2012 continues to show some slow growth (if any) in demand for legal services in Western markets, leaving a lot of big name firms strugling to keep up profits. Add to that, resistance to fee increases and growing expenses, and its no wonder we’re seeing some cost cutting measures. However, that doesn’t seem to be the main reason for redundancies across the board. Take, for example, the recent news of the latest layoffs at Addelsons, from Roll on Friday:
“There was more bad news on the redundancy front this week as Addleshaw Goddard announced yesterday that 24 fee earners were at risk, and Irwin Mitchell confirmed that nine staff had been booted out in April.
Addleshaws is in the uncomfortable situation of announcing the consultation at the same time as reporting a rise in profits per equity partner of 37% (with turnover and profit also up 5% and 30% respectively). The explanation, as ever, is that in this difficult and nervous market, senior people on big money are singularly failing to leave. As the law firm model normally relies upon natural attrition, the only solution for increasingly top-heavy firms is to undertake a bit of unnatural enforced attrition, as recent examples have shown.”
So, want more numbers? Here you go, courtesy of thelawyer.com:
“The news comes as Addleshaws has posted a 5 per cent rise in turnover for the 2011-12 financial year. Revenue at the firm was £170m, up from £161.9m in 2010-11.
Profit for 2011-12 was up 30 per cent, from £34.4m to £44.9m, while average profit per equity partner (PEP) rose 37 per cent over the same period, from £328,000 to £450,000.
The rises come after a disappointing 2010-11, however, when the firm cut around 40 support staff jobs (24 May 2011).
In that year profit fell 17 per cent, average PEP dropped 23 per cent and revenue fell by just over 3 per cent.”
All is not lost however. We’re seeing the development (overdue) of new business models and approaches to expense management and compensation packages, which may bring some growing pains, but will hopefully lead to a bit more growth and stability in the legal market in 2013.
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