Leadership often hinges on decisions made with incomplete information. In this episode of Leaders and Legacies, John C. Scott explains why strong leaders build financial clarity into their organizations rather than relying on intuition or a bank balance.
John, a CPA and partner at Anders, specializes in helping law firms understand the business side of their practice. Many attorneys excel in legal reasoning but never receive training in finance or firm management. That gap often leads to poor cash planning, uneven partner distributions, and missed opportunities to reinvest in growth.
John explains how law firms can shift from reactive accounting to proactive financial leadership. Instead of looking backward at reports, leaders should forecast cash flow, set operating cash targets, and plan distributions strategically. This forward-looking discipline helps firms avoid cash crunches and operate with confidence.
The conversation also explores leadership culture inside professional services firms. John emphasizes the importance of hiring smart people, building flexible work environments, and creating a culture where employees choose to stay. Leaders who treat their people well build organizations that thrive beyond themselves.
For law firm leaders—and any professional services owner—this episode highlights how financial discipline, thoughtful leadership, and strong culture combine to create long-term success.
Want to learn more about John C. Scott's work? Check out their website at https://anderscpa.com/virtual-cfo-legal/.
Connect with John C. Scott on LinkedIn at https://www.linkedin.com/in/john-c-scott-cpa/
Key Points with Timestamps
- 00:51 — Introducing John C. Scott
CPA, partner at Anders, and leader of the firm’s Virtual CFO services for law firms. - 02:25 — Why Lawyers Struggle with Finance
Attorneys excel at logic but rarely receive training in accounting or financial management. - 03:42 — The Bank Balance Trap
Many firm owners assume available cash equals available profit, ignoring upcoming expenses like payroll and rent. - 04:06 — The Power of Cash Forecasting
Forecasting 12 weeks ahead provides clarity on distributions and operating capital. - 05:09 — Revenue Drivers in Law Firms
Billing hygiene, consistent invoicing, and case management all influence cash flow. - 06:00 — Leadership Through Vendor Relationships
Paying contractors quickly builds loyalty and strengthens a firm’s talent network. - 08:00 — Building a Culture People Stay For
Hiring smart people and giving flexibility reduces turnover and strengthens organizations. - 11:11 — The Cost of a Bad Hire
A poor hiring decision can take 18 months or more to recognize and correct. - 13:13 — Leadership Lesson: Admit When You Don’t Know
Saying “Let me figure that out and get back to you” builds credibility. - 18:00 — Law Firm Cash Flow Challenges
Many firms distribute too much cash and rely on credit lines early in the year. - 18:36 — Setting Cash Targets
Firms should maintain operating reserves and tax reserves before distributing profits. - 20:20 — Managing Tax Distributions
Strategic reserve accounts help partners avoid scrambling to pay taxes. - 22:01 — Law Firm Compensation Structures
Different partnership models influence collaboration and firm culture. - 23:19 — The Demographic Challenge Facing Professional Services
Aging professionals and fewer young entrants create workforce gaps. - 24:14 — AI and the Future of Professional Work
Technology may increase productivity and allow professionals to focus on higher-value work. - 30:57 — Final Leadership Takeaway
Strong leadership blends financial discipline, cultural awareness, and long-term thinking.
Transcript
00;00;05;20 - 00;00;30;20
Craig Andrews
I was in a coma for six weeks while the doctors told my wife I was going to die. When I woke up, she told me the most fantastic story. My team kept running the business without me. Freelancers reached out to my team and said, we will do whatever it takes. As long as Craig's in the hospital. I consider that the greatest accomplishment in my career.
00;00;30;23 - 00;00;51;07
Craig Andrews
My name is Craig Andrews and this is the Leaders and Legacies podcast where we talk to leaders creating an impact beyond themselves. At the end of today's interview, I'll tell you how you can be the next leader featured on this show.
00;00;51;10 - 00;01;02;12
Craig Andrews
Today I went. Welcome, John Scott. He is a CPA in AEP and Sigma. I don't know what all that means, but sounds interesting. He is also a partner,
00;01;02;15 - 00;01;25;20
Craig Andrews
in tax at Anders and a leading authority in law firm financial management. He has over 30 years of experience, and he heads Anders legal industry efforts for their virtual CFO team, offering law firms that dedicated resources, forward looking financial insight and critical thinking they need to thrive.
00;01;25;22 - 00;01;32;24
Craig Andrews
John is also the author of Judicial Dollars and Cents. He specializes in helping firms optimize
00;01;32;27 - 00;01;43;25
Craig Andrews
processes, improve profitability, and position themselves for successful succession or managing partner transitions. John, welcome.
00;01;43;27 - 00;01;46;07
John Scott
Thank you Craig. Great to be here.
00;01;46;09 - 00;01;54;24
Craig Andrews
So I have to ask when all those letters me I know see CPA, I think everybody knows that. But where are the rest of those ledgers mean?
00;01;54;26 - 00;02;22;25
John Scott
Sigma is, certified chartered global accountants? It's a designation that the CPA has. AEP deals with trusts and estates. They're just designations along the way that demonstrate an expertise in a certain area. I mean, at Anders, we work with high net worth individuals and a lot of those are attorneys. And so beyond the firm finances, you want to talk about their own personal finances and their estate planning.
00;02;22;25 - 00;02;25;01
John Scott
And that's what those things deal with.
00;02;25;03 - 00;02;43;12
Craig Andrews
Yeah. Well, you know, I think there's an interesting trait about attorneys. Nobody is going to deny that there anything other than exceptionally brilliant. You know, they very, very smart. But it seems like there's some things, some areas where they struggle.
00;02;43;14 - 00;03;05;18
John Scott
They are very smart and they have been trained to box you in with words, which I love and appreciate. But one thing that they lack in their undergrad and in law school is most of them do not have a finance or accounting background. So when it comes to logic, they nail it. Okay. When it comes to finances, they don't quite get it.
00;03;05;18 - 00;03;10;21
John Scott
And they need, in my opinion, a little bit of help to figure out the financial part of it.
00;03;10;23 - 00;03;15;08
Craig Andrews
Yeah. Well, and one of the things so we used to market,
00;03;15;08 - 00;03;22;14
Craig Andrews
professional liability insurance for attorneys and, you know, some of the content we generated was,
00;03;22;17 - 00;03;37;12
Craig Andrews
we had we had something called the, the lawyers MBA. And it was all based on the premise that I heard lawyers say, hey, in law school, they don't teach you the business of, well, they teach you all, but they don't teach you the business of law.
00;03;37;14 - 00;03;38;17
John Scott
Yeah. That's,
00;03;38;17 - 00;03;42;18
John Scott
it. A lot of times you'll look at the bank account as,
00;03;42;20 - 00;04;06;26
John Scott
a law firm owner and you'll say, well, there's there's a big balance in there, not realizing that next week is payroll, but rents do. So that money's already accounted for, and you can't just take it out. If you do take it out. You know, the worst thing I could ever do to a law firm owner is say, hey, we told you you could take that distribution last week, but now you got to put 50,000 that back in so we can cover the rent and payroll.
00;04;06;29 - 00;04;24;03
John Scott
And that's just not how we plan. We like to not be historical in nature, but have good current data so that we can forecast at least the next 12 weeks and say, okay, here's the cash we know is coming in. Here are known expenses. Here's the excess cash that's available for a distribution.
00;04;24;05 - 00;04;47;23
Craig Andrews
Yeah. Which I'll be honest, that is that's valuable. That's something that I've struggled in my own business understanding to be able to look at. And it's it's very easy to look at the the chunk of cash sitting there. But to be able to look forward and say, okay, what's this mean? How much of this can we use to either do a distribution or reinvest in the business?
00;04;47;25 - 00;05;09;17
John Scott
Yeah, you really have to know what the the value drivers or the revenue drivers are. Those are the levers that you can pull to to increase that cash position. I mean, you could slow down paying payables. A lot of big companies when they make a merger, Anheuser-Busch did that here when they acquired when InBev acquired AB, they said to all the vendors, hey, we used to pay in 30 days.
00;05;09;18 - 00;05;28;16
John Scott
Guess what? It's going to be much longer than that. That was a way for them to increase their cash and pay off their debt early. So firms have that same thing if they have good billing hygiene and send out bills on a regular cadence and have good clients, train your clients to pay those bills within terms, then you can increase that cash position.
00;05;28;16 - 00;05;50;04
John Scott
If it's an hourly billing firm, you know, let's monitor and manage those hours that folks are billing you and get bills out on time. If it's a PR firm, let's close cases. Let's not have little hiccups where cases kind of lag and somebody forgets about it. Let's manage that process and get the cash flow will flowing.
00;05;50;06 - 00;05;59;03
Craig Andrews
You know, you said something that triggered something. May I do something that I think many find to be weird?
00;05;59;06 - 00;06;00;12
Craig Andrews
I would imagine a lot of,
00;06;00;12 - 00;06;04;14
Craig Andrews
CPAs find to be or CFOs find to be important.
00;06;04;17 - 00;06;15;26
Craig Andrews
Maybe. Or they are being put in the stocks and, you know, publicly mocked for doing it. But I decided a long time ago that with my especially with my 1099.
00;06;15;26 - 00;06;35;07
Craig Andrews
So now I'm in a business where we rely heavily on 1090 nines, that I'm going to try to pay them faster than anybody else, to the point where there have been times where I've gotten an invoice and I immediately stop. It will pop up in the email, and I'll immediately stop what I'm doing and pay them,
00;06;35;10 - 00;06;36;00
Craig Andrews
to make them think.
00;06;36;00 - 00;06;55;00
John Scott
That's actually smart, because it might not be the best use of your cash. But the next time you need that contractor, you're in a client to them because you pay by return mail, and we have the same set of clients and the client that you have to pester to get paid. They're not an AA client, but the one that sends back my return mail.
00;06;55;00 - 00;07;03;06
John Scott
The check. You're going to pick up the phone call, you're going to bend over backwards for that person. And and your contractors are going to do the same for you.
00;07;03;08 - 00;07;04;16
Craig Andrews
Well and they have.
00;07;04;19 - 00;07;05;01
John Scott
Yeah, we.
00;07;05;01 - 00;07;06;12
Craig Andrews
Have
00;07;06;15 - 00;07;07;28
Craig Andrews
I have one who,
00;07;08;03 - 00;07;17;02
Craig Andrews
what was it? Somebody a somebody, an exceptional, exceptional marketer was,
00;07;17;05 - 00;07;19;00
Craig Andrews
Ushered.
00;07;19;03 - 00;07;33;26
Craig Andrews
An exceptional marketer was trying to poacher and one being the serious about it. And, you know, somebody came up who was kind of brokering it and came up and talked to me about it, and I said, look, this is a huge opportunity for,
00;07;33;29 - 00;07;36;04
Craig Andrews
the last thing I'm going to do is hold her back.
00;07;36;07 - 00;07;39;18
Craig Andrews
And she happened to be walking. Walking by right then.
00;07;39;18 - 00;07;40;15
Craig Andrews
So, hey,
00;07;40;18 - 00;07;45;14
Craig Andrews
there's a conversation we need to have. Here's this opportunity. And,
00;07;45;17 - 00;07;56;27
Craig Andrews
And she listened, and she thanked them, and she said, no, I'm gonna stick with Craig. And we were talking, and I told her privately, you know, you should really think about this opportunity. It's very, very good.
00;07;56;29 - 00;08;00;10
Craig Andrews
And she said, no, I'm loyal to you.
00;08;00;13 - 00;08;28;02
John Scott
But and that speaks to your leadership. You have surround yourself with good people. You treat them well. I mean, I think the you're being influential and not overbearing. You're not being difficult to work with. You're actually really helping them out. And you you pick the right people. They they fit your culture. They're good at what they do. And that's what we all need to do to build our organizations, because we want those organizations to go beyond us.
00;08;28;04 - 00;09;00;16
Craig Andrews
Yeah, yeah, well, the thing that shocks me because I've seen, you know, a lot of businesses play the, you know, play the game with, hey, you know, we pay is when the pandemic hit, Dell reached out to all of its suppliers and said, hey, by the way, immediately you're on 80 day terms and the thing that the thing that surprises me about that is at least in critical elements of your supply chain.
00;09;00;18 - 00;09;10;25
Craig Andrews
And if your supply chain is talent as it is with me or your supply chain is, you know, bits and pieces that go on computers, as it was from Michael Dell.
00;09;10;28 - 00;09;17;12
Craig Andrews
It seems like that's that that is disruptive behavior to your supply chain.
00;09;17;15 - 00;09;26;24
John Scott
It was disruptive and in the pandemic was dire times. People make good decisions and people made poor decisions.
00;09;26;26 - 00;09;42;00
John Scott
I think the way you're treating your contractors is the way we like to treat our employees. We like to think that we're paying at or above market. We want to give them flexibility to. And we only hire the smartest people.
00;09;42;04 - 00;10;03;00
John Scott
I mean, we want people who are really good at their job, but we also need them to buy into what this organization is trying to do. And that means we give them flexibility. They can work from home, they can work or fully remote. They can work part time remote part time in the office. We want to give them as much flexibility as possible so that they stay.
00;10;03;00 - 00;10;12;04
John Scott
I mean, the worst thing you can do is have high turnover. Yeah, because you're constantly training. You don't know who the next person in the door is going to be.
00;10;12;07 - 00;10;17;09
Craig Andrews
Yeah. Well and it's just it's costly to retrain them minutes.
00;10;17;09 - 00;10;31;23
Craig Andrews
And yeah like I said you never know what the next, but it just, it's a, it takes time. And, you know, it's expensive to train somebody even if they're already good, you know, bringing them in and getting them familiar with what you do and how you do things.
00;10;31;26 - 00;10;53;15
John Scott
That's actually the value proposition of what we do. We provide a team of finance people for a firm at a fraction of the cost. It would have to hire that that team internally. And there's no long term commitment. And we have a menu of services that you pick and choose what you want to keep, what we do and the price changes by what you say.
00;10;53;15 - 00;11;11;20
John Scott
Yes and no. Two and it's three months down the line. You say, hey, I'd like you to take over accounts payable. We flip the switch, change the statement of work and the price changes. Or conversely, you say, hey, I'm going to take back accounts payable. We flip the switch. No big deal. We move forward with a lesser price.
00;11;11;23 - 00;11;22;06
John Scott
So we're not taking the risk of hiring the right team, training them, getting them up to speed. You know, if you make a bad hire, it can be 18 months before you figure it out and correct it.
00;11;22;08 - 00;11;24;01
Craig Andrews
Yeah, yeah,
00;11;24;04 - 00;11;30;02
Craig Andrews
I worked for a company years ago that we hired somebody that they didn't report to me.
00;11;30;05 - 00;11;49;27
Craig Andrews
They were based in Taiwan, and, they came back to the factory and I was meeting with this person and figured out pretty quickly that when he didn't know the answer to something, he would make something up and I went to my GM and I said, we can't let this person meet with customers.
00;11;49;29 - 00;12;15;00
Craig Andrews
And so I ended up going to talk to his boss, not my GM's boss, but the and it was fine. I ended up losing a little political clout in that because everybody thought I was just being mean and harsh and said, you need to give them some time. You need to give them some time. And so he worked for us for three years until one of our competitors hired him away.
00;12;15;02 - 00;12;24;22
Craig Andrews
And, you know, I was in a fairly small industry. We did semiconductors for mobile phones. And so we knew each other. And a few years after that, I was having some beers with,
00;12;24;25 - 00;12;30;16
Craig Andrews
the guys that hired them away. And I said, hey, guys, I'm meant to send you a Christmas card, but thank you for hiring away Sam.
00;12;30;18 - 00;12;39;25
Craig Andrews
They're like, oh, he was horrible. We fired him within a year. I said, yeah, you're the smart ones. We kept them on for three.
00;12;39;28 - 00;12;45;28
John Scott
Well, and that's happened to us where somebody in the organization has been hired away by a client, and it didn't
00;12;45;28 - 00;12;58;12
John Scott
always work out. And like Ralph, you never asked me. You just poached him. And, you know, it was probably one of our loyal performers anyway. But the other thing you said was,
00;12;58;14 - 00;13;00;25
John Scott
And I'm freezing on it now.
00;13;00;27 - 00;13;13;27
John Scott
Oh, I know I always tell young people in our organization, hey, if you come into my office, bring a pen and paper. All right? I want you to take notes so that you comprehend what we talked about. And then alternatively,
00;13;14;00 - 00;13;20;27
John Scott
when you don't know the answer, the best answer is. That's a great question. Let me figure it out and I'll get back to you.
00;13;21;00 - 00;13;33;04
John Scott
And there's no there's no shame in saying that. In fact, I think it's respected by whoever's asking the question that you care enough to say, I don't know. It's a great question, and I'll go figure it out.
00;13;33;07 - 00;13;39;18
Craig Andrews
Yeah, yeah, yeah. Making something that never, never works out never pans out.
00;13;39;20 - 00;13;43;08
John Scott
Yeah. It usually ends up burning you. Yeah. Because it was wrong.
00;13;43;10 - 00;13;53;08
Craig Andrews
Well, I'm curious, it was something you mentioned because, you know, I've had multiple discussions about this, my business in terms of having kind of non station clauses with
00;13;53;08 - 00;13;57;01
Craig Andrews
contractors and various things.
00;13;57;04 - 00;14;02;14
Craig Andrews
You know, how do you, how do you handle that honestly?
00;14;02;14 - 00;14;26;01
John Scott
You know, we we have them, we have non solicitation and non-compete clauses. So you can't really leave here and take clients without paying for them. But we also have with our, our vendors and our clients that they won't solicit our employees and other firms. We have these agreements. They're not really written agreements, but we won't poach your people.
00;14;26;03 - 00;14;52;02
John Scott
But it happens. I mean, especially it's slowing down now because the market for for jobs are slowing down. But when you could get a phone call and two days later be making $15,000 more, it it was a flywheel of things. And even though we have these agreements, they're really tough to enforce. It's got to be respect and honor between competitors.
00;14;52;05 - 00;15;07;02
Craig Andrews
Yeah. You know. Yeah. But I think ultimately it goes back to how you treat your employees. And there are some that will just leave. There's some that you're happy when they leave.
00;15;07;05 - 00;15;15;16
Craig Andrews
But there are some that will just leave. But I think the best, the best form of security is to build an environment where they don't want to.
00;15;15;18 - 00;15;29;27
John Scott
Write and build a culture that they love. And we have a lot of boomerang people, you know, they did leave. They took the shiny offer for a little bit more money. Six months to a year later, they come back. Yeah, but if you didn't want them back, you're like, oh,
00;15;30;02 - 00;15;34;26
John Scott
sorry, I don't have any room for you. There also is this generational difference, right?
00;15;34;26 - 00;15;58;04
John Scott
The there's a guy, Chris DeSantis that wrote a book about why why I find you irritating. And it's the bias that all the different generations have against each other. Yeah. I'm in the boomer generation, and I get frustrated with, somebody that's, you know, a block down the hall sending me a teams message or an email. I'm like, I'm the generation that would get up and go talk to you.
00;15;58;07 - 00;16;14;07
John Scott
Now, if you're remote, I get it. The teams message, but I would prefer you send me a teams invitation or pick up the phone. I text a lot, even with my clients, and texting is probably the preferred method. If I can't meet with you face to face.
00;16;14;10 - 00;16;15;21
Craig Andrews
Yeah.
00;16;15;24 - 00;16;20;14
John Scott
That is the text is going to go back and forth and back and forth than we should talk on the phone.
00;16;20;17 - 00;16;28;20
Craig Andrews
Yeah, yeah. It's it's interesting. It's
00;16;28;22 - 00;16;40;27
Craig Andrews
There is a generational change. And I think even in, in offices, there are people that have to sit there, message back and forth and the person they're messaging is 20, 30ft away.
00;16;41;00 - 00;16;41;21
John Scott
Yep.
00;16;41;23 - 00;16;45;26
Craig Andrews
And they can just go over and say, hey, let's chat about this or and.
00;16;45;27 - 00;16;49;00
John Scott
Get it done. You just let me off both your list.
00;16;49;03 - 00;17;05;21
Craig Andrews
Yeah, yeah. You know, I have a mentor who he has a really neat role. He says never, never deal with conflict via text or email.
00;17;05;24 - 00;17;08;04
John Scott
These because you can't tell the emotion.
00;17;08;06 - 00;17;15;07
Craig Andrews
Yeah. And he tells his employees, he said, you do that, I will fire you on the spot.
00;17;15;10 - 00;17;25;10
John Scott
Yeah. I think that's sound advice. At least when you can see each other, you can read the body language and know you know what the intent really is.
00;17;25;13 - 00;17;30;14
Craig Andrews
Yeah. Well, the other thing I've noticed is some people are,
00;17;30;17 - 00;17;40;19
Craig Andrews
they're very brave. They're very bold when they're hiding behind the keyboard. And, and when you meet them in person, they're a little bit less inflammatory.
00;17;40;21 - 00;17;43;00
John Scott
Yeah. Less confrontational.
00;17;43;02 - 00;17;49;14
Craig Andrews
Yeah. Well, so let's go back to the lawyers. So,
00;17;49;16 - 00;18;00;13
Craig Andrews
What are some of the typical things that that law firms struggle with, you know, what are what are the things that they uniquely struggle with and what are some things that are kind of common struggles?
00;18;00;16 - 00;18;18;29
John Scott
The common struggle is keeping enough cash in the business so that the business can invest and grow, or even pay the bills. In the next few months, typical firm will get to the end of the year, pay out all the cash, and then live on the line of credit for the first few months when you're just chasing your tail there.
00;18;19;01 - 00;18;36;18
John Scott
And we want to get to a point where you're setting cash targets. How much operating cash do I need? How much do I need to set aside for taxes in order to flow through? Like a partnership, we're going to have to make distributions to cover the income tax from the entity. And so I want to set that aside as well in a high yield money market.
00;18;36;18 - 00;18;56;19
John Scott
So I can make those tax distributions to the partners. But just the discipline. And once I hit those cash targets, then the next dollar that comes in is truly available for distribution. So it's really short term delayed gratification so that we can get to a nirvana where we can distribute that next dollar that comes out.
00;18;56;22 - 00;19;19;26
Craig Andrews
So okay. And so for partnerships and I just want to make sure I'm following what you're saying. Partnerships where the taxation flows through to the individual. And I guess when you have multiple partners you have to basically make a fund where everybody has a basically owns a percentage of that fund that then later gets distributed when they have to pay their taxes.
00;19;19;29 - 00;19;45;24
John Scott
They're personally right. And we'd probably distribute that on a quarterly basis. So if they make $100 for the year, we're going to set aside $40 for distribution for taxes and distribute it to the owners in proportion to their ownership. And then we might decide that, hey, 20 of those dollars we need to set aside for operating income. Well, that's only going to leave $40 for paying the other bills and distributing profit to the to the owners.
00;19;45;26 - 00;20;01;08
John Scott
Now, my example is very simplistic. At $100, but you get the concept of setting aside the money so that you don't have to scramble to find the tax money later. And the distributions you get, you get to keep because they're not for income taxes.
00;20;01;10 - 00;20;10;07
Craig Andrews
Okay. This is fascinating. This is actually kind of helpful. So you said you put it in the money market is it,
00;20;10;10 - 00;20;10;16
Craig Andrews
so,
00;20;10;16 - 00;20;14;15
Craig Andrews
not like a, a,
00;20;14;17 - 00;20;20;01
Craig Andrews
you know, index fund or something like that. It's something that's reasonably stable that, you know, yeah.
00;20;20;01 - 00;20;43;20
John Scott
You can find a high yield money market account and it's only going to be there for a few months, right, because you pay taxes on a quarterly basis, but every month you're putting money into that account and then you're going to distribute what you have to to make your safe harbor estimate. That might not in a year where your income is going up, you're going to be putting more money in that account than you actually have to make it estimates.
00;20;43;20 - 00;21;02;29
John Scott
But then the following April, when you file or extend, you're going to need that money that was accumulating there to pay your extension payment or your balance due. So it's just a way to make sure that you're segregating those funds so that they're when you need them. And if you can make 3 or 4%, then all the better.
00;21;03;02 - 00;21;15;21
Craig Andrews
Do you set it up so that that the firm automatically mixes estimated payments or does the individual do the individual partners have to receive it and then make the payment?
00;21;15;25 - 00;21;42;19
John Scott
The individual partners would make their federal tax deposits in and out. In a lot of states. Now, we have passed around any tax where we can pay at the entity level, the state income tax, which is actually better because when I pay it at the entity level, I get it at auction. So in my example of $100 of net income, if $5 is paid to the state, I'm only taxed on $95 as the ownership group because I get a deduction for those state payments.
00;21;42;21 - 00;21;52;14
Craig Andrews
Got okay, that's fascinating. And with,
00;21;52;16 - 00;21;58;02
Craig Andrews
and that could be really complicated for a law firm because they have a ton of partners.
00;21;58;05 - 00;22;01;00
John Scott
The it can be,
00;22;01;02 - 00;22;24;26
John Scott
and there are very few partners or partnerships rather, that are all for one, one for all. There's 100 different Cop models in a partnership. I do have a few in in our client base experience where, you know, especially in a pie firm where big dollars are coming in and a lot of places are eat what you kill.
00;22;24;26 - 00;22;46;23
John Scott
Well, that was my case. So I get the profits from it. And in a partnership I can allocate away from ownership percentage. But I do have a few that say, hey, you know, Joe had a good year, but we're splitting it 5050. And next year I'll have a good year and we'll split it 6050. They're not all ruthless and say, well, this is my book, this is your book.
00;22;46;26 - 00;23;12;12
John Scott
And really, when you have that book of business mentality, you don't really have the collaboration of a firm. Right? Because you're really just sharing overhead, saying, okay, I produce this. And so minus the overhead I get X and the you produce less, so you're going to get less. We want to build something that we can both win at or all the partners can win at.
00;23;12;15 - 00;23;19;03
John Scott
And you want to build something that has a younger group of people that can replace you someday.
00;23;19;05 - 00;23;26;20
Craig Andrews
Yeah, yeah. Which is challenging because we have an upside down demographic.
00;23;26;23 - 00;23;59;14
John Scott
We do, but that's where I can help and not hopefully hurt us. If I can create some efficiencies, then we can do more with less people. And I'm not suggesting that we to say, but we're going to use AI to do more. In fact, there's a guy named Zach Kass who co-founded OpenAI, in a sense left there, and he spent his entire time talking about, let's use that excess capacity that we create from AI to reconnect with our family and friends.
00;23;59;16 - 00;24;14;16
John Scott
And he actually goes to local and state governments and says, hey, we've got to create parks and good roads and good schools so that when I create these efficiencies, we can reconnect and do good with it and ethically use it.
00;24;14;19 - 00;24;17;27
Craig Andrews
Yeah. Yeah.
00;24;17;27 - 00;24;18;08
Craig Andrews
There's,
00;24;18;08 - 00;24;20;07
Craig Andrews
some there's some,
00;24;20;10 - 00;24;22;02
Craig Andrews
the comments that follow,
00;24;22;05 - 00;24;24;02
Craig Andrews
called it economics and there.
00;24;24;02 - 00;24;25;00
John Scott
Love that group.
00;24;25;07 - 00;24;29;02
Craig Andrews
Yeah. So, you know, they're predicting a Great Depression in 2030.
00;24;29;04 - 00;24;29;26
John Scott
Yeah.
00;24;29;29 - 00;24;49;15
Craig Andrews
And one of the factors, you know, I think from phrasing it right. They say all countries are going to suffer. Those with the higher birth rates will suffer less. And you know, of us versus like China, China's really, really going to hurt during that depression.
00;24;49;17 - 00;24;59;08
John Scott
And they're we're behind them. Demographically it's France the birth rate decline. But we have the same issues there just maybe years ahead of us.
00;24;59;11 - 00;25;20;16
Craig Andrews
Yeah. But they said something was really interesting. They said, you know, AI is not the threat. It may be the savior for our birth rate issue that, you know, it, that may actually be, you know, a solution that just fortuitously popped up when it did that, as we,
00;25;20;16 - 00;25;22;02
Craig Andrews
as we're having trouble filling,
00;25;22;02 - 00;25;27;15
Craig Andrews
these know, like, wealth managers, one of the problems they're having is they don't have young guys coming up.
00;25;27;15 - 00;25;37;25
Craig Andrews
There's not a lot of certified financial planners coming up through the ranks. The average age of a wealth manager is like 58 years old.
00;25;37;27 - 00;25;38;19
Craig Andrews
And,
00;25;38;26 - 00;25;44;09
Craig Andrews
and so for places like that, I may be the, the savior, not the threat.
00;25;44;12 - 00;25;58;22
John Scott
Right. Because theoretically, you need less of those coming into the profession to do the same amount of work. It's an interesting thought. I love it here. Every time they come to town at least once a year, and I try and be at their presentation,
00;25;58;25 - 00;26;11;24
John Scott
I think it plays back into keeping your bills paid and keeping cash in your business, because you need to be prepared for when that next really bad economic event happens.
00;26;11;26 - 00;26;17;09
John Scott
And they've been predicting this since I've been following him since the early 2011 or so.
00;26;17;12 - 00;26;18;04
Craig Andrews
Yeah.
00;26;18;07 - 00;26;33;02
John Scott
I mean, it's it's morphed a little bit. It's moved a little bit time wise. But I mean, I remember Alan Boulay saying, hey, the 20s are going to be robust and great going, you know, incur a bunch of debt in the early 20s, but make sure it's paid off by the late 20s.
00;26;33;05 - 00;26;38;00
Craig Andrews
Yeah, yeah, yeah. It's
00;26;38;00 - 00;26;47;06
Craig Andrews
well, and they also say, just so you know, for those listening, it's not all doom and gloom. They, they say if you go into this prepared, this will be your biggest moneymaking opportunity of your lifetime.
00;26;47;09 - 00;26;51;18
John Scott
Right? You'll be buying things at a discount if you have the cash.
00;26;51;20 - 00;26;53;15
Craig Andrews
Yeah.
00;26;53;18 - 00;27;12;12
John Scott
I tell my kids all the time about it and I don't know that they've listened, although I do. You know, for years I've been telling them, read Dale Carnegie How to Win Friends and Influence People. My youngest came home for Chicago last night, and I picked him up at the train station. He was telling me about this great book he read, Dale Carnegie.
00;27;12;15 - 00;27;14;01
John Scott
I'm like, wow, that's.
00;27;14;01 - 00;27;17;27
Craig Andrews
Awesome. Yeah, yeah, yeah.
00;27;17;27 - 00;27;19;00
Craig Andrews
It's funny how,
00;27;19;02 - 00;27;21;28
Craig Andrews
like how you become more, more wise.
00;27;22;01 - 00;27;23;22
Craig Andrews
Parents always become more wise.
00;27;23;22 - 00;27;27;23
Craig Andrews
As as the awareness of the kids increases.
00;27;27;25 - 00;27;33;06
John Scott
On the younger me would have said, I told you, you remember I told you that. But I just let it go.
00;27;33;08 - 00;27;39;28
Craig Andrews
Yeah, yeah, well, it's funny, it's, you know, one of your comments about the influential, not overbearing,
00;27;40;01 - 00;28;00;09
Craig Andrews
back when I was in the industry, the best sales guys. So we'd have sales guys saying, hey, the customers are saying this, the customers are saying this. And periodically I go out on the road and meet the customers. And, you know, a lot of marketers would go out on the road and they're like, they'd hear something.
00;28;00;16 - 00;28;18;21
Craig Andrews
It's like Moses coming down from the mountain. They're like, I've met with God, and I have the oracles of God here in my hands, and I'm coming back to the factory to tell you what the customer said. And the younger sales guys would be like, I've been telling you this for a year.
00;28;18;23 - 00;28;20;25
John Scott
It's a sign of better. When they said it.
00;28;20;28 - 00;28;26;00
Craig Andrews
Yeah, but the smarter sales guys. And I was guilty of that, too.
00;28;26;03 - 00;28;40;16
Craig Andrews
The smarter sales guys was, you know, they'd sit there and say, man, Craig, that was so good that you were able to figure that out. And, and, and I'd sit there and reflect was like, oh, yeah, they've been telling me for, you know, 6 to 9 months.
00;28;40;19 - 00;28;44;09
John Scott
Yeah, yeah. I like a really good attorney that,
00;28;44;12 - 00;29;01;29
John Scott
I was kind of friends with, and we were at a football game. It was a high school game, and I thought that one of the players out there was going to this certain university, and he didn't disagree with me, but the way he said, oh, made me think I was wrong.
00;29;02;01 - 00;29;19;19
John Scott
And so I looked it up, like during the next week and the next week, we're at the game and I'm like, you know, I was wrong last week. And he knew I was wrong, but he didn't pointed out at the time. He just planted enough doubt with his, oh, that. I went and looked it up and sure enough, he was right.
00;29;19;19 - 00;29;27;04
John Scott
And it was genius the way he he didn't confront me, he just planted the seed to maybe make me go look it up.
00;29;27;07 - 00;29;40;09
Craig Andrews
Yeah. And I mean, back in your whole thought about being influential, not overbearing. I've seen that. Also, when I was leaving North Carolina to come to Texas, there was some. There was,
00;29;40;14 - 00;29;50;20
Craig Andrews
I was coming to a competitor. And of course, my non-compete had been overwritten. They always are. Yeah. And so once we agreed on the job, I said, okay, the last thing is you got to make.
00;29;50;22 - 00;30;14;26
Craig Andrews
Yeah, you got to make my lawyer give me the green light that we're going to be operating in a way that not violating what the reasonable non-compete is. And so they brought a very senior attorney, employment attorney on on the case. And I remember sitting there on a call, and this the company's attorney starts telling my attorneys like, well, hey, if I understand what you're saying, right?
00;30;14;29 - 00;30;25;19
Craig Andrews
Tell me if it sounds like you're saying that North Carolina has no severability clause, an employment contract, so part of it's null and void, then the whole thing is null and void. And my attorney is like,
00;30;25;21 - 00;30;36;28
Craig Andrews
yes, that's what I'm saying. And he just kind of got I'm sitting there watching it. And I was like, that is so brilliant.
00;30;37;05 - 00;30;44;03
Craig Andrews
You know, there's just the human side. It was about more than knowledge of the law. It was about knowledge of people.
00;30;44;05 - 00;30;52;21
John Scott
Right? He was able to read it and get the other guy to come over to his point of view without confrontation.
00;30;52;23 - 00;30;57;00
Craig Andrews
Yeah. Well, John, this has been really good.
00;30;57;00 - 00;30;59;15
Craig Andrews
I really feel like we could talk for another
00;30;59;18 - 00;31;02;11
Craig Andrews
hour easily because,
00;31;02;14 - 00;31;05;02
Craig Andrews
you're doing something really fascinating. Working with
00;31;05;02 - 00;31;16;13
Craig Andrews
attorneys, I think is always interesting. Yeah, I don't mean that I'm not being euphemistic. I just think they're they're an interesting dynamic of people. Super, super smart,
00;31;16;16 - 00;31;19;28
Craig Andrews
that have, you know, some unique ways of doing things.
00;31;19;28 - 00;31;21;07
Craig Andrews
And I think it's,
00;31;21;09 - 00;31;27;25
Craig Andrews
it's fascinating. How can how can people contact you?
00;31;27;27 - 00;31;40;20
John Scott
Well, you can search the web for Anders virtual CFO services or, and or cpa.com. I'm also on LinkedIn. John C Scott, CPA. I think my LinkedIn profile picture is a,
00;31;40;22 - 00;31;45;17
John Scott
caricature of me holding a Kansas City Chiefs pennant. And then I'm on
00;31;45;17 - 00;31;54;12
John Scott
TikTok and I'm also on Instagram for GDC virtual CFO.
00;31;54;14 - 00;31;57;27
Craig Andrews
Well, excellent. Well, hey, thanks for coming on Layers and Legacies.
00;31;57;29 - 00;32;08;14
John Scott
Thank you. Thanks for having me, Craig.
00;32;08;16 - 00;32;30;06
Craig Andrews
This is Craig Andrews. I want to thank you for listening to the Leaders and Legacies podcast. We're looking for leaders to share how they're making the impact beyond themselves. If that's you, please go to Ally's for me.com/guest and sign up there. If you got something out of this interview, we would love you to share this
00;32;30;06 - 00;32;32;01
Craig Andrews
episode on social media.
00;32;32;03 - 00;32;55;13
Craig Andrews
Just do a quick screenshot with your phone and text it to a friend, or posted on the socials. If you know someone who would be a great guest. Tag them on social media and let them know about the show, including the hashtag leaders and legacies. I love seeing your posts and suggestions. We are regularly putting out new episodes and content to make sure you don't miss anything.
00;32;55;15 - 00;33;03;22
Craig Andrews
Please go ahead and subscribe. Your thumbs up. Ratings and reviews go a long way to help promote the show. It means a lot to me.
00;33;03;22 - 00;33;14;01
Craig Andrews
It means a lot to my team. If you want to know more, please go to Ally's for me.com. Or follow me on LinkedIn. Thanks for listening. We'll see you next time.
