A survey of the legal market points to a resurgence by a majority of firms across the sector, according to Mark Hunt, partner at the Cheltenham office of national audit, tax and advisory firm Crowe Clark Whitehill.
During a year when the shape of the legal landscape was dramatically transformed, the most common trend to emerge was the ability of firms outside London to experience and benefit from the green shoots of recovery.
While median growth across the sector stood at 6% (a 2% increase on last year’s findings), the story of firms located outside London emerged as the “narrative to watch” in 2014/15. Of those surveyed, these firms recorded the highest rate of annual growth in fee income – 7% compared with 4% for City outfits.
This growth in fee income was also backed up by a complementary increase in Profit per Equity Partner (PEP) across all regions. 74% of respondents reported an increase in PEP, demonstrating that the sector’s consolidation measures and growing commercial success are bearing fruit. Firms have also managed a modest improvement in their working capital management, with the number of lock-up days reduced from 136 (as recorded in last year’s survey results) to 131 in 2013.
Throughout 2013, Alternative Business Structures were the talk of the sector. Yet what this survey proves is that a number of important trends have gone largely unnoticed by the majority of onlookers during the past 12 months.
Mark Hunt said: “Despite predictions of doom, many firms have responded robustly to new commercial threats in the sector on the back of the emerging economic recovery. With a spate of recent mergers occupying the headlines, many others have had a successful year laying the ground for greater financial stability and a platform for financial success in 2015.
“Whilst the rise of the ABS is likely to stay on the agenda over the next year, we watch and wait with interest to see what the rest of 2014 holds for the legal sector.”
