Partner fees at regional law firms are catching up with City rivals
As the vast majority of law firms are expecting increased revenues in the current financial year, City partners are seeing their fees slowly drop whereas regional law firms are catching-up, according to new figures.
A new report by professional service firm Crowe has stated that despite inflation peaking at 11 per cent in 2024, nearly 40 per cent of firms have increased their revenues over that rate.
The survey was completed by 56 law firms, all with a turnover above £1m last year.
However, fees per City partner have dipped for the second year in a row to £1.5m, dropping one per cent from the previous 12 months.
This comes as regional firms start to close the gap, with the average partner generating £955,000, a near six per cent increase from last year.
In terms of fees per fee earner (includes partners), they increased by five per cent in City law firms to £284,782 and by three per cent in regional firms to £146,487.
This comes as the report detailed that the change in headcount for fee earners in regional firms increased by nearly 10 per cent and by over two per cent for partners; whereas City firms saw fee earners increased by one per cent and partners by over six per cent.
Crowe went on to reveal that the rise in interest rates generated interest on client accounts at levels not seen for years, as 41 per cent of client account was in the excess of £1m, the highest being in excess of £7m.
The majority (72 per cent) of firms are reported to have generated more than £250,000 of interest on client accounts.
The survey went on to highlight a shift in workplace dynamics as law firms are looking to change the flexibly working system, as 66 per cent expect people in the office more than half (50 per cent) of their time.
It was suggested in the survey that office attendance has largely been driven by regional firms, 75 per cent of whom expect three or more days a week in office, compared to 50 per cent of City firms.
Commenting on the report, Nicky Owen, head of professional practices at Crowe noted that the “legal sector has performed well” but highlighted that “the challenge for firms will be controlling expenditure and increasing profits per partner whilst effectively managing clients and the wellbeing of staff”.