City firms are starting to pull ahead of their regional counterparts through investment in technology, a new benchmarking survey has found.
Research from consulting firm Crowe revealed that partner profit pools at City firms grew by 12% this year, while regional firms suffered an 11% fall. This was despite revenue increasing across the board. The Office for National Statistics this week reported UK legal sector revenues of £4.87bn in September, 10% up on the same month last year.
Analysts suggest that City firms have maintained tight control over their cost bases through operational efficiencies, technology adoption and disciplined resource management. However, regional firms are struggling to offset inflationary pressures even while continuing to report healthy turnover.
The survey found contrasting strengths in how and when firms invoice for work. City firms take 35 days on average to bill clients, while regional firms take 71 days. But regional firms were more efficient at collecting payments.
A recurring theme was concern about cyber-attacks. Almost a quarter of firms (22%) reported experiencing a cyber incident in the past year, while four-fifths (81%) now have dedicated cyber specialists. More than 70% of firms expect to increase cybersecurity spending in the coming year, investing in areas such as threat detection, incident response planning, penetration testing and secure cloud infrastructure.
Nicky Owen, head of professional services at Crowe, said: ‘Investing in shoring up defences against cyber-attacks is a priority, alongside carefully managed adoption of new technologies and artificial intelligence tools.’
The reliance on AI is more cautious among most firms, with 73% reporting that they do not yet have a clear strategy or vision for how it can support them. Many were concerned about the confidentiality of client information and the risk of data being processed or stored outside of secure, compliant platforms.
The research, in collaboration with the Institute of Legal Finance & Management, involved surveys and interviews with firms that have a turnover between £1.6m and £250m. The financial data collected was for accounting end dates from 30 September 2024 through to 30 June 2025.
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