In a well-run law firm, there is really no reason to ever have any accounts receivables at all. Not if you are using the IOLTA Client Property Trust Account the way it was actually invented and meant to be used.” – RJon Robins, author of Profit First for Lawyers

In this episode, Ed Gegan reveals how he stopped the profit-eating cycle that was destroying his cash flow and peace of mind. By adopting profit first accounting principles and taking action on the lessons learned from reading Profit First for Lawyers, Ed has seen tremendous law firm growth. He shares the shift his business, team, and family transformed when he stopped the “bill and pray” method of getting paid for his services.

In a clip from the audiobook recording of Chapter 14 “For When You Really Take Profits Seriously”, RJon breaks down the devastating mathematics when clients don’t pay. One non-paying client creates a scenario where you are working multiple cases just to break even. The result? Exhausted owners with no enthusiasm left for the business.

Like Ed, most law firm owners don’t realize how accounts receivable systematically destroys their profitability. Once he took action and developed systems, processes, and procedures to educate clients and staff, things began to change dramatically. He went from avoiding his financial reports to having predictable cash flow that arrives on specific dates every month.

His secret?

Leveraging the IOLTA trust accounts the way they were originally intended to be used combined with a systematic approach that clients and staff prefer.

As Ed puts it: “People don’t have an objection to paying for the services that they’re getting.” The fear of asking for payment upfront is often worse than the reality. Making that change is how he was able to grow his law firm from $270,000 to just under $1M in revenue in 3 1/2 years. Better yet, his specific system requires minimal staff involvement because much of it is automated. Which has made for a law firm that operates like a profitable well-oiled machine.

Bookkeeping That Does Not Suck

Episodes on Mindset and Profitability:

Break Through Your Profit First Mindset Block

Profit First: The Right Choice

A Case for Profit First

Your Invitation to Live a Profitable Life