Financial Benchmarking Survey 2025

The survey is written and produced by the legal team at Hazlewoods LLP and sponsored by Lloyds.

The Financial Benchmarking Survey collected financial data from 145 law firms across England and Wales, with a combined fee income of over £1.1 billion – an average of £7.8 million per practice.

It’s one of the largest surveys of its type in England and Wales.

What do these findings mean for firms? And how can they inform how you run your business?

Key findings

Despite increasing pressure on profit margins, 71% of firms surveyed reported year-on-year fee growth in 2024. A third of firms saw growth of over 10%.

Median practice fee income increased by 6.1% compared to a 6.8% increase in 2023. The rate of increase has been decelerating since 2022.

The fee earner break-even point has risen again due to increased overhead costs, as inflationary pressures on wages and other cost-of-living expenses have continued.

The cost of a fee earner rose by 6.1% to £67,476 per fee earner. Total salary costs as a percentage of fee income rose to 63.5% from 62.4% in 2023.

The median hourly cost of a fee earner (based on 1,100 chargeable hours) was £123.40, compared to median hourly fees per fee earner of £133.01.

This means almost 93% of fees earned are used to cover their costs.

The number of chargeable hours recorded per fee earner was 773, up from 765 in 2023, but well below the 1,100 chargeable hours target.

Total year-end lock-up days (work in progress and debtors combined) increased slightly from 143 days to 146 days.

Despite this, profit per equity partner has risen notably in the year due to exceptionally high levels of interest income compared to last year.

It is unlikely that interest earned will be a sustainable source of profitability for firms.

Firms should be alert to the fundamental and far-reaching questions raised in the Solicitors Regulation Authority’s (SRA) consultation on client money in legal services.

The impact of the SRA’s proposals could have a profound impact on how firms conduct legal business in the future.

There is a very real prospect of firms experiencing financial stability problems without client interest.

How you can use this survey

Key to meeting the ongoing challenges in the sector is:

• getting the most from staff
• providing the best client service efficiently, and
• charging for it accordingly

Making sure the underlying business is running properly is key.

While client interest can be flattering to the bottom line and the cash balance, it should not be viewed as a measure of a successful, sustainable business.

“A well-run law firm has control over its costs, its fee-earner gearing, productivity, pricing and realisation,” says Abby Winkworth, Leadership and Management Section chair.

“It has sustainable and profitable revenue streams; technically excellent and responsive client service; and time for its senior leadership to scan the horizon for emerging challenges and novel opportunities.

“When you look at the survey results, despite the market turbulence, revenues continue to grow, and wage and recruitment pressure seems to be reducing.

“But profit margins are vulnerable. Interest rates have helped profitability over the last couple of years, although should not be relied upon.

“However, lock-up remains high, fee earner productivity remains low, and the time invested in developing people and the business is frequently not measured at all.

“I would encourage you to share these findings with your team and use this as a basis for conversation and training.”