2014 Annual Law Firms’ Survey: working capital and finance

Overall lock-up has deteriorated across all bandings of firms and, therefore, more cash is tied up in the working capital of law firms. In addition, there has been a notable increase in the number of firms making capital calls along with an increase in the amount of capital call.


  • There has been a deterioration in lock-up performance across all bandings in 2014, with average year end lock-up varying between 120 days for Top 10 (2013: 118 days) and 149 for Top 51-100 (2013: 146 days).
  • Top 11-25 lock-up statistics are impacted by high volume firms and, excluding these, this banding is the best performer with year-end lock-up of 108 days (2013: 111 days).
  • Individual firms improving their performance in lock-up can generate significant additional cash (for example, an average of £9.5m in Top 10 firms by achieving a 110 day benchmark). Further improvements are also possible with a better profile of billing (i.e. avoiding the year-end billing bulge).
  • Increases have been seen in the number of firms making capital calls in all bandings outside the Top 10 and the average call has increased for all bandings.
  • External funding appears to be readily available for well run businesses, with over half of firms who renegotiated their financing this year increasing their facilities and few suffering any increase in interest rates and fees.
  • As in 2013, the Top 11-25 firms remain most dependent on direct external finance, with 23% of funding sourced externally.

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