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The #1 Financial Mistake Solo Lawyers Make (And How to Fix It)
Why Your Growth Might Be Stalling—and How to Take Back Control
Let’s cut to the chase.
Most solo attorneys are struggling because they don’t have control over their cash flow.
If you’ve ever thought,
“I’m making money, but I don’t know where it’s going…”
you’re not alone—and this blog is for you.
The Most Common Mistake: Ignoring Cash Flow
Here’s the #1 financial mistake I see solo law firm owners make:
You’re focused on revenue, not cash flow.
Revenue is what you bill.
Cash flow is what you keep—and what’s actually available to pay yourself, your staff, your taxes, and your bills.
Too many lawyers look at their Stripe account, see $15K deposited, and think everything’s fine…
…until payroll’s due, taxes hit, or they try to take a draw—and realize the account is empty.
This isn’t just a math issue—it’s a system issue.
What Happens When You Don’t Track Cash Flow
When cash flow isn’t tracked or understood, it causes a ripple effect of stress and mistakes:
- Overdrawing your operating account
- Paying yourself inconsistently or too much
- Underpaying quarterly taxes (or skipping them altogether)
- Avoiding hiring help because you’re unsure what you can afford
- Making decisions based on emotion—not data
Here’s the kicker:
You can be profitable on paper and still be broke.
(We’ve seen it happen. More than once.)
Why This Happens to Solo Lawyers
This problem shows up even faster for solo attorneys because:
- You don’t have a team to catch errors or notice patterns.
- You often mix personal and business expenses early on.
- You’re wearing all the hats, so bookkeeping gets pushed to the bottom.
- Your “system” is Google Sheets and gut instinct.
None of this makes you a bad business owner.
It just means you’ve outgrown the DIY phase—and now it’s time to get serious.
Quick Wins to Take Control of Cash Flow
You don’t have to rebuild everything overnight.
Here are a few high-impact actions to get back in control fast:
1. Separate Everything
If your firm doesn’t have a dedicated:
- Operating account
- Tax savings account
- Profit or draw account
…it’s time to set that up. Today.
This alone helps you see your real spending power—not just your gross deposits.
2. Implement a 3-Account Rule
We recommend:
- Operating: For expenses, payroll, software, etc.
- Owner Pay/Profit: Set a fixed percentage for your monthly draw.
- Tax Holding: Transfer 25–30% of profit here every month.
This structure avoids tax panic and accidental overspending.
3. Use Real-Time Financial Reports
Set up monthly reports (not once a year!) that track:
- Monthly revenue vs. expenses
- Cash on hand
- Trust account balance (if applicable)
- Draws taken YTD
- Tax set-asides
We help our clients at Prestige Accounting do this every single month using cloud-based dashboards designed for lawyers.
4. Forecast Your Next 90 Days
Even a basic forecast of what’s coming in and what’s going out can help you:
- Time your marketing expenses
- Know if you can hire or outsource
- Avoid overdrafting during low-collection months
What This Mistake Is Really Costing You
Let’s be honest—this isn’t just about “clean books.”
It’s about the mental load of not knowing:
- Can I afford to take a vacation?
- Am I saving enough for taxes?
- Do I need to push off hiring help again?
When you don’t have cash flow clarity, you work harder than you need to—and feel like you’re always behind.
This lack of visibility is often the hidden reason lawyers burn out, underpay themselves, or keep spinning their wheels with no clear direction.
What We Do for Our Clients
At Prestige, we specialize in:
- Monthly cash flow planning
- Profit forecasting
- Tax-saving strategy implementation
- Real-time dashboards that actually make sense
We’ll help you go from guessing to knowing exactly what’s going on inside your firm’s finances—without drowning in spreadsheets or jargon.
Want a sneak peek of how we do it?
Book a consultation and let’s walk through where your cash is going—and how to fix it.
