Surging profits at regional law firms have masked a deterioration in equity partnership prospects for senior associates and salaried partners, an authoritative annual study suggests. Firms are instead investing in staff numbers, technology and premises, the annual legal benchmarking survey of accountants Crowe Clark Whitehill has concluded.
The 2014 snapshot shows that half of all regional firms increased revenues by more than 10%, compared with just 27% of City firms. By other measures, regional firms also narrowed the gap with the City, growing headcount while City headcounts remained static, and recording double the growth in profits per equity partner (PEP).
‘The proportion of regional and City firms showing growth was roughly equal in last year’s survey,’ Crowe Clark Whitehill partner Steve Gale told the Gazette. While throughout the recession City firms had been more resilient, the regional firms had now ‘bounced back’, he said.
But although 64% of regional firms reported an increase in PEP of more than 10%, the number of fee-earners per equity partner increased by just over a fifth. The total number of equity partners fell by 5%, and only 7% of firms saw succession planning as a priority. The report concluded: ‘Regional firms are still finding it challenging to recruit staff of the appropriate quality and with the essential skills to match growth demands.’ This points to wage inflation in the year ahead, Gale added.
Kathryn Riley, Manchester-based managing director of legal recruiter Douglas Scott, told the Gazette that partnership ‘is still a massive consideration’ for applicants when moving jobs. She said that Douglas Scott had recorded 46% more vacancies on the same period last year.
‘Firms are having to be more creative when it comes to attracting the best, to the extent that we have even heard of some regionals offering £10,000 golden handshakes,’ she added.