Despite slump, more than 90% expect firmwide revenues to rise over next 12 months. Anna Reynolds reports

As the number of firms announcing redundancy consultations this week continued to rise – with news of widespread cuts at Berwin Leighton Paisner – new research from Legal Week has found a surprising degree of business confidence among partners in UK law firms. 

Results of the latest Big Question survey show that more than 90% of partners expect to see revenues climb at their own firm over the next 12 months, with more than 80% expecting the same to be true across the UK's 50 largest law firms by revenue as a whole. 

The research found more than half of respondents (53%) expect to see revenue at their own firm climb by more than 5% over the coming year, with a further 41% predicting more modest increases of between 0% and 5%. Meanwhile, only 6% of partners expect to see their firm's revenues fall. 

This compares with 65% predicting revenue increases at their firm when the survey was last carried out in December and 79% last summer. 

Respondents were almost as hopeful about the wider legal market, with 59% expecting rises across the UK top 50 of 0% to 5%, with a further 23.5% predicting increases of between 5% and 10%. Here, 18% thought turnover would either fall or remain static.

Tim Gee, global head of M&A at Baker & McKenzie, said: "I am bullish on the outlook. The positive equity markets are creating opportunities. But I also see a lot of discipline in the boardroom. The deals we are seeing have strong equity stories behind them: companies consolidating positions of strength and moving into new markets. It feels very rational."

But Mark Rawlinson, London managing partner at Freshfields Bruckhaus Deringer (pictured, above), was more cautious about the next six months: "There is an overriding lack of confidence, full stop. In general, companies are cash rich but are sitting on their hands – people are not making big acquisitions. 

"Private equity is a pretty robust area and tends to move deal activity out of a recession, but I'm not confident this will be anytime soon. From a lawyer's perspective, this is the worst sort of market. There are no real catalysts for change at the moment. We are looking for the deal market to create its own momentum."

Broken down by practice area, litigation remains the biggest priority for investment, followed by corporate, banking and restructuring, real estate, employment, capital markets, and intellectual property. Simon Tinkler, corporate partner at Clifford Chance (pictured, top left), said: "Generally, pricing pressures remain high, firms are as competitive as ever, and there isn't a vast amount of M&A work. But after a quiet six to nine months, we have been seeing an uptick in private equity and in the financial institutions group sector, while litigation remains very busy."

Despite the difficulties some are experiencing in Asia, respondents are continuing to pin their hopes on the region, with 53% expecting it to be the best-performing region over the next 12 months. Almost a third (29%) selected the US, while 9% of respondents chose Central and Eastern Europe, and 6% said the UK. A handful of respondents identified Western Europe while none chose the Middle East and North Africa. 

Tinkler added: "I'd expect to see more growth in Africa, Latin America and the US. We are cautiously optimistic regarding Asia-Pacific for the coming year. Despite the 'slowdown' in China, the economy there is still growing much faster than most economies and we are seeing increasing activity in southeast Asia." 

Jonathan Scott, senior partner at Herbert Smith Freehills (pictured, top right), concluded: "The picture is far from uniform across the globe, but the resurgence in European IPO activity and increase in worldwide M&A during the first quarter of 2013 are encouraging signs. 

"Given that financial stability seems to have returned to the international banking system and the risks of a euro system collapse, hard landing in China and US cliff dive have largely faded from view, we are cautiously optimistic about the prospects for global economic growth – though we expect it will be 2014 before we see a significant upturn in real economic activity."

Partners on business confidence

Number of partners predicting rising revenues at their firm over the next 12 months:

94% (May 2013) 65% (December 2012) 79% (July 2012)

3% predict own revenues to fall by more than 10%

82% predict revenue increases across the top 50 as a whole

53% identify Asia as the best-performing region for the year ahead