UK law firms are being forced to wait over four months to get paid by clients, new data reveals, spotlighting potential cash flow issues firms could face if the economy nosedives.
The average time the UK’s top 100 law firms are waiting to get paid is 124 days, according to research from accountancy firm Lubbock Fine shared with City A.M.
The problem is worse for smaller law firms, with firms listed in the bottom half of the top 100 waiting on average 133 days to receive payment.
While law firms have traditionally faced long delays to get paid in comparison to other businesses, many lawyers are reticent about pursuing outstanding bills as they worry this could damage client relationships.
“Most lawyers will admit they are poor at issuing invoices to their clients,” Mark Turner, head of professional services at Lubbock Fine, said.
“Having weak cash flow like that can substantially increase the risk that a law firm will get into financial distress, especially in a weak economy,” he added.
“If the economy weakens even further then clients of law firms may be even more careful about sitting on their cash and delaying payments to law firms,” he added.