically and what compelled you to write this book, The Lawyer Millionaire, specifically for lawyers.
• 11:57
  Darren: Absolutely. You know, as I was starting my business, I was learning about marketing, and I was learning about the importance of having a well defined niche. I'm sure that's something you talk about with your clients, and I think it's so important. I had the reaction that most people have when they hear that, I don't want to limit myself. You know?
• 12:18
  I don't want to put myself in a box. I don't want to turn people away. You know? So I was kind of reluctant to do that for a while. But I'll tell you, one of my first really big wins was I had gotten to know some people in the community, and I had become familiar with some attorneys who were at this law firm in Cincinnati.
• 12:37
  And they had reached a point where they had decided that they were going to dissolve the firm, and all of the lawyers in the firm needed someone to help them with their 401s. And so they brought me in to meet with the individual attorneys, get them set up, talk about their plans for the future, and help them create a financial plan for what was next for them. And that really set the wheels in motion, because I had a bunch of new clients who were attorneys, and I wanted to learn how I could better serve them and understand what they were dealing with. And what is it like to run a law firm? Law firms are very interesting businesses.
• 13:17
  They're very unique types of businesses. And I saw that there was kind of a real need here for someone who specializes in serving attorneys and and someone who knows what attorneys are dealing with. Now I mentioned my younger brother a minute ago, and he came into the business a few years after I did, and he was struggling too. He's like, I don't know where to find clients. What do I do?
• 13:42
  And so I was like, you know, why don't you start with realtors? Why don't you try talking to realtors? They answer their phones. They want to network. They want to get to know people, and so they might be easy to get to know, and you might develop client relationships through that.
• 13:56
  And so he started doing that, and then he went all in on it. And he was doing CEs for realtors, and he was going to realtor events, and before he knew it, he was developing a whole business centered around serving realtors. And I was like, Dang, this is cool. I gotta try this. And so that kind of inspired me.
• 14:16
  And so I said, Okay, I want to narrow my niche down to something real specific. You you see a lot of advisers who serve retirees or business owners, you know, things like that, or doctors even. But I didn't find hardly any advisers. There's a few out there, but very few that really focus on serving attorneys. And so I said, you know, let's go for it.
• 14:36
  Let's do it. And I decided to start really honing in on the legal field. Some of the first things I did was just doing CLE programs at the local bar association, on different financial topics for attorneys, especially retirement planning for attorneys. And those turned out to be very successful. And then, of course, I always had in the back of my mind to write a book.
• 14:59
  One of my good friends, Christine Lucan, she's written a book called Money is Emotional. And I met her early on in my career, and she kind of put the bug in my ear that this would be a great way to set yourself apart and to build your business, to get your name out there. And so, ironically, I was looking for materials I could read on how I could be a better adviser to my attorney clients. But here's the thing. I didn't find anything.
• 15:27
  Were a couple books out there that were written for attorneys, but the material I found in them was really focused on the later years of retirement, like what to do with Medicare and stuff. And I'm like, this isn't really what I feel like my clients are looking for. My clients are usually mid career. They're looking to really hone in on their planning and really get serious about building wealth. That's really the stage that they're at.
• 15:53
  And so I didn't find anything out there that was really written to them. And so I decided that I would write the book myself. And so I did.
• 16:01
  Davina: Good. Good. I've read some of the book. I haven't had a chance to read it, finish it, but I've read some of the book. And there's really good stuff in here and some things that, you know, the challenges that attorneys face, particularly if they start their own business or if they're a partner in a law firm, they have unique income structures and maybe not the kind of consistency that somebody who's working a nine to five or eight to five job has.
• 16:25
  And it was always been my challenge as a business owner to find financial advisers who understood that our money doesn't always come in a nice even, you know, but sitch so that we can automate, you know, everything the way that they want us to set it up. If you're a entrepreneur, you have times of fees, times of famine. You have to learn how to manage money so that you can bridge that gap. And so it's good to see that somebody has written something that addresses that kind of thing. Also, there are different pay structures for attorneys, and you've addressed that again here as well.
• 16:57
  So let's get into some of that. Let's talk about some of the unique challenges that you have found with lawyer clients that you think sets them apart from other sorts of businesses?
• 17:09
  Darren: Yeah. I I think you hit the nail on the head with the compensation idea there. Not having a steady income is definitely a big thing. You don't just have to be a contingency fee attorney to experience this. If you're a solo attorney, you experience Yeah.
• 17:24
  Know, the ups and downs in your income stream. So, I talk about in the book some of the ways you can deal with that. One of the things you have to be really careful about that cycle because it's very easy to get yourself into trouble. And I've experienced that myself, so I can commiserate with those circumstances. But you get a bunch of clients, you get a bunch of new cases, you have a whole bunch of income, and then all of a sudden, you're feeling great.
• 17:52
  I had this happen to me. A whole bunch of new clients, and income's looking good, and then you start projecting this forward in your mind. You're like, okay, this is just how it's gonna be now. Right.
• 18:02
  Davina: Right. Not gonna be any hard times here. It's good.
• 18:04
  Darren: Right. And so it's a funny story, actually. My brother had a client who was selling a boat, and I was thinking about buying a boat.
• 18:13
  Davina: Did you buy the boat?
• 18:14
  Darren: No. Thankfully, I did not buy a boat because, you know, after those few months that were really good, I had a few months that were awful. You know? And so I was like, okay. Well, thank goodness I had enough in cash to survive the remaining months.
• 18:28
  Another big challenge is taxes. So I had just had to write a nice check to the IRS for my January prepayments. You've got these big expenditures that might happen all at once that you have to deal with. So one of the tricks is to try to instill some regularity on your own for yourself. You can set up multiple accounts for yourself.
• 18:51
  So one of the things that I do personally, I found it to be very effective is, you know, of course, this is a no brainer. Right? Keep your personal and business things separate.
• 19:02
  Davina: Yeah. Yeah. I expect all my attorney clients to do that at a minimum, but it is surprising how often you see that kind of mix of things, especially in the beginning.
• 19:12
  Darren: Yes. Especially in the beginning. That's so critical to keep those things apart. Number one, I mean, how do you know what's happening in your business if all your personal stuff is mixed in there? It's very difficult.
• 19:23
  Davina: Right.
• 19:24
  Darren: So when I'm paid, all the income goes into the business account, and that business account fluctuates dramatically. And then you could have a separate account that you pay yourself from that account, you try to instill some regularity in your financial life. So for me personally, I pay myself weekly, and that gives me some regularity that I know that I have x amount of dollars to spend each week.
• 19:51
  Davina: If it looks like there's not going to be that in the business account, you start hustling to make sure that it is so that you keep that cushion and that check there. You know, I'm always recommending to my clients, depending on what their structure is. But as soon as they can set up a structure, a business structure other than solo, you know, a true solo where you don't have an LLC or any sort of entity. But, you know, the IRS wants you to pay yourself a reasonable salary once you start making any decent amount of money. And that helps a lot, paying yourself that salary instead of waiting and paying yourself out of quarterly dividends or that kind of thing because then you have that kind of set paycheck that you're gonna get.
• 20:31
  And what I always say is that the dividends, a law firm cannot operate without a lawyer. So if you're a solo, one of the expenses of the law firm is paying at least one lawyer. I always recommend more, but at least one lawyer. And that is you when you're starting out as a solo. So that's an expense of the firm.
• 20:49
  So you need to get to a point where you're paying yourself a reasonable salary. You're not profitable. So those fun little dividends that you get right now, if you're not paying yourself a regular, that's not profit. You're borrowing against the business to pay yourself those dividends. They aren't real dividends.
• 21:04
  I call them false profits. Clever. So really paying yourself a reasonable salary first and then whatever's left over quarterly after you paid your salary, you paid your taxes, all of your expenses, then you're looking at that. And I don't always recommend at the beginning that you're taking those quarterly anyway. You need to build up that cushion.
• 21:23
  Right? Did you experience that with some of the law firm owner clients that you work with sort of coming in and they're taking dividends? Maybe they think they're taking profits if really they haven't covered things like taxes and paying lawyers and all that kind of stuff where they're looking at. Have you encountered any of that?
• 21:39
  Darren: Oh, yeah. For sure. It's very easy trap to get into. And and you're so right. Once you set up that LLC structure and you have a paycheck for yourself, that really does put things into perspective.
• 21:51
  A lot of times, it's just a matter of sitting down and doing the planning. And I know my attorney clients are so busy. Often, they don't feel like they have the time to sit down and do the planning because they're busy running a business and being a professional. So that's tough. But if you sit down and you say, okay.
• 22:11
  Here's what I'm going to pay myself, and make it part of that plan upfront from the beginning. It's a nonnegotiable. Here's what I'm gonna pay myself. You know, you just have to have set that expectation for yourself upfront. That's really critical.
• 22:26
  Because a lot of times, what happens is we get so busy in our businesses, we're spending time playing catch up. We're we're constantly looking in reverse. And I did that for a while, and just spending what was left over. You know? Then you get yourself into a lot of trouble.
• 22:39
  So it's two sides of the coin. Right? You have your business expenses, and you have your personal expenses. And some of those business expenses are, nondiscretionary. They absolutely have to happen.
• 22:51
  But then there's other things. Right? Like, do I want to buy a new painting for the entryway? Know, trying to spruce things up, or do I want to invest in this? Or, you know, there's discretionary expenses that we spend money in our businesses, and I have always been very quick to spend money on my business.
• 23:10
  It's funny because in my personal life, you know, I would never spend a couple thousand dollars on starting a podcast, let's say. You know? But business wise, yeah. You know, it's like, okay. Click the button.
• 23:23
  Swipe the card. You know? Let's go for it. So it's easy to fall into that trap of, Well, I'm spending it on the business, so I can go ahead and spend it. And you have to understand that, well, paying myself, that's a business expense, as you mentioned.
• 23:38
  Right? Right. That's something that has to happen. It's a non negotiable. So, we have to make sure that happens first.
• 23:43
  And I'm really big on that. Make sure that you are paying yourself.
• 23:48
  Davina: Right. Right. Right. Right. And, you know, I'm talking about starting a podcast.
• 23:52
  Both of us have podcasts, and there's a lot that goes into a podcast with every marketing initiative that you have to consider the return on the investment of that and how soon you're going to get that return. A marketing podcast is kind of a long term strategy. It's something that builds your reputation and your credibility, and it helps you expand your network and all those kinds of things, but you may not see a payoff from that right away. So you're making those business decisions. So it's important, especially when you're small and you're starting out to kind of get make sure you are paying yourself first before you start sort of investing in those kind of things.
• 24:27
  But I wanna talk about a lot of our listeners are further along the line. Mhmm. They're expanding, and they're hiring people and that kind of stuff. They may be paying themselves. They may be taking some dividends out of the company as bonuses or whatever.
• 24:41
  But I want to talk about the lump sum mentality because I know I have it, and I know other people have it in that I'm going to get a lump sum and I'm going to be able to do a lot of things with the lump sum. And you're smiling. So I know you can relate to this. You've probably done this. But it's human nature.
• 24:57
  We'll get a lump sum. And how many people say April is a great month for like divorce lawyers because people get their tax return heading down there and they're using that lump sum to pay the lawyer, right, to do their divorce or whatever. So we all have that lump sum mentality. Whether you're doing contingency or you're doing something where you're selling a flat rate service or you're settling a case for a client or, you know, something where you might get a lump sum, what have you seen with lawyers, some of the mistakes they make when they receive that sort of lump sum, and what could they do better?
• 25:34
  Darren: Well, typically, the mistake is we blow it. I have all this cash, and I can use it. But you have to think about all the things that are connected with that. And, you know, taxes would be a big first start. You know?
• 25:48
  What are the taxes gonna be on this extra amount of income? Am I making sure I'm putting a certain amount of that away for tax purposes? It's the wealth effect, and it's an economic term. You know, when people's four zero one k's are bigger, when their stock portfolios are bigger, they feel wealthier, they spend more money. When we feel wealthier, we spend more money.
• 26:09
  And when you get a lump sum of money, you feel wealthier. You may not actually be, you know, wealthier on paper. You're the same person. Right? But we have this tendency.
• 26:20
  It's a psychological thing where all of a sudden, we feel like we have more, and so we feel like we can spend more. And so you kinda get into that trap. So what I would recommend for that type of situation where you get a lump sum of money is have a plan for maybe giving it to yourself slowly. Right? Put it into a separate account and pay it back to yourself over a period of time.
• 26:49
  You know, if I have $12,000, boom, in my account right now, yeah, I feel a lot wealthier. I might go out and spend it all, you know, on something. But if I get an extra thousand dollars a month for the next twelve months, I don't feel that much wealthier. I actually feel the same, and I'm going to probably exercise a lot more financial discipline. So that could be one way you could deal with it.
• 27:14
  Another thing to think about is people who have a regular paycheck, it's easier to save because you set it up on auto. You have a x amount coming out of your paycheck each month or each week or whatever it is. When you receive a large amount of cash or you're getting punctuated payments, right, instead of kind of a consistent cash flow. One of the ways you can think about saving is to think about it percentage wise. I want to be able to save 10% of my income, And so you may not be able to set up X amount of dollars going into your investment portfolio each month.
• 27:49
  But let's say you get paid $50.00 all at once and you're like okay I know that 10% of it needs to go into retirement. I'm going to take 5,000 out of it and I'm going to put that immediately into retirement and then, the last thing I would say is treat your savings like a bill and pay it first. Oh, yeah. If you know how much you need to save for retirement or what your ideal amount is, you know, make that one of your expenses. That's just like the light bill or the gas bill and I've gotta pay that one first and then, I can deal with everything else.
• 28:21
  You shift that up on your priority list. You'll make sure that it happens.
• 28:26
  Davina: Right. Right. Right. That is good advice because I actually follow that advice myself. When you make your savings and investments, it's just a monthly thing just like everything else is, and you set it up, especially any way that you could set up to automate I hope you're enjoying the Wealthy Woman Lawyer Podcast.
• 28:42
  We'll get back to the show in just a moment. But first, I'd like to thank some of our sponsors. In the next ten years, 90 of legal services will be delivered online. Gavel is the software lawyers are using to streamline internal document automation and build online legal products like landlord legal or hello divorce. With gavel, you can easily build client intake that generates document sets through powerful logic based document automation.
• 29:14
  Gavel, formerly known as document can be used internally or you can make it client facing. It also integrates with nearly everything. Clio even rated Gavel their best integration tool. Visit www.gavel.io and mention the Wealthy Woman Lawyer Podcast for a free fourteen day trial, or just click on the link in the show notes. Wealthy Woman Lawyer helps women law firm owners scale their law firm businesses to and through a million dollars without overwork and overwhelm.
• 29:47
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• 30:51
  We wanna make sure that people are keeping in mind as we're talking about this. We're kind of going back and forth between personal and business because when you're bringing money into your business in a lump sum, that doesn't all go to you. It's what the business needs. So you have to look at what the business needs. And I think one of the things that people often forget that the business needs is a cushion.
• 31:09
  Right? So I have some clients who have contingency practices, something like personal injury. I often recommend they balance it out with something that is a transactional practice. So, if you're doing personal injury, you might also do family law. So, you're getting those regular cash influx while you're waiting for this big personal injury case to settle that may take a year or two years or whatever it is, right?
• 31:31
  But when you get that big burst of cash, that's an opportunity for you to build up the cushion in your business for those lean times, right? And then from a personal standpoint, it's really understanding it just because a lump sum comes into the business doesn't mean that you're gonna get the lump sum for your personal life, right? And so, you might want to take some percentage and like you said, put it in retirement depending on what your retirement structure is, how big your business is, what all is involved in that. Or you may have a retirement set up if you have a firm with multiple attorneys, you may have a retirement plan set up like the practice you were talking about, that's already accounted for kind of thing. So I think people need to keep in mind as they're listening to this.
• 32:14
  He and I Darren and I are just bouncing back and forth. We're, like, ripping off each other here. So we're we're bouncing back and forth between business and personal, but you definitely wanna keep those separate and realize just because the business makes a certain amount doesn't mean that, ah, we're in the money, right, personally. Besides taxes and kind of this fluctuation of income, what are some of the other challenges that you see law firm owners dealing with in their business?
• 32:39
  Darren: One of the most important things is sitting down and creating a plan for yourself, for your financial future, really thinking strategically about what you want that future to look like. Do you wanna go the traditional retirement route, retire at 65, and stop working completely? Do you want to continue working? These are important things to think about early on. And then when it comes to retirement, thinking about your succession plan for your business.
• 33:07
  Who's gonna take the reins? Are you gonna be able to sell your business? And the answer is yes. You can sell your law practice. Start thinking early on about these things.
• 33:19
  It's never too early to start. A lot of times, people don't think about succession planning until they're only a few years away from retirement. And then at that point, the only option really is to close the remaining cases, wrap things up, and turn out the lights. And that's very sad because there's a lot of value that is perhaps going unused.
• 33:43
  Davina: Before we get too far away from it, I want to go back to the big R word, and that's retirement. Because the reason I started Wealthy Woman Lawyer is because I spoke with a lot of my colleagues, women in their fifties who had $30,000, you know, saved up. And that was all because they've been a solo for so long, and they used every penny, and they never made that a priority. And they didn't realize that they needed to make their business make more money so they would have more money to save for the future. They thought their business was doing well because it covered today's bills.
• 34:18
  And this is something I'm constantly sort of bringing up with prospective clients and clients. Because when I start out with clients, the first thing I ask them is, what are your personal goals? And most of the time, what they say their personal goals are are paying for my kid's education, maybe buying a new house or renovating your house or something or investing in real estate. Travel is number one. They wanna travel internationally.
• 34:44
  They wanna take multiple trips a year, And no one mentions retirement but me. And I mentioned retirement because I'm in my mid fifties. And so to me, it's a very real I'm looking, you know, the next few years going, okay, where are we going? Right? But most people in their thirties and forties, they're not even thinking about retirement, and they're not thinking that their business needs to be generating enough money to cover the future as well as the present day.
• 35:10
  And when you say you cannot get started too soon. Mhmm. Unfortunately, a lot of people have not even started thinking about retirement. I have some clients who have even said to me, I'm 30. I wanna retire in ten years.
• 35:24
  So you're gonna have retiring at 40, and they wanna travel internationally multiple times a year between now and then. So I think one of the biggest mistakes I see people make when it comes to planning and thinking about it is they don't sit and do the math. Mhmm. First of all, just sit and do the math. Like, if I wanna retire at 40 and let's say the life expectancy for women in The US is 87, you know, we're talking forty years.
• 35:50
  If I wanna retire at 65, I live to 95 longevity. My family women in my family live a long time. Hopefully, that's me. You know, think about how many years that is that you need to have an income for yourself. And I'm shocked at how many people don't do the math and even just sit and go and before they start sort of picking numbers that I'm going to retire at this age, it's like, well, girl, you better get busy.
• 36:15
  That's just a lot of money you got to make, right?
• 36:17
  Darren: Absolutely. You know, an ideal situation, right, is you should be able to live on half of your income. The other half, you should be able to save. That's kind of the ideal scenario. I know not a lot of
• 36:30
  Davina: people Nobody are lives that way.
• 36:31
  Darren: Right?
• 36:32
  Davina: Except for the fire people. Nobody lives that way.
• 36:35
  Darren: Sure. Sure. But you're so right. People wait, they procrastinate, and so then it becomes a point of catching up. And one of the mathematical aspects that a lot of people don't take into consideration is the power of compounding.
• 36:49
  Later you Tell me start about that. Yes. When you start saving money, let's say you save $10,000 this year, and you earn 10% this year. You're gonna make a thousand dollars. Okay?
• 37:03
  But then next year, you're gonna earn not a thousand dollars. You're gonna earn more than a thousand dollars because you're gonna earn 10% on a larger amount of money. And what happens is your earnings are increasing each year. The rate of return might stay the same, but the actual dollar amount that you're earning increases because the amount that you're earning money on increases. And so what happens is you get this exponential pathway where the growth of your money goes vertical.
• 37:33
  Right. And here's the thing about that. To really harvest that power, you have to start early, because the biggest part of that equation is how much time you have. So when it comes to exponential growth, one way to measure exponential growth is how many years it takes to double your money. In the investment world, we sometimes refer to the rule of 72, which gives you an idea of how long it takes to double your money at a certain interest rate.
• 38:00
  So the rule of 72 is take 72 divided by the interest rate you're getting, and that's how much how long it should take to double your money. So if you get a 7.2% rate of return, you should double your money in ten years. Okay? So let's say you double your money. Let's say you have $10,000 invested today.
• 38:19
  In ten years, 7.2%, that's a reasonable expectation for the stock market over over a ten year period. So let's say ten years from now, you have 20,000. Well, then ten years from then, you're not gonna have 30,000. You're gonna have 40,000. And then ten years from then, you'll have 80.
• 38:37
  Let's make it a 100,000. It goes up to 200 after ten years, and then it goes to 400, and then it goes to 800,000. Now we're talking serious money.
• 38:49
  Davina: Right.
• 38:50
  Darren: You know? So the earlier you can put the money to work, the more money you'll have. And when I do retirement planning with people, we look at, okay. When do you wanna retire? What variables can we manipulate to get you there?
• 39:05
  If I'm dealing with somebody who's 20 years old, we're gonna change in the software. We're gonna play around with how much money they're investing. And when we look at the program, investing a little bit more money makes a huge difference. But then when I'm dealing with somebody who's 55 and wants to retire in ten years, Investing more money, they have to invest a lot more money in order for it to make even the smallest amount of difference. And that is simply because of the power of compounding.
• 39:36
  So I think that I preach it all day long. I think it's something that people really need to understand and to grasp, because if we truly understood it, we would want to invest those dollars a lot earlier and get that money to work a lot earlier. And so I tell people all day long, you've got to start investing even if it's tough, even if it's hard. From early on, early in your career, you've got to start putting money into your investments.
• 40:02
  Davina: One of the things that financial advisers will tell you, start early, start early. But when you're having a conversation with somebody in their forties who hasn't invested much, life has gone by. And that is what we see a lot of when I'm talking to people about their finances is there's a lot of, yeah, I don't really have much retirement. That is a you need to stop what you're doing right now today and do some math and look at your numbers and make some changes in your budget. This is an urgency.
• 40:32
  Right? And I don't think people get the urgency of it. And I think oftentimes financial advisers will say, you can't start early enough. You need to start early. Right?
• 40:40
  I've got two nephews who are 20. They've got index funds. Like, I'm already on them. You know? Like, let's put some.
• 40:46
  Right? So your mother's on them. I'm on them. Everybody's all telling them all the mistakes we ever made. Right?
• 40:52
  Because I was the one who worked a great job, took my $4.00 1 k money, and used it to spend when I left that job, you know, to cover myself till I found another one. All of the mistakes to be made, I did. But I think I want to really stress for people is that if you think you don't have money for retiring, you don't have money to put in retirement right now because you have so many other expenses or whatever. You need to meet with somebody and talk with them about rearranging your budget and also how to sell more, how to get more money coming in, how to rearrange your budget, and make that a number one priority. And I think a lot of people think that this is a problem that will solve itself somewhere down the line.
• 41:36
  I'm not going to think about it today because it's gonna solve itself down the line somewhere. I'm gonna get this big. It's this lump sum mentality. I'm going to suddenly be a kajillionaire, and then this won't be a problem for me because I'm growing. Magically, by 65, I'm gonna have all this money because my business will be so successful by then.
• 41:56
  And I think that if you read the Millionaire Next Door, you see that the majority of millionaires are, you know, now we're seeing a lot of people on social media going, I'm a millionaire. I'm a millionaire. Majority of millionaires are people who budgeted and invested over many, many years and enjoy that compounded effect and interest rate and things like that. So I wanna just put some brackets around this and just say, like, it's not about starting the 20 year olds are not listening to this podcast. People listening to this podcast are in their thirties.
• 42:26
  They're in their forties. They're in their fifties. And this is a hair on fire thing for you if you don't have a plan for your retirement. And I think what a lot of attorneys will say to me, and this is kind of a common thing that's always been around in the legal industry, And it comes from sort of your typical male attorney. You know, I'll die at my desk at 80.
• 42:47
  Like, I'm going to work at 80. I'll die at my desk. It'll be over. I won't have to worry about retirement. But the truth of the matter is I've got two parents who are in their eighties, and they do not have the energy and the capability to work at the speed and the intensity that I work, that my colleagues work.
• 43:06
  You don't. If you think you're going be the same person at 80 that you are, you know, in your forties or fifties or whatever, if you're gonna be the same person in your fifties, I don't have the energy and stamina that I did when I was 30 working. So if you think I'm going to work until I die, it's just not the case. I mean, you can look statistically in America, especially if you're on the great American diet. It's just not gonna happen.
• 43:28
  Right? So this is a really urgent kind of thing. Is this something when you're having conversations with clients, are you seeing this, or is this just me?
• 43:35
  Darren: Yeah. You're so right. I do see that a lot. Thankfully, folks are coming to me. They're coming to me because they've realized this.
• 43:43
  Yeah. Yeah. And they're ready to make some changes. But you're right. It is about rearranging some things.
• 43:50
  You can save for retirement. It is possible. We feed ourselves this lie that I just don't have enough money. But the thing is, when you really dial down, and you look at the numbers, and you look carefully at where the money's going, you will find money that you can save for retirement. Think a lot of times we get in the trap of we're investing in our business, and we justify everything that way.
• 44:14
  It's all going to pay off. I'm investing, investing, investing, investing in my business. Here's the thing. There is a point at which you're not going to get a return on that investment. Right?
• 44:23
  You have to be wise about those investments that you're making. And you can't just pour money into it, you know, because some of that money you may not get back. So there comes a point at which we need to invest in our business, but we also need to make sure we're investing in ourselves. And we're taking those steps to put money away where it's necessary. I find this all the time in meeting with clients.
• 44:46
  We look at everything very carefully. We look at where the money is going. There's always a way to find what needs to take place to rearrange things. I think a lot of the problem is we create these lifestyles for ourselves, and we want our lives to keep upgrading. You know?
• 45:01
  And so Right. We continue to spend more money to upgrade our lifestyle. When you really think about it, how much do you really need in life? There are some changes you can make. You can dial some things back in certain areas, and you can make your goals happen.
• 45:16
  You really can.
• 45:17
  Davina: We live in a world where there's so much comparison now with social media, and everybody seems to be living a wealthy lifestyle. But you, you know, when you're scrolling through social media and you're going, oh my god, they're in France or whatever. And that puts a lot of pressure on people to show for other people.
• 45:34
  Darren: And
• 45:35
  Davina: I think one of the biggest mistakes that a lot of people make is worrying about what other people think in terms of do they think I'm wealthy or not wealthy. Some of the wealthiest people around you are not carrying the designer handbags. They're not booking trips to Europe every year. Right? They've got money.
• 45:56
  They've got a lot of money, but they've got it invested and got a place that got it working for them. It make babies and make more money because I think that's truly when you get to wealth. When we're growing a business, the reason I on people about creating a wealth generating law firm. So it's a creating a business that covers all of your needs, your current needs, your future needs. The work you're doing is alright.
• 46:16
  So how do we take this money that you've earned through your business and turn it into money that earns money for you? Right?
• 46:25
  Darren: Yeah. Yeah. I've been there. In the initial stages of my business, it was spend whatever needs to be spent to make the business grow. But then as the business starts to mature, it's like, Okay, now we need to start being very strategic.
• 46:39
  What things are working? Those things we continue spending money on. The things that aren't working, we're not gonna spend money on anymore. We're going to be strategic and careful about where the money goes, so that I can maximize my profitability. Actually, I wanna dispel a common misunderstanding that I have seen.
• 46:58
  I don't know if you've encountered this, but some people that I talk to feel that it doesn't feel right to run my business for maximum profitability. It feels somehow unprofessional. I want to put that aside. You know, you are running a business, and you can be both in it to make money and in it to be a professional and serve your clients well at the same time. There's nothing sinful
• 47:24
  Davina: or deeper. I wanna ask you for a specific example on that. You can give me some example because I really want people to get this concept that you're saying. Yeah. Can you give me an example of that?
• 47:35
  Darren: Well, one of the examples that comes to mind is I actually had someone comment on my social media who was upset with the title of my book.
• 47:44
  Davina: Wow. Wow.
• 47:45
  Darren: Yeah. Like, it was somehow unethical to be a lawyer millionaire. I think that's totally wrong. I think that's an inner understanding of your worth. You know?
• 47:54
  You are worthy of getting paid for the work you do. You deserve to get paid. You deserve to be compensated well for the work you do, and that is a sign of professionalism. That is absolutely a sign of professionalism. But I think that there are some ghosts, perhaps, from our upbringings or our backgrounds that that haunt us sometimes and make us feel like I don't deserve to make a lot of money, you know, or I don't deserve to be wealthy.
• 48:21
  Davina: Money is the root of all evil. Those kind of things that we tell that we bring up, you hearing in church or your your parents or your grandparents, there's this idea that if you want to have wealth, if you wanna have money, that you're greedy, you're not somebody who's thinks of other people, you can't be altruistic, you're not any of those. And that's really not the case. I got the same thing with Wealthy Woman Lawyer. Wealthy Woman Lawyer first came out.
• 48:45
  I got a lot of trolls kind of on my, you know, in the comments saying horrible things. But my feeling is and what I try to teach and share, and I'm sure you're the same, is that you are the more resources you have, the bigger impact you can make in the world and the more people you can help. So if you have a purpose driven life where you want to serve and help a lot of people. So a lot of people get into this work, do this because, you know, like financial advisers, maybe they grew up in a family that didn't have, and they said, I want to help more people because I saw my parents get to retirement and they weren't prepared and it was difficult. That wasn't the case with my parents, but their parents grew up in abject poverty.
• 49:29
  And so you start to look at life and say, I wanna help more people so they have more resources. Like, the ideal utopia would be if we all had ample resources for everything that we needed. So focusing on growing your resources allows you to help more people get more resources for them, whatever that is. So solving their problem. If you're a lawyer and you're helping somebody solve their problem, you're helping them their legal problem, you're helping them move forward with their life, and they should pay you for it because you invested a lot to get here.
• 50:03
  And the thing to keep in mind too, I always say your business and your person are separate. So it's not about your personal worth. It is about the worth of your business and services. Like, there's a certain amount of money that that business is required to operate, and it is your job as a steward of that business to make sure that business has what is required to operate and that is profitable for the shareholders, which is you and other partners. Right?
• 50:30
  And the more you do that, you think about somebody like Bill Gates, Elon Musk, Jeff Bezos, any of these people. Yes. They made a lot of money, and it's sickening to a lot of people. A lot of people say, oh, they shouldn't make that much money. But they also have all invested philanthropically in the world and have had tremendous impact through that.
• 50:49
  They've also brought a lot of ease and technology to a lot of people's lives through the work they've been able to do. So there's a tremendous impact on the world when you have more resources, and you could bring your own desired impact and purpose to the world. You don't have to do it like somebody else does. Right? So I think that's my answer to the trolls out there who are trolling you and trolling me about using the word millionaire or wealth or anything like that.
• 51:13
  I'm gonna talk about wealth and say, my goal is to help as many people who have not been wealthy to become wealthy so they can live a life of joy and ease, and they can impact others in a positive way. That's my goal.
• 51:26
  Darren: I second that. I think I have a very similar goal. It's to help my clients reach that point of financial freedom, financial independence. There's nothing wrong with reaching that point, and I feel like you're totally right in that. It's the impact that you can have.
• 51:41
  Your business has an impact, you know, especially if you have employees. You have partners. Right? You are enriching their lives you know. Your clients you know yes you're getting paid for your work but you are having a positive net impact on their lives.
• 51:55
  You are helping them. You're making things better for them. You're solving their problems and that sort of thing. Then your family You know, by having a good retirement and plan in place, you're going to make sure that you're not a burden on your children at some point in life and you're going to make sure that your kids are well taken care of and so forth. So, yes, that's a great point.
• 52:14
  The impact that you have on the people around you.
• 52:17
  Davina: Right. Right. So I want everybody there's a lot in his book. There's a lot. I love it.
• 52:23
  And I'm reading it now. I recommend it to you if you will check this out. You can find it on Amazon. I know The Lawyer Millionaire World. Can you find this book?
• 52:31
  Is it just on Amazon, or can you buy it on your website? Or where do we get it?
• 52:35
  Darren: If you go to the lawyermillionaire.com, it's right there. It's actually on the American Bar Association's website. So there's a link there. It'll take you right to the page where you can buy it, and you can learn more about that and the podcast.
• 52:48
  Davina: Wonderful. So, also, tell us where else can we contact you. We can find your podcast on your favorite podcast app.
• 52:55
  Darren: Yeah. It's everywhere. It's Apple Podcast, Spotify. Just search for the lawyer millionaire. I'm also on Facebook, LinkedIn, Twitter, Instagram.
• 53:04
  I recently got on TikTok. I don't know what I'm doing yet. But
• 53:09
  Davina: You wanna see Darren's awkward dances, you can go to TikTok.
• 53:14
  Darren: I haven't done any dances yet. I guess I have to. You know? I guess that's the thing. So
• 53:19
  Davina: Well, Darren, thanks so much for being here. I've really enjoyed our conversation about one of my favorite topics, which is making lawyers millionaires. So thanks so much for being here with me.
• 53:28
  Darren: Thank you for having me. It's been great.
• 53:30
  Intro: If you're ready to create more of what you truly desire in your business and your life, then you'll want to visit us at wealthywomanlawyer.com to learn more about how we help our clients create wealth generating law firms with ease.