The UK's law firms are seeing revenues plateau as they struggle to keep up with client expectations

Lucy White
law firms
A large majority of law firms are not planning to publish gender pay gap statistics (Source: Getty)

Law firms in the UK have seen muted revenue growth this year, as they are struggling to keep up with client expectations and advancing technologies.

PwC's annual UK law firms survey noted average fee income growth of just three per cent, while half of the businesses saw domestic profits fall.

This was due to increased pricing pressure and staff costs, combined with firms falling behind on cutting edge technologies and client expectations, according to the report.

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“Fundamental action is needed to future-proof the shape and operation of the legal sector. Technology will impact all areas, from client service delivery to business support and, importantly, staff recruitment and retention,” said David Snell, partner and leader of PwC’s law firms advisory group.

“At the moment, the focus seems to be on updating or replacing old systems. Firms need to be more agile in embracing emerging technologies such as artificial intelligence (AI) which will ultimately help them achieve more effective staffing levels and react faster to changing client demands.”

The survey showed that most law firms do understand the importance of technology, with 70 per cent already investing in client collaboration tools such as secure file sharing and 40 per cent offering mobile apps or automated document production.

But only 11 per cent are making any use of “big data” and predictive analytics, while PwC found that more sophisticated technologies like smart contracts – self-executing contracts where the terms are directly written in to computer code – and blockchain are “barely featuring”.

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This comes at a time when the UK's legal sector landscape is becoming increasingly difficult, due to ongoing economic uncertainty combined with growing competition from new entrants and US firms.

PwC's survey found that recruiting, developing and retaining top talent remains a priority for boards. More than 70 per cent of firms have embarked on a remote working proposition, although this is not yet a cultural norm in most firms.

The majority of firms are also still to respond to the new gender pay legislation introduced in April, which introduces a requirement for firms with more than 250 employees to report on the gender pay gap.

Reporting is optional for businesses with fewer employees, but just 20 per cent of top 10 firms (banded by global fee income) and eight per cent of top 11-25 intend to make changes to this effect.

Law firms are continuing to recruit more female trainees than male, but women still constitute fewer than 20 per cent of partners.

Read more: City law firms boosted by growth as they weather Brexit uncertainty

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