Provincial firms foresee happier future than City

City firms are four times more likely than provincial firms to be making redundancies over the next six months, says the gloomy new business confidence survey of managing partners by The Lawyer.
And the City's managing partners are not just glum about secretaries' and associates' job prospects. One in 10 City firms expect to lose partners, says the report, which was carried out on behalf of The Lawyer by research companies Wheeler Associates and McCallum Layton.
Much of this pessimism can be traced to grim growth predictions for corporate finance. “The hopes for a recovery in corporate finance work that were evident at the beginning of the year have all but disappeared,” states the survey. Firms expect a mere 2 per cent increase in fee income from corporate finance.
However, as in last quarter's survey, provincial firms remain more optimistic about their prospects for fee and profit growth than those based in the City. Provincial firms are predicting fee growth of 7 per cent over the next six months, while City firms are expecting 4 per cent growth. Provincial firms' expectations for profit growth, at 4 per cent, are slightly ahead of the City firms' 3 per cent, which is a drop of 50 per cent since last quarter.
The expected boost from corporate restructuring work is unlikely to offset the depressing outlook for property work. The City's managing partners expect a mere 1 per cent rise in property fee income – a figure that may explain Linklaters' decision to relegate its real estate practice, as reported in The Lawyer (9 September).
As if this was not bad enough, the survey also exemplifies the benefits of an international strategy based on building one's own presence on the Continent, either through merger or organically, over becoming a member of an international network. While firms with overseas offices now generate an average 17 per cent of total fees locally from these offices, nearly half of managing partners with an international law firm network admit that it is not an effective source of referral business.
Nevertheless, despite receiving only 4 per cent of total fee income from referrals from an international network, 92 per cent of managing partners feel that the benefits of membership outweigh the costs. They argue that the benefits can be seen in the extra credibility that comes from having an international presence and the additional profile that this provides the firm with.