The UK’s top 100 law firms achieved an average fee income increase of 9.7% in the quarter ended 31 October 2018, compared with the same period last year. This led to an overall increase in fees of 10.6% in the first half of the financial year, according to Deloitte’s Quarterly Legal Sector Survey.
The increase in the quarter was driven primarily by a combination of growth in fees per fee earner of 5.3% and growth in fee earner headcount of 4.5%. Chargeable hours per fee earner increased for each of the size categories with improvements of between 1.4% and 2.4%.
The strong increases in fees per fee earner for firms in the 1-10, 11-25 and 51-100 size categories (5.4%, 7.7%, 6.6%, respectively) were driven by improvements in the rates firms were able to recover. In contrast, firms in the 26-50 size category reported only modest increases in fees per fee earner (0.7%), suggesting that rates continued to be under pressure.
Jeremy Black, professional services partner at Deloitte, said: “Overall, this half year has been a very successful one for the sector. The strength of the transaction and IPO markets over the last six months has obviously been a major factor in this growth. However, while the overall results were very strong, performance of individual firms varied considerably depending on their areas of work and geographical footprint.”
The survey also found that participants expect slower growth in the third quarter, with fee income forecast to increase by 6.9%.
Black added: “The increasing uncertainty faced by firms is leading them to be less optimistic about the next quarter with those participating in the survey forecasting a fall in the rate of growth. Whilst the strong first half of the year should ensure the outcome over the year as a whole is resilient, firms remain nervous due to uncertainty around Brexit and the overall global economic outlook.”