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A recent survey has revealed that the top 10 UK law firms are now charging clients nearly 40% more per hour compared to five years ago. This increase in fees can be attributed to factors such as inflation and the growing presence of US firms in London. According to PwC’s annual law firm survey, the average hourly rate charged by the largest UK-headquartered firms was £449 in 2024, up from £321 in 2019. The survey also showed double-digit growth in average rates across the top 100 UK firms.
The rise in hourly pricing is a result of the increased number of billable hours recorded by the 10 biggest firms at all levels, from trainees to partners. Lawyers have benefitted from a rise in deals and a busy litigation market, leading to an average 11.6% increase in fee income for the top group in the most recent financial year.
The UK-based international firms included in the survey have been facing challenges such as high inflation and fierce competition for talent, particularly due to the expansion of wealthy US firms in London. This competition has driven up salaries, with international firms in the City striving to stay competitive.
On the positive side, the heavy investment by US firms in London has led to an increase in rates. US firms generally charge higher hourly rates than British firms, allowing UK firms to raise their prices. Recruiters report that top US firms are charging over $2,000 per hour, while top partners at UK firms are charging more than £1,000 per hour.
Mark Anderson, PwC’s global legal and professional services sector leader, commented that the UK’s top law firms have been able to increase their rates through a combination of factors including offering more specialized services, inflation, and the boost to the corporate and deals market post-pandemic.
Anderson also noted that the presence of US firms in London has played a significant role in the rate increases.
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Despite the growth in rates, Anderson warned that sustaining this pace of growth will be challenging for UK firms. Clients are likely to resist steep increases as they seek to manage their own costs.
Meanwhile, salary costs for firms are on the rise, with leading UK firms like Freshfields Bruckhaus Deringer, Linklaters, Clifford Chance, A&O Shearman, and Slaughter and May increasing salaries for newly qualified lawyers by 20% to £150,000 this year.
PwC’s research revealed that cyber risks are the top concern for law firms this year, with 90% of the firms surveyed expressing extreme or moderate concern. This marks a shift from the previous year when macroeconomic volatility was the main worry.
Law firms are attractive targets for hackers due to the large amounts of sensitive data they handle. A notable incident was the cyber attack on the systems of legacy Allen & Overy, now A&O Shearman, attributed to the hacking group LockBit.
Firms are also making significant investments in artificial intelligence, with nearly 90% of the top 100 firms stating that they have either trialed or implemented generative AI tools, compared to 55% in 2023.