Britain's elite law firms failed to track the country's improving economy, reporting a combined turnover of £20.64bn, a one per cent drop in earnings from 2014.
The number of lawyers employed by the largest 100 firms in the UK, has also fallen, down two per cent to 64,024, according to figures published by Legal Business magazine today.
Editor-in-chief Alex Novarese told City A.M.: “This isn't a new trend, London law firms have been struggling for five or six years now, but this year was meant to be the comeback year.
“London firms were less nimble [than their American rivals] after the banking crisis. [They're] more corporate, and have a global outlook, which makes it harder to slim down. They still face real structural challenges.”
But, with the economy looking better and more ligation work available, especially a surge in mergers and acquisitions work, it was hoped things would pick up in 2015.
Instead, while DLA Piper maintained its position as the UK's largest law firm (in terms of turnover) it is no longer the world's largest, with revenue dropping four per cent to £1.5bn.
Other big City players Clifford Chance, Hogan Lovells and Ashurst also saw turnover fall away, with Linklaters and Freshfields struggling to achieve any meaningful growth.
US giants continue to dominate the world leaderboard, clocking up five per cent growth and revenues up to £60.1bn ($92.87bn).
Novarese said: “It's a bit of a mystery [why the magic circle firms have been hit.] The obvious thing is American firms are dominating markets here, especially in global M&A. US regulators are driving activity, but also American investors being used in leveraged finance projects. M&A is being driven by American money.
Legal Business' research also revealed a woeful gender imbalance at the top of these firms. Whilst at junior levels the numbers are evenly matched, just 27% of partners are female, falling to 20% for equity partners.
And while the firms may be struggling, eight of the top 100 companies have average profit per equity partner of over £1m – meaning a total of 1,868 partners are millionaires.
Slaughter and May’s partners remain the highest earning, with top earners taking home £3m.