From GenAI adoption and cyber security management to workforce transformation and ESG sentiment, explore our Legal Report 2024 based on contributions from nearly 100 firms for financial performance and trends from the past year. 

David Weaver, our Head of Professional and Business Services, reflects on some of the key findings:

A healthy legal sector helps create a business-friendly environment, supports key industries like technology, real estate and healthcare that rely on legal expertise, and contributes to job creation, all of which are crucial for sustained economic growth in the UK.

Optimism in the sector remains high. Among our participants, 90% compared to 87% in 2023 are optimistic about the future with just over a third being “very optimistic”.

“An optimistic legal sector is a good barometer of overall business confidence within the UK economy. As a major economic contributor, the legal industry supports jobs across all regions,” David says.

In the year since our last survey the pressure on margins has become more acute for many firms. High salary rises in the summer of 2023, after a period of high economic inflation, baked in a requirement for firms to achieve high levels of top line growth just to stand still.

We asked firms for their expectations of fee growth in 2025. Our data shows that 88% of firms expect fee income to increase. The most common projected level (36% of participants) is growth in fees of between 5% to 10% in 2025.

“Leaders are focusing on increasing fee income to offset wage inflation while controlling costs and boosting productivity,” David notes

We asked participants for their views on the best and least performing teams in the current environment. Private client (28%) was reported as the most buoyant area in 2024 followed by commercial litigation (13%) and corporate & transaction work (10%). Residential conveyancing is noted as the lowest performing area at a fee income level in 2024.

“Firms have been able to pass on fee growth to counter higher inflationary pressures and appear confident that they will continue to do so. We are starting to see some modest growth return to the UK economy and the wider Professional Services sector has been a significant contributor to that growth.”

AI is here to stay, and some firms are already falling behind. We see the practical use of AI appearing in Practice Management Software systems as well as bespoke products.

“AI is helping mid-market and larger firms to try and gain a competitive edge. We see this predominantly in automating routine risk and compliance tasks, such as onboarding of clients and conducting anti-money laundering checks. We also see AI used in client interactions via chatbots, text generation for document drafting and predicting the outcome of a client’s case.

“AI is not just about driving cost benefits but is also about delivering improved and quicker client service. In addition, we see it freeing up fee earners’ time to focus on more value add and complex matters, which is generally more rewarding for the individual.”

How could the legal sector's job market evolve heading into 2025? Over the past year, we've continued to see significant challenges in recruiting for private client and commercial litigation roles. Meanwhile, other areas — such as property (residential, real estate, and commercial) — have shown notable improvement, with hiring conditions easing compared to previous years.

While 44% of respondent firms see the attraction and retention of talent as the key challenge they face over the next 12 months, 17% cite margin pressure and 15% cite improving productivity as significant challenges.

“Attracting and retaining talent remains a top concern, though continued wage inflation at recent levels is unsustainable. Firms are focusing on culture, ESG, and new technologies to differentiate themselves,” David observes. 

“We share the optimism that is borne out in this report. The demand for legal services remains strong and the sector remains a critical part of the UK economy. Businesses that have been most successful in recent years are those that have gone above and beyond survival mode. They have shown longer term vision and agility throughout these tough times.

Trailblazers in the sector are generally those that have a clear long-term strategy and focus on key areas such as sustainability, technology, and talent.”

Follow us on social media for more business insights.