Nearly 70% of the 206 respondents (with an average income of £5.3m) experienced year-on-year growth in fee income in 2020.
Median practice fee income rose by 6.2%, the largest increase for seven years, while median fee income per equity partner rose 8.3% from £761,981 in 2020 to £825,331 in 2021.
Total salary costs as a percentage of fee income fell by 2.9%. The saving may be attributed to staff being furloughed during the pandemic, delays in pay reviews and promotions and fee earners’ fees rising more than the increase in salaries.
Equity partners fared well, with median net profit per equity partner rising by 39%. This could be due to increased fee income particularly in residential conveyancing and employment combined with reductions in staff and overhead costs such as heating and lighting. The median spend on non-salary costs (such as premises, marketing and recruitment) reduced by 2.2%.
Many of the firms took part in COVID-19 support schemes, with 83% furloughing at least some of their staff and 13% making use of local authority grants to receive an average £27,000. Three-quarters of respondents borrowed money through the Bounce Back Loan Scheme or Coronavirus Business Interruption Loan Scheme.
Nearly four out of five of the firms deferred their VAT payments, while 12% deferred or spread the PAYE/NIC due on monthly salaries and 44% of self-employed sole practitioners or partners in partnership/LLP firms deferred their tax. Among respondents who were limited companies, 12% negotiated time to repay their corporation tax bills.
Law Society vice president Lubna Shuja said: ‘Solicitor firms have demonstrated their resilience through 2020/21, using lifelines from government to retain staff and equipping them to support clients from outside traditional office environments.’
