The average firm increased its income by 5.4% in 2015 compared with the previous year according to the Law Society’s Law Management Section (LMS) Financial Benchmarking Survey.
The rise is the sixth consecutive increase, despite what the Law Society saw as “a challenging year”. Net profit per partner also rose for the fifth consecutive year and now standing at £146,600 per partner.
The survey also found that fee income rose across most work types and regions. It also found an increase in the breakeven point for a fee earner, from £102,000 to £109,000.
Of the 200 firms who responded, one in four of their partners took more money out of their firm than they made profit, up from one in five last year.
Law Society President, Jonathan Smithers, said: “The Law Society welcomes the news of a continuing increase in income for the majority of firms surveyed, particularly after the challenges of the last decade.
“Our Future of Legal Services report brings together new and existing evidence to identify the key drivers for change over the next five years, together with the opportunities and potential threats. Having good management helps firms financially, which will be important for them to remain sustainable in the face of increased competition.”
Paul McCluskey, Head of Professional Practices at Lloyds Bank Commercial Banking, who sponsor the survey, said: “The last 12 months continued to offer challenges for many law firms and although the majority of results are encouraging, a key priority for all firms in 2016 will be to effectively manage their cash flow.”
Jon Cartwright of accountancy firm Hazlewoods, who carried out the survey on behalf of the Law Society Law Management Section said: “There is no doubt that most mainstream legal practices are in good shape financially, and more confident as a result. Medium term strategy planning is now firmly back on the agenda, although clearly some areas such as personal injury and criminal continue to be tricky.”
Full results are to be published in March.
