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English Law Society reports law firms enjoy 0.2% increase in fee income

A survey by the Law Society of England & Wales has revealed that legal practices are seeing an improvement in fortunes with an average increase of 0.2% practice fee income in 2010, following a reduction of 6.5% in the previous year.
The findings are in the Law Society Law Management Section's annual profitability survey which reveal the financial health of law firms. Firms are also beginning to recruit again. The survey reveals that the 200 participating firms reported total recruitment costs of £2,141,614 to recruit 1022 people, while the average spend on non-salary overheads per fee earner dropped to £35,551, down from £41,959 in 2009.

Other key findings include:

• An increase in median net profit per partner from £89,621 to £106,297 – a rise of 18.6%.

• The measure of profit after deducting a realistic notional partner salary is 7.3% of fee income (up from 2.3% in 2009.
• Median fee income per equity partner of £455,650 (2009: £469,666).
• Median equity partner capital increased by 7% to £135,191.
• The median cost of a fee earner was £40,240 compared to £43,938 in 2009, a fall of 8.4%.
The ratio of partners to fee earners remains  static – a median of 1 to 4.