North West law firms ‘prioritising succession’, reveals survey
North West law firms are intensifying their efforts to retain top talent as they prioritise better succession planning, according to an influential report on the legal sector.
The latest Legal Benchmarking Report from MHA, the UK-wide group of accountancy and business advisory firms, shows how succession planning is at the heart of increases in the number of fee-earning staff and partners.
The report, compiled in partnership with North West based accountancy and business advisory firm MHA Moore and Smalley, also reveals firms are investing more heavily in training for future skills needs.
Karen Hain, partner at MHA Moore and Smalley and head of the professional practices sector for MHA, said: “There’s a clear pattern within the report showing that many firms are now in a period of talent investment and looking to future-proof their capacity to grow.
“Firms have increased the numbers of fee-earning staff and partners and trainee recruitment is up. Firms are promoting senior fee-earners to partner level in a bid to strengthen their succession plans and retain important individuals in what is a very difficult recruitment market.”
Collectively MHA works with over 180 legal practices across the UK. The eighth annual Legal Benchmarking Report reveals a general upward trend in fee income growth for most firms except for those in the 2-4 partners bracket which has seen a continuing fall in income from last year.
Sole trader practices and those with 5-10 partners saw modest levels of fee income growth (2.9% and 1.7% respectively), but it was the larger firms who saw the more significant increases. Those with more than 25 partners grew to 22.4%.
The difference between the profits being realised by larger firms and smaller firms is significant with average profit per equity partner (PEP) in the largest firms at £255k, compared to £82k in the smallest.
The percentage of total funding from external sources grew across most firms with only the largest seeing a significant drop from 32% to 18%, reaching its lowest level in four years.
Firms are looking to new funding streams, including the challenger banks and other finance offerings, reflecting the opportunities to access the favourable interest rates and fees available and so reducing the call on partner investment in their firms. The survey also reveals continuing trend in static or decreasing level of funding per equity partner.