It's November.
For many law firms, that means the beginning of a familiar year-end routine. Partners start asking where revenue will finish, whether collections will meet expectations, how much profit will be available for distribution, and what the firm should budget for next year.
Those are all important questions.
But if November is the first time leadership has seriously considered them, the firm is already behind.
I've spent more than 15 years managing law firm operations, and one thing I've learned is that a strong financial finish doesn't happen because everyone suddenly becomes focused on profitability during the last two weeks of December.
It happens because leadership understands the numbers, anticipates the bottlenecks, and takes action while there's still time to influence the outcome.
And right now, there is still time.
October invoices can get out the door. Outstanding receivables can be addressed. Unbilled work can be evaluated. Financial forecasts can be refined. And the partners can begin making thoughtful decisions about what they want the business to accomplish in 2027.
That last point is particularly important.
Because while you're working to finish 2026 profitably, you should also be laying the foundation for next year's financial performance.
And that process shouldn't begin with an Excel spreadsheet.
Your budget should be the financial expression of your strategy. If you haven't decided where the firm is going, you have no business finalizing what it's going to spend.
Let's talk about what law firm leadership should be doing right now.
First Things First: Get Your October Bills Out This Week
If I were sitting in your law firm's management meeting this morning, one of my first questions would be whether October billing is complete.
Not whether the accounting team has generated pre-bills.
Not whether attorneys are planning to review them.
I want to know when invoices will actually be sent to clients.
Because the longer those invoices sit in review, the less time the firm has to collect that revenue before December 31.
Let's assume your firm generates $500,000 in monthly billings.
If October invoices go out during the first week of November, clients have nearly two months to process and pay them before year-end.
If those same invoices don't go out until Thanksgiving week, you've significantly reduced that window.
And if they sit until December, there's a meaningful possibility that some of those payments won't arrive until 2027.
The work has already been performed. The firm has already incurred the payroll and overhead expenses associated with delivering it.
But the cash hasn't arrived.
To be clear, delayed invoicing doesn't necessarily mean lost revenue. Some of those invoices will eventually be collected.
But timing matters.
It affects available cash, year-end distributions, working capital, and the firm's ability to fund expenses without relying on reserves or credit.
For firms using cash-basis tax accounting, the timing of collections may also affect the year in which income is recognized. That's something leadership should coordinate with its CPA rather than leaving to chance.
So my first recommendation is simple: establish a firm deadline for October billing and enforce it.
Time entries should be complete. Pre-bills should be reviewed promptly. Corrections should be resolved. And invoices should be distributed without unnecessary delays.
If a partner hasn't reviewed their pre-bills, that needs to be addressed as a management issue, not accepted as an unavoidable part of the process.
Your billing department cannot collect invoices that haven't been sent.
And your accounting team shouldn't have to spend the last two months of the year chasing partners for permission to bill work that was completed weeks earlier.
Your Accounts Receivable Report Should Be Getting a Lot of Attention
The next thing I want to see is the firm's accounts receivable aging report.
And I don't mean a quick glance at the total balance.
I want to understand which invoices are outstanding, how old they are, which clients owe the money, and who is responsible for collecting it.
November is not the time to discover that a significant portion of your A/R has been sitting untouched for months.
If the firm has $1 million in outstanding receivables, that number by itself doesn't tell me enough.
How much is current?
How much is more than 30 days old?
How much is over 60 or 90 days?
Are there disputed invoices?
Are certain partners consistently carrying older balances?
Are clients waiting for revised invoices, supporting documentation, or responses to billing questions?
And, perhaps most importantly, what is the realistic likelihood of collecting those balances before year-end?
I would prioritize the accounts with the greatest potential impact and assign specific follow-up responsibility.
That doesn't mean making indiscriminate collection calls or damaging valuable client relationships.
It means having a deliberate process.
Sometimes a friendly reminder is sufficient.
Sometimes the responsible attorney needs to contact the client directly.
Sometimes there's a billing dispute that should have been resolved months ago.
And sometimes leadership needs to acknowledge that an old receivable may not be fully collectible.
Those situations require different responses.
But doing nothing until the final week of December is rarely an effective strategy.
I also want partners involved in this process.
A/R management shouldn't be something the accounting department handles in isolation while the attorneys responsible for the client relationships remain disengaged.
The firm needs clear expectations about when follow-up occurs, who handles it, and when unresolved balances are escalated.
Revenue that exists only on an aging report isn't the same thing as cash in the bank.
And as year-end approaches, that distinction becomes increasingly important.
Don't Forget About the Work You Haven't Billed Yet
While leadership is reviewing A/R, it should also examine unbilled work in progress.
In some firms, the amount of unbilled time sitting in the system is substantial.
Attorneys may have completed work that hasn't been invoiced because a matter is awaiting review, an invoice requires adjustments, or nobody has taken responsibility for moving it forward.
There may also be older time entries that leadership has been reluctant to address.
Those balances need attention.
I would review unbilled WIP by age, attorney, client, and matter.
Determine what can be billed immediately, what requires additional information, and what may need to be written down because collection is no longer realistic.
The objective isn't to push inappropriate invoices out simply to improve the firm's year-end numbers.
It's to eliminate unnecessary delays between performing work and billing for it.
This is also an opportunity to identify recurring operational problems.
If the same attorneys consistently have substantial unbilled balances, why?
If certain practice areas experience longer billing cycles, is that driven by the nature of the work, the fee arrangement, or an inefficient internal process?
If invoices regularly require significant revisions, is the firm addressing the underlying causes?
These questions matter beyond December.
But November is an excellent time to start asking them.
Forecast Where 2026 Will Actually Finish
By early November, law firm leadership should have a reasonably informed view of its expected year-end financial performance.
That doesn't mean every number will be exact.
There will still be uncertainty around collections, expenses, and the timing of certain transactions.
But the firm should be able to develop a realistic forecast.
I would start with year-to-date financial results and incorporate expected November and December collections, payroll, benefits, bonuses, operating expenses, debt obligations, and other known commitments.
Then I would compare the forecast against the firm's original budget and profitability targets.
Are we ahead or behind?
Why?
Is the difference driven by revenue, compensation, staffing, overhead, or collection timing?
And what can we realistically influence before December 31?
This is where I want managing partners to move beyond simply asking whether revenue will hit the annual goal.
Revenue is important.
But it doesn't tell the whole story.
A firm may achieve record revenue while experiencing disappointing profitability because compensation costs, staffing levels, or operating expenses increased faster than collections.
Another firm may finish below its original revenue target but deliver strong profits because it managed expenses and leverage effectively.
I've written before about why not every client translates to good revenue. The same principle applies to firmwide financial performance.
The goal isn't simply to collect more money.
It's to understand how much of that money the firm actually retains after delivering the work and supporting the business.
That's why I want to see projected profit, not just projected revenue.
And I want to understand the assumptions behind the forecast.
Be Thoughtful About Bonuses, Distributions, and Year-End Spending
As December approaches, partners naturally begin discussing bonuses and distributions.
Those conversations should be informed by the firm's financial forecast, not simply by how much cash happens to be sitting in the operating account.
Cash availability and profitability are related, but they're not interchangeable.
A firm may have a strong bank balance because it recently collected several large invoices, while still facing substantial payroll, tax, debt, or other obligations.
Another may report healthy accounting profits while carrying significant receivables that haven't converted to cash.
Before approving discretionary compensation or distributions, leadership should understand the firm's projected cash position, outstanding liabilities, reserve requirements, and anticipated first-quarter expenses.
I also encourage firms to avoid the familiar December spending scramble.
There's sometimes an assumption that spending money before year-end is inherently beneficial because it may reduce taxable income.
But spending a dollar to save a fraction of that dollar in taxes doesn't automatically make financial sense.
Necessary investments should be evaluated based on their business value, timing, cash impact, and applicable tax treatment.
Work with your CPA on tax planning.
But don't allow tax considerations alone to drive unnecessary expenditures.
A profitable firm should be intentional about how much money it retains, reinvests, and distributes.
Those decisions should support the business's financial health, not simply respond to whatever happens to be available on December 20.
Now, Before You Start Your 2027 Budget, Have a Strategy Meeting
This is the part of year-end planning that I think law firms get backward most often.
The accounting team is asked to prepare next year's budget.
They pull the current-year financial statements, estimate where expenses will finish, adjust compensation for expected increases, add a few planned hires, and build a revenue projection.
The partners review the spreadsheet, make some adjustments, and approve it.
And everyone feels like the firm has completed its annual planning.
But what, exactly, is that budget designed to accomplish?
Did leadership decide what the business should look like at the end of 2027?
Did the partners establish financial priorities?
Did they agree on growth objectives, staffing needs, operational improvements, and major investments?
Or did they simply take the current operating model and project what it might cost next year?
Those are very different exercises.
Your budget should be the financial expression of your strategy.
If you haven't decided where the firm is going, you have no business finalizing what it's going to spend.
A budget isn't a strategic plan.
It's the financial roadmap for executing one.
Before assigning dollars to departments, hiring, technology, or marketing, leadership needs to agree on what the firm is trying to accomplish.
Are you trying to increase profitability without adding headcount?
Expand a practice area?
Improve attorney leverage?
Build a stronger management team?
Reduce partner dependency?
Invest in business development?
Each of those objectives requires a different allocation of resources.
And if those conversations haven't happened, you're not really budgeting.
You're just projecting expenses.
The numbers should follow the decisions. Not the other way around.
What Should Your 2027 Vision and Goal-Setting Meeting Actually Accomplish?
I don't believe every law firm needs an elaborate strategic planning retreat.
But I do believe the partners need dedicated time to discuss the direction of the business before management builds the financial plan.
The conversation should begin with an honest assessment of the firm's current position.
What's working?
What's not?
Which practice areas are performing well?
Where are margins under pressure?
Do we have the right staffing structure?
Are our partners spending their time on the highest-value activities?
What operational problems continue limiting performance?
And what does leadership actually want to achieve over the next 12 months?
Those discussions should produce a manageable set of priorities.
Not 25 initiatives that nobody has time to execute.
A few meaningful objectives that the firm can realistically fund, implement, and measure.
For example, leadership might decide that its primary objective is to increase profitability by improving associate utilization and delegation.
Another firm may determine that its most important priority is building a stronger management team so partners can spend more time on client development.
A third may want to expand a profitable practice area while reducing its reliance on a single major client.
Those strategies require different investments.
And the budget should reflect those differences.
If improving attorney leverage is the priority, the firm may need better capacity reporting, training, and work allocation processes rather than additional hires.
If reducing partner dependency is the priority, it may need to invest in management infrastructure.
If expanding a practice area is the priority, leadership should evaluate expected demand, staffing requirements, ramp-up costs, and the timeline for generating a return.
The budget becomes much more useful when every significant investment is connected to an intentional business objective.
Stop Building Budgets That Simply Preserve Last Year's Inefficiencies
One of the problems with rolling the prior year's numbers forward is that it assumes the existing operating model is fundamentally sound.
Sometimes it isn't.
Maybe the firm is overstaffed in one department and understaffed in another.
Maybe it has too many attorneys performing work below their experience level.
Maybe certain practice areas generate impressive revenue but relatively little profit.
Maybe the organization is paying for software that nobody uses effectively.
Or maybe the partners are performing administrative responsibilities that should have been delegated years ago.
If leadership simply increases those expense categories by 3% or 5%, it has effectively budgeted to continue the same inefficiencies.
That's not strategic financial planning.
A thoughtful budget should challenge the assumptions behind the current cost structure.
Does the firm need every existing position in its current form?
Are compensation structures aligned with profitability?
Could better delegation increase productive capacity without additional hiring?
Are planned technology investments solving actual operational problems?
Should certain expenses be reduced so resources can be redirected toward more valuable initiatives?
These are management decisions.
Accounting can help quantify them.
But accounting shouldn't be expected to make them.
Every Major Budget Initiative Should Have a Business Case
Once leadership has established its priorities, the next step is translating them into financial assumptions.
Let's say the firm wants to hire two additional associates in 2027.
That shouldn't appear in the budget as simply two additional salaries and associated benefits.
Leadership should understand why the positions are needed.
Is existing demand sufficient to support them?
Are current attorneys operating near reasonable capacity?
What work will the new associates perform?
How quickly are they expected to become productive?
What support resources will they require?
And what level of collections and financial contribution should the firm reasonably expect?
The same approach applies to technology.
If the firm wants to invest $75,000 in a new system, what operational improvement is that investment supposed to produce?
Reduced administrative time?
Faster billing?
Improved intake conversion?
Better reporting?
Lower staffing requirements over time?
Those benefits may not all be immediately quantifiable, but leadership should still articulate the expected value.
And someone should be accountable for making sure the investment produces results.
A budget that includes initiatives without defined objectives is little more than a spending plan.
A strategic budget connects resources to outcomes.
Build Profitability Targets Into the Budget, Not Just Revenue Goals
Another mistake I see is treating profitability as whatever remains after the firm projects revenue and expenses.
Leadership establishes a revenue target, builds an expense budget, and then calculates the resulting profit.
If the number looks acceptable, the budget is approved.
I prefer to reverse some of that thinking.
Start by determining what financial performance the owners want the business to achieve.
What level of profitability is appropriate given the firm's practice mix, compensation model, growth plans, and risk profile?
How much cash should the firm retain?
What investments are necessary to support its strategic priorities?
What level of owner compensation and return is the business expected to support?
Those decisions should inform the financial model.
That doesn't mean choosing an arbitrary profit margin and forcing the numbers to fit.
It means making profitability an intentional management objective rather than an accidental outcome.
For firms with equity partners who also practice law, it's also important to distinguish compensation for their legal and management work from returns attributable to ownership. Otherwise, comparisons of profit margins can become misleading.
The firm should understand what it is measuring and apply that definition consistently.
If leadership wants to improve profitability in 2027, the budget should identify the operational changes expected to produce that improvement.
Perhaps the firm plans to increase effective collected rates.
Perhaps it expects better utilization from existing associates.
Perhaps it intends to reduce write-offs, improve collections, or change the way matters are staffed.
Each initiative should have a reasonable financial assumption.
Otherwise, the profit target is just a number leadership hopes to achieve.
Your 2027 Budget Needs an Execution Plan
This is where strategic planning and financial management come together.
Suppose the partners agree that improving associate utilization is a major priority for 2027.
The budget assumes an increase in collections from existing attorneys without a corresponding increase in headcount.
That's a reasonable strategy if the firm has available capacity and sufficient demand.
But who is responsible for making it happen?
Will practice-group leaders review capacity monthly?
Will partners be expected to delegate differently?
Will the COO implement new utilization dashboards?
Will the firm establish targets and monitor progress?
And what happens if utilization doesn't improve during the first quarter?
Those details matter.
Without them, the budget contains an assumption that nobody is responsible for delivering.
The same issue applies to marketing investments, hiring plans, technology implementations, and expense reductions.
Every significant initiative should have a defined owner, implementation timeline, financial expectation, and method for measuring progress.
That doesn't require creating unnecessary bureaucracy.
It requires establishing accountability.
I've seen plenty of firms develop thoughtful plans that never produce meaningful results because the organization doesn't establish who is responsible for execution.
The annual budget should help prevent that.
It should connect what the partners want to accomplish with what management is actually going to do.
Establish Your 2027 KPIs Before January Arrives
Once the budget and strategic initiatives are defined, leadership should determine how progress will be measured.
I would want a practical KPI dashboard that reflects the firm's priorities.
For financial performance, that may include collections, profitability, A/R aging, billing lag, realization, and cash reserves.
For attorney productivity, it may include utilization, effective collected rates, capacity, and contribution.
For growth initiatives, it may include qualified leads, consultation conversion, new matters, client acquisition costs, or revenue by practice area.
The specific metrics should depend on the firm's strategy.
If improving profitability is the primary goal, don't build a dashboard that focuses almost exclusively on gross revenue.
If improving intake performance is a major initiative, don't wait until the end of the quarter to determine whether the process is working.
And if the firm is investing in new staff or technology, establish the expected outcomes before the investment is made.
I also recommend determining the reporting cadence now.
Who reviews the metrics?
How frequently?
Who is responsible for investigating variances?
What decisions should follow when results fall short?
A KPI dashboard should be a management tool, not simply a collection of charts that everyone admires during a monthly meeting.
The purpose is to help leadership identify problems early enough to do something about them.
Don't Wait Until January to Start Managing Next Year
There's a tendency to treat January 1 as the starting line for annual planning.
But if the firm waits until January to begin discussing its priorities, it may spend the first quarter trying to establish direction.
Meanwhile, staffing decisions, expenses, and operational commitments continue.
I'd rather see the partners complete their vision and goal-setting discussions during November, develop the budget in November and December, and enter January with a clear plan.
That doesn't mean every initiative needs to launch immediately.
Some projects should begin in the second or third quarter.
But the organization should know what's coming.
If a major hire is planned for March, recruiting may need to begin earlier.
If the firm intends to implement new software in the spring, vendor evaluation and budget approval may need to happen now.
If compensation changes are expected, leadership should understand the financial implications and communication requirements before the new year.
And if profitability improvements depend on changes to utilization, delegation, or billing practices, those initiatives may require preparation well before they produce measurable financial results.
Good planning creates lead time.
Waiting until January compresses it.
Two Months. Two Different Responsibilities.
I think the most effective way to approach the remainder of 2026 is to recognize that leadership has two distinct responsibilities.
The first is to protect the financial performance of the current year.
That means getting invoices out, collecting receivables, reviewing unbilled work, forecasting cash flow, managing expenses, and making thoughtful decisions about compensation and distributions.
The second is to prepare the business for next year.
That means establishing strategic priorities, evaluating the current operating model, building a budget that supports those priorities, and assigning accountability for execution.
Neither responsibility should be neglected.
A firm that focuses exclusively on year-end collections may finish December with a healthy bank balance but enter January without a clear direction.
A firm that spends all its time discussing next year's strategy may overlook immediate financial opportunities that could materially improve its current-year results.
Strong leadership manages both.
And it understands how they connect.
The financial performance of 2026 should inform the strategy for 2027.
The lessons learned from this year's staffing, compensation, profitability, and operational results should influence next year's investments.
And the budget should reflect intentional decisions about what the firm wants to become, not simply assumptions about what it has always been.
Your Year-End Results Aren't Something That Just Happens to You
By the time December 31 arrives, much of the firm's financial outcome will already have been determined.
But in early November, leadership still has meaningful opportunities to influence it.
Invoices can be accelerated.
Receivables can be addressed.
Financial risks can be identified.
Unnecessary expenses can be avoided.
And decisions about next year's direction can be made thoughtfully rather than under pressure.
What concerns me isn't that law firms occasionally miss a revenue or profitability target.
That happens.
What concerns me is when leadership doesn't understand why the target was missed, doesn't recognize the warning signs, and doesn't establish a plan to improve the result.
The same principle applies to budgeting.
If your 2027 budget is simply a revised version of your 2026 financial statements, you may be missing the most important part of the planning process.
The conversation about what you actually want the business to accomplish.
Your budget should be the financial expression of your strategy. If you haven't decided where the firm is going, you have no business finalizing what it's going to spend.
The numbers should follow the decisions.
And the decisions should lead to action.
Because the difference between a law firm that hopes for a profitable year and one that actively manages toward profitability isn't necessarily how much revenue it generates.
It's how intentionally it operates.
How ING Collaborations Helps Law Firms Finish Strong and Plan Ahead
At ING Collaborations, I work with law firm owners and managing partners to connect financial performance, strategic planning, and operational execution.
That includes improving billing and collections processes, developing meaningful KPI dashboards, evaluating profitability, forecasting cash flow, facilitating partner vision and goal-setting discussions, and building budgets that reflect the firm's actual business priorities.
As a fractional COO, I don't believe a strategic plan should sit on a shelf or that a budget should exist simply because the accounting department prepares one every year.
Both should be practical management tools that help leadership make better decisions and hold the organization accountable for results.
Whether your firm needs to improve its year-end financial performance, establish a more disciplined planning process, or develop a 2027 budget that actually supports its goals, the right time to start is now.
Learn more about ING Collaborations' fractional COO services and how experienced operational leadership can help your law firm turn its financial goals into a practical, executable plan.