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The number of UK partners being made redundant has dropped to levels not seen since before the recession, according to an annual survey of partner roles.
The research, provided by the Solicitors Regulation Authority and compiled by accountancy firm Wilkins Kennedy, found that there was an overall net increase of 2,795 partnership posts between 2012 and 2013, an increase of 10 per cent compared to the year before.
Despite a continued backdrop of cuts and redundancies, the survey also found that terminated partnership posts dropped 44 per cent in the last year - 3,077 partnership posts were closed in 2012/13 compared to 5,487 the year before.
Wilkins Kennedy partner Tommy White said: “Although many firms are still adapting to the more challenging market conditions, this marked fall in apparent “firing and retiring” of partners at UK law firms is perhaps an indicator that the stop-start restructuring and cost-cutting of the legal sector is now past its worst.
“On the one hand, after the unprecedented partner redundancies and forced retirements which have taken place recently, most firms have by now already taken the opportunity to offer early retirement to those partners that perhaps were not performing and contributing to profitability.
“Whilst we may not be out of the woods yet with further law firm insolvencies expected, increasing partnership numbers suggests confidence about future revenue growth.”
The brightening economic outlook has also been reflected in an increase in partner rates. According to costs lawyer Jim Diamond, partner rates at magic circle firms have spiralled 62 per cent since 2005, with work-hungry top guns charging up to £850 per hour (26 November 2013)
“One of the factors here is firms taking advantage of the brightening economic outlook and pushing up hourly rates to make up for the increase in discounts and caps,” commented Kingsmead Square director Chris Bull. "The value of any deals clients have negotiated begins to be eroded compared to the headline discount level, in a similar way to those supermarket discounts where a bottle of wine is bumped up for a couple of weeks before it goes on sale for a ’bargain’ 50 per cent off.”
In total there were 38,740 partners practising at UK law firms in 2012.
Net partnership positions at UK law firms*
*Year to June 30. Data nets off new partner roles against partner roles lost over the year – based on data provided by the Solicitors Regulation Authority.