Financial benchmarking survey reveals...

For the seventh consecutive year, law firms have seen an increase in fee income with the median fee income per equity partner increasing by 7.1% to £600k up from £560k in 2015.

Continuing growth has led to an increase in profit with the largest return seen across smaller practices.  The report suggests many contributing factors including and perhaps most notably a rise in the number of fee earners.

It appears that practices are improving management of their overall lock-up, with a reduction in work-in-progress and debtor days noted.  In addition, there has been a decrease in the total practice borrowings per equity partner, a positive change unless it is been driven by external forces i.e. a lack of financing for the professional firms market.

Recruitment challenges continue to put greater pressure on firms to increase salaries for staff retention and to attract new employees. Smaller practices also face increased salary costs as they approach or reach their staging dates for auto-enrolment.

Pressures on cash flow remain prominent and practices need to remain mindful of the lessons learned over recent years, particularly given the uncertainty of the future of the legal sector and wider economy.

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