- A structured year-end review helps firms reconcile finances, prepare for tax deadlines, and close the books with confidence.
- CARET Legal streamlines operational clean-up, technology assessments, and performance reporting, all in one platform.
- Firms that use year-end to reflect, document, and plan are better equipped to set goals, align teams, and make smarter decisions in 2026.
The end of the year can be a turning point for legal practices. It offers the structure and timing to close financials, organize operations, evaluate firm performance, and prepare for the road ahead. For law firms managing multiple systems, shifting priorities, and complex compliance needs, it’s an important window to align the business side of practice with strategic growth initiatives.
This structured guide supports managing partners, firm administrators, bookkeepers, and legal operations teams with a full-scope review of financials, compliance, staffing, systems, and reporting. The checklist provides the framework for wrapping up the year efficiently while setting a clear path for 2026 planning.
Your Law Firm Year-End Checklist
The checklist includes important focus areas that touch every part of your practice. Following each step allows firms to close confidently, communicate clearly, and make better decisions moving forward:
1. Financial Review and Reconciliation
Reconcile all bank accounts and finalize financial reports, including the balance sheet, trial balance, and profit and loss statement. Review your Work in Progress (WIP) and accounts receivable to confirm what remains outstanding. Any discrepancies should be resolved now, not after January starts.
Once these steps are complete, send your finalized reports to your accountant or CPA. Reports should include a year-end balance sheet and income statement. With this information in hand, your team can officially close the books and prepare for tax filings, audits, or future forecasting.
2. Law Firm Tax Preparation and Compliance
Once the books are closed, turn your attention to federal and state tax requirements. Start preparing legal tax documents such as 1099s, W-2s, and other relevant forms.
Distribute 1099-MISC and 1099-NEC forms to your vendors by January 31 and prepare e-filings for subcontracted work, which are due March 31. Take time now to confirm filing deadlines at the federal, state, and local levels. Preparing early allows your team to avoid disruptions during the first quarter.
3. Operational Clean-Up
This is the time to review your firm’s day-to-day operations and make sure loose ends are tied up. Close out inactive matters that have remained dormant. Audit your user list and deactivate any accounts no longer in use. Confirm that time tracking is up to date and that all unbilled invoices are finalized.
You can also use this time to update your billing rate cards for 2026. Evaluate your firm’s billing practices, address inefficiencies, and resolve any client account issues that may carry over into the new year.
Finally, review internal processes. Based on team performance this year, what workflows need refinement? What could be documented or standardized better? Capturing these insights now will improve consistency and efficiency going forward.
4. Technology and System Updates
Review your law firm’s technology stack. Ensure all software is up to date and properly integrated. Back up financial, matter, and client data in accordance with your firm’s retention policies.
Check in on usage metrics. Which tools are heavily used? Which are underutilized or duplicative? Is any training needed to improve adoption across the team?
If you’re using CARET Legal, these assessments are easier to conduct. Because time tracking, billing, matter management, document storage, and client communication are housed in one unified platform, firm leaders can monitor usage and plan improvements without jumping between systems.
5. Strategic Insights and Planning
Year-end reporting provides compliance and gives leadership the opportunity to assess what’s working and what needs to change. Run dashboards and reporting modules to review trends across client activity, practice areas, time tracking, and profitability.
Use the data to identify where your firm grew this year, what types of matters were most profitable, and where resources may have been underutilized. These insights can support goal-setting, budgeting, and operational decisions in the first quarter.
The best time to plan is right after you’ve reviewed your performance. Use what you’ve learned to set financial goals, define key performance indicators (KPIs), and allocate budget for the year ahead. Outline plans for hiring, marketing, or tech investment based on a realistic view of your resources.
Also, review staffing needs and team capacity. Have any roles shifted this year? Are workloads evenly distributed? Consider performance evaluations as part of this review. Even in small firms, this kind of reflection strengthens alignment going into the new year.
6. Communication and Documentation
Once your review is complete, communicate what you’ve learned. Share financial and performance reports with firm leadership. Brief your team on any changes to policies, billing rates, or compliance requirements.
Document lessons learned, action items, and any adjustments to workflows or technology. Creating a clear record allows your firm to track progress over time and revisit year-end insights during quarterly reviews.
A Smarter Approach to Year-End
Closing out the year does more than check boxes. When done thoughtfully, it positions your firm for growth, clarity, and long-term success. This checklist is built to support this process with a focus on transparency, accuracy, and operational alignment.
The firms that take year-end seriously are the ones that enter January prepared, not just to meet deadlines, but to make better decisions.
Start a free trial of CARET Legal today and see how integrated legal technology can help your firm move into 2026 with confidence.
