The Global Financial Crisis has hit British law firms hard according to the Financial Times with the country’s largest law firms having their worst quarter since 2010.
The FT reports: “The 100 biggest law firms by revenue grew billings by just 3.4 per cent in the quarter ending October 31 compared with 10 per cent in the same period last year, data compiled by Deloitte shows. This is the slowest growth in seven quarters.
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The mid-tier firms enjoyed ostensibly better results than their larger rivals, with the top ten firms reporting static billings or barely increasing their revenues above 1 per cent in the quarter.
However, the mid-tier firms’ performance has been flattered by a flurry of mergers in the sector which has boosted revenues, according to Deloitte.
The lucrative mergers-and-acquisitions work and banking advice that firms once relied upon has dried up, while the financial crisis has meant that companies that use law firms are demanding more services for lower fees.
“Consolidation has long been expected in a sector where supply continues to outstrip to demand. A tough, competitive domestic market is forcing a change in the profile of mid-tier firms,” said Jeremy Black, a partner at Deloitte’s professional services team.
“Consolidation is one way to expand the client base and also deepen specialist knowledge […] As clients seek value for money and law firms adopt cost-saving measures, merger opportunities continue to become more attractive.”
Watching how the financials for major law firms play out in the coming months will doubtless have a lot to do with how the British and world economies perform, but the large firms will be holding their collective breath hoping for an upturn.
