Benchmarking: take the benefits
Solicitors’ firms should look out for the 2018 financial benchmarking survey, which launches this month
Knowing just how your business is performing is a crucial aspect of running a successful law firm. Completing the Society’s financial benchmarking survey, carried out by independent researchers Tribal, helps firms of all sizes, from sole practitioner and high street firms to large-scale commercial firms, assess their performance against similar firms elsewhere in Scotland, as well as compare their own performance year on year.
This year’s financial benchmarking survey will be launched in February. The confidential, online questionnaire has been improved and streamlined to make it even easier to complete – all that is required is your firm’s most recent set of accounts. Look out for your firm’s online questionnaire from Tribal to take part.
Taking part allows firms to view and compare:
- income and costs by the size or location of a firm;
- a breakdown of the firm’s total costs;
- cashflow management;
- the relationships between the different results, e.g. plotting your firm’s staff costs against profitability.
Findings from the 2017 financial benchmarking survey showed that profits per partner (before outlays) for the respondent firms have remained relatively static since 2014’s cost of time survey of the profession, at £69,000. However, some smaller firms appear to be closing the gap on their larger competitors, with two to four-partner firms showing an 11% increase in median profit per partner levels to £82,000. This compares with five to nine-partner firms, which showed a 4% increase to £96,000 profit per partner. Bigger firms of over 10 partners showed the highest profits per partner at £125,000.
Graham Matthews, President of the Society, said: “I encourage every firm to participate in the 2017 survey. It has been designed to gather relevant information and offer interactive, online reporting to help solicitors assess how their own business is faring year on year, as well as compare how they have performed in the wider market. Firms which complete the survey on annual basis will build up an in-depth knowledge and understanding of where their business is doing well, or of any underperforming areas, which can help steer their future development.”
Sue Carter, UK Head of Professional Services Sector at Clydesdale Bank, which is sponsoring the research, added: “Firms that choose to participate in the survey can easily demonstrate to their bank how seriously they take financial management. The findings should inform strategic decisions and enable questions to be asked such as ‘Why are you performing differently?’ or ‘What needs to change or remain the same?’ Benchmarking your own firm against trends and your peers can be a valuable aid to making the right decisions for your business. Clydesdale Bank’s Professional Services Sector team has first-hand insight into the unprecedented levels of change that continue to reshape the legal services sector. We want to add value and facilitate growth to ensure firms continue to be successful.”
All survey responses go to research company Tribal and are confidential. To read the report on the 2017 survey findings, check the financial benchmarking pages on the Society’s website.