What is the definition of success in law today? To most lawyers, a successful practice is one where they enjoy their work and make a good living along the way.
Unfortunately, many attorneys do not enjoy their work, and many are struggling financially (or are having to work far too hard to make a living).
While this article is about “out of the box” concepts to grow a law practice, they are not really out of the box as much as they are just not well-known. Of the three concepts covered in this article, at least one, and probably two, will be usable by nearly everyone who reads it.
Asset Protection Planning
What is asset protection planning? In the legal community, most would define asset protection planning as planning that protects a client’s assets from lawsuits.
What’s ironic about asset protection planning is that 90% or more of the attorneys who read this article do not have an asset protection plan.
What assets need to be protected?
- Brokerage and savings accounts
- Real estate (especially vacation and rental properties)
- Collectibles (cars, jewelry, paintings, etc.)
- IRAs in some states
What are the primary tools used by attorneys?
Domestic limited liability companies (LLCs) or family limited partnerships (FLPs) (multi-member) are commonly used. Once assets are owned properly by an LLC or FLP, they are out of the reach of typical creditors.
What clients need asset protection?
All professional clients (attorneys, CPAs, doctors, etc.) need asset protection planning. Professionals can’t hide behind their corporate entities and are sued personally for screw-ups at work.
Who else need asset protection?
Any client who has valuable assets, drives a car, and owns a cell phone (which means everyone) would benefit from asset protection. In today’s tech age, all clients are literally one text message away from a negligent car accident that could wipe out their wealth.
One of the best things about asset protection planning is that 95% or more of your clients with wealth will not have a proper asset protection plan. The opportunity for law firms who know this subject matter is significant.
Is asset protection planning profitable?
It’s very profitable. A client with a brokerage account and a vacation home should have two properly set up LLCs (one for each asset). The cost to set up each should be $1,500 at a minimum and more likely the charge will be closer to $2,500-$3,000. After the entity is set up, annual maintenance is needed (annual minutes and filings). Once enough entities are formed, the fee income from each entity acts as an annuity for the law firm (the fees just keep coming in each year and grow as more entities are added).
Medicaid Planning
With 10,000 people turning 65 every day in this country, you’d think that more attorneys would learn Medicaid planning.
What is Medicaid Planning?
Medicaid planning is the proper use of the Medicaid spend-down rules to help clients avoid paying more for long-term care than is required by law.
Millions of people ask every year how will they be able to pay for their long-term care expenses. There are only four ways to do so: 1) Medicare (very limited); 2) Long-term care (LTC) insurance; 3) Private Pay (what most people who do not plan will end up doing), and 4) Medicaid.
Because most clients won’t qualify for Medicare and most have not purchased LTC insurance, most clients, as their first default, will end up paying for care out of their own pockets. What about Medicaid? Clients won’t qualify for Medicaid until they have spent down virtually all of their assets.
When I say spend down, I mean that most clients will have to spend all of their countable assets (which is just about everything except their home) down to $2,000. That means spending down IRA assets, brokerage accounts, annuities, etc.
Unfortunately, many people think they can just give their assets away before trying to qualify for Medicaid. This only works if the gifts are made five years in advance.
Because most people don’t plan properly, they will call their local attorney on the way to the nursing home or when they are already in the home. Some Medicaid planning techniques can still immediately qualify most clients for aid. This is called critical need Medicaid planning.
Medicaid planning is a very lucrative practice area. People can either pay an attorney to help them save money in a Medicaid plan, or they can give the money to the nursing home. It’s not a difficult decision. Because most attorneys, even most estate planning attorneys, do not know this subject matter, those who do learn it can grow their law practice and generate more revenue.
Multi-Disciplinary Practice of Law (MDPL)
What is the MDPL?
The MDPL is a “full service” practice of law model that includes giving advice on financial matters as well as life insurance, annuities, disability insurance and LTC insurance.
Currently, many people are getting life insurance and annuity advice from their local insurance agent. Attorneys who learn the subject matter can give better (often significantly better) and more suitable advice on these products. The same can be said for clients who receive investment advice from advisors who work through most broker-dealers (Ameriprise, Transamerica, Mass Mutual, Raymond James, etc.).
The MDPL model has been around for decades. Unfortunately, the ABA has not been proactive in promoting this model, so attorneys are years behind the CPAs who have been using a full-service model that is not only supported by the AICPA but is encouraged.
Is the MDPL profitable?
In a word, yes. A solo practitioner should be able to generate an additional $50,000 a year with relative ease, and those that really embrace the model could earn many times that amount. Additionally, the model can generate a growing and recurring revenue stream.
What are the benefits of using the MDPL model?
The benefits include 1) more comprehensive advice for clients; 2) increased revenue; 3) with increased revenue, attorneys can choose to work less, which may significantly increase their enjoyment of work.
What type of law firm can use the MDPL model?
Just about any law firm can use this model. It’s a terrific fit for estate planning firms as well as any firm that deals with profitable business owners. Also, it’s really a no-brainer fit for larger firms that cover several different areas of law.
Summary
Attorneys, in general, are not good at getting out of the box they work in. Most simply go to work, complain to themselves that they are not having fun or making the money they want, and then do the same things over and over. Expecting a different outcome when working this way is, well… we’ve all heard that old saying about the definition of insanity.
If you want to get more enjoyment out of your law practice, if you want to provide better and more expanded advice to clients, and if you want to significantly increase the revenue of your practice, I highly recommend that you consider implementing one or more of the “out of the box” concepts discussed in this article.
About the Author
Roccy DeFrancesco is an attorney and author of numerous books, as well as the co-author of 21st Century Attorney. Contact him at roccy@21stcenturyattorney.com or 269.216.9978.