The UK has lost out to Germany as the European jurisdiction with the highest fees per fee-earner, but it continues - along with Italy - to be home to the most profitable law firms, research has claimed.


A study by LexisNexis Martindale-Hubbell, accountants BDO Stoy Hayward and European Lawyer magazine showed that the average profit per partner in the 47 medium-sized to large European firms surveyed had risen from ¤406,300 (£277,100) in 2005 to a record ¤465,700 (£317,500) in 2006 - a 15% increase.



Partners at firms in Italy and the UK generated the highest profits. This was particularly the case where their work focused on higher margin corporate, banking, civil litigation and property transactions. German fees per fee-earner were ¤328,300, compared to ¤299,700 in the UK.



Other key findings included continued concerns about financial management, with a median 'lock up' period across Europe for fees owed of 153 days.



James Harley, marketing director at LexisNexis Martindale-Hubbell, said the profession had embraced change and the need to link remuneration with performance. 'We're seeing the tail end of lockstep and the beginning of firms following Italy's example of "eat what you kill",' he added.



Nick Carter-Pegg, head of professional services at BDO, said: 'Managing partners should make reducing lock-up a priority. When the market eventually cools, good cashflow management could help ensure they are strategically well placed to survive and prosper.'



Jonathan Rayner