A record year – but no time for complacency

This year's financial figures from the top 50 firms reflect the blissful economic climate most businesses are currently enjoying. There are few surprises. The firms we expected to do well have indeed done so with record fees and profits.

Others have performed relatively well, but there is a core of firms which go against the trend. It is these which must ask some serious questions about their business. If a firm cannot improve its position in such a vibrant period, something is amiss. These firms are often between a rock and a hard place. They find themselves competing for premium business with the top firms while their bread and butter clients are increasingly looking for better deals.

Divising a suitable strategy for success is a difficult task as each firm is a collection of individuals whose collective talents translate into the bottom line. Hard choices have to be made leading to uncomfortable situations, and even then there is no guarantee of success for these firms. It takes a degree of vision to predict how the market will move. Lawyers, while trained to spot risk in clients' business, do not have the same skills when it comes to their own. However, if action is not taken, their client base will shrink to such an extent that they will be forced into mergers or break ups.

The figures present key messages, namely that firms which have invested time and money in devising strategies for the future are reaping the benefits – Clifford Chance being a case in point. If Linklaters' investment in the alliance succeeds, then it will also be worth watching. Slaughter and May's strategy goes somewhat against the current line of thought and it will be interesting to see how it pans out.

Regional firms can also ensure they are on the success list if Hammonds Suddards is anything to go by. The John Heller school of management at that firm believes that bottom line profits must increase if firms are to retain their best people in an increasingly mobile and polarised marketplace.

The favourable economy does not mean that major decisions can be postponed. Few can afford to await the arrival of a downturn before acting.