Average practice income and profit per equity partner in medium-sized firms rose strongly in 2014, according to an annual health check published today.
Figures from the Law Management Section’s 2014 Financial Benchmarking Survey are unanimously positive and point to firms having a strong year, the Law Society said. Financial stability is also improving.
The Society said that there has been ‘a dramatic rise in the percentage of practices operating profitably and within their overdraft limit’.
According to the 157 firms from across England and Wales that took part, in 2014:
- Median practice income increased by 8.7% on 2013, with most geographic regions and most work types seeing growth;
- For the first time in several years, the ratio of fee-earners to equity partners increased by 6.4%;
- Median profit per equity partner increased by 16.9%, the fifth consecutive year of increase;
- Participants predicted a median fee-income growth of 3.3% for 2015. The most optimistic participants predicted an increase of 9.4%.
One in six practices said it is likely that that they would seek external investment for expansion, and a similar number said that they were likely to bring in one or more non-lawyer owners. In line with last year, one-third of practices said that they were likely to merge with another practice within the next two to three years, although only a fifth were already speaking to other practices.
The Financial Benchmarking Survey, sponsored by Lloyds Bank Commercial Banking and compiled by Hazlewoods LLP, is one of the biggest surveys its kind and regarded as the leading annual health check for medium-sized practices.
Andrew Caplen, Law Society president, said: ‘We are encouraged to see continuing economic growth for our members’ firms. Although financial stability can never be guaranteed, this is positive news given the challenging economic conditions of recent years.’