Global operating and financial performance
2014 Annual Law Firms’ Survey
UK-based global firms increased both fee income and profits over the last year. An important challenge these firms must address is the dilution of UK profits by international operations.
- Overall, firms have seen an improvement in average global fee income and profits.
- International operations continue to be supported by UK financial performance. Profits per all partners from Top 10 firms' international offices were similar to 2013 at £558k (2013: £553k), whilst UK profits per all partners improved from £840k to £925k.
- International partners in Top 10 firms make up 62% of total global partner headcount, but are only contributing 56% of revenues and 49% of profits. For Top 11-50 global firms, global partner headcount falls to 36%, with a revenue and profit contribution of 32% and 26% respectively.
- As in previous years, profit margin by region is mixed with UK margin performance significantly ahead of international.
- Chargeable hours across international regions are significantly below those of the UK. Average Top 10 international chargeable hours for 1-5 years pqe are between 10% and 39% behind the UK by region.
- US top tier firms (top tier is defined as firms with global revenue in excess of £1bn) have increased their net profit margin by 1 percentage point to 47% whilst the UK top tier achieved, on average, 37%.
- Whilst fees per full equity partner in UK and US top tier firms are consistent, the UK top tier is 21.5% behind its US counterparts with respect to profit per partner. UK top tier firms fall significantly short of the US top tier in terms of both fees and profits per fee earner – 20.5% and 36.3% respectively.