MHA Legal Benchmarking Report 2017July 11, 2017
In conjunction with our UK accountancy association, MHA, we are delighted to present a benchmarking review of UK legal practices, looking at results across 2016. The review, undertaken by the MHA Professional Practices Group, indicates that profitability is at its highest level in the last three years.
Key findings from the UK report include:
- Growth in fee income across all sizes of firms, with growth of between 8% and 20% for firms with more than five equity partners.
- With exception of sole practitioners, firms saw an increase in net profit percentages of between 2% and 5%.
- Increase in lock-up days for all multi partner firms other than the firms with 5-10 partners who have managed to keep control of their work in progress (WIP) and debtors. 11-25 partner firms’ lockup increased by 31 days.
- Equity partner own funding continues to be the favoured method of financing, making up between 53% and 72% of the overall finance in the year. Equity investment ranged from £87,000 to £215,000.
- Lack of succession planning continues to be a challenge for the sector.
- Increase in professional indemnity insurance.
David Smith, Managing Director & Head of the Professional Practices Sector Group at Henderson Loggie explains:
“Profit is the life blood of any professional practice. Profits provide the vital funds needed for investment into growth. It may seem an overly simplistic formula, but: Profit = Fees Variable – Expenses – Overheads. The firms driving their profits higher are implementing strategies to increase fees, decrease variable expenses and decrease overheads. This formula gives a focus on profitability.”
If you would like to discuss any issues raised in the report or if you have any questions and would like to speak with a member of our team, please contact David Smith, or call us on 01382 200 055 to be put in contact with a member of our Professional Practices team.