* Top firms saw gross margins over 60 percent
* Report sees mid-tier legal firms under pressure
* Larger firms expect overseas growth
By Dasha Afanasieva
LONDON, Oct 29 Takeovers and new hires helped UK
law firms maintain profits in the year ended June 2012 despite a
steady decline in the earning power of individual partners, a
Of the top 100 British law firms, four in five increased
their income in nominal terms over the year, largely through
acquisitions and hiring partners who bring in clients, PwC, a
professional services firm, said in a report.
The earnings boost came despite average UK fees per partner
having fallen by over a fifth since 2008 as economic uncertainty
has suppressed corporate activity and, in turn, the demand for
"Against a difficult backdrop, 2012 could be characterized
as a solid year for the legal sector, with the gap between best
and worst performing firms beginning to widen further," said
David Snell, partner and leader of the professional partnerships
advisory group at PwC.
The UK legal system, which is often the choice of
international firms for takeovers or disputes, is an important
bellwether for corporate activity.
The PwC report found the top 10 firms by income, which
account for 44 percent of total income, recorded better UK
results thanks to tight management of fees and an ability to
charge premium rates.
Mid-tier firms, however, were squeezed by larger rivals as
well as smaller firms and new entrants, according to the study.
Larger British law firms expect their overseas business to
grow in the coming years, according to the report which cited
Indonesia, Korea, Africa and South America as potential growth
Half of the top 10 firms expect to acquire overseas players
within the next three years.
So far, 2012 has seen moderate growth in international
revenue and profits, with a number of major deals in Australia,
China, Singapore, Canada, South Africa and the Middle East, the
New legislation allowing law firms to seek external
investment by converting from partnerships into so-called
Alternative Business Structures (ABS) has provided a new source
PwC said that ABS has already and will continue to entice
new entrants into the British legal market.