New research from the Law Society's Law Management Section (LMS)
reveals that legal practices are continuing to show signs of
growth.
The LMS annual Financial Benchmarking Survey, sponsored by
Lloyds TSB Commercial, shows that practice fee income increased by
1 per cent in 2011, as practices continue to climb out of the hit
from the recession. In 2009, firms saw a 6.5 per cent drop in fee
income.
The survey of LMS member firms also revealed that average net
profit per equity partner increased from 112,549 to
114,853, a rise of 2 per cent.
- Law Society President John Wotton said: 'The LMS Financial
Benchmarking Survey and the support that LMS provides to its
members have had a key role to play in helping practices emerge
from the recession through effective management. ;
'Now, LMS has added importance in the light of changes to
the legal services market. With more competition emerging and more
opportunities for practices as a result of the changes under the
Legal Services Act, a robust management system is critical for any
law firm looking to attract external investment or remain
competitive.'
Chris Marston, Head of Professional Practices at Lloyds TSB
Commercial, said:
'2012 will be a pivotal year for solicitors. New entrants and
external capital will undoubtedly bring change, but I firmly
believe that this will expand the market for legal services and
create opportunities for innovative, well-managed firms with strong
leadership and effective financial management. Getting in shape now
is therefore very important, and this year's survey shows admirable
resilience on the part of solicitors. Fee income rose slightly in
difficult economic conditions and I was pleased to see that median
net profit increased by two per cent - modest, but
nevertheless building on last year's improvement.
'I was also struck by the accuracy of last year's predictions
- respondents suggested that income growth might be around
one per cent and they were spot on. This year, they are forecasting
three per cent growth, so hopefully there are better times ahead.
Respondents again commented positively on the support provided by
their bank and this is pleasing. This is a key focus for Lloyds TSB
Commercial and latest figures show that we have achieved a growth
in lending to the sector of five per cent in the past year
(February 2012 vs. February 2011).'
Now in its 12th year, the survey, which is produced in
association with Hazelwoods LLP, a medium-sized, niche accountancy
practice specialising in advising the legal profession, is widely
regarded as the annual financial health check, particularly for the
smaller end of the legal profession.
Other findings from the survey were:
- The number of support staff per fee earner decreased from 0.65
to 0.61, an average saving per fee earner of 821.
- The 181 participants reported total recruitment costs of
2,775,770 paid to recruit 1,050 people. This is about 11 per
cent of the reported workforce, and runs ahead of the 2.1m
and 8 per cent in the 2010 survey.
- The median spend on non-salary overheads per fee earner was
38,142 compared with 37,163 in 2010, an increase of
2.6 per cent.
Ends