Legal sector grows despite rising costs

The legal sector has demonstrated resilience amid economic challenges, with law firms experiencing steady growth in 2024, according to the Law Society’s latest Financial Benchmarking Survey.

The research highlights the sector’s stability and its vital contribution to the UK economy, with law firms’ average earnings increasing by 6.1% last year. While this marks continued expansion, the growth rate has slowed from 6.8% in 2023, and rising costs present an ongoing challenge.

The legal industry contributes £74.4 billion to the UK economy through direct and indirect means, with exports reaching £9.5 billion in 2023. It also remains a major employer, supporting more than half a million people either directly or indirectly. The workforce of solicitors and legal professionals expanded by 3.4%, while total salary costs as a percentage of fee income rose by 1.1 percentage points.

Richard Atkinson, president of the Law Society of England and Wales, said the legal sector continues to thrive despite financial pressures. He stated that despite rising costs and a slowing growth rate, law firms are still performing well. The legal sector remains healthy, continues to be a powerhouse of the UK economy and a significant employer. Solicitors and law firms are committed to helping to build a robust economy that competes internationally while contributing to the country’s prosperity and supporting local communities.

Key findings from the Financial Benchmarking Survey include:

• Law firms’ earnings grew by 6.1%
• Income growth is slowing, down from 6.8% in 2023
• The cost per legal professional increased to £67,476 from £63,614 in 2023
• The number of legal professionals grew by 3.4%, with total salary costs as a percentage of fee income rising by 1.1 percentage points
• Overhead expenses increased to £45,796 from £42,844
• Lock-up days, referring to the time taken to collect payments, rose from 143 to 146

The Financial Benchmarking Survey 2025 provides an overview of the financial performance of the legal sector. It is written and produced by the legal team at Hazlewoods LLP for the Law Society Leadership and Management Section, sponsored by Lloyds Bank Commercial Banking. Now in its 24th year, the 2025 survey collected financial data from 145 firms with a combined income exceeding £1.5 billion, making it one of the most comprehensive studies of its kind in England and Wales.