Strong growth returns to legal sector as law firms see fee income increase

The increase, in the quarter ending October 31, is more than double that seen in the previous quarter which was four per cent, compared with the same period last year.

The strongest growth for the last quarter was experienced by the ‘26-50’ category, with a 15.6 per cent increase in fee income.

Higher revenues have been driven by an average increase in fee earner headcount and average fees per fee earner, which rose by 3.9 per cent and 5.7 per cent respectively, the survey discover-ed.

However, the averages hide a large degree of variability, said Deloitte, as some firms suffered a decline in revenues, whilst others saw fee income increase by more than 20 per cent.

The survey found that many of the firms with the strongest performance were mainly UK focused.

Deloitte said this came against a backdrop of a recent tendency for firms with a larger international presence to achieve a greater degree of success than those focused on the domestic market.

However, it also said whether the domestic market can continue to achieve this share of revenue in the medium to long term remains to be seen.

UK law firms forecast a 6.2 per cent increase in fee income for the year to April 2012 (against the year to April 2011), Deloitte said.

Stephen Hall, tax partner at Deloitte in Yorkshire, said: “It is pleasing to see strong growth returning to the UK legal sector and renewed optimism in the domestic market, after an extended period of challenging conditions.

“However, whilst firms are relatively positive about the next six months continued uncertainty in the markets means a degree of caution is needed.”

Leeds has the largest legal sector outside of London. Yorkshire and Humber is home to 1,700 legal firms. That represents 13 per cent of the UK’s legal services workforce.