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By Jared Correia, IndyBar Law Practice Management Consultant, Red Cave Legal Consulting
“Work in Progress” (often abbreviated to WIP) is a representation of work outstanding for law firm clients. While most lawyers just let it ride and take it for granted that the work just keeps coming in and keeps getting done — WIP has some predictive powers that law firms are largely ignoring.
Your WIP gives you an idea of what your pipeline value is in aggregate. In other words, you should be able to pinpoint how much money you’ll make if you finish everything that’s currently on your plate. Better yet, many modern software (including law practice management software) will calculate that number for you automatically so you don’t have to jump through any mathematical hoops.
Now, you can get fancier than that to boot. Because if you know how long it generally takes you to close cases and the frequency of payments for those cases, you can generally pinpoint (pretty precisely) when you’ll get paid and how much. Simply by reviewing your WIP on a recurring basis, you can predict your revenue for the near future.
That’s a pretty powerful tool, especially given how attorneys approach this problem now: by panicking when business seems slow, and crossing their fingers that it picks up again. Hope is not a strategy. Better to know for sure.•
Need to whip your financial metrics into shape? We can help. The IndyBar offers FREE law practice management consulting services through Red Cave Law Firm Consulting. To request a consult, visit indybar.org/lpm and start running your law firm like a business.
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