The UK’s largest global law firms have generated significant amounts of growth in 2017 not through innovation or new business, but through foreign exchange movements, according to a PwC survey.
Currency movements resulting from a weaker sterling caused a 4.9 per cent growth in fee income for the UK’s global top 10 firms, PwC’s 2017 law firms survey showed, compared to an 8.1 per cent growth in fee income overall.
Similarly, fluctuating foreign exchange rates caused a 4.4 per cent growth in profit, compared to a 9.8 per cent growth in profit overall.
This meant currency movements alone increased law firms’ revenues by £43.7m and profit by £16.2m.
But PwC has warned that relying on foreign exchange fluctuations will not be enough to ensure survival in an increasingly competitive market, and that “global law firms will need to make fundamental changes if they are to thrive in the future”.
“Having taken this one-off income and profit boost, it will be interesting to see the real commercial impact of Brexit on law firms start to play out in the current financial year,” said Kate Wolstenholme, PwC’s business services leader.
“Undoubtedly some firms will enjoy a rise in revenue from providing regulatory advice to clients – but economic uncertainty means workflow is unpredictable, and there is also a cost of scenario planning to ensure firms remain fit for purpose for a post-Brexit environment.”
PwC’s survey also revealed that the international offices of UK global top 10 firms delivered around twice as much profit growth as in the UK, and that US top-tier firms are outperforming their UK peers across all key performance indicators.