North West legal market conditions improve

Law firms across the North West are benefiting from improved conditions in the region’s economy, according to a new study.

A report from accountancy and business advisory group MHA has shown that North West law firms of various sizes now have a more positive outlook, while it also found the number of legal mergers in the region continuing to rise.

Conducted in partnership with Preston-headquartered accountants Moore and Smalley, the report claimed that despite dwindling personal injury work, total fee increases were experienced across all sizes of companies as they sought new areas of litigation.

The results also showed growth in fee income per equity partner, particularly among practices with 25 or more partners.

Profits were likewise found to have increased, but not at the same rate as income from fees, while expenditure on key overheads fell as a percentage of fee income.

Karen Hain, a professional practices partner with Moore and Smalley, said: “Large practices have succeeded in making true economy of scale savings in overheads and running expenses, while still increasing top line fee income.

“We have also seen a reduction in equity partner numbers, so that these fewer individuals are really benefiting from higher rewards derived from personal capital invested in the business.”

She added: “We are seeing far more movement this year in smaller practice mergers, most of which is driven by succession planning issues.”

Meanwhile, expenditure on staff remained steady, although the report’s authors expect it to increase this year as takeovers continue and staff seek jobs offering more money.

Karen continued: “2014 was in many aspects a positive financial year for law firms and for individual partner profitability.

“In 2015 and 2016 we are likely to see more consolidation in the sector, with further merger activity expected.”