Follow the Law Firm Work-to-Cash Chain

1. Separate work performed from work billed

Start with recorded time and expenses that have not yet reached an invoice. Review unbilled work by age, matter, responsible lawyer and reason for delay. A large WIP balance alone does not explain whether work is awaiting a narrative, partner review, a client decision or a billing run.

Hypothetical example: two firms each have $500,000 in WIP. Firm A has 80% aged under 30 days and 20% over 90 days; Firm B has the reverse. Identical totals conceal different review priorities: Firm B has much more older work to investigate for billing delays.

Choose a consistent way to show age and make the underlying matter easy to find. The useful question is not only “How much WIP do we have?” but “What is keeping this work from becoming a bill?”

2. Measure the handoff to an invoice

Track the time between work being recorded and an invoice being issued. A matter can have strong time capture and still have a slow billing process. Separate work awaiting review from work approved for billing, and make the oldest items visible to the people who can unblock them.

When comparing lawyers or practice groups, use the same time window and the same rules. Exclude or identify matters that follow a different billing cycle, such as fixed-fee work, so that a comparison does not mix different processes.

3. Read receivables by age and next action

After an invoice is issued, examine unpaid balances by age, matter, client and responsible relationship partner. A total accounts-receivable figure does not show which items are disputed, missing a client decision, awaiting a follow-up or simply not yet due.

For each older balance, record a next step and an owner. Keep the invoice and matter detail close to the summary so a finance review can move from a firm-level concern to the underlying record without rebuilding the report.

4. Define realization before comparing it

“Realization” can refer to different points in the path from time worked to fees received. A billing measure may compare billed value with recorded value; a collection measure may compare cash received with amounts billed. Firms may use different formulas and credit rules.

Write each definition beside the metric. State the period, currency, exclusions and source records, and explain whether discounts, write-offs, shared credits or adjustments affect the result. This makes a comparison easier to discuss and keeps a change in the formula from looking like a change in performance.

For collection realization, compare receipts with the corresponding billed amounts for the invoices being reviewed. Use consistent billing periods, receipt cut-off dates and treatment of discounts, write-offs, credits and other adjustments when comparing results.

Partner contribution needs the same care. Decide whether the report counts originated work, worked fees, billed amounts, cash collected, profitability, shared relationship credit or another agreed measure. A dashboard cannot settle a partnership’s credit policy; it can make the chosen policy visible and traceable.

5. Keep client trust money separate

Trust balances are funds held on behalf of clients or third parties and need a distinct review from operating cash. Reconcile records through the firm’s established trust-accounting process, investigate exceptions promptly and keep supporting matter detail available. A business dashboard may help organize a review, but it does not replace the firm’s accounting, legal or regulatory obligations.

For British Columbia firms, the Law Society says practicing lawyers are generally required to file an annual trust report, subject to stated exemptions. Its Trust Reports page says the filing is due within three months of the firm’s reporting-period end. Check the current rules and the firm’s own circumstances with the appropriate professional. Law Society of British Columbia: Trust Reports

A short finance-review sequence

Use the same questions each time:

• What work is recorded but not billed, and what is holding it up?
• Which invoices are aging, and who owns the next action?
• How long does work take to move from time entry to invoice?
• What definition and period sit behind each realization measure?
• Are trust balances reviewed separately, with exceptions linked to their source records?
• Can each partner contribution figure be traced to an agreed credit rule?

A useful report makes the path visible from summary to matter detail. It also records the definition behind each number, the person responsible for the next action and the date the item will be reviewed again.