The UK’s top 100 law firms achieved overall fee income growth of 3.9% in the last financial year - but the gap between top and bottom is continuing to grow.

Deloitte’s latest Quarterly Legal Sector Survey shows top firms increased productivity by 1.6% up to the end of April 2011 and boosted fee earner headcount by 2.4%.

Figures were also up in the first quarter of 2011 compared to the fourth quarter of 2010, with firms on average achieving fee income growth of 4.5% - this despite the reduced number of working days in April and an average decline in chargeable hours per fee earner.

Jeremy Black, a partner in Deloitte’s professional practices group, said the performance in the latest quarter was stronger than many had anticipated.

‘However, the average figures do hide increasingly polarised performance levels,’ he added.

‘While some firms are achieving strong growth others are suffering an absolute decline in their fee income.

‘While these figures show a moderate increase in sector revenues over the prior year, there are a number of structural issues that firms are facing.

‘The traditional partnership model used by many firms is difficult to operate in a period of lower growth and many firms will face significant challenges over the next couple of years.’

One firm that has run into difficulties is the City firm Dawsons, which has been placed into creditor’s voluntary liquidation.

In a statement by Martin Codd, former managing partner at Dawsons, it was confirmed that joint liquidators had been brought in after a merger with Penningtons earlier this year failed to satisfy creditors.

The statement said: ‘It was originally the intention of the Dawsons partners to use a CVA structure to wind up the activities of Dawsons LLP (which became 2 New Square LLP with effect from midnight on 30 April 2011).

‘Unfortunately, this has subsequently been found to be unworkable because of the stance taken by certain parties and the liquidation of the business was the only remaining option open to us.’