The Mid-Year Review Most Law Firms Skip
Your firm is halfway through the year.
Do you know whether it was profitable, or just busy?
Most firms only find out in January. By then, the year is over, the numbers are set, and any problems that built up over the past twelve months are now locked in.
Mid-year is different. At this point, you can still make changes to your numbers.
That’s the main reason for this newsletter. It’s not about adding more reports. It’s about using the window of time you still have before it closes.
Why June and July matter more than December?
By mid-year, your firm has six months of real data. That’s enough to spot trends, but not so much that you can’t still change the outcome.
If you catch a billing gap in July, you can still recover six months of lost revenue. If you find it in January, it’s already a write-off.
A trust discrepancy found in July is just a bookkeeping fix. If it’s found during a bar audit, it becomes a much bigger issue.
Firms that review their numbers mid-year can make decisions. Firms that wait until year-end are left making excuses.
The 5 checks
1. Unbilled and delayed work
Start here, because this is where most firms quietly lose money.
Time entries in your system that never made it onto an invoice are revenue you’ve earned but haven’t requested. Work in progress that sits too long is harder to bill, since clients may question charges they don’t remember.
What to look at:
→ Unbilled time by matter, oldest first
→ Matters with activity but no invoice in the last 60 days
→ Time entries that were logged but never approved for billing
→ Disbursements and case costs advanced but never passed through to the client
What to do: Set a regular billing cycle and stick to it. Billing monthly is always better than waiting until you have time.
2. Accounts receivable
An invoice that’s 30 days old is just a timing issue. If it’s 120 days old, it’s a collections problem—and it probably won’t resolve on its own.
What to look at:
→ Your A/R aging report, grouped by bucket
→ Concentration risk, meaning how much of your outstanding balance sits with one or two clients
→ Anything past 90 days that has had no follow-up
→ Balances that should honestly be written off, so your revenue figure stops lying to you
What to do: For each overdue balance, decide if it’s collectible, negotiable, or should be written off. Then follow through. Keeping uncollectible receivables on your books inflates your revenue and throws off your numbers.
3. Trust account accuracy
This is the one that affects your license.
Mid-year is the right time to check that your trust records are accurate, not just assume they are. Assumptions are what end up in disciplinary reports.
What to look at:
→ Three-way reconciliation for every month of the year so far. Bank balance, trust ledger, and the sum of client ledgers. All three must tie. Two out of three is not a reconciliation. ,
→ Any client ledger showing a negative balance. There is no legitimate reason for one. A negative client ledger means one client’s funds have paid another client’s costs.
→ Bank fees. If your trust account charges fees and they are being absorbed by client funds, that is commingling.
→ Earned fees still sitting in trust. Money you have earned and invoiced does not belong in the trust account.
→ Dormant balances. Small residual amounts left over from closed matters need resolving, not ignoring.
What to do: If any month in the last six hasn’t been fully reconciled, fix that first. Start with the oldest unreconciled month, not the most recent, because errors build up over time.
4. Expense creep
Costs can creep up without you noticing a subscription here, a rate increase there, or a service you forgot to cancel. Each one seems small, but together they eat into your margin.
What to look at:
→ This year’s expenses by category against the same period last year
→ Recurring software and subscription charges, line by line
→ Anything categorized as “miscellaneous” or “other,” which is usually where clarity goes to die
→ Owner draws and personal expenses that have drifted into firm accounts
What to do: Cancel anything you’re not using. Move expenses into the right categories. A clean chart of accounts makes deductions easier to find later, and it’s much easier to fix things now than at year-end.
5. Profitable, or just busy
The last check is only possible if you’ve done the first four.
Revenue isn’t the same as cash collected, and cash collected isn’t the same as profit. Many firms have their best billing year and their worst cash year at once, and don’t notice the gap until it’s a problem.
What to look at:
→ Budget against actual, if you set one. If you did not, this is the year to start.
→ Profitability by practice area or matter type, not just firm-wide
→ Realization, meaning what proportion of the time you recorded actually turned into collected cash
→ Your operating account balance trend across six months, not just today’s figure
What to do: No matter what the numbers show, you still have six months to make changes. You can adjust staffing, billing rates, intake criteria, and spending.
Running the review
You don’t need a whole week for this. You just need a focused session with accurate data in front of you.
The order that works:
- Reconcile everything that is unreconciled, trust first
- Pull unbilled time and A/R aging, and deal with both
- Review expenses against last year
- Then, and only then, look at the profitability picture
The order matters. Profitability numbers based on unreconciled books are just guesses.
What this is really about?
For a law firm, this isn’t just bookkeeping. It’s about having control over your finances.
You can’t make decisions for the rest of the year if you don’t trust your numbers. And you can’t trust numbers that haven’t been checked.
You have six months left. Everything on this list can still be fixed.
Want this run for your firm?
We handle mid-year reviews for solo attorneys and small firms, including full three-way reconciliation, A/R and WIP analysis, and a clean set of books you can actually make decisions from.
