Top law firms enjoy fee income growth of nearly eight per cent

Higher revenues this quarter have been driven by average increases in fee earner headcount and fees per fee earner, the professional services firm found, with both increasing by around four per cent.

Jeremy Black, partner in Deloitte’s professional services practice, said: “This has been another robust quarter for firms in the legal sector, in particular the small to mid-size firms. While all firms are facing a number of challenges, overall performance remains strong.”

Despite industry growth in fee income, there was a significant difference between law firms. Firms in the 1-10 size category, reported much lower growth of two and a half per cent, as a result of stable fee earner numbers and continued pressure on rates.

All but the largest 10 law firms grew fee earner headcount, with size categories 11-25 and 26-50 growing by six per cent and firms in the 51-100 category by three per cent.

The increase in fee income for firms in the 11-25 (9.6 per cent) and also the 51-100 size categories (8.4 per cent) outstripped their growth in fee earner headcount and chargeable hours per fee earner. This indicates that firms in these size categories have successfully grown their fees generated per hour.

The survey also found that participants expect a slow fourth quarter, with fee income forecast to increase by just four per cent.

Mr Black added: “Although firms remain cautious about the future the underlying data shows that the market remains resilient.”