Legal sector sees growth despite slower payment times

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Law firm earnings were up in 2024 but it’s taking longer for firms to get paid, according to the Law Society’s 2025 Financial Benchmarking Survey.

The survey, which collected data from 145 law firms across England and Wales, found that, overall, the legal sector contributes £74.4 billion to the economy. In 2024, there was a 6.1% increase in firm earnings, just under the 8.8% growth seen in 2023. Additionally, 71% of firms surveyed reported year-on-year fee growth in 2024 and one-third saw growth of more than 10%. The report also revealed that the number of legal professionals grew by 3.4% and the average cost per lawyer rose to £67,000, which is almost a £4,000 increase on 2023.

However, data also indicated that the average time for firms to receive payment has increased from 143 days to 146 days. The report emphasised that reducing ‘lock-up’, the total sum of unbilled work in progress and debtors combined, should be a focus for law firms. It outlined that higher lock-up can lead to issues with cash flow and increased bad debt exposure. Findings showed that a firm with turnover of £10 million would free up almost £30,000 for every day’s reduction in lock-up.

Law Society President Richard Atkinson said: “Despite rising costs and a slowing growth rate, law firms are still performing well. The legal sector remains healthy, continues to be a powerhouse of the UK economy and a significant employer. Solicitors and law firms are committed to helping to build a robust economy that competes internationally while contributing to the country’s prosperity and supporting local communities.”