Top 100 UK law firms achieve fee income growth of 5.4 per cent in FY16
The UK’s largest law firms achieved an average increase in fee income of 6 per cent in the final quarter of the financial year ended 30 April 2016 compared with the same period last year.
This resulted in an average increase in fee income of 5.4 per cent for the full financial year, largely driven by a growth of 2.6 per cent in fee earner headcount and increases in the average rate per fee earner hour that firms have been able to recover.
Average fees of £257,000
The average fees per fee earner achieved by firms in the survey were £257,000, up by 2.7 per cent on the previous year. Fees per fee earner for firms in the different size categories (1-10, 11-25, 26-50, 51-100) were £391,000, £248,000, £260,000 and £204,000 respectively.
‘Changing dynamics’
Jeremy Black, a partner in Deloitte’s Professional Practices group, commented: ‘The fact that the average fees per fee earner in the 26-50 size category was higher than that achieved in the 11-25 size category is a clear sign of the changing dynamics within the sector.
‘Over the last couple of years, merger activity in the sector and large differences in the growth rates achieved by firms, along with changes in business models and technology, have had a significant impact on what has historically been a relatively stable sector.’
Above growth in GDP
Deloitte also compared the historical revenue growth achieved by firms in the survey since 2007 with historical GDP data. The analysis found that fee income growth followed a similar pattern to the growth in GDP and, other than the period between 2009 and 2011 and Q1 2013, law firms’ growth was above the growth in GDP.
Looking forward, firms are forecasting fee income growth of 4 per cent for the year ahead.
Source: Global Legal Post
