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New research from the Law Society's Law Management Section (LMS) reveals that legal practices are continuing to show signs of growth.
The LMS annual Financial Benchmarking Survey shows that practice fee income increased by 1 per cent in 2011, as practices continue to climb out of the hit from the recession. In 2009, firms saw a 6.5 per cent drop in fee income.
The survey of LMS member firms also revealed that average net profit per equity partner increased from £112,549 to £114,853, a rise of 2 per cent.
Firms have cut the number of support staff per fee earner which decreased from 0.65 to 0.61, an indication that law firms may be introducing more efficient IT solutions.
Now in its 12th year, the survey, which is produced in association with Hazelwoods LLP, a medium-sized, niche accountancy practice specialising in advising the legal profession, is widely regarded as the annual financial health check, particularly for the smaller end of the legal profession.
Chris Marston, Head of Professional Practices at Lloyds TSB Commercial, believes 2012 will be a pivotal year for solicitors. "New entrants and external capital will undoubtedly bring change, but I firmly believe that this will expand the market for legal services and create opportunities for innovative, well-managed firms with strong leadership and effective financial management. Getting in shape now is therefore very important, and this year's survey shows admirable resilience on the part of solicitors. Fee income rose slightly in difficult economic conditions and I was pleased to see that median net profit increased by two per cent - modest, but nevertheless building on last year's improvement.
"I was also struck by the accuracy of last year's predictions - respondents suggested that income growth might be around one per cent and they were spot on. This year, they are forecasting three per cent growth, so hopefully there are better times ahead."
The Red Book is the acknowledged authority on practice and procedure