2021 Law Firm Benchmarking
In a period of unprecedented global disruption, we might have expected revenues to be challenged. Back in March 2020 most law firms were braced for the worst, but were these fears unfounded?
For the sector as a whole, the answer is a reassuringly positive one with aggregate revenue growth of 5.9% across the all-participant population. As we dissect the headline results, we once again see a number of firms growing with almost a quarter of firms returned solid growth in excess of 10%, but around a third saw their top line shrink compared to their 2020 fee levels. Continuing a somewhat concerning theme, the proportion of regional firms with falling fee income climbed to 43% this year.
demand manifested in the need to continue to grow headcount, in particular
The demand for talent continues in the City with all
participant firms highlighting ‘retention of our key people’ and ‘availability
of people with the skills we need’ as high priority business risks. We
anticipate further inflationary pressures on salaries in the coming year if
service demand continues at the current levels.
Two thirds of participants told us that their final results greatly exceeded expectations. The COVID-19 situation forced many management teams to look more closely at their operations including cash flow management and this seems to have paid off.
Demand levels have increased with average fees per fee earner grew by 5% this year and four-fifths of firms planning to increase fee earner numbers in the coming year.
Following the use of the government’s suite of initiatives to support businesses impacted by the pandemic, some firms told us of their decisions to make voluntary repayments following the stabilisation of the UK legal market.
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