For most of Britain’s large and mid-tier law firms 2014 holds more promise than any other year in the last five.
For many 2013 saw a return to growth, which means we are recruiting. According to Deloitte’s latest legal sector survey, fee income among the top 100 law firms was up 5.2 per cent in the last quarter, compared to last year.
The largest ten are doing even better, with a rise of 6.3 per cent, while those in the mid-tier enjoyed 6.7 per cent growth.
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Areas of practice that had been hardest hit, including real estate and corporate work, are also showing signs of recovery. The authors of the report said they had greater confidence in these latest statistics, since returns were based on underlying improvements, rather than on merger and acquisitions.
With the curve back on the upward trajectory, the top100 are back on track for growth and recovery.
In its annual survey of law firms, PWC also tracked the performance of the top 100. They too concluded these firms were well placed to take advantage of the upturn in corporate activity.
But it’s not good news for all of the legal sector.
The performance of small and medium-sized firms is tracked, tellingly, by an insolvency firm.
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Begbies Traynor’s “Red Flag Alert” research, which monitors the financial health of 海角视频 corporates, reports rising financial stress among SMEs in the legal sector and says the number of smaller firms trading has decreased.
Not that we need a survey to tell us this - we all have anecdotes regarding the struggles of our smaller practices.
Along the high street, firms are battling to get indemnity cover, without which they can’t practice. Those traditionally reliant upon publicly funded work have seen their income slashed as a result of the savage cuts to the Legal Aid budget. Regulatory changes, the referral fee ban and the liberalisation of the legal services market to newcomers has been felt hardest at the grass roots of our sector.
The legal sector has endured a lot of consolidation during the recession. Now we are seeing an increased polarisation of the profession – the have and the have-nots– and I regret that while workloads and profits are returning to the top tiers, the challenges for smaller firms remain.
* Steve Allen, Birmingham head of office at Mills & Reeve