In this episode of The Effective Lawyer, Zinda Law Group’s CMO, Kevin Tully, turns the tables and interviews CEO and founding partner of Zinda Law Group, Jack Zinda. Listen as Jack dives headfirst into effective management of law firm finances. Whether you are a seasoned lawyer or are just starting out, Jack offers invaluable insight into what it’s like to start a law firm and manage resources.
Discussed in this Episode:
Becoming a personal injury lawyer
Cash in a personal injury practice
How to make a cash practice work
The right mix of cases
Case cost anticipation
Alternative revenue sources
Measuring healthy cash flow
Why Become a Personal Injury Lawyer?
When Jack was in law school, he wanted to be a prosecutor. Later, he found himself contemplating whether or not it was the best choice for him. One summer while working for a small personal injury firm, he realized how much more impactful his work could be by being on the side of the little guy in “David vs Goliath” cases.
Cash in a Personal Injury Practice
Personal injury cases can require large sums of cash on-hand. Not only do you need to pay for your practice’s expenses up-front, but you’ll also be waiting from six months to two years before receiving compensation. “It’s like a giant layaway program,” Jack says.
How to make a Cash Practice Work
A combination of an hourly practice and a line of credit are crucial to maintain and grow your business, but you must also be able to understand your business’ finances. “The first thing you have to do is make yourself financially literate”. Jack recommends Simple Numbers by Greg Crabtree as a useful tool to improve your financial literacy. Working with a partner or associate who specializes in a different type of law is another way to create financial stability. He also recommends working with another law firm that fronts the cash for a case while you put it in the “sweat equity”.
The Right Mix of Cases
Before agreeing to handle a case, Jack will ask, “How long will the case that I’m working on take to fund?” Each type of case presents its own set of challenges, which makes the funding timeline vary greatly. Creating the proper mix of cases ensures that you’ll maintain consistent cash flow.
Case Cost Anticipation
Jack explains how his practice uses a system they developed to better understand what the anticipated costs of a case might be. Once the cost has been established, they then update the anticipated cost monthly as things change. “Once you get to enough cases… the law of averages comes into play,” Jack says. Forecasting cash flow is another important aspect and it all starts with a budget. The anticipated costs must be cross-referenced with the budget in order to project your earnings.
Alternative Revenue Sources
Outside of traditional methods, there are other areas to explore in regard to revenue. One such area is referral fees. It may not always make sense for your practice to take on certain cases. Referring those cases to another practice for a small fee is an easy way to create passive revenue.
Measuring Healthy Cash Flow
Jack gives his insights on how his practice manages cash flow. “There’s no substitute for being able to sleep at night,” Jack says. Creating good habits can reduce financial stress, especially as the business grows and the finances become more complex. Being disciplined is crucial when it comes to being a business owner.