Scottish firms are emptying their bank balances as partners face up to reduced profits, a survey revealed today.
Research commissioned by the Law Society of Scotland found that median profit was £64,000 per partner in 2012, £7,000 down on the previous year.
The poll of 244 firms also reveals a growing gap between the performance of medium-sized firms and both sole practitioners and larger firms.
Partners in medium-sized firms have experienced the biggest drop, with profits at firms of two to four partners dropping from £75,000 to £67,000 in 2012 and five-to-nine partner firms seeing a £4,000 fall to £76,000 in 2012.
However the survey showed an increase of £7,000 to £53,000 on average for sole practitioners. Those in firms with more than 10 partners have seen a rise in their average per-partner profits from £144,000 to £163,000.
The research showed a drop in law firms’ bank balances in the past year, from over £200,000 last year to just over £50,000 this year for 10-plus partner firms. Firms with up to four partners have seen their median bank balance fall from £27,000 to £6,000, and five-to-nine partner firms have also seen a major fall.
Lorna Jack, chief executive of the Law Society of Scotland, said it was clear from the results that the effects of the recession were not over.
‘The legal services sector is, and will remain, highly competitive,’ she said. ‘We anticipate the arrival of the first licensed legal services providers in Scotland in the first half of this year and we will undoubtedly see further consolidation.
‘As the legal market continues to change it’s vital that our members make sure that they are running a tight ship and take steps to ensure that they are effective business managers as well as excellent solicitors.’