The number of partners at UK law firms has risen for a third consecutive year says Hazlewoods, Chartered Accountants and Business Advisers who specialise in the legal profession.
Hazlewoods explains that the total number of partners at law firms increased by 17 in 2016/17, following increases of 264 and 284 in 2014/15 and 2015/16 respectively.
Hazlewoods says that although there has been a slowdown in that growth rate of new partners, the slight rise in the last year shows the industry has remained resilient through the period of immediate uncertainty created by Brexit.
As a result of Brexit, law firms are assessing what potential changes there will be and what they will mean for their future workloads, which roughly splits into two scenarios:
- An increase in work from companies requiring legal advice to deal with the possible impact of Brexit. With EU laws and regulations so deeply imbedded in the UK economy businesses, especially regulated businesses, are using law firms to help prepare for the final Brexit. This work ranges from scenario planning through to the rewriting of contracts and setting up of new legal entities to help smooth the transition to final Brexit.
- A reduction in corporate finance and broader financial services and real estate work. These are all key areas of revenue for many of the UK’s largest law firms. The risks connected to Brexit is said to have made UK businesses less attractive as M&A targets and UK real estate less attractive compared to other markets such as e.g. Frankfurt. If UK based financial companies lose EU passporting rights UK law firms could lose out on work as more financial services shift activities to the rest of Europe.
Hazlewoods says that Top 100 law firms are still the main generator of new partners, but “platform law firms” and boutique legal practices are growing niches that are creating their own flow of new partners. There is a reduction in partner numbers in many smaller firms, and the move from partnership to limited company status is also continuing apace.
Some larger law firms are losing senior lawyers to platform law firms and boutique law firms who offer them the prospect of retaining a higher percent of the fees they bring in for themselves.
Andy Harris, Associate Partner at Hazlewoods, comments: “The growth in the number of partners at law firms for the third year running, although small, shows the resilience of the legal profession.”
“Despite Brexit and the uncertainty surrounding any future deal, law firms have been able to maintain their current partner numbers, and in many instances continue to grow the business.”
“We anticipate that it will continue to be the success of strategically important practices, like corporate finance and real estate that determines the overall growth in partner numbers at the biggest law firms.