Global scale counts in achieving superior revenue and profit growth for law firms, a report by Citi Private Bank on the sector has found.

Global law firms beat other segments in this industry in terms of profits per equity partner, or PPEP, and other metrics, last year, although overall results for 2013 slightly lagged behind those of the previous 12 months but momentum remains positive, a survey by Citi Private Bank shows.

The US bank’s Law Watch report, a quarterly update on the sector, showed that PPEP rose by 3.5 per cent last year; revenues rose by 2.5 per cent, beating expense growth of 2 per cent. Some 180 law firms took part in the survey.  The poll comprised 11 global, 19 international, 65 national (US) and 85 regional (US) firms.

The results did not break down the figures in terms of private client law firms; however, in general the figures suggest that scale does count in terms of financial performance, which might suggest why mergers and acquisitions happen at a time of continued upward pressure on costs, even though a service sector area such as the law might not be best suited to economies of scale.

There were more surplus lawyers in the end of last year, defined in the report as “excess capacity”; equity partner headcount fell slightly.

The data suggests that international law firms with a global footprint were better able to report stronger results.

“Global firms in particular saw the highest revenue growth, and were the only segment to see demand and productivity growth. This segment also ended 2013 with the highest inventory growth of all segments. The more US-centric firms, on the other hand, saw declining demand, deepening excess capacity and declining margins,” it said.

Am Law 1-50 firms [US firms in the top 50 rankings by size) materially outperformed other segments. They led all segments in revenue growth and saw the lowest increase in expenses. In fact, they were the only segment to see revenue growth outpace expense growth.