Top City lawyers saw their annual payouts surge in 2022, as a boom in demand for legal services bolstered the sector’s profits.
Partners in City law firms saw their annual payouts increase by 15 per cent, to £738,728, as Covid-19 drove a boom in legal sector revenues, new Crowe research shows.
The higher payouts came as more than three-quarters (77 per cent) of City firms successfully boosted their profits by capitalising on surging demand.
Covid related economic disruption sparked a major uptick in M&A deals, that in turn drove a boom in demand for legal services.
City lawyers’ payouts outstripped those earned by their counterparts in the UK’s regional firms, who instead saw their earnings increase by just five per cent, to average sums of £313,845.
Law firms’ efforts to capitalise on the boom saw them bolster their headcounts, by average rates of 4.2 per cent.
These efforts in turn created fierce competition for legal talent that saw UK law firms forced to hike their workers’ pay by 4.9 per cent.
Crowe partner Nicky Owen noted the UK’s legal sector “again performed well” in 2022, even as the wider UK economy faced significant “headwinds”.
All in all, 90 per cent of UK law firms saw their revenues increase over 2022, as the sector as a whole grew by 12 per cent.
Law firms were, however, less optimistic about the prospects for 2023, with 85 per cent fearing an uptick in price competition.
Legal sector leaders predicted fast-paced inflation across the UK economy will push clients into seeking out cheaper advice, as they deal with headwinds in the wider economy.
“The full impact of inflationary pressures and salary shifts may still be felt in the coming months, and the retention of key people has been identified as a core focus for management teams,” Owen said.