Maximum Lawyer

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When business owners talk about success, they almost always talk about revenue. But what if the real question isn’t how much you made… it’s how much you kept? 💰

In this episode, Chelsea Williams breaks down the uncomfortable truth many entrepreneurs avoid: high revenue does not equal a profitable business. Drawing from her experience helping law firms across the country understand their financial data, Chelsea explains why so many business owners feel financial stress even while bringing in significant income.

Through her CFO Framework, Chelsea challenges entrepreneurs to step out of being “pawns” in the game of money and start thinking like the financial leader of their business. She introduces the Three Pillars of Finance, Foundation, Framework, and Flywheel, simple systems that replace guesswork with clarity and help business owners build sustainable profit. By understanding financial reports, implementing intentional spending controls, and confronting the beliefs that shape our money habits, entrepreneurs can move from financial anxiety to confidence, control, and long-term freedom.

Chelsea Williams is a Chief Financial Architect who works with law firms across the United States to help owners leverage their financial data, keep more of what they earn, and scale their businesses with intention. With nearly two decades of experience working with business owners, she specializes in turning confusing financial reports into clear strategies that support both business growth and personal financial freedom.

Tune in to today’s episode and checkout the full show notes here. 

  • 2:05 Why revenue doesn’t matter if you’re not keeping profit
  •  4:15 Thinking like the CFO of your own business
  •  6:30 The three pillars of financial strategy
  •  7:50 The importance of monthly financial reports
  •  9:25 How budgets protect your future freedom
  •  10:35 The flywheel: systems that create financial momentum
  •  11:55 Confronting limiting beliefs around money
  •  13:05 The universal profit equation explained
  •  15:35 Why more revenue won’t fix broken finances
  •  16:50 The $7 million firm that still struggled with cash flow
  •  17:55 How systems create freedom for business owners
  •  19:15 Why profit is about life, not just money
  •  21:40 Moving from pawn to player in the game of money 

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Creators and Guests

Host
Tyson Mutrux
Tyson is the founder of Mutrux Firm Injury Lawyers and the co-founder of Maximum Lawyer.

What is Maximum Lawyer?

Maximum Lawyer is the podcast for law firm owners who want to scale with intention and build a business that works for their life.

Hosted by Tyson Mutrux, each weekly episode features candid conversations with law firm owners, business experts, and industry leaders sharing real strategies and lessons learned in the trenches.

If you're ready to grow your firm with less stress and more support, this is your next must listen. Subscribe today.

878 - Chelsea WIlliams

Chelsea Williams 00:00:00 All right, here's what we're going to do. Pull out your phone and text somebody you know that left and be like, you're an idiot. This girl is throwing money in the crowd. You missed everything. You have to come next year because she's speaking again. And she's throwing out money. Yeah. This is great, you guys. I was so excited when I heard Max Walken was going to be a thing again. Give Tyson a round of applause. I know this has been a lot. We're excited. Thank you. Yeah, we're going to we're going to take it out with a bang. Oh that's fancy I got all my slides right there. Let's see if the clicker works for me. Oh it's the green button, not the firecracker. There we go okay. We're going to talk about money. Who in here likes money? We're here for this right okay. Great. So my first question to everybody in the audience is if I was to ask you how much you made in revenue last year, who could tell me? All right.

Chelsea Williams 00:01:01 What was it? I'm just kidding. I'm not going to make you sound all right. Good. So we know. We know. How about if I was to ask you how much you kept out of that revenue in profit, not W2 profit. Who knows? Far less. Far less. That is the difference between knowing what we make versus what we keep. Revenue is irrelevant if we're not keeping any of it. And that's what we're going to talk about today. Now, we all started our businesses for reasons rooted in money. Okay. Other reasons, yes, but reasons rooted in money. We love tracking how much we make. We're really good at spending it. But what we kind of suck at is keeping it. And this gap in knowledge is not a character flaw. It's that no one's teaching us. Law school didn't teach you? My finance degree didn't teach me well enough. So this is the gap we're going to close today. For those of you that don't know me, I know a lot of people here.

Chelsea Williams 00:02:12 I was really excited to see a lot of familiar faces. But for those of you that don't know who I am, I'm Chelsea Williams. I am a chief financial architect for law firms across the United States. I've been working with business owners for about 20 years now, helping them leverage their financial data so that they can keep more of what they're already making, scale as big as they desire, and stop thinking that struggle is a necessary evil to growth. Now, when I first started, I thought accounting was about spreadsheets and tax codes. Why did I do that? Knowing this right? But I quickly found out it's about people and their money stories. Now. I grew up in a family where money was either a source of stress or silence, and I would later come to work with law firm owners who were making millions, but secretly admitting to me they were terrified of their numbers and despite making millions, had empty bank accounts and mounds of debt. So we're going to get real about why some of you might be having money problems.

Chelsea Williams 00:03:20 And if you're not having them now, you may have them later. So still pay attention. But the first thing I want you to know and believe is that there are no such thing as money problems. Only problems showing up in your money. Now, in the game of money, you're either a player or a pawn. And if you're sitting there thinking to yourself, oh my gosh, I wonder which one I am? That's your clue. You're a pawn. In order to be a player in the game of money. You have to think like a CFO, a chief financial officer. Now, for some of you, that term might be a new term. For some of you. Maybe you've heard about it, but you don't really understand it. I actually spoke to a law firm owner at this event who was like, oh yeah, I have a CFO. I don't know what they do, and I haven't talked to him, but I got one right. So let's clear this up. A CFO is not your bookkeeper.

Chelsea Williams 00:04:16 It is not your tax preparer. It ain't your financial advisor. And it is not your banker. Actually, for most of you in this room here, your CFO is you. You just didn't know it until this moment. And until you can afford to hire a fractional CFO when you're making around $1 million in annual revenue, you own that hat. And to truly wear and understand that hat will serve you not just in your business life, but in your personal financial life as well. But to abdicate that hat, to not know it and understand it will have you blaming everyone else for your money problems and dependent on other people to fix them. Now, I don't want you to depend on other people to fix your money problems. So today I'm going to teach you the three pillars to law firm finance so that you can stop using your gut to make decisions. Working 60 hours a week because you don't know if you can afford to hire. Help crossing your fingers until payroll clears. Wondering where all your money went and taking out loans to cover operating expenses.

Chelsea Williams 00:05:25 Some of you feel that pit in your stomach right now. Good. We're going to face it head on together because you started a business, not a hobby. And you don't have to choose between making good money, delivering superior services, working less, keeping your clients happy, and making sure your team is well taken care of. You can have all of those things if you use numbers as your guide. So who in here wants all of those things from those from your business? All of them. Obviously, we're not settling for anything. Good. We are in the right place. Max Law can come next year. But the truth is, if you don't know what your profit is, you don't actually know how your law firm is doing. And that's the gap we're going to close today. And the way we close it is not with more hustle, and it is not with more ours. It's with structure. And I call them the three pillars to law firm finance. The foundation is what positions us to stop guessing and start looking.

Chelsea Williams 00:06:34 The framework gets us out of the rearview mirror of our financial past and into planning intentionally for our financial future. And the flywheel is made up of systems and touchpoints that let us know we're on track and alert us when we're off track. So let's look at what a solid foundation is.

Chelsea WIlliams 00:07:02 That's it.

Chelsea Williams 00:07:04 It is that simple. Some of you need to stop working with bookkeepers who don't understand trust accounting. You're playing Russian roulette with your license to practice law. And on the topic of taxes, I want you to understand there is a difference between preparing a tax return from year to year and curating a tax strategy that accounts for not just your business goals, but your personal goals. And over the next 3 to 5 years, Pennywise Tax Strategies is here. If you haven't talked to him, you definitely should.

Chelsea WIlliams 00:07:40 Thanks, Chelsea.

Chelsea Williams 00:07:41 Hey. And the last piece of the foundation are those monthly financials. Now we're at Max Lacon. So I know everyone looks at those every single month right. Yes. Yes.

Chelsea Williams 00:07:55 You guys are cool. You don't have to lie to kick it. It's okay. Those are arguably the most important part of your foundation because they answer the question you're asking me the most, which is? Where did all my money go? The framework is made up of financial tools that give you spending controls, insight into your financial future, and a systematic process to protect cash profits. Profit first. Who uses it? Yes. Budgets aren't cages. They are boundaries. And those boundaries are protecting your future self. Inside of them. You can spend on whatever you want outside of them. What you have to lose isn't money. It's freedom. And being able to see your financial future as a game changer. This is where we uncross our fingers and plan for things like more revenue, hiring new team members, investing in marketing, and intentionally protecting cash profits. These systems are guardrails, and if you don't have them, chances are you're stuck in Parkinson's Law. Just like a goldfish will grow to the size of its bowl.

Chelsea Williams 00:09:26 Parkinson's Law says that for every increase in your revenue, your expenses will increase to meet or exceed that increase within 4 to 6 months, unless a specific force is put against it. Who can tell me what that specific force is a budget. I am so impressed. I thought I'd have to wait longer. Thank you. A budget money is only 20% mechanics. The other 80% is in our heads and in our habits. Those mechanics help us stay out of our head and on track with how we're allocating our money. And when you know the 20% and you follow it, your head and your habits will catch up. And that's where the flywheel comes in really handy. Now there's a lot of words on this slide. I only have 20 minutes unless you're giving me 30 more. No okay. I only have 20 minutes. The point of the flywheel is that when you look at the right things, at the right times, you begin to unlock anticipation in your law firm. When Covid hit, we got a lot of calls.

Chelsea Williams 00:10:38 And when I would get on the phone with each individual. Within five seconds, I could place everyone into one of two camps, prepared and unprepared. Now, nobody knew Covid was coming. Of course they didn't. But that first group, they were prepared for whatever it was. Because if it's not Covid, it's a stock market crash or terrorists or AI. It will always be something that first group was ready for. Whatever. Implement these three pillars and the next time that something rolls around, you will be prepared and positioned and ready and anticipating to face it with confidence. Now, have you guys ever heard this saying here your beliefs create your thoughts, create your habits? Yes, we're all high achievers here. We get this Alexis talks a lot about this. The flywheel kind of hacks this sequence right at the actions part. It's kind of like dressing for the job you want, not the job you have. If you want a more profitable, bigger law firm than today. Start acting like and treating it as if it already is.

Chelsea Williams 00:11:58 Because the flywheel is the 20%. But what will inevitably happen is that that 80% kicks in and you are forced to reverse engineer this sequence back to your beliefs around money, because we as humans will sabotage ourselves. So if you have deeply rooted money beliefs like money is bad, making too much is a bad thing. Who are you to be charging that much? You'll stay stuck. So the flywheel helps us expose these limiting beliefs. But it's up to you to fix them. Oh, cool. We got the animations working. I was told they wouldn't work. That's surprising. Thank you. All right, so once we have the flywheel in motion, we finally have momentum. You're no longer reacting. You're anticipating. And put this way, I hope it seems simple. Like everybody can go home and make sure you have everything checked off of each pillar. Except for what I know. Because of what I do and how long I've been doing it, is that most people don't take action. In fact, most people stay stuck at the foundation.

Chelsea Williams 00:13:08 Why? You all will argue a 20 page contract clause like your life depends on it. I know it because you argue with me about my engagement letter, but you won't argue with yourself to sit down and look at your numbers. Every single month you solve your client's problems in your sleep. Meanwhile, your own numbers are over there in witness protection. Why? Because something is off on your profit equation. And I'm going to explain exactly what that is. And I'm going to pair it with four hard truths that may sting a little bit, but I truly believe it's what you need to hear. This is what I call the universal profit equation. The money you make, minus the money you spend, equals the money you keep to save and invest. And that's worth repeating. The money you make. Not what's over here. Sitting in accounts receivable that you're not collecting on the money you actually make, minus the money you spend, equals the money you keep to save and invest. Now, because of what I know and what I do and how long I've been doing it.

Chelsea Williams 00:14:19 What I also know is that most law firm owners are living in a net zero or worse, a net negative equation. So let's look at why this breaks down. Now I know why a lot of you are avoiding your numbers. Some of you look at your financial reports and they're unorganized. They make no sense. You can't read the story behind them and you're frustrated, I get it. There's an easy fix to that. Some of you are going to your bookkeepers and your tax preparers, and you're asking CFO level questions that they're not qualified to answer, and you leave frustrated. It's okay. You didn't know any better today, you know. And some of you know that when you look your numbers in the face, you're going to be staring at the same issues you already know are happening and you're avoiding. The truth is, fear never disappears. We just learn how to move with it. And confidence isn't given. It's built by taking these actions. Time and time again. If you aren't keeping enough of what you're already making, more revenue will only create more chaos.

Chelsea Williams 00:15:38 It will never solve the underlying problems. The struggle with a lot of you is that you just don't know how much you're keeping. You don't know the bottom piece of that equation. What is my profit? I don't know where is it? So we're going to clear that up. I'm going to make it real simple. It's your cash flow and this is how you figure it out. Your income statement is your taxable revenue minus your tax deductible expenses, leaving your taxable net income. What you will never see on your income statement, but that comes out of your bank account, are things like the taxes you owe your principal, payments to debt and liabilities, and your owner's draws and distributions. The number in my example tell a real life story. By the way, this is a firm that came to me making $7 million a year in revenue, and after one bad month, the owner had to skip a paycheck and take out a loan to cover payroll. Profit can be broken at any revenue level. It can also be protected at any revenue level if you systematically do so with profit first.

Chelsea Williams 00:16:52 Most of you do that, so you're on track. Are these resonating with anyone? Can anybody be honest? Be like, look, I can I can do this I. This makes sense. I need to look at these things. Yeah. According to Cleo Law, Cleo's trend report, 60% of you are resonating right now. It's just really uncomfortable. I get it, I get it, but I want you to know I want you to hear it. Systems are the only way to build a business. Even if you are a solo and you want to stay that way, you want to go on a peaceful vacation, right? Documenting and implementing systems will be the thing that sets you free from the grind, and not having them can cost you big time. In that same $7 million firm, we were able to quantify what avoidance and lack of systems was costing them by looking at their misleads, their poor conversion rates, and their underutilized billable staff. Now, don't look at me like that. Flat fears.

Chelsea Williams 00:17:58 I know what you're thinking. I'm not a billable hour. This. Yes it does. The whole point of a flat fee is to do the same or better than the billable hour. And for my contingency fee firms, your equation may be a little different, but the principles are the exact same. Systems don't complicate your firm. They free it. So the truth is. And by now, I've shown you exactly why. If you can't manage where you're at now, you won't be able to manage where you want to go until you look your numbers in the face. Swallow the hard truths and take action on your profit equation to protect cash profits. I work with a lot of law firms that make way less and keep a lot more in profit than that $7 million a year firm. Stop telling yourself that you'll get your finances together at some point down the road when something magical clicks. If you don't make time for it now, it will steal your time later and when you're still not ready. So the three pillars in the profit equation.

Chelsea Williams 00:19:17 It's not just about numbers. This is not just about money. You guys, this is your life. It's about stepping off the financial hamster wheel. When you implement the three pillars and you work on your profit equation to protect profits, you unlock a whole new world of potential in your law firm. Just like Alexis did. And yes, my numbers agree with hers on her slide. Yes, Alexis owned this process. I don't take credit. This is a framework. You got to do the work. Alexis did it, and her numbers prove it. Not only does she own a successful law firm, she has a coaching business helping other law firm owners do the same thing she did. So this all comes back to simplicity. You don't need a dozen spreadsheets, an MBA, or a magic formula. What you need are steady steps you can take over and over again because profit isn't built in one big moment. It's built in the rhythm of how you run your firm. Firms don't fail because of clients and cases.

Chelsea Williams 00:20:22 They fail because the owners never step out of being a pawn and into a player in the game of money. So here are your steps moving forward. Simple four steps. Now imagine six months from now you implement what I've taught you and what I'm about to share with you on this next slide that I didn't have time to go over. And you open up your bank account and instead of dread, you feel peace. You know what's coming in, what's going out and what you get to keep. You know how to use financial statements to make data driven decisions, and you have a financial forecast and can see your financial future, those things, that's financial freedom. And the good news is you don't have to be like Rihanna to get it. You don't have to have millions. You just need clarity, systems and courage. Now go ahead and snap that QR code. Me and my team did a lot of work to make sure you got all the nuggets that I couldn't share with you today. So at the beginning of this presentation, I asked everybody who knew their revenue, who could tell me their revenue from last year, and a lot of your hands went up.

Chelsea Williams 00:21:44 Then I asked, who knows how much they kept in profit out of that revenue? And a lot of your hands frozen your labs. Six months from now, I want you answering that second question with confidence. Because in the game of money, you're either a player or a pawn. And when you know your profit, when you own your money story, you step out of being a pawn. You become the player. That's the CFO framework, and that's how you win the game. Checkmate.