Legal
Leadership is key to survival
Midlands law firms are divided when it comes to their leadership, according to national audit, tax and advisory firm Crowe Clark Whitehill. Ross Prince, the partner heading
up the firm’s regional professional practices group, said Crowe’s 2017 Law Firm Benchmarking report made sobering reading. Growth in regional law firms had
a challenging year, with around two thirds feeling they had not met their targets. Growth in regional firms lagged behind that seen in London firms and profit per equity partner (PEP) fell in 40 per cent of firms. Of those firms that did see
growth, only 28 per cent saw revenues increase by more than 10 per cent, compared to 41 per cent last year and 52 per cent in 2015. There was continued steady
growth in fee earner numbers again this year at around five per cent, the same increase as that seen last year, though growth in support staff numbers has slowed to just over one per cent.
In light of the steady increase in
staff numbers, 43 per cent of regional firms cited availability of high quality staff as their biggest challenge to future success.
‘Good working capital practices can make all the difference’
Wage inflation remains a
pressure as staff costs increased by 3.2 per cent compared to just over 2 per cent in both 2016 and 2015. Aggregate partner numbers
across the firms actually fell this year by 0.5 per cent, with the main shift being among top-tier partner numbers, which fell by 2.8 per cent. Ross said: “Was this fall in top-tier
partners a reaction to changes in profitability? A headline increase in aggregate profit per partner of two per cent certainly does not tell the full story, with 40 per cent of participating regional firms experiencing a fall in PEP this year. “With price competition,
inflationary pressures in personnel
costs and, anecdotally, good quality property and space also costing more, it appears that even firms who are growing their top line are finding it hard to translate that growth into bottom line profitability.” Approximately half of regional
firms attribute much of the mixed year result to past investment decisions relating to staff. Although many economic factors
are outside the control of law firms, there are still internal processes that firms can improve.
Ross added: “It is encouraging to
see that regional firms are consistently reducing their lock-up. We have seen total lock-up days fall to 122 days from 147 days in 2016, and this fall is almost entirely attributable to falling debtor days of 54 days compared to 78 in 2016. “Good working capital practices
can make all the difference between success and failure. Of the high profile law firm collapses that we have seen, it is always cash, not reported profits, that has been the primary driver.”
Sector Focus Ross Prince: Leadership is king
November 2017 CHAMBERLINK 57
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72