Improving confidence and increased market activity leads to strengthening of law firm rates
7 March 2014
- 4.5% increase in fees per fee earner for Q3 FY14;
- 3.5% increase in average rates recovered per hour across all firms;
- 11.3% increase in fee income for Q3 FY14 as a result of rapid sector consolidation.
The UK’s top 100 law firms have had a strong third quarter (quarter ended 31 January 2014), according to the latest quarterly legal sector survey from Deloitte, the business advisory firm. The survey found that the level of fees earned by each fee earner increased by 4.5% in the last three months, compared to the same period last year. This increased to around 6% at firms in the top 25 (by size) and was around 3% for the remainder of firms in the top 100. The increase in fees per fee earner has been driven by an increase in the average rates recovered per hour of approximately 3.5% across firms in the survey.
This quarter, merger activity in the legal sector has been a significant driver of some firms’ fee income growth. This has been particularly prevalent amongst firms ranked between 51-100, where the growth in fee income of 16.9% this quarter was mainly a result of an increase in fee earner headcount of 15.7%.
Jeremy Black, partner in Deloitte’s professional service practice, said: “It is encouraging to see that firms across the board have achieved an increase in rates recovered this quarter. Greater confidence amongst lawyers when negotiating rates, particularly against a background of limited fee earner capacity has driven these increases. However, the performance of individual firms in the top 100 continues to be diverse and those firms focused on the relatively stagnant domestic market continue to face significant challenges.
“While competition is still fierce in the legal sector and clients remain cost conscious, for firms with exposure to the international M&A markets the outlook is looking brighter than it has for many years.”
Notes to editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited.
“It is encouraging to see that firms across the board have achieved an increase in rates recovered this quarter. Greater confidence amongst lawyers when negotiating rates, particularly against a background of limited fee earner capacity has driven these increases"-Jeremy Black, partner in Deloitte’s professional service practice