Mixed results for UK law firms in first quarter
11 September 2015
- Top 100 law firms achieve average fee income increase of 6.8% in Q1 FY16;
- Merger activity responsible for at least one third of overall increase in fee income;
- Increase in fees per fee earner of 3.5%.
The top 100 UK law firms achieved an average increase in fee income of 6.8% for the first quarter in 2015, according to Deloitte’s latest quarterly legal sector survey. This was partly driven by merger activity over the last 12 months, which has contributed at least one third of the overall increase.
Jeremy Black, professional services partner at Deloitte, said: “There has been significant merger activity in the last year which has had a real impact on the growth rates recorded in this quarter. This is particularly evident for firms in the 51-100 category, where approximately half of the fee income increase of 13.6% was generated by an increase in fee earner headcount of 7.4%.”
Firms outside the 1-10 size category achieved encouraging average increases in fees per fee earner of 4%, despite only modest increases in chargeable hours per fee earner. This suggests that firms are achieving improvements in the average rates they are recovering per hour.
Black said: “The increase in average rates is most likely the result of a general softening in the external pressure on rates, as well as the impact of the work firms are doing on ‘pricing’ and ‘legal service delivery’.”
However, for firms in the 1-10 category, average fee income has remained flat, despite strong improvements in average chargeable hours. This is largely due to the ongoing challenge of practicing in certain overseas locations and the impact of foreign exchange fluctuations on Sterling denominated results.
Black commented: “On average, firms have had a reasonable start to the first quarter of the new financial year. However, many remain concerned that rising costs could make it difficult for firms to maintain and increase their profitability this year.”
Notes to editors
This is Deloitte’s 33rd Quarterly Legal Sector Survey of the top 100 UK law firms in the UK.
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.
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