The latest UK Legal Benchmarking report has revealed that Britain’s legal sector welcomed growth for the third consecutive year in 2016.
The report, which was put together by high street bank NatWest, revealed that law firms with five or more partners enjoyed growth of between eight and 20 per cent over the course of the year.
According to the report, this growth was spurred on by a flurry of mergers and acquisitions (M&A) deals and other corporate transactions.
Firms with five partners or more also managed to hold back on expenditure and reduce their overheads throughout the year – but firms with four partners or less did not fare quite so well.
In fact, the report found that law firms at the smaller end of the scale experienced a two per cent decline in income during 2016.
Commenting, NatWest spokesperson, Steve Arundale, said that firms ought to focus on “efficiency” going forward.
He said: “This report highlights some obvious areas of focus and opportunity for legal firms if revenue growth does not continue at the pace witnessed in recent years.
“Firms should look to reduce their lock-up, which at an average of 113 days is now longer than at any time in the last five years.
“Without a constant flow of new matter starts and paid fees they would, on average, run out of cash within 40 days, possibly something worth thinking about before all the cash is distributed in the form of partner’s profits,” he said.
“A further area of risk for legal firms comes in the form of cyber-attacks. Our findings suggest that one in four of all legal firms have been the subject of a criminal attack and some of them would have incurred a financial loss and potentially reputational damage.
“There is huge pressure on firms to be ever more diligent and to ensure that they have a disaster recovery plan in place,” he added.