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An article on a recent PWC survey of UK law firms caught my eye. So I dug into it. The title “Top 10 UK Firms Use Int’l Growth To Grab Huge Revenue Slice” gave me the impression these firms were doing well by growing in international markets. So the questions for me were: Where? and How? I really wanted to learn from these successful firms’ experience.
At first blush, a rosy picture appeared.
The top 10 firms, which receive about 44 percent of the total legal revenues among the top 100 firms, are reinforcing their dominance with better results across all financial metrics, according to PwC’s 21st Annual Law Firms’ Survey for 2012.
Despite the revenue increases reported by 82 percent of the firms that participated in the survey — much of it through mergers and lateral hires — profits per equity partner in the top 10 firms fell 24 percent when compared to 2008 and adjusted for inflation, according to the survey.
So apparently “better results” includes a significant drop in profits. And ‘growth’ is growth in number of laterals. But it could have been worse for the Top 10.
The top 10 firms have managed to keep a stable headcount, but those firms ranked just below the top 10 saw “significant average reductions both in equity partners and in overall fee earner numbers,” the survey said.
Although there was some good news on the cost savings front.
Though more than half of the firms surveyed completed cost reduction programs in the previous two years, most reported savings of just 5 percent and none reported more than 10 percent in savings, according to the report.
OK – so not really good news. What was the point of this article?