The Law Firm Mid-Year Financial Review: A 12-Point H1 Checkup to Run Before July 1, 2026

📅 Why June Is the Highest-Leverage Month in Your Financial Year

By June, six months of data has accumulated — enough to see real trends, early enough to change the year's outcome. A billing leak found in June saves six months of bleeding; the same leak found during year-end close is just a bigger write-off. Yet most firms only do this exercise in December, when nothing can be fixed.

Here is the 12-point review, grouped into four areas. For each point: the report to pull, and the threshold that should trigger action.

💵 Part 1: Revenue Quality (Points 1–4)

1. Billing realization rate

Billed value divided by standard value of time worked. Pull your realization report for January–June. Threshold: below 92% means systematic pre-bill discounting — find which attorneys and which matter types.

2. Collection realization rate

Collected divided by billed. Threshold: below 95% on invoices over 90 days old signals a collections process problem, not a client problem.

3. Unbilled WIP aging

Time and costs sitting unbilled. Threshold: any WIP older than 60 days. Every month WIP ages, its collectability drops roughly 10%.

4. Effective rate by practice area

Collected revenue divided by hours worked, by practice group. This tells you where the firm actually earns — often a surprise compared to headline rates.

🏦 Part 2: Cash & Lockup (Points 5–7)

5. Lockup days

WIP days plus AR days. Threshold: over 120 days demands a billing-cycle intervention in Q3 — pre-bill SLAs, e-payment links, automated reminders.

6. AR aging concentration

What percentage of receivables sits past 90 days, and how much of it belongs to your ten largest balances? Threshold: more than 25% past 90 days.

7. Operating cash runway

Months of operating expenses covered by operating cash (never trust funds). Threshold: under 2 months is fragile; under 1 month is an emergency.

🔒 Part 3: Compliance & Controls (Points 8–9)

8. Trust reconciliation currency

Are all IOLTA three-way reconciliations complete through May? With California's CTAPP regime randomly selecting attorneys for compliance reviews and multiple states tightening reconciliation requirements in 2026, "we're a few months behind" is no longer a survivable answer. Threshold: any month unreconciled.

9. Aged trust balances

Dormant client balances and matters closed with funds still in trust. Flag anything untouched for 12+ months and start your state's unclaimed funds process.

📈 Part 4: Plan vs. Reality (Points 10–12)

10. Budget variance by line

Compare H1 actuals to budget for the five largest expense lines. Threshold: any line more than 10% over plan gets a written explanation and an H2 adjustment.

11. Matter profitability outliers

Rank matters by margin. The bottom ten usually share a pattern — a fee arrangement, a client, a practice area. Decide whether to reprice, restaff, or decline that work going forward.

12. Revenue per timekeeper vs. plan

If the firm is behind plan, this tells you whether it's a volume problem (hours), a rate problem, or a leakage problem (realization) — three very different H2 strategies.

⚙️ Running This in Hours Instead of Weeks

The reason most firms skip the mid-year review is mechanical: the data lives in four systems. Time in one tool, billing in another, the GL in QuickBooks, trust in spreadsheets. In LawAccounting, every report above — realization, WIP aging, AR aging, trust reconciliation status, budget variance, matter profitability — comes off the same general ledger in real time, because billing, trust, and accounting are one system. The twelve points become an afternoon, not a project.