There’s another trio, but not from the old nursery rhyme:
the Lawyer, the Accountant, the Insurance Agent
——————
Mature leaders and those leading larger organizations get plenty of exposure to attorneys and CPAs (less so insurance agents). For evolving leaders of small and mid-sized companies, these three professionals are often their primary outside advisors. Depending upon circumstances, an organization often requires additional outside professionals, but this trio is a good place to start.
Attorney
If you’re not experienced with business legal matters, it may seem easier—and cheaper—to hire that friendly real estate closing attorney who says, “We do a little business law.” But just as you wouldn’t see a dermatologist for a heart condition, a company needs legal counsel with expertise that matches its industry, regulatory landscape, and challenges.
Maintaining some version of outside counsel from the outset (beyond incorporation documents) will help develop rapport. When the company faces an emergency, counsel who already understands the business can quickly assess the situation – and grasp the fallout beyond the specific issue. A crisis is not the time to educate a new lawyer.
Outside counsel won’t be an expert in all aspects of law. Leaders and their lawyer or law firm should recognize when to secure outside expertise rather than forcing a generalist attorney to navigate unfamiliar territory. Yes, adding another law firm is a cost and a hassle. But the right specialist can prevent far greater legal headaches down the road. I discuss how to interview law firms in The Pinball Theory of Business & Life.
Keeping Clean
When I was a young lawyer, I ran into a well-known criminal attorney. I was considering dipping my toes into criminal law. He gave me a piece of advice I’ve never forgotten:
Marty, be careful. If you play with shit, you’re going to get it on you.
That lesson applies far beyond criminal law. It’s a reminder to be mindful of the business and legal situations we engage in—some things aren’t worth the mess. Try to keep yourself and your company clean.
CPA
As small companies grow, they often transition from a bookkeeper to a small CPA firm, eventually upgrading to a full-service accounting and advisory group. Because switching firms can be complicated, time-consuming, and expensive, businesses often resist making the change. However, once the transition is complete, it’s not uncommon to realize that significant tax savings and missed opportunities had been left on the table.
In many cases, a company’s original bookkeeper or accountant is one of the first professional advisors a leader relies on. The relationship can be deeply personal, built on years of trust. Still, if a business owner starts questioning whether it’s time for a change, that’s often a sign it’s overdue.
A leader—especially one unfamiliar with larger accounting and advisory firms—should think beyond the notion that “accountants just do taxes.” Depending on the size and expertise of the firm, these professionals can provide invaluable strategic support. Many firms also have subsidiaries specializing in personal financial planning, HR consulting, technology solutions, and M&A advisory services. The ability to access expertise and coordinate various financial and strategic efforts under one roof is a huge advantage. The lead CPA should serve as the linchpin, coordinating for the accounting firm.
Ultimately, transitioning to a more sophisticated accounting firm isn’t just about better bookkeeping or tax support—it’s about gaining a critical advisor who can help lead the company into the future.
Insurance Agent
Cost
If your company has ever filed a claim for a severe loss, you understand that insurance only matters when you desperately need it. Still, when purchasing commercial insurance, cost often takes center stage.
Amount
Your policy states: General Liability Insurance –$5,000,000. That number might look impressive, but the real question is: What’s actually covered? If disaster strikes, will your policy provide what you expect? Understanding specific coverages before you file a claim is far more valuable than scrambling to decipher them afterward, which I’ve done as painfully recollected in Pinball Theory.
The Agent
Potential insurance agents will happily take you to lunch—or at least offer a coffee meeting. “I really want to work with you. Let’s grab lunch and talk about it.” Lunch is nice, but here’s the real question: Does the agent under-stand your business?
When evaluating an agent, ask yourself: Have they spent sufficient time at your facility? Have they spoken with key people in your company? Have they involved relevant experts (e.g., fire suppression consultants)? Have they asked the right questions about your daily operations? If the answer is no, how can they recommend appropriate coverages?
The right agent—one who truly understands your business and how separate coverages can be stacked when needed—can be the difference between a swift recovery and financial disaster.
Critical Coverages
Don’t let the big General Liability coverage number on your policy lull you into a false sense of security. The real safety net is in the details. When discussing coverage with your agent, specifically consider these critical coverages for recovery:
- Business Interruption – Covers lost income and operating expenses during downtime.
- Emergency Relocation – Covers the cost of temporarily moving operations elsewhere.
A high overall policy limit means little if the right coverages aren’t there when you need them. Sometimes, aggregating multiple coverages makes the difference between sinking and survival. A good agent can guide you. When our disaster came, our excellent agent made all the difference in the outcome. Find yourself a good agent—even if you must buy lunch.
——————
When thinking about your trio of professionals:
- Budget sufficiently, meet regularly, create robust relationships.
- These advisors aren’t just paper pushers but top confidants.
- Collaborate with them as if your company’s future depends upon them.
