06:45, November 23 54 0

2017-11-23 06:45:09
Business services numbers dip as firms cut costs, data reveals

The number of business services professionals as a ratio of total fee-earners fell across UK 200 firms last year as cost-cutting, efficiency drives and the increased use of technology increasingly take hold in the legal market.

Recent years have seen a trend for firms to slim down their business support functions and the latest data in this year’s UK 200: Business Services report, published next Monday, appears to confirm that trend, with the ratio of business services staff to fee-earners falling year on year.

In 2015/16 the average ratio of business services professionals to fee-earners across the UK 200 was 0.72:1. Last year that ratio dropped to 0.70:1.

Of the 10 firms with the lowest non fee-earner to fee-earner ratios, four feature in the UK top 100 (ranked by total revenue) although none feature in the top 50.

Allen & Overy (A&O), Clifford Chance, DLA Piper and Linklaters all feature in the top 10 highest ratios among the top 50 firms ranked by revenue. Clifford Chance (0.82:1) and DLA Piper (0.81:1) are two of just six firms in the top 50 with a ratio of more than 0.8 non-fee-earners to every fee-earner.

Of the top 10 firms ranked by total turnover six saw a reduction in the ratio of non-fee-earners to fee-earners last year, although in most cases the change was minuscule. The most significant drop was at Freshfields Bruckhaus Deringer, which has reduced its ratio over the past three years from 0.95:1 in 2014/15 to 0.71:1 last year. The firm has moved the majority of its back-office roles to Manchester in the past couple of years, and in January 2017 put 180 personal assistant roles under review.

The other four firms in the top 10 – A&O, Ashurst, Herbert Smith Freehills and Norton Rose Fulbright – all reported slight increases in their non-fee-earner to fee-earner ratios in the past year.

Dispersed firm Keystone Law, which recently confirmed its intention to list on the London Stock Exchange, has the lowest ratio in the UK 200, just 0.13:1. The firm’s lean operating model means it has just 32 business services staff to support its 248 fee-earners, who work from a variety of locations around the UK including their homes, co-working or client spaces.

The trend for fewer business services staff tends to be exacerbated by merger activity, with firms routinely cutting down on support staff in the wake of a tie-up. CMS Cameron McKenna, Nabarro and Olswang announced in the run-up to their tripartite merger in May 2017 that they would be making around 300 secretarial and support staff roles redundant.

Meanwhile, the use of technology is also leading to redundancy programmes at firms including BLM and Pinsent Masons, both of which are in the process of reducing their support staff headcount.

Other firms, while not actively managing support staff numbers, are choosing not to replace those leaving or going on maternity leave.

In contrast to the prevailing trend, the proportion of firms with a business services staff to fee-earner ratio of between 0.5:1 and 0.8:1 dropped from 61.5 per cent in 2015/16 to 58 per cent last year.

Although the overwhelming majority of firms still have a non-fee-earner to fee-earner ratio of less than 1:1, a total of 19 firms out of 200 exceeded this ratio last year. Just two firms, Bott & Co and Thrings, had a non fee-earner to fee-earner ratio of more than 2:1. Bott’s volume, process-driven model means it relies heavily on technology, and secretarial staff in particular, to drive instructions.

Just six firms have a non fee-earner to lawyer ratio of less than 0.5:1 – Dickson Minto, Fox Williams, Gordon Dadds, Keystone, Kemp Little and Knights. Again, Keystone has the lowest ratio of 0.13:1, with most of its fee-earners being qualified lawyers.

A total of 80 firms have a ratio of 1:1 or higher, although almost half of these are banded between 1:1 and 1.2:1.