The UK’s top 100 law firms cut their running costs by £500m to help tip themselves into profit last year, research by trade body TheCityUK has found.
Profits of the largest 100 UK law firms increased by 1% in 2009/10 to £4.07bn, despite a 4% fall in fee income to £13.7bn over the same period, according to the research, released today. Profits for the first half of the financial year 2010/11 are up 6% on the first half of 2009/10, the research found.
Globally, law firms saw revenues fall by 6% to $74.6bn (£46.5bn) in 2009/10 – the first decline in over a decade. The world’s 100 largest law firms reduced their cost base by $3.9bn (£2.4bn) over this period.
Legal services generated £23.1bn for the UK economy, or 1.8% of the UK’s gross domestic product, in 2009.
‘Large London law firms that are diversified more by geography and practice group performed better than those that were focused heavily on the domestic market,’ the report says. ‘A significant proportion of revenue in 2009/10 came from the growth markets of central and Eastern Europe, the Middle East and Asia.
‘The UK and global legal services market should see a gradual recovery in the forthcoming period, although it remains susceptible to any further global macro-economic shocks.’
UK law firms exported £2.9bn worth of legal services in 2009, down 14% on the previous year but nearly three times the level a decade earlier. Barristers exported £152m worth of legal services in 2010, up from £131m in 2009. Taking account of imports of £714m, net exports of UK legal services stood at £2.5bn in 2009, the research found.
Revenues at the largest 50 law firms in London decreased for the second year running in 2009/10 to £6.54bn, a fall of 4% on the previous year. Meanwhile, US firms in London reported a 1% increase in fee revenue, marking their sixth successive year of growth.