Podcast Summary: Maximum Lawyer Episode: The Best Strategies for Navigating Financial Management Challenges with Emil Abadian
Host: Tyson Mutrux
Guest: Emil Abadian
Release Date: March 4, 2025

Introduction to Emil Abadian

The episode kicks off with host Tyson Mutrix welcoming Emil Abadian to the show at [01:29]. Emil shares his multicultural background, highlighting his Armenian heritage, birth in Iran during a tumultuous period, and subsequent immigration to Sweden as a child. Despite not fitting the stereotypical Swedish image, Emil emphasizes how growing up in a diverse Swedish community instilled in him the resilience and work ethic necessary for entrepreneurial success.

Emil Abadian [02:38]: "I think growing up in Sweden really helped me. Being an immigrant, even though I was very young, taught me to work harder and adapt to different environments."

Transition to the United States and Entrepreneurial Journey

Emil recounts his move to California in 2007, driven by a desire to explore new opportunities and reconnect with his siblings who had migrated earlier. Landing a job at a large firm in Woodland, Emil quickly immersed himself in the local business scene. However, the financial crisis of 2009 led to a sudden layoff, prompting him to take a bold step—starting his own accounting firm with no initial paying clients.

Emil Abadian [09:50]: "I rented a space for just $300 a month and began taking on any type of client to keep the business afloat, even if it meant working 70 to 80 hours a week."

Building and Restructuring the Firm

Over three years, Emil's firm grew by handling diverse clients without a strategic focus, which eventually led to a merger with a retiring CPA, Varus Totlian, in [11:00] 2013. This merger exposed Emil to the challenges of integrating different business practices, leading to a significant restructuring where they reduced their client base from approximately 800 to less than 500 to better serve quality clients.

Emil Abadian [11:50]: "It was not painful, but it was scary. Once we streamlined our client base, I had more time to serve clients who truly appreciated our services."

Specializing in Legal Firms

Recognizing the inefficiencies of a generalized approach, Emil transitioned to specializing in serving law firms, particularly attorneys. This decision was influenced by networking within the Swedish American Chamber of Commerce and joining the Provisors group, which connected him with numerous legal professionals needing specialized accounting services.

Emil Abadian [29:00]: "Specializing in attorneys significantly standardized my operations. I could anticipate their needs and provide tailored solutions, unlike handling a diverse client base."

Financial Management Strategies for Law Firms

Emil delves into specific financial management strategies tailored for law firms, emphasizing the importance of trust accounting compliance. He discusses the impact of high-profile cases, like Tom Girardi's fraud, which led to stricter state bar regulations and increased demand for specialized accounting services.

Emil Abadian [32:07]: "California's implementation of random trust account audits has made attorneys more cautious, thereby increasing the need for specialized accounting services that ensure compliance."

Tax Planning and Payroll Management

A significant portion of the discussion centers on effective tax planning strategies for attorneys. Emil highlights the necessity of paying a reasonable salary to S corporation owners to comply with IRS guidelines and avoid reclassification of profits as wages.

Emil Abadian [50:39]: "A major red flag is seeing zero payroll in an S corporation with substantial profits. Ensuring reasonable payroll not only complies with IRS regulations but also stabilizes cash flow."

He also touches on the "Profit First" methodology, appreciating its focus on payroll but critiquing its administrative complexity for smaller firms.

Emil Abadian [53:21]: "I like the overall idea of Profit First, especially the emphasis on payroll. However, the detailed bucket system can create excessive administrative work, making it impractical for many firms."

Hiring and Promoting Within the Firm

Emil advocates for promoting from within the organization, citing the success of elevating senior accountants who are familiar with the firm's processes and culture. This approach fosters motivation and loyalty among employees.

Emil Abadian [19:51]: "Promoting internally ensures that your managers understand your systems and culture, which is essential for maintaining consistent service quality."

Incorporating Family into the Business

Emil shares his personal approach to involving his children in the business, emphasizing the importance of teaching them about money management from an early age. He allows his kids to perform simple tasks like shredding paper, fostering responsibility and financial literacy.

Emil Abadian [25:22]: "I want my kids to learn about money early on, even if it means assigning them small tasks like shredding paper. It's about building their financial understanding from a young age."

Upcoming Firm Merger and Future Plans

Towards the end of the episode, Emil reveals that his firm is in the process of merging with a larger company, expanding its workforce to 30-35 employees. This strategic move aims to enhance service offerings and streamline operations.

Emil Abadian [26:18]: "We're signing the merger documents today to join a larger firm. This isn't a sale but a strategic expansion to better serve our clients and grow our operations."

Conclusion and Key Takeaways

Emil concludes by emphasizing the importance of specialization, robust financial processes, and strategic hiring practices in building a successful accounting firm tailored to the legal industry. His experiences underscore the value of adapting to market changes, such as those brought by the COVID-19 pandemic, and leveraging technology to stay ahead.

Emil Abadian [48:01]: "In business, it's crucial to stick to what you do best. Specializing allows you to provide exceptional value without diluting your expertise across multiple industries."

Notable Quotes

• Emil Abadian [04:37]: "Diversity and community interactions in Sweden taught me a lot about dealing with different kinds of people, which has been incredibly helpful in LA's diverse environment."
• Emil Abadian [16:39]: "Putting processes and hiring the right people are fundamental—you have to go through the pain to establish solid systems."
• Emil Abadian [35:36]: "Tax planning is where CPAs can provide immense value beyond just bookkeeping; it's about leveraging your knowledge to save clients money and optimize their financial strategies."

Additional Resources

For those interested in implementing the strategies discussed, Emil is currently finalizing his book, Council to Counsel, which delves deeper into his journey and the best practices for accounting firms servicing legal practices. Additionally, the Maximum Lawyer Mastermind event in Maui, scheduled for April 10th and 11th, offers law firm owners an opportunity to reset, refocus, and recharge with high-impact business training and personalized strategies.

This comprehensive discussion between Tyson Mutrix and Emil Abadian offers invaluable insights for law firm owners navigating the complexities of financial management, emphasizing the importance of specialization, strategic hiring, and proactive tax planning to achieve sustainable growth and compliance.