The chartered accountants’ third annual poll of 75 of SME law firms in London and South East England shows 4.5 per cent growth overall, rising to 10 per cent at the larger end of the ‘small practice’ spectrum. Profits too have risen – with the best performers recording a 17 per cent rise on the previous year.
But in spite of the brightening outlook, some practices remain cautious about their potential for internal expansion. More than a third are pursuing outside investment instead, and 43 per cent plan to bring in new non-lawyer partners. A little over a quarter of the firms polled report having been approached by a legal consolidator.
The Legal Services Act, which allows such non-lawyer partnerships and mergers to take place, has so far had little impact on the workings of SME practices. An overwhelming 93 per cent of those polled have yet to notice any effect on business.
But more than a third think the situation could change in 2014, as the full impact of the LSA begins to be felt.
The current economic overview seems upbeat for some small legal firms. Turnover per employee grew to a new average of over £100,000 per employee for the survey period (2011/12) – or a rise of 11 per cent on the previous year, well above that of inflation.
Litigation work remains a key part of the small practice agenda. Personal injury and clinical negligence work made up 15 per cent of respondents’ business, while 5 per cent was in employment and 4 per cent in probate.
