Profits rate slumps in SME sector of UK law firms

UK law firms working with small and medium-sized organisations are optimistic about growing fees and cash flow - despite the fact that profits fell on average from 24 to 20 per cent of turnover during 2014.

18 March 2015

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Bank Nat West has carried out research among 339 law firms and has found that 81 per cent expect to see fees increasing per fee earner. Some 68 per cent expect to see an increase in the number of chargeable hours. And 66 per cent predict that the firm bank accounts will have higher cash balances.

Litigation

But Lisa Ford of the bank explains why profits have shrunk as a proportion of turnover: 'Legislation changes associated with litigation work has applied a downward pressure on profit levels.' In the best-performing region, the north, profits per equity partner increased 4.7 per cent, by £5,000 to £112,000. Sources: NatWest and Lancashire Evening Post