The results are in: Financial Benchmarking Survey 2024

The Financial Benchmarking Survey 2024 presents financial performance data on the financial year from 31 March 2022 to 30 April 2023.

The survey is written and produced by the legal team at Hazlewoods LLP and sponsored by Lloyds Bank.

The 2024 results show that:

• in early 2023, many firms were performing well, with 73% of participants recording year-on-year growth, with 34% seeing growth of more than 10%
• median practice fee income increased by 6.8% and income per equity partner increased by 9.8% from £1,023,831 in 2022 to £1,124,103 in 2023
• median net profits per equity partner fell for the second year in a row, from £211,204 in 2022 to £209,650 in 2023, returning to pre-COVID patterns:
  • firms saw a steep 824% median increase in interest received on money held in client accounts; removing interest earned, median net profit per equity partner fell by 7.85%
  • median spend on non-salary overheads per fee earner (everything except salary costs) increased from £38,791 in 2022 to £43,886 in 2023, with no single obvious area of increased spend

What do these findings mean for firms? And how can they inform how you run your business? Explore our results overview

How you can use these findings

Taken as a whole, the findings focus on not just challenges for law firm leaders but th eneed for good management habits in terms of work in progress, collection of fees and to build on the income growth across the sector, which is insufficient to protect profitability year on year.

The data suggests areas to focus on to enhance the future for all law firms.

For those who did not take part, looking at the trends can help with planning and future management. Taking part next time will not only enhance the data but also give access to a personalised summary of your firm against the benchmark results.

The benchmarking aspect will help those who took part to be more profitable in future years. By using our data, leading your law firm should get that little bit easier.

Change in fee income compared to the previous year’s fee income

Overheads and profitability as a proportion of fee income

“The resilience of law firms shines through this year’s survey,” said Paul Bennett, chair of the Leadership and Management Section. “Economically, it is a tough period, but firms are doing well.”

“The obvious challenge of productivity shown in the reduced billed and recovered hours is a likely good place for law firm leaders to support their teams with training and personal development.

”The profitability challenge is also something which may benefit from training for law firm leaders, as we know pricing training and skills enhancement on the setting and recovery of fees can help.

“Firms reviewing this year’s survey might like to reflect how post-COVID challenges can be an opportunity to demonstrate inspiring leadership. Considering current and future fee income, collection and capital needs can be useful to help plan ahead.

“We would like to thank those who took part in the survey. Benchmarking should help them with planning and revising goals, as every firm who participates gets a personalised summary with their own data.”