National audit, tax, advisory and consulting firm Crowe today released the findings of its 2026 Law Firm Benchmarking Survey, produced in collaboration with the Institute of Legal Finance & Management (ILFM), revealing that law firms across Gloucestershire and the South Westare matching City firms on growth while outperforming them on cash management.
Key findings include:
- Revenue growth of 11% to 12% across both City and regional firms
- Half of firms exceeded budget expectations
- Regional firms improved lock-up performance from 140 to 132 days
- People costs remain the biggest pressure on profitability, cited by 75% of firms
- More than half (51%) identify profitability and margin improvement as a strategic priority
- Nearly eight in ten firms (79%) have committed dedicated funding to AI initiatives
Nicky Owen, Head of Professional Practices at Crowe, said: “This year’s findings highlight the growing strength of regional legal markets such as Gloucestershire and the South West. Regional firms are delivering growth on a par with City practices while making meaningful improvements in working capital management and cash conversion.”
The findings support Owen’s comments, with regional firms reporting revenue growth of 11% to 12%, matching their City counterparts while achieving significant improvements in lock-up performance and cash conversion. Average lock-up among regional firms improved from 140 to 132 days, compared with an increase from 135 to 153 days among City firms.
While growth remains strong, the survey suggests firms are increasingly focused on turning revenue into sustainable profitability. Owen added: “At a time when firms are facing rising employment costs, increasing regulation and ongoing investment in technology, the ability to convert growth into profit and cash is becoming a key differentiator. Regional firms are demonstrating that strong financial performance is not confined to London.”
Despite ongoing economic uncertainty, half of all firms surveyed exceeded their budget expectations, underlining the resilience and adaptability of the legal sector. However, more than half of firms (51%) now cite profitability and margin improvement as a strategic priority, reflecting a shift in focus from growth alone towards cash generation, operational efficiency and sustainable partner returns.
The survey also points to the ways firms are responding to these pressures, balancing investment in people with technology and innovation.
Ben Carter, Partner, Professional Practices and Private Clients at Crowe, said: ” Gloucestershire and the South West continues to be a significant legal sector, and the survey reflects the ambition and resilience we are seeing across the wider sector as firms continue to grow and invest for the future.
“While three quarters of firms identified rising employment costs as their biggest challenge to profitability, the survey also highlights a strong commitment to innovation. Nearly eight in ten firms have committed dedicated funding to AI initiatives as they look to improve productivity, enhance client service and support future growth. The results paint a picture of a sector that is both commercially focused and forward-looking.”
Overall, the findings highlight a resilient and forward-looking legal sector, with firms across Gloucestershire and the South Westdemonstrating that strong growth, financial discipline and investment in innovation can go hand in hand.
To find out more about the survey and its implications for law firms, please contact Ben Carter at Ben.Carter@crowe.co.uk. Read the full reporthere.
