The top 10 firms recorded an average growth of 11.6 percent, exceeding their forecasted growth
PwC’s 2024 Law Firms’ Survey revealed that 97 percent of the UK’s top 100 law firms posted fee income growth and 84 percent increased profits, despite rising concerns over cybersecurity and adapting to technological advances like Generative AI.
The survey indicated a significant rise in fee income across all tiers of firms. The UK’s top 10 firms recorded an average growth of 11.6 percent, exceeding their forecasted growth of 8.7 percent. Firms ranked 11-25 and 26-50 also outpaced their targets, achieving growth rates of 9.8 percent and 11.7 percent, respectively. Notably, the firms in the 51-100 category surpassed inflation with a 12.5 percent rise in fees.
This growth was accompanied by rising profitability. Net profit margins for the top 10 firms increased by 0.5 percentage points to 41.2 percent. Similar gains were reported for firms ranked 11-25 and 26-50, while firms in the 51-100 category experienced a slight margin dip.
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The survey highlighted the growing importance of Generative AI (GenAI) in the legal sector. Nearly 90 percent of the top 100 firms have implemented or trialled GenAI tools, compared to just 55 percent in 2023. The largest firms are more optimistic about the technology’s impact, with 83 percent of the top 10 expecting increased productivity and enhanced service offerings.
However, there are concerns that GenAI may lead to client expectations of lower costs. More than half of firms outside the top 10 anticipate pricing pressures due to efficiency gains from AI adoption.
Cyber risks have also re-emerged as the leading threat to growth, with 90 percent of firms expressing concern over potential impacts. Increased investments in cybersecurity were noted across all top 50 firms, reflecting a proactive approach to safeguarding operations amid rising digital threats.
Diversity improvements were evident, with female representation among full equity partners rising in all but the 51-100 category. Minority ethnic representation also saw modest gains across most bandings.
Looking forward, firms are focusing on a mix of organic and inorganic growth strategies. Lateral hiring remains a popular method, with 79 percent of firms actively pursuing this approach. Additionally, firms are increasingly exploring tactical acquisitions to expand geographically or strengthen specific service lines.
Mark Anderson, global legal & professional services leader at PwC UK, emphasized that law firms are thriving, stating, “This year’s survey findings are welcome news and a testament to the ongoing agility and innovation within the sector.”
However, Anderson also highlighted the need for continued agility in managing risks and embracing technological advances to sustain growth. “Robust risk management will continue to be essential to protect against cyber threats, changing workforce requirements, and the ever-increasing reputational risk that comes with renewed levels of focus on environmental, social and governance (ESG) considerations,” he said.