Less than a quarter of law firms have made changes to respond to the digital age, despite 80% identifying the need to, according to a long-established annual industry snapshot published today. 

In the Law Firms Survey 2015, compiled by consultancy PwC, 80% of respondents said they recognised the importance of digital in their future strategies. However just 23% have so far made changes to how they operate.

The majority of firms have not yet enabled their websites or mobile applications to enable alternative interaction with clients, according to the survey.

But the report did show that firms are starting to adopt diverse organisational structures and are using paralegals and technology to boost efficiency. Firms are also using contract lawyers to flex the number of fee-earners according to activity levels.

Nearly a quarter of respondents said they are employing alternative models for legal staffing, preparation of documents and legal support.

David Snell, partner and leader of the PwC’s law firm advisory group, said: ‘This year’s survey shows a sector that is continuing to evolve, with the pace of change beginning to pick up as global economies improve. Alongside economic improvement we see rapid technological change, innovation in business models and changing client buying patterns.'

More agile firms are responding to these factors and beginning to anticipate the next likely development, he said. 'At the same time, new market entrants are bringing disruption to the market and fuelling the need to innovate.’

He added that this would require significant investment: ‘For those who don’t - or can’t - respond to this change, the future will become increasingly difficult.'  

Meanwhile, the report shows that top-tier firms in the UK have fallen further behind their US counterparts. Top firms in the US reported profits per partner at £1.5m, 36% higher than the UK top tier.

Among US firms as a whole, average fee income and profits rose by 6% and 10% against 2% and 3% respectively for firms in the UK. This was as US firms benefitted from a stronger economy, active financing markets and the largest legal market in the world, the report said.

But while differing cultures and profitability expectations reduces the attraction of UK-US mergers, fierce competition for talent is forcing the UK top tier to benchmark performance against US rivals.

Overall 82% of firms reported growing fee incomes this years, the highest level since 2008. This compares with 70% of firms in 2014.