Just because there’s money in your bank account doesn’t mean your law firm is financially healthy. Too many firm owners look at today’s balance and assume everything is fine—until payroll, taxes, or a surprise expense hits and the cash disappears overnight.
In Episode 68 of Crushing Chaos With Law Firm Mentor, Allison Williams breaks down why cash flow projections are a non-negotiable skill for law firm owners—and exactly how to build them in a way that actually supports growth instead of sabotaging it. This episode isn’t about spreadsheets for the sake of spreadsheets. It’s about giving you control, clarity, and confidence over your firm’s financial future.
Below, we unpack the five golden cashflow fixes every law firm needs if you want to stop leaking money and start running your firm like a true CEO.
Fix #1: Anchor Your Projections to Historical Data
One of the biggest mistakes law firm owners make is forecasting based on optimism instead of evidence. Hope is not a strategy—and neither is relying on someone’s “gut feeling” about how business usually flows.
Your historical financial data tells a story. It shows you when revenue typically comes in, when expenses spike, and where cash flow pressure tends to build. Ignoring that history almost guarantees future problems.
Allison shares a real-world example of a firm owner who confidently paid out large year-end bonuses based on years of strong first-quarter performance. That strategy worked—until the firm added a new practice area staffed by an associate who misunderstood seasonality entirely. Decisions were being made on assumptions instead of data, and the firm came dangerously close to a cash crunch.
The takeaway is simple: projections must start with what has actually happened in your firm, not what you assume will happen next. Before you factor in growth, new hires, or expansion plans, you need a clear understanding of your past revenue, expenses, and timing patterns.
Historical data gives you a baseline. From there, you can make smarter decisions instead of expensive guesses.
Fix #2: Account for Firm-Wide Seasonality (Not Just Your Own)
Many solo and small firm owners understand the seasonality of their personal caseload—but overlook how seasonality shifts once the firm grows beyond them.
As your firm expands, seasonality becomes a firm-wide issue, not a practice-area issue. Different practice areas surge and slow at different times of year, and those fluctuations directly affect your cash flow.
Ideally, growth should smooth revenue—not magnify volatility. That means being intentional about which practice areas you add, which attorneys you hire, and when you do it. Complementary seasonality can stabilize your firm, while overlapping slow periods can amplify financial stress.
Allison emphasizes that seasonality isn’t a reason to avoid growth—it’s a reason to plan for it. When you know when revenue typically dips or spikes, you can prepare for those moments instead of being blindsided by them.
Seasonality awareness turns reactive decisions into proactive strategy.
Fix #3: Forecast Revenue Based on Capacity, Not Guesswork
Revenue projections fail when they’re built on wishful thinking instead of operational reality. The real question isn’t how much money you want to make—it’s how much work your firm can actually handle.
Capacity-based forecasting forces you to look at:
- Billable capacity per timekeeper
- Utilization and collection rates
- Case stages and workload distribution
- Staffing realities, including hiring and turnover
Your firm has a ceiling. Exceeding it doesn’t just cause stress—it increases malpractice and grievance risk. Knowing your capacity helps you grow responsibly while protecting both your clients and your team.
Allison also highlights a hard truth many owners resist: employee turnover is normal. Even well-run firms experience churn. When you plan for that reality instead of being shocked by it, you stay staffed, stable, and profitable.
Capacity forecasting gives you a realistic range—your worst case, best case, and everything in between. That spread is where profit lives.
Fix #4: Tie Expense Projections to Growth Levers
Expenses aren’t the enemy—unplanned expenses are.
Every law firm grows through specific levers: more clients, higher fees, better collections, improved utilization, or smarter systems. Your expense projections should be directly tied to the levers you’re pulling.
Instead of asking, “How do I cut costs?” ask:
- Which expenses help me serve more clients?
- Which systems let my team work more efficiently?
- Where can I get more value from tools I already pay for?
Allison cautions against reactive cost-cutting, which often undermines growth. Spending money is part of making money—but only when it’s intentional.
This includes everything from software usage and office space to owner compensation. How and when you pay yourself matters. Strategic timing of draws, bonuses, and distributions can dramatically improve cash flow without reducing income.
When expenses align with growth strategy, cash flow becomes a tool—not a constraint.
Fix #5: Build Dynamic Cash Flow Projections
Static projections create false confidence. Dynamic projections create leadership.
Your cash flow plan should evolve as your firm evolves. Every strategic decision—hiring, marketing shifts, acquisitions, compensation changes—has ripple effects. If your projections don’t change with those decisions, they stop being useful.
Allison encourages firm owners to revisit projections regularly, especially when:
- Adding high-salary team members
- Experiencing market shifts
- Adjusting marketing investments
- Changing billing or collection cycles
Dynamic projections allow you to test scenarios before they become problems. They help you time decisions, adjust distributions, and protect the firm during ramp-up periods.
This is how CEOs think. They don’t set a plan and hope—it gets reviewed, refined, and recalibrated as conditions change.
Turning Projections Into Power
Cash flow projections aren’t about restriction—they’re about freedom. When you understand how money moves through your firm, you stop reacting and start leading.
If you want to hear Allison break these strategies down in real time, complete with real-world stories and practical examples, watch or listen to Episode 68 of Crushing Chaos With Law Firm Mentor.
And if you’re ready to stop guessing and start building financial systems that support real growth, book a discovery call with Law Firm Mentor. This is how law firm owners become CEOs—on purpose.