Three-quarters of the 155 firms surveyed reported year-on-year growth in fee income in 2022, with 46% seeing growth of more than 10%.
Median practice fee income increased by 9.2%, while median fee income per equity partner increased by 5.4% from £891,693 in 2021 to £939,525 in 2022.
The survey, produced by Hazlewoods and sponsored by Lloyds Bank Commercial Banking, also reported a 3.2% increase in fee earners and a 2.1% increase in support staff.
All firms face the challenge of attracting and retaining high-quality staff. The survey report highlights that recent cost-of-living increases have added pressure on firms to raise salaries, which means the percentage of fee income spent on employment costs is likely to continue to rise.
Total salary costs as a percentage of fee income increased by 0.4%, from 58.5% in 2021 to 58.9% in 2022.
Paul Bennett, chair of the Law Society’s leadership and management section, said: ‘In tough economic times the resilience of law firms shines through, although we need to remember these findings pre-date the cost-of-living crisis, the UK’s political contortions of 2022 in terms of multiple prime ministers and of course the impact of the war in Ukraine.
‘The results reflect the property boom of 2021 and the challenges in the service economy during 2021/2022 financial year. Resilience is, though, a good sign knowing as we do that firms are currently steering through the on-going choppy waters.
“Firms reviewing this year’s survey might like to consider the growth in fee income, the 10-day reduction in lockup and the median equity capital trends. These three give a great insight into fee income, collection, and capital needs: all of which will be useful to help plan ahead.’
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