The UK's top law firms are not keeping pace with cutting-edge technologies and growing client expectations, according to a new report by PwC.

In a survey of more than half of the UK's 100 largest law firms by revenue, PwC found that 70% have invested in client collaboration tools and about 40% use automated document production software.

Just 11% of firms surveyed by PwC utilise big data and predictive analytics, however, while more sophisticated technologies such as smart contracts and blockchain – a tool that allows information to be shared and updated across a network – are "barely featuring".

David Snell, who heads PwC's law firm advisory group, said firms need to take "fundamental action" to improve areas such as client service delivery, business support and recruitment in an increasingly competitive market.

"Firms need to be more agile in embracing emerging technologies, which will ultimately help them achieve more effective staffing levels and react faster to changing client demands," he said. "This will require significant investment and firms need to think carefully as to how this will be funded."

The report also said firms must tackle workplace management issues in order to "rebalance" performance and profitability, which has become squeezed by rising staff costs and flattening demand for legal services.

PwC has in recent years invested heavily in its own legal services arm, which now employs more than 3,200 lawyers across 90 countries.

Legal Week sister title The American Lawyer last month revealed that PwC is launching a US law firm. The firm, ILC Legal, is based in Washington DC and is structured as a separate legal entity from the rest of PwC and its legal services arm.

Its key service offerings include entity governance and compliance, international reorganisations, employment, immigration, M&A, financial services, tax disputes, cybersecurity and data protection.