Personal injury practices are built on work‑in‑progress.
Long‑running matters. Long hours of work on all fronts. Managing claimant expectations while pushing for outcomes. Deferred recoveries. High disbursement spend. Outcomes that are uncertain until the very end.
Every PI Principal understands this in theory. Yet in practice, WIP is often the least actively managed asset in the firm.
Too often, matters that are unlikely to settle for the necessary quantum to support the stated WIP are not adjusted down, leading to inflated WIP. Occasionally, WIP is understated, leading to a less-favourable picture in a prospective financier's eyes when assessing a funding application.
Sometimes, a valuation of the firm seems like something that might be important one day, then it is upon you, and reviewing and adjusting the WIP is a major obstacle to securing a reliable valuation heading into succession or M&A opportunities.
This is not because Principals don't care — but because WIP feels clinical, uncomfortable, and endlessly deferrable.
WIP is not an accounting artefact. It's commercial reality.
In PI firms, WIP is not just a reporting line; it is:
- Deferred revenue
- Deferred risk
- Deferred decision‑making
- A significant component in a prospective valuation of the firm
Unbilled WIP represents work already completed, capital already deployed, and exposure already incurred — whether or not the firm chooses to look closely at it.
ASIC‑focused accounting guidance and Australian law‑firm consultants regularly note that WIP quality, not WIP volume, is what differentiates stable and higher-valued firms from volatile ones, particularly in contingency‑style practices where revenue timing is inherently unpredictable.
Put simply:
A firm can be busy, growing and winning, but the vital sign of WIP can be in poor health.
Why WIP reviews slip — even in well‑run PI firms
It's rarely intentional. More often, it's structural.
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PI Principals are operationally pulled forward, not backward.
The urgency in a PI practice is always:
- New matters
- Client pressure
- Settlement conferences
- Mediation
- Court timetables
- Staff utilisation
WIP reviews, by contrast, require:
- Retrospective judgment
- Discomfort with sunk cost
- Conversations that don't directly generate fees this quarter
So they tend to be delayed, rescheduled, deferred.
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WIP problems don't ring loud alarm bells.
Unlike trust breaches or cash shortfalls, WIP deterioration is slow and quiet.
- Files stay open
- Aged matters accumulate
- Hours are not recorded or under-recorded
- Recovery assumptions go unchallenged
Professional insolvency advisers consistently observe that by the time WIP is formally impaired, the commercial issue is already several years old.
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Emotional investment distorts objectivity.
In PI work, WIP is personal.
- The firm has believed in the claim
- The lawyer has invested time, identity, and advocacy
- The client relationship often runs deep
That makes it harder to ask:
- "If this matter came in today, would we finance it again?"
- "In retrospect, did this matter deserve the amount of hours that have been input?"
- "Does the WIP on this file represent a realistic recovery in fees given what the current estimated settlement quantum is?"
These are exactly the questions that a WIP review asks.
The real cost of neglected WIP
Poor WIP discipline & management can constrain growth, distort funding requirements, cause problems with a firm valuation, and magnify risk.
Common downstream effects include:
- Over‑optimistic balance sheets
- Deterrents to prospective partners/principals
- Mispriced funding facilities
- Difficulties in forecasting and budgeting
- Cash flow shocks when settlements land below expectations
Lenders and funders are increasingly explicit that WIP ageing and review discipline are core indicators of a PI firm's commercial maturity — not just its legal capability.
The same is true of specialist business brokers and valuers of law firms as the credibility of the WIP feeds directly into the appeal or otherwise to prospective acquirers.
It's not just firm valuations either, it's also file valuations. With PI files increasingly being recognised as a tradable commodity, why wouldn't a firm leave the door open to a sale of files by insisting on a high degree of integrity in the WIP.
WIP reviews are uncomfortable because they force decisions
A genuine WIP review eventually asks Principals to confront:
- Which matters should be de‑prioritised
- Which files no longer justify continued capital
- Where recovery assumptions rely on hope rather than evidence
- Whether resourcing matches commercial reality
These are leadership decisions, not accounting exercises. And they don't get easier with time.
The paradox: strong PI firms review WIP more, not less
High‑performing PI practices tend to share one feature: they review WIP before they are forced to. Not to punish lawyers or to reduce client advocacy, but to ensure that:
- Capital is deployed deliberately
- Funding supports strategy, not inertia
- Growth doesn't outrun discipline
In those firms, WIP reviews are framed as commercial hygiene, not crisis response.
A pause worth taking
This is not advice. Just perspective.
If WIP is the largest asset on your balance sheet, it's also the largest concentration of assumption in your firm. And assumptions deserve occasional challenge.
About Providior
Providior helps PI firms to unlock trapped cash to help fund investment in sustainable growth. Providior funds disbursements.
We firmly believe that increased comfort and confidence among PI principals with topics of finance, cash flow and debt can help firms succeed in building for sustained future growth.
Our role isn't to provide legal advice (that's our clients' role). It's to help busy PI Principals build awareness of funding options and practices.
In growing firms, the lawyers are busying lawyering and someone has to find the funding to support that important work.