FINANCIAL MANAGEMENT SURVEY: 63% of practices expect profits to increase next year

Top City firms are banking on an upturn in the economy to give them the profit required to bolster their partnerships, the results of a comprehensive survey of financial management in law firms said last week.

The survey, by big-four accountancy firm PricewaterhouseCoopers (PwC), found that only 59% of the top 25 firms by size in the UK said they had seen a rise in fees billed per equity partner last year; however, 65% said their partner numbers had grown over the same period.

But these firms did not anticipate a growth of fee-earners across the board next year.

While 65% expected to see the equity partnership rise, 63% said fee-earner numbers would stay the same or decrease.

Figures for the profits actually available for equity partners in firms showed a continuing downturn.

In 2001, 81% of the top 100 firms told PwC they had increased their available profits, dropping to 68% last year.

It fell to 59% this year.

The survey found that - despite the declining profits - six of the top 25 firms managed to generate profits in excess of 500,000 per partner, and five generated profits in excess of 750,000 per partner.

The top 25 were also optimistic about next year's results, with 63% expecting profits to increase.

The survey found the firms still keen to expand, with 94% of the top 25 firms seeking growth opportunities in western Europe, 65% in the US, and 53% in Asia.

The survey was compiled using information from 47 of the top 100 firms and 17 of the top 25.

Alistair Rose, a partner with PwC's professional partnerships advisory group, said: 'Equity partner headcount has increased at many firms and is diluting profits per partner.

'Firms should focus on partner performance and seriously consider managing their partner numbers in line with both reducing staff numbers and the pressure on profitability.'

LINKS: www.pwcglobal.com/uk/lawfirmsurvey

Jeremy Fleming