Confidence is dropping among managing partners, a survey by The Lawyer and Wheeler Associates has found.
In the second quarterly Law Firm Business Confidence Survey, two-thirds of managing partners from The Lawyer 100 were questioned about fee income expectations and merger possibilities. Although nearly two thirds (63 per cent) expected their firm's fee income to grow over the next six months, this compared with 81 per cent last quarter. City firms that forecast growth expect to see only a 5 per cent increase. Regional firms which are faring better - or are more optimistic - predict fee growth of 10 per cent. Similarly, managing partners are less positive about the growth in their firm's profits. Only 51 per cent expect profits to grow over the next six months. This compares with 72 per cent in March. The survey also found that one third of firms are actively seeking a merger and 11 per cent of managing partners had been involved in more than one merger in the past three years. In those cases integrating the different cultures and client base were cited as the biggest challenges. Kevin Wheeler of Wheeler Associates said: "That a third of managing partners are considering a merger as part of their business strategy strikes me as high." He added: "Most firms - 90 per cent of those looking - are looking within the UK. "Of all the firms we spoke to, only two are talking to US firms. There is lots of talk about UK law firms marrying US firms but, based on our research, few are thinking about that option. This is probably because a merger with another UK firm is easier to pull off." However, the survey also exposed doubts about the success of mergers. Only two thirds of the firms claimed that their merger had been "very successful", although none admitted that the marriage had not been successful. Unsurprisingly, given the current economic slowdown, 75 per cent of firms expected growth in insolvency and corporate recovery work. The data illustrated that this sector could increase by 12 per cent, with regional firms predicting 15 per cent more work and City firms estimating 10 per cent growth. The next Law Firm Business Confidence Survey will be undertaken in September.