Law firm lock-up: cut WIP days before cash runs dry

September 24, 2026 · 5 min · Free, with full transcript

Why does a firm post record revenue and still struggle to fund bonuses? The answer is lock-up, the combination of unbilled work in progress and unpaid debtors, expressed in days. The position here is blunt: lock-up is a structural financial risk, not a billing admin chore, and at 110 to 130 days a typical UK firm is making an interest free loan to its own clients funded by an overdraft that costs real money. You walk away able to age WIP into 30, 60 and 90 plus day buckets, calculate lock-up days from daily revenue, price excess days against a borrowing rate near 6 percent, track realisation on fresh versus stale time, and publish lock-up days by partner name.

Listen to the podcast

4 min

Chapters

Key takeaways

  • Age all unbilled time into 0 to 30, 30 to 60 and 90 plus day buckets and treat the 90 plus pile as the priority.
  • Calculate lock-up days by dividing total lock-up by daily revenue, then multiply the excess days over a 90 day target by your daily cost of funding.
  • Track realisation by age of time, since fresh work can recover around 90 pence in the pound against roughly 60 pence on stale work.
  • Publish a monthly table showing lock-up days next to each partner's name so peer pressure drives billing.
  • On Monday, pull all unbilled time older than 90 days, put a cash value on it and email that single figure to the managing partner with no project proposal attached.
Read the full transcript

Host:Welcome back to Leaders Insights. Cut lockup before it cuts your cash, a law firm CFO's diagnostic playbook, and why it matters this week.

Expert:It's a Thursday afternoon. The partner walks into my office, and he wants to know why we can't fund the summer associate bonuses when the firm just posted record revenue. So I turn my monitor around and show him 14 million pounds sitting in unbilled time and unpaid invoices. Record revenue. Zero cash.

Host:That gap has a name, and today that's the whole conversation. Lockup in law firms. Start me at zero. What is it?

Expert:Lockup is the money you've earned but haven't collected yet. It comes in two flavors. First, work in progress. The hours your lawyers have burned but haven't turned into a bill. Second, debtors. Bills you've sent that clients haven't paid. They've put them together, express it in days, and that's how long your cash is trapped between doing the work and touching the money.

Host:Days. Give me a number that should scare a managing partner.

Expert:The typical UK firm runs somewhere around 110 to 130 days of lockup. That's four months. You did the work in January, and you're spending the proceeds in May, if you're lucky.

Host:Why do CFOs let it drift? This sounds like the first thing you'd fix.

Expert:Because it gets filed under billing, which everyone treats as an admin chore for the finance clerks. Nobody puts it on the risk register next to a market crash. But a hundred days of lockup is a permanent, self-inflicted loan you're making to your own clients. Interest-free. And you funded it with an overdraft that isn't free at all.

Host:Walk me through the diagnosis. Where do you actually start?

Expert:You age the work in progress first. That means sorting every unbilled hour by how old it is. Not to 30 days, 30 to 60, 90 plus. The 90-plus pile is where the horror lives. Time recorded three months ago that nobody has invoiced.

Host:A vivid way to see it.

Expert:Milk in the fridge. Fresh time bills easily. Time that's been sitting for a quarter has gone off, and the client will fight you on every hour of it.

Host:Why does old time become uncollectible? The work was still done.

Expert:Because memory fades, and goodwill curdles. Send someone a bill in March for a phone call in December. And they no longer remember the call. They remember that you're slow, and now they're querying the whole thing. Every week you wait, your realization. The share of recorded value you actually collect drops. I've seen firms recover 90-odd pence in the pound on fresh time and 60 on stale.

Host:Alright, quantify it. How do I turn worse slow into a number my partners feel?

Expert:Take total lockup. Divide by daily revenue. Increase your lockup days. Then multiply the excess days by your daily cost of funding. A 50 million pounds firm at 120 days versus a sensible 90 is roughly 4 million pounds of cash sitting idle. At current borrowing rates, near 6%, that idle cash is costing you a couple of hundred thousand a year in interest. That's a partner's drawings, gone. Because nobody chased an invoice.

Host:So who owns fixing it? Because you said finance keeps blaming billing.

Expert:The fee earners own it. And that's the uncomfortable bit. The CFO can build the reports, but the lawyer who won't raise the bill because they're protecting the client relationship is the one leaking the cash. My move is to put lockup days next to each partner's name in a monthly table everyone can see. Peer pressure collects faster than any letter I could write.

Host:Isn't naming and shaming a bit crude for a roomful of partners?

Expert:Crude works. Lawyers are competitive to the bone. Show them their bottom of a ranked list and the bills go out by Friday. I tried Gentle for years. Gentle bought me 130 days.

Host:Give me the one thing a finance leader does Monday morning.

Expert:Pull every piece of unbilled time older than 90 days. Put a cash value on it. And email that single figure to the managing partner with one line. This is what we've locked up in stale work. Don't propose a project. Don't ask for a committee. Just the number. The number starts the fight, and the fight is what gets you paid.

Host:Sources for today's episode. Financial Times CFO Dive, Accounting Today. That's your five. The full CFO track, structured and free of fluff, is at MBA-training.com.

Read and go deeper