US firms have outperformed their UK rivals financially over the last five years but the improving productivity of City lawyers could see the gap narrowed in years to come, the forum heard.

Figures compiled by Citigroup Private Bank showed that profits per equity partner at the ten most profitable law firms in the US increased by an average of 6% year on year from 1999 to 2003, while at UK firms they declined.


However, the research also demonstrated that the rise in profitability at US firms came despite a fall in their lawyers' productivity.


Dan DiPietro, group head of the law firm group at Citigroup in New York, said US firms have been able to perform well despite a downturn in the rest of the economy, thanks to the continued high demand for litigation advice. This demand was particularly strong in the product liability arena, and above all in the pharmaceuticals industry.


But Mr DiPietro added that UK firms were ahead of their US counterparts in terms of technology and infrastructure investment, and that this could lead to significantly enhanced profitability.


Allen & Overy finance director Ian Dinwiddie said US firms' higher profitability could be explained in part by their more rigorous approach to dealing with under-performing partners and lawyers.


He said: 'That is an inevitable consequence of the higher salaries paid over there. People in the US are paid a lot more and work a lot harder.'


Mr Dinwiddie added that improving performance by City firms recently would lead to a greater emphasis on growing the business, ahead of controlling costs.


The Citibank figures meanwhile showed revenue growth in US firms of 6% for the first quarter of 2005, down from 10% for the same period last year.


Nick Heywood-Waddington, finance director at magic circle firm Linklaters, warned: 'The UK tends to follow the trends across the pond and firms should be cautious coming out of a strong performance over the last quarter in the UK.'