The total fee income generated by the UK’s 50-largest firms hit a new record in 2022/23, despite many firms conceding that the trading conditions during the year were among the most challenging they have ever faced.

The top 50 firms ranked by global revenue generated a total of £30.8bn last year, up by 8 per cent on the previous year. The growth seen across the top end of the legal market was so pronounced that, for the first time, every one of the top 50 produced a turnover of £100m or more.

The threshold for entry into the top 50 club also rose significantly in 2022/23, by 7 per cent from £98m to £105m. But at the same time as this story of growth, the narrative is also one of squeezed margins.

Indeed, a significant number of top 50 firms saw their profits tumble last year as business practices returned to something more like normality, with business travel, business development, marketing spend and several other overheads biting a chunk out of the bottom line.

Most notably, a succession of firms reported that they had felt the impact of spiralling salary costs last year, a trend that is visible in the level of profit seen across the market, which contrasts sharply with the financial results in 2021/22.

Litigation boutique Stewarts offers the starkest example, with its 25 per cent reduction in total revenue enough to see it fall out of the top 50 this year. Stewarts was also down 56 per cent in net profit and 55 per cent down in average profit per equity partner (PEP).

Several firms conformed to the prevailing pattern of rising revenue and falling profit. Clyde & Co’s revenue rose by 21 per cent but could only manage a 6 per cent uplift in profits, while TLT’s revenue rose 9 per cent but saw its profit tumble by 21 per cent. Hill Dickinson’s PEP is down 46 per cent on 2021/22, while RPC’s profit is also down double digits at 15 per cent.

Despite the tougher economic climate and rising costs, a number of firms still posted record financial results. Four top 50 firms – Clifford Chance, Freshfields Bruckhaus Deringer, Slaughter and May, and Macfarlanes – posted an average PEP in excess of £2m, a new record.

This year’s top 50 also includes a new entrant – Browne Jacobson, which replaces Ince & Co. The latter firm went into administration earlier this year.

The UK Top 20 list can be found below, but click here to view the full provisional UK Top 50 ranking.