Lock-up days is the number of days it takes to convert advice (fee earners’ time) into cash. Technically speaking, lock-up is the sum of cash trapped in work-in-progress (WIP, or fee earners’ time booked, but not yet billed), and debtors (bills issued, but not yet paid).
The faster the cash materialises, the more the firm can do with it (e.g. re-invest in its people, tech and growth). Good cash conversion also minimises the need for short-term borrowing from banks which can be expensive.
Good client expectation management is key, as are more mundane things such as well kept timesheets submitted on time. In general, whichever action supports good realisation tends to also support good cash conversion. 90 day lockup is seen as the ‘platinum standard’; the City average is closer to 150 days.
In a £100m revenue practice, every 1 week of lockup is equivalent to c.£2m in cash collections. Use the calculator below to see how much the "excess" lockup is costing your practice.