Improved confidence and increased market activity has pushed up rates and fee earner income at the UK's top 100 law firms, according to the latest legal sector survey by auditor Deloitte.

The study, which looked at the quarter ended 31 January 2014, found that average income for fee earners increased by 4.5% compared with the same period a year ago. Fee earners at firms in the top 25 by size saw their income increase by an average of 6%.

For firms outside the top 25, increases in average fee earner income were more modest, with an average rise of 3%. Across the top 100, Deloitte said the growth had been driven by a 3.5% increase in the rates recovered per hour.

The rise is smaller than the hourly rate growth in Q2 2013-14, when fees were up 6.3% against the same period in 2012-13.

Every quarter in the last year has seen like-for-like growth across the key metrics measured in Deloitte's survey.

Elsewhere, the auditor found firms' fee income increased by an average of 11.3% for the quarter, largely as a result of sector consolidation and merger activity.

For firms ranked in the lower half of the UK top 100, average growth in fee income stood at 16.9%, largely buoyed by firm mergers and fee earner headcount increases of 15.7%.

"Greater confidence amongst lawyers when negotiating rates, particularly against a background of limited fee earner capacity has driven these increases," said Deloitte professional service practice partner Jeremy Black (pictured).

He added that the outlook for firms with exposure to the international M&A markets was particularly positive.