Top law firm profits smash through £5bn

 
Elizabeth Fournier
COMBINED profits at the UK’s 100 biggest law firms have topped £5bn for the first time, as the legal sector’s recovery continues to outpace the rest of the economy.

Total billings by the UK’s 100 largest law firms hit £17.67bn in the 2011-12 financial year, sending profits eight per cent higher to £5.39bn, according to new research from Legal Business magazine.

DLA Piper topped the revenue table with a turnover of £1.4bn, boosting its profits per equity partner (PEP) by five per cent to £766,000.

PEP is used as an indicator of law firm success but does not necessarily relate directly to each partner’s pay package, as the figure is separate from the base salary and partly used to cover firm costs such as insurance.

Based on UK revenues alone, magic circle firm Linklaters moves up from third place to the front of the pack, earning £513.5m of its total £1.2bn turnover domestically.

The research also reveals firms profits per lawyer – the average amount each employee brings in minus the cost to the firm of employing them.

By this metric, London corporate powerhouse Slaughter and May comes out on top, earning a profit of £304,000 per lawyer against an average billing of £621,000.

The figures also reveal that the legal profession is still struggling with gender equality – just 14 per cent of equity partners are female.

The survey marks the 20th year of Legal Business research into the sector, which began in 1992 when the top 100 firms collectively billed clients just £2.7bn and made profits of £891m.

“The UK legal market has grown eightfold over this period, which ... is even more remarkable when compared against the wider economy, which has grown by just 2.5 times,” said national editor Mark McAteer.