Top 50 UK law firms: accounts analysis
The legal market saw another strong year, with buoyant demand for legal services driving strong revenue and profit growth across the sector. However, with little improvement in lock-up or cash levels, the sector looked vulnerable as it headed into the COVID-19 crisis.
We seek not just to solve, but to anticipate the challenges faced by the legal industry. Our insight programme shines a light on the most pressing issues, while working collaboratively to find thoughtful solutions for clients.
We have just launched our 25th annual Smith & Williamson Law Firm Survey. We sought the opinion of over 130 senior executives at UK law firms to examine how they are adapting their businesses to succeed in a changing market.
Together with Legal Week, we analysed the latest set of filed accounts for the top 50 UK law firms to explore the financial health of the profession.
Recognised as a leading adviser to the legal market, we offer a co-ordinated, cross-discipline approach. Our services cross accounting, tax, business, investment management and financial planning, each tailored to the needs of you and your firm. We have capabilities in over 115 countries, provided in part through our membership of Nexia International and Oaklins International. We strive to help our clients achieve their financial ambitions, no matter where in the world.
Employee benefits: Ensuring you can attract and retain the best talent.
Partners’ finances: A full range of financial planning and investment advice to provide enhanced financial security.
Profit sharing: Advising on profit sharing strategies to drive desired behaviours.
Incorporation: Assisting with the incorporation of a partnership as a company or LLP.
Partnership disputes: Acting as expert witness and mediating on disputes
Investigations into rogue partner activities: Assessment of scale of inappropriate behaviours and prevention measures
Data identification post cyber-attacks: Investigation into impact of hacking activity
Administration of insolvent professional practices: Formal appointments and solutions for firms in financial distress
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Legal Week Top 50
The legal market saw another strong year, with buoyant demand for legal services driving strong revenue and profit growth across the sector.
However, with little improvement in lock-up or cash levels, the sector looked vulnerable as it headed into the COVID-19 crisis.
We delve into the issues affecting the legal industry: why are efficiency gains proving stubbornly hard to achieve? How can the sector address the problem of lock-up and improve its cash position? Is it too late?
We provide in-depth analysis, in association with Legal Week, of law firm LLP accounts for the year 2018-2019. Using recently filed data from Companies House, we look at everything from debt levels to profit margins to partner capital to build robust insight into the health of the legal sector.
Professional Practices Leaders
Professional practices are contending with an increasingly competitive marketplace for both talent and clients. Leaders must also look at the role for technology and how to create efficiency and productivity.
In our Professional Practice Leaders section, we talk to your peers about how they have handled these and other challenges and the steps they're taking to build the practices of the future.
Law firm survey 2019
Confidence among senior executives is a factor that has been measured over the majority of the last 25 years. Levels of optimism have taken a significant dip this year, in light of the US-China trade wars, tensions in the Gulf, the ongoing Brexit saga and signs of a weakening global and domestic economy.
Alongside lower levels of confidence is continued competitive pressure: from traditional UK firms, US firms and, now recognised as a threat here to stay, the Big 4 accountants. Retention of good people is the number one concern to emerge from the survey, with firms vying to attract the best and brightest minds. It’s not just cyber-security that firms are focusing on in technology investment over the next 12 months with the automation of manual processes and improving the client experience, being a close second and third in terms of priorities.
For the first time the survey asked whether the Limited Liability Partnership (LLP) model still best served the needs of the business. There is a clear view that a pure LLP structure may not be the best arrangement to take these organisations forward. This clearly indicates just how much and how rapidly the legal sector has been changing over the last few years.
We also hear from Pam Sayers, a partner in Smith & Williamson’s Professional Practices team, on her reflections of the past 25 years and the changes she has seen first-hand in the legal industry.
Lock-up: debtor days fall, but problems remain
For many years, the legal profession has been subject to the apparently small but persistent problem of managing lock-up. Firms consistently have large outstanding debtor days and poor cash flow. In normal times, this leaves firms with limited cash resources to invest in the business. Today, as law firms struggle with the impact of COVID-19, it may pose a more serious threat.
Efficiency: productivity gains elusive
While revenues and profits have continued to increase as demand for legal services expands, law firms have found it difficult to improve productivity at the same time. This is in spite of higher spending on technology and people, which should bring about efficiency gains.
Professional Practices: COVID-19: what will the future look like?
01/06/2020 - As the Government imposed lockdown, we explored the immediate action all firms should take to protect themselves financially. We then looked at the lessons to be learned so far from the impact of the pandemic on professional services firms. In this insight we look further ahead, assessing the potential longer-term consequences.
International tax reporting changes: Directive on Administrative Cooperation 6 and the Mandatory Disclosure Rules
HMRC has recently released draft regulations and a consultation document on the sixth version of the Directive on Administrative Cooperation (DAC6), an EU directive that will be implemented in the UK.