Latest research from the Law Society’s Law Management Section has revealed that law firms in Devon and Cornwall have generally experienced increases in profitability, but also suggests a need for firms to refocus on ensuring their long-term financial stability.
The key findings from the Law Management Section’s (LMS) annual Financial Benchmarking survey, which is sponsored by Lloyds Bank Commercial Banking, reveals the health of law firms across the UK.
The survey shows that fee income for legal firms increased by an average 4.1% in 2013, and that the average profit per equity partner rose by 3.6% to £121,731.
Now in its 14th year, the survey also revealed that whilst a greater number of practices in Devon and Cornwall have converted to a limited company or LLP, there is a fall in equity partner capital with some firms overdrawing profits.
Peter Blakesley, senior manager at Lloyds Bank Commercial Banking in Devon and Cornwall, said:
“This year’s survey shows some positive trends, including growth in fee income and profits. It was pleasing to see some firms improving their working capital management, too. We are beginning to see some positive indicators that bode well for the economy in 2014, and solicitors are likely to get busier with a revival in house move transactions and rising levels of confidence among their business clients.
“However, solicitors in Devon and Cornwall will need to maintain financial discipline for sustained success.”
Other key findings from the survey were:
- A stability in ratios of fee earners to partners, secretaries and support staff
- Total lock up (work in progress and debtors combined) down slightly to 177 days
- For 21% of participants, partners’ total drawings (including income tax) exceeded profits in both 2012 and 2013.