MHA publish results of Professional Practices Survey
Most sizes of law firms had limited growth in fee income over 2013, according to accountants' association MHA’s annual Professional Practices Survey.
In terms of profitability, however, 11-25 partner firms did better than larger 25+ firms and the survey uncovered signs that 2-4 partner firms are starting to reap the benefits of managing expenditure, although their profitability is down.
Harmy Gill, of MHA member firm MHA Macintyre Hudson, says: “The 11-25 partner firms have managed to turn income growth into bottom line profits as partners take on and deliver more ‘new work’ themselves.
“The fortunes of smaller (2-4 partner) firms are beginning to improve thanks to better expenditure management, but with only limited income growth their overall profitability has plummeted dramatically. Sole traders continue to struggle to generate adequate levels of return for the degree of work and risk undertaken.”
Profit per equity partner (PEP) rose by 21% for 11-25 partner firms as revenue improved, while PEP for large firms dropped by 2% to £134k compared to 2012.
Charlie Eve, of MHA member firm Carpenter Box, says: “Lockup is harder to control as the number of partners grows.
“We feel that there will be increasing pressure on lockup in the years to come and there are techniques available to assist with reducing this. It will be an increasing role of the COFA and other valued advisors within firms to ensure that lockup does not become a serious problem.”
