The UK’s top 100 law firms managed to maintain double-digit growth last quarter despite the market downturn, according to new research from professional services giant Deloitte.
However, while firms still saw revenue growth, the quarterly survey of the legal sector found that fee income grew by only 10.6% in the third quarter of 2007, compared to 12.5% in Q2 and 15.1% in Q1.
The UK’s biggest firms grew more rapidly than small counterparts over the period ending 31 January, 2008, with average fees
per fee earner across the top end of the market outpacing smaller rivals. Across the top 25 firms fees were up 3.7%; amid the rest of the top 100 they increased by 1.6% on average.
Despite the continued - if slowing - growth, Deloitte’s Q3 results reveal a drop in the average number of chargeable hours per fee earner, indicating that firms are no longer working to full capacity.
Jeremy Black (pictured, right), associate partner in Deloitte’s professional practices group, said the results proved that City lawyers continue to be busy in the face of negative market predictions.
He commented: “Firms are still performing well and have achieved growth on their figures. It is not all doom and gloom. While there are still significant opportunities in the market, all firms have a different footprint, which means that the movement in the markets will affect them differently.”
Nabarro senior partner Simon Johnston told Legal Week he remained optimistic in the face of gloomy predictions for 2008: “We are on target to be ahead of last year but it is too early to say by how much.”
He added: “There are probably more people deciding they want to litigate. As markets turn down, people are not willing to settle disputes. At the moment it seems people are concerned about the market.”
Simmons & Simmons managing partner Mark Dawkins said the timing and nature of the possible downturn that the legal sector may experience in 2008 would be characterised by the firms themselves.
He said: “Those firms with a strong litigation practice are likely to do well; those who have done nothing but private equity deals for the past few years will feel the bite. We are finding the mix of work has changed a bit and that litigation has been getting busier.”
