1. Resilience and optimism in the legal sector: 84% of firms remain optimistic about the future.
2. Embracing technology and AI: Half of the surveyed firms are actively using AI, primarily for administrative tasks and general matter management.
3. Focus on talent and productivity: The strongest performing firms prioritise long-term vision, talent, and productivity.
4. Diversity and inclusion: 66% of firms report that over 60% of their fee earners are female.
5. Environmental, Social and Governance (ESG): A growing number of firms are investing in green energy solutions, with 25% of respondents having already made such investments.

David Weaver, our Head of Professional and Business Services, says: “The Royal Bank Legal Report 2025, based on insights from 110 law firms across the UK, is far more than a collection of data. It offers a strategic framework to help firms identify where they excel and where there are opportunities for improvement.

“From talent management and technology adoption to sustainability and private equity investment, the report covers key topics shaping the UK legal market.

“By benchmarking your firm’s performance against peers, you can uncover actionable insights that could enhance profitability, improve cash flow management, and future-proof your business.

“The report also features expert commentary from industry leaders, providing valuable context on current trends and challenges.”

In 2025, the sector has seen a significant uplift in median fee income growth, reaching 12% — up from 10% in 2024. This increase is not by chance but the result of focused productivity improvements.

Leading firms have sharpened their time capture, scoping, and matter management processes, allowing them to maximise fee earner output efficiently. Encouragingly, fees per fee earner grew by 10%, with smaller firms often outperforming in this metric.

Key takeout: These productivity gains are essential for firms aiming to maintain competitive advantage in a fast-evolving market.

Profitability remains a core focus for law firms, and the data reveals a positive picture.

Median profits per equity partner (PEP) surged by 23% in 2025, and larger firms saw an even more remarkable 31% rise.

This suggests firms are successfully navigating margin pressures and rising employee costs through effective operational efficiencies.

Key takeout: As firms seek sustainable growth, strategic financial management and the optimisation of cost bases is crucial.

People costs continue to represent a significant portion of total fees, but encouragingly, this figure has improved slightly — from 50% in 2024 to 48% in 2025.

Including notional salaries for self-employed partners, overall people costs declined from 65% in 2024 to 64% in 2025.

While most firms still anticipate headcount growth in 2026, the pace has moderated compared to previous years, reflecting broader economic and tax pressures.

Key takeout: Legal leaders must balance talent acquisition with productivity to ensure long-term profitability.

Interest income remains a noteworthy contributor to law firm profitability, comprising a median of 5.6% of earned income and 21% of PEP.

Although reliance on interest income has moderated — due in part to lower base rates and tighter regulatory oversight — it remains an integral element of many firms’ financial models.

Key takeout: Effective management of working capital, including lock-up days, which have improved from 133 to 128 days, is pivotal to maintaining a healthy cash flow position.

Half of the firms surveyed are now actively integrating artificial intelligence (AI) into their workflows, mainly to enhance administrative processes and matter management.

These investments in technology correlate strongly with improved productivity and profitability, highlighting a clear pathway to future-fit law firms.

Key takeout: A sector-wide commitment to innovation could be crucial in addressing challenges around talent retention, client expectations, and operational efficiency.

We encourage you to download the full Royal Bank Legal Report 2025 and to join our live webinar on 14th October.

Andrew Allen, the report’s author from PKF Francis Clark, will guide you through the key findings and answer your questions.

Following the webinar, we will continue the conversation with a series of roundtables and seminars across the UK, offering you the opportunity to engage directly with peers and experts.

Discover more insights on managing talent from our colleagues at Cushon.

Insights on working capital and cash flow

Download our Future Fit blueprint for long-term growth and discover how your business could build resilience, seize opportunities and prepare to thrive.

Despite recent economic headwinds and margin pressures, the UK legal sector demonstrates remarkable resilience and optimism. Firms that adopt a Future Fit mindset — prioritising talent, technology, and sustainability — will be best positioned to thrive amid ongoing change.

Don’t miss this opportunity to gain a competitive edge. Download the Royal Bank Legal Report 2025 and join our webinar. Register here

Keep up to date with our sector insights and thought leadership through the Royal Bank Business Hub.