Hefty drop in profits for lawyers

LAWYERS have been warned to brace themselves for another tough year after a second consecutive and hefty drop in profitability across the Scottish sector.

Though many larger firms managed to raise their profits, the sector as a whole suffered an 11 per cent decline last year. Smaller firms in the urban areas around Glasgow and Edinburgh were particularly hard-hit.

The figures - from the Law Society of Scotland's annual "cost of time" survey - show that the average profit per equity partner across all sizes of firms fell to 64,000 last year, down from 72,000 in 2009.

In total, profits across the Scottish sector have tumbled by more than 40 per cent since 2008's average high of 104,000.

The average among large firms of ten or more partners staged a recovery from 2009's crash, with profit per partner rising from 136,000 to 178,000.

The worst affected were sole practitioners and those with between five and nine partners. Average profits for sole practitioners tumbled from 55,000 to 49,000, with those in Glasgow and Edinburgh worst hit with 24 per cent and 12 per cent falls respectively. Partnerships with between five and nine equity holders saw profits drop to 66,000 from 84,000 previously.

Firms of between two and four partners suffered a gentler decline to 74,000, down from 77,000 in 2009. Lorna Jack, chief executive of the Law Society of Scotland, said: "The report predicts continuing difficulties for this year as the public sector cuts make an impact.

"Solicitors need to plan ahead to make the most of any new business opportunities in a year that will see the introduction of alternative business structures, which will allow solicitors to set up in partnership with other professionals."