As momentum continues to build in the UK legal market, many businesses are posting improved performances in many key metrics of profit per partner and fees invoiced per fee earner. A consequence of this increased market performance is that “Lock-up” tends to increase, especially within larger firms.
A large, well-respected London firm of Solicitors, that has an existing relationship with UTB through their broker, approached us in February as they were suffering with some of the cash flow issues that many firms in their position experience. The firm’s fees were growing year on year, and they appear to be onto a record-breaking year with growth figures up to 30%. Although their fees were increasing, their average debtor days were passing 90 days, which was putting their existing facilities under some stress. Throw in a couple of large commercial litigation cases and the firm’s ability to continue to grow its fee base became highly constrained by the cash the business can generate.
The broker that looks after this particular firm knew that we already had some exposure to this practice, but also knew that we had a good understanding of the law firm, its partners and their financial situation. After a consultation with the broker and a quick conference call with the customer, UTB were able to provide the client with the loan advance they needed over their preferred repayment term. This allowed the partners to get back to focussing on growing market share, improving their fee earners’ performances and reducing overall lock-up within their organisation.
Loan size: £350,000