Law firms are “in good shape financially”, with median income increasing by 5.4% last year, according to Law Society research.
The survey of 200 firms across England and Wales found the median fee income for a partner had reached almost £620,000 and a solicitor almost £118,000.
Releasing headline figures from the annual financial benchmarking report put together by its law management section, the society said average salaries for solicitors amounted to 57% of their fee income.
Overheads, excluding salaries, amounted on average to just under a third (32%) of fee income, with the median net profit per partner rising for the fifth consecutive year from £144,600 to £146,600.
Jon Cartwright, partner at accountants Hazlewoods, which carried out the survey, said: “There is no doubt that most mainstream legal practices are in good shape financially, and more confident as a result.
“Medium-term strategy planning is now firmly back on the agenda, although clearly some areas such as personal injury and criminal continue to be tricky.”
Jonathan Smithers, Law Society president welcomed the continuing increase in income for the majority of firms in the survey.
“One area of concern, however, is that a quarter of participating firms’ partners took more money out of their firms than they made in profits, up from a fifth last year. For law firms to remain financially sound, it is important that a considerable amount is retained to fund working capital.”
The survey found a rise in the ‘breakeven point’ for a fee earner from £102,000 last year to £109,000 this year, mainly due to increases in fee earner costs and non-salary overheads.
Paul McCluskey, head of professional practices at Lloyds Bank Commercial Banking, which sponsored the survey, added: “The last 12 months continued to offer challenges for many law firms and although the majority of results are encouraging, a key priority for all firms in 2016 will be to effectively manage their cash flow.”
The full benchmarking report will be published next month.