Month: November 2017

Exit Planning: Why do Business Owners Avoid it?

Science has proved it to be an urban myth, but it was long believed that ostriches buried their heads in the ground at the sight of approaching danger.

Thus, the phrase “You have your head in the sand”, was born. It means: “To refuse to acknowledge or deal with problems, danger, or difficulty in the hopes that they will resolve themselves on their own.”

Business owners are notorious for “burying their heads in the sand” as they near the end of their runway. But why?

When so much can be gained by sucking it up and planning for an exit, why do business owners avoid it?

In no particular order, here are several reasons:

  1. Afraid of getting old. Exiting the business represents “the end” of youth.
  2. Feel trapped. Used to a high level of income that accompanies business ownership. Afraid that they will have to take a “pay cut” in the last chapter of their lives. The tendency is to stay in the business, pulling off a heavy salary, as long as possible.
  3. Don’t know what to do next. Don’t have a purpose in life after work. Business is their identity.
  4. Afraid of being bored.
  5. Don’t want anyone to know they are planning to exit their business. They have an irrational fear that employees, customers, suppliers will leave if they find out a transition is happening. In reality, these people are already thinking about the business owner’s eventual retirement, and they would feel more comfortable if they knew the strategy for moving forward after you are gone.
  6. Have priorities that feel way more urgent than exit planning. “I don’t even have enough time in the day to run my business, how am I supposed to have time to plan for an exit”. This is the classic “saving face” excuse that many business owners are willing to voice when they don’t want to discuss their soft/emotional apprehension toward leaving the business.
  7. Misinformed and confused about what to do. In a world where most professional services have stood as pillars of industry for hundreds of years, Exit Planning is still in its infancy as a practice. It’s an incredibly confusing and very time-consuming process. And different advisors preach different things. Unfortunately, many advisors right now are taking a micro-view of “Exit Planning” that fits their personal expertise, because there is money to be made if they can play a role in an owner’s exit. For example, a financial advisor may map out a business owner’s projected retirement assets/expenses + reallocate their investment portfolio and call it “Exit Planning”. This is not Exit Planning. It is a very small piece of the much larger Exit Planning process.
  8. Genuinely don’t want to exit. They still have the drive for it. They still thoroughly enjoy what they do. Can’t even comprehend leaving in the next 10 years. This doesn’t mean they shouldn’t familiarize themselves with the Exit Planning process. There are certain concepts – particularly in the area of risk management – that all business owners should implement correctly many years before they feel “ready”. Taking some time to understand the process – to understand what buyers are looking for – can afford business owners a strategic advantage.
  9. Control issues. Some business owners are simply attached to the operations. Can’t let go, even if there are people in place, ready to assume more responsibility. If they aren’t in place, it usually is a simple process to cross-train people to assume more responsibility or hire an additional employee to assume some of the burden.
  10. Don’t understand all the options available to them. Many business owners have very misguided beliefs about the market for their business. A common mistake is to ignore a sale to employees because they “don’t have any money”. In many cases, if time is on the owner’s side, there are strategic ways of helping employees build capital.
  11. Heir-apparent (successor) is not working out. The most common situation is that the owner’s “heir-apparent” child does not possess all the qualities that the owner would like to see. In some cases, the concerns are valid. In other cases, the owner is being overly-critical. Regardless, owners whose heir-apparent isn’t “just so” undergo a great deal of emotional turmoil as they grapple with “what to do”.
  12. Can’t figure out how to be “fair” to everyone, including: children, spouses, employees, etc.

 

Fear and other emotional distresses play huge roles in a business owner’s decisions near the end of their runway. It’s common for the owner to vocalize a “rational” reason (like #6) to others, while concealing the true reason. The sad and unfortunate truth is that many business owners never work up the courage to face the true source of their distress. They simply avoid the situation entirely until they are forced from the business by some health-related factor. Businesses rarely survive that situation.

Question for the Crowd: Do you have personal experience dealing with an owner who stuck their head in the sand near the end of their runway? We would love to hear your story! Tell us what your role was (employee, child, spouse, etc.) and what you think the owner was avoiding. Is there anything you could have done to help the situation?  Please comment below or send an email to marketing@epiphanylaw.com (Re: Head in the sand) and we will post your comments anonymously.

What is a Revocable Trust?

Legal matters, business strategy and life perspectives from the mind of a non-attorney.

As a sophomore in college, I spent 5 months in Bordeaux, France.

Another example of me pushing myself WAY out of my comfort zone, it turned out to be one of the most valuable/memorable/amazing – and difficult – experiences of my life. I might write a little more about it another time – specifically the lessons learned. But, we’ll see.

In preparation for that trip, I started learning French. #RosettaStone. It sucked. Like… I’m a reasonably intelligent person, but for whatever reason my brain just wants NOTHING to do with learning another language. 2 years of Spanish in high school were an absolute prison sentence for me.

Something to know about me: If I’m not good at something… and I know I’m not good at it… I’m not trying to do that thing anymore.

So, naturally, after about 1 month of struggle-fest with Rosetta Stone French I started looking for a reason not to do it. It was pretty easy to find one. Everyone I talked to about the trip – advisors, former exchange students, current exchange students – asked me, “How’s your French?” … “Uhhh… Not very good,” … “Don’t worry, almost everyone there speaks English, so you’ll be fine.”

Bingo!

So yes, I was the lazy American that spent 5 months in a foreign country relying on others to speak my primary language.

And it worked out just fine.

My Points:

  • I recognize, respect, and envy anyone that takes the time to learn another language. It is an amazing skill. I don’t care who you are, you have not gotten enough credit for it… Especially if you did it as an adult (sorry kids, it’s just easier for you).
  • Those of us who are born speaking English are lucky. English is the Universal language of the world. By some estimates, almost 2 billion people speak English as their Secondary language. People in other countries STRIVE to perfect their English. Parents PUSH their children to excel in speaking it the way we push ours to excel in sports. We were born speaking it. It’s a real blessing. We may not realize it or appreciate it, but it is.
  • Finally – and this is the point that will link into this week’s content – I feel bad for the people who have to learn our language.

By almost all accounts, French is one of the easiest languages in the world to learn (talk about a blow to the ‘ole self esteem). English is among the most difficult.

There are probably thousands of examples of why that is true. Here is one from NapoleonMidnight, commenting on this blog:

“The plural of chicken would be chickens only if you are speaking about chickens – the animal. Once they have been slaughtered and are used for food, all of the multiple pieces of chicken that you might cook are always referred to as chicken, no matter how many pieces you use. UNLESS you specifically cooked 2 or more whole chickens and somebody specifically wanted to know how many of them you were cooking. Then you would say ‘two chickens’. Is this confusing enough?”

At this time I’d like to direct your attention to a term from Lawyer-Land that I expect would be puzzlingly confusing for anyone trying to learn the English language:

The Revocable Trust.

Trust: An unwavering reliance on the character, ability, or strength of someone or something.

Revocable: Capable of being cancelled.

I’m sorry, what?

You want me to put all my most valuable assets into something called… “Revocable Trust”?

So the lawyer marketing people had a bad day that day. But don’t let that discourage you from learning what a Revocable Trust is!

It’s approximately 1,327% better than its name would lead you to believe.

Explain it to me like I’m 5 please… Think of it like a special basket. This basket is created by an attorney for you to put assets in. When you die, the basket will be delivered directly to whoever you said it should go to.

But that’s why I have a will… (3) Things to know: 1) The legitimacy of a will must be verified by a court of law. This is called Probate. Probate costs money. 2) Probate takes a long time and can be very stressful for your loved ones 3) When a will is verified by a court of law, everything in your estate becomes public record. Trusts, on the other hand, are private.

Ok. But what if I still need my assets after I put them in the basket? No problem. Most people do. With a revocable trust, you can still use your assets.

Isn’t this just for rich people? No it isn’t. If you don’t want people knowing how much “stuff” you had after you die – a trust is what you need. Period. End of story. Privacy is a very legitimate, non-financial reason to own a trust. You are also doing your loved ones a big favor when you create a trust – it’s one less stressful thing they have to deal with after you are gone.

Do YOU own a trust? No. Why not? 1) As of today, my estate is rather small. Avoiding the cost of probate doesn’t help my family out a whole lot. 2) Privacy is not a concern of mine at this point in life. After all, I just told you that my estate is small… So if I die tomorrow and you look up public records of my estate and find out that it’s… Small… I don’t really care.

Ok, I get the privacy thing and I don’t want anything to be stressful for my family… But I’m still not convinced it’s right for me. If you’re looking for further rationalization that your estate is “big enough” to need a trust, try this:

Think about the value of your estate, minus anything that has a named beneficiary. As a general rule:

 This Counts      

This Doesn’t

Home Equity

401(k)/403(b)/IRA

Real Estate / Land Equity

Life Insurance Proceeds

Guns

Anything held in a Trust

Jewelry

Cash

In the state of Wisconsin, probate generally costs 4% of ‘Probate Assets’ (roughly half of that going to attorney fees. The other half going to the state fees.)

So, for an estate that has $100,000 in ‘Probate Assets’… The probate process will cost roughly $4,000.

The Google Machine tells us that the average cost of creating a Trust is about $2,500 for married couples.

Does it make financial sense for YOU to get a Trust? Make a simple comparison between the expected cost of Probate and the cost to create a Trust to find out:

Estate Size (Assets subject to Probate)

Cost of Probate (Assuming 4%) Cost of a Trust (Average)

$1,000,000

$40,000 $2,500

$750,000

$30,000 $2,500

$500,000

$20,000

$2,500

$250,000 $10,000

$2,500

$100,000 $4,000

$2,500

$50,000 $2,000

$2,500

Is it worth it for you to spend $2,500(ish) on a Trust now in order to avoid ______ financial cost when you die, privacy to your estate, and less stress for your family? Only you can decide that.

For me, right now, the answer is no. It’s not worth it. But I can also tell you that at some point down the road, the answer will be an emphatic YES.

A couple things to keep in mind:

  • What I have done here is very rudimentary in nature. These are purely estimates to give you some sort basis upon which you can start making your decision.
  • In reality, the cost of a Trust varies greatly based on the specific Firm and Attorney you are working with. In many cases, costs are based on the amount of time (Billable Hours) an attorney takes to draft your document.

Give Epiphany Law a call if you want to find out what our Fixed Pricing is for Estate Plans w/ a Trust.

Question for the Crowd: Have you ever had to deal with an extended/stressful Probate process? Do you wish a Trust would have been involved? Please comment below or send us an email (Re: Probate Experience) and we will post your story anonymously.

I continue to be humbled by the likes, comments, shares and general love that you have shown our blog. If you have questions, comments, or topic suggestions for us, please direct those to: marketing@epiphanylaw.com

Exit Planning: Starting the Conversation

More than 70% of businesses put on the market never sell.   That’s 70% of those put on the market, don’t sell.  And countless more businesses never even get listed but rather die quietly due to an owner’s unexpected death or illness.

Only 34% of family businesses survive to the 2nd generation.  That’s 2 out of 3 never successfully make it from mom and dad to the kids.  And only 14% of family businesses survive to the 3rd generation.

Why?  Simple:  Failure to properly plan for the succession of the business to a buyer/next generation and failure to plan for the successful exit of current owners.

Bottom line: Business owners wait too long to begin planning for this HUGE transition. It’s a major issue afflicting our society, and one that will only grow over the next decade as hundreds of thousands of baby boomers look to sell.

As we well know, the first step in solving any problem is recognizing there is one. In the case of the aging business owner, the simple act of talking openly with someone about exit planning can spark action. And action can mean the difference between a seamless transition at fair value or a disastrous failure. If you are a loving spouse, child, parent, friend or confidant of a business owner that is avoiding tackling exit planning for their business, this article is written for you. As this tsunami swells, it is critical that you – the child, the spouse or the close friend – assume a vital role: Starting the Conversation.

Whether you are next in line for a business succession or simply a concerned loved one, here are some tips for starting the conversation with an aging business owner:

  1. Have empathy. It’s the ability to understand someone else’s feelings, attitudes, and perspectives. The ability to “put yourself in someone else’s shoes”. Start by opening your mind to think about the situation exclusively from their side. Think about how they feel about their business. Think about the hours they put into it, the hard times they have endured, and the success they have achieved. Respect and embrace those thoughts, and keep them with you as you talk. To further prepare yourself, understand the common concerns business owners have:
  2. Treat it like a business meeting. This is a BIG deal. Do not treat it as you would if you were talking about last weekend’s college football games. Don’t bring up in passing or with playful jests. Doing so diminishes the importance and may provide an avenue for the owner to continue avoiding the topic. Set aside time for this conversation, as you would with an important business matter. Ensure there are no distractions. Doing so will set the tone that it is a serious conversation. You words will instantly come across as more sincere and genuine.
  3. Prepare yourself. Come into it with a list of things you would like to say and questions you would like to ask. Mentally, have an open mind and be prepared to listen. Emotionally, try to remain neutral so they can express themselves completely.
  4. Understand your ideal outcome. The ideal outcome may be lightly different for everyone having this conversation, but it generally looks something like this:
    • You effectively express your own concern and love for this business owner.
    • You are able to ask a few questions.
    • You schedule a time to revisit the conversation at a later date (with more information, a 3rd party, after serious thought).
  5. Don’t be discouraged if they aren’t ready. It is very likely that they won’t be ready to open-up the first time you talk. Don’t be discouraged! Be respectful of their process for dealing with this, and focus on committing to another time to talk in the future (a couple weeks later). The business owner will probably think and process extensively over the next couple weeks, before coming to your next meeting much more prepared.
  6. Seek the help of a 3rd party — eventually. Not for the first meeting – you may risk blindsiding and/or offending the business owner. You want them to open up, not shut down. However, assuming an initial conversation went well, you may suggest having a 3rd party present for subsequent meetings in order to help facilitate discussion. Look for their most trusted advisor – whether a financial planner, banker, accountant or attorney. If they don’t have a most trusted advisor, look for a Certified Exit Planning Advisor (CEPA), as they have a deep understanding of common concerns, as well as strategies to move forward.
  7. Just do it. We all want to avoid having the difficult conversations – its human nature. Most will avoid it, ignore it, and make excuses not to do it. Be one of the few. You aren’t doing it for yourself, you’re doing it for someone you care about. Someone who is woefully unprepared. Someone who’s future happiness depends on you Starting the Conversation.   The difference between a successful exit and the destruction of a lifetime of work could be you!

Crazy decisions… And what is Exit Planning?

Legal matters, business strategy, and life perspectives from the mind of a non-attorney.

For me, the kid from a real small town in central WI, the path that led to Epiphany Law was pretty crazy.

Not much happens in Wild Rose, WI. It’s classic small town USA. No movie theatre, no stoplights, and a grocery store that is best known for selling expired food (sorry, Benny’s, you brought this on yourself). In High School, my friends and I didn’t throw crazy house parties or vandalize public property, we “rebelled” by bringing in lawn chairs to lunch and wearing shorts outside of our sweatpants. Damn, we were cool.

One thing always amazes me, though. For as small and seemingly insignificant as the town is, it seems like whenever I have the chance to tell people I’m from Wild Rose, they always have some story to tell me about going there. Shout-out to Nordic Mountain, Evergreen Campground & Resorts, and the public beach at The Red Fox, three destination spots on the outskirts of the Big City, for putting us on the map!

Despite being a family-friendly tourist location, the bottom line is this: The town itself is small and it’s quiet, and that’s the way we like it. The lack of excitement leaves more time for the things that really matter: Friends, Family, and High School Sports.

All that to say:

On a “crazy” scale from 1 – 10, where:

  • 1 = The kid who brings a peanut butter sandwich with the crust cut off (S/O Luke Thompson)
  • 10 = The kid who mixes his peaches, mashed potatoes, and milk together (S/O Matt Roemer)

Growing up in Wild Rose was like a -4.

It was great, and I loved every minute of it, but you should know:

When YOU read the story that brought Kelton to Epiphany, you might be like, “Yeah, Kelton, cool story bro. That’s how EVERY PERSON WHO HAS EVER BEEN EMPLOYED SINCE THE BEGINNING OF TIME got their job. That’s not crazy.” Then I’ll be like, “Ha-Ha! See above. I put a lengthy and altogether unnecessary disclaimer addressing that very point 🙂 .”

For the love of everything beautiful, just shut up and tell us your story! Ok, ok. I will.

If you read our previous blog post, you’ll know that my professional career began as a financial advisor. That’s where this story begins.

It was September 21st. Almost 8 months after I had passed my “financial advisor” tests and signed on for real. And I was already starting to feel the squeeze. I was running out of actual prospects to call; and, while I pushed myself to attend events – I sucked at “working a room”. I have some gifts, but the “gift of gab” is definitely not one of them. It was the beginning of the end of my brief career as an advisor. I sort of knew I wasn’t going to make it, even then. Determined as I was, though, it would take me almost 7 more months to waive the white flag.

What I didn’t know on September 21st, 2016 was that while one door was slowly closing, another door was opened.

I had a flip-of-the-coin decision to make that evening. Two different events that I could go to, and I’ll be honest, it made no difference to me. Boy am I glad I chose to go to Epiphany’s.

It was the first time I had ever heard of Exit Planning, and my passion for it was immediately sparked. I listened on as Kevin Eismann captivated a room of professionals, talking about what Exit Planning was, the huge need for it in our community, and the team of advisors (CPA, Attorney, Banker, Financial Planner, etc.) that was needed to get it done right. Something clicked for me then. It wasn’t fanboy mentality – I didn’t even know who this guy was – it just made sense.

I was lying in bed that night, thinking about this cool new thing that I had learned, when an idea came to me: If those are the different advisors who are needed in an Exit Plan, why don’t we get one of each of them together and do a panel discussion? We can make it available to the public, and – who knows – maybe each of us will get some work out of the deal.

Something very important happened next: I followed through on my idea. So often, dreams and ideas die on the pillow because we wake up the next morning seeing all the work it’s going to take to make the dream reality. I didn’t let that happen. I worked with the Chamber of Commerce and Mr. Eismann to set it up. We found some great professionals to fill the remaining seats on our panel, and by all accounts the event was a success.

During the course of that time, it is my belief that Kevin must have seen something in me – either that or he’s just a really nice guy who likes to give away free books to acquaintances. He gave me (2) books to read so I could learn more about Exit Planning, and told me to come back and see him when I had finished.

Again, something very important happened: I read the books. After all, this wasn’t my job (yet). I was still just a financial guy. I knew some business owners who could use Exit Planning, but I wasn’t the guy who offered it. The reality is that it would have been SO EASY to leave the books on a shelf in my office, because I had “more pressing matters”. You know, stuff that might actually get me paid. I didn’t. I knew Kevin was the real deal, and I knew this was something I had a passion for. Those books helped me to begin understanding HOW to help people Exit their business. In my next meeting with Kevin, I presented him a mini business plan, summarizing what I had learned. I think that impressed him.

At that point we sort of went our separate ways for a while. I struggled through a few more months of failure. When I finally decided to hang it up, I really didn’t know what I was going to do next…

I interviewed at like 3 different places, right off the bat. I got an offer right away from a company that was pretending to do marketing, but I’m pretty sure was fronting some kind of pyramid scheme. Sketchy. That was a strong no. The second interview was for an opportunity to work in ESOP’s. I was really hopeful that one would work out, but I ended up not getting an offer. The last opportunity was to work in suitability for a pretty large financial firm. It was basically the “behind the scenes” part of what I had been doing as a financial planner. I would keep my licenses, and have some opportunity to move around in the company, if I wanted to. They made me a really nice offer, which I thought about for a few days, and I accepted.

Kevin was one of the first people I told – he knew I had been looking for something new. I sent him an email, telling him the things I liked and didn’t like. I think I even told him how much I was going to be making…

Then, at the bottom of the email, I wrote something really important: “I don’t start for a couple weeks. If you have anything available, what I really want is to work with you.”  I just put it all out there. No pride. No shame. Just did it.

We met. He didn’t exactly have a spot for me, but he said he would make something work. The offer was to help him build an Exit Planning program. My dream gig. The catch: I’d be earning half what I had just accepted at the other place.

That is not an exaggeration. Half. Exactly half.

Coming off about 14 months of real struggle. Like mentally, emotionally, and financially grinding it out as a fresh-outta-college dude. I cannot tell you how nice that previously accepted offer looked. It meant I could stop eating like s***. It meant I could start digging myself out of this nice pile of debt I had built. It meant I could buy my longtime girlfriend a ring. It meant I could R-E-L-A-X… Relax.

Of course, you know how this story ended up. Crazy? You tell me.

Anyone who knows me knows that I am a very thoughtful, careful person when it comes to making big decisions or having important conversations. It wasn’t a decision I made on a whim.

Some people may call my decision stupid. Crazy. Foolish. That’s fine. I respect that.

For me, it came down to an acknowledgement of the fact that we as humans have a very limited window of opportunity to do things that we really believe in. If this opportunity had come to me 5 years later and I was a married man with a kid on the way, I wouldn’t have been able to do it. It would have been out of the question. The window of opportunity to seize moments and take risks – for those of us that are into that sort of thing – is really very small.

Patience. Delayed Gratification. Two very unattractive terms in today’s society. They are not lost on me.

I am thankful every day for the decision I made.

I made it because I really, truly believe in this thing called Exit Planning.

 

What is Exit Planning?

I suppose any good blogger would actually answer the question posed in the title… Unfortunately, I am not that good blogger.

I’m just going to give you one piece of it here:

From 20,000 feet, Exit Planning is just good business strategy.

If you want the full story on Exit Planning, I humbly ask you to visit our Exit Planning page. There, you can read along as I break it down from the most basic definition possible to its vital, core benefits.

Question for the Crowd: Are there any major risks that you have taken in life (or not taken)? How do you feel about that now? Got any advice for the young adults out there who might be reading this? Please comment below or send us an email (Re: Big Risk) and we will post your comments anonymously.

As always, I genuinely appreciate your likes, shares, and feedback.  If you have questions, comments, or topic suggestions for us, please direct those to: marketing@epiphanylaw.com

Past, Present, and Death of the Billable Hour

Legal matters, business strategy, and life perspectives from the mind of a non-attorney.

 

Prior to joining Epiphany, my professional work experience was in financial planning.

Eat, breathe, and sleep it, I did – for about 3 years in total. It was fun, at times; but if I’m being completely honest it was mostly stressful. For a kid right out of college with a rolodex the size of a fortune cookie, the financial planning gig only had one probable outcome.

To make things more difficult, I was – and still am – the type that really wanted to help my clients, as opposed to the many who just want to make a sale. It’s harder to stick around in the industry when you adhere to a moral obligation to do the right thing. I’ll admit, I was bitter about it for some time after I had thrown up the white flag: “I have the knowledge. I have the true intentions. I should be the one succeeding.” But it wasn’t so. In the end, I’m incredibly thankful for my time spent as an advisor. By most measures, I suppose it was a failed experiment. If you want to call it that, it’s fine with me. I’m calling it a stepping stone.

That stepping stone has led me to one of the top law firms in the Fox Valley (I’ll recap what that path looked like another time – it’s a mildly interesting story).

Joining the firm was interesting… The general atmosphere of this place is not anything like what I expected. I guess I assumed that law firms fit into most-if-not-all of the following criteria: Elitist, tense, cut-throat, stale, shrewd… As a smaller, specialized law firm, I knew it wouldn’t be super hard-core. But I still figured I’d find some of that culture. Strangely, I haven’t. I would go into a diatribe about what our culture IS like (blah, blah, blah), but I know you really don’t care. Just know that it isn’t like that ^^^, it’s a lot better.

For those that read last week’s blog, consider this me holding up my end of the bargain:

I’m committed to writing content that is relevant, light-hearted, and accurate without being… how do you say it… DRY AF.

 

On to the Content!

As I referenced in last week’s blog: Over the course of history, law firms have made money by selling the time of their employees. It’s called Billable Hours. Most of you are aware of how they work. (If not, quickly check out this article from Eli Mattern) The biggest problem with Billable Hours? They promote inefficiency!!

Let’s look at an example:

Joe Smith comes into XYZ Law Firm and tells them he wants a trust to hold his family cottage (smart planning Joe!). The attorney takes down a bunch of information and gives Joe an estimate based on the projected billable hours. Let’s say the attorney and support people work together well and finish the project ahead of schedule: Joe is happy because he got exactly what he wanted and it even cost a little less than what they originally told him.

Steve Wilson comes into XYZ Law Firm the very next week with the same request: he wants a trust to hold his family cottage (smart planning Steve!). Herein lies the problem though: Joe and Steve’s requests were exactly the same, but will be treated like they were completely unique. A firm that needs to bill hours will start Steve’s trust from scratch, even though they have a template (Joe’s) that could be used to do the project faster.

Under the Billable Hours system, there is no incentive to be efficient! The whole concept is incredibly ambiguous and outdated. Nobody is going to challenge an attorney that says a trust is going to take 10 hours to draft…

I will concede this: There are absolutely times when a case is so unique that there is no avoiding a Billable Hour system.

But for most of you, this whole system is like going online to Nike ID (customize) a pair of sneakers online, but instead of creating something totally unique/different, you decide to create the same colorway that you could just buy off the shelves for 40% less. Nobody does that!!! But we’ve done it in “lawyer world” for a LONG TIME, because the terminology is confusing and we don’t know any better.

Say what!?

The end result: LEGAL SERVICES COST MORE THAN THEY NEED TO. Nobody tries to find better ways of doing things and people generally work “just hard enough”. The thought of that drives me insane!!!

An Alternative:

Let me apologize in advance. Once you read the alternative you’re going to be mad at me for even trying to explain the billable hour system.

It’s so simple. So obvious. I almost don’t even want to say it…

The answer is: Products.

Instead of quoting billable time to a client, quote a flat fee for the creation of the product. Trust = $2,000. The more efficient the firm is in delivering that trust, the more profitable they become on the project.

Let’s look at our previous example of Joe and Steve:

Let’s suppose that Joe Smith’s family cottage trust was the first one of its kind that XYZ Law Firm would ever do. So they quote Joe $2,000 for the trust. Joe agrees. Due to the many hours of research and document creation required, the company incurs costs of $2800 on Joe’s case. They lose $800.

Steve Wilson comes in the following week with the same need. The firm quotes Steve $2,000 for the trust. Steve agrees. This time, the firm uses the template that they have to work with because there is incentive to finish the project as efficiently as possible! The company only incurs costs of $1400 on Steve’s case and they make a profit! Over time, as the firm discovers methods of becoming more and more efficient, trust prices go DOWN.

It really isn’t groundbreaking. Just being dramatic. But it is a fair assessment of what the legal world is like right now, versus what it will be like in the future. As I previously stated, there will likely always be some authority for Billable Hours, especially when a truly unique case comes along and an attorney truly needs to “customize” for you. But in general, Legal Services will become Legal “Products”.

I’m very proud to say Epiphany Law is ahead of that trend.

I did not get the green light from the boss to share our specific price points. But I can tell you that we offer a pretty extensive list of legal products at a “flat rate”. That list includes:

  • Estate Plan w/ a will
  • Estate Plan w/ a trust
  • Entity Formation
  • Trademarks
  • Copyrights

I would strongly encourage you to consider a law firm that offers “flat rate” pricing options for your next legal project (Hint, Hint, Hint…). I think we can all agree that it just makes sense!

As for you, Mr. Billable Hour, you sir have officially been put on notice: We’re coming for you.

Question for the Crowd: What do you think about “flat rate” pricing for Law Firms? Would you rather pay a flat rate for legal services or pay by the hour? Please comment below or send us an email (Re: Billable Hour) and we will post your comments anonymously.

I am truly humbled by the likes, comments, shares and general love that you have shown our blog. If you have questions, comments, or topic suggestions for us, please direct those to: info@epiphanylaw.com