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£14bn lawyers' party could be over

26/ 8/2008

THE UK's 100 biggest law firms racked up a record £14bn in fees last year - but a worsening economy could put an end to the party, it emerged today.

The top 100 firms posted profits of £4.7bn in the 12 months to March - 13 per cent ahead of the previous year - and billed clients £13.96bn in the process, according to Legal Business magazine's annual survey.

Partners at City law firm Slaughter and May landed up to £2.43m each, the magazine said.

But editor James Baxter said `dark clouds are on the horizon', with most law firms expecting to show a drop in profits this year for the first time in a decade, following 10 years of rapid growth.

He said: "The credit crunch, while not showing much impact on this year's figures, has UK law firms worried.

"There are precious few deals being done, the usually lucrative financial services markets have dried up, and the commercial property market has all but stalled." Although litigation practices tend to do better in a downturn as troubled firms turn to the courts, these could struggle to offset billing shortfalls in other areas.

"Law firms are beginning to look at one of their costliest overheads - their staff - and ask questions. We have begun to see a trickle of redundancies, and more are expected. It is costly to have lawyers on six-figure salaries sitting there with nothing to do."

The UK's top 100 firms employ 47,300 lawyers, of which 6,724 are equity partners or owners of the business. These took home an average of £473,000 last year.

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