UK survey shows law firms rebuilding profitability

January 20, 2014 Financial results show that UK law firms are continuing to rebuild their profitability, according to the 14th Financial Benchmarking Survey, published by the Law Society’s Law Management Section.

The study, which covers the 2013 financial year, offers a respected financial health check of the sector, and particularly for the smaller end of the profession. It included data from 165 firms with a total fee income £685m, an average of £3.4m per practice.

The survey showed a 3.6% rise in median net profit per equity partner, to £121,731, which represents the same percentage increase as in 2012. In 2011 there was a 2% rise, and 2009 saw a 6.5% fall. Practices predict median growth in fee income of 3.7% for 2013/14, compared with the 3.4% they forecast for last year (against the 4.1% achieved).

LMS chair Chris Hart, managing partner at Devon firm Wollen Michelmore, said: ‘After what feels like an eternity of change within the profession, we appear to be in a “settling-down” phase.

‘Many practices have been through a period of change, in structure and/or operations. Across the profession practices are now focusing on financial performance and service delivery.

‘This year’s survey reveals several positives: an increase in fee income and profit per equity partner, an increase in interest received, a slight fall in lock-up, and stability in ratios of fee-earners to partners, secretaries and support staff. However there are negatives, [including] a fall in equity partner capital, with some firms overdrawing profits.’

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