By Helen Chandler-Wilde, Bloomberg News
Profits per partner at U.K. law firms rose 8.5 percent to an average of just under 136,000 pounds ($178,000) in 2016 to the highest level in seven years.
The increase was fueled at least in part by law firm revenues that rose 5.8 percent, well above inflation, according to a survey of the industry by accountants at Hazlewoods.
Profits per partner have traditionally been considered a key indicator of law firm financial health.
The Hazlewoods survey comes a few weeks after London’s largest law firms, known as the Magic Circle, released their annual earnings. The post-Brexit slump in the pound boosted revenue from foreign exchange gains.
“Law is able to grow fast because the world has created new issues and lawyers are able to solve them,” said Michael Chissick, managing partner at London-based Fieldfisher LLP, which increased profits per partner by 16 percent last year. “We have several fast-growing teams like data security that didn’t exist 10 years ago.”
According to Hazlewoods, firms also boosted profits by keeping a tight rein on costs, fitting more employees into limited office space and keeping marketing and insurance expenses stable.
“While salaries may be rising, our findings suggest that most firms have a firm handle on their other big costs and are operating more efficiently” said Andy Harris, an associate partner at Hazlewoods.
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