WIP days plus debtor days is the number most firms have never worked out — and the cash a single month of it is holding hostage. Four figures in, and you get the release that comes from collecting thirty days earlier.
Use the fee income figure from your last full year. Exclude VAT and exclude disbursements recharged at cost.
Time recorded and not yet billed, at the value you expect to recover — not at standard rates if you routinely write down.
Bills issued and unpaid, plus disbursements you have paid out and not yet recovered.
The rate your firm actually pays on its overdraft or partner capital facility. The figure here is only a starting point, not a market rate.
Illustrative figures on 2026/27 rates and simplified assumptions. This is information, not advice, and it is no substitute for a proper calculation on your firm's real numbers. Ask us for the accurate version — it's free.
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Lockup is the fee income your firm has earned and not yet been paid for. It has two halves. Work in progress is time recorded and not yet billed; debtors are bills issued and not yet settled, including any disbursements you have paid out on the client's behalf and recharged. Both are converted into days at your own rate of trading, so a day of lockup is one day of average fee income, and the total tells you how many days of work the firm is funding before the cash arrives.
The headline figure is what one month less lockup would release. That is the number worth carrying into a partners' meeting, because it is a one-off release of cash that then stays out: you collect a month earlier once, and from that point the firm runs with that much more money in it. The interest line is the recurring half of the same point — whatever you are paying on the overdraft or the partners' capital account, you are paying it on every pound sitting in unbilled time and unpaid bills.
Nobody sets out to build lockup. It accumulates from four ordinary habits. Time is recorded but not billed until the matter finishes, so a six-month transaction carries six months of work before a single invoice. Bills go out at month end rather than at the point the work is done. Disbursements are paid the day the search or the court fee falls due and recovered only at the end. And nobody owns collection, so a bill that ages past its terms quietly becomes somebody's problem next quarter.
The fix for each is unglamorous and immediate. Interim billing on anything running longer than a month converts recorded time into a debt you can chase. Billing on the day the work is done, rather than in a monthly run, removes an average of two weeks from every matter. Asking for money on account at the outset moves the disbursement cash to the client's side of the ledger — and once you hold money on account, a bill under Rule 4.3 converts it to firm money the same day, provided the bill goes out first and the transfer matches it.
Lockup is a cash measure, not a profit measure. A firm can carry high lockup and be very profitable, and a firm with low lockup can still be losing money on the work. What lockup determines is how much capital the practice needs to run at its current size — which is why it shows up as a constraint every time partners want to draw more, hire, or take on a bigger matter. If your partner drawings feel tight on paper but comfortable on profit, lockup is usually the reason.
It also interacts with the client account, but the two must not be confused. Money held on account for a client is not your money and is not lockup; it becomes yours only when a bill has been delivered and the transfer follows it. Firms that get the client account bookkeeping right tend to have lower lockup as a by-product, simply because the billing discipline the Accounts Rules force on them is the same discipline that gets cash in.
Print this result and take three actions. Pull the aged debtor list and call every bill over ninety days yourself, as a partner — the conversation lands differently. Look at every matter open longer than a month with no bill raised and raise one. And agree a firm-wide rule that no matter opens without money on account for disbursements.
Then keep measuring it. Lockup only improves when somebody reports it monthly to the same people who see the profit figure. That reporting is part of what we do in law firm accounts and management figures, and it is usually the single fastest improvement available to a profitable firm that feels short of cash. If you want the number checked against your own ledgers rather than typed in from memory, a free conversation will do it.
These tools use sensible simplifications. A free conversation gets you the accurate version — and usually two or three things worth fixing before your next reporting period ends.
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