City slump as third of top 100 firms see profits slide

UNDER PRESSURE: newly qualifieds billing 99% of the time

A third of the top 100 law firms saw profits slide last year - 13% by more than a tenth - a survey of the financial performance of law firms has shown.

The annual benchmarking financial and management survey from big four accountants PricewaterhouseCoopers (PwC) found that 77% of top 100 firms said fees billed had increased, whereas of smaller firms outside the top 100 polled, 86% said fees billed increased - up from 76% last year.

The survey found that 65% of the top 100 reported staff costs exceeding 40% of profits, whereas only 44% were in this situation last year.

Meanwhile, the top firms are struggling to rake in fees: 85% had debtors of more than 60 days, whereas last year it was only 65%.

The survey included responses of 42 firms in the top 100 and a further 100 smaller firms.

The survey found that newly qualified lawyers at the top 50 firms are most hard-worked - being 99% utilised - as opposed to the 70% average utilisation score for qualified staff across all firms.

PwC partner David Snell said: 'The question is whether all these chargeable hours can be recovered at full rate from clients.

Also, if newly qualified lawyers are spending 99% of their time on chargeable work, what does that leave for training?'

Nick Jarrett-Kerr, chairman of the of the Law Society's law management section, said: 'It's been a difficult year, and it's interesting that it is the top 100 law firms who have performed less well.'

Jeremy Fleming