LAW firms in central London are showing signs of recovery, with an average increase in practice fee income of two per cent in 2010, compared to a 6.5 per cent reduction the previous year.
The figures from the annual Law Society profitability survey show an upturn in fortunes across the 200 firms surveyed, with profits per partner up from £89,621 last year to £106,297 – an increase of 18.6 per cent.
“Although there are signs of recovery, process is slow and firms will be looking at how they can continue to grow as we emerge from the recession,” said Law Society president Linda Lee.
Firms are also returning to the recruitment market, after a difficult few years that have seen staff layoffs and incoming trainees asked to defer their start date. Recruitment costs for 2010 ran to £2.1m to hire 1,022 people.
Business models at law firms are coming under increasing scrutiny ahead of the Legal Services Act being introduced in October.
The Act aims to open up the sector by introducing alternative business structures for law firms, which will allow firms to list on the Alternative Investment Market.
The annual survey provides a benchmark for the financial health of smaller law firms across the country, and could hint at an upbeat set of major law firm financials during the upcoming results season in May and June.
Holman Fenwick Willan and Osborne Clarke, both top 50 UK law firms, have kicked off the latest results round by posting revenue increases of 12.6 per cent and eight per cent respectively.