“We had our best billing year on record. Why is the partner draw the same?”
Three numbers describe the same hour of work, and in most firms nobody owns the distance between them. A review that reads matter economics end to end finds where the hour was lost, and whether it was lost in the recording, the billing or the collecting.
realization
WIP
leverage
origination credit
matter economics
disbursements
client account
lock-up
Your words, not ours.
Where it concentrates here
Five places the money tends to
go in law firms. Each one is concentrated — a single agreement, a single queue,
a single account nobody reviews — which is why sampling walks straight past them.
Time recorded and left in WIP past the point any client will pay it, aging quietly because writing it off requires a conversation nobody wants.
A realization rate that is reported firm-wide and never decomposed, so the two practice groups dragging it down are invisible in the average.
Disbursements incurred on a client's behalf and never recharged — small individually, and continuous.
Panel rate agreements with volume commitments or agreed discounts that nobody tracks against actual billings.
Trust and client account reconciliation exceptions carried month to month, which is a regulatory exposure rather than an accounting untidiness.
Elite 3E or ProLaw for the larger firms; Aderant Expert where the finance function grew up around it
Clio Manage or PracticePanther in firms under about forty fee earners
Chrome River or Nexudus for disbursements, usually reconciled by hand
iManage or NetDocuments for matter files — often the only complete record of what was actually agreed
A separate IOLTA/client account reconciliation, frequently in Excel
Named because it changes what the intake asks for. An extract from one of these has known gaps, and the review is built around them rather than surprised by them.
Reported in your numbers, not ours
realization
collection rate
lock-up days
WIP aging
leverage ratio
profit per equity partner
matter margin
origination credit
The obligations that set the deadlines
State bar trust account (IOLTA) compliance and the annual certification
Client account three-way reconciliation — bank, ledger and matter balances
Malpractice insurance renewal disclosures on claims and circumstances
1099 reporting on settlement disbursements
What the review would ask you for
9 requests written for law firms
and asked of nobody else — 4 of them core. They sit alongside
the operating spine every business has — finance, revenue, receivables,
payables, contracts, people, IT, operations, risk, commercial and governance
— which is 107 further requests.
Matter list with fee arrangement CoreHourly, fixed, contingent or capped, by practice group.
Billed, collected and written down by matter CoreRecorded time, billed time and collected fee are three different numbers.
Work in progress and unbilled time CoreAged by matter and fee earner.
Client and trust account reconciliation CoreBalances, aging and unclaimed funds. Reconciliation exceptions here are a regulatory matter, not merely an accounting one.
Leverage and utilization by gradePartner, associate and paralegal hours against target.
Origination and credit allocationHow work is credited, and what that drives.
Conflicts checking process and turnaround
Disbursements and expense recoveryWhat is incurred and never recharged.
Panel appointments and rate agreementsIncluding any agreed discounts and volumes.
Anything you do not have can be skipped in one
click, with a reason. The intake is completed in the
client portal, which saves each answer as it is given and can be
returned to as often as you like.
When this stops being interesting and becomes urgent
A partner retiring or de-equitizing, which forces a real valuation of WIP and receivables rather than a comfortable one
A merger conversation, where the other side's diligence asks the questions nobody internal has asked
A bar audit or a trust account exception that did not clear
A practice management migration, which surfaces every unbilled matter at once
A bank covenant test on the firm's line of credit
Who this involves
Signs it: Managing partner, or the executive committee
Resists it: The practice group heads whose realization the review will decompose
Has been asking for it: The finance director, who has been saying this for two years
Who commissions it
Managing partners, finance directors and COOs. Phase one is priced before phase two is
discussed, the report is yours either way, and we take no vendor commissions or referral
fees on anything we recommend.
The proposal sets out the sequence week by
week, what we would need from you, and what it costs for your number of operating
units. No call required to see the number.
Closest to this
Operations that share more with law firms than the sector label
suggests.