Top 100 UK law firms revise down growth forecasts
8 March 2013
The UK’s top 100 law firms achieved fee income growth of 3.5% in Q3 (ended 31 January 2013), compared with the same period last year, according to the latest Quarterly Legal Sector Survey from business advisory firm Deloitte.
The analysis has revealed a pattern of relatively subdued growth throughout FY12. Subsequently, this has led to firms lowering forecasts for annual fee income increases. At the start of the financial year, the sector predicted 5.7% growth. However, this quarter’s expectations for annual revenue increases have been adjusted to 3.3%. Whilst the top 10 firms achieved the lion’s share of growth this quarter, with nearly double the sector average (7.4%), even the market leaders remain conservative, estimating a total annual rise of only 2.7%.
Jeremy Black, partner at Deloitte’s professional services practice, said: “Law firms are right to be cautious as the domestic market remains fiercely competitive whilst pressure on rates persists. Unfortunately, this has led to the sector forecasting annual income fee rises that are barely above inflation. With challenging economic conditions expected to continue, it has been necessary for firms to reconsider what margins can be achieved.”
However, this third quarter has seen an end to the continual fall in growth rates which has occurred consecutively for the previous four quarters. Higher revenues have been driven by an average increase in fee earner headcount and average fees per fee earner, which rose by 1.8% and 1.9% respectively.
Jeremy Black continued:
“It is pleasing to see that growth rates have not fallen any further this quarter. However, we are far from the revenue increases witnessed this time last year. In this tough environment, consolidation in the market will continue to become a key trend. Merger activity highlights the ‘survival of the fittest’ reality facing the professional services sector.”
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.