The second quarter of the 2012/13 financial year was the worst in almost two years for law firms, with the UK top 100 seeing fee income grow 3.4 per cent compared with the same period in 2011.
Top 10 firms were the hardest hit, according to the latest Quarterly Legal Sector Survey by Deloitte, showing less than 1 per cent growth. The mid-tier did better, with fee income up 5.8 per cent, but this figure was buoyed by the large number of mergers among firms of that size.
According to Deloitte this is the slowest growth experienced by firms in seven quarters, and is the fourth consecutive quarter where growth has slowed. Fee income growth among UK top 100 firms was 10 per cent at this point in 2011.
In a statement, Deloitte professional services partner Jeremy Black said: “The instability of the eurozone continues to cause concern for the UK’s legal sector, particularly for larger firms with a wider international reach. Nevertheless, law firms remain broadly optimistic, forecasting 5.8per cent growth for the third quarter ending 31 January 2013 and 4.7 per cent growth for the year ending 30 April 2013 – both in comparison to the respective period last year. To achieve such strong increases in revenue, there will need to be considerable up-tick in activity levels over the second half of the year.”
Recent half-year results from firms have come from Addleshaw Goddard, where turnover was down by 3 per cent on the previous year (7 December 2012); Stephenson Harwood, where income was flat (28 November 2012); and Simmons & Simmons, where revenue dipped by 3 per cent (28 November 2012).