Why Lawyers Make the Worst Millionaires

millionaires
Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on email

What’s the number one indicator of super-success?

When researching my latest book, Six Secrets to Leveraging Success – A Guide for Entrepreneurs, Family Offices, and Their Trusted Advisors, it was no surprise that for the top 1% of earners in America, the number one indicator of success was education. Inside that segment, I looked at people who made it to the top 0.1% and earned a minimum of $800,000 a year.

When you study those elite earners, you often find that they had little or no formal education.

For the average American, there is no doubt that education is the number one indicator for success—up to a certain point.  But once you get into that top one percent of the top one percent, on average those earners have much less education.  Why is that?

Answering Legal Banner

I’ve been asking this question for the last three years. I’ve asked business owners, salespeople, financial advisors, doctors, and attorneys. No one had the right answer, until last month.

I was at the University of Rhode Island, lecturing to various classes in the College of Business Administration. “Why do the very top earners in this country have the least formal education?” I asked, expecting to hear the same answers.

One of the students raised their hand and stated matter-of-factly, “Because they have to.”

OAS Banner 600 x 160

Bingo.  Without formal education, how could you possibly bill hundreds of dollars per hour or land a job earning hundreds of thousands of dollars per year? You can’t.

The only way people without formal education can earn hundreds of thousands of dollars is by creating a business that will earn it for them.

Some of these people launch something so disruptive and amazing that it generates millions, or billions, of dollars.

Why does this truth work against you as a lawyer?

You start out at $200 per hour and gradually raise your rates to $300, then $400, then $500 per hour.  But, can you really bill clients $3,000 per hour? Maybe once.

Your best path is to work really hard to build credibility and put in tons of hours.  Stick with what got you this far.

You worked long nights and weekends in college to get good grades. You took the LSAT prep course so you could earn high scores and have a great GPA so you could get into a good law school.

Once at your desk, you became determined to be the hardest worker in your new associate class so you could someday be a partner.

How do you get to be partner? Three guesses. You make partner by working really hard, putting in long hours, and billing, billing, billing.

You’ve been educated all right … just in the wrong school. Sure, you’re billing triple your starting rate, but all you’ve learned how to do is work harder. Here’s a test:

What happens when you’re faced with a career challenge?

You go with what you’ve trained yourself to do: work harder and longer. It’s the natural, reflexive response. It did get you this far, but now it’s limiting you—financially and creatively.  It’s your Achilles heel.

Do the Math: You Have a Problem

The problem with billing for your time is very simple; you’re eventually going to run out of time. There is no next level for those whose only strategy is “work harder.”

You may burn out or you may top out, but those are your two obvious outcomes.

Maybe you’ve already done both.

The key to “lawyering differently” is to first “see differently.”   If you don’t want to burn out or top out, then you must get out. What I mean by “get out” probably isn’t what you’re thinking—though many of your successful predecessors have done just that.

You don’t have to leave the practice of law to become more successful. But, you do have to abandon the path you’ve been on for so long. This will be very difficult for most.  To some, this advice will sound like someone telling you that it’s actually easier to ride a bike upside down.

Is anyone at your firm doing it the way you hope to do it?  If so, is there a clear path, and room for another lawyer, to have the same lifestyle?

If the answer is, “yes,” then I have to ask you why everyone hasn’t taken it already.

If the answer is, “no,” then you have to consider a different path to the level of success you want to achieve.   You have to look at what people who have less education, training, and experience have done—and have made much more money than you have.  They abandon the wide path and take chances.

Case Study:  A (Hair) Cut Above

 My friend, Gordon Logan, was in my Vistage CEO Group.  Every month, he was the happiest member there.  One day, he told me he wasn’t always so cheerful.   Many years before, Gordon wanted to leave his fantastic job at a Big Eight accounting firm. He had an impressive education with degrees from MIT and Wharton, as well as a highly-desired position at the firm.  But, he wanted something else.

Gordon wanted to create a hair cutting system for men and boys. People around him said, “Um, Gordon, that’s completely crazy. The concept already exists: it’s called a barbershop. There’s a hundred thousand of them.”

But what Gordan knew, and proved, was that millions of men wanted a different haircutting experience.

 Today, the family-owned SportClips franchise has 2000 stores nationwide.  They advertise on ESPN and other national media. They even sponsor a Nascar Team car with a Sports Clips logo.

Does Price Waterhouse have a Nascar team? Does your firm? If you keep working hard and billing higher rates to more clients, will you ever own a Nascar Team, be able to advertise on ESPN, leave an amazing business to your family, or have an impressive classic car collection (like Gordon does)?

The Worst Kind of Millionaire

I tell my attorney clients, “Working harder and longer will take you to the top ten percent, and it might get you to the top one percent, But it will almost certainly keep you from the 0.01%.”

You must see differently and lawyer differently.

In the legal world, the attorneys who make the most money take chances. Sure, personal injury attorneys might get a bad rap, and some deservedly so.  Consider what your ambulance-chasing colleagues actually do to make so much money. They are willing to give up tracking their lives in 6-minute increments (which clients absolutely hate) in lieu of a percentage of their client’s success (which clients love).

Are you ready to take a risk to get more out of your career—and your life?

You Want More Out of Law. Now What?

If you are ready, do yourself a favor.  Don’t run these ideas by your colleagues at the law firm.  Talk to entrepreneurs.  Talk with me. Start with your business-owner clients who take risks every day.  They will be much better resources as you plan your new path.

Consider surveying your clients, or taking them out for lunch or coffee (your treat and off the clock, of course) and asking these questions:

  1. Why did you hire me? (or) Why did you fire me?
  2. What do you love about working with me?
  3. What do you wish was different?
  4. What do you like about our firm?
  5. What do you dislike about our firm?
  6. What do you like (and dislike) about working with lawyers?
  7. In a client-focused law firm, how would things be different?

That last question is the most important.

If you focus on what clients dislike most about working with your profession, you will find the change that could be very innovative, disruptive, and profitable! Chris Jarvis

TRENDING ARTICLES

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to Our Newsletter

You have successfully subscribed!

X