This year, as the data on work in progress (WIP) and debtor days provided by firms to The Lawyer continues to increase in accuracy, we have taken a representative sample of the top 100 firms to reflect how market conditions are affecting lockup. For the first time we can show year-on-year improvements or a worsening of lockup attributed to individual firms. In many ways this figure, which reflects how quickly a firm is converting business into cash, is the most important indicator of the health of a firm. "The key is to convert hours worked into cash as quickly as possible," says Baker Tilly's George Bull. "So it follows that, the shorter the lockup, the better."

But it is important to stress that the purpose of this chart is not to measure one firm's lockup against another's. Meaningful comparisons are all but impossible because of the variety in the practice areas in all of the firms listed. But as a representative sample of the market, in which firms can measure themselves against their peers on an attributed basis to see exactly how they have performed in reducing lockup, it is invaluable.

Each peer group faces its own particular pressures, be it long-tailed personal injury work (see Pannone & Partners with its 266- day lockup) or more transactionally focused firms which also generate a large proportion of fees from property and projects work (ie Fladgate Fielder, which saw its lockup increase last year by 26 days to 140).

The results show the great strides some firms have made during the year in getting on top of their financial management. Ward Hadaway, for example, has slashed its total lockup by a phenomenal 72 days. The improvement to the bottom line can be easily seen, with average profit per equity partner (PEP) at the Newcastle firm skyrocketing 40 per cent, from £265,000 to £370,000. As managing partner Jamie Martin puts it, the rise has been achieved largely by ªworking smarterº, or in other words, billing and collecting more efficiently.

The published figures also invite direct comparisons between peer group firms. Taylor Wessing's average WIP (or unbilled revenue) across the UK business was 35.9, with 52 debtor days, giving the firm a total lockup in days of 87.9. Arch rival Bird & Bird beat its longer lockup target of 120 days by two last year, a combination of 40 days WIP and 78 debtors'.

As with everything in The Lawyer UK 100 Annual Report, it is all about the money. And the bottom line of good financial management is to find a way for equity partners to increase the efficiency of their firms and consequently their remuneration. The last thing we want to do is publish a charter for slave-driving, but we would like to offer a neat illustration of the importance of good leverage and the effect of a tightlyheld equity.

It is an equation that the professional practices chaps at Barclays have been using for several years to show the upside of good financial management, and it simply shows the effect on an equity partner's profits of squeezing one more unit out of every feeearner per day. Although it may make your head hurt if you do not like maths, we are assured that it is simple. And the results are simply astounding.

This is how the equation works. Assume every lawyer in your firm works one extra six-minute unit per day over a 220-day working year. That gives you an extra 22 hours per fee-earner per year. Multiply that (22 hours) by the firm's average hourly rate (this is calculated by dividing the firm's turnover by the total hours worked, which itself is calculated by taking the average hours per lawyer (say 1,400) and multiplying it by the number of lawyers in the firm). The result is the extra cash generated by the extra six-minute period. Factor in the profit margin and divide by the number of equity partners and you have an approximate extra annual profit per equity partner (PEP).

So, staying with the UK end of Taylor Wessing as an example, that hourly rate works out as £202.20 per fee-earner (243 total UK fee-earners multiplied by an estimated 1,400 average hours per fee-earner gives 340,200 extra hours per year); divide the firm's UK turnover of £68.8m by that to give an approximate average hourly rate of £202. Then, 22 multiplied by £202 is £4,444, which, when multiplied by the total number of fee-earners (243) and divided by the total number of equity partners (62), makes £17,400 extra revenue and £6,000 PEP per year, thanks to just one extra six-minute unit a day each.

The same calculation applied to Bird & Bird, which has a better leverage (4.5 compared with Taylor Wessing's 2.3 in the UK) and a proportionately smaller number of equity partners (42 per cent versus 63 per cent), and it only generates an extra £5,400 thanks to the firm's lower profit margin of 20 per cent.

Maths lesson over. The figures are an indication of how firms can leverage their lawyers better and also increase the emphasis on, and the importance of, billings. As Andy Jobson, the research manager in Barclays Professional Practices, says: "The legal industry is benefiting from the emphasis on financial management we're seeing in the current competitive climate. It's in the interests of all firms to not only control costs, but to ensure that billing practices, in terms of time recording, billing and collection, are robust. This can only have a positive effect on the bottom line."

As ever, the key to this equation working remains tight financial management. There is no point making your assistants work the extra hours if the bills remain uncollected.

*22 = Value in hours of six minutes per day over a 220-day working year, ie (6 x 220)/60