Your Law Firm Is Profitable. So Why Is the Bank Account Empty?

Understanding lock-up – and how LawBlazer legal funding can help

If you talk privately to almost any principal of a small law firm, the story is familiar:

On paper, the practice is profitable.
– The team is busy.
– Matters are flowing.
– Utilisation is solid.

Yet month after month, the bank balance never seems to match the effort.

It’s usually not mismanagement. It’s not a lack of work. And it’s rarely a lack of legal skill.

The culprit is something more structural – and in many firms, quietly corrosive: lock-up.

This is exactly the problem LawBlazer, TrailBlazer Finance’s specialist law firm funding solution, is designed to help fix.

The cash trapped inside your law firm

Lock-up is the total value of work that has been performed but not yet converted into cash – the combination of unbilled WIP and uncollected debtors.

Industry benchmarking reveals just how big this problem is for Australian law firms:

Median total lock-up sits at 92 days
The bottom quartile exceeds 150 days – more than five months of revenue delayed
Around 9% of all billable hours are never collected
A firm with $1 million in fees and 150 days of lock-up can have $400,000+ trapped inside the business at any given time

For smaller practices, this locked-up cash is the difference between:

Smooth operations vs. constant strain
Confident partner drawings vs. “just take what we can this month”
Investing in growth vs. putting everything on hold

Law firm cash flow funding through LawBlazer is built around this reality: your issue often isn’t revenue – it’s timing.

Why law firms feel profitable but cash-poor.

Legal work is structurally cash-lagged. Time is recorded today, billed later, collected later again – and sometimes disputed or discounted along the way. Unlike a product business, you don’t convert effort into money in linear time.

Three structural realities drive lock-up in law firms:

1. WIP grows in silence

Matters progress, time is recorded, files move – but every unbilled day is another day cash hasn’t entered the business. Without discipline around WIP, lock-up quietly builds.

2. Debtors linger longer than expected

Debtor days of 80–120+ are now common. Clients delay payment because life gets in the way, not necessarily because they’re unhappy. In other industries this would be an operational failure. In law, it’s endemic.

3. Billing is reactive, not rhythmic

Many firms still bill:

At the end of a matter
At the end of a month
Or when the partner finally sits down to review files

The billing cycle simply doesn’t match the cash needs of the business.

Operationally, there’s a lot you can improve. But even firms that do the right things often still find themselves cash-poor and stressed. That’s where LawBlazer legal funding can complement good practice management.

Operational fixes that actually help reduce lock-up.

The best-run small firms in 2025 are attacking lock-up on multiple fronts:

Bill earlier, bill smaller, bill more often
- A 5-hour invoice issued weekly gets paid faster (and with less friction) than a 40-hour invoice issued months later.
- Clients often prefer small, predictable increments.
Make it frictionless to pay
- Add one-click payment links to every invoice.
- Offer card, BPAY, PayID, direct debit.
- Automate reminders at 7, 14 and 21 days.
- Automated reminders alone can reduce debtor days by 15–20%.
Get money before you do the work
- Upfront retainers, evergreen retainers, and progress billing at milestones all reduce lock-up before it builds.
- Law should not be the only profession still doing large amounts of work on unsecured credit.
Track the metrics and talk about them
- Monitor WIP days, debtor days and total lock-up monthly.
- Make it a standing partner agenda item.
- Lock-up isn’t just a finance issue – it’s a leadership and culture issue.

These changes will improve law firm cash flow – and every firm should tackle them. But they don’t always solve the underlying problem, especially where matters naturally have long cash cycles.

When operational improvements aren’t enough.

Many firms do the right things – better billing cadence, automated reminders, clearer engagement terms – and still find lock-up stubbornly high.

This is normal.

Some practice areas have long cash conversion cycles by nature:

Family law
Estate disputes
Commercial litigation
Complex commercial or property deals

These matters simply take time. Growing firms also absorb cash before it’s generated: salaries, rent, insurances, tech and tax don’t wait for slow files to settle.

This is where many firms hit the wall:
Operational improvements help, but the structural gap remains.

For these practices, a working capital injection – used deliberately, not reactively – can bridge the gap in a sustainable way. The goal is not “more debt for the sake of it”. The goal is:

Smoother, more predictable cash flow
Stable partner drawings
A buffer that lets you focus on clients instead of creditors

This is exactly where LawBlazer law firm funding comes in.

How LawBlazer legal funding helps law firms fix lock-up.

LawBlazer, from TrailBlazer Finance, is a specialist legal practice finance solution built specifically for small and mid-sized Australian law firms.

A LawBlazer facility is designed to:

Provide working capital funding to bridge lock-up
Smooth cash flow when WIP and debtors stretch
Support growth, hiring and succession planning
Reduce reliance on ATO arrears and personal overdrafts

Key features of LawBlazer law firm funding typically include:

Working capital facilities sized to your practice (e.g. $50,000–$500,000+)
Terms structured around your cash conversion cycle
Security over the business, not always your home (no automatic property mortgage requirement)
Assessment by a team that understands WIP, partnership structures and lock-up

Rather than reacting to each cash crunch, LawBlazer gives firms a purpose-built law firm funding structure that sits behind the business, supporting:

Partner drawings
Compliance and tax obligations
Investment in people and systems

Major transitions (partner buy-in/buy-out, succession, scaling)

Case study: a family law firm breaks the cycle with LawBlazer-style funding

A 2-partner family law firm on Melbourne’s eastern fringe generated around $1.8 million in fees each year. On paper, the firm was profitable – but it never felt that way.

Lock-up sat at 130 days, meaning around $650,000 was trapped in WIP and debtors at any time
Their client base was emotionally and financially stressed, so paying the lawyer was rarely top priority
BAS, wages and rent still needed to be paid on time

The partners tried everything:

More frequent billing
Payment plans
Tighter engagement letters

They improved lock-up to around 95 days (about $470,000 tied up) – but the cash stress remained.

The turning point came when the senior partner wanted to scale back. A long-standing senior lawyer was keen to buy in, but the firm needed liquidity to manage the transition without destabilising drawings.

A $250,000 working capital facility – structured much like a LawBlazer facility – provided breathing room to:

Stabilise partner drawings during the transition
Fund a new associate to support the remaining partners
Absorb short-term cash flow volatility without panic

Within 12 months, the succession was complete and cash flow was finally predictable.

This is the type of structured, law-firm-specific funding LawBlazer delivers.

Why specialist law firm finance often works better than the bank.

Many small law firms assume their bank is the only source of business finance. In reality, traditional banks are often poorly suited to legal practice funding:

Credit processes can take 4–6 weeks – too slow when cash flow pressure is immediate
Banks typically want residential property as security, even for modest facilities
Generalist credit teams may not understand trust accounts, WIP cycles or partnership structures

By contrast, specialist lenders like TrailBlazer Finance:

Focus on professional services and law firm funding
Can move faster and structure facilities around practice cash flows
Often operate without requiring partners to pledge their homes upfront

With LawBlazer, you’re dealing with a team that understands:

Lock-up and legal billing cycles
How partnership drawings and succession work

The realities of running a small or mid-sized law firm in Australia

Final thought: you don’t have a revenue problem – you have a timing problem

Most law firms don’t have a revenue problem. They have a timing problem.

Fixing lock-up requires both:

Operational discipline – better billing, faster collection, clear metrics
The right funding structure – so cash flow is smoothed while you improve processes

With the right combination of process and LawBlazer legal funding, even small firms can:

Release significant improvements in cash flow
Stabilise partner drawings
Fund growth, hiring and succession with confidence

Finally align the bank balance with the effort going in

About LawBlazer by TrailBlazer Finance.

LawBlazer is a specialist law firm financing solution from TrailBlazer Finance, designed specifically for small and mid-sized Australian law firms. Our working capital funding helps firms:

Stabilise cash flow and reduce lock-up
Avoid over-reliance on ATO arrears, credit cards or personal overdrafts
Fund growth, hiring and partner transitions without property as primary security

We understand legal practice structures, the realities of lock-up and the pressures of partnership. Our credit decisions are made by people who have spent their careers in professional services lending, not by generic algorithms.

Ready to review your lock-up and funding options?

If your firm feels profitable but the bank account tells a different story, it’s time to look at both your lock-up metrics and your funding structure.

Request a confidential LawBlazer working capital assessment: