The median profit per equity partner at UK law firms increased last year despite coronavirus disruption, new research has revealed.
The Legal Report 2021, published by NatWest, suggests that the sector is amongst the few to experience growth in profitability throughout the global lockdown.
According to the study, the industry unsurprisingly recorded a fall in fee income in 2020, with a median reduction in revenue of 12 per cent compared to the previous year.
Median reduction in fee income per partner also fell eight per cent compared to the same period a year ago, with just a quarter of law firms recording an increase in revenue.
Despite this, median profit per equity partner grew. The survey reveals that median take-home profits increased from £158,000 to £168,000 over the year – representing an annual rise of six per cent.
Commenting on the figures, lead author Robert Mowbray said the sector has been strongly supported by the Coronavirus Job Retention Scheme (CJRS) and benefited from an overall fall in costs, leading to higher profits despite generating less revenue.
The furlough scheme alone, for example, resulted in a five per cent fall in expenses across the sector.
The figures also show that average bank balances at the end of 2020 were “substantially higher” than at the end of 2019, rising from £63,000 to over £542,000.
“This edition differs from its predecessors because it is important for us to fully understand how the legal sector performed and how firms behaved during the pandemic,” said Mr Mowbray.
“It is encouraging that the legal sector has shown remarkable resilience, with many firms even demonstrating a growth in profitability at a time when many other sectors have experienced significant downturns.”
The NatWest Legal Report 2021 can be found here.
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