As law firms look to the longer term, they realise there are many demands on finance, including technology and innovation, employee recruitment and retention, and a workplace fit for the future of work.

This year, a significant number of firms have increased their financing. More than half of all Top 100 firms have renegotiated banking facilities, with nearly two thirds of these increasing their facility level. Further, the average levels of total partner capital and current accounts have increased.

Despite the need for financing, law firms still struggle with unlocking finance through reducing working capital.

At a glance



  • For the first time in several years, year end lock up performance improved across all four bandings, albeit the improvement was only modest at a maximum of 2 days in each banding.
  • For all bandings except the Top 10, WIP performance has driven this improvement, decreasing by between 5 to 7 days. This has obviously been offset by a deteriorating debtor day performance.
  • In contrast to year end performance, average lock up has worsened for Top 10 and 11-25 firms by 9 days (to 150 days and 144 days respectively) and this more than outweighs the minor year end improvement.
  • Both Top 26-50 and 51-100 firms improved average total lock up performance by 3 days (to 145 days and 151 days respectively). However, average lock up in all bandings continues to track significantly behind year end lock up and this represents a lost cash opportunity.
  • An integrated operating model, with clear links between billing and collections teams and practice staff, will help firms achieve accurate and timely billing supported by an effective collections approach.


  • Average full equity partner capital balances have increased across all bandings (by between 2.7% and 6.7%), except Top 11-25 firms where they have fallen by 7.1% to £221k as a result of a change in the mix of respondents. When removed, it becomes an increase of 4.5%.
  • The above occurs alongside a varied change in the timing of partner profit distributions across the bandings. Top 10 firms, on average, reduced the proportion of profit paid in the year it is earned, dropping 8 percentage points from 55% to 47%. However, one firm’s significant reduction caused this, with only minimal movements across the rest of the Top 10. The Top 11-100 bandings increased their in-year distribution, most notably the Top 11-25 with a 13 percentage point increase to 62%.
  • As rising average lock up days are an increasing draw on cash, it is no surprise that a significant number of firms have refinanced during the year and the majority of those have increased the level of their facilities. For example, half of Top 10 firms refinanced during the year and all of these increased their facilities.
  • Firms are not yet feeling the pinch from external lenders on their borrowings; approximately 70% of firms who renegotiated their facilities reported that existing interest rates and fees either stayed the same or decreased. It would appear that lenders, for the meantime, will continue to support the legal sector.
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Stephen Tebbett

Stephen Tebbett

Partner, PwC United Kingdom

Tel: +44 (0)7717 782240

Malcolm Wren

Malcolm Wren

Director, PwC United Kingdom