Booming M&A and securities markets are holding confidence at top firms at near-record levels, with business lawyers expecting to repeat surging profitability growth in their current financial year.

The quarterly Legal Week/ EJ Legal Big Question business confidence poll found 94% of respondents expect their firm's income to increase over the next year, with advisers largely shrugging off fears over global interest rates and the recent pounding on major stockmarkets.

In addition, 66% of more than 100 senior lawyers surveyed are expecting at least double-digit growth in turnover, building on the back of a 2005-06 reporting season that has already seen many major firms post surging increases in profits.

The number of firms expecting double-digit growth is up on the 61% recorded in the last confidence survey in April and also exceeds the record Big Question turnover prediction seen in the summer of 2001, when 62% were expecting growth of at least 10%.

Of these, 40% said they expect fees to grow by 10%-15%, a further 20% predicted increases of 15%-20%. A hopeful 2% predicted a rise of 20%-25%, leaving 4% aiming for 25%-plus income growth.

Freshfields Bruckhaus Deringer corporate partner Barry O'Brien told Legal Week: "Everyone's pipeline is full and we are working flat out. We can look forward to the next six months with confidence because what we are doing today does not get billed for a few weeks or months. Across the board, it is looking strong."

Slaughter and May corporate partner Martin Hattrell commented: "Lawyers and the legal business tend to be fairly reactive. There is a lot of confidence because we are busy at the moment. M&A activity is at a pretty significant peak, which generally buoys up feelings and flows into the wider practice."

O'Brien added: "After Enron and all the problems of 2000 there was a market-imposed iron fist. Everyone was thinking they had to stop doing so many deals and repair the balance sheet.

"But that discipline has changed now as lots of companies have completed cost reduction programmes and people once again have permission to do M&A work."

Unsurprisingly, respondents over-whelmingly (56%) cited corporate finance as their top investment priority. Its closest rivals for the vote, litigation and banking, were significantly behind, both being earmarked by 13%.

Of the remaining departments, employment was next in line for investment with 5% of the vote, followed by property (4%) and projects (3%). Insolvency, IT and tax each got 2% of the vote, but IP will have a frugal year, having not received any votes.

CMS Cameron McKenna corporate finance partner David Day said: "There have been a lot of big cross-border deals and there is international confidence. Doing lots of M&A work is good for firm finances overall and affects a broad base of practices, but everyone has been busy this year. There are a lot more deals in the pipeline."

Nonetheless, the recent fluctuations in the stock market appear to have had some effect on confidence, with one partner at a top 10 firm observing: "The stockmarket does not know its own mind." The same partner added: "This is the beginning of the end of the boom."

And 2% of respondents to the survey predicted a fall in profits of 5%-10%, whereas last quarter not one respondent thought profit would fall.