Steep decline in activity leaves national firms at the bottom of the pile for second year running as turnover falls 2.3%

National firms have emerged as below-trend performers in the UK for a second year running, with reduced workflow resulting in widespread job cuts and plunging profitability in 2008-09.

The top 10 national and regional firms saw turnover contract by 2.3% during the last financial year, compared with an increase of 10.4% in 2007-08, and revenue growth of just under 3% across the top 50 as a whole. Profits per equity partner (PEP) fell by 23.9%, against a marginal increase in PEP the previous year and a 17% drop across the top 50.

The results mean that average PEP across the biggest national and regional players stood at £375,100 for 2008-09, compared with £492,700 the previous year.

Wragge & Co was the worst performing firm in the group by revenue growth, reporting a 16.8% drop in turnover to £105.8m, while Shoosmiths saw the biggest dip in profits across the whole of the top 50 – reporting a 53.8% fall to £151,000.

The results came after a difficult year for the firms, in which all bar Beachcroft and Pinsent Masons launched redundancy consultations. In addition to redundancies, Addleshaw Goddard and Hammonds both carried out partner restructurings.

Peter Crossley (pictured), managing partner at Hammonds, said: "I'm never going to be satisfied that we went backwards, but one has to accept and understand the challenging market conditions we are in. In one sense, that year is history and it is about concentrating on the future. It is imperative that we achieve a profit turnaround in the current year."

Despite the poor results in the group as a whole, both Hill Dickinson and Beachcroft put in above average performances, with Hill Dickinson growing revenues by 12% and Beachcroft by 6%.

Beachcroft managing partner Paul Murray commented: "The firms that still have a mix of work that is overly-reliant on real estate or transactional will continue to have a very difficult year."