IT may have been one of the hardest years in history for law firms, with record redundancies and pay freezes across the country, but new statistics show many law firms have done much better than their clients.
In new statistics released on Britain’s legal market, Legal Business, a trade magazine, found Britain’s biggest law firms suffered a dip in profits for the first time in a decade last year, but they still earned more than £4 ($7.7) billion, one of their best years ever.
The results have left City lawyers with an awkward dilemma - explaining to their long-suffering clients how they did so well while those clients were left smarting in the global financial downturn.
According to the report, to be released tomorrow, the average equity partner at the UK’s top 100 firms earned £380,000 ($735,000) in 2008-09.
The results show that 20 firms have profit per equity partner that was higher than £500,000. Hundreds of partners at the UK’s Magic Circle firms, including Allens & Overy, Freshfields Bruckhaus Deringer and Linklaters made more than £1 million.
But these figures are almost a source of embarrassment for many UK law firms, editor of Legal Business, Jim Baxter said.
“While poor compared their performance over the past few years, these figures would be to die for in many other industries. The commercial law firm model has proven itself extremely resilient,” Baxter said, The Times reports today.
The best-paid firm of the year was Slaughter & May, despite a 5 per cent drop in partners’ profits.
Partners at Slaughter & May made an average of £1.6 million. Freshfields, as the second most profitable, had a profit per equity partner of £1.4 million.
Baxter reports in July/ August issue of the magazine that profits have dropped for the Global 50, down 8 per cent to a combined $20bn this year, with revenues broadly unchanged at $55.73bn.
“On the face of it, this is an impressive performance when compared with the current financial woes of their major international clients.
“Nonetheless, the current figures contained only three months of the post-Lehman meltdown for US firms and six months for the UK leaders,” he said.
Baxter reports: “According to most law firm managers, the figures for 2010 are going to be much worse, with firms bracing themselves for profit drops of up to 30 per cent.”
“The good news is that there is definitely something moving in the ground. The bad news is that it is more likely to be worms than green shoots of recovery,” Baxter said.