The availability of cash is vital to support the growth and perpetuity of any business. Law firms know this more than most, with proportionally large expenditure on people, resources and insurances, and often lengthy timescales for cases to settle and fees collected.
Hazlewoods review of lock up in the 2018 Law Society’s LMS Benchmarking survey, shows that the best performing practices have a median number of 113 lock up days. That’s compared to 218 for the highest quartile. In other words, to fund an extra £1 million turnover is likely to require between £310,000 and £600,000 of additional working capital investment.
Anticipating the pinch points in cash flow and keeping lock up to a minimum is essential. Obviously, the cost of funding capital will have a significant impact on the overall profitability of the practice. We will work with you to ensure that funding is obtained in the most economical way and strategies are put in place to keep borrowing as low as possible without restricting your business development.