Just a few weeks ago the profession was patting itself on the back as The Lawyer 100 survey revealed fee income had broken through the £5bn barrier. As the mainstream media ran with the story, firms congratulated themselves on an exceptional year and the promise of better still to come.
But this week we reveal a worrying trend behind those figures. Profits and fee income are indeed at an all-time high but the rise has been less than in previous years and firms are seeing less of their fee income appearing as profit.
Clearly part of the reason is that clients are forcing the price down as they demand better value. But the survey also points to a problem of financial management in firms.
While firms ponder big strategic moves and mergers, they are seeing their profitability being eroded because of inadequate attention being given to business planning, internal structures, organisation and staffing.
It is nothing to be proud of that the number of firms with a business plan has risen by 4 per cent this year. How many industries of comparable size would admit that less than three quarters of their companies had a business plan?
Two weeks ago The Lawyer reported Cameron McKenna's plans to change its partnership structure. Managing partner Robert Derry-Evans said at the time: "We will end up with what we have always had - a lockstep system with bonuses." This was a courageous step but this week The Lawyer reports that even this modest attempt at modernising financial management has been rejected.
Effectively, change itself is being rejected or at best viewed with suspicion.
Firms need a radical look at how partners and associates are organised as teams, who does what and why. Running a large business is not a simple matter. But legal businesses should note our findings and look at what they need to do to ensure that the trend is reversed.
Law firms need to take a step back from their media-acclaimed position as one of the UK's most important industries and take a long hard look at their business. If they don't it will not be long before The Lawyer 100 will show the results of their inaction.