Law firms in the South West have seen the second biggest increase in profit
Law firms in the South West have seen the second biggest increase in profit in the UK according to NatWest’s latest Legal Benchmarking Report.
The research, now in its fourth year, looks at the performance of law firms operating in the SME space with revenues below £46 million.
According to results, firms in the region achieved a median 9% rise of profit per equity partner (PEP) to £115,000 in 2015 – second only to London’s firms which posted a 10% growth.
This is a continuation of the region’s positive performance, which has grown PEP from £70,000, as reported in NatWest’s first benchmarking report in 2013.
Chris Rowden, Regional Director, South West & Wales Corporate & Commercial Banking, NatWest comments: “It’s great to see firms in the South West continuing to grow – and compete with firms across the country. However, firms need to be aware of demands around labour and cash flow to remain competitive.
“The more positive firms are now looking ahead and recognise that if they could now increase fees by 10-15% without any real increase in expenses, then most of the additional fee income will be pure profit and results would be very healthy. This is going to be achieved by a real focus on fee earner productivity.”
Over 390 firms took part in this year’s research, produced with Robert Mowbray of legal consultancy Taylor Mowbray.
Profit margin in the South West also grew slightly from 25% to 26% – ahead of the UK median performance of 24% and close to the long-term average of 25%.
According to results, fees also grew by 6% in 2015 – considerably above inflation.
Confidence is still strong despite dipping slightly for the next year with 44% of firms predicting fee growth to rise by 10% in the next year, compared to 56% last year.