The U.K.’s 10 largest law firms control nearly half of the revenue for legal services among the country’s top 100 firms and are continuing to increase their share of the market through overseas business.
Most of the top-10 firms already get 40 percent of their revenue from outside the U.K. and are looking to expand through mergers or acquisitions in other countries, PricewaterhouseCoopers LLP said in a report published today.
International growth into new markets “offers an opportunity for revenue growth for firms that have the scale and appetite to compete,” said David Snell, head of PwC’s professional partnerships group in London.
Gains in market share can’t offset an otherwise difficult environment for legal services that is still behind the levels recorded before the financial crisis began in 2008, PwC said. With inflation stripped out from annual results, profits per partner at the 10 largest U.K. firms dropped by 22 percent since 2008 to 2.5 million pounds according to the 84-page report.
The U.K.’s so-called magic circle of law firms produced a mixed bag of financial results this year. Clifford Chance LLP, the country’s highest-grossing law firm, reported a 7 percent rise in revenue to 1.3 billion pounds ($2.1 billion). Allen & Overy LLP posted a 6 percent increase while Linklaters LLP rose 0.6 percent. Freshfields Bruckhaus Deringer LLP’s fee income fell by about 0.9 percent to 1.13 billion pounds.
The large firms are also increasing income and profits by charging higher fees than smaller rivals and managing senior lawyers better.
“The big differentiator for the largest firms remains their higher chargeable hours, premium pricing and tightly managed fee earner headcount,” Snell said.