Those of you who have been keeping a close eye on Lawyer2B.com and its sister site TheLawyer.com won’t have failed to notice how partner profits at many of the UK’s leading law firms have suddenly bounced back in spite of ongoing economic woes.
National firm Shoosmiths, for instance, stunned its rivals earlier this week by posting an eye-watering 83 per cent hike in net profit for the 2009-10 financial year with average profit per equity partner (PEP) rising by 69.5 per cent for the same period (read more).
LG, Travers Smith and Withers, meanwhile, posted PEP rises of 64, 53 and 31 per cent respectively.
What’s so surprising about these figures is that they were achieved against falling or static revenue. Shoosmiths’ revenue for example fell by 9 per cent to £90m. Indeed, as exclusively reported by TheLawyer.com on Monday (12 July) the total revenue generated by the UK’s top 30 law firms fell by half a billion pounds last year. In 2008-09 the total revenue of the UK top 30 stood at £11.36bn. Last year that fell by 4.5 per cent to £10.84bn.
So why then have two-thirds of these firms seen a rise in PEP? It’s simple aggressive cost cutting namely in the form of office closures, redundancies, four-day weeks, pay cuts, outsourcing and trainee deferrals.
It’s therefore no wonder that the figures have sparked outrage among many of our readers. “Once upon a time law was a profession. Now it is the preserve of a venal, disgraceful, pathetic oligarchy who have scrambled up the stepladder before kicking it away. I wonder how many good lawyers will walk away from the law as a direct result. In 20 years’ time we might be seeing a crisis of intelligence. Unfortunately, the current partners will not care, as they will have made their stash,” writes one user.
Indeed, one has to ask whether at a time when most of us are having to cutback is it morally acceptable for partners to make so much money and what’s more can it be sustained? Now there’s a good question to ask at your training contract interview!