Law firm lock-up: what it is and how firms reduce it

Lock-up is the time between a law firm doing work and being paid for it, usually measured in days. It is the sum of WIP days (work done, not yet billed) and debtor days (billed, not yet paid). The Law Society's 2026 Financial Benchmarking Survey reported a median of 134 days, down from 146. Reducing it frees cash without winning any new work.

This post is part of our series on law firm profit margins and what drives them. It is an operations guide: how lock-up is measured in your accounts, and anything touching tax or financing, is for your accountant.

What does lock-up mean in a law firm?

Picture a single matter. A fee-earner starts work on 1 March. Time is recorded through March and April. The firm bills on 30 April. The client pays on 15 June. For that matter, lock-up is 106 days: 60 days of WIP and 46 days of debt. For the whole of that time the firm paid the fee-earner's salary, the rent and the insurance, and the client held the money.

Across a firm, lock-up is expressed as days of annual fee income tied up in WIP and debtors. It is a cash number. It does not change profit directly, but it decides how much money the owners must leave in the business, or borrow, to keep it running.

How do you calculate lock-up days?

The common formulas are:

• WIP days = (unbilled WIP ÷ annual fee income) × 365.
• Debtor days = (unpaid bills, excluding VAT ÷ annual fee income) × 365.
• Lock-up days = WIP days + debtor days.

A worked example, with invented numbers. A hypothetical firm with fee income of £2,400,000 has £420,000 of unbilled WIP and £390,000 of unpaid bills (excluding VAT).

• WIP days: (420,000 ÷ 2,400,000) × 365 ≈ 64 days.
• Debtor days: (390,000 ÷ 2,400,000) × 365 ≈ 59 days.
• Lock-up: about 123 days.

If that firm cut lock-up to 100 days, it would release roughly 23 days of fee income: about £150,000 of cash, once, from work it has already done. That is why lock-up is often called the cheapest source of funding a firm has.

Be consistent about definitions. The Law Society's 2026 figure was 134 days excluding unbilled disbursements and 144 days including them. Decide which you use and stick to it.

What is a good lock-up for a UK law firm?

The best published comparison I could verify is the Law Society's survey. Its public summaries give the median: 146 days in the 2025 survey and 134 days in the 2026 survey, from 121 firms with an average fee income of £9.9 million. The public summary does not break that down by practice area or firm size, and the sample leans towards established firms that choose to benchmark.

Advisers often quote targets well below the median. I have not seen the method behind most of those numbers, so I would not set your target from them. A better approach:

• Measure your own lock-up by department for the last twelve months.
• Set a target for each department that is a clear improvement on its own trend.
• Compare against the survey median only at firm level, and only on the same definition.

Practice area matters a great deal, and so does how you price. Fixed fees paid in advance or on completion behave very differently from hourly work billed at the end of a stage; the trade-offs are set out in law firm pricing strategies. In general, conveyancing paid from completion funds can run very short lock-up; contested litigation billed at the end of a stage cannot.

Why is lock-up so high in law firms?

Because the process has more handoffs than most businesses, and each one waits. From work done to money banked, the steps are: record time, review WIP, draft the bill, approve the bill, send it, chase it, receive payment, allocate it. In most firms at least three different people own those steps, and nobody owns the whole chain.

The causes I would look for first:

• Late time recording, which delays the bill. See time recording in law firms.
• No billing trigger agreed at the start of the matter. Covered in what WIP means in a law firm.
• Bill approval queues. A partner who approves bills once a fortnight adds up to a fortnight to every bill.
• Unclear bills. A client who does not understand a bill asks a question, and a queried bill is an unpaid bill.
• No money on account. Where the firm's terms allow it, taking payment on account before work starts shortens lock-up from the first day. Your terms of business and your COLP decide how your firm does this.
• Chasing that starts late. If the first reminder goes out at 60 days, the firm has trained the client that 60 days is fine.
• Clients who feel ignored. A client who has not heard from the firm in weeks pays the bill last. Silence during a matter tends to show up as delay after it.

How can a law firm reduce lock-up?

Here is a 90-day plan I would run in a firm of five to fifty fee-earners. It is deliberately operational: none of it requires a new system.

• Days 1–10. Baseline. Calculate WIP days and debtor days by department and by fee-earner, with aged buckets (0–30, 31–60, 61–90, 90+). Publish it to partners without comment.
• Days 10–20. Name owners. One person owns WIP for each department (usually the head of department). One person owns debtors firm-wide. Write it down.
• Days 20–30. Fix the billing trigger. For every open matter above a value threshold you choose, agree when it will next be billed. For new matters, set it at opening.
• Days 30–45. Shorten approval. Bills under an agreed value go out without partner approval, or approval happens daily, not fortnightly.
• Days 45–60. Rewrite the first reminder. Send a friendly reminder a few days before the due date, not after it. Make paying easy: include the bank details and the reference on every bill and every reminder.
• Days 60–90. Review the 90+ list weekly. Every aged item gets a named action and a date. Anything that is going to be written off is written off, with a recorded reason, so the report reflects reality.

Measure the same numbers again at day 90. The pattern to expect is that debtor days move first and WIP days move later, because billing habits take longer to change than chasing habits.

Should lock-up be part of fee-earner targets?

It can be, carefully. Tying bonuses to lock-up rewards the behaviour you want (billing promptly) but can push fee-earners to send bills clients are not ready for, which lengthens debtor days and damages relationships. A common compromise is to include WIP days in a fee-earner's review and leave debtor days with credit control. The wider question of what fee-earners should be measured on is covered in fee-earner targets.

What does lock-up actually cost a law firm?

Lock-up has a cost even when every bill is eventually paid. The firm is funding its clients' matters, so the money has to come from somewhere: the partners' capital, an overdraft or a loan. A rough way to see the cost, with invented numbers:

• A hypothetical firm with £2,400,000 of fee income and 123 days of lock-up has about £810,000 tied up at any moment.
• If that is funded by borrowing at, say, 8% a year, the carrying cost is roughly £65,000 a year before a single bill goes bad.
• If it is funded by partners' capital instead, the cost is less visible but still real: it is money the partners cannot draw.

Then there is the risk cost. The older a debt, the less likely it is to be paid in full, and the more partner time goes on chasing it. Neither cost appears on a line called "lock-up", which is why it tends to be tolerated.

What should a weekly lock-up review look at?

Fifteen minutes, the same people, the same page. I would include:

• WIP days and debtor days, firm-wide and by department, with last month's figure beside each.
• The ten largest unbilled matters and the ten largest unpaid bills, each with a named owner and a next action.
• Everything over 90 days, in either list.
• Bills sent this week against bills expected this week.
• Write-offs approved this week, with their recorded reasons.

The discipline is the point. A number reviewed every week by people who can act on it moves. A number that appears once a quarter in the management accounts does not.

A trap: reducing lock-up by writing off

The fastest way to improve a lock-up number is to write off old WIP and old debt. The number falls overnight, and nothing has improved. If lock-up drops sharply in one month, check the write-off line before celebrating. A healthy reduction shows up as more bills sent earlier and more cash received, not more written off.

How does client communication affect lock-up?

More than most firms measure. A client who has been kept informed during a matter recognises the work on the bill. A client who has chased the firm three times for an update, and then receives a large bill, is more likely to query it. Regular matter updates for clients are a billing tool as much as a client care one.

Where does WasilX fit?

The personal assistant each fee-earner gets with WasilX covers their calls while they are in court and drafts matter updates for the fee-earner to approve. It does not bill, chase debts or record time. It helps with the part of lock-up that starts as a relationship problem: clients who feel informed tend to recognise the work they are being billed for. If that sounds like your firm, we would be glad to talk.

Frequently asked questions

What is lock-up in a law firm? Lock-up is the number of days between doing work and being paid for it. It is WIP days plus debtor days.

What is the average lock-up for UK law firms? The Law Society's 2026 Financial Benchmarking Survey reported a median of 134 days, excluding unbilled disbursements, down from 146 days the year before. It was 144 days including unbilled disbursements.

How do you calculate lock-up days? Divide unbilled WIP by annual fee income and multiply by 365 to get WIP days. Do the same with unpaid bills (excluding VAT) to get debtor days. Add them together.

Does reducing lock-up increase profit? Not directly. It releases cash tied up in work already done, which reduces borrowing and the capital partners must leave in the firm. Less aged WIP also tends to mean fewer write-offs, which does protect profit.

Who should own lock-up in a law firm? Split it. Heads of department own WIP, because billing is a fee-earner behaviour. A named person owns debtors, because chasing needs consistency. The managing partner owns the total.