Profits recovering at leaner law firms says pro.manchester

LAW firms in Manchester are becoming leaner and their profits rose last year but remain below the levels seen in 2008, research said today.

Professional services group pro.manchester estimates the value of the sector to be around £1.4bn to the city region based on the accounts of 17 regional, national and international firms with operations in the city.

The organisation’s Legal Sector review reveals that while profits for the sample have fallen from £575.9m in 2008, they bounced back last year from £478m in 2010 to £497.7m.

Reflecting firms’ attempts to become more efficient, profits per employee for the sample group fell from £36.600 in 2008 to £31,200 in 2009. Thereafter profits per employee recovered to £34,000 in 2010 and £36,300 in 2011

Turnover saw falls in 2009 and 2010 before rising again last year –  turnover of the firms in the sample was £1.8bn in 2008 it is now £1.72bn.

Employment has fallen by 12.5% from the peak in 2007 to around 11,600, which pro.manchester attributes to firms seeking greater efficiencies with non-fee earners bearing the brunt of the reduction in staff.

The ratio of fee earners to non fee earners increased from 49% of staff numbers to 54.4%

Pro.manchester chief executive John Ashcroft said: “Using data from our sample group of companies with a base in Manchester we are able to derive realistic estimates of the Greater Manchester market place.

“It is worth around £1.4bn per annum with the fall in employment largely as a result of greater efficiencies.”

“The sector faces significant challenges as a result of low economic growth and structural changes. We have already seen the merger of Pinsent Masons and McGrigors with further consolidation by merger a distinct possibility,” he added.

The sample includes major international firm including DLA Piper, national players such as Pinsent Masons, Gateley and Eversheds, strong North West names such as Hill Dickinson, DWF, Brabners Chaffe Street and Weightmans to Manchester firms such as George Davies, Pannone and JMW.