Profits of UK law firms increase despite global fee income slowdown
- Profits up 1% in 2009/10 and 6% in first half of 2010/11 as law firms cut costs
- Fee revenue of Global 100 law firms down 6% in 2009/10 to $74.6bn, the first decline in over a decade
- UK law firms maintain strong position with 14% of Global 100 fee revenue.
Profits of the largest 100 law firms in the UK increased by 1% in 2009/10 to £4.07bn according to the Legal Services 2011 report produced by TheCityUK. This was despite a 6% reduction in fee revenue of law firms globally to $74.6bn, the first decline in over a decade.
The increase in profits was largely due to overall tighter spending and management controls leading to a £500m reduction in costs during the year. Furthermore, the first half of the financial year 2010/11 showed a 6% improvement in UK law firms' profits on the same period in the previous year. Overall fee income generated by UK law firms mirrored global trends and fell 4% in 2009/10 to £13.7bn. Barristers' international earnings rose over the period from £131m to £152m in 2010. TheCityUK expects the UK and global legal services market to make a gradual recovery in the forthcoming period.
London is one of the two largest centres for legal services along with New York according to the report. Based on fee revenue, two of the largest five firms amongst the largest 100 global firms were from the UK. In terms of head count, UK firms held two of the top four places. Overall, UK firms generated 14% of the Global 100 gross revenue in 2009/10.
Legal services make an important contribution to the UK economy. They generated £23.1 billion or 1.8% of the UK's gross domestic product in 2009. There are nearly 320,000 employed in legal services which includes around 115,000 solicitors and over 13,000 barristers. Exports of law firms in the UK totalled £3,192 million in 2009, up nearly three times over the past decade.
Khawar Qureshi QC, chairman of TheCityUK's Legal Services and Dispute Resolution Group said:
"London's prominence in the International Legal Services market looks set to continue, given the underlying strength in expertise and reputation. Challenges which lie ahead include meeting the needs of increasingly sophisticated clients who demand more time/cost effective services, as well as embracing the emergence of regional hubs for legal services such as Singapore, Dubai and Hong Kong."
