Steve Palmer [00:00:00]:

Alright. Here we are again. Lawyer Talk Off The Record On The Air. You can check us out at lawyer talk podcast.com or in all the socials. See, I'm cool that way. We are coming at you with a another episode of They Don't Teach You That in Law School. What does that mean? Well, we're talking about stuff they don't teach you in law school. And I've got Troy, my champion law clerk here.

Steve Palmer [00:00:20]:

And, today, we have a guest for They Don't Teach You in Law School. Usually, what happens is Troy comes up with questions and said, hey. Look. We're talking about this in law school. What's really going on in the real world with this? And I give him a, they don't teach you that law school analysis. But, you know, one of the things that Troy's been asking me about lately is, what is it what does it take to open a law practice? What's the business side of it? And, you know, there's like that whole other thing. You know? It's a and when you've got a professional, type of business, you've got, 1, learn your profession, and, 2, learn how to run a business. Neither are easy, particularly when you're doing it for the first time.

Steve Palmer [00:00:52]:

So who have I brought in? None other than the guy who made it possible for me, Glenn Harper from Harper Plus Accounting. And from the title, you might guess that you're my accountant. Thank you, Steve.

Glenn Harper [00:01:00]:

Thanks for having me on.

Steve Palmer [00:01:01]:

And and, Glenn, we're gonna we're gonna Troy, we're gonna talk to Glenn a lot about what it sort of what happens on the financial end of running a business. And and and, Glenn, before we go there, I think I will just sort of share my experience. You know, I was sitting in my office in this very building, my first law practice. I wasn't even a partner yet with, with Javec. And we, you came in, set up my little glass table, and, basically told me I was doing all my taxes wrong. I wasn't, I I wasn't, doing this or that. And he tried to soft sell it to me in such a way. I was like, yeah.

Steve Palmer [00:01:31]:

You got me. You had me at hello as they say. And, you know, that was, almost that was probably 30 years ago.

Glenn Harper [00:01:37]:

At least.

Steve Palmer [00:01:37]:

That was probably 30 years ago, and, you know, it's been sort of a partnership, ever since. And my dad once said, look. Whether it's a professional business, whether you're just gonna be a professional, or you're gonna be any or you're gonna be a responsible adult in the world, find your people and stick with them. That means your doctor, your attorney, your accountant, your dentist, these people that about your age that you sort of grow up with and and come of age with because that becomes your network of resources, and, that's what you've been to me. And I think IDU in in some ways. So we're gonna we're gonna talk a little bit about what do you do, what's the financial end. But why don't you your practice isn't just that. You we you're not H&R Block.

Steve Palmer [00:02:18]:

We don't just bring you papers and say fix it. It's more of an advice and consultation process. So I'll let you talk about your your current business form and what you guys are up to over there.

Glenn Harper [00:02:28]:

Well, thanks for having me on here. Appreciate it. Nice to meet you, Troy. Looking forward to this. This is there's always fun having these kind of conversations because at the end of the day, most people, they know what they want to do for a living, but they don't know what it takes to run the show that supports that. So at our firm, you know, what we do is basically there's 2 components to it. Every client has this. If they have a business one-sided, we call compliance, which is these are things you have to do no matter what.

Glenn Harper [00:02:55]:

You've got to calculate your money and money out. You got to put into some sort of financial statement. You got to take that data and then you have to take that in all the other data you get from investments and stocks and bonds and real estate. And you had to accumulate all that, and you got to do some sort of a tax return. And you got to you have some federal, state, local requirements at the business side, at the personal side. And you have to do these things whether you make a million, lose a million or break even. There's just a function. You have to do that.

Glenn Harper [00:03:23]:

All right. No matter what, you're paying your office rent, whether you're in there one day a month or 247 for the whole month, you still got to pay it. So it's this is a compliance thing is something that has to be done no matter what. And if you don't do those things, then there's some penalties with the federal, state, and local regulators. You know, they can give you you know, send you all kinds of nasty letters and things of that nature. So you wanna make sure that's done. That's one part of it. But the next part of what we do is we call it our advisory side, and that's the the how and the why and the shortcut and the value add and the knowledge transfer, which is, like, what does that all mean? You know, how do I run a business? What what tax saving strategies are there? And that advisory is broken in these 2 buckets.

Glenn Harper [00:04:02]:

One bucket is operations. Like, how do I account for my money going in and money out? You know, what is what should I look for to have if I'm profitable or not? Or what should I do with operations? How do I pay some with a w two or a 10.99? Just, you know, what how do I even pay write my tax check? How do I even run a payroll? What does that even look like? So that's the, we'll call it the the business operation side, and then the tax efficiency side is, like, well, what type of entity should I be? Should I buy an LLC, an LPA? Should I be a sole prop? Should I be a partnership, an s corp, a c corp, blah blah blah? What should I be? And with inside of that, how do I take all this data based on we think is gonna happen and create the perfect tax scenario where we're not paying any more tax than we legally obligated to do? And so it's the planning side of reverse engineering all these things. So you wanna go hang up your shingle. That's awesome. But what does it have to happen behind the scenes? Alright? And so that's what we do.

Troy Hendrickson [00:04:55]:

You like the whole package?

Steve Palmer [00:04:56]:

Yes. I mean, all of that sounds like, you've just used a vocabulary that most people don't know. You've talked about things that most people don't think about, and you provide a service that sort of solves that. But from Troy's standpoint, Troy, you're gonna finish law school and say that, you just say, look, I'm gonna be a lawyer, and I'm gonna be Ranson. Is it Ranson R. Stoddard, attorney at law? You don't even know that because you you're too young, but we're talking about, a great old Jimmy Stewart and John Wayne movie. But, anyway, you're gonna hang out your shingle, and you're gonna be a lawyer. And boom.

Steve Palmer [00:05:28]:

Now you've so you go rent yourself a little office for $500 a month. What does he need to worry about now? Oh, the

Glenn Harper [00:05:35]:

the list is long and distinguished. The first thing you have to do is you got to decide what kind of entity am I going to be? All right. And before you decide what that is, you have to do some projections. Or what does this look like in the future? How much money do I think I'm going to make? Like, if I work, I'm going to build out, you know, $200 an hour and I'm going to work and I think I can build out 20 hours a week. How much money will I probably bring in? And then you have to say, well, how much money is it gonna cost me to run my business? You have to make your list. I gotta pay rent. I gotta pay utilities. I gotta pay my cell phone bill.

Glenn Harper [00:06:06]:

I got some I gotta get my education. I gotta get all my, you know, all my continued education books that I have to make look on real good on my wall. Now it's probably all digital, but back in the day, you remember you had volumes volumes of books. Volumes. Right. Yep. And then you gotta figure out, well, I gotta have some I'm gonna probably pay some court cost, advanced things. I've gotta do all these things that I have to pay.

Glenn Harper [00:06:26]:

And then you have to say, well, how much money do we need to live on? Okay. Like, well, how much do I need to pull out of my a company a month to pay my bills at home? So now I gotta go home and figure out what does it cost me to operate at home. Gotta pay my student loans probably because everybody has to pay those. Unfortunately. Rent, utilities, car payment, insurances. You have to reverse engineer. What are my uses of cash to kinda break even at home? Well, that's what I gotta pull out. And if you say, well, I need I'm making up a number.

Glenn Harper [00:06:52]:

I need 5,000 a month to pull out. When you're self employed at a certain level, the tax rate is just punitive when you're self employed.

Steve Palmer [00:07:01]:

Oh, it's it's brutal.

Glenn Harper [00:07:02]:

That is dollar 1. It's 15.3 percent if you're, you know, just a regular small entrepreneur with a sole sole proprietor, an LLC, or even in a partnership. So the first dollar you make is at 15.3%. You got 2 purse 2 and a half percent city. It sit state's free in Ohio for quite a bit, and then you've got whatever income tax bracket you're in. So it's I always tell my clients, plan on its 50% tax rate. It's not gonna be quite that high, but it's really close. And as you make more, you're gonna things drop off and other things come in.

Glenn Harper [00:07:33]:

But if you just budget 50% for taxes, you'll never have a tax problem. So if you need 5,000 a month, that means your company has to profit 10,000. Because I got you gotta take the 10, and I got to take 5 to the government, and I get to keep 5. Everybody's gonna say that's too much. It's just trust me. If you use that number, you'll never have a problem. So now you gotta make $10. Okay.

Glenn Harper [00:07:52]:

Well, your overhead, we'll call it your expenses to run your business. Let's say that's $10,000. So I need 10 plus 10. So I need to bring in $20,000 a month to make my $10,000 of expenses to run my business. I only give uncle Sam 5 grand, and I'm left with 5 to pay my bills. That's to break even.

Steve Palmer [00:08:13]:

I think

Troy Hendrickson [00:08:14]:

I think that'd be very difficult first year of law school bringing in $20 a month, though. I don't What are you talking about?

Glenn Harper [00:08:18]:

It's all monopoly money.

Troy Hendrickson [00:08:19]:

I Oh, okay.

Glenn Harper [00:08:21]:

Well, look. Here's It's just the the it's just the analogy, but the numbers don't matter. Right? It's just the the ratio is what I'm trying

Steve Palmer [00:08:27]:

to show. Yeah. So let me translate some of this and tell you, I I can only plug it into my experience, particularly working with Glenn. After maybe a year, the 1st year of my partnership, there was a guy named Eric Yavich. God rest his soul. He has passed on to the other worlds. But, we went to your house for Thanksgiving. It wasn't Thanksgiving, but it was like a pre Thanksgiving.

Steve Palmer [00:08:47]:

It was sort of a dinner party at your place. Like

Glenn Harper [00:08:48]:

a Festivus, pre Festivus, everything. Yeah.

Steve Palmer [00:08:50]:

Pre Festivus for the rest of us. And we were, before as the cookie was or the turkey was cooking, not the cookie was turkeying, the cookie was the turkey whatever. You get it. You handed us each a spreadsheet, and the spreadsheet was basically what you just said. And and I must have been 27 Top. Ish. And the spreadsheet was alright. Here's what here's what your, I think you might have had some blanks or maybe I can't remember if you talked to us if there are real numbers in there, but you had estimated numbers for my mortgage, estimated numbers for my all my home utilities, bills.

Steve Palmer [00:09:23]:

You had estimated numbers for, you know, student loan payments, etcetera. And, it was basically a simple budget, and it was some of the best advice I've ever had because then you put the top number, what we were making. You know, we had had a couple years of track record and then what it looked like on the backside. So then we created a budget where Eric and I would pay ourselves x dollars each week, and the rest would stay in the business until we figured out what we really needed at the end of the year. That was the first bit of advice I got, and that was from you. The second bit of advice I got was from an older an old school legal secretary that used to work for all my mentors, named Louise. And Louise said, alright. Here's what you're gonna do now that you're a lawyer, young Steve.

Steve Palmer [00:10:09]:

If you make a dollar, you're gonna put 35¢ into a savings account. That's what you're gonna do. Now you're saying 50, which I end up I end up doing 50. But so if a dollar came in, immediately, I I funneled over about 40 to 50% to a savings account, and I just put it there and left it there. I I do that to this day. Mhmm. And I have never ever had an issue paying any of my taxes. Never.

Troy Hendrickson [00:10:37]:

How hard is it to be disciplined like that, though, starting out?

Steve Palmer [00:10:40]:

Starting out, it's easy. Right? So here's what I mean by that. If you start that way, you never adjust your budget to have, where you can't where where you rely on that money. So here's where people get in trouble, running a business. And I do you probably see this all the time. I bring people to Glenn all the time.

Glenn Harper [00:10:56]:

All the time.

Steve Palmer [00:10:56]:

Guys are drywaller. Guys are a concrete guy, and good good quality tradesmen running good businesses. And they've sort of been off the grid for a while, and they've sort of been off the grid for a while. And they come and talk to me about what do I do, and I'm like, well, I'm not the guy you talk to. You gotta talk to him. And, what they've done is they've learned they've adjusted their home budget based upon a cash business without paying taxes. And it is remarkable how the water finds its high mark no matter what or its own level no matter what. So if I'm making 20,000 a month and I'm not saving for taxes, well, guess, it just so happens I need 20,000 a month at home because that's what you adjust to.

Steve Palmer [00:11:30]:

So what I was I gave you sort of a smart ass answer. It's easy at first. It's difficult if you have to do it later because now you have to adjust your lifestyle at home to meet what your income is. But if you start off that way, then each can grow at the same time.

Glenn Harper [00:11:45]:

I get 2 thoughts on it. So the the one of the first things we say in our first meeting with our clients is that the success of the business is directly attributable to the financial demands that the owner puts on it. I if you company makes x and you pull it out, there's no money left in the company for operating capital. So if you're when you're in business, you do this. It's all the time. Every company does this. Very rare you do you make money. You're always going up and down.

Glenn Harper [00:12:11]:

So if you take all your money out, and then you have a down period, because you have your high period, and you make total money out, and you have a down how are you gonna pay your bills? Now you gotta go home and borrow it from somewhere on a credit card cash advance to put it back, and you're in a vicious cycle. So you have to set the minimum nut that you need to pull out per month for yourself, and that's it. Then you let everything accumulate inside the company. We're setting the money aside for tax. We're not taking out we're just living like we're in college, probably that what they call it, the 3rd year of college when you're living in Raymond noodles and living in the basement. You're not spending any money. If you do that, probably, the 1st 6 months to year of your new business until you get a toehold and get some, momentum where that income starts going up, you just do not take anything out if you can help it. Now some people get lucky and they have a great business, but even then, if you don't set aside that half, the number one reason actually, there's two reasons why businesses fail generally.

Glenn Harper [00:13:03]:

I mean, besides you're selling horseshoes, and we don't have any horses. It's cars now. The the biggest reason is you don't properly classify and pay your employees as w 2 versus 1099. That tax that can come at you, not only from not following the right form, the penalties are brutal, but the taxes follow you forever personally. It's not it's a fiduciary responsibility. So they can go back 3 years, 5 years, 10, and say, hey. You should have paid Bob here as an as an employee. Those taxes that you should have paid were are $20,000, and that's been, you know, 7 years.

Glenn Harper [00:13:39]:

So you now owe us $300,000, and you have to pay. You can't get out of that.

Steve Palmer [00:13:43]:

Yeah. Owing the IRS is no fun.

Glenn Harper [00:13:45]:

So you don't wanna be that guy. So that that's the number one thing. The second reason is, in this example, you make a $100,000. I've had people in the past. I've done, hey. Hey. Are you gonna make a 100,000? Set aside 50. They're like, yeah.

Glenn Harper [00:13:57]:

Whatever. They don't. They come in, do the taxes, and I'm like, okay. You made a 100,000. I need 50,000 for last year's tax, and I'm gonna need 125 for quarter one estimate. And they're like, how how much do you need? I go, yeah. 62.5. You should already have the 50, and you should have already set aside q one aside.

Glenn Harper [00:14:14]:

This is April. Like, oh, I don't have it. Oh, so now you gotta go on a payment plan with IRS, and it usually takes between 3 to 5 years to get out from behind that. Unless you're chasing it forever. You're chasing it. Unless your income skyrockets because you gotta be current, plus you're making payment on saying old and that on the old stuff. And that risk, as we know, they're very reasonable with their rates and their penalties. It's compounded daily.

Glenn Harper [00:14:38]:

So if you just never go into that arena, you never worry about it. You wake up in the morning like, oh, taxes? Yeah. They're just sitting right there. How much do I owe? Alright. So do not get behind on on that in that particular area. And that and so whatever that means, that makes you hustle more. If you're, like again, you're thinking, oh, I only need 10,000 a month to do it. No.

Glenn Harper [00:14:58]:

You need 20 or 5, whatever the number is.

Steve Palmer [00:15:01]:

And and let me tell you as a as somebody who did this starting out, and and I get it. There's a lot of people here that just say, well, you can't. It's all different now. It's all changed. I don't think it has changed very much. I I really don't, because I watched other people try to do this. Now what everybody goes in, they hang out their shingle, and the first thing they do is they go buy a real fancy desk, And then they buy the most expensive computer. Now computers have come down in cost, so it's actually easier for you in some ways.

Glenn Harper [00:15:24]:

Back in the day, they were

Steve Palmer [00:15:25]:

that was a nice day. Pricey thing. And, How much how

Troy Hendrickson [00:15:28]:

much was one back in the day?

Steve Palmer [00:15:30]:

The same as it is now. Oh, but it was obviously Dollar for dollar. Wow. Maybe even a little more dollar for dollar than what you would pay now. So now, like, a laptop, you couldn't buy a laptop. A laptop back then would have been $3,000, 35 25100 Holy crap.

Troy Hendrickson [00:15:43]:

For a

Steve Palmer [00:15:44]:

good laptop. So we didn't have that luxury.

Troy Hendrickson [00:15:45]:

Like, topping in now.

Steve Palmer [00:15:47]:

We would buy, like,

Glenn Harper [00:15:47]:

the TV is 4 grand. Today, you can get one for $500. That's flat screen.

Steve Palmer [00:15:52]:

So Yeah. And then and, you know, I'm talking dollars 30 years ago. So, you know, there's add 50% for inflation at least anyway. So you've got some of the stuff is easier for you. You don't need servers. You don't need, You got the cloud.

Glenn Harper [00:16:06]:

You know?

Steve Palmer [00:16:07]:

You got the cloud, and you can sign up for some of these services, etcetera. Other stuff has gone up. But, you know, people would go in, and the first thing they do, they're a lawyer, so they buy the fancy watch. They're a lawyer, so they get the fancy car. They're a lawyer, so they get, the they go immediately to buy the most expensive suits or whatever it is. I didn't do any of that. I mean, look, I I didn't I didn't come to I didn't come dressed in overalls, but I didn't go buy the most expensive stuff. I rented my first desk for a $100 a month at Aaron's rents and sells furniture and, until I could store up enough money to go buy 1.

Steve Palmer [00:16:36]:

I don't even know if

Glenn Harper [00:16:36]:

you actually had a desk when I first came over and saw you had papers all over the floor.

Steve Palmer [00:16:40]:

I did.

Glenn Harper [00:16:40]:

It looked like a bomb went off. I'm like, oh, this is gonna be fun.

Steve Palmer [00:16:43]:

I did. And I didn't need fancy space, and I cut deals with lawyers to to make things happen. And, it I didn't live that way for a very long time, but I did live that way because I was scared to death of not being able to pay my bills. And every every dollar I made, 30, 40, 50¢ went into a savings account. And then year 1, when I needed to pay my taxes, this is even before I met Glenn, when I needed to pay my taxes, or my estimates like you're talking about, I just wrote a check. I transferred the money. I wrote a check, and that was that. Now back then, you had to go to the bank and transfer the money.

Steve Palmer [00:17:14]:

It was a little bit different. But I transferred the money, and I wrote a check. Today, it's easier because you don't need a landline. You've already got a cell phone. You don't need, the real expensive computer. You don't need in a lot of ways, you don't even need office space anymore.

Glenn Harper [00:17:31]:

It's just change. You're still spending about the same to do what you need to do. You're just spending in different places. You're buying technology versus the hardware. Yeah.

Steve Palmer [00:17:39]:

Suppose. You there's things you do need.

Glenn Harper [00:17:40]:

You got marketing you gotta do now where before, maybe we didn't do much. Maybe we'd go out and take clients out for dinner and drinks, and now you're doing it on social media. So there's the it doesn't matter what it is. You're still gonna spend what you think you gotta spend around your business. You just have to have a good idea that and and I it's generally if if you walk in and you're like, oh my gosh. I got a client that's paying me 50,000 a month. Yeah. You're probably gonna be fine.

Glenn Harper [00:18:02]:

You don't have to worry too much about it, but the same concept holds true. But if you don't have the uncertainty of income is what makes people an entrepreneur, is they wanna go out and hunt every morning, every day, and start off negative. They wanna go make it. You gotta make it so you don't have to go kill yourself till 11:59 PM so the next minute you make something for yourself. So you're just trying don't get encumbered in long term leases and high dollar or high process thing. You you just don't wanna spend that kind of money to be committed to it. You just kinda shoot you know, shoestring budget to start off.

Troy Hendrickson [00:18:32]:

When when you were starting out, like, I understand you were saying rent a desk and all that and not fancy suit. What's your opinion on starting out with a small business loan? Like, maybe right out of law school, you get the staffing. Boo. Okay.

Glenn Harper [00:18:45]:

Thing. Now you're encumbered. Mhmm. So when you borrow the money oh, thank you. I get $50,000. This is great. You go buy all your stuff. You get to write that off then generally when you buy it.

Glenn Harper [00:18:56]:

Now you gotta pay that $50,000 loan for probably the next 5 to 10 years, and you're paying that payment of whatever it is, 3, $4,500 a month. You get no write off for that. It's just cash flow leaving.

Steve Palmer [00:19:06]:

And to pay it. So what he's not saying is, like, if it's a $500 a month payment, that it really cost you a 1,000 because you gotta pay you gotta earn 500, pay tax on that, and then you gotta earn another 5. Yeah. Let let

Glenn Harper [00:19:18]:

me go back to that. So if I'm in a business and I go and I gotta go buy, something that's, my intent is for it to be the business, it's ordinary, necessary, and reasonable. Generally, I can deduct that. So I need to go buy I'm gonna buy some Yeti tumblers for my clients, and I'm gonna spend whatever it is, a $100 apiece because, you know, they're Yetis. I can go I spend a $100, and I get to subtract a $100 from my income, and I don't have to pay tax on that money because it it doesn't it's no longer in my account. If I pay debt, that same $100, I don't get to deduct that. So my cash, I spent a $100 to pay my loan payment, but I still gotta pay tax on that $100. So now I'm I owe $50 in tax.

Glenn Harper [00:20:04]:

So I spent a 100 there, and I still owe 50, so that cost me a $150 to pay that payment back. Now granted, when I bought these, and I got the loan, I ended or if I paid cash, right, I don't have the cash, but I don't have to pay I I have no, the the money isn't there, so I don't owe any tax on it, but I don't have the cash. Here, you don't have cash, and you still have to pay tax on the money you used to pull out. It's a

Steve Palmer [00:20:28]:

terrible situation. Debt debt kills people. Now look. They're they're like, if you talk to the high finance guys about debt, you know, they've got property that they're leveraged against. They've got that's a whole different game. But if you're if you're just borrowing money from the of the worst place of all, uncle Sam, I mean, I going into business with the government is, like, making a deal with the devil.

Troy Hendrickson [00:20:45]:

I didn't know you could get SBA loans through the government.

Steve Palmer [00:20:48]:

But that is the SBA loan. It is the government. The Small Business Association is the federal government loaning money.

Troy Hendrickson [00:20:53]:

I have no idea.

Steve Palmer [00:20:54]:

The bank may give you a private loan, but good luck with that.

Glenn Harper [00:20:57]:

Remember, you're when you are trying to we call it capitalizing your business. Like, hey. I need x dollars to start. I gotta buy furniture, I sequester a lease, I buy these things, get this ready, get my marketing campaign. And, again, whatever x is the number you need, you can either use it from your own pocket. That's you're just contributing money, and it's your money, and you're using it, and that's your investment in your company. You can go have somebody else loan it to you and say, hey, Steve. Give me 5 50 grand.

Glenn Harper [00:21:22]:

He's like, here you go, and you're gonna be paying him. You get it from a bank. You're gonna be paying them back. You can get it from other investors and give them shares, but it doesn't really work like that as you're an attorney. But if you go into the business with an SBA, when you sign up for them, they own everything you own because they wanna protect that investment.

Steve Palmer [00:21:40]:

So you have interest in all of it.

Glenn Harper [00:21:41]:

Yep. Your your all your personal things, they put their hooks in everything. So, you can't do anything until that loan is paid in full. Now, again, they've relaxed the rules a lot on people coming at me after that. There's there's different ways you can do it, but, generally, they own you. If you just get a regular bank loan, they're just gonna probably own that, but they're gonna make you sign personally. So you can't ever get out of it.

Steve Palmer [00:22:01]:

And and and think about this. What do you when when you have money like that, if the SBA gives you $50,000 to go buy stuff for your business, you're gonna find a way to spend $50,000 to go buy stuff for your business. And, you know, this isn't a business where you need stuff, interestingly. You know? Like, we're the stuff I'm talking about, like a desk, office space, and a phone and a computer, like, that's $5,000. Maybe at the like, budget that. You don't need a fancy office. You don't need a car. You don't need any of this stuff.

Steve Palmer [00:22:32]:

Now if it's a manufacturing business where you're where you're trying to capitalize on equipment and you wanna go buy a press or you wanna go buy a, you know, a bulldozer because you got an excavator business, you know, that that might be a little different scenario to start a business. You don't need that as a lawyer. You just need your mind.

Troy Hendrickson [00:22:46]:

I think that, like, more on the area I wanna get a loan for I'm not saying I would, but I'm

Steve Palmer [00:22:50]:

just saying, yeah, if I were great questions. But, like, I think a lot

Troy Hendrickson [00:22:53]:

of problem with people in law school is they think they're gonna get their degree, they're gonna walk out suit on, and there's gonna be handed cases. If you're setting up your own shingle, cases aren't just flooding to your door. In my head, an SBA loan would help pay for marketing, a website, like stuff that actually would help bring in

Steve Palmer [00:23:10]:

I would see. Type of client.

Glenn Harper [00:23:11]:

Alright. Well, fine. So now go ahead. So you're gonna evaluate on yourself and with your team and whoever's helping you with that to figure out what the best option is. Most of the time, the best option is not available. You have to drop down and get what you can get. And if in your circumstances, if you're the only option available is the SBA, that's why it's there. Okay? And that you'll you'll choose that if that's the only thing you have.

Glenn Harper [00:23:36]:

But you're trying always to navigate what what situation or what lending or borrowing thing will give me in the best position to protect myself if something goes wrong, get me what I need, a good interest rate, and a favorable payment back. And you're gonna navigate that, and then you're gonna look at what your choices are. Sometimes you have a lot of choices. Sometimes you only have just the the one. So just the encouragement out there is to look and see what choices and options you have and try to pick the best one. Don't just, hey. How long do you sell money? I'm on it's it's a very low interest rate, and it's 30% interest rate. Or you're gonna go buy again, the the biggest criminal thing out there is if you're gonna go, these, companies will lease you something.

Glenn Harper [00:24:19]:

And the interest rate's something like 25, 30%, and they make you pay all interest at the first, and you're done. You you will never it the banks can give you, like, 7, 8, 9, 10%. But these companies, oh, your payment's so low because it's all interest, and they take you long term. So you just know what you're signing isn't the only advice. Don't sign until you know.

Steve Palmer [00:24:39]:

And and, look, you're sort of talking about we're talking about 2 different things. With Glenn, we're talking about, like, alright. You've got the the what do you do with your, your gross income? How do you where's how does it flow through the business? And then over here, you're talking about what do I need to start my business. Mhmm. Now those things sort of come together and and are intertangled in all sorts of ways, But you probably need less than you think to start your business, and maybe this is another show we'll do. But, like, how did I start getting business day 1 when I hung out my shingle, when I graduated law school? It started like what you're doing. It started with me working for other attorneys, making connections before I was I was actually a licensed attorney. And then when I became a licensed attorney, my biggest marketing, paydays were picking up the phone, going to talk to people, interacting with other lawyers, particularly older lawyers.

Steve Palmer [00:25:29]:

Because, look, there's a lot of guys like I am. I love helping people get a foothold in this business. I love it. I I refer a lot of young lawyers business. I always have. I work with people. I help people. I associate with people.

Steve Palmer [00:25:42]:

And that's gonna get it's gonna have a far far more longevity than spending dollars online to market, because here's the deal. You're competing with everybody else who is spending dollars online to market, and it gets really expensive to do that. And when somebody picks up the phone and says, hey. Look. I wanna I wanna hire you. Tell me a little bit about yourself. And you say, well, look. I've got this fancy website, and I've been doing this for about 2 weeks.

Steve Palmer [00:26:08]:

Well, they're gonna call a guy up the street, and he's gonna say, I got this fancy website, and I've been doing it for about 10 years. And they're gonna be at the same price because they're spending the same. You can't compete in that world. So if you're coming out of law school and you think that you're gonna go buy a website, create a fancy marketing scheme, and kill it, and you're gonna borrow 30, 40 grand to do all that, good luck.

Glenn Harper [00:26:26]:

It's not gonna happen. Everybody's doing that. Well, some are, but that it's this you're in the relationship business of getting referrals. That's what it comes down to. You you you know, generally, as an attorney, you don't sell. You market, and marketing means that people want to find you for your product or service. You're not out trying to solicit. You're just trying to build relationships, and when people know what you do, they'll come and see you.

Glenn Harper [00:26:53]:

And it takes a bit. You know? It's it's a tough it's a tough business. It is

Steve Palmer [00:26:57]:

hardass work, and it takes a while to get paid out. So, you know, again, the this this side of it where I started out, I would go do free work for lawyers. And by free, I mean, literally free. I'd be sitting in trial watching attorneys try cases, and I would say, hey. Look. I can help you do some research on this evidence issue issue if you want, and, you know, that that would do it. And I didn't expect them to pay me. I wanted to work with people who knew what they were doing.

Steve Palmer [00:27:20]:

And what I was doing was sort of building and building. I I the first thing I had to do was dig the hole, which is the free work, and then start laying the foundation, which is learning and then making the relationship. So I'm starting to build my foundation. So now you're upstairs. You see my phone ring. Very few cases come from the online mark I get a lot of calls, but very few cases actually convert It's a lot of window shopping. It's a lot of window shopping. And there's always somebody that'll do it cheaper.

Steve Palmer [00:27:45]:

Now you can be the cheapest guy, but if you owe $50 to pay for all that marketing, then you can't afford to be the cheapest guy. So now you're back right where you started had you not done the the upfront cost.

Glenn Harper [00:27:56]:

One of the evolutionary things that happens in a firm, and especially if we're just talking about attorneys, is that when you start off, you you need money. So you're probably gonna say yes to most any case that comes your way. Even if the fair market value of that case is higher, you may be willing to do it for less because you need the money. And, eventually, as you get your tread you know, get you you get some tread build up, you know what you're gun what you're doing, you got a little more reputation, your demand for your services will go up, and you'll be able to charge commiserating with that, and you get to pick and choose, and you won't take those cases. But there's a reason why a lot of attorneys come out of school. They they take the defender route. Right? They take the the court appointed cases.

Steve Palmer [00:28:38]:

Court appointed cases. Doing criminal work. Yes.

Glenn Harper [00:28:40]:

Yeah. Because some money is better than no money. Alright? So you once you know your budget so if you have a massive nut that you have to pay every month to run your business and that isn't coming in the revenue, you'll have to take whatever you have to take, or you won't be in business long. The smaller your half two payments, we call them the half two payments, are every month, that's less you have to go bring in to cover your half two payments. But if your half two payments are massive, you set a really

Steve Palmer [00:29:09]:

high bar. Don't build your business on debt, I guess, is what you're saying, because you it'll end up falling apart. Now, look, it doesn't mean you have to starve to death either, but use it's sort of like the Lord will provide what you need. If you have a market home that you need 25100 to pay your basic expenses or 5,000 to pay your basic expenses, Lo and behold, that's what you'll make, and I I don't know why that is. It's human nature. Look. There's probably some divine logic there that that comes into play, but it it people tend to be able to do that. What happens is, though, with doing what you're talking about, I want the fancy I want the fancy, office.

Steve Palmer [00:29:42]:

I want the fancy website. I want the marketing scheme. I want all that. Now you're over your skis. And it's not that you know, the Lord's not gonna provide for all the stuff that you don't need. He's gonna provide for the stuff you do, so you have to adjust what you need down to the bare minimum. It's like when, and and I only know this from hard knocks me because I've I've made all these mistakes. Alright? It's like, I didn't do it the right way.

Steve Palmer [00:30:03]:

I'm trying to help other people do it the right way. But when people ask me, I'm gonna start this business, Glenn, they say, what do I do? And I and and they've even asked me to go into business with them. And I my first response is, how little can you live on Mhmm. Right now? Give me that number. I wanna know. And I'm not talking about, you know, we're you're not going out to eat. You're not gonna go do all this fancy stuff. You're not gonna have a car.

Steve Palmer [00:30:27]:

You're not gonna have a fancy house yet. You're not gonna get you're gonna go to, this $6 barbershop instead of the $40 haircut place. You know, whatever it is, you're gonna live on nothing. And lo and behold, if you live like that, you're gonna get what you need. And, eventually, both will sort of move forward at once if you're if you're operating that way. Otherwise, you're operating in this weird world. I I don't know what you you see this. Like, I see guys operating in this world of desperation, and that tends to be where people end up calling my office, because they end up stealing.

Steve Palmer [00:30:58]:

They end up they end up hiding money. They end up committing tax fraud. They rip somebody off. Lawyers get in trouble all the time with trust accounts because they need the money, so they know they got $10 here on this case, but they haven't earned it. It's really there. I'll just borrow it real quick so I can pay this other stuff. They're over their skis, and nobody's gonna provide

Glenn Harper [00:31:15]:

for that. The when you're hungry and the goal is achievable, you're gonna probably be a lot more efficient and better at what you do. If you're starving and you can't get there, you might end up doing something you don't you shouldn't be doing to get trying to get ahead. So listen. Everybody listen watching this. Everybody's gotta do what they gotta do. This is just like if you had options to do these best choices, this is what you would do. But sometimes, you have to do things.

Glenn Harper [00:31:45]:

You don't get those options. You have to do other alternative ways, but just be cognizant of what you're doing to know what that consequence is that. And if you're hungry, but not you're gonna do better than if you're starving. Alright? Is just just a

Steve Palmer [00:31:58]:

general. You don't wanna be desperate. You wanna be hungry, but not desperate. Well, let's shift gears a little bit because you talked a little bit about Glenn, early on about different business forms, whether it's an LPA, whether it's an LLC, whether it's a a sole proprietorship, a partnership. So Troy's coming out of law school. He wants to hang his shingle. He wants to be a lawyer. How does he figure that out? A multinational corporation

Glenn Harper [00:32:20]:

of the Maoris. No. I'm kidding. No. You what we try to do is when you first start out, it's it's the old adage. Keep it simple stupid. Like, just keep it simple. We don't need to create some labyrinth of a massive New York law firm today.

Glenn Harper [00:32:34]:

We're just trying to have an a structure that we want to say, hey. Here's Troy myself, and here is my business. It's probably gonna be an LLC. It's real easy to do. And when you set that up, it's $99 for the state of Ohio, and you get yourself an EIN number. And what that is is you go get a bank account for their savings account for taxes, checking account for operations, get your business credit card, and you're just boom. This is all there is to it. And all money goes into there, and all money goes out of there for anything related to the business.

Glenn Harper [00:33:07]:

And if you just do that, you're gonna be just fine. You don't wanna commingle. Commingling is very, very hard to do. It doubles the time. So that's what you would usually set up.

Troy Hendrickson [00:33:15]:

Do you think, starting out the business, the business credit card is a slippery slope for people? Or

Glenn Harper [00:33:19]:

Well, again, it takes discipline. You're like you you have to it's amazing financial illiteracy of people coming out of just high school. They don't know what this all means. And coming out of college is the same thing. You just have to be smart enough to know that if I gotta go that's a use of cash. I'm borrowing it. Can I if I use a credit card, then I and I'm gonna pay it back every month, it's a very safe way to pay bills where nobody's gonna get in your bank account? You're using credit card for our protection, all those things. It's on one statement.

Glenn Harper [00:33:49]:

You're gonna charge up. Listen. I think my bills are 5,000 a month. I charge 5,000 my credit card. I'm gonna pay my $5,000 bill. I don't really have debt. It's just a way to pay bills securely and safely. Okay? I'm not saying you get the credit card, and I have 5,000 bills, and I charge 30,000 on it.

Glenn Harper [00:34:05]:

That would be I mean, you could do that if you had to. That's a choice to do it, but now you're paying it back at 25% interest. You don't want that.

Steve Palmer [00:34:12]:

And I'll tell you, there's been one one time, one instance in my entire professional career where I paid for something on a credit card on the business side that I couldn't have written a check for. Only 1. And it was when I bought this building, and I resurfaced the parking lot. And, it needed to get done. I didn't have the I could have contributed. I could have done something else. I've only done it one time, and it stressed me the f out. I hated it.

Steve Palmer [00:34:34]:

I hated it. I hated having I hated owing that money to a credit card, and I paid it off as fast as the business as the rental income would let me, and I got out of that mess. It is the most stressful way

Glenn Harper [00:34:45]:

to live. Remember, there's, there's good debt and there's not so good debt. And if you have the option, you wanna use good debt, and it's a very effective tool for running a business, use other people's money. There's tons of pros on it, to do that. It's just that if you're using debt to get everything you want and you're getting farther and farther than debt, that's not good. When in when operations like, if

Steve Palmer [00:35:08]:

you're gonna buy a house or,

Glenn Harper [00:35:10]:

you know, a building or a big piece of equipment, that's good debt. Right? You you you would wanna do that. But if in your case, the credit card in the business is more of a tool to pay your bills, not to finance your operations.

Steve Palmer [00:35:20]:

But, yeah, I think it is a huge slippery slope for people. And what what we're saying is, look. If you are paying your bills by a credit card and you're doing it on the if come, meaning, well, I think I'm gonna get paid next week on this other case, so I'll just pay this now with my credit card. That's a mistake because what happens is next month, the bill might come in inevitably, and now you owe double, and it just keeps going. So then that credit card fills up, and then you get another credit card because you can't pay this one or this one, is maxed, and then you still have business.

Glenn Harper [00:35:48]:

Well, we'll transfer the balances, see,

Steve Palmer [00:35:49]:

and we'll get a better rate,

Glenn Harper [00:35:50]:

and then and you're down down you go.

Steve Palmer [00:35:53]:

Look. The the like, this is the Dave Ramsey approach. If you can run your business without that kind of debt, go do it. You know, if you can just get a debit card, pay only, and use that to pay your expenses to create some insulation if you need to, then you get one statement like Glenn said. If you're worried about falling down that slippery slope because you tend to do those things in your personal life, then don't freaking do it. Stop it now. Don't start drinking if you never drank before. You know, don't don't go to that well and start borrowing money to pay your monthly expenses in your business because it it is a slippery slope.

Troy Hendrickson [00:36:24]:

I did wanna talk about trust. You mentioned that earlier. I'm kind of confused on do we have to pay taxes as a lawyer for the amount of money that people put in the trust or about the amount of money that they that we use?

Steve Palmer [00:36:35]:

Alright. So he asked me a great question. It's a great question. He asked me a great we're gonna talk about a trust account, which is an interest on lawyers trust account. We'll talk about that in a second. But what you're really asking, he was asking if I was deducting my accounts receivable. And we had a little bit of a discussion about cash based accounting versus accrual accounting, so I'll just let you take it from there.

Glenn Harper [00:36:58]:

Yes. Generally, the the two ways you can account for things are cash and accrual. Cash means I recognize it as income when I receive it, and I expense it when I actually spend the money. K? And so I collect the money, I pay my bill, that's cash basis accounting, and that's why I pay my taxes on whatever's left. Accrual based accounting is I, recognize my income when it's earned, and I recognize my expenses when it incurred. So if I go borrow $10,000, or I have a bill for $10,000, but I haven't paid for it yet, But I got the bill, and I did work for a client. I bill them for $20,000, but I have not yet collected it. And on accrual basis of accounting, I've brought 20,000 in, and I have a 10,000 expense.

Glenn Harper [00:37:49]:

I've made $10,000 of profit, but I don't have anything. Right? But I've incurred and recognized it. Generally, if you're an attorney, you're gonna be cash basis. You recognize income when you receive it. And in your guys, you have the trust account where that's just a holding place for money that you've not yet earned. It just sits over there. You don't pay tax on it until you've earned it. You take it out.

Glenn Harper [00:38:12]:

You put in your operating account, and at that point, that's real money.

Troy Hendrickson [00:38:15]:

This money is just in limbo. Right?

Glenn Harper [00:38:16]:

It's in limbo. It's because it's not technically your money. Escrow means it's it's not your money. If the client wants it back, you have to give it back. Mhmm. So the government says, well, yeah. If it's you have to give it back, we're not gonna make you pay tax on that. We're gonna let you set that over there, and I think your state has some rules

Steve Palmer [00:38:31]:

that are associated. Yeah. There are very specific rules about how you how we operate an Iota account. So I'm not allowed to have any of my own personal money in my Iota account if I also have client money in there. It's called commingling. So, look, there are different different lawyers do it different ways. In in the criminal defense arena, we are allowed to take flat rate retainers, at least in Ohio, and put that directly into our operating checking account. I don't do that.

Steve Palmer [00:38:57]:

If if somebody pays me $10,000, I put it in my trust account, and I draw against it as I do the work. And the reason I do that, and I keep track of my time, I keep track of my what what I put into it even though it's a flat rate. I'm not billing hourly. And I transfer it over as the case is completed, or I wait sometimes until the case is done, then I transfer it over. Now there is, like, there nothing is perfect because in in any scenario, even if I'm billing hourly, typically, law firms will bill monthly. So if I earn the money on on day 2 of the month, I've earned that money and sitting in my trust account until the end of the month, then I transfer it over. The bar association and the highest supreme court's typically okay with that as long as it doesn't sit there in perpetuity. What they don't wanna do is let us hide money in our trust account in order to avoid taxes or in order to do whatever we do, and then they don't want us doing anything with that money and and use it as sort of a personal checking account because what happens is lawyers start to steal from their clients.

Steve Palmer [00:39:57]:

You pay me $10,000 to do a case or say it's a larger case where it's a a big fee. I wanna do the case, but I I wanna know that I'm getting paid. So I say, look. It's gonna cost you even a 6 figure case, say, $100,000 for me to do this case. It's gonna take me a year and a half to get this case done. It's a lot of work. And the the client says, that's no big deal. Just pay as we go.

Steve Palmer [00:40:20]:

And I'm thinking, wow. I'm signed on. I'm doing the work. I've I've I've I've I've entered my formal appearance as counsel of record. What if my client doesn't pay me? And I'm, like, 6 months in. I I run the risk, and it's happened to me where I go to a judge and say, judge, my client my client quit paying me. Can you let me off the case? I wanna withdraw. Judge says, sorry, Charlie.

Steve Palmer [00:40:42]:

You're on it. You signed up. You're stuck with it. And judges do that crap. Now it doesn't mean I can't sue my client later, but think what that does to the relationship. It's miserable. So what the what the process is, we collect fees and put them in trust, and then I can bill against it incrementally. So what it is is when I the reason I explain to clients this way, look, you're gonna pay me this upfront that way.

Steve Palmer [00:41:03]:

That way, I know I'm gonna get paid, and you know that you've paid me to do the work I promised to do. But if I don't do the work I promised to do, you also know that it's sitting in my trust account, and you can demand it back and fire me, and you'll have money back. That's that's why I do it that way. And I think if as soon as people start using their trust account beyond those types of of ways, they run into trouble.

Glenn Harper [00:41:25]:

So And I think to that noted and it kinda goes to our little noted little tax savings account. The trust money is not yours. The tax savings account money is not yours. That's the government's they're gonna get it at some point, to some level. The trust money is not yours till you actually do the work. And to Steve's point, let's say you complete the case for the $10,000, but you're like, oh, I don't wanna really wanna pay tax on that. I'm gonna let that money sit in my trust account. Uh-uh.

Glenn Harper [00:41:52]:

If you earn it, you gotta take it out. The government is saying, look. If it's earned, you gotta pay tax on it. You have the money, you've earned it, it needs to move over to your operating account. So it's just an accurate accounting of your trust clients, and that account is very important to do, I guess, is what we're saying.

Steve Palmer [00:42:08]:

Yeah. And that's the other rule. The part of the rules of the highest Supreme Court or any court, I think, or or any state or jurisdiction would be, you have to have a very specific ledger of whose money is in your trust account, what the work has been done on it, where the money has been dispersed. Now that's easy now. When I started out, it wasn't so easy because we didn't like, we were still using, like, Quicken like, those those sort of programs were just starting or QuickBooks where you would go buy the, 3 and a half inch disks and put them in and and do it that way, or or a lot of people do it on a spreadsheet or just a little general ledger. I mean, I had a check ledger when I started, like, the kind of big book that you would sort of keep your ledger. And there's specific forms you would use to to manage your trust account. Again, you as long as you keep the records, as long as you keep everything separate and you keep it straight, you avoid problems.

Steve Palmer [00:42:57]:

But people get into problems when they haven't done what you're suggesting, Glenn, which is figure out your home budget first and then backfill everything from there. When people get over their skis at home with fancy cars, fancy houses, big mortgage payments, diamond ring for the new girlfriend, whatever it is, fancy watch, fancy suits. Well, that guy's got a cool little thing, so I'm gonna get that too, or let's go to eat at Smith and Wollenskis or whatever it would be. Now you've gotta pay for that, But and you're like, oh, look. I got this money over here in trust. That case will probably be done sometime soon. I'll just take it now. And then the client calls and says, hey, guess what? Palmer's gonna do it for me because I don't like you anymore.

Steve Palmer [00:43:38]:

Seems like you're out doing all this crazy stuff. I think you're not the person for me. I'm gonna go hire Steve Palmer.

Troy Hendrickson [00:43:43]:

They got the fancier website. You know? You got

Steve Palmer [00:43:44]:

the fancier website. So I'd like my money back. I'd like whatever I haven't used back. And you're like, well, it's a flat rate fee. It was 10,000. I it's gone. You know, they're like, well, what did you do? And you've just done nothing. Now you end up in trouble.

Steve Palmer [00:43:56]:

So what do you do? You write the check out of your trust account, but now you're using the next guy's money instead. So what you have now Like

Glenn Harper [00:44:02]:

a contractor.

Steve Palmer [00:44:03]:

Is a Ponzi scheme, and it fails. And not only does it fail, you get disbarred for that. But one of the number one reasons you see for disciplinary problems with lawyers is stuff like that, but it's always just the symptom. It's always just the symptom from something going on at home.

Glenn Harper [00:44:17]:

So I think I don't think I know. The reality is is that if you solicit the advice and you make the commitment to say, I'm gonna do things the right way, and then you put in those systems and processes and routines to do the things the right right way, you will never get in trouble for doing something the wrong way. You'll always have money for your taxes. Trust accounts are always cool. Business expenses are business. Personal is personal. You take 90% of the problems of a company, why they would fail and something would go wrong. You take that totally off the table because you're committing to do things the right way.

Glenn Harper [00:44:53]:

And if you start that way from the beginning, you odds are you will continue to do it the right way because now it's just a habit. It's what you do, and you just don't wanna deal with that side of your brain without stress of going, oh, shoot. I just crossed the line. How do I navigate that? I'm probably gonna cross the line again, and now here I go. And then now you're wigged out, and it just it just will not end well. You end up calling Steve to defend you.

Steve Palmer [00:45:17]:

And it has its rewards. Alright? Almost before you even know it, you're gonna look over at your savings account, and you're gonna say, well, look, I've been saving 50¢ on the dollar now for about 3 years, and there's a $100,000 in that account. And I haven't had to, you you know, because I've hired somebody like Glenn to help me make my taxes efficient. You're sitting on a pile of cash. And then you can do something like buy a building, or you can do something like put a down payment on a house. Or then now you now you do it, and you feel good about it when you go home. It's not borrowing money. You're using your money because you've saved it, or you can leverage that in some way.

Steve Palmer [00:45:50]:

It's like it doesn't take long to save a $100,000. And if you're thinking it does, you're wrong. It really doesn't. It's it's you can just put put the money aside for set it and forget it, as they say. And you can even put it now. I I do I've changed over. I use a high interest savings account at Schwab or one of those places, and you can it'll just grow.

Glenn Harper [00:46:10]:

And Remember, it's not what you make, it's what you take. It's what you spend. So if you control your spending and work within again, I hate the word budget because it just sounds so restraining, but it's just more like Work within your means. What what are we supposed to what did we plan for to do? And it it's gonna move a little bit, but if you if you make it, don't take it or as little as possible, and it will accumulate. And pretty soon now, you're, like, you're not as you're not as hungry because the money's there, and you can just go back. Like, I just can do work because I know I get everything's covered. You don't have to be worried about where is the next check coming from and just up at night. Like, I gotta pay rent tomorrow, and I have no money.

Glenn Harper [00:46:47]:

What am I gonna do?

Steve Palmer [00:46:47]:

And remember, in your case or our case as lawyers starting out, that's not your only worry. You gotta learn how to do the damn job. You gotta you gotta you gotta worry about getting the court.

Glenn Harper [00:46:57]:

Being there.

Steve Palmer [00:46:58]:

Learn how to try cases. You gotta learn how to do the probate work. You gotta learn how to I saw to handle PI like, you have to learn the work at the same time you're doing this. And if you're doing criminal defense work, add another layer of stress because we don't get retainers. Like, monthly like, what I mean by retainer is, like, a monthly business client who's paying me every month. Like, we start at 0 literally every day. You start negative. Negative every day.

Steve Palmer [00:47:19]:

That's right. So, like, next year, I this people love December. I hate it. I mean, look. I love Christmas. I I love the reason for the holiday. I love all that on my personal side. But on the business side, I hate it because it creates this pressure in me where I say, man, I did it last I did it this year.

Steve Palmer [00:47:37]:

Crap. I gotta do it again next year. How am I gonna do that? And it's I'm looking at my I'm looking at my budget, and it's all out there. I gotta make all this money, and I have 0 and less than 0 because I owe this money because I've committed to paying my people. I've committed to a certain, expense structure. Now I gotta go earn it. And the problem is, in our line of work is, like, that means we're we're relying on the phone to ring. Now if you wanna couple that with an with getting over your skis and your personal life so you're relying on the phone to ring and you can't pay your personal bills, like, that's trouble.

Glenn Harper [00:48:09]:

Yeah. So your blood pressure goes up. But it's like Steven says, you're entitled to nothing today. You have to start every day is a brand new thing.

Steve Palmer [00:48:16]:

That's such

Glenn Harper [00:48:16]:

a good point. Trying to make progress and build the blocks and not be encumbered, not spend a lot. Again, there's a there is an adage if you spend money, you'll make money. That generally is true in a lot of things, but it's gotta be the right kind of spend, not just, well, I'm just gonna throw some money out there. You you will always get a return if you spend your money strategically, if you're smart and with intent and purpose of how you do it. Holding back and not and being scared isn't gonna work. It's about being intentional with what you're trying to do. And when you do that, you'll be successful.

Glenn Harper [00:48:46]:

Again, assuming you're a good attorney. I saw my cousin, Vinny. I could do this job. It's not that hard. Yeah. So if you can just do that and and, again, when you're not worried about all these finances and taxes and bills, and you're in there and you can service your client who's on trial for their life or prison time or gonna lose something or they need something, like, you can put your attention to that and be the best you can be at your profession, you shouldn't be in there worrying about everything at the office. That should be that's covered. It's all about your client at that time.

Steve Palmer [00:49:15]:

And when you get out in the real world, so to speak, and you look around at those doing this job, particularly criminal defense, you will know the ones. You'll know them. You'll you'll be able to spot them. If you're not one of them, you'll be to spot them. The guys who are wearing the fancy suits, the guys who've got the watches, the guys who have got the the car, the guys who have got all the stuff, and, they're always hustling. They're always doing their you can just tell that they're over their skis. And you're walking over to court thinking, alright. I got things under control.

Steve Palmer [00:49:42]:

Not living a fancy lifestyle yet, but I got things under control. The lifestyle will come. I promise it does if you do good work.

Glenn Harper [00:49:48]:

I'll show you one little cool story that is inevitably true true. The the struggle of a farmer, the struggle of an attorney practicing, it's like we're profitable, like, big time every few years. It just happens. Think about if you work with discipline on your spending and you don't get encumbered with debt, and you just make it hap and you just you exist, and you're making it work, and then you hit the big case. And the choices are, I take the big case, and I gotta go pay all the sins on my past to get reset. Or I don't have any sins in the past to reset, and I get the big case, and now I got a hunk of cash I can do something really cool with. You this will happen to you. And if you're disciplined, whatever you were spending before when you're barely getting along and then you whatever you when you make the big case, you're gonna continue to spend the same amount, and now you have this huge chunk of cash.

Glenn Harper [00:50:40]:

It's life changing. But if you gotta go pay the sins of the past because you overextended yourself, you will never ever get caught up.

Steve Palmer [00:50:47]:

Yeah.

Glenn Harper [00:50:47]:

So the first step is don't get behind in the 1st place. I guess that's the massive lesson for today.

Steve Palmer [00:50:52]:

And and for me, I I'm not gonna be shy about it, and Glenn knows all my personal life. I have not done this perfectly throughout my life. I've I've done it mostly okay, but I've made my mistakes. And what we're trying to do is teach people not to make the same mistakes that I've made. Right? So and and and in large part, people didn't have this conversation with me when I came out of law school. It was just go forth and prosper, young man. Figure it out, and that's what I had to do. So I learned the hard way, and I've even made mistakes even 10, 15, 20 years in.

Steve Palmer [00:51:22]:

But in the main, I have followed this program, and I don't stress about paying my taxes. I don't stress about paying my mortgage. I don't stress about, anything other than what I should be I wanna say should be. What I need to stress about, which is how's the phone gonna ring tomorrow? How do I get my next client? How do I serve the clients that I have? How do we get this brief done that's due on Monday and do a good professional job? And I'm not worried about all that. At the same time, I'm thinking I owe $20 on credit cards at home because I spent

Glenn Harper [00:51:50]:

too much for Christmas. And and on further note, you said some of those very, appropriate is that things happen in business and in personal life all the time. It is the way it is. Look at it when you have a client, and you're representing them for maybe they had a misdemeanor for whatever that happened. You've got a good relationship with them, but something else happens again. They know to call you, and whatever that is, you're gonna cover it. We have a good relationship with your financial team, your financial advisor, your banker, your CPA, your advisor, whatever that is. When things go south or when things go very well, lean on your team.

Glenn Harper [00:52:24]:

Hey. I I'm I'm in deep trouble here. What should I do? As a as a CPA or as your your accountant, we look at it from a different lens of we can damage control, reconfigure things, and say, this is your path to do it. Just do this, and you'll be okay, and this will buy you more time. Right? If you make a gatling on a bunch of money, just don't go out and spend it. We're like, woah. Woah. Woah.

Glenn Harper [00:52:45]:

We need this for tax. We need this for this. Put this aside here. This is what you really have. So before something big happens, consult with your team. That's their job to help you. We don't operate in a world where everyone makes the same amount of money. Like, it it just does all year long.

Glenn Harper [00:52:58]:

It is always controlled anarchy of highs, lows, and things. Embrace your team to when you need them, when something happens, call them. We whenever you make a mistake, call. That's what we're here for is to help you navigate that.

Steve Palmer [00:53:13]:

So along and we're gonna talk about I'm gonna finish that topic, and we're gonna talk about one more thing. But, what what Glenn is saying, and and you don't know this, but I talk to Glenn probably 3 times a week at 6 in the morning. Why? Just a just a whatever. You know, sometimes it's business, sometimes it's not business, sometimes it's personal, sometimes we're just saying, hey. What's going on? And that's because I developed we developed a relationship professionally when we were in our twenties, early twenties, and that is developed. So it's you know, find that person, whether in your accountant. Find that person if it's your general contractor, if you're building a house or you need home repairs or if it's your plumber or if it's your electrician or whatever. Like, find those people.

Steve Palmer [00:53:54]:

And what I have done successfully, and this is an extension of what you just said, and I think you do this too. I'm the guy people call when they need a new roof. Why? I don't know. Because I've been a I've been sort of a a resource for people. I'm the guy people call and they say, hey. Look. Do you know your who's your account? Who do you you're the guy. And when and Glenn's the guy people call when they need something similar, like his other network.

Steve Palmer [00:54:16]:

So what we've been able to do is leverage our networks together. So all of his people are my people. I don't even know who they are because Glenn is out there literally selling for me, and he doesn't even know he's doing it. I'm doing that for him. When you develop relationships and and anybody who's out there wanting to go pay for a fancy website, anyone who go pay for all the SEO, go pay for all the good marketing people in the world, this is what works. Be the person that is the go to guy in your world, in your sphere. And it's only, like, 10 people right now, but make it 20. Like, if you've got a goal for next year, expand your sphere of influence and help people, and help people for free.

Steve Palmer [00:54:57]:

So people call me all the time, and they call Glenn all the time. Hey. Look. I got something going on. It's legal. I know it's not your area of law. Can you help me? Blah blah blah blah blah. That's what that's what launched lawyer talk or this podcast in the first place because I just became the person that people would ask questions, and I never billed them.

Steve Palmer [00:55:12]:

There are lawyers out there, good friends of mine who won't do that. Like, well, look. I charge $450 an hour. If you want my time, you gotta pay for it. Like, great. Well, they're making money in the short term. I'm I'm playing the long game. I don't know who wins at the end.

Steve Palmer [00:55:23]:

It's not about that, but that works for me partly because our business is referral based. That means that everybody I've helped now, I am the go to guy for everybody in their sphere. And you need to create it's sort of like those I don't even know what the it's not a Venn diagram. It's like where they're all connected. But you you need to you need to be that person that's more valuable than any of the marketing schemes that we've talked about.

Glenn Harper [00:55:46]:

I think it's, we we're in the service business. You're in the service. You're here to help. And if you generally want to help people, the money will come. If you go out to try to make money and you're not trying to help, you will probably not be successful at it or you're gonna be somebody you really don't wanna be. You're here to help, and when you help people, the money will come.

Steve Palmer [00:56:07]:

You have to have the heart of of, like, maybe the heart of a helper. I don't know what I don't know if that's right, but you're exactly right. And that is I have made more money when I'm not worried about making money. And when I'm worried about making money and I really need it, which is back to this over here, my personal life is out of control, I don't make it. And it's it I it's because you're focused on the wrong thing in some sort of subconscious way. But the biggest cases I've had, biggest trials, TV, national, I've gotten zilch on or or close to nothing, or I've lost my ass on.

Glenn Harper [00:56:40]:

But you look good on TV.

Steve Palmer [00:56:41]:

But it was but I and it wasn't even for that. It wasn't even for the TV. It was because I got linked into a case. I got latched in, and I couldn't give it up because I wanted to win the case. I wanted to help these people, and I got to know my clients. And I really, you know, I I I got connected maybe in a way that's not you gotta be careful professionally with that. But then what happens is you make your money elsewhere. It comes.

Steve Palmer [00:57:04]:

It just come. Your money comes. But if you're chasing it, you tend not to find it. It's funny how that is. And remember,

Glenn Harper [00:57:11]:

you will f up. You will make mistakes, and they're horrible, and you will and you will take them more personally than professionally because you know you're bet you you know you're better than that. Things happen in life. You gotta recover from that. Don't judge yourself on that mistake. Judge yourself on the successes. Try to make amends, but you will make and when you're in business, you will make mistake. It's a horriblest thing, but

Steve Palmer [00:57:31]:

it has lost vast amounts of money doing stupid business stuff.

Glenn Harper [00:57:34]:

It's horrible. But you gotta get over that and keep trying to do your best because, again, you you you your intent is to do well. And if you can focus on the right things with the right people, you'll be fine.

Steve Palmer [00:57:44]:

Alright. Alright. There's one topic I wanna talk about. Troy asked me another question. We were I don't know if he asked. I don't know how it came up, but it might it might have come up with a cash and accrual thing. I have I got some early advice from a lawyer, one of my mentors, not directly, but sort of one of the indirect mentors that, that so I did what I've exactly I told you to do. It was like I when I first started practicing, I started to meet people and talk to people, of course, on these older lawyers and just got to know them, and he this is one of those guys.

Steve Palmer [00:58:13]:

And he made a comment to me. He goes, you know, every every dollar I get, every every every bit of money I get goes into the bank, even the cash. Now cash isn't so ubiquitous as it used to be. I mean, in my world, criminal defense, there was a time when I started where, you know, you'd come into my office, and there'd be, like, $30,000 sitting on a table as we're counting it out for the bank deposit because that was the rake for the month or the 2 whatever it was because that all was all in the safe. People just paid in cash. I mean, that that's just one thing to

Glenn Harper [00:58:45]:

do. That?

Steve Palmer [00:58:46]:

It's crazy. I've had insane amounts of cash. Every penny, every every dollar, every cent, every you know, I've had actually people paying nickels. It all goes to the bank. And what this lawyer said is he goes, yeah. They're a lawyer. You can get away with it. They're lawyers that got away with it.

Steve Palmer [00:59:02]:

They take half to the bank, half goes in their pocket, or they would do this or do that. And he made this comment that I've never forgotten. He goes, yeah, but they're always broke. They're always broke because the money tends to be devalued in some way. They got cash in their pocket. That's those are the guys who are dropping the bills at the bar. Those are the guy like, they're always broke, and he's it is almost always true. I've never seen an exception to this.

Steve Palmer [00:59:24]:

The guys who I know are filtering the cash off their business are always freaking broke. They're always struggling to find that next dollar. And that's ironic, right, because they're not paying they're they're making twice as much, but they're spending twice as much and then some because that's the lifestyle they've created. So talk about cash and cash in the bank.

Glenn Harper [00:59:42]:

This is one of my favorite topics at all time. At the end of the day, if you're claiming all your income, everything, and you're cheating and not claiming all your income, 100% of the time, you will have more money. And if you would've just claimed your income and did it right, you would have way more money than by just cheating. So you have to make everybody has to make the decision. Am I gonna be an ethical business owner or an ethical?

Steve Palmer [01:00:09]:

Is that? Like, you've watched this for years.

Glenn Harper [01:00:11]:

It because when you take cash, it doesn't mean anything. It has no value. You can't go buy assets with that because where'd the money come from? So you're you know you're doing it wrong. You know you can't go buy assets, so now you're just blowing it on. Whatever those needs are that had nothing tangible to them. And then you have the guilt, and now you're used to doing that thing so you need more and more and more. And what ends up happening is the real money that you are trying supposed to be claiming keeps going down, and you don't have the money to do what you're supposed to do. And, generally, everybody knows you shouldn't steal your money and steal from the government for your business, but some people will do that.

Glenn Harper [01:00:51]:

And once you start, you cannot stop. You you're no different than one of your clients who's embezzling money. You're no different. And it's when you get caught, did you tell it from your trust? The supreme court's got you. The bar association's got

Steve Palmer [01:01:03]:

you for it.

Glenn Harper [01:01:03]:

If you the guy rest catches you, oh, that's a big deal. Right? So you don't just don't get in that arena. So cat you people pay you cash, Venmo. People now, like, what's all Venmo? They don't why wouldn't you claim that? It's still money coming in. And if it comes in and it goes in the bucket, now I get to flex, and this is what you do from a tax standpoint to shelter that or to get a different type of write off or to have lesser tax. You will have more money 100% of the time, guaranteed.

Steve Palmer [01:01:32]:

Even though you made less. Correct. You you Correct. You didn't make less, but you you saved less at up front. But in the end, you always end up with more. That's why I've never had any problem paying taxes. And and, look, we've had some I've had some pissed off conversations. Like, they're taking how much freaking money from me? Are you freaking kidding me? Like, where does this happen? And, like, we just had one, and I'm like, alright.

Steve Palmer [01:01:55]:

Well, I gotta call Schwab and transfer the money and pay it because it's in my tax account. And I was hoping I would have to pay less, but I'm not thinking, shit. How do I tell my wife that we're not going on vacation next year, or I gotta use a credit card, I gotta final this, or final that? And then then the shame sets in, and that's where the crime happens.

Troy Hendrickson [01:02:13]:

I remember how we got into that. I was talking about getting paid cash all day, and I was like, for some reason, when I get all my clients pay me cash, one of my buddies will call me and be like, you wanna go to the casino tonight? It's like it's like the planets align. They want me to The rush.

Glenn Harper [01:02:25]:

I don't like so lame.

Troy Hendrickson [01:02:26]:

Well, I do have this cash in my hand. It's it's it's it's not real money.

Glenn Harper [01:02:29]:

Nobody knows about this money. Nobody's gonna know, and the the person that knows is you. And so if you hold yourself up to that standard, then you're gonna that's gonna demand that everybody around you holds themselves to the standard. And now you can walk in with confidence, and you there's never gonna be a wolf at your door because you're doing it right. It gives me goosebumps just thinking about it.

Troy Hendrickson [01:02:49]:

That's such

Steve Palmer [01:02:50]:

a great thing.

Glenn Harper [01:02:51]:

You never have to worry about it. And in business, you got enough things to worry about, let alone worrying about, oh, they're gonna find out that I scammed some of that cash out, and I did this or that. And just just don't be that guy. And if you pay out in cash, cash is fine to pay. Get a receipt. Write it down. We'll deduct it. It's no problem.

Glenn Harper [01:03:08]:

Pay in Venmo. That's fine. It's just technology hasn't caught up as fast as we would like for these online payment platforms because they don't give you the reporting. So that's just something you have to do on your own.

Steve Palmer [01:03:18]:

Sooner or later, the IRS is gonna crack down on that, and you're gonna be you're gonna people are there there is there is gonna be hell to pay sooner or later or some or money to pay sooner or later for people.

Glenn Harper [01:03:27]:

We just a a note. With technology, 20 years ago, you had the federal state city, and you would probably get on a 100 clients, you would probably get maybe one letter of the IRS state or city saying, hey. There's a there's a discrepancy, or can you explain this or whatever? We might get one letter out of a 100. Today, out of those 100 clients, we're getting 50. We're not doing anything wrong. They're all comparing the data, and they're trying to do what they do, and they haven't perfected the systems enough to know that just because they think they don't have something. We've already given it to them. They just don't have the ability to bring it in, so we have to resend it manually.

Glenn Harper [01:04:10]:

So the client's not in trouble, but they're gonna get these letters, and they're like, oh my god. Don't worry about it. It's just a letter. It's but the time and effort it takes to address that is in the industry, you just it's unconscionable what happens. So they're gonna find it eventually, so it's better to just put it out there and be fine.

Steve Palmer [01:04:27]:

And if you've done it wrong, you got no answer other than dip into some source of money that you don't have, which is usually borrowing it or stealing it or taking it some place that's a little bit nefarious. So look. I mean, I as I often say in my conference room, doing the right thing is hardly ever the easiest thing to do, but it's always the right thing to do. And once you once you build that foundation, once you've got your trench, you've got your footer, you've got your block foundation or whatever you're doing, and then you can start building your house, it's never gonna fall down on you. You you've got it. So build the house the right way, and you'll have no problems on the money and starting your practice. So I I think that's a good place to wrap it up. We'll, there's a lot more to talk about here on starting a small practice.

Glenn Harper [01:05:06]:

Tons of things.

Steve Palmer [01:05:07]:

But I hope this was helpful. So if you're thinking about starting a practice, hope we didn't scare you. I think I hope the message, I think, was pretty much loud and clear. Don't live beyond your means. Do your business. Start it the right way, and you will succeed. I promise you. It's not that difficult.

Steve Palmer [01:05:20]:

The only thing that makes it difficult is when you want more money than you have. So this is a lawyer talk podcast. They don't teach you that in law school edition. If you've got a question, if you've got a topic, if you're a young budding lawyer, even a college student or anybody who wants to go be a lawyer or or you got some questions, check us out. Troy and I will kick it around at the table. And if you got the chops, you can hang with us at the table like Glenn did today. So we are lawyer talk podcast.com. They don't teach you that in law school off the record on the air, at least until now.