US law firms and new entrants to the legal marketplace are proving difficult for UK firms to compete with as half of the UK firms see profits decrease. According to new figures, despite 70 per cent seeing fee income growth, the average growth was just around three per cent. Rising staff costs are a key contributor to the decreasing net profit margins of UK law firms as they grapple with increased fee earner numbers over recent years coupled with an ongoing decrease in chargeable hours and resulting spare capacity. Furthermore, many UK legal firms are still only embracing commonplace - rather than cutting edge - technologies, according to PwC’s 2017 Law Firms’ Survey.
Not keeping pace
The report suggests that firms understand the importance of technology to help improve the experience of both clients and employees, with over 70 per already investing in client collaboration tools and around 40 per cent offering mobile apps and using automated document production to drive performance improvements. But many firms are not keeping pace with cutting edge technologies - or more crucially with growing client expectations – with only 11 per cent utilising the opportunities of big data and predictive analytics, while more sophisticated technologies like smart contracts and blockchain are barely featuring.