“One of the big problems that we see in your profit and loss statement is when your business is not paying you an appropriate normalized salary.” – RJon Robins, author of Profit First for Lawyers

Many law firm owners know what they pay themselves, but few have stopped to ask an important question:

What should the business be paying them?

In part four of our seven-part financial literacy series, RJon takes a deeper look at normalized salary. This is one of the key components of Total Owner Benefit discussed in the previous episode, Calculating Your Total Owner Benefits. Drawing from a 2019 Profit First for Lawyers workshop, he challenges a common assumption about an owner’s compensation:

A law firm owner’s salary should be based on the work they actually perform inside the business, not their title, credentials, or ownership stake.

A normalized salary is the amount a law firm would reasonably pay someone else to perform the same work you currently do inside the business.

Whether you are acting as a senior associate, marketer, salesperson, tech support, or even the occasional janitor, each role has a market value. Understanding how much time you spend performing each role helps create a more accurate picture of what your labor is worth to the firm.

Many law firm owners unintentionally blur the line between compensation for labor and compensation for ownership. When that happens, financial reports become harder to interpret and profitability becomes more difficult to measure accurately. But calculating a normalized salary creates greater clarity around both.

Normalized salary is not about assigning a value to yourself as a person. It is about creating a more objective understanding of the work you perform inside your business.

Action Steps

While this exercise may feel uncomfortable at first, it can provide valuable insight into how your time is being spent and whether your firm’s resources are aligned with its highest priorities. The clearer you become about how your time is spent and what that work is worth in the marketplace, the easier it becomes to make informed decisions about compensation, profitability, and growth.

“Happiness is not accounted for in Generally Accepted Accounting Principles. Neither is peace of mind, propensity for burnout, or the quality of your life.” – RJon Robins, author of Profit First for Lawyers

Before you can build a roadmap for the future, you need to know where you are today. Evelyn Aucoin, Financial Literacy & Strategy Expert from How To Manage a Small Law Firm, joins us to discuss understanding your starting point. Whether your goal is greater profitability, more time with family, or long-term financial security, meaningful progress begins with an honest assessment of your current reality.

Drawing from core financial literacy concepts found in Profit First for Lawyers, Evelyn explains why financial reports are not simply accounting documents. She introduces the seven key financial reports and explains how they help law firm owners understand where they are today so they can make better decisions about where they want to go.

One of the central themes of this episode is that success is personal. For some law firm owners, success may mean growing a multi-million-dollar firm. For others, it may mean working fewer hours, spending more time with family, or creating greater flexibility in their lives. Before measuring progress, law firm owners must first define what success looks like for them.

Once that destination is clear, financial reports can help answer an important question:

Are you currently on the path that will get you there?

Financial literacy is not an end goal. It is a tool that helps law firm owners make better decisions. If you are ready to take action on the concepts discussed in this episode, start here:

This is not a one-time set-it-and-forget-it exercise. The destination you choose today may need to change as your business and personal goals evolve. That’s why it is important to keep your hands on the steering wheel. While this may seem challenging at first, regular monitoring keeps you in tune with the direction your business is headed, allowing you to adjust for road hazards and stay on course.

“There are three ways you’re going to get compensated from your business. One is W-2 Salary. Two is K-1 distributions. Three is other benefits.” – RJon Robins, author of Profit First for Lawyers

How profitable is your law firm? The answer might be more complicated than what shows up on your P&L statement. In this third part of our seven-part financial literacy series, we revisit a topic from season one: Total Owner Benefits. A topic of such importance that it has an entire chapter devoted to it. Listen in as RJon takes a law firm owner through an exercise to calculate the true value they are receiving from their firm.

RJon poses a powerful question: Would you rather own Firm A (making $1M but working 70-hour weeks doing work you hate with no vacations) or Firm B (making $500K working 50 hours doing meaningful work with real time off?) Your banker might say Firm A is more profitable, but which would contribute to your family’s happiness more?

In the 2019 workshop, RJon shows how a business that appears to have a 20% profit margin actually delivers 38% in Total Owner Benefits when you account for all three components (W-2 Salary + K-1 distributions + Other benefits). The difference is dramatic and changes everything about how you evaluate your firm’s true profitability. Understanding Total Owner Benefits reveals the value your business is actually providing you with.

Action Steps

Next Time: Join us for Part 4 where RJon walks law firm owners through normalized salary calculations. This is an eye-opening episode you won’t want to miss. So be sure to subscribe to the Profit First for Lawyers podcast.

“Accounts receivables are so much worse for a law firm than most lawyers understand or appreciate. So much worse.” – RJon Robins, author of Profit First for Lawyers

In this episode, How To Manage a Small Law Firm CFO and CEO advisor, Etienne Hardre expands upon RJon’s clip from Chapter 14 about the devastating mathematics behind accounts receivable.

Here is what really happens when Client A doesn’t pay their bill. You’ve already spent the money on marketing, sales, production, and overhead to serve them. When their bill goes unpaid, they’re not just skipping the 33% profit, they’re stiffing you on the entire bill. So what happens next?

Now you need to cover marketing, sales, production, and overhead for Clients B, C, and D before you begin to see your first profit from working with all four clients. Here’s the breakdown for a theoretical $10,000 case/matter with a 33% profit:

After four clients you’ve finally recovered what one client should have originally provided. This illustration makes is easy to see how Accounts Receivable is the silent profit killer that is crushing law firms nationwide. Is it any wonder that RJon put A/R in the Profit First for Lawyers book twice?

Most law firm owners hate looking at their aging A/R reports. Some have six-figures of A/R outstanding and are challenged to ask to be paid for the completed work. The mindset issue around asking for money compounds the problem. The fact is that A/R and Profit First work against each other. The more money trapped in A/R, the harder it becomes to take profits first. To combat the mindset issues, start implementing Profit First even with 1%. The urgency will force you to address your law firm’s accounts receivables.

So, what’s a law firm owner with A/R to do? Stop the bleeding.

Start with preventing new A/R from forming. Screen clients for ability to pay during marketing. Use retainer policies and implement “red rubber band” systems that stop work when payments are due. Adopt more frequent billing to top up retainers.

Tackle existing A/R by starting with recent accounts receivables, be flexible with payment plans and discounts. Remember: Get creative because any A/R you collect is 100% profit since you’ve already paid all the associated costs.

Your Action Steps:

“If we can develop good habits for you when your business is still in the first stage of growth, you’re going to bring those good habits with you into business maturity.” – RJon Robins, author of Profit First for Lawyers

A growing business requires a growing owner. During a Q&A session in part two of our seven-part series, RJon explains why financial literacy does not carry the same weight at every stage of growth. In the earliest stages, the owner’s job is to “hustle, market, and sell.” New benchmarks require the owner to develop new skills, learn to hire, delegate, and build team productivity. Then as the business becomes more complex, financial literacy, systems, metrics, and accountability become increasingly important.

The lesson is not simply that law firms grow in stages. It is that the owner must gain new skills and maturity to grow with the firm.

Financial literacy is not equally important at every stage of growth. A growing business requires the owner to keep learning, adapting, and leading differently.

Action Steps

The goal is not to master every financial concept at once. The goal is to begin building the habits that will support your next stage of growth.

“We are going to break away from the dictionary’s limited definition of profit and profitable, which only account for financial profits.” – RJon Robins, author of Profit First for Lawyers

For many law firm owners, profitability is measured by one thing: money.

But what if profit gives you something even more valuable?

Time.

In this episode, Michigan estate planning attorney Rose Coonen shares how implementing Profit First accounting principles transformed not only her firm’s finances, but also how she spends her time, serves her clients, and shows up for her family.

RJon challenges the traditional definition of profit and introduces a broader perspective: profit can be personal and professional as well as financial. For Rose, that shift in understanding changed everything. Since implementing Profit First three years ago, she has built a strong financial foundation, gained the freedom to stop working with toxic clients, become more present with the families she serves, and grow a law firm that supports the life she wants to live. Today, her law firm is a family affair with her husband and daughter working alongside her as the business continues to grow and serve her community.

What started as a desire for greater financial stability ultimately became a way to regain control of her time.

Sometimes the most meaningful result isn’t found on a financial statement. It is the ability to spend more time with family, build a business that aligns with your values, and make a greater impact in your community. Because the most valuable form of profit may be time itself

Plan Like You Won’t Be Here Tomorrow

And most importantly, order your copy of Profit First for Lawyers today!

“I want to expose you to a really cool world of financial literacy to empower you to be better, more confident business owners.” – RJon Robins, author of Profit First for Lawyers

If financial reports, spreadsheets, or business metrics have ever made you want to tune out, this episode is for you. In part one of a seven-part series on financial controls, RJon explains why financial literacy is not about becoming an accountant or learning advanced math. It’s about learning to recognize the story your numbers are already telling you about your business.

Featuring clips of RJon from a 2019 financial literacy workshop, this episode introduces foundational concepts that would later appear in Profit First for Lawyers. As the first installment in a seven-part series, it explores how learning the language of business and finance can change the way law firm owners see and understand their firms. With greater financial literacy comes the ability to recognize patterns, opportunities, and warning signs that may have previously gone unnoticed.

The goal is not perfection.

The goal is confidence, awareness, and the ability to make better business decisions over time.

“Your law firm is a business. Your business is supposed to work for you.” – RJon Robins, author of Profit First for Lawyers

For many law firm owners, profitability seems uncertain. Maybe there will be money left over at the end of the year. Maybe there won’t be.

For years, that was exactly how Matt Loker approached business ownership. That changed when he implemented Profit First accounting principles. By building stronger systems, he replaced guessing with structure, clarity, and intentional growth.

In this episode, Matt shares how shifting from reactive decision-making to measurable systems transformed both his law firm and his family life.

Drawing inspiration from one of RJon’s most memorable analogies, Matt explains why so many law firm owners unintentionally build businesses that depend entirely on them. But just like a farmer cannot successfully operate an entire farm alone, law firm owners cannot sustainably grow a business without systems, structure, and a strong team.

As Matt stopped guessing about profits, his law firm evolved from a solo practice into a business that is growing nationally. His law firm is now capable of operating successfully even when he is away for extended periods of time. This has given him the ability to create experiences and opportunities for his family that once felt out of reach.

By creating structure around profitability, distributions, systems, and operational planning, Matt was able to:

The result was not just a larger seven-figure firm, but a more predictable and sustainable one.

“The biggest challenge we have in helping someone go from zero to seven figures… is that they don’t believe it’s possible.” – RJon Robins, author of Profit First for Lawyers

Why do brilliant lawyers struggle to build profitable businesses?

That’s a question you’ll find the answer to in this episode where RJon explains the fundamental mindset shift that separates struggling attorneys from successful business owners. He does this by illustrating just how simple a business is to run with the 7 Main Parts of Every Successful Law Firm:

In season one, we did an entire series on the 7 Main Parts. See links in the Resources Mentioned section to access those episodes directly. Additional context of this framework can be read in Chapter 5 of the Profit First for Lawyers book.

RJon begins with a radical challenge: stop calling yourself a lawyer. Start saying, “I’m a business owner who sells legal services.” This isn’t just semantics. It’s the foundation for everything that follows. Lawyers who identify as business owners think differently, plan differently, and execute differently.

The challenge? Self-sabotage. Overcomplicating the process. Not believing YOU can do it.

Everyone in your ecosystem wants profit: your family, your clients, and you. Business owners understand this. They think in terms of return on investment. They have a business plan they actively use that they measure their business against. When metrics scream: ‘Hire someone! Expand! Invest!’ they listen and take action.

Your Action Steps:

If your business plan reads like a legal treatise, you’re thinking like a lawyer, not a business owner. Great business plans are simple, readable, and actionable.

“I want you to feel empowered by the knowledge that GAAP is not the only way to manage a small law firm to profitability.” – RJon Robins, author of Profit First for Lawyers

In this episode, Pietro Canestrelli shares how following Profit First accounting principles helped transform not just his law firm’s profitability, but the way he thinks about ownership, decision-making, hiring, and growth.

Drawing from his experience as both a longtime tax attorney and as the owner of a rapidly growing law firm, Pietro explains why GAAP accounting was never designed to help small law firms maximize profitability and why business owners must become comfortable looking at their numbers regularly.

Regular listeners know that RJon frequently speaks about GAAP and that there is an entire chapter titled, “Why Generally Accepted Accounting Principles (GAAP) Are Not Meant For You” (Chapter 8) in Profit First for Lawyers. Well worth a second or third read for those who need a refresher.

Pietro introduces a phrase that he says law firm owners need in order to build a profitable business: courage and math.

The Importance of Looking at Your Numbers

One of the most practical lessons in this episode is the importance of reviewing business metrics consistently, especially when the numbers are uncomfortable. By regularly reviewing data like leads, production, consultations, and conversion rates, he was able to identify operational issues quickly and make adjustments before larger problems developed. Because avoiding financial reality does not prevent the consequences.