You’re listening to The Less Stressed Lawyer podcast, Episode 65. Today, we’re talking all about underearning. You ready? Let’s go.
Welcome to The Less Stressed Lawyer, the only podcast that teaches you how to manage your mind so you can live a life with less stress and far more fulfillment. If you’re a lawyer who’s over the overwhelm and tired of trying to hustle your way to happiness, you’re in the right place. Now, here’s your host, lawyer turned life coach Olivia Vizachero.
Hello there. How are you? How are you holding up this week? I always like to start off my episodes by just bringing you guys along with me, giving you a behind-the-scenes look at my life. If I’m being really honest, life has been full on 50/50 lately. That’s actually a concept that I teach my clients to expect that life is going to be 50/50; 50% good 50% not so good. That split is really unavoidable.
It might not always be 50/50 all at the same time. Maybe it’s 80/20 sometimes, and then other times, it’s 20/80, it just depends. But that, over the course of a lifetime, you’re going to get a 50/50 split of things that are great and things that are not so great.
Now, all circumstances are neutral of course. You know I teach that as well. But you’re going to encounter circumstances, 50% of the time approximately, where you’re going to think that the circumstance is not so great. For me, I’ve really been living in this. There’s so much amazing stuff going on in my life; that’s the 50% great.
And then recently, I just felt so compelled to tell you guys this, because I shared about it on social media. But I know I’ve talked about him on my podcast before. I actually just had a client reach out to me and tell me that they were listening to one of my episodes, and that he made a guest appearance because you could hear him purring. But I just lost my sweet, sweet Bear. He’s one of the two cats that I have.
Talk about 50% ass! Just really an unpleasant, unfortunate… For me, really heartbreaking experience. It’s the first pet I’ve ever lost. I wasn’t allowed to have pets growing up. So, my two cats that I have were my first pets ever. I unexpectedly had to put him to sleep.
As a coach, it’s been such an incredible example of when you encounter a circumstance that you want to think negative thoughts about. I want to be sad. I want to be heartbroken. I want to feel grief. I want to feel all those negative, complicated emotions. I don’t want to think positive thoughts and feel positive feelings about the situation. I want to have that negative experience.
So, as I’ve been going through this, I’ve really just been tender with myself, giving myself room to be human and to grieve. But it’s been just a really neat experience, as a coach, to watch the thoughts that I think and to see how they create the emotions that I experience, and then what I do from those feelings.
The unintentional action that I might take. Wanting to buffer away the negative emotion, wanting to escape it. That’s just our natural human tendency. Then having the intentionality within me, the discipline within me, to be able to interrupt that and to take a more intentional action instead.
So, I’m going to do a whole episode, at some point, on life being 50/50, and talking all about when something happens, and we want to think that it sucks… I definitely want to think that this sucks. I miss him terribly. My house feels very, very empty without him.
But I just want you to know that the point of coaching, which a lot of people get confused by this, the point of coaching isn’t to feel amazing 100% of the time. You’re going to encounter situations that you want to feel negatively about. You’re going to want to think negative thoughts. You’re going to want to feel negative feelings. All of that is just part of the human experience.
Now, we get to control our thoughts. So, there are going to be a lot of situations in life where we don’t want to think negative thoughts about something and we don’t want to feel negative emotions, and we can change our thoughts in those moments. But there will be those times where you’re going to want to think negative thoughts and feel the negative feelings that come with them. That’s totally okay to do that, you just want to be intentional about it.
I’m being very intentional here. I know that my thoughts are causing my feelings, and I’m giving myself permission to think those thoughts and to have that negative emotional experience. Okay, so that is the negative side of things over here. Just keeping it real. It’s not all rainbows, daisies, and sunshine.
But there is a lot of fun, amazing stuff going on. It is summer here in Michigan, and I could not be more excited. It’s my favorite time of year here. I absolutely love Michigan summers. I have been really giving myself a chance to enjoy the warm weather.
Enjoy my life and just have some downtime. Let my hair down and just soak up friends and family in a way that I haven’t really given myself an opportunity to do so this year. Because I’ve been really intentional about working a lot and hitting some business goals that I’ve set for myself. But I’ve been having a little bit more fun than I’ve had, I’d say, like the past six or 10 months. So, that’s been really amazing.
The other thing that’s really amazing, is that I just reopened enrollment for The Less Stressed Lawyer Mastermind. So, if you want to get in to the August class, before we kick-start things with the in-person event in Big Sky, August 23 – 26, you have one more chance to join.
Enrollment is going to be open until spots fill up. Spots are limited, so there’s only a certain number of people that I’ll be accepting into this round of the mastermind. Get your applications and you can go to TheLessStressedLawyer.com/mastermind in order to apply.
Ultimately, enrollment will close, at the very latest, July 21 at midnight. But I do expect this cohort to fill up, so when it fills enrollment will close. So, don’t wait until the last minute to apply.
There you have it. You can see there’s the good things, and then there’s the not-so-good things. And that’s just part of the human experience, my friends. It is okay. None of it will kill you. You can weather it all. If you’re going through what feels like an emotional time, or you’re experiencing some hardship right now, I promise you, that’s part of the human experience. It’s part of life. It’s okay. You were built for this. You can make it through.
Now, changing the subject a bit. Continuing on the Money Mindset series that we’ve been talking about. In the last episode on the Money Mindset series, we talked about overspending. Which is one of the main problems that I see people encounter when it comes to money.
Today, we’re going to talk about underearning. And if you want to talk about suffering, that is completely unnecessary, this is an excellent area. This is directly on point for that. Underearning is so, so common and so, so avoidable. Today, I want to talk about the different ways that people underearn. And then, we’re going to explore why exactly you might struggle with each one of those ways, and what you need to do in order to overcome each one.
I’m going to give you a framework that you can apply to each one of the ways that you might be underearning, so you can figure out why you’re underearning in that way. And then, what exactly you need to do in order to stop underearning in that way. So, today’s episode is going to be really comprehensive.
Okay, so here are some of the ways that I see people underearn. First things first, you don’t bill all of your time. If you work in a billable hour job, and you don’t enter all of your time, that’s a massive way people underearn. Or you put in all of your time, but you write it off before the bill goes to the client.
Another way people underearn is that they send the full bill to the client, but then the client balks at the bill and then you end up discounting your bill. Or they don’t pay you quickly enough, and you worry that the bill is too expensive, so you end up discounting your bill.
I also watch people do this constantly; they discount their rates. Whether someone asks for a discount or not. I see it actually most frequently when no one’s asked, and yet people still discount their rates. So, you discount your rates.
I also see people undercharge. They just don’t charge enough. They don’t charge what they could be charging based on the demand that they have for their services, or based on what’s common in the market. They charge a lot less than that.
Another common way people underearn is that they don’t raise their rates. They either never raise their rates, or they raise them too infrequently and then they don’t raise them enough when they do raise them. So, not raising your rates is a surefire way to underearn.
People will also not follow up on accounts receivable. Because they don’t like talking about money and they don’t like having uncomfortable conversations with clients. So, they won’t follow up on accounts receivable and they let money fall by the wayside. Because they don’t stay on top of it, they normally end up accepting less than the total amount owed. Or they don’t collect any of it, and they just write it off as a loss.
If you’re not in a position where you’re on the receiving end of client funds, other ways that you will underearn are by not asking for a raise. Or by staying in a job with a lower salary. Maybe you’ve asked for a raise, and they have refused it, they won’t give it to you. They say they don’t have the money available, and you continue to stay in a job where you’re underearning instead of moving and going someplace where you could be earning more.
Another way that people underearn is that they don’t maximize the bonuses that are available to them. Number one, by not advocating for themselves strongly enough. And number two, not understanding their organization’s compensation structure. So, this is especially true if you work in private practice, and you have a compensation model that’s based on developing business or things like that.
If you don’t understand the compensation structure, you will typically underearn. You won’t maximize the money that is available to you, if you were to leverage that compensation structure in your favor.
And then last, but not least, you guys, no, I will never stop talking about the importance of this developing business. I’m going to do a whole series on developing business. But this is a massive way that people underearn. They just rely on their salary.
They don’t develop a business, which leaves them with a lot less leverage. A lot less negotiating power when it comes to salary increases or bonuses. You just leave money on the table, because you’re not taking advantage of that extra compensation that would be available, if you were bringing in your own book of business.
So, those are the ways that people underearn. If you identified any that I didn’t mention, by all means… Oh, actually, I just did a webinar on this topic, around how to be better with money. One of the things someone said, which I thought was so clever, another way that people underearn is that they don’t submit reimbursements.
If you work at an establishment that reimburses you for certain costs; maybe it’s your mileage, maybe it’s lunches, client lunches, whatever, travel expenses. If you don’t submit your receipts to get reimbursed for those, that’s another way that you underearn.
There’s definitely someone out there, that you work with, that submits all that stuff. They get it paid for because it’s company policy or firm policy to cover those costs. And here you are not submitting that stuff. So, it’s a way that you impact your bottom line, pretty subconsciously or unconsciously, but it also leads to underearning.
If you go through that list… Number one, if you spot anything that I didn’t mention, send me a DM on LinkedIn or Instagram. I’d love to hear about the ways that you’ve identified underearning in your own life, in your own career. I can cover that in a future episode.
Number two, I want you to take an inventory, real quick. How are you currently underearning? Which of those actions are you guilty of? What offenses have you been committing? This isn’t for you to judge yourself or beat yourself up. We just want to create awareness here. Are you billing all of your time? Are you writing time off? Are you discounting your rates? Are you discounting your bills? Are you undercharging? Are you not raising your rates?
Are you not following up on accounts receivable? Are you not asking for raises? Are you staying in a job where you’re underpaid? Mind you, that is always a thought, that you’re being underpaid. But it may be a thought that you want to think. Depending on what your salary situation is. And then, are you developing business or are you avoiding it? Are you submitting those receipts to be reimbursed for? So, identify the ways that you’re currently underearning. Let’s start there.
Now, I’m going to ask you an even more painful question. So sorry, in advance, for this one. But it really is an important question for us to ask and answer. If you had to guess, how much is your underearning costing you? If you had to guess. Your brain’s going to want to offer you an ‘I don’t know’ thought. It’s going to want to say, “I don’t know how much.”
But push past that initial response and just take a guess. If you guessed, what would you say it’s costing you? What’s the amount? In brass tacks dollars and cents, right? Now, I like math. I always like to say that there’s two issues: there’s math, and then there’s mind drama. I love solving for the math.
Because one of the things that we’re going to talk about in this episode, you’re going to see that mind drama is the reason we underearn. We think negative thoughts about the intentional action we would need to take, like not discounting or raising our rates or asking for a raise. And then, we feel negative emotions about doing those activities because of our negative thoughts. And then, we avoid those negative feelings by taking the action that causes us to underearn instead. All right?
Now, when you’re not focused on how much this bad behavior is costing you… And that’s not a judgment on the behavior. I’m not trying to make you wrong. I’m just saying, if you want to earn more, it is bad behavior. Because it’s going to lead to you earning less.
So, if we want to stop associating the greatest amount of discomfort with doing the intentional action that would allow you to earn more, we have to increase the pain of your underearning. I find one of the best ways to do that is to make the pain quantifiable. It’s for you to really understand, how much money are you leaving on the table? How much are you underearning?
And then, for you to think about what could you be doing with that money if you were making it? That pain becomes so much more acute. And then, the most severe pain isn’t with taking the intentional, uncomfortable action. It’s with underearning and leaving that money on the table.
So, the discomfort switches, and you care more about making that money than you do about embracing that discomfort. Okay? That’s what we want to do. We want to get clear on, how much are you underearning by? How much money are you leaving on the table?
I did some simple math for you. If you are someone who doesn’t bill all of your time, or writes off your time, here as some simple math. Okay, so let’s say you charge $350 an hour. That’s the average billable hour rate across the US for all attorneys.
So, if you’re charging $350 an hour… I think that’s the high average. There’s also a low average. Which, let me double check that. That is the high average. The low average is $167. Okay, and that’s just from a Google search. So, we’re going to trust Google with this, let’s not get too particular.
But if you’re not within that range, or on the high side of this range, or on the low side of this range, it doesn’t matter. I’m just giving you facts and figures to go by, okay? Don’t use this and weaponize these numbers against yourself. I’m just trying to use them to create some awareness.
So, if you bill $350 an hour, and approximately, you write off or don’t bill four hours of your time each week, okay? If you work 48 weeks a year, I’m giving you four weeks of vacation, and holidays and all that good stuff. That leads to $70,000 that you’re not making.
If your billable rate is $200 an hour, maybe you’re at that lower end of that spectrum. You don’t bill four hours a week. That leads to 200 hours, or just under 200 hours. I think it’s like 192 hours, but we’ll round up to 200 hours. You’re leaving $40,000 on the table.
Now, a lot of my audience is from big law, so maybe these rates aren’t even remotely close to what your billable rate is. I have clients that charge up to $1,600 an hour. Depending on the client and the work and all that stuff. So, I’m not going to go all the way up to $1,600. Actually, now that I said it, I’m going to go all the way up to $1,600.
But let’s start in the middle first. If you charge $800 an hour, and you don’t bill four hours per week. You either write it off after you’ve entered it, or it never makes its way into the system. You’re leaving $160,000 on the table. And you guessed it, if you were to double that hourly rate, and you’re at $1,600 an hour, you’re leaving $320,000 on the table every single year.
So, if you do this over the course of a 20-year career… I’m going to do the math on that real quick, hold on. Oh my god, I’m so glad I did this math really fast. It is upsetting, to say the least. If you do what I just described to you, you write off your time or you don’t enter all of your time, and you do it consistently over the course of a 20-year career.
If your billable rate is $350 an hour, it’s going to cost you $1.4 million over the course of 20 years. If your billable rate is $200 an hour, it’s going to cost you $800,000 over a 20-year career. If your billable rate is $800 an hour, it’s going to cost you $3.2 million. And if your billable rate is $1,600 per hour, it’s going to cost you $6.4 million. All right?
Is this getting painful and uncomfortable enough for you yet, to stop underearning and to start entering your time and to no longer write it off? I sure hope so.
Another common thing that I see people do, like I explained a moment ago, is to discount their bills. So, they bill all of their time. They send the bill out. But they end up giving a discount, either before it goes to the client or after. And maybe you just have a policy where you do this. It’s just normal course of business for you; you give a 10% discount.
If you do that, and you typically bill out $500,000 worth of work per year, you’re leaving $50,000 per year on the table. Over a 20-year career, that’s a million dollars. If you do a million dollars a year, and you give a 10% discount on your bills, that’s $100,000 per year that you’re leaving on the table. Which, of course, is $2 million that you don’t earn. Two million dollars that you leave on the table over the course of a 20-year career.
Maybe you don’t collect 100% of what you bill out. You don’t follow up on those accounts receivable. You give a discount down the road, in hopes of just getting any money versus no dollars. Or you just let certain bills languish and you don’t follow up.
If you’re only collecting 80% of what you bill, if you’re billing $500,000 a year, that’s $100,000 that you’re not collecting. If it’s $1million that you build out each year, that’s $200,000 that you’re not collecting. And then, over the course of a 20-year career, that’s $2 million, and $4 million, respectively.
How about if you don’t raise your rates? I see so much resistance, that my clients have, to raising their rates. So, let’s say you forego raising your rates by $25 in a year. And on average, you bill 1,500 hours each year. You leave $37,500 on the table.
If you don’t increase your rates by $50, and you’re at that same number of billable hours, 1,500, you leave $75,000 on the table. If you don’t raise your rates by $100, you leave $150,000 on the table.
Now, maybe you work a little bit more than 1,500 hours per year. Maybe you’re at that 2,000 mark. If you are, the same breakdown, as far as the numbers. If you don’t increase by $25 per hour, you leave $50,000 on the table. If you don’t increase your rates by $50 per hour, you leave $100,000 on the table. And then, if you don’t increase them by $100, you leave $200,000 on the table.
Again, if you want to see what this costs you, year in, year out, over the course of a 20-year career, you’ve just got to times all those numbers by 20. If you’re billing 1,500 hours per year, and over the course of a 20-year career you don’t raise your rates by $25 each year, you’re leaving $750,000 on the table. If you don’t raise your rates by %50, it’s $1.5 million. If you don’t raise them by $100, it’s $3 million. If you’re doing a 2,000-hour billable year, the numbers are $1 million, $2 million, and $4 million, respectively.
This is a lot of money. It’s just $25 an hour. But over the course of a legal career, over decades, this really adds up. Maybe you’re practicing longer than 20 years. Maybe that’s totally undershooting the amount of time that you’re going to be engaging in this underearning behavior. If so, all that means is that you’re leaving more money on the table.
The same is true if you’re not asking for a pay raise. So, if you go year in, year out, without getting a pay raise, or you’re getting a very minimal cost of living increase. And you’re not getting what you could otherwise get if you were advocating for yourself, that money compounds, right? So, you can’t get further the next year if you didn’t make that progress that you could have made this year.
Over time it leads to compounded underearning. Also, most people receive the largest salary increases when they switch jobs. When they move from one company or firm to another one. I believe the average is 26%, is the salary increase on average when you switch organizations. So, one of my cousins, Emily, her favorite line is, “Y’all, it pays to quit.” It really does; statistics back this up.
So, if you are staying in a job and you’re not happy with your salary, it may be time to move. Consider that. Or even if you’re pretty happy but you want to maximize your earning potential, you’re probably going to move more than you may initially have thought. Specifically, so you can take advantage of those larger pay increases from moving from place to place.
All right, so now that we’re clear on how you might be underearning, you should have your list in your head. You should have spotted, when I named all of those different ways out, which ones you’re guilty of. And you should have a clearer idea of what your underearning activities are costing you, in no-nonsense dollars and cents.
I want to talk about why exactly you’re engaging in these underearning practices, and how to stop. So, we’re going to take them one by one. Before we do that, I want to give you a framework so you can understand what’s actually going on with each one of these issues.
You’ve heard me say this before, but there’s only ever three problems going on in any given issue. So, you’re thinking negative thoughts. In this case, you’re thinking negative thoughts about the intentional action that you should take. Okay?
You’re feeling negative feelings, and then you avoid those feelings, or you react to them in an unintentional manner. And there are positive actions that you would need to take that you’re not taking. Therefore, you’re not getting that result that you would get if you took those positive, intentional actions.
Those are the three problems on a really high 50,000-foot view, service level approach to underearning: you’re thinking negative thoughts. You’re avoiding negative feelings, and you aren’t taking positive intentional actions.
Now, the solution for underearning, no matter how it is that you’re doing it, is basically the flip side of those three issues. So, you need to change your thoughts. You need to think more positive thoughts about the intentional actions that you should be taking.
Contrarily, you need to think negative thoughts about the underearning activities that you’re currently engaged in rather than thinking positive thoughts. Or I’ll even go so far as to say, resigned thoughts. For instance, a lot of people think that they have to discount their rates. That’s a resigned thought where you’re relinquishing control and agency that you actually have over your billing.
So, we need to change that thought about the unintentional action that leads you to underearn, and we need to think a different thought about discounting your bills. Maybe you need to think that you don’t do it or that you don’t need to do it; you have to change the thought. The first step to solving your underearning issues is to change the thoughts that you’re thinking.
The second step to addressing your underearning is gagging and going through the discomfort of taking that intentional action. So, you’re going to have to be willing to feel your negative feelings. You’re going to have to allow them to be there, and you’re going to have to wade into them and move through them with intention.
Which brings me to step three. You’ve got to take that positive, productive, intentional action, in spite and despite the discomfort. All right? In spite of it, and despite it. So, that is the overarching framework for how to resolve your underearning issues.
Now, we’re going to go, step by step, through each of the ways that you underearn, so you can see this at play. Let’s say you don’t bill all of your time. I’m going to do an entire episode on billable time and the issues around it. But there are two main reasons that people don’t bill all of their time.
Number one, they don’t enter all of their time, because they just hate time entry. They dread it. They think it’s boring. They don’t consider it real work. They see it as being administrative. They think their other work, the more substantive work, is more important so they deprioritize entering all their time. Then they fall behind on it, and they have to reinvent the wheel and recreate their time for the entire month.
I used to be guilty of this when I worked in big law. Actually, when I worked and practiced law, in general. In big law and in some of the smaller civil work that I did when I worked at the boutique sized firm, as well. So, I was a terrible offender of this.
It leads to underearning because you don’t capture all of your time. And then, when you try and recreate your time for the month, you just don’t capture everything because you’re doing it at a time that’s far removed when you actually did the work. So, it’s not going to be fresh in your mind. Things are going to fall through the cracks, and you’re going to miss hours.
That’s one reason that people don’t bill all of their time. You can see that it comes from negative thoughts; a lot of the thoughts that I listed. That you don’t have time to do it or that it sucks. Or that you don’t feel like it, and other work’s more important.
And then, those thoughts are going to trigger you to feel negative feelings. Feelings like, feeling bothered or dread or pressured or stressed or overwhelmed. And then, you are unwilling to feel those feelings and you avoid them by not entering your time.
Entering your time is the intentional action that you would need to take in order to not underearn. That’s the action that you don’t end up taking. So, you can see, there’s that framework at play: Negative thoughts you’re thinking. Negative feelings that you’re avoiding, or reacting to. And then, intentional actions that you’re not taking.
You would have to change your thoughts, feel those negative feelings on purpose, and take that intentional action of entering your time every day even if you don’t feel like it, in order to stop underearning.
Another reason people don’t bill all of their time is that they feel guilty or worried about what a client is going to think. So, maybe you think that it shouldn’t have taken you as long as it did take you to complete a task. Then you don’t bill all of your time for that task.
Or you’re worried a client, or a supervising attorney is going to be upset with you for spending as long as you did spend. So, you don’t bill all of your time. Or you just feel guilty about what your billable rate is. And you feel badly for charging a client that much money. Maybe you get in your head about what a client can afford versus what they can’t afford.
And so, for these reasons, this guilt or this fear, this worry, you don’t enter all of your time. This also might be the same reason that you write off your time. Okay?
Now, these negative thoughts that you’re thinking about entering all of your time, are causing this problem to begin with. Then they’re making you feel those negative emotions, and you’re avoiding those negative emotions; that worry or that fear or that guilt. Then you don’t enter all of your time or submit the bill without writing your time off.
In order to stop underearning, you’ve got to change your thoughts about entering all of your time. Instead of thinking that you can’t enter all of your time, or that it should have taken you less time, you want to tell yourself, “It took me as long as it took me. My clients are willing to pay for this. It’s still valuable to them. Regardless of whether I think it’s expensive or not is irrelevant. It’s not my job to give another attorneys client a discount that that attorney didn’t approve.”
That especially happens when you don’t enter all of your time for a client who isn’t your client, someone else’s client. You’re basically giving that person’s client a discount that that attorney didn’t approve, and they don’t know that you’re doing it.
One of my rules is, if you’re going to give a discount, make sure the client knows about it so you get the goodwill. Now, I am not suggesting that you discount your rates or discount your bills. I believe that your clients will pay your full rate. All right?
I have a “No Discounts” policy in my business, and it’s never been a problem. But it comes from me making the decision ahead of time that I don’t discount my rates, ever. No matter what. No matter what circumstance arises, I never, ever discount. That’s just a foundational concept, a cornerstone in my business. You get to have the same exact thing in your practice.
One of the thoughts that I teach my clients to adopt is, “I don’t discount, and I always get paid.” Those are just really great foundational self-concept beliefs to hold about yourself. Because remember, your thoughts create your results. So, those are really powerful thoughts to practice thinking. Because you’ll go on to create those results, if those thoughts become practice thoughts of yours.
Now, in order to enter all of your time, when you’re feeling guilty and worried, you’ve got to be willing to gag-and-go through that guilt and that worry, in order to put in all of your time and to resist the urge to write off that time. Okay? You’ve got to take the intentional action of entering every single hour you worked. All right? And you’ve got to change your thoughts.
You’ve got to be thinking about the time that you enter, differently. If you discount your bills or you discount your rates, the same thing is at play here. You think thoughts about not discounting that are getting in your way. What are those thoughts that are coming up for you? Do you think you have to give a discount? Do you think clients expect a discount? Do you think they will go and work with another attorney if you don’t offer a discount?
In fairness, especially if you’re fully booked with clients, if you’re at your capacity for work… I have a whole episode on understanding your capacity, so go listen to that. I’ll link it in the show notes. If you’re at capacity and you’re full, and you’re still discounting, this makes absolutely no sense.
In fact, even if it’s true, that if you charge a client’s going to go work with someone else, good riddance. You literally want them to because they’re taking up a spot in that capacity of yours. And you want that to be filled with a client who’s going to pay your full rate. There is a client that will pay your full rate.
You have to believe that, in order to receive that client into your practice. But I promise you, they are there. You just have to believe. Even if you’re not in full belief, believe a little bit. Take my word for it. Trust me. Borrow my belief. Someone will work with you at your full rate, but only if you require them to.
That is a really fascinating thing about discounting. When you discount, you create more evidence that people will only work with you at your discounted rate. Or will only continue to work with you if you continue to discount your bills. You don’t create evidence to the contrary, that people will continue to work with you even if you don’t discount, right? So, be careful with the evidence that you’re creating.
Also, people aren’t going to fight you. Sometimes they will, but a lot of times they won’t. If you’re going to offer a discount, people will take it. If you offer a payment plan versus having to pay a retainer up front, people will take you up on it. The only reason people pay you the way that they pay you is because you let them pay you that way. All right?
So, be really clear about that. How are you enabling this? How are you allowing some of this behavior that maybe you don’t care for? Maybe it’s even triggering a lot of frustration in your practice. Check in with yourself. It’s easy to blame your clients, but you’re the one who is allowing this to happen.
It’s time to take radical ownership here and be onto yourself if you’re guilty of engaging in these underearning practices. You’re allowing this to happen. So, if you’re discounting and people are paying discounted rates, it’s only because you’re letting them.
You also might be undercharging. If you’re undercharging, check in with yourself: Why are you doing it? What negative thoughts do you have about charging more than what you’re charging, that are holding you back from charging more? Do you think no one will pay a higher rate? Do you think no one would pay for services at that amount? Do you think that you’re not good enough, not qualified enough, not experienced enough, to warrant charging that much?
If you think these thoughts, you’re going to feel afraid. You’re going to feel guilty. You’re going to feel inadequate. You’re going to feel unqualified, and insecure or uncertain. And then, you end up avoiding those feelings by refusing to charge more; you continue to undercharge.
It’s a way that you avoid all that discomfort. So, check in with yourself: Are you guilty of these thoughts? The thoughts that you think about charging more and increasing your rates are probably very similar if you’re not increasing your rates each year. Okay?
That’s not the right frequency to change your rates. I say, let demand drive your rate increases. If you’re consistently full with clients, and you’ve got more work than you really have room for, continue to increase your rates until you start to get nos, until you start to fall underneath your capacity. If you’re at capacity, that’s when you want to increase your rates. And you can just continue to do it until you start to get resistance.
It’s also the best time to increase your rates because it’s when you need the money the least. A terrible time to increase your rates is when you are in a desperate or graspy or insufficient, insecure place in your practice. If you’re in need of clients, it’s really not ideal to increase your rates then to try and make up for lost revenue. Because you’re going to come with an energy that’s going to be really repelling to clients.
So, you want to be unattached when you raise your rates. And you want to be in a place where you care more about getting the higher rate than you care about getting the client. Okay?
Now, if you aren’t raising your rates, check in with yourself. What are those negative thoughts that you’re thinking about increasing your rates? Maybe you think your clients won’t stand for it. That they’ll be upset. That they won’t want to work with you anymore. That they’re going to hire someone else. They’re going to quit.
Maybe you think you’re not worth a higher rate. Maybe you think you can’t charge a certain rate because people who have been at your firm longer than you don’t charge more than that. That is a really common way that people underearn. Who cares what anyone else charges? Don’t worry about them.
If you have control and autonomy over what you charge, set your rates according to your demand. And by gradually increasing, year in and year out, rather than setting your rates based on what other people charge. People will pay what you require them to pay. Don’t worry about what someone else is doing. Only compare yourself to yourself.
So, if you’re guilty of undercharging and not increasing your rates, what would you need to think in order to actually increase them? What would you need to believe?
You would need to believe that people are willing to pay more than what they’re paying right now. You need to believe that it’s safe to charge more. You need to believe that your clients like working with you, and that they’ll continue to work with you because they know the value you bring. You need to believe that you will continue to bring more value than what you’re charging, even as you charge more.
You need to believe that other clients are out there who are willing to pay a higher rate, even if your current clients are not. You need to believe that you are in demand and that you’re worth charging more. That even with charging more, it’s still an overdeliver and an undercharge.
That’s one of my favorite ways to think about how I charge and what I charge. That even as I continue to charge more and more and more, I’m still overdelivering and undercharging, based on the value that I provide my clients. Based on what they get from working with me.
A really fun way to engage in that mental exercise for yourself, is to think about, “What’s the value that my clients get from the services that I provide?” For a lot of my clients, the value that they offer their clients, maybe they offer them peace of mind. Maybe they offer them certainty. Maybe there’s a specific monetary amount.
Whether it’s a tangible or intangible benefit, a lot of times it’s either worth far more than what you’re charging, or it’s invaluable. It’s priceless. In which case, you can charge more. And people will still value the service that they’re getting from you, the service that you’re rendering, and they’ll be happy to pay a higher rate.
You’re also going to have to feel those negative emotions, that I listed, that are coming up for you, when you think about increasing your rates and charging more than what you’re currently charging. To be willing to embrace those negative emotions, gag-and-go, and increase your rates anyways; in spite of and despite them.
And take that intentional action of actually increasing your rates. Doing whatever you need to do in order to facilitate that activity. It might be informing your clients. It might be making the decision and honoring it. It might be not discounting, and going back to your original rates when you send out a bill after you’ve decided on a price increase. Okay?
Whatever it is, there’s those intentional actions you’re going to have to take. You want to identify them and be really clear on what they are.
Now, when it comes to following up on accounts receivable, if you’re not doing this, check in with yourself. What are those negative thoughts that you’re thinking about following up on that outstanding invoice, that leads you to not follow up? Maybe you’re thinking that someone doesn’t have the money and they’re not going to be able to pay.
I love coaching people on this limiting belief. People always come up with the money for the things that they prioritize. All right? So, you can look for evidence of this. I assure you; you will find it. People always find the money.
The people who aren’t paying your rates are spending money on other stuff. Absolutely. They’re not just spending money on the essential life stuff. They’re spending money on other things, too: vacations, restaurants out, beer, wine, cigarettes. Those buffers. Those coping mechanisms.
People spend money. They probably have different subscriptions. Maybe they have cable, maybe they have HBO. Maybe they have an expensive lease payment. Maybe they’re paying for private school or kids travel soccer. It doesn’t matter. Maybe they’re paying for elective beauty procedures. It doesn’t matter. People find the money.
So, you’ve got to make them find the money, by following up on accounts receivable and being the squeaky wheel that gets the grease, okay? If you’re not following up, you’re doing it because either you think that they’re not going to pay you, that they don’t have the money, you’re feeling guilty.
Or maybe you’re feeling compassionate in a way that really doesn’t serve you. Empathetic in a way that really doesn’t serve you here. You’re prioritizing someone else’s discomfort over your own. You want to be onto yourself if you’re doing that, and you want to resist the urge. Charity starts at home, here. You’ve got to put your own needs first, in order to make sure you don’t underearn.
Maybe you’re thinking there’s no point. You’re never going to collect anything, so why even waste your time. You might think that the money doesn’t make that big of a difference. That you made enough off of them already, so you don’t have to chase the rest of the money. You might think that you hate talking about money.
If you’re thinking these thoughts, the chances of you following up on accounts receivable are very slim to none. So, you’ve got to change your thoughts. You’ve got to think that you’re willing to do this. That it does make a difference. You’ve got to think that thought, that I introduced you to earlier, that you always get paid. That you don’t leave money on the table.
You also are going to have to gag-and-go through the discomfort that’s associated with following up on accounts receivable. You’re going to have to feel pushy. You’re going to have to feel needy. You’re going to have to feel rude. You’re going to have to feel intrusive. You’re going to have to feel worried that the client might judge you, or not like that you’re following up.
I always like to tell people that the clients bring it on themselves. If they don’t pay on time, and you’ve got to follow up with them… You, of course, don’t have to follow up with them, you’re choosing to follow up with them. But if you choose to follow up with them, you’re not doing anything wrong. You’re not making them feel uncomfortable. If they feel uncomfortable, it’s because of their thoughts about their own behavior, or their thoughts about your behavior.
You’re not in control of their thoughts. Their thoughts aren’t your business. It’s really irrelevant what they think, okay? But they brought this on themselves by not paying you in a timely fashion. So, don’t go making yourself feel guilty or embarrassed for following up. You’re completely within your rights, as a service provider, to follow up on accounts receivable when you’ve done the work, you’ve provided the value, the clients reaped the benefit, and they owe you money.
Okay, if you’re not in an accounts receivable situation, because you’re an employee, and you work for an organization. Maybe you worked in-house, or at some other type of establishment. Other ways that you underearn, that are different than private practice, are maybe you’re not asking for a raise.
This could also certainly apply to you if you’re working in private practice. Okay? If you’re not asking for a raise, check in with yourself. What are your negative thoughts about asking for a raise? Do you think you don’t deserve one? Do you think your boss is going to be upset if you ask for one? Do you think it makes you look ungrateful? Do you think they’re probably going to say no? Do you think now’s not a great time to ask?
Those thoughts are going to hold you back from asking and earning more. You’ve got to change them. You’ve got to think, “Now’s as good a time as any. I’ve earned it. I’m worth more. I provide more value; therefore, it makes sense for me to receive a raise.” You might need to think, “They might say yes. They will say yes.” That you’ll never know if you don’t ask. You’ve got to be thinking more positive thoughts about asking for the raise.
You’ve also got to be willing to feel negative emotions. So, guilt or feeling entitlement or feeling worried, those negative emotions are emotions you have to be willing to feel. You also might have to feel pushy or rude or inconsiderate, if you’ve got negative thoughts about you asking. You also might have to be willing to feel negative emotions if they tell you no.
You might have to be willing to feel disappointed, offended, hurt, discouraged, resentful, frustrated, rejected. All those negative emotions too, that we prevent ourselves from experiencing when we avoid asking for more money.
Maybe you’re not asking for a bonus, or you’re not negotiating a higher bonus for similar reasons. If that’s the case, you’ve got to change your thoughts. You’ve got to embrace the discomfort that comes from asking.
And then, you’ve got to gag-and-go and take the intentional action of asking for what you want, in spite of and despite the discomfort. This is really going to require you to care less about other people’s opinions, and to prioritize yourself and what you want.
Now, maybe you’ve asked for a raise, and they’ve told you no. Or you’ve asked for more money and you’re not getting it. Or you’re in a job where the compensation structure doesn’t suit you, it leads you to underearn, and you could be working somewhere else with a more conducive beneficial compensation structure.
That means you’ve got to leave and move to a different job. If you don’t do that, and you keep staying in a job with a lower salary or disadvantaged compensation benefits, you want to switch jobs. But if you’re not switching jobs, if you’re not looking, if you’re not applying, if you’re not moving on to a position that would enable you to earn more, you’ve got to ask yourself why.
What are the thoughts that are getting in your way? You might be thinking that you should stay. That your employer has done a lot for you. That it makes you look ungrateful. That it’s good enough. That it’s wrong or greedy of you to want more. Those negative thoughts are getting in your way.
Maybe you think that there isn’t a position out there that will allow you to earn more. I promise you, that’s just not true. There’s always a position that will allow you to earn more. You might think you’re not qualified for it, so you might feel inadequate or insecure. You might feel uncertain about whether or not you’ll get it, and that uncertainty drives you to just maintain the status quo.
So, get really clear here. If you’re guilty of this, staying put when you know it’s time to leave, and that’s causing you to underearn, you’ve got to change your thoughts. What do you need to think instead, about the intentional action you need to take? About looking for a job and about switching jobs?
You might think you’re not going to find as good of a gig. That you’re not going to find as nice of an environment. You’re not going to work with better people or as good of people as you’re currently working with. Those are other limiting beliefs that are holding you back.
So, that doubt that’s going to come in, along with all the other discomfort that comes from the thoughts that I just mentioned, those are going to present as roadblocks that keep you in your place. You’re going to have to change your thoughts and embrace that discomfort, in order to move on to a position that’s more conducive to you earning more.
Last but not least, if you’re not developing business. Actually, not last but not least, let’s talk about reimbursements first. If you’re not submitting your receipts for reimbursement at the job that you work at, ask yourself why? What are your thoughts about submitting receipts for reimbursement? Do you think it makes you look petty? That’s a thought I used to think, actually.
Do you think, “Meh, I really don’t need the money. It’s not that big of a deal.” Check in with yourself. What thoughts come up for you? And then, what flavors of discomfort come up for you? What negative emotions do experience when you think about forcing yourself to submit those receipts for reimbursement? For asking for what you’re technically entitled to?
Or maybe there’s not even a company policy, but you could be asking to be reimbursed and compensated for your financial expenditure. A lot of times, my clients could have their employers pay for their coaching; this is such a great example of this. But they never ask, they leave money on the table, and they end up paying out of pocket for something that the company or the firm might cover.
Now, I’m a big advocate of paying out of pocket. I think when you have your own skin in the game, you show up a little bit differently in that coaching relationship. You take it a little bit more seriously. You value the time and the financial investment a little bit differently when it’s your own money that you’re putting up and spending, to get the ROI that you get from coaching.
However, you could receive compensation from your employer for this expenditure. If spending the money on coaching is something that’s holding you back, check in with your employer and see if they’ll cover the costs. Sometimes they will.
But you might feel guilty about asking. If that’s you, you’re going to have to gag-and-go through that guilt. Or you’re going to have to change the way that you’re thinking about making the ask in order to be able to make it. Okay?
So, check in with yourself. If you’re not submitting things for reimbursement, there’s a couple of reasons why. You’re not thinking the right thoughts. You’re not being willing to feel the negative feelings that come up for you. And you’re not taking the intentional action you would need to take, in spite of and despite the discomfort.
Now, last but not least; for real this time. If you’re not developing business, and you work for an establishment that compensates really well, or at least better than just your salary if you do develop business, you’re leaving money on the table. This is a way that you’re underearning.
Maybe you would get a higher salary because of the business that you bring in. Your firm, your company, would value you more, so you’d receive higher salary increases. That might be one way. Or you’d receive bigger bonuses based on the firm or the company’s compensation structure.
If this is you and you’re not developing business, check in with yourself. Why are you not developing business? Maybe you think you don’t have time for it. Maybe you think it’s too hard. Maybe you think no one wants to hire you. Maybe you think it’s uncomfortable and you don’t know where to start.
If you’re thinking these thoughts, you’re going to feel overwhelmed and pressured, confused, uncertain, unprepared, unqualified, nervous, embarrassed. Exposed maybe when you think about putting yourself out there and marketing yourself.
So, if those thoughts are prevalent for you, and you’re experiencing those negative feelings, you’re not engaging in business development because those thoughts are getting in your way. And you’re avoiding those emotions instead of embracing them. In order to develop business, and take advantage of that compensation structure that you are able to access and leverage when you do develop business, you’re going to have to change your thoughts about business development.
You’re going to have to believe that people want to hire you, and that you do have time to develop business, and that you’re capable of developing business. That business development is fun. That it can be easy. That you’ll be good at it. That it’s a skill you can develop over time, even if it’s a skill that you feel like you don’t have right now. Okay?
So, you’ve got to change your thoughts. And then, you’ve got to be willing to embrace the discomfort of developing business that comes from those negative thoughts that just happen to linger. They just don’t go away completely as you start to practice new thoughts.
You’ve got to take the intentional action of developing business. You’ve got to know what you’re offering people. You’ve got to meet people. Tell them what you do, add value ahead of time to your audience, and make offers to help them when it makes sense. Basically meaning, if they need your help, you’ve got to tell them you can help them, and you got to let them know how to work with you. How to take the next step to move forward.
And in order to take those actions, you’re going to have to be willing to feel uncomfortable. So, you’ve got to gag-and-go through that discomfort and just put yourself out there and start developing business.
These are the ways that you underearn. Find and identify them in your own life. How are you underearning? What is it costing you? Get clear on the negative thoughts you’re thinking about the intentional action that you would need to take in order to not underearn. See what negative emotions come up for you when you think those negative thoughts. And then, be very clear about the intentional action that you’re not taking.
The solution here, once you’ve identified the thoughts, identified the feelings that you’re avoiding, and identified the intentional action that you’re not taking, is to flip the script. And to change your thoughts. Embrace that discomfort and take that intentional action anyways, no matter how you’re underearning. That is the solution.
That framework works for any of the ways in which you may be underearning, okay? So, go out there in your life, apply this framework, and shift from the problem to the solution. Change those thoughts, embrace those feelings, and take that intentional action, in spite of and despite the discomfort.
It is going to be life changing for you if you do this. Okay? Alright, that’s what I have for you this week. I want to add one more final thing before I go. If you struggle with underearning, in any of the ways that I mentioned or in a handful of the ways that I mentioned or in all of the ways that I mentioned, I highly, highly recommend you join the August class of The Less Stressed Lawyer Mastermind.
We will be addressing each and every one of these underearning issues in the August 2023 cohort. So, make sure you’re in it. We’ll get very clear on exactly what your thoughts are. I’ll help you identify the mindset blocks that are holding you back from earning more. And then, I will help you learn how to take uncomfortable action, in spite of the discomfort, so you can be intentional. So, you can stop underearning. Okay?
It is going to be extremely comprehensive what we cover in this upcoming round, when it comes to underearning. If you’re guilty of doing this, you do not want to miss it. It is literally costing you, I gave you the numbers already, it’s literally costing you tens, if not hundreds of thousands of dollars a year. And it’s costing you hundreds of thousands of dollars, or millions of dollars, over the course of your legal career.
You literally cannot afford to not solve your underearning issue; to not address this problem. The cost of the mastermind is peanuts compared to the money that you’re leaving on the table. The mastermind is $5,000 for the six-month program. Including the three-and-a-half day in-person event in Big Sky, Montana. The $5,000 doesn’t cover your travel to Big Sky or your hotel accommodations. But it covers, basically, everything else. Okay?
So, the $5,000 expenditure, that you would need to make in order to invest in yourself, in order to invest in learning how to overcome your underearning problem, pales in comparison to the money that you will start to earn. The money that you will recoup. The money that you will stop leaving on the table if you join this program. You will learn the tools, that I’m going to teach you during our six months together.
Get out of your own way. Don’t be penny-wise and pound foolish. Spend the money now. Make this investment in yourself and your future. Build this skill set. Learn how to solve your underearning problems, once and for all. It’s going to pay dividends, literally, if you do this. All right? Now remember, spots are limited, so don’t wait. Get in and apply now. You can do that at TheLessStressedLawyer.com/mastermind.
Your future self is going to thank you. The future self that has an extra $100,000 to play with a year, or $50,000 to play with a year. Fifty thousand versus five thousand is nothing. Five thousand dollars versus $100,000, nothing. Five thousand dollars versus a million dollars, nothing.
Get out of your own way. I know it can feel icky or uncomfortable to invest in yourself, and to come up out of pocket and spend the money, but seriously, it makes absolutely no sense to continue dealing with this underearning problem year in and year out. Let’s address this issue once and for all.
I cannot wait to see you in the mastermind. I can’t wait to help you with this problem. I think one of my absolute favorite things to coach on, is teaching people how to make more money. You work hard, you don’t need to work harder to make more of it. You need to work smarter, okay?
And one of the best ways to work smarter is to learn how to overcome your underearning tendencies, once and for all. You learn this once; it’s going to last you a lifetime. It’s going to be the best $5,000 you’ve ever spent, I promise you.
Alright, my friends, I will talk to you in the next episode. we’re going to continue talking about money. I’ve got a couple more episodes left in this series. So, if you haven’t subscribed yet, make sure you hit the subscribe or follow button. Tune in next week, where we continue with the Money Making Mindset series. All right?
In the meantime, I hope you have a beautiful week. I’ll talk to you in the next episode.
Thanks for listening to The Less Stressed Lawyer podcast. If you want more info about Olivia Vizachero or the show’s notes and resources from today’s episode, visit www.TheLessStressedLawyer.com.