Difficult year for North East law firms
Northern law firms are falling behind their counterparts in the rest of the country, according to new figures.
Law firms in the north of England have reported an average decline in profit per partner of around 40% in the latest annual survey of the legal sector by PricewaterhouseCoopers LLP.
The UK’s Top 10 law firms have maintained their relative breakaway performance over the rest of the sector, despite an average 21% fall in profit per partner over the last year.
The survey shows that average profits per partner of the Top 10 at £872,000 were almost twice that of the next tier (11-25) at £444,000.
David Thurkettle, director, PricewaterhouseCoopers LLP, said: “This year has seen the greatest turmoil in the law firm sector since our survey began in 1991. It was quite clear when our last survey was published that law firms would be far from immune from the economic crisis. As it turns out, the impact has been even greater than we anticipated across the sector. A relatively small number of firms predicted the likely extent and severity of the recession and started to cut headcount and take out cost early in the second half of financial year 2009.”
The survey shows business confidence remains weak among firms with none of the Top 10 ‘very confident’ about prospects for revenue growth over the next 12 months.
Northern firms’ confidence for the next 12 months is somewhat mixed, with opinions ranging from ‘very confident’ to ‘not very confident at all’ about revenue growth prospects. The majority of firms predict that the number of fee earners on their staff will either increase or stay the same, whilst the majority also expect to reduce support staff headcount.
David Thurkettle added: “Fierce competition has made firms think hard about how to become distinctive in the eye of the client. Client relationship and engagement management, sustainability and innovative delivery models are all moving fast up the agenda as a result. The recession has put some operating models under severe stress and survival in the current form for some firms may prove a challenge if market conditions do not rapidly improve.”