190: The 5 Profit Leaks Killing Law Firms with superstar CFO Kelley Brubaker

Started realizing I was having similar conversations over and over and over, which is what prompted me to write my book. So I narrowed it down in the book to 10 different profit leaks. And I talk about profit leaks because I try to set the stage that when you have a drippy faucet, so whether it's your kitchen or your bathroom, and you just see one drip, right? It's one drop and then one drop and one drop. And at first you're kind of like, Nah, not a big deal. I can live with it. I don't need to call the plumber yet. But if you before bed, plug up the sink and then let the drip, drip drips all accumulate overnight in the morning, that might be a big chunk of water sitting in your sink, and now you're like, Oh, now it's a problem. I really should call the plumber. So I'm trying to make that correlation, that little things, if you let them continue to be little drops, the drops are money leaving your business that you could capture and put more money in your bank account.

Well, good morning, good afternoon, good evening, whatever time this podcast finds you. Welcome to the 10 Golden Rules of Internet Marketing for Law Firms podcast. My name is Jay Berkowitz, great guest today. Kelley Brubaker from profit scale thrive. Welcome to the 110 Golden Rules podcast.

Thank you for having me, Jay. I'm so excited.

First thing we always want to learn your story. How did you get from young Kelley to Kelley who's helping law firms today?

Oh no, absolutely. So back in high school, when you know I'm thinking about my career, and my parents were blue collar. My dad was a fireman. My mom worked in retail, and I didn't really know people from many other professions, and I ended up taking an accounting class in high school, and we had a student teacher who brought a friend of his that showed up. And I grew up in this small, little town in Ohio. His friend shows up driving a nice, shiny, brand new red Porsche. And I'm like, Oh, I could this was stuff I like doing in class, and I could drive a red Porsche. I'm all in at the time. Had actually been considering law or accounting or veterinary medicine, but I had a drop biology class because I couldn't do all the dissecting projects that I I'm like, No, it's so easy design with you, by the way, bloody kind of guy, yeah, I can't do it, yeah, when I saw that, and then I'm like, well, and because I didn't know any other professionals, I thought what I saw on TV and movies, all attorneys were litigators. And public speaking at that point in my life was no go. So I'm like, speaking in front of people not going to happen had I known about transactional work and the other things I could do with a law license, I probably would have had done that path, but, but yeah, so that led me into accounting and straight into college. Got through in four years, I was dead set, like I couldn't wait to get out just knock out my credits and started in big four. So it's been a journey, and Big Four is comparable to big law. A lot of people, whether you've worked in big law or not, you're like, Oh, it's a machine. It definitely grinded me up, spit me out. I was there almost a decade, and then left there to be the CFO of a bank, and just got to a point where I'm like, this just isn't serving my life. And so we decided never, ever intended to be a business owner. But here I am 20 last month. Was 20 years that I've had my accounts firm. Congratulations, and it's been

an adventure so much like

let's talk about that red crazy. And we always set goals for the quarter. Actually, we meet three times a year for so for the three months, four months, I don't know what you call that, the trimester. I don't know either one of my mastermind members set a goal to buy a red Corvette. Another one is a pilot, and he actually set a goal to buy a plane. And both of them made it, and we celebrated in the group. So did you have that red Porsche or something on your wish list, did you hit the bucket goal?

So the goal changed slightly, because back in late 90s gold and I was the newest Jane Bond movie that came out. So like they had that big break, and then piers Brosnan became the new James Bond, and that car in that movie was a BMW z3 and I had never, to that point, seen James Bond, I hadn't seen any of the movies Saul gold, and I was like, oh my god, I love this car. And now, all of a sudden, I'm a new James Bond fan. And I'm like, I want that car now. It took me almost five years, but ended up in what 2003 ended up getting my BMW z3 and so now I and I still have it like I've had it so great all this time, so, but yeah, so I did do it, and then I went back and watched every James Bond film.

And what do you think was the difference? What got you over the edge? What did you need? What business lessons did you need to learn to get there?

So the big thing was, when I started my business, I did not know any other business owners. I just thought, hey, I'm an accountant. I'm a CPA. I was a CFO of a bank. I should be able to figure this out, right? I've had all this business experience, but it's just such a different experience to start your own company, like literally from scratch, no clients. I just kind of felt like things would happen naturally, and nothing ever happened naturally. So when I started my firm, it was 2005 and I had started reaching out to different CPAs in my area, everybody was like, I'll talk to you, but I'm not really going to tell you anything. I figured it out. You can figure it out. So that was a big struggle, and it took me starting to consume. So I one of my first jobs as a teen, was working at the library, but I put away all the fiction books. So I used to devour like I just read constantly, but I was reading all the fiction. And once I started my firm, I had then had to dive into reading all these business books. And it took really finding the solid you know, and some of them start to repeat after a while, if you read enough of them, but once you start seeing the common themes, I'm like, Oh my gosh, yeah, that would help. But then also take into consideration that you can read 100 books that have 100 different ideas, and 75 of them aren't going to work for you for whatever reason. You just have a different business model, you're in a different location, just different restraints, right? And so it's acknowledging that you can read an idea and maybe it works for you and maybe it doesn't, and if it doesn't discard it move on to the next thing. So it's definitely taken a lot, and then over the years, I've joined different masterminds, different groups, and to be able to network with other people, or really not network, but connect with other people, to be able to talk through things. Yes, I've struggled with that. This is how I did it. And so to get more

inspiration, of more ideas, to be able to improve, and it's constant, like it's been 20 years, and even my firm looks different today than it did a year ago. Like it's constant evolution. So it's just being open to the idea of constant learning, right? Lifetime Learning. I love it.

You've got all the great markers of success, and Tony Robbins is the great motivational speaker, but much more, he's the best business trainer and mind trainer of our generation. And Tony says success leaves clues, and some of those clues, I see it on this podcast and talking to other successful business owners like almost everybody's walked on fire with Tony Robbins. And I would say almost every successful business owner has done five of these six things, or five of these seven things. They've been to a Tony Robbins, they've read E Myth, or they've studied EOS like traction. They're running a business operating system like it doesn't have to be Eos, which comes from the book traction, and we've done podcasts and webinars on that topic. They're in a mastermind. They go to conferences, they read books, they watch webinars and podcasts like this one. And if you don't have five of the six, you're probably not one of the leaders in your market, because, like you said, you just don't get there by doing it and making it up as you go. You have to learn from somewhere. Now maybe there's one exception, like, if you have an amazing mentor, like your dad's amazing business person, you get an amazing mentor through your career, and then you just follow that model and roll out your business. But anyways, enough said. Enough about my theories. Let's get back to you. One of the things that we talked about at our last meeting is you have wrote a book called 10 profit leaks, right? We're not going to try and do all 10 today, because you said there's five that are pretty significant and in particular relevant to law firms. So why don't we talk about the five profit leaks? Because, after all, you are a CFO law firm consultant. So today we're going to talk a little bit about the numbers.

No, absolutely. I mean, I started realizing I was having similar conversations over and over and over, which is what prompted me to write my book. So I narrowed it down in the book to 10 different profit leaks. And I talk about profit leaks because I try to set the stage that when you have a drippy faucet, so whether it's your kitchen or your bathroom, and you just see one drip, right? It's one drop and then one drop and one drop. And at first, you're kind of like me, not a big deal. I can live with it. I don't need to call the plumber yet. But if you before bed, plug up the sink and then let the drip, drip. Drips all accumulate overnight. In the morning, that might be a big chunk of water sitting in your sink, and now you're like, Oh, now it's a problem. I really should call the plumber. So I'm trying to make that correlation, that little things, if you let them continue to be little drops, the drops. Money leaving your business that you could capture and put more money in your bank account, because that's the ultimate goal. I talked to a lot of business owners, most will say, I want to hit a million in revenue, 5 million in revenue, 10 million in revenue. They have a revenue goal. And I will often reply back, well, that's great, and I encourage you. I will do what I can to help you get there. But did you know that Uber has billions with a B in revenue they have since like 2019 but they were running a net loss until 2023 so just because you have a large revenue number does not mean that you have net profit, and that means you have no money in the bank. Uber is going to take a long time to pay off all their debt. They had a borrow money so that they could be able to fund their losses, to be able to continue to survive until they got to a point where they made a profit. So I try to encourage people, let's not try to work on a top line revenue goal. Let's work on a net profit goal, because if you have net profit, there's still no guarantee you'll

have money in the bank, because people will take distributions and so that that'll suck up your net profit. But my ultimate goal is to put money in your bank like I want more money in your bank account, because that opens up so many doors, right? So the top profit leaks that I often will tell people, first off, making sure you have a very distinct system that's very solid, that will capture all your advanced client costs so that you can bill them back. So often I will see a law firm where somebody files three has three filings in the same court on the same day, and they're like, Oh, I remember the two cases, but I can't think what that third one was. And now you've got to do a whole bunch of research. So something that should take 30 seconds to go into your billing system and just type in the date, court and amount and the client. Now you're spending all this time researching to try to figure out what that third case was so you can bill it back. And I've seen too often where people just give up, can't figure it out, get frustrated, and then don't bill it back. So now the firm's on the hook for that. So that's a big one that I see often. Another one is sending a bill out, and then, oh, client will pay it. I just know they'll pay it. So there's no collection system in place. And my initial reaction, my first question is always one, do you take credit cards make it easy for people to pay you? And the second is, do you have some type of an automation for follow ups. So some billing systems, not all of them, but some of them, give you the ability to queue up an email that goes out. So invoices three days past due, send this email. This one's five days late, send a text message. So not every system does it, but some do. And if yours does, set those up and you can go through and say you could customize each message, and then it can't always be automated. The first

profit leak is not capturing costs that you can build back, not tracking collections correct.

It's just issuing a bill and just letting people, you know, just expecting them to pay. Yeah, they'll do it. My clients, this

is like Jay's Greatest Hits. It took me 23 years to learn a lot of these things. A matter of fact, we just Oh, yeah, ACH is free. Credit cards cost 2.8% and no option for checks. And so when I say we just switched about two years ago, but now three quarters of our clients, there's no more the checks in the mail syndrome, and we did a whole cash flow issue where we're chasing checks and going

through that every single and I love that. Yeah, I love that. For you, I will have people that will say, I refuse to pay the merchant service fees. And I'm like, okay, I get it. It's almost 3% of whatever that transaction is, which could be large if you allow clients to pay by credit card. But I will counter, accepting checks is not free. You just don't see a hard cost to it. You know how in law firms, you have soft costs and hard costs accepting checks like literal checks, and I'm not talking ACH. Ach is a little automated. That's a whole different that's very efficient. I love that. But taking checks, like physical checks that people either drop off or mail, there is an actual cost of that. It would be comparable to a soft cost in your firm. You have to have a person who now has to open the envelope, go and make a copy for your files so you know that the check came in or scan it, however you keep your records, then they've gotta go and sit in your bookkeeping system or your trust accounting, depending on what the payments for, and track, enter all that manually. There's a cost to that. You could free up so much time by taking Ach, because if you take ACH or credit cards, typically the billing system, as soon as that payment comes. Zen payment system marks it is paid. It's all done like it's all done for you. It's all hands off. So that's just so much easier, right? Profit leak, yeah. So, so, okay, so third profit leak, so this is a big one forgotten subscriptions. How many times have you signed up? Oh, I'm going to sign up for chat, G, P, T, I'm going to sign up for Claude. I'm going to sign up for perplexity, I'm going to sign up for Microsoft copilot. I'm going to sign up and I'm going to upgrade, because all of those have free options. But let's test out and see what their upgraded subscriptions are. And now all of a sudden, you've got four or five different subscriptions to the exact same thing. Okay? And I will grant that they do

function a little differently, but I will challenge you, which ones do you actually use? Because I know I've done the whole little tour, and I've settled like, for a while. I was on Claude, that was my favorite. You couldn't get me off it, and then it started giving me weird responses. And I'm like, Okay, I'm done. And so I moved to chat GPT, and now I've been there for about a year, and I still now, every once in a while, I'll see a new something new, and I'm like, oh, I should try that out. And I'm like, Okay, time out. Though, if I'm going to abandon chat GPT, I need to stop paying for it. Just downgrade to the free option and then flip over to whatever else I'm going to pay for but forgotten subscriptions is huge. I just see it so often.

How do you calendarize that? What we found is we do it, but we do it in waves. Yeah, I do too on the calendar and do it every quarter. Yeah, that was our solution.

Then, yeah. So I do something similar. I do it as part of my monthly close so for my firm, as part of my monthly close process, because I'm doing my own books when I go through and I have a whole list, a checklist, I have a whole, you know, SOP about how to close books. And so for my firm, I do it once a month, because I'll get mad at myself if I let things go on too long, and I'll go through and pull a report of all the outflow, like every payment I made for the last month does is anything duplicate. And then I also actually go back and look at it and say, Okay, I'm paying for chat, G, P, T, but am I using the premium? You know how each tier has, like, the extra all of the prior tier, plus, and you can do these extra things, do a check, and just make sure that you're on the right tier of when certain subscriptions offer multiple packages right? But I do that monthly. For clients depends on I have different tiers. I have different packages of services. And so for some clients, I do quarterly review. For them, I go through and review their expenses. Now I can't, because I'm not sitting in all my clients, you know, offices, so I can't always say hey, but I'll go through and I'll say, Hey, you're paying for acuity and Calendly. Do you need to pay for two scheduling systems? And there may be a valid reason. So just because I come up with a list to say this to me, I'm suspicious it's not an automatic I'm just trying to give back to the clients and say, Hey, I just looked at things. And if it's me, I'm kind of looking into these

such a good exercise. As a matter of fact, we just went through it at our annual planning our financial guy made us go through the list, and there was about 20 subscriptions. We got rid of about 15 of them because we had everyone in the room. It's like, do you use this? Use this? Oh, you know, it's two different AI clip products that do clipping, and which one's a social media team using, like so many things we I sign up for as a test that I forget, then I forget that they used it or didn't use it. But I think $30,000 a year. We had an $800 product. 800 a month. We weren't using a 400 a month. We weren't using or we were lightly using, but we had a similar product we were heavily using exactly when we made the hard choices. We put about $30,000 on the bottom line. All right, that's great. Third 1/3, profit, leak, forgotten subscriptions. What is the fourth profit leak?

Okay, you're going to love this one, unproven market spending. So your marketing so often I will talk to somebody and say, Hey, I see that your ad spend went up three months ago, and you're paying this higher. I see it, you know, for the last three months, but I'm looking at your revenue, and by now, I would expect your revenue to increase, because I know just because you flip a switch and you turn on some new ad, whatever it is, does not bring in the money today, right? There's a time involved in it between when you can pick up new clients, get them signed, do the work, build the work, and they pay. So I give it a couple months, and I'm like, can we talk to your marketing guy? Like I'm or your marketing person. I don't want to be discriminatory, but can we talk to your marketing person? Because I just want to make sure that what you're paying for, you're getting results from. Because I've also had the situation where. I had somebody I was talking to that said, Oh my gosh, I found this new marketing agency. My phone is literally ringing off the hook. Went from one day no phone calls to I have to hire somebody to answer the phones because I can't get work done. The phone's ringing so much. And then it turned into a similar conversation. Well, okay, but I don't see your revenue going up. Oh, well, that's because the phone calls are all for work. I don't do I have my practice area and all these phone calls coming in, I don't do that work. So we ended up turning that into a positive because we were able to set up a referral network of local attorneys. So when a call came in and somebody would say, I'm calling, I got a DUI. Oh, hold on a minute. We don't practice that, but let me connect you to this other firm. And so there turns out to be referral fees in that arrangement, but just unproven marketing spend, just making sure that what you're paying for you're getting, and I get that, there's the testing, yeah, but I don't want to see it go on,

where you're spending 10% of your revenue over a year, and there's no change in revenue that

that very simple. We do this for our clients. Make a chart. Google spend $5,000 Facebook spend $2,000 Yahoo spend $1,000 how many leads did we get in each of those is this is the next column, how many signed cases did we get? Is the next column? Very easy to do the calculation. What's the cost per lead? Absolutely, cost per sign case. And that's a great way to confirm the testing. And frankly, so many of our clients don't know how many leads they get in a month. What the conversion percentage is how many signed cases, and what's their target cost per case? Simple numbers. Gotta have them. Awesome. Number four, unproven market spending. And last, but certainly not least, the fifth, leaky bucket, profit loser for law firms

is not doing tax planning now, yes, I'm a CPA. No, I do not do tax work, but I have seen so often, and it's more and more, and I think it's more because the tax code, like every day, the tax code, gets more complex, right? There's always something new coming up, which is part of why I don't deal with taxes. I just can't keep up with it. I don't care to keep up with it, and I hire somebody else to do my own tax return. But there is a difference. And what I see often is there's an expectation in the market just in general, and not among law firm owners specifically, just in the market in general, there's an expectation. I just paid somebody 500 bucks or 1000 or whatever the amount is, that's irrelevant. But I just paid somebody X dollars to prepare my taxes, and I owed a ton, and they told me nothing. There was no tips about hey, change that. Do this different. You should have called me before that happened. And I'm like, okay, but here's the deal. Tax Prep is one service, and that's what you paid for. You got what you paid for. You're expecting more. You need to pay more for the tax planning, and it was well worth spending the money for the tax planning. And it's the same like, I challenge my law firm owners. What's the saying about law, the person who represents themselves has a fool for a client. Right? Same deal. Don't expect your tax preparer to give you tax advice without paying for it, and then don't try to figure it out on your own, either. Like, don't go down the rabbit hole of YouTube and Tiktok and all those for the tax advice, because nine times out of 10, probably 99 out of 100 those are not good, not good advice, but actually pay to sit down with somebody, whether that's one time a year, two, three, whatever, like, depending on what you have going on in your life, make sure that you're speaking to somebody to plan your taxes. Some of it's just as simple as making sure you're making the correct amount of estimated tax payments

every quarter, because if you underpay, there's a tax penalty which is costing you money. But the more you have going on in your between your business and your personal life, there's more that a tax professional can help you with tax planning, and sometimes it's today you have to make decisions that you're going to reap the benefit tomorrow, five years like retirement accounts now, tax pro is not going to be able to set up the retirement account, but they can at least say, hey, look into this type of retirement account. I would probably avoid this for whatever reason. There's certain for example, small businesses, a lot of retirement planners will say, Hey, you can set up a SEP IRA account, and that's great, but there's a rule that if you have another employee, if I put in money into my separate IRA account, I have to put the same, comparable amount into my employees. So now you're like, Oh, is that really the best decision for my use of money? Like, and I'm not saying don't do it. I'm not saying don't pay, you know, don't pay benefits to your employees, but. But maybe it'd be better for a 401 k plan, because then you're just matching what they're putting in. So now they have a dog in the fight, right? So let your employees put money in, and now you're going to match a percentage of that. That's probably going to be a better use than a win. Win. Your employee is going to benefit you have you're supporting them better. But tax planning, like I just can't even emphasize enough that a little bit, just even one conversation, can save you so much money in taxes.

Yeah, tax planning doesn't start around March 10.

Okay, correct? It's December 31

let's run through these quickly. Kelley Brubaker from profit scale and thrives five profit leaks for law firms. The overall theme is your target for your business. And what Kelley talks to her clients about is net profit. The goal is not top line revenue. The goal is net profit, and that's such a great place to start. Number one is capturing client costs and having a distinct strategy to capture client costs. Number two is having no collection system. So you send out the bills, but you don't have an automated collection system. You're not using credit cards and ACH to make it easy for your customers. Number three is forgotten subscriptions, and we just went through that exercise and probably saved about $30,000 a year. Number four is unproven market spending, doing ad spending, without tracking the cost per lead acquisition and the cost per sign new client acquisition. And the fifth one is not doing tax planning. Kelley, give us one thought, what's the number one thing most firms should do to fix these profit leaks,

I recommend just calendaring 30 minutes once a week. And I don't care what day a week it is, I try to do it Monday mornings. Just it's easier. I can look at last week. Have a full picture last week, but calendar, even if it's only 15 minutes, I just beg you put in your calendar an appointment with yourself, so that you're going to have that time that you're like, oh, there it is. I already have it blocked off. Nobody else can schedule that time. I'm going to sit down just look through my information. Have a routine of what you're looking at, know who you can ask questions of. So whether you have a bookkeeper, a CFO, a tax person, that when you get stuck, ask that person, but calendar the time so that you're forcing yourself to do it. I think we're

getting right into the first of the quick one liners. And we've been doing this podcast for over 10 years, and we've been asking great people like yourself a quick one liner on the following topics. And the first one, is there an app or technique you use for personal productivity?

So I use clickup. And it's not for everybody, because it's a little bit open ended, so it's highly customizable. So it was a little bit rough to get into, but clickup has been my task management productivity.

That's great. And I thought you were going to say blocking time on your calendar, because you just let in with that one. I wanted something new next up. And by the way we use club cup as well. You have a personal wellness routine.

I do. So in my work day, I found I was sitting way too much. So I have a decent sized office, and I have a walking pad and a standing desk. So every like hour to two hours, depending on meetings and what my schedule looks like, I just try to get up and walk for 10 to 15 minutes just to get moving. It makes me feel so much better to get up and have that movement.

That's awesome. I love it. I have the stand up desk too. Best business books.

Oh, well, I often will talk about Mike Michalowicz. I love him for a really long time. I was part of his group for profit first. Professionals love profit first. I'm a little sad that I just got to a point I didn't have time to be so active in the group, and I let that certification drop. But I love Mike's very practical and very open about the business failures that he's experienced, some pretty big ones, and then he's open about his success as well, and just very giving. I've met him in person. He's just a very giving guy and very practical. I love his sense of humor. He and I are similar age, so it's a lot of pop culture references from back in the 80s, but I love all of Mike's, books, blogs,

podcasts and youtubes. When something you subscribe to hits your feed, you immediately go to Yeah.

So I would say Carolyn elephant has my shingle. She's had it for a long time, so I definitely, yeah, love her stuff. Again, practical advice, and that's what resonates most with me. When somebody can it's relatable, it's easy to digest, it's practical stuff. I'm all in on that. So hers, I read for sure, and then podcasts. I've been listening to Brian glass, and I think it's called life between the briefs. I'm pretty sure that's what it's called. But Brian glass, lawyer out of Virginia and just again, practical advice, and that's what resonates

most with me. Great guy, and Ben Glass's dad has a podcast. I've been on those podcasts. Us as well. Fantastic guys, and they run Great Legal Marketing, a conference we participate in.

Oh, absolutely, yeah.

And a mastermind as well. And if you're looking for a great lawyer, mastermind, that's a good place to start. Particularly good for the guys trying to get to a million dollars, yeah, absolutely. Do you have an NFL or sports team?

I live in Cleveland. Alright, we can skip that one, trust me, it is. It is, yeah, heartbreak constantly

on the fourth quarterback this year. Pretty good track record. All right. Oh, it is, back to a business question. What's a great introduction for you? If folks are listening, they're saying, Wow, this is one of the smartest financial people I've ever heard with regards to law firms, and that's what I said when I asked Kelley to be on the podcast. Who should they

introduce you to? So my ideal client is a law firm of any size who's looking to grow, because I'm trying to help you. So I have some clients who are trying to hit a half a million in annual revenue. And those conversations are much different than trying to hit a million, a million and a half, 2 million, 5 million. Where I shine is trying to help people grow, and it's going through and saying, are you looking at this? Did you consider that? Maybe now's the time we need to hire somebody. How much can you afford? So anybody who's looking to grow I'm the girl.

You know, this might not be the sexiest topic for conference, but right now, I'm proposing that this podcast becomes a presentation at Great Legal Marketing next year. So Ben Glass and Brian glass, over you last question, Where can people get in touch with you?

Two ways you can either go to my website, which is profit, scale, thrive.com, there's information there that you can link, you know, get jump on my calendar, and then you can connect with me on LinkedIn. So just on LinkedIn. Kelley Brubaker, I think there's a couple other Kelley Brubakers. I'm the only CPA, and definitely the only one that supports law firms.

Kelley, you made a topic that's not always the most enthralling, very, very interesting. So thank you for joining us here on the 10 Golden Rules podcast.

Thank you, Jay. I've had so much fun today, and I hope the listeners enjoy it as well. And I agree with you. It's not always fun to talk about money or finances, but I want to be able to have real conversations with people that inspire people to be like, okay, mind shift. I'll tolerate this. Let's do it. Let's because I want more money in your bank, which is why my firm is called profit scale thrive. My focus on law firms to grow overflowing profits that get you scaled growth and then you have a thriving life. That's the like reason behind the the name of the company.

Awesome job. Kelley, thanks so much. Bye, bye.

Thank you, Jay