Liquidity
Credit capacity is not the same thing as cash
A useful runway policy separates cash on hand, committed credit, utilization limits, and timing risk.
Read the lending environment carefully
The Federal Reserve's July 2026 survey reported that banks, on balance, left commercial and industrial lending standards basically unchanged for firms of all sizes in the second quarter of 2026. Demand strengthened among large and middle-market firms and was basically unchanged among small firms.
That is a directional bank survey—not a quote for law-firm credit. Availability, pricing, covenants, collateral, and advance mechanics remain facility-specific.
Define usable liquidity
Cash is available now. A line of credit is contingent capacity. A prudent dashboard keeps them separate, then calculates usable liquidity from the portion of the line management is willing and contractually able to draw.
A maximum utilization tolerance is a management policy, not an industry benchmark. The firm should set it after reviewing covenants, renewal risk, interest expense, concentration, and the downside case for delayed fees.
A decision-ready minimum
A cash policy should state both a hard dollar floor and a forward-looking coverage period.
- Cash floor: the minimum unrestricted cash the firm will retain
- Runway target: months of expected overhead and case costs to preserve
- Credit tolerance: the maximum portion of committed capacity management plans to use
- Stress case: the same calculation after delaying expected receipts