Top UK Law Firms Raise Hourly Rates by 40% Amid Inflation and US Competition.

The top 10 UK law firms have increased their hourly rates by nearly 40% over the past five years, according to a PwC survey. In 2024, these firms are charging an average of £449 per hour, up from £321 in 2019. This significant increase is attributed to high inflation and the growing presence of US law firms in London, which has intensified competition for talent and driven up salaries.

The rise in hourly rates has coincided with an increase in billable hours across all levels, from trainees to partners. As a result, the top UK firms have seen an average 11.6% increase in fee income for the most recent financial year. The expansion of US firms in London has allowed UK firms to raise their prices, as American counterparts typically charge higher rates.

While the rate increases have been successful, PwC warns that sustaining this growth may be challenging as clients push back against steep price hikes. Law firms are also facing rising salary costs, with many top UK firms recently increasing salaries for newly qualified lawyers by 20% to £150,000.

The survey also revealed that cyber risks have become the top concern for law firms, with 90% of respondents expressing significant worry about this issue. Additionally, nearly 90% of the top 100 UK law firms have either trialed or implemented generative AI tools, highlighting the industry's increasing focus on technological advancements.

Report by Financial Times