Business finance for solicitors & law firms

Lock-up: the lawyer's working-capital problem

Few sectors tie up cash like legal practice. The combined value of unbilled work-in-progress and billed-but-unpaid invoices — what firms call lock-up — routinely runs to several months of fee income. A litigation matter may take a year to conclude; a conveyancing chain can collapse and reform; a probate file moves at the pace of the estate, not the firm. Throughout, the practice pays salaries, professional indemnity insurance, practising certificates and office costs every month. The fee, meanwhile, is often only billed at the end of the matter. High profitability per partner sits alongside a current account that has funded months of effort it has not yet been paid for.

Disbursements and the client-account rule

Law firms also front disbursements — counsel's fees, court fees, search fees, expert reports, medical records — often before the client has put a penny on account. Crucially, SRA accounts rules mean money held in client account belongs to the client and cannot be used to fund the firm's own running costs. So even a firm holding large client balances can be short of its own working capital. That distinction trips up directors who assume a healthy aggregate bank balance means cash to spare. It does not. Office-account liquidity is what pays the wages, and disbursement-heavy areas such as personal injury or clinical negligence can drain it fastest.

What firms use funding for

Used well, short-term finance in a law firm is a lock-up and growth tool rather than a rescue line. Typical uses:

• Funding WIP and disbursements on matters that will bill well but bill late.
• Smoothing PII renewal and practising-certificate season, when large costs land together.
• Hiring a fee-earner ahead of the billing they will generate, including the lag before they are fully utilised.
• Lateral hires or a small acquisition — bringing in a team or a caseload.
• Technology — case-management, e-signature and compliance systems billed annually.

A revolving facility such as Credicorp Flex suits this well: draw against the lock-up you are carrying, repay as matters settle and bills are paid.

What to weigh before borrowing

Start by measuring your lock-up honestly — WIP days plus debtor days — and identifying which practice areas drive it. Borrow against work that is genuinely going to bill and be collected, not against speculative or no-win-no-fee matters whose outcome is uncertain. Keep the firm's own office-account cash flow distinct from client-account balances in your planning. Match the term to the need: a seasonal cost like PII renewal suits a short facility; a long-running case load may need a different structure. Understand the total cost of the finance and compare it with alternatives such as billing on account or tightening collection. Any market rates you see elsewhere are illustrative, not a quote.

How no-personal-guarantee finance fits

Credicorp lends to the limited company or LLP, not to the partners personally, with no personal guarantee. For solicitors that is a meaningful protection — your home is not pledged against a facility taken to fund the firm's lock-up. As an exempt business lender serving companies rather than consumers, Credicorp assesses the firm: its billing record, its matter pipeline and its trading. That keeps the finance aligned with how a practice actually earns — money goes out to fund work, comes back when bills settle. You can apply online. This page is educational; how a facility fits your firm is a matter for your own COFA and finance team to weigh.