By Rob Starr, Content Manager, Big4.com
The UK’s top 100 law firms achieved fee income growth of 3.4% in the quarter ended 31 October 2012, compared with the same period last year, according to the latest Quarterly Legal Sector Survey from business advisory firm Deloitte. Merger activity was the primary driver of the 5.8% increase in revenue enjoyed by the mid-tier firms. In contrast, firms in the top 10 saw a relatively flat performance, with less than 1% growth.
Research from Deloitte and Winmark recently revealed that 71% of professional services firms have been in merger or acquisition talks in the past 12 months. In 2011, 81% of those involved in merger discussions wanted to join with a smaller firm. This year the figure has fallen to 52%, with 24% wishing to embrace businesses of a similar size and another 24% seeking opportunities with larger firms.
“We continue to see suppressed growth rates in the legal market. Whilst the mid-tier firms appear to be enjoying slightly stronger growth, this is predominantly due to increased merger and acquisition activity,” said Jeremy Black, partner at Deloitte’s professional services practice. ” Consolidation has long been expected in a sector where supply continues to outstrip demand. A tough, competitive domestic market is forcing a change in the profile of mid-tier firms. Consolidation is one way to expand the client base and also deepen specialist knowledge – whether that is in an industry focus or a practice area.”