UK Law Firms Depending On Foreign Currency Movements For Boosting Growth, PwC Data Reveals
UK’s biggest global law firms have seen significant growth in 2017 on the back of foreign exchange movements rather than from new business or innovation, a PwC survey has found.
Currency movements which resulted in a weaker sterling last year caused fee income for UK’s top 10 global law firms to grow by 4.9 per cent, as against an overall growth of 8.1 per cent, as per the results of PwC’s 2017 law firms survey.
In the same manner, profit for the firms went up by 4.4 per cent due to fluctuations in foreign exchange rates as against overall growth of 9.8 per cent.
This implies that currency movements alone have accounted for an increase of £43.7 million in revenues and £16.2 million in profit for the law firms.
Relying On Foreign Exchange Fluctuations Not Enough
PwC warned that relying on fluctuations in foreign exchange for growth was not sufficient to ensure survival in a highly competitive marketplace. The company noted that the law firms will need to make “fundamental changes if they are to thrive in the future”.
Kate Wolstenholme, PwC’s business services leader stated that after benefitting from the one-off profit and income boost this year it would be interesting to see “the real commercial impact of Brexit” on the law firms in the current financial year.
She further pointed out while the law firms will see an increase in revenue by offering regulatory advice to clients , the rising economic uncertainty may cause workflow to be unpredictable. The firms may also have to bear the cost of scenario planning for ensuring that they remain fit for a post-Brexit environment.
As per PwC’s survey, international offices of UK global top 10 firms experienced twice as much growth in profit as those in the UK. Additionally US top-tier firms were found to be performing better than their UK peers across all major performance indicators.