Whilst 56% of firms grew net profit by more by 10%, 35% said they had dropped below the profits achieved in the previous year.
Firms reported having cut spending as a result of the recession, but they were questioning whether they were currently spending enough now that the economy had improved.
The survey also highlighted that most smaller firms had increased their number of employees, whereas the medium and larger firms had remained static.
Many firms appear to have struggled to find the “Goldilocks Zone” of spending not too much, not too little, but just the right amount on their overheads.
The anonymous survey of 127 law firms clients, conducted by Waltons Clark Whitehill in conjunction with HCWA, its unique network of partner firms around the UK, allows local practices to benchmark their performance against other firms.
Paul Harrison, Director at Waltons Clark Whitehill, said: “The benchmarking report produced as a result of this survey is an unique opportunity for law firms to assess their performance in relation to their competitors.
“It was interesting to see on average smaller firms had seen the greater increase in profitability over the last twelve months.
“Additionally, 39% of firms had available cash of below 5% of fees, this gives a real indication of the financial challenges faced by the legal sector.”
Any firms interested in receiving a full copy of the report can e-mail shirley.blackwood@waltonscw.