Law firms deliver strong 2018 performance

Clare Boardman

The UK’s largest law firms delivered a strong finish to the year with an average increase in fee income of 8.7% in the final quarter.

This resulted in an overall increase of 7.7% for the year to the end of April – the most common financial year end for UK law firms.

Despite some general uncertainty in the economy, across the Top 100 firms the year has been a strong one with the average performance being much stronger than many anticipated, according to Deloitte’s latest Quarterly Legal Sector Survey.

Fee income increased across all size categories, with firms in the 11 – 25 and 26 – 50 size categories reporting the highest growth rates (11% and 9% respectively) and growth for the largest firms (those in the 1-10 size category) and the firms in the 51-100 size category being more modest, but still strong at 4% and 6% respectively.

The strong growth in fees per fee earner of 5% was achieved through a roughly equal contribution from increases in chargeable hours per fee earner and rates recovered, with the balance of the fee income growth being due to a 2.5% increase in the average number of fee earners at firms in the survey.

Clare Boardman, restructuring services partner and legal sector specialist at Deloitte in Yorkshire, said: “While the overall performance of firms in the sector has been very strong we are seeing huge variances in the performance of individual firms.  There are some firms who have had one of their best years ever, while others are struggling.”

The survey also found that while firms are not expecting to achieve rates of growth quite as strong as those achieved this year, they are forecasting growth in excess of 5% for the year ahead.

Boardman added: “It is really encouraging to see firms forecasting strong growth for the year ahead.  That said, many firms do see a lot of downside risk to their forecasts and they remain nervous about how the year ahead will pan out.”

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