The Law Management Section’s 2015 Financial Benchmarking Survey – sponsored by Lloyds Bank Commercial Banking and compiled by Hazlewoods LLP – has been published and points to firms having enjoyed a strong year.
The survey showed that financial stability is increasing and compared with findings from last year’s survey, it is clear that there has been a dramatic rise in the percentage of practices operating profitably and within their overdraft limit.
One in six practices thought it likely that they would seek external investment for expansion, and a similar number said that they were likely to bring in one or more non-lawyer owners. In line with last year, a third of practices reported that they were likely to merge with another practice within the next two to three years, although only a fifth were already speaking to other practices.
One hundred and fifty nine firms from across England and Wales took part, making it one of the biggest surveys of its kind in the UK. As in previous years, participants provided two years’ worth of data (the most recent accounting period and the previous one) allowing results to be compared on a like-for-like basis.
The survey’s key findings are that median practice income increased by 8.7 per cent compared to 2013, with most geographic regions and most work types seeing growth. Furthermore, for the first time in several years, the ratio of fee earners to equity partners increased by 6.4 per cent. In addition, median profit per equity partner increased for the fifth year running to £144,567; a rise of 16.9 per cent, whilst participants predicted a median fee income growth of 3.3 per cent for 2015. The most optimistic participants predicted an increase of 9.4 per cent.
President of the Law Society, Andrew Caplen said: “We are encouraged to see continuing economic growth for our members’ firms. Although financial stability can never be guaranteed, this is positive news given the challenging economic conditions of recent years.”
Legal practices looking at ways to develop their firms may find it helpful to discuss their options and the financial issues involved with professional advisers that specialise in this area.
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