The first of a 4-part mini-series, Hazlewoods report upon the vital signs of the UK Legal Market.
Starting with Partner Numbers, next the rise of Platform Firms, Closure stats and finishing with a Law Society approved benchmarking overview.
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Our first vital sign report focusses on Partner Numbers:
UK law firms add 307 Partners in a year – bounces back from 17 increase in the previous year
Legal sector continues growth despite Brexit jitters
UK law firms added a net 307 new Partners to their ranks in 2017/18*, compared to a net increase of just 17 Partners the year before.
The increase in the number of lawyers being promoted to the top ranks of law firms comes despite worries that Brexit might hit law firm growth in areas like M&A, corporate finance and commercial property work. Recent research shows that the UK’s Top 100 law firms generated a record £24.1bn in revenue in 2017/18, a rise of 10% on the previous year**.
A total of 4,594 lawyers became Partners at law firms in 2017/18, compared to the 4,287 who either left or retired from their positions in the same year.
Contrary to initial expectations, Brexit has added to the workload of commercial law firms, in the short term, in areas such as advising on post-Brexit legal changes and rewriting contracts so that they are Brexit proof.
The increase in the number of new partners in the last year may also be a correction to the low number of new Partners added in the year immediately following the original Brexit vote. Strong revenue growth allows law firms to reward associates with a position in the partnership. Without growth in profits, existing partners are much more reluctant to dilute their own equity stake by adding to their ranks.”
An active recruitment market for lawyers will also lead to more Partner promotions. A partnership position will often make it contractually harder for a lawyer to leave their firm. It will also help stop a lawyer joining another firm that has offered them a partnership.”
“Whilst it’s argued that younger lawyers seem to be less interested in becoming Partners at law firms, it is still a very attractive prospect for most lawyers. The financial rewards and the status that comes with a partnership position makes up for the notoriously long working hours that lawyers have to deliver on the way.”
This year’s increase in the number of Partners is the fourth consecutive year of growth. The initial indication for 2018/19 also looks very encouraging. Partner numbers in the sector had dropped sharply in 2013/14, by 778 Partners (see graph below), the same year as changes to partnership tax rules that made it less tax efficient to promote lawyers to a “salaried” partner position.