New report spotlights challenges facing firms inside and outside the capital
City firms are pulling comfortably ahead of their regional counterparts after posting a healthy jump in partner profits this year, while regional partners have taken a noticeable hit despite firms everywhere enjoying a boost in revenue.
Fresh figures courtesy of audit firm Crowe show that City partner profit pools climbed by just over 12%. Regional firms, meanwhile, saw profits fall by almost 11%, even though their revenues actually rose faster than those of City outfits. Regional turnover increased by just over 12%, compared with about 10% for the City, but the extra income does not appear to have made its way to partners’ pockets.
Crowe suggests the gap comes down to a familiar mix of inflation, rising salaries and investment in office space and infrastructure. These pressures are proving harder for regional firms to absorb, while the City continues to reap the rewards of complex, premium work and a fairly disciplined approach to spending. Average fees per City partner now sit above £1.3 million, noticeably higher than the roughly £1.1 million recorded in the regions.
The billing habits of firms also provided some eyebrow raising contrasts. City outfits take about 35 days to get invoices out the door while their regional counterparts take more than double that at 71 days. That said, once the bill finally lands, regional firms are quicker at collecting payment, suggesting their cash-flow discipline kicks in further down the process. Both sides did manage to trim their overall lock-up times, meaning the period between doing the work and actually getting paid, with City firms making the most progress.
One thing everyone agrees on is that cyber threats are keeping managing partners awake at night. Around 22% of firms reported a cyber incident this year and more than four fifths now have a dedicated cybersecurity specialist in-house. Most firms plan to bump their cyber spend again next year, with money going into things like threat monitoring, incident response planning and more secure cloud setups.
Crowe’s Nicky Owen said the high level of concern is entirely justified and that firms are trying to balance stronger defences with sensible tech adoption.
AI, however, continues to be the industry’s collective shrug. Seventy three percent of firms still do not have a clear strategy for it and many remain jittery about how client data is handled on external platforms. The result is cautious experimentation rather than widespread rollout.
Private equity, which has been rumoured to be on the brink of sweeping into the legal sector for years, has yet to make a meaningful entrance. Not a single surveyed firm reported any PE backing. That has not stopped speculation though. Owen noted that interest remains high and hinted that 2026 could be the year when movement finally materialises.