Clouds-with-sun-behind

2020 Law Firm Benchmarking  

This year we have seen our most interesting set of results
ever. How were firms doing in the lead up to the COVID-19 pandemic? 

The big picture

Our results this year provide an intriguing snapshot of our participants financial position as they braced themselves for the beginning of the COVID-19 pandemic, along with an indication of how they responded in the first six months of this unprecedented event. Aggregate growth across all participants fell back slightly to 6.5%. Participants have increased their total profit pool by 5% but this looking into these headline results also masks some considerable variation between firms. Firms are continuing to invest in their people with a 5.3% increase in headcount but within these figures we see 70% of City firms increasing their headcount whereas half of regional firms reduced their overall headcount.

Revenue

      -Growth in revenue

  Profitability 
  - Profit per equity partner
                    People 
                    - Increase in headcount
Growth image Benchmarking city firms
 

COVID-19 response

The results submitted by firms during October 2020 and over six months into the global pandemic, provide valuable insight into how the legal responded. The survey asked participants about the initial impact on their firm, what strategies they employed and how this event has impacted their future strategy.

City firms

City firms appeared to be in good shape as they entered the COVID-19 pandemic. They reported average growth of 7.4% and over a third reported an increase in top line in excess of 10%. 95% of firms reported growth this year, an increase from 83% last year. This growth in revenue is reflected in the continued investment in headcount with 6.6% growth.

City firm infographic 

 

Benchmarking infographic

The majority of participants (90%) cited little to no disruption to adapting to home-working due to the pandemic and expect some form of remote working to continue for their teams once the COVID-19 restrictions are fully lifted. Over 80% of City firms have expressed concerns about meeting resource requirements in the short term citing “the availability of people with the skills we need” as a business-critical risk, an increase from 30% in 2019.



Regional firms

 Benchmarking infographic

A more challenging year for many regional firms. Only 59% experienced growth this year, down from 70% last year. Looking deeper into the headline figures shows particularly polarised results among the regional participants. Almost a quarter of firms produced a healthy increase in revenue, often well in excess of 10%, whole 40% reported a fall in their top line.

If generating revenues in 2020 was challenging, maintaining profit levels has also proven to be the case. The aggregate profit pool fell by 1.9% and 62% of firms reported a decrease in their distributable profits with an average fall in PEP of 6%.

 Benchmarking regional firm
Sky sandstorm

Looking forward

Firms are remaining positive about their own future performance and continuing the optimism, around 85% of all participants believe demand levels will continue into 2020/21. Retention of key people and health and wellbeing of people and availability of people with the skills they need have become firm’s top business critical risks.

Our Professional Practices team

Our professional practices team advises law firms of all sizes on their growth plans, always tailoring our advice to best suit their needs.
Louis Baker
Louis Baker
Head of Professional Practices
London
Steve Gale
Steve Gale
Partner, Professional Practices and Head of Audit
London
Ross Prince
Ross Prince
Partner, Audit
Midlands