Member Article

Legal firms’ profits up in the North

The North East and North West is the UK’s second largest area for legal activity, according to a report released by NatWest and RBS today.

Profits grew by 11% in the region - £20k above the national average - while fees are up 3% compared to last year.

The report concluded that optimism among UK law firms is at an “all time high”, with 92% of respondents believing their profits will grow or remain the same in 2014 and just less than half predicting growth up to 10%.

The Financial Benchmarking Report - now in its second year - looks at the financial performance of small and medium enterprise (SME) law firms operating outside the UK top 100.

Steve Arundale, head of professionals at Natwest and RBS, said: “Last year was another challenging one for the legal sector however optimism seems at an all time high with some great performances recorded across the country.”

Results showed that, on average, firms reported a 7% increase in profits from last year.

However, smaller firms (with less than £1.5 million annual fees) reported an impressive 15% jump with larger firms (more than £1.5 million annual fees) achieving just 3% profit growth.

Steve added: “The report allows firms to track their performance against their peers and measure their progress.

“One of the key issues we find firms have is in understanding the relationship between profit and cash. For example, a firm is unlikely to improve its position if it concentrates solely on growing revenue and profit and fails to look at the finer points like improving efficiency and lock up days.

“As the largest and only free benchmarking report in this space, this report provides a truly representative picture. We hope firms will use it to help them interpret their performance compared to their peers and identify areas where they can improve future financial performance and security.”

This was posted in Bdaily's Members' News section by Graham Vincent .