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Business of Tax: The Almighty Billable Hour Versus Branding

Posted on Apr. 1, 2019

Tax and accounting firms are starting to see value in letting their employees take on unconventional activities that yield intangible benefits, like speaking or podcasting, but the trend hasn’t taken hold without some pushback.

“The business model of public accounting and professional services in general is based off making money off the time you’re providing a service. So there’s a tendency to try to quantify and come up with a value proposition,” Damien Martin of BKD LLP told Tax Notes.

But Martin, the host of his firm’s Simply Tax podcast, observed that a project like a podcast doesn’t have a direct translation to a charge hour. “There’s an almost quasi-marketing aspect to it to some degree. How do you evaluate the return on the time that you’re spending on it?” he mused.

At first glance, the podcast might seem like a net loss: It’s free to download, and it takes time to produce — time that isn’t billable to a customer. But take a closer look, and the podcast has many benefits, according to Martin.

“We’ve generated business directly from it” in terms of new clients and expanded services for existing clients, Martin said. The podcast has also helped with recruiting by attracting both experienced hires and applicants fresh out school, he added.

“It’s not as black and white as a charge hour and revenue generation,” Martin said. “If you strictly look at that, it’s not going to make sense; you have to look at these intangible elements.”

Anthony J. Nitti of RubinBrown LLP said the accounting industry has only recently begun allowing — and even encouraging — associates to get involved in non-billed activities like writing or speaking.

Ten years ago, “you couldn’t lean towards the academic in your career doing more writing and teaching, where you really were more of a marketer,” said Nitti, a frequent writer and speaker.

But “if done correctly, everybody benefits,” Nitti said. “The firm benefits, I benefit, and then the accounting industry as a whole benefits if we start to understand this incomprehensible tax law a little bit better.”

Nitti explained that ultimately, he writes and teaches because it cements his own knowledge of complex tax issues, which he can later use to serve his firm’s client base. “It’s a whole big circle of life thing,” he said.

Courting Millennials

The Simply Tax podcast first came out of what Martin described as a “stereotypical millennial-bashing” discussion at his firm on how to get younger attorneys to study up on tax issues. Martin — a millennial himself — suggested that a podcast might be worth considering.

“When I started in the profession, I always wished that I could get 10, 15, 20 minutes on some aspect of tax law that I could learn more about and that I could do on my way to work or on a jog,” Martin said. “That’s basically what I set out to build.”

The podcast went external in September 2017, just as tax reform discussions were picking up steam in Congress, which brought even more attention to the podcast, according to Martin. But beyond boosting the firm’s reputation and courting clients, Martin’s podcast serves a key function that’s harder to quantify: education.

As firms incorporate artificial intelligence and automation into their practices, there will be a continued need for their employees to upskill, or even just to keep up with the changes wrought by the Tax Cuts and Jobs Act, many of which expire by 2026 or earlier, Martin explained.

The Unorthodox Path

Getting started on an unorthodox career path often isn’t easy.

“No one was begging me, ‘Hey Tony, take some time away from your charge-hour requirements and do some writing,’” Nitti said. “Nobody was going to clear my plate in order to do that.”

Nitti said that in 2010 he was feeling comfortable with his knowledge base and wanted to see if he could get an article published. But starting out, he was largely unknown, and although he pitched story ideas to The Tax Adviser for months, they were rejected each time, usually because the publication already had someone covering the topic.

But late in 2010, within an hour of a court decision on S corporations and reasonable compensation being published that he thought looked “pretty darn important,” Nitti pitched another story idea — and it was accepted. “Now I had the terrifying realization that I had to actually write it,” he said.

“So basically, I turned my bedroom into a Unabomber-style shack where there’s just piles of paper everywhere, like I was working on my manifesto that I wrote and rewrote and rewrote. And it got published,” Nitti recounted.

Building a Brand

Nitti said he initially thought his firm would be excited about his getting published — but still, no one was going to let him take time away from his billable-hour targets to do more writing. “Back then, few firms, if any, saw the intangible value that we’re now kind of just accepting as being part and parcel with publishing,” he explained.

But a few months later, The Tax Adviser named Nitti’s article its best article of the year, and that, he said, was when his firm at the time — Withum Smith+Brown PC — became open to allowing him to do more writing.

From there, Nitti said that “things snowballed in two different directions.” He said he was asked by a tax information provider to coauthor a treatise on consolidated returns, which he would be paid for. So from the firm’s perspective, even if it wasn’t a billable hour, it was at least compensated, he said.

But his firm also agreed to create a firm blog — despite some concern that people might take the blog as advice and sue the firm — which provided Nitti with an outlet to write more informally. “We noticed right away that not a lot of people were reading it, but the right people were reading,” he said.

Nitti said he suddenly started getting requests from major media outlets, not because they were avid readers of the blog, but because they would search a tax issue online and see his name pop up. Six months later, Forbes reached out, and Nitti began writing regularly for it.

Balancing Responsibilities

For Nitti, the transition from writing a firm blog to writing for Forbes came with some hesitancy, both for him and his firm. “The bigger the audience, the bigger the fear factor gets,” he explained, especially when adding color and commentary and not just doing technical writing.

But ultimately, Withum, a regional firm, saw the value of being able to say it had someone on staff who could reach hundreds of thousands of people, Nitti said.

Nitti acknowledged that he occupies a unique role in the public accounting industry, where upwards of 75 percent of his time is spent on activities that look more like academia. That kind of role is “much easier to get hired into than to evolve into,” he said.

There was no official policy for balancing billable versus marketing hours when Nitti was at Withum, which he said became a challenge. “For every person that certainly saw the intangible value that was being brought to the firm by my career pivot, you can imagine there were two or three who were thinking, ‘I don’t really care that he’s out there writing something, I need him to review this return for me,’” Nitti said.

Now at a new firm, Nitti said his responsibilities and expectations there were clear from the beginning, rather than evolving ambiguously over time. He explained that he was explicitly hired not just to spend a large amount of time writing and teaching, but also to help other employees at his firm get published themselves.

Network to Get Work

Travis W. Thompson of Sideman & Bancroft LLP said that as early as law school he realized the value of networking and being active in the American Bar Association Section of Taxation, particularly for young attorneys.

Thompson said attending the ABA meetings offered the opportunity “to hear panels on some of the most wide-ranging topics in the tax world,” so he listened carefully, took notes, and did some more research on where the industry was moving.

That led Thompson to start diving into the use of AI and big data in the IRS’s tax enforcement efforts, and he decided to become a subject matter expert on the topic. Thompson said he soon enrolled in a Massachusetts Institute of Technology course on AI and businesses, and before long began presenting on it.

“In the last year, I’ve done more press and more speaking engagements than my previous five years combined,” Thompson said.

Thompson said the flipside is that as a practicing attorney, he still has billable hour requirements, but that’s why he aligned himself with a firm that understands the importance of encouraging its attorneys to have active professional affiliations.

“Not only did they recognize the importance of those meetings, they also recognized I wasn’t just going to show up and drink the wine. I was going to bring real value to their organization by being out there,” Thompson said.

Follow Jonathan Curry (@jtcurry005) on Twitter for real-time updates.

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