Scottish sub £35 million law firms see revenue increase for first time in three years

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Scottish law firms achieved a 5% increase in revenue last year according to the latest Financial Benchmarking Report from RBS – the largest free report of its kind.

The research – now in its third year – looks at the performance of law firms operating in the SME space across the UK with revenues below £35 million.

According to results, this is the first time Scotland’s law firms have achieved an increase in profits in three years.

Alastair McLean, Director, Professionals Sector, Corporate & Commercial Banking in Scotland, said: “Scottish firms are typically amongst the most efficient and this approach has supported a healthy median profit level of 26%, down 1% on 2013, which is second only to firms in London.

“It is perhaps surprising then that Profit per Equity Partner at a median level of £84,000 is flat with that of 2013.

“Like other regions, the suggestion is that increased staff numbers has impacted profitability.”

Other figures include:

• Median fees per fee earners at £108,000 is down £6,000 and gearing levels improved only marginally at median level from 2.63 in 2013 to 2.8 in 2014.
• Median lock-up days of 96 represents a 10 day improvement on 2013.
• Typically Partners of Scottish Legal Firms maintain a larger capital position than other regions but against that the level of debt against capital remains higher than any other region.

Steve Arundale, Head of Professional Services at RBS and NatWest, said: “I’m delighted to be releasing our third annual report looking at SME law firms. The report has grown significantly since we launched it three years ago, and has been a valuable tool for us and our customers in tracking how they are performing against their peers in a relatively unexplored area of the market.”

Over 330 firms across the UK took part in this year’s research, produced with Robert Mowbray of legal consultancy Taylor Mowbray, showing healthy improvement in both revenue and profit levels.

The RBS Legal Benchmarking Report is available to download for free at:
http://www.rbs-businesssense.co.uk/financial-benchmarking-law.html

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