In this week’s episode, Chip Griffin and Gini Dietrich discuss how important it is to find — and use — a good lawyer and accountant to advise your agency.
The mere thought of lawyers and accountants may give you a shiver. Or it may cause your eyelids to begin to feel heavy. But the value they can provide to your business should not be underestimated.
From reducing risk to increasing profit in your pocket, good legal and accounting advice can make a big difference in the success of your agency business.
The following transcript has been automatically generated. Please listen to the audio to confirm before quoting.
Chip Griffin 0:02
Hello, and welcome to another episode of the agency leadership podcast. I’m Chip Griffin
Gini Dietrich 0:06
and I am Gini Dietrich
Chip Griffin 0:08
and we’re here to talk about legal and accounting issues. So don’t fall asleep.
Gini Dietrich 0:14
Don’t leave just because of that topic.
Chip Griffin 0:17
But before we get into the topic, a few shout outs this week. The first one is to Cheryl and Starkey, who tweeted a couple of times about the podcast said the just listening to your new podcast, lots of value. Great initiative that always always nice to see you.
Gini Dietrich 0:33
Chip Griffin 0:34
So we get another listener. I mean, we’re gonna have to just start keeping a list. We
Gini Dietrich 0:37
were up to four now. That’s amazing. Yeah.
Chip Griffin 0:39
And it’s, it’s amazing. We are really, you know, on all cylinders. Right now,
the unfortunately there were no new iTunes reviews this week. So I have no shout outs there. So it would be great. If you’re listening and you’re enjoying what you’re listening to. Maybe you can leave a nice iTunes review, because those are always helpful and very growing. audience. Yes, the app, we don’t
Gini Dietrich 1:00
Chip Griffin 1:02
Yeah, I mean, this is free, right? for free for people. So you know, a little payment for a nice, nice tweet, a nice iTunes review. We always appreciate it. We do appreciate that. And if you missed it. Recently, I had a post on spin sucks that actually spun out of the finding focus episode that we had a few episodes back. Yep. So talked about differentiation and my sort of journalistic approach
Gini Dietrich 1:28
to finding a holistic approach. I love it.
Chip Griffin 1:31
Well, thank you. And it seems to have been fairly popular. There is actually a follow up question. And I’ve now done a post on the agency leadership hub answering that question. So, you know, we’re just spinning around in circles on this and providing great resources all throughout. So it’s, it’s nice when, when different paths can all intersect together?
Gini Dietrich 1:49
Yes, I love it. I love it. I love it.
Chip Griffin 1:53
So do you have any other shout outs or things you want to plug? Before we jump into the topic
Gini Dietrich 1:58
you do not. So I’m going to avoid one topic in particular. So let’s just move on. Excellent.
Chip Griffin 2:05
And everybody who has been listening, the last five episodes knows exactly what you’re talking about. If you don’t know, go back and listen to those five episodes. And you’ll figure it out very quickly. So moving on the topic today is getting and using good legal and accounting advice. So this is this is not the sexiest of topics, it is not, you know, it’s not the kind of thing that most agency owners want to spend a lot of time thinking about. And yet, it can be critically important to the overall success of the agency.
Gini Dietrich 2:33
Yeah, it’s definitely not something that I enjoy, particularly. And when my attorney says, Can we get on the phone for an hour, all I can think is that’s going to cost me $600. So you know, there’s, there’s definitely it’s there’s definitely an avoidance or stick your hand head in the sand kind of reaction when it comes to accounting and law firm counsel. But it’s incredibly am and it’s more important, I think, for agency owners, because it’s not something that we’re good at. And it’s not something that we enjoy typically. And so finding the right partner is probably more important for us than it would be for a gone up through the ranks business owner who understands the business side of things.
Chip Griffin 3:22
Oh, exactly. And I think it’s, it’s something where at different stages of your agency, you may need or be able to afford different types of advice and different kinds of advisors. So it’s something that will evolve, you know, I think, if you’re just getting started out, it may be that you may want to, at least for some simple basic things, you know, say
a nondisclosure agreement or something like that, you might just rely on some of the sites out there that have free templates, you know, those are, you know, an NDA is a relatively low risk kind of document to use as a template contracts often can be, although you need to think about those two and, and understand it. But, you know, there are a lot of options out there that are relatively low cost for folks getting started on the the basic template documents that we all use every day and an agency
Gini Dietrich 4:14
and, you know, I’m Greg Brooks from West third group who’s a spin sucks community member put together a master contract that’s fully editable as a word and text document, and he gives you an owner’s manual on how to use it, and what kinds of things to be looking for. And it certainly is not something that we would advise that you just run with, and not have your, your attorney, your business attorney, look it over. But you know, it’s, it’s a whopping $97, and it’s going to cost you like I said, If I get on the phone with my attorney for an hour, it’s going to be $600. So right there, you know, when they’re, when they’re collecting all of the information, they need to write your master contract, it costs at least $600 because they have to have a conversation with you. And then they have to actually draft it. So there’s, you know, just because I know and trust Greg, you know, $97, I think is a really easy way to get started and then have your business attorney add their two cents to it.
Chip Griffin 5:09
Yeah, I think this is a great point for us to give the disclaimer that we are not lawyers and accountants, we say here is advice. And it should consult actual professionals who had three certifications, etc. So we’re offering our perceptions as business owners, not as the ultimate professionals just so we’re clear. And, you know, don’t bother suing us, because please, we now have this in the transcript and you can’t, you’re not going to win. So. So look, I think those kinds of documents can be very helpful. And I think particularly as you go on in business, whether it’s an agency or elsewhere, you start to learn some of these basics. And you learn which, you know, the first time you read one of these contracts, and I have not seen Greg’s document a lot. I probably got buy it now, just so I can see what it looks like. But it’s
all these documents look scary. The first time you read three right there they have and lawyers love to put things in anything but plain English, that and one of my favorites is paragraphs where they put it in all caps. Yes. Which technically is because it’s the most important paragraph. But it also makes it the most unreadable, right? Because all caps text is very difficult to read. But so, you know, you just need to get more comfortable with it as you go along. And you will understand, you know, what are the common of and you should be looking at, at all contracts you signed very carefully as a business owner. So whether that’s something you’re signing with your clients or something that you’re signing with a vendor or something like that, you need to understand what it is that you’re agreeing to this is these are typically documents that you can negotiate. It’s not like, you know, buying a car or signing a mortgage, need to have a basic understanding of those. But, you know, good luck calling up the bank and saying on page 27, I really don’t like this sense, we’re going to need to change it, they’re probably not going to happen with your mortgage lender, it’s probably not gonna happen. But if it’s with a client of your agency, it probably is negotiable. And certain clients, you will have will want to negotiate the heck out of these documents. And you need to understand, you know, what to fight for, and what not to fight for. But that’s where good professional legal advice comes in.
Gini Dietrich 7:23
And I will say that one of the most important lessons that I’ve learned in working with our legal team is they certainly have written our contracts in our best interest. So there’s a 90 day out clause, there’s a, I think we asked for six months up front, there’s, you know, if you don’t pay within 15 days, you we stopped work, like, there’s all those pieces in it that are definitely to our benefit. But what the attorney said to us was, think about what your dropped a negotiable is our and we’re going to ask for all of these things. And you may get them and you may not. But if you know, what you’re doing negotiable are. So if you know, it’s payment in 15 days, like hardly anybody goes for that some new but you know, 30 days, okay, I’m willing to negotiate to that. And I don’t really expect you to pay a six months in advance. But I do expect a deposit. So, you know, there’s, there are things that you can you are willing to negotiate. And then there are clients are like, Okay, this is fine. I mean, we had one client who signed it, and it wasn’t, there was a 90 day out and they got bought, and the PE firm that was them was like, you have a 90 day out clause. And so we got paid for 90 days. So you know, that that kind of stuff, I think is really important to understand. And you know, what your dropped a negotiable is are like what you will and won’t
sort of sway on
Chip Griffin 8:48
right. And if you’ve got a good relationship with your outside advisor, and, and I certainly encourage that, I think that it’s it’s important to build that rapport. And the more time you spend with them, you know, they sort of learn your philosophy. I mean, I’ve used the same lawyer and accountant for my businesses for nearly 20 years now. So it really is short
Gini Dietrich 9:08
and they put up with you that wow, a long time
Chip Griffin 9:12
to put up with this is only episode six. Jenny? I mean, do you think you think maybe we could make it to say episode, let’s get to double digits before we start,
Gini Dietrich 9:20
okay. All right, we’ll come back to this, it’s okay. 20 years, 20 years. Yeah.
Chip Griffin 9:24
So in any case, that you know, that they have, they have gotten to understand the kinds of things that that I personally am willing to fight for, and agreements and those things that I’m not. And frankly, at this point in my career, I’ve, I’ve learned enough that I don’t even need to go to them. For every contract right there, I go into the tricky stuff, but I sort of know the parameters in which it’s okay to operate. And as you say, you know, knowing what you’re willing to negotiate away is valuable. So, you know, I know, there are certain provisions that that almost everybody complains about in the template and one sided agreement. So I typically use and I immediately capitulate, frankly, some of them now, I’ve gotten to the point where I know that it’s almost certain that it’s going to be pushed back on. So I don’t go as one sided as I did, when I was younger and less experienced, you know, you try to figure out the, at least I try to figure out the battles I want to fight Absolutely. And, and I, I frankly, you know, may make a judgment as I’m putting together the contract for a client, okay, you know, this one’s not likely to fight, I’ll give them the more one sided deal this one, you know, they’re going to put it through their legal department, let’s let’s short circuit, you know, half of the edits, and we’ll send them one that’s, you know, a little bit more balanced, because, you know, as soon as they have a lawyer involved on the other side, you know, exactly like five or six things that they’re always going to add it I mean, every single lawyer, I’ve never seen a lawyer that will not argue over venue, like, Who cares what law I mean, but but, but every company, big companies have certain states in which they’re allowed to have content tracks governed by the law of that state. And so it’s one of those ones where I stopped fighting about it years ago, because you’re just, you’re not going to win that with a bigger company. So you’ve got to decide, you know, what’s, what’s worth fighting about, and what isn’t. And the other thing with with contracts in particular, is to think about, and this is something I think I’ve said on the show before, but contracts are written for when there’s a problem they’re not written for when the relationship is going well, so think about and read all of your contracts in with the eye towards if everything’s going bad in this relationship, am I happy with what’s in this document, because when it’s good, nobody pulls it out and looks at it, you just kind of work through it.
Gini Dietrich 11:41
The other thing I would add to that is just based on a recent experience with a friend when you are when you’re looking for either I mean, legal or accounting help, but especially on the legal side, you know, lawyers tend to be very, very expensive, and they’re like us, they bill by the, you know, they have an hourly rate. And, you know, most of us have evolved past billing by the hour, but they still mill by the hour, and you could easily end up with a $10,000 bill, and the attorney has never given you a this is, you know, if you want this is going to cost this if there’s no, there’s never been a proposal or anything. So you have them do all this work to get everything set up for you and in and then you end up with a $10,000 bill. And you know, in some cases, maybe you don’t even have that in revenue yet. So make sure you do your due diligence and asking, okay, if I need a nondisclosure if I need a contract. If I need an employee agreement, if I need like, all of the documentation that you need, how much is that going to cost me because trying to decide between a master contract that you can edit for $97, or one that’s going to cost you three or $4,000, it starts to be going to become a numbers game at that point.
Chip Griffin 12:56
Oh, absolutely. And I will say, I mean, I, at least most of the wars, and I’ve dealt with over the years, or are decent at setting some sort of a ballpark expectation for different things. Because that, you know, they want to make sure they’re getting paid, right. So, but you’re right, you know, that some will not, or some, you know, you know, some will be very
sketchy about giving you a, you know, a firm number. And I get that, you know, because they are doing it by the hour. And there are a lot of variables that that go into it, and they haven’t worked with you yet, right. So they don’t know, you know, how difficult you’re going to be in the process. Because, I mean, frankly, the client drives a lot of the cost in these as well. Because if you’re not able to give quick clear responses to the questions that they have, you’re not able to give, you know, succinct feedback to the drafts, all those things that will drive up your cost. So there’s a lot of responsibility on the client in these relationships as well.
Gini Dietrich 13:51
I agree with that. And I also think that, especially as you know, and this goes into the conversation about where what kinds of accounting and legal help you need at certain points of your business growth. But when you’re starting out, or you’re a solo printer, and you’re adding your first colleague, or whatever it happens, like, I would like to think that a law firm will be ethical enough to say, you know, what, we probably shouldn’t put our thousand dollar an hour attorney on this, because they’re just starting out, or they’re just adding a new their very first employee. So let’s put our $200 an hour to $200 an hour attorney on it. So you know, but that doesn’t happen unless you ask. So make sure that you’re asking those kinds of questions. Otherwise, you are going to have the thousand dollar an hour or you’re going to have the $1,000 an hour attorney overseeing the $200 an hour attorneys, then you’re getting builds, right. So be careful for that with
Chip Griffin 14:47
what I think it’s important to, to make sure that that you find professional advisors with whom you have a good fit, you know, this is something where you want to make sure that, you know, if you are a very nervous, risk averse person, you’re probably best working with an attorney who is in that same ballpark. And an accountant who’s in that same ballpark, you know, what, be careful, you don’t feed off of each other and make it much worse. Same thing on the, you know, the aggressive, more risk oriented side, but you want to make sure that there are some alignment there because otherwise, you’re just going to be butting heads and and it’s it’s so that will add time to it. And it will also just add a lot of heartburn. So if you can, in those usually will have initial conversation with these advisors that’s not on the clock. And that’s a good opportunity to sort of, you know, find out, you know, what their background is, find out what their philosophy is, doesn’t matter, the personalities, mesh, do you just enjoy talking to that person. And I know that sounds weird drawing, talking to a legal a lawyer and accountant, right, that’s, you know, my sorry, to my Oh, my lawyer and accountant friends, it’s not typically high on people’s lives whole God, I can spend some time with account today, that’s fantastic.
Gini Dietrich 15:56
but it’s, it’s right. Because if you don’t enjoy, then you will start avoiding, right
Chip Griffin 16:02
and and that’s when you start to get into a lot of trouble. Because you know that they exist for a reason, you’ve hired them for a reason. And you want to make sure that you’re, you know, leveraging their experience. And and that’s another piece to look at here. Ideally, you want people who are familiar with the either agencies, generally the specific kind of agency you have, or at least you know, similar types of firm, professional service type firms so that, you know, they’re familiar with the kinds of issues you’re going to run up against, you don’t want to deal with an accountant to, for example, deals mostly with retail stores, because, you know, they may steer you in correctly on on different kinds of accounting decisions, because they’re simply not as knowledgeable and they haven’t seen as many of the, the challenges that you’re facing.
Gini Dietrich 16:50
Well, one of the things you said before we started recording, which I think is really important is to be able to say to them, don’t tell me, no, help me figure out a solution. And the solution may be that it’s actually ordinarily risky, or it’s going to be too expensive, or whatever happens to be, but you know, we’re interviewing right now we’re looking for an IP trademark attorney, and we’re interviewing attorneys, and I’ve had five conversations, four out of the five have told me know, and the fifth one was like, Yeah, I think it’s gonna it can work and here’s how it can work. But this is what it’s good. And like, she went through that whole and I was like, okay, that’s the conversation I want to have. I don’t want to be told no,
Chip Griffin 17:27
right. And, and frankly, a good advisor shouldn’t tell, you know, they should tell you, okay, this is this is what, you know, this is an alternative. And I see it the same way, just as in the advice that we offer, from a communications perspective of a client asks for something, I almost never will say straight up. No, I’ll say that’s not the best idea. here’s, here’s what you could do instead, and achieve something similar. And I’ve always been very clear with my lawyers and accountants that that’s, that’s the mindset they need to take with me, they need they need to figure out helped me figure out the path forward to accomplish what I’m wanting to accomplish, because simply saying, No, doesn’t really help any.
Gini Dietrich 18:10
Right. Right. And, you know,
Chip Griffin 18:13
I think the, you know, the other thing to think about here is, is looking to have lawyers and accountants who are thinking about the big picture and not just about the individual task at hand. And, you know, one of the things that I’ve done, for example, is the law firm that I use specializes in legal services for entrepreneurs, right? So they are, that’s their mindset, a lot of their lawyers have business degrees, in addition to law degrees, you know, so they can, they can sort of think strategically about it, you know, same thing, you know, when you’re thinking about it on the accounting side, you know, don’t just, you know, tell me how to complete my tax returns or generate a p&l, but think about, okay, you know, what advice what value can you add? How can you help me develop strategies for tax compliance that are also advantageous to me personally, you know, how can you think about those things, and if you’ve got a good advisor, they won’t simply do exactly what they’re told they will steer you in the right direction overall.
Gini Dietrich 19:16
And I would say as well, if you’re an LLC, when do I switch to an S corp, or a C Corp? Or if I’m a C Corp? Do I go to an escort? Like having those conversations are extraordinarily important? And if you’re like me, where you’re adding different revenue streams, and some of them are credit card card processed versus invoiced and accounts receivable? How do we manage all of that? So being able to have those kinds of conversations to like, what, you know, can you help me navigate that those pieces? And can you help me navigate the 1099 vs w two employees, like others, all those conversations that needs to happen from that perspective as well.
Chip Griffin 19:55
And that and they need to understand and whether they asked it or whether you volunteer it they need to under and you know, what your vision is Where you headed. So, you know, if they’re, if you sit there and tell them look, you know, my goal is to sell this agency in three to five years, you know, they will think about it one way versus if you say, look, you know, this is going to be, I’m going to just do this till retirement, and then I bags walk away, I don’t care, you know, whatever it is, they need to understand sort of how you’re looking at things, what your time horizons are, because then they can offer you good advice and say, Okay, well, if you make this decision today, it makes it harder to do this a year from now, or whatever. And things like you mentioned, you know, your structure, you know, whether you’re LLC, S corp, etc, some of those things are easier to change than others over time. And so if you think about that, you know, they will, they will focus their energies appropriately. Same thing with contracts, right, if you’re looking to sell your agent, so you need to make sure that your contracts are all assignable, which is something that’s often overlooked. And so, you know, those are the kinds of things we are if a lawyer knows that you would eventually like to at least contemplate the sale, not necessarily that you’re actively selling it. But, you know, hey, I could see a day where I would sell it, you know, that they might steer you differently in contract creation, or other strategic decisions that you make. So, the more you can bring your professional advisors into your vision, the more effective they can be for you.
Gini Dietrich 21:22
Absolutely, and rely on them rely on them. I mean, I consider our, our accountants on my I consider him part of my leadership team.
Chip Griffin 21:31
And I think the other thing is, you know, as you think about cost, because these things can get expensive, you know, are there ways to split it out, you know, I think before we started recording, we talked about how, you know, you can have a bookkeeper do the day to day books. And then your higher priced accountant does the, you know, the, the more complicated, bigger picture strategic type activities. And that’s, that’s a setup that a lot of agencies use, I’ve used it a lot over the years myself, where I’ve got someone who’s fantastic as they and much cheaper than, you know, the person who prepares tax isn’t, gives me overall strategy.
Gini Dietrich 22:03
And today, there’s so much there’s so much out there from a, an artificial intelligence standpoint, that, you know, if you sync your bank accounts in your credit cards together, like the ai ai can go in, and for all intents and purposes, do the bookkeeping, and then your accountant is to your point, doing the strategic overview. They’re looking at tax planning and projections and making sure that you’re taking advantage of certain things, and, you know, all of that, instead of being mired in details.
Chip Griffin 22:30
And the other thing is, you know, if you are doing things like that, to reduce costs, you know, be upfront with your advisors about it as well. So, you know, if you’ve, you know, if you’re perhaps doing, you know, in the A’s or contracts through a template, you know, make sure your lawyers at least aware of that, so that, you know, they’re thinking about that, and they’re not surprised when two years down the road, you say, Oh, I have a problem with this document here. I know, you never looked at it to begin with, you know, the more that they that they know, the better they can advise you and say, Okay, well, that’s, I’m fine with you using a template for that one, but don’t ever use it for this kind of document. Right? Because, I mean, if you if you developed a good relationship, you know, with your lawyer account, they will absolutely do that, because mine certainly do. And periodically, they do ridicule me for some of my cost cutting efforts. And that’s and that’s fine. I, you know, I understand it, but it’s, you know, you have to make those choices because, you know, otherwise you can run up quite a bill. And it is it is all a cost benefit analysis that you need to think about.
Gini Dietrich 23:30
Yes, it is for sure. So,
Chip Griffin 23:33
I think that, you know, if we haven’t put you to sleep with talk about lawyers and accountants, we appreciate you sticking through to this point, you know, I can hear a little snoring here. I really can just just just faintly, but you know, hopefully, now that, I’m speaking a little bit more boisterously to wake you up and you’ll remember to turn off your iPod or go do whatever it is. That’s next on your list.
Jenny, anything else you’d like to add?
Gini Dietrich 23:58
No, just you know, be very smart about the questions you ask. If something is it, something doesn’t feel right. Go on to the next and you know, like chips like you said, make sure make sure make sure you actually like them as people.
Chip Griffin 24:12
Absolutely. And we hope you like us as people too. So, again, thank you for listening. This has been another episode of the agency leadership podcast. I’m Chip Griffin
Gini Dietrich 24:23
and I’m Gini Dietrich.