Firms are witnessing a growing gulf in profits paid to partners, say accountants

RESEARCH: Doing less work and delegating responsibility may make partners wealthier

Doing less work may make solicitors more profitable as long as they are supervising staff properly, according to a survey published this week.

However, the research also revealed a yawning gap in profitability between firms.

The report showed that profits per equity partner in a quarter of lowest earning firms with between two to four partners were as little as 37,626 by contrast with 105,526 for firms in the upper quartile.

In firms of between 11 and 25 partners, the figures were 83,900 and 130,210 respectively.

The survey commissioned by the Law Society's law management section (LMS) and prepared and sponsored by accountants BDO Stoy Hayward, showed that a key factor in profitability was the ratio of fee earners to equity partners.

'Generally, the higher a firm's gearing [the greater the number of fee earners per equity partner employed] the better its profitability,' the survey found.

However, two key provisos to that principle were that junior staff must be properly supervised and that work which could be delegated was available within the firm.

The survey - which gathered information from 132 LMS-member firms nationwide, mainly from those of between two to 25 partners - also found that in medium-sized practices, fee earners had to earn around 27,000 in addition to their own and their secretarial salaries before they would start to generate profits, owing to the cost of additional overheads.

The report's author, Andrew Otterburn, said firms which 'really had their act together' were delegating and supervising work well and keeping a tight control on the number of files fee earners were dealing with.

'Overworked fee earners can't turn round work effectively or give the levels of service which bring clients back or encourage client recommendations,' he added.

The report also showed stark differences between the amounts that firms were spending on marketing.

A quarter of firms between two to four partners spent as little as 325 per fee earner on marketing annually whereas those in the upper quartile spent 1,222.

The figures for firms of between 11 and 25 partners were 1,211 per fee earner in the lower quartile as against 2,536 among those in the upper quartile.

Mr Otterburn said the figures showed that some firms appeared to be failing to put enough into raising their profiles and attracting new work.

'At the extreme, firms pay for an advert in Yellow Pages but little more than that,' he said.

Sue Allen