While the majority of law firms anticipate a rise in revenues this financial year, City partners are witnessing a gradual decline in their fees as regional law firms begin to close the gap, new data reveals.
Professional service firm Crowe's latest report indicates that despite inflation hitting 11 per cent in 2024, nearly 40 per cent of firms have seen their revenues grow beyond this rate, as reported by .
The study, which included 56 law firms each with a turnover exceeding £1m last year, found that City partner fees have fallen for the second consecutive year to £1.5m, a one per cent decrease from the previous 12 months.
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Meanwhile, regional firms are making strides, with the average partner generating £955,000, marking a near six per cent increase from the previous year.
When it comes to fees per fee earner (including partners), they rose by five per cent in City law firms to £284,782 and by three per cent in regional firms to £146,487.
The report also highlighted that the headcount for fee earners in regional firms grew by almost 10 per cent and by over two per cent for partners. In contrast, City firms saw an increase of one per cent for fee earners and over six per cent for partners.
Crowe further disclosed that the surge in interest rates has led to unprecedented levels of interest on client accounts, with 41 per cent of client account balances exceeding £1m, the highest reaching over £7m.
The survey revealed that a significant majority (72 per cent) of companies reportedly generated over £250,000 in interest from client accounts.
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The study also pointed out a shift in workplace dynamics, with law firms considering changes to flexible working systems - 66 per cent anticipate staff being in the office for more than half (50 per cent) of their time.
The survey suggested that the drive for office attendance has predominantly come from regional firms, with 75 per cent expecting employees to be in the office three or more days a week, compared to just 50 per cent of City firms.
Nicky Owen, head of professional practices at Crowe, commented on the report, stating that the "legal sector has performed well", but emphasised that "the challenge for firms will be controlling expenditure and increasing profits per partner whilst effectively managing clients and the wellbeing of staff".