lock-up

Key Takeaways from the 2025 Law Society Financial Benchmarking Survey

The latest Law Society (England and Wales) Financial Benchmarking Survey has sparked significant discussion on social media today. The findings highlight some critical financial challenges for mid-sized law firms, particularly in terms of profitability, chargeable hours and cash flow management.

📊 Top 3 Key Findings:

1️⃣ Fee Earners’ Costs vs. Fees Charged

  • The median hourly cost of a fee earner (based on 1,100 chargeable hours) was ÂŁ123.40, while the median hourly fees per fee earner stood at ÂŁ133.01.
  • 🔴 93% of fees earned are being used to cover costs, leaving minimal margin for profitability.

2️⃣ Shortfall in Chargeable Hours

  • The average recorded chargeable hours per fee earner increased slightly to 773 hours (up from 765 in 2023).
  • ⚠️ However, this is still well below the 1,100-hour target—a shortfall of over 300 hours per year per lawyer.

3️⃣ Increase in Lock-Up Days

  • Year-end lock-up days (including work in progress and debtors) rose from 143 to 146 days.
  • This trend indicates longer cash flow cycles, which can put pressure on a firm’s financial stability.

🚨 What Should Law Firms Do?

These figures underscore the urgent need for better financial planning, sustainable profitability strategies, and operational efficiency. Some key focus areas include:

✔️ Improving revenue streams—exploring retainer-based models for better income predictability.
✔️ Enhancing productivity—have a robust and actionable business development plan for all lawyers!
✔️ Optimise cash flow—reduce lock-up days by streamlining billing and collections processes.

🔗 Full Report: Read the Law Society Financial Benchmarking Survey 2025

📢 Looking to bridge the 300+ hour gap per lawyer? Or interested in strategies for growing a profitable legal practice sustainably? Let’s talk! Get in touch today.

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richard@gsjconsulting.com.au

What law firms can learn from Taylor Swift

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Unless you have been hiding under a rock, or living in a world of news blackout, you’ll of heard about Taylor Swift’s 21st June open letter (via Tumblr) to Apple (‘To Apple, Love Taylor‘).

As you will also undoubtedly known by now, the Tumblr post is Taylor’s way of explaining why she will be holding back her album – 1989 – from the new streaming service Apple Music (an album I understand she also doesn’t permit to be on another music streaming service, Spotify). And while I don’t particularly like Taylor Swift’s music (nor do I really participate in music streaming services), I have to applaud the reasons she outlines for her decision.

In particular, I like – and 100 per cent agree with – Taylor’s remark that:

“Three months is a long time to go unpaid, and it is unfair to ask anyone to work for nothing.”

Taylor’s right on the money there – so to speak, three months is a very long time to go unpaid.

But wait: what’s your law firm’s average lock-up days?

If you firm’s average lock-up days are anywhere near the industry average, then your firm’s lock-up is going to be somewhere between 100 and 120 days. Which means your firm typically gets paid 100 to 120 days after you have done the work for the client.

Aside from being a period of close to four (4) months to go unpaid for your work, you are also providing your client with an interest free working capital loan during this time – a period you will likely be paying interest to your bank on the working capital (overdraft) facility it has extended to you (otherwise known as a double-whammy)!

Simply put, that should be unacceptable and it is time law firms took a take a leaf out of Taylor’s book and started to tell clients (and some law firm partners I might add!) that four months is a long time to go unpaid!

Not possible? Will likely kill the client relationship?

Well, interestingly, in this case the giant corporate might of Apple has listened to Taylor’s complaint and has decided to back down. And I suspect your clients would be more than willing to listen to alternatives you could offer too – but you won’t know unless you have the conversation.