10/13/2026
Where should surplus cash go first when a law firm has more than the minimum in its operating account?
The answer should not depend on who speaks loudest in the partner meeting. A disciplined allocation policy creates clarity:
1️⃣ Listen first: What should the firm’s money accomplish, partner income now, firm value later, or both? Start there before building the framework.
2️⃣ Protect the reserve floor 🛡️ Set minimum cash based on operating runway, payroll, and fee-cycle timing. Growth funded from a thin reserve creates fragility.
3️⃣ Sequence obligations ✅ Address taxes, debt service, payroll, retirement plan funding, and core operating needs before opportunity.
4️⃣ Evaluate growth investments 🚀 For technology, lateral hiring, a new practice group, business development, or office expansion, define the ROI/payback threshold, decision criteria, owner, and milestones.
5️⃣ Stage the investment. Release funding in phases, review performance, and commit the next tranche only when results support it.
6️⃣ Balance distributions and growth. Partner income matters, but so does building durable firm value. The right balance is intentional, not reactive.
7️⃣ Review quarterly. Document allocation decisions with the partners so a simple policy removes conflict and guesswork.
Through The Salter Shield Recovery, we help Houston-area law firms and firms supported remotely nationwide turn surplus cash into a strategic engine.
Call Rachel at (832) 926-5999 or visit www.saltermultiservice.com. For Salter Multi-Service support, call (832) 352-7151.
Educational information only; not legal or tax advice.
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