Lancashire legal market ‘bouncing back strongly’

Lancashire law firms are benefiting from improved economic conditions and legal mergers continue to rise, according to a study of the region’s legal market.

The annual review of legal firms, conducted in partnership with Preston-based accountancy firm Moore and Smalley, one of nine MHA members, highlights growing demand for legal services in the commercial and residential property sectors, with confidence also returning to many practices active in corporate transactions.

Karen Hain, professional practices partner at Moore and Smalley, and head of the professional practices group at MHA, said: “Large practices have succeeded in making true economy of scale savings in overheads and running expenses, while still increasing top line fee income. We have also seen a reduction in equity partner numbers, so that these fewer individuals are really benefitting from higher rewards derived from personal capital invested in the business.

As the results from last year predicted, personal injury work in progress, signed up before the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), is dwindling, meaning a reduction in income as a result of diminished success fees. Many firms have looked for new areas of litigation to replace the falling workload. Legally aided funded practitioners are experiencing further cuts to income levels and are under continued fee pressure.

Improvements in profit have been made, but not at the same growth rates as fee income rises. However, results show expenditure on certain key overheads has reduced as a percentage of fee income. Expenditure on staffing remained fairly consistent, although this is expected to increase this current year and into next as market forces take over and staff look for new opportunities at higher pay rates.