How law firms fund WIP, lock-up and case disbursements: revolving credit, term loans, invoice discounting and disbursement lines, and what lenders check.
From around £10,000 to £500,000+Larger facilities available in suitable cases
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In short
WIP and disbursement funding gives a law firm cash to cover the gap between recording time, billing it and being paid, and to pay experts, counsel and court fees before a matter settles. Revolving credit suits cyclical lock-up, term loans suit a one-off increase, and specialist disbursement lines suit contingent-fee litigation. Lenders focus on lock-up days, WIP write-offs and the firm's work mix.
A law firm's cash position is set less by how much work it does than by how long that work takes to become money. This page is for managing partners, COLPs, COFAs and finance directors whose fee earners are busy but whose office account is thin, because time is sitting in WIP, bills are sitting unpaid and disbursements have been paid out on matters that will not settle for months. We are a broker, not a lender: we arrange working capital facilities for law firms from around £10,000 to £500,000+, with larger facilities available in suitable cases, by approaching the lenders on our panel that understand how legal fees are earned. It sits within our wider solicitor practice loans section.
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The shape of a firm's funding need depends heavily on its work mix, and lenders read it that way.
01
Personal injury and clinical negligence
Most matters run on conditional fee agreements, so fees are recovered only on success and often years after instruction. The firm pays for medical reports, experts, court fees and counsel along the way. This is where disbursement funding is most common, and where lenders ask most about success rates and case duration.
02
Commercial litigation
Interim bills are possible, but large matters can carry heavy WIP until a stage is reached, and counsel's and experts' fees fall due before the client settles the next bill.
03
Private client and probate
Estate administration fees are often paid only once assets are realised, so WIP builds while property sales and HMRC clearances take their course.
04
Legal aid
Rates are fixed and payment comes from the Legal Aid Agency, which is a reliable payer but on its own timetable. Civil firms can claim payments on account on some certificated work; the Legal Aid Agency's guidance on claims paid out of the legal aid fund explains the process.
05
Residential conveyancing
Fees are usually taken from completion monies, so lock-up is short, but search and registration fees are paid out on every file, including those that fall through.
06
Corporate and commercial advisory
Monthly billing to business clients keeps WIP modest, but debtor days can stretch when large clients impose their own payment terms.
What lock-up really measures
Lock-up is the number of days between a fee earner recording time and the firm banking the fee. It has two parts: WIP days (time recorded but not yet billed) and debtor days (bills issued but not yet paid). Add unrecovered disbursements and you have the full amount of the firm's own money working for its clients.
Lenders and firms both use lock-up because it is the single figure that explains why a profitable practice can struggle to pay salaries at the end of the month. Profit in the accounts is earned when time is recorded and valued; the cash only arrives when the client pays. A firm growing its fee income usually sees lock-up grow in pounds even if the days stay flat, because every new fee earner adds months of unbilled time before their first bill is paid.
Illustration: what 30 days of lock-up is worth
A hypothetical example in round figures shows the scale. A firm billing £2,000,000 a year earns roughly £5,500 of fees per calendar day. If its lock-up runs at 150 days, about £820,000 of fees is tied up at any moment. Bringing lock-up down by 30 days would release around £160,000 of cash permanently, which is often more than the firm was about to borrow. Funding and collection work are not alternatives: the best outcome is usually a modest facility alongside a plan to shorten lock-up.
Risks and alternatives to borrowing
Borrowing against WIP treats the symptom. If lock-up is long because bills go out late, the cheapest capital is a monthly billing discipline, interim bills on long matters and money on account for disbursements at the start of each file. Many firms find that tightening engagement letters and chasing aged debt releases more than any facility.
A facility sized to today's lock-up can also become permanent. If WIP never falls, the firm is paying interest indefinitely on a funding gap it could have closed with more partner capital. Personal guarantees are usual for facilities to partnerships and LLPs, so partners should read them carefully, and it is worth reading up on how personal guarantees work before signing one. Contingent-fee firms face a particular risk: a run of lost cases can leave disbursement funding to repay with no recovery behind it, unless it is protected by after-the-event cover.
Underwriting
What lenders look for in a law firm's WIP
01
Lock-up trend
Rising lock-up alongside flat fees suggests a billing or collection problem that more borrowing will not cure.
02
WIP write-offs
Lenders want to know what proportion of recorded time is actually billed and collected. A history of heavy write-downs reduces the value they place on WIP.
03
Work-type concentration
A firm dependent on one referral source, one insurer client or one type of claim carries more risk than a balanced practice.
04
Office account only
Under the SRA Accounts Rules, client money must be kept separate and cannot fund the firm. Lenders look solely at office account statements, and disbursements not covered by money on account are paid from office funds.
05
Partners' commitment
Partner drawings compared with profit, and whether capital accounts have been built up or run down.
06
Regulatory standing
Qualifying PII in place, no outstanding SRA investigation, and a clean record on accounts rule breaches.
Checklist
Documents for a WIP facility
Two years of filed accounts plus up-to-date management figures
WIP and aged debtor reports from your practice management system, by work type and fee earner
Lock-up figures for the last 12 months, if you track them
Office account statements covering at least the last six months, ideally a full year so seasonal billing shows
For disbursement funding: a case list with claim type, stage, disbursements to date and expected conclusion
Partnership or members' agreement and current partner capital balances
Details of existing borrowing and your PII renewal date and premium
Side by side
Compare your options
How the main business finance structures work. Lenders set their own terms, so treat this as a guide to the questions to ask.
General information only. Every lender has its own criteria, and all finance is subject to status.
Funding options for WIP and disbursements
Option
Best suited to
Trade-off
Revolving credit facility
Firms whose need rises and falls with billing cycles
Facility fees apply even when undrawn; limits are reviewed
Working capital term loan
A one-off step up in lock-up, such as after hiring a team
Fixed repayments continue even if a big matter settles early
Invoice discounting
Firms billing businesses on regular bills
Only funds issued bills, not unbilled time or contingent fees
Disbursement funding line
PI, clinical negligence and volume litigation
Funder scrutinises case selection and outcomes
Partner capital
Firms whose capital base has fallen behind growth
Moves the burden onto individual partners
Revolving credit
A revolving credit facility is the natural fit for WIP because the need is cyclical. You draw when a heavy month of counsel's fees lands and repay when a large matter settles. Interest runs only on the drawn balance, although lenders usually charge an arrangement or non-utilisation fee.
Term working capital
Where lock-up has stepped up for a specific reason, for example a new litigation team that will take a year to produce paid bills, a fixed working capital loan can match that one-off investment. It gives certainty but is less forgiving if cash comes in faster than expected, so check early repayment terms.
Funding issued bills
Firms with a commercial client base can release cash from unpaid bills through invoice finance, usually confidential invoice discounting so clients continue to pay the firm. It does not reach unbilled WIP, and lenders are wary of bills to individuals or bills contingent on outcome. Where bills have gone unpaid for a long time, aged debt funding is a separate route, and a lender will weigh each old bill by who owes it and for how long.
Disbursement funding
Specialist disbursement funders provide a facility the firm draws matter by matter to pay experts, medical records and court fees, repaid when the case concludes. Some structures are linked to after-the-event insurance, so the disbursement is covered if the case is lost. The funder is effectively assessing the firm's case selection, so expect questions about success rates by claim type.
How we put a WIP facility together
We look at your lock-up, work mix and billing pattern to decide whether the need is cyclical, a one-off step or disbursement-specific.
We shortlist lenders on our panel with experience of legal practices and their WIP, rather than treating the firm as a generic service business.
We present the firm's case with the reports lenders ask for, so the first conversation is about structure rather than missing papers.
You compare offers with us, including fees, security and guarantees. The lender makes the decision and sets the final terms.
It is free to enquire; any broker fee is disclosed separately before you proceed. If your cash pressure comes from a specific bill rather than lock-up, see our pages on funding a VAT quarter or tax bill and funding your PII renewal.
What our clients say
I’d like to say a big thank you to Simon and the team for successfully assisting with the sourcing and placing of our most recent funding. Simon was able to secure a lend when others appeared to have run out of appetite to place business or source viable options. I would highly recommend Simon should you need to raise capital or finance for your business needs.
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FAQs
Questions clients ask
Can a lender take a charge over unbilled WIP?
Rarely as a direct asset. Unbilled time is not a debt anyone owes the firm yet, so most lenders treat it as evidence of future fee income rather than as security. The facility is usually secured by a debenture and partners' guarantees, with WIP informing how much the firm can afford.
Is disbursement funding the same as litigation funding?
No. Disbursement funding lends to the firm to pay the costs of running cases and is repaid by the firm. Third-party litigation funding usually finances a specific claim in return for a share of the damages or costs, and the funder takes the risk of losing.
What is a reasonable lock-up for a law firm?
It varies widely by work type. Conveyancing firms can run very short lock-up because fees come from completion monies, while contingent-fee litigation firms can carry much longer cycles. The useful comparison is your own trend and your peers in the same practice area. Tracking it monthly, as part of working out your working capital, shows whether it is drifting.
Can a sole practitioner get WIP funding?
Yes, although the lender relies more on the practitioner's own credit and income record. Borrowing of £25,000 or less by sole traders and small partnerships can be regulated consumer credit, which brings additional protections.
Can a law firm with high lock-up still get WIP and disbursement funding?
Yes, high lock-up is often the reason firms look for WIP and disbursement funding, but lenders will want to understand why it is high and whether it is improving. They look at the age of WIP, write-off history, the type of work and billing discipline. A firm that can show a plan to bill faster is usually viewed better than one simply asking for headroom. A revolving credit facility often suits cyclical lock-up.
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