Small law firms saw profits per equity partner fall 24% as the recession hit, according to the Law Society Law Management Section’s annual profitability survey. The median net profit per equity partner fall from £114,078 in 2008 to £86,960 this year. Approximately 18% of a practice’s total income is equity partner profit, compared to 24% in 2008.
The survey, now in its tenth year, and produced in association with accountancy practice Hazlewoods LLP, charted the views of 185 law firms with fewer than 40 partners around England and Wales. It focuses on three measures: income levels, profit and working capital. The results show that median practice fee income reduced by 6.5% compared with 2008, reflecting the general perception that last year was one of the most difficult years for solicitors in many years.
More than 1,000 people, or about 9% of the workforce, were made redundant across the participating firms, at a total cost of more than £4m.
Overall, participating law firms showed little sign of confidence about their prospects for growth in 2010.
The most optimistic quarter of law firms predicted up to 6% growth. The most pessimistic cited a likely reduction in income of 8%.
