The Growth Trap: Why Scaling Your Law Firm is Making You Poorer (Ep. 149)
If you’re a law firm owner, chances are you’ve heard the rallying cry to “grow, grow, grow.” You see colleagues expanding, taking on more cases, hiring more staff, and launching flashy marketing campaigns. But is bigger always better? What if scaling your firm is actually making you poorer and less happy?
On this episode of The Lawyer Millionaire Podcast hosted by Darren Wurz, we unpack why chasing growth without the right financial systems can put your firm and your personal finances at risk. Plus, we share actionable steps to build a law practice that supports true wealth, stability, and freedom.
Why the Growth Trap Is Costing Law Firm Owners More Than They Think
Many entrepreneurial law firm owners are driven by a desire to grow. But as Darren Wurz shares, 43% of small law firms fail and the primary reason isn’t poor legal skill or lack of effort. It’s financial mismanagement. Even prestigious legacy firms like Ryder Bennett LLP in Minneapolis have gone under due to declining profits and unchecked debt.
Key causes of law firm failure:
Lack of sustainable financial systems
Addiction to growth without strategic purpose
Increasing expenses that outpace income
Growing for the sake of growth—not for profitability or freedom
Bigger Isn’t Always Better: The Hidden Costs of Scaling
From hiring more staff to splurging on office upgrades and marketing, larger firms often face outsized financial headaches. As Darren Wurz explains using relatable analogies like choosing a house that’s too big or putting up more weight at the gym, business growth brings more responsibility, complexity, and risk.
Understand these growth risks:
Bigger problems and anxiety: A million-dollar firm faces million-dollar problems. The stress increases with each new responsibility.
Bigger expenses and dependency: Growth typically leads to higher expenses (rents, salaries, software, marketing). This creates a need for consistent revenue, making the firm vulnerable during slow periods.
Bigger doesn’t guarantee bigger profits: Many athletes and lottery winners lose fortunes because they focus only on income, not on what they keep. The same applies to law firm owners as well, profitability can shrink as you scale if costs spiral out of control.
Find Your Firm’s “Sweet Spot”: Profitability Over Size
There’s an optimal point, an “efficient frontier” where your firm size, profit margin, and risk are perfectly balanced. Going past this point might sabotage profitability rather than improve it. Before you set wild growth targets, pause and ask:
What’s driving my growth goal, ego or true benefit?
Am I seeking more income or adding more stress?
Will growth actually bring more freedom for my family, my team, and myself?
As Darren Wurz advises, don’t try to grow your way out of fundamental problems. Instead, get financially healthy first. Invest in robust financial systems, track your key metrics, and prioritize profit over flashy metrics like revenue or caseload.
Practical Steps for Law Firm Owners:
Audit Your Financial Systems:
Before expanding, ensure your financial processes are airtight. Bookkeeping, budgeting, cash flow management, and debt oversight are essential.Reflect on Your Growth Goals:
Ask yourself why you want to grow. Is it for genuine personal and professional fulfillment—or just because you feel you should?Embrace Disciplined Decision-Making:
Be selective with new investments, hires, or marketing tactics. Focus on what genuinely moves the needle for profit and client service.Join a Supportive Community:
Connect with peers who value financial health and strategic growth, like The Lawyer Millionaire Community’s Profit on Purpose program.
Conclusion
Growing your law firm can be exciting—but don’t let the drive for scale blind you to what truly matters: sustainable profit, personal freedom, and peace of mind. Think purposefully, act strategically, and let financial discipline guide your next move.
Resources:
Book: Profit First - Transform Your Business from a Cash-Eating Monster to a Money-Making Machine by Mike Michalowicz
Connect with Darren Wurz:
Transcript:
Darren Wurz [00:00:00]:
Most entrepreneurial law firm owners want to grow, but that same desire to grow could be costing you more than you realize. 43% of small law firms will fail. And if you don't want to be part of that statistic, today's episode is for you, friend. Hey there. I'm excited to kick off 2026 with you. Thank you so much for being here today. This year, in our lawyer millionaire community, we're focused on profit. This whole year is dedicated to helping you build a better, more profitable business.
Darren Wurz [00:00:38]:
So our theme for this year is Profit on purpose. And in this first quarter, we're focusing on the systems that drive profit. Our theme is Profit Systems, and we're reading the book Profit First. And by the way, you can join us for profit on purpose 2026. See the link in the show notes. Now, the reason that 43% of small law firms will fail is usually because of financial reasons. They simply couldn't keep the money wheel going. And you know, this isn't just mom and pop law firms.
Darren Wurz [00:01:17]:
Prestigious, highly successful law firms do go under. I've got a great example for you. There's a law firm, or was a law firm in Minneapolis named Ryder Bennett LLP. Prime example. They were founded in 1960, grew to about 85 attorneys, had a very strong corporate and litigation practice. Deep community roots. They were highly successful, highly prestigious. But over time, profitability started to decline.
Darren Wurz [00:01:52]:
And when profitability starts to decline, what do you do? You take on debt. So they took on debt, but the partners kept taking big draws despite falling margins. Then they lost a few clients, and very quickly, it all unraveled. The firm filed for Chapter 11 bankruptcy in 2007. Done. Kaput. The lesson here is that successful does not equal sustainable. Law firms don't go under because their founders are bad lawyers or dumb people.
Darren Wurz [00:02:27]:
It's because of a simple lack of financial systems. Very simple. And one of the biggest reasons that law firms go under is because the owner or the founder is addicted to to growth. And that addiction to growth is that it is competing or is contributing to a lack of financial systems. So this addiction to growth, you know, grow, grow, grow, grow, grow, grow. It's the rally cry of every entrepreneur, every business owner, and certainly every law firm coaching agency. I'm sure you've heard the spiel. You need to be 10xing your business.
Darren Wurz [00:03:06]:
You need to be growing faster. You have so much opportunity. Grow. But to what end? And what are you really chasing? What do you really want more of? There's a lot that's at stake Here. And what's at stake is a lot more than just the success of your firm. It's your sustainability. It's stability for, for yourself, for your employees. And it's the financial security and safety of your family and those that you love.
Darren Wurz [00:03:43]:
Friend, you are in a dangerous position. You can't afford to get ahead of your skis. Too many people rely on you. It's time to rise to the leader that you were meant to be. No more haphazard spending because it feels right. It's time to be disciplined. It's time to be focused. And you know, it's easy to focus on growth.
Darren Wurz [00:04:06]:
It's easy to focus on that top line number. But that is the biggest mistake. It's what we see. It's right there in front of us. We see the new clients being onboarded. We see the new cases getting signed. We see the checks getting cashed. We see the deposits coming into the bank account.
Darren Wurz [00:04:24]:
And it feels great. But that is only the tip of the iceberg. And it truly is an iceberg. You know, the reason that expression is so commonly used is the part of the iceberg you see is only 10% of the actual iceberg. 90% is below water and out of view. So before you set your wild and audacious goals for growth this year, I want you to stop and ask yourself a question. Is bigger really better? Am I growing just for growth sake? What difference will this make for myself and my family? More money or just more stress? What could go wrong if I 10x my business? And is this really the life that I want? Sales solves a lot of problems, but you can't just grow your way out of your problems. So here are some reasons why bigger is not necessarily better.
Darren Wurz [00:05:33]:
I want you to contemplate these before you launch that new SEO strategy, before you sign up that ads agency, before you buy that huge expensive marketing package or software, Here are the reasons why bigger isn't better. And let me just caveat. I'm not telling you not to grow, but these things you need to think about before you do. Why bigger isn't better. Number one, bigger means bigger problems and more anxiety. $100,000 firms have $100,000 problems. Million dollar firms have million dollar problems. As a financial advisor, I often counsel people.
Darren Wurz [00:06:20]:
And this is actually, I wrote this in my book the Lawyer Millionaire, which was published by the aba, by the way. Shameless plug. But anyway, in the beginning, I talk about young attorneys just starting out. And I say this, I say, don't go out and buy the biggest House you can afford. The bank is willing to lend you a lot of money. But there's a very important reason why you don't want to buy the biggest house you can afford. You say, well, you know, the mortgage and interest payment and you know, let's lump the insurance and taxes in there too. The payment's only $3,000 a month.
Darren Wurz [00:06:50]:
I can afford that. Maybe that's the maximum or whatever the maximum is for you. But here's the raw truth. It's more than the mortgage payment. Smaller houses have smaller problems, smaller repairs, smaller bills. A smaller roof to replace when it comes time to fix. Replace the roof. Okay, Bigger houses, bigger problems, Bigger furniture.
Darren Wurz [00:07:19]:
You know, you need more furniture to put it in. You can't buy a million dollar house and put Ikea in it. Well, maybe you could, you know, but okay, but more than that, the bigger the house, the bigger the problems, the bigger the repairs. You get the idea. Another example is cutting down trees. You have a house, you have some trees in the backyard. You've had some really big trees that you've had to cut down, right? When they're small, they're not a problem. You could take a hatchet and you could cut them down yourself, but they sneak up on you and they grow very slowly.
Darren Wurz [00:07:50]:
And before you know it, you've got this giant redwood in the back of your yard and they're going to have to bring in a whole fricking crane to cut it down. And it's going to take a whole team of guys and it's going to cost you $10,000 or more. Crap. You know, businesses work the same way. And you know, I'll give you one more analogy. If you're a weightlifter or you've been in the gym, you know, I've. I go to the gym religiously once a day. Let me give you an example.
Darren Wurz [00:08:18]:
You know, a lot of people in the gym, they want to get bigger. They want more muscles, right? And I understand this. I wanted more muscles. I still want, you know, to be larger, leaner, you know, all of that good stuff, right? So here's the deal. The first time you go to the gym, you've never been to the gym before. You go to the bench press, you grab the bar and you can just do, barely do the bar, right? Or maybe you can put a little bit of weight on it and you're lifting it and you're grunting and straining. But you know, what if that bar slips, it's not a big deal. It's not going to kill you, you know, if you get stuck and you know, you go down, you can't get it back up, it's not going to squish you, right? You're going to be just fine.
Darren Wurz [00:08:58]:
You can holler, somebody else can get come get you, or you can wiggle your way out, probably. However, the bigger you get, the more you have to lift to keep getting bigger. It's a principle in weightlifting called progressive overload, right? You can't just bench 135 pounds every day in the gym and expect to keep growing. You've got to bench more and more and more. Eventually you get so big, let's say you're benching 400 pounds. Now, here's a reason why bigger isn't better. Because benching 400 pounds is a lot more dangerous. If you get stuck with that weight and you can't get out from under it, not just anybody's going to be able to help you.
Darren Wurz [00:09:40]:
You're going to need some people to help you or that bar slips and it comes down on your chest or on your head or whatnot. You're going to have some issues, right? The same applies to businesses. The bigger you go, the bigger the problems get and the bigger the anxiety can become. Number two, bigger means bigger expenses and a bigger need for consistency. Here's what happens, friend. Our revenue grows and so does our expenses. Even if our expenses don't need to grow, right? We reach a new revenue level and we're like, oh, wow, great. This is the new.
Darren Wurz [00:10:25]:
This is the new normal. We've hit a new plateau, right? We're at a million dollars a year in revenue or 10 million or whatever it is. We know what we deserve? A better office. And everybody's getting a raise, by the way. Oh, and that fancy software. Yeah, let's do it. And we're all going to take a, you know, business retreat to Puerto Rico. Well, then reality comes without consistency, drought periods can cause major, major problems because your expenses have grown, so has your income.
Darren Wurz [00:11:04]:
So now you need that income to be consistent in order to maintain the level, the new level of expenses that you have signed yourself up for. When you're a small firm, marketing is optional. You can pause your ads when cash is tight. Not going to be a big problem. You probably hopefully rely pretty much on repeat customers and referrals, which, by the way, is the best source of growth. Everybody wants to run out and sign up for Google Ads, but yeah, okay, that's another rant. Okay. When you're small, marketing is not a big expense.
Darren Wurz [00:11:40]:
It's not a huge deal. You could pause it, right? There are other ways to find clients you can go out and hustle. The big guys have huge ad budgets. There are several national personal injury law firms. You probably know them. They will remain nameless. You see them on billboards everywhere. It's expensive to have those billboards.
Darren Wurz [00:12:01]:
You see them on tv, you hear them on radio. There was a guy in Cincinnati, Blake Maislan. He grew his business so fast and hats off to him, right? But in order to do that, he was everywhere. He was on every radio station, he was flooding the airwaves. And guess what? It takes a lot of capital to do that. The big guys have to do that. They have to spend thousands of dollars each month to keep the lights on, to cover the overhead, to meet payroll, to keep the cash wheel turning. A small stream that floods is an inconvenience.
Darren Wurz [00:12:39]:
A big river that floods is a nightmare. The bigger you go, the bigger the problems. You know, getting that hundred million dollar settlement feels great, right? But before you go out and say, oh, this is the new normal, we're going to get one of these every year, hold up. Because doing that consistently, that is tough as heck. So bigger means bigger expenses. We've got to be aware of that and a greater need for consistency. And that's where the problem develops. Number three, bigger doesn't guarantee bigger profits.
Darren Wurz [00:13:22]:
I'm sure you've heard the stories time and time again of athletes and superstars who have gone broke. Athletes go broke all the time. They're making millions of dollars a year. Or let's not pick on athletes too much. Lottery winners. Lottery winners who spend everything and end up worse off than they were before. Meanwhile, little Grandma and grandpa down the street, retired millionaires barely making $100,000 a year. It's not how much money you make, it's how much money you keep.
Darren Wurz [00:14:01]:
And small can be a huge advantage. But I'm not here to say don't grow. I'm just here to help you have some awareness around the realities of growth. By all means, do grow. Achieve those big goals, but understand why you're doing it. And, and most importantly, get financially healthy before you do it, before you plow into that new strategy that's going to get you all kinds of new clients. Get your systems and your financial house in order. First, don't grow to solve your problems.
Darren Wurz [00:14:40]:
Most business owners try to grow their way out of their problems, and that's a mistake. That's a really big mistake. Sales can solve a lot of problems, but you can't grow your way out of your problems. That's much like, you know, trying to propose to your significant other, ask them to marry you to fix the relationship. That is a recipe for disaster. Fast growth can actually be your demise. Massive growth without further financial health will kill your company and may seriously harm you and those you care about. Why do you really want a bigger business? Ask yourself this question first.
Darren Wurz [00:15:30]:
I see law firm owners making millions of dollars a year in personal profit who want to grow. And I scratch my head and think, why? You've got a great thing going. Growth brings risk. And then when they do go to grow, they find that their profit margins shrink. Why? I'm convinced that there is a sweet spot in terms of law firm size, an inflection point at which profitability is optimal. In the financial world, we call this the efficient frontier. It's where risk and reward are optimized. I think there's a risk and reward optimal relationship in business.
Darren Wurz [00:16:18]:
Also, there's an inflection point at which profitability and size is optimal. Before you get to that point, you're not taking home as much. And after you reach that point, you're starting to sabotage yourself and your own profitability. That inflection point may be different for everybody and every different kind of business and different industries. Industries. Yours will find you the perfect size for your business will find you as a result of strong financial discipline, exceptional client service and outstanding business leadership. Because we have to be leaders in our businesses. So, friend, here's the one thing for this week, the one thing that I want you to do.
Darren Wurz [00:17:09]:
Reflect on your growth goals and ask yourself, why do I really want this? And do I really want this? Get clear on that first and all else will follow. Here at the Lawyer Millionaire, we're not your typical advisors. We're not going to cheer on every business decision. Pump you up full of hot air. Yeah, that's a great idea. We're going to challenge you. We're going to give you the truth. We're going to ask you the hard questions.
Darren Wurz [00:17:42]:
Because our primary concern is is this contributing to your wealth and freedom? We're your all in one financial and business advisory team. If you want to learn more about how we can help you, book some time with me. The link is in the show notes. And if you want to make 2026 your most profitable year yet, join us for Profit on purpose 2026 Inside the Lawyer Millionaire community. The link is in the show notes. Well, that's it for today, friend. And remember, if your law firm isn't building you wealth, freedom and joy. What the hell are you doing? Can I get an amen? I'll see you next time.