Partners at small and medium-sized firms have seen their profits rise by nearly a third in the past 12 months, according to an annual snapshot of the sector.
The Armstrong Watson Legal Sector Benchmark, published today, reveals that net profit per equity partner for firms increased by 33% between 2015/16 and 2016/17. Average profit stood at £129,000, up from £97,000.
The results are based on a survey of around 100 firms that Armstrong Watson advises. The firms all have up to 30 partners and are based mainly in the north of England.
Fee income per equity partner also increased. Overall, this stood at £598,000, an increase of 48%, the report said. Firms with one to seven partners saw a 52% rise in fee income, while those with eight or more partners reported a 25% rise.
However, the report notes that ‘despite this increased profitability, cash still appears to be tight as lock-up has increased; investments have been made and therefore drawings have fallen behind profits.’
Among other findings, firms with eight or more partners had 2.9 fee-earners to every partner (down from 3.2 the previous year), while at firms with one to seven partners, the ratio of fee-earner to equity partner increased from 3 to 4.3.