New survey reveals economic resilience of small and medium-sized law firms
Around three-quarters of law firms have reported year-on-year growth in fee income in the past 12 months, with almost half experiencing growth of more than 10%.
Solicitors who responded to a recent Law Society Financial Benchmarking survey appear to be bucking the general cost of living squeeze, with median practice fee income increasing by 9.2% whilst median fee income per equity partner increased by 5.4% to £939,525 in 2022.
The survey, which is now in its 22nd year, received responses from more than 150 mainly small and medium sized law firms across England and Wales. Collectively the respondents have an income in excess of £1.1billion.
Law Society president, Lubna Shuja, said: “It is encouraging to see law firms continuing to perform strongly, especially given the difficult economic climate we are all facing.
“In this current crisis, lawyers are needed more than ever to help people access justice in their time of need. The government must take action to stop the shortfall in legal aid providers before it is too late.”
The survey also highlighted a number of key financial pressures for the legal sector including rising staff costs and recruitment and retention issues.
According to the report, total salary costs as a percentage of fee income increased by 0.4%, from 58.5% in 2021 to 58.9% in 2022.
Paul Bennett, chair of the Law Society’s Leadership and Management Section, said: “Firms reviewing this year’s survey might like to consider the growth in fee income, the 10-day reduction in lockup and the median equity capital trends. These three give a great insight into fee income, collection, and capital needs: all of which will be useful to help plan ahead.
“The benchmarking aspect should help those who took part to be more profitable again. For those who did not take part, looking at the trends can help with their planning and, of course, taking part next time would ease the use of the data as every firm who participates gets a personalised summary to help them with business planning using their own data.”
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