Are You Aware of the Financial Realities of Your Firm and Your Career?

In my last post, I pointed to Carolyns Elefant’s post on the issue of ‘work-life balance,’ particularly for women. I also talked about the discussion at my monthly networking meeting about the decision of some women to stay home with their families rather than pursuing their careers.

In actuality, the discussion at the meeting didn’t focus on whether the choice to stay home with family was a ‘mistake.’ The group went in a different direction and talked about education and planning.  The focus became the idea that women who decide to stay home need to be concerned about more than just economic dependence – they need to plan for the possibility that their source of financial stability might one day change or disappear. The consensus was that women who chose to stay home should do so only with a plan for the possibility of change and that they should knowledge about their finances at all times.

While this may seem like a no-brainer to some, the reality is that many stay at home spouses (whether men or women), have abdicated responsibility for their finances and their family’s economic condition to someone else. But this concept doesn’t just apply to stay at home Moms. In fact, it’s a pertinent point for all lawyers, regardless of their position within their firm or what stage of their career they happen to be in.

Think you’re comfortable at your firm and that you’ll ‘always’ have a job there? Think again. That kind of naive thinking is what gets many ‘suddenly singles’ in trouble. You never know what could happen to you or your firm, so it’s best to plan ahead.

While you may not be privy to your firm’s financial information as an associate or young lawyer, you should have an awareness of the firm’s overall financial health, and a plan for your own financial stability if something should happen to the firm. Make sure you’re constantly updating your resume and bio, whether you think you’ll need them or not. Know what you’re worth. Keep updating your skills and make sure that you’re always making new contacts. Know your finances and how much you need to meet your expenses monthly. Maintain savings and insurance for the unexpected.

If you are a solo or you’re a partner or are in a position in which you’re entitled to information about your firm’s finances, don’t ignore that information. It’s important for you to know which clients pay on time, which clients pay consistently, who pays the most, whether the firm has debts, and if so, to whom and for what.

What’s your plan for the future? If you’re a partner and a key person leaves your firm, will there be a significant change in the firm’s financial health? Who knows where the money is and where it’s going? If you’re a principal in your firm, it’s vital that you are in the loop on this information. If you’re not a principal, make a plan of action should there be a sudden change in your health, your firm’s viability, your employment status, your spouse’s employment status, etc.

Knowledge is power. Learn about your firm’s finances and your own personal economic reality. And make a plan.