10 billion earnings masks fee worries

By Neil RoseSolicitors' income is nearing the 10 billion mark following another record-breaking year, but the figures mask the problems of keeping up with the expanding profession and inflation.The Law Society's annual statistical report also revealed that the profession's growth looks set to continue with a record 5,285 training contracts available, even though not enough students are passing the legal practice course to fill them.The report showed that gross fees reported in 1999 (financial year 1998-99) have reached 9.5 billion, a 9.7% increase on the year before.

Around 15% of income came from legal aid.However, taking into account the 3.2% retail price index rise and the profession's similar expansion, the report said income growth was only 'sufficient to slightly increase last year's level of earnings and profitability'.

The profession's income has grown 43% in the five years from 1993-94.

But inflation and the profession's expansion mean that real gross fees per solicitor have actually only increased by 3.2% in that time.

The report said that in all categories of firms except 11-25 partners - with sole practitioners the worst affected - there has been a slight reduction in real income over the five-year period.Law Society President Michael Napier said: 'Figures like these prove what we have always said which is that the idea of fat-cat lawyers is more myth than fact.'Data from the Society's annual panel survey of law firms showed that the average profits per equity partner in firms of 26-80 partners was 167,000, compared with 46,000 for sole practitioners.

The lowest earning sole practitioners had an average profit of 26,000.continued from page 1On 31 July 2000, there were 104,538 solicitors on the roll, of whom 82,769 held practising certificates, a 4.1% rise on the year before.

This is in line with the annual growth rate since 1970, when there were 24,407 practising solicitors.However, the report revealed a shift in the demographics of law firms.

There were 9,770 private practice partnerships registered with the Law Society; Solicitors Indemnity Fund figures indicated that only 8,319 were active (defined as having a turnover exceeding 15,000).In the past five years, the number of five-to-ten partner firms has fallen by 10% and the number of two-to-four partner firms by 5%; while overall the number of sole practitioners rose over the past decade, it dropped by 5% last year.

The number with 26 or more partner firms almost doubled in ten years to 127; the 23 firms with 81 or more partners employ 19% of all solicitors.Private practice employs almost 200,000 people, half of whom are administrative and support staff.See Editorial, page 15Neil Rose