Firms 'must invest' in IT and training

Law firms are not spending enough on training and information technology, says a new financial benchmarking survey by the Law Society.

The Society's practice management section has produced a critical report that reveals that general investment in the key areas of IT, training and marketing is 'too low.'The report's editor, Andrew Otterburn, said the savings are a false economy.

A quarter of the 132 firms of different sizes spend less than 700 per fee-earner on IT, 0.6% of gross fee income on training and 0.8% on marketing.

On average, firms spend less than 1% on training, and the most lavish still invest less than 1.5%.

Mr Otterburn said firms should invest 2-3% of fee income on training.Ronnie Fox, senior partner at City firm Fox Williams and a founder of the section, commented: 'Firms that don't invest in IT and training are going to have money problems.

It is no longer an option [not to do so].

The world is changing very quickly and the pace of change is changing and that means keeping abreast of IT,' said Mr Fox.The survey also showed that, on average, fee-earners need to be bringing in 27,000 on top of the cost of salaries for themselves and support staff just to cover costs, even before they start contributing to the firm's profits.The survey said that at 85,346 on average, profits for sole practitioners - albeit with a small sample - proved better than profits per equity partner at firms of two to four partners (60,360) and five to ten partners (74,226).Average profits per equity partner at firms of 11-25 partners was 95,231 and 158,303 for 26 plus partner firms.But the average partner charge-out rate in some sectors shows that even the most well managed firms are suffering.

A quarter of criminal firms average hourly rate is only 76, while the top rate only reached 120.

Crime practices werefollowed by family and residential conveyancing departments, a quarter of which charge 100, rising to 131.'It is the people in the high street legal aid and criminal practices who are actually earning very little.

It's only people at the top of the profession that are making serious money,' said Mr Fox.

'It's getting tough, really tough, for them.'Rodney Warren, vice-chairman of the Criminal Law Solicitors Association, said he was not surprised by the figures.

He added: 'There are outrageously lowlevels of remuneration for all state-funded work, especially in criminal law.

Our criminal lawyers are being paid 40% of the private client charge-out rate.'The survey also revealed a 'tremendous variation' of between three and six months for recovery of fees, with many departments not hitting the 60% profit target they should be aiming for.l The report costs 47 for section members and 58.75 for non-members.

Contact Louise Holmes, tel: 020 7316 5707.