Robust growth for law firms
THE UK’s top 100 law firms have enjoyed a robust performance in Q2, according to the latest quarterly legal sector survey from Deloitte.
The survey showed a 5.2% average increase in fee income, compared to the same period last year.
This quarter, growth has been achieved through a combination of an increase in rates, chargeable hours and fee earner headcount, Deloitte said. The drivers for growth vary across categories.The ten largest firms achieved a 6.3% rise almost exclusively due to increases in rates. In contrast, nearly three quarters of the 6.7% growth achieved by mid-tier firms (those ranked between 26-50) was driven by an increase in fee earner headcount.
Clare Boardman, restructuring services partner and legal sector specialist at Deloitte in Yorkshire, said: “The results support recent economic data showing the services sector as a key engine for growth in the UK economy. Admittedly, the position can be more challenging for some local practices, but on a national level the legal sector is seeing increased activity in the real estate and corporate departments as a result of increased bank lending and a rise in IPO and transaction activity.
“Whilst last quarter’s results were strong, we can perhaps take more confidence from this latest set of results as a greater proportion of growth has come from underlying improvements, rather than mergers and acquisitions in the sector.”
The half year results are consistent with the Q2 results with 5.7% average growth. This consistent performance suggests a more stable environment for the sector than that seen for some time. Looking ahead, law firms are forecasting a strong 8.4% year-on-year increase in fee income for Q3 and 6.1% annual growth for FY14.
Boardman added: “The sector has achieved a strong first half performance and is well positioned to build on this in the second half. This is essential given the demanding cash quarter firms are now in. Hopefully, this is the start of a steady rise in activity for the domestic market after a prolonged period of stagnation.”
