FEE income at the UK’s Top 100 law firms rose by 4% in the three months to the end of July, according to latest figures from accountancy firm Deloitte.

A report by the firm said the figures suggested that the industry was recovering, but stressed that a closer analysis revealed continuing weakness in the UK market and a stark variation in the performance of firms.

The survey revealed that while one in six firms enjoyed revenue growth above 12%, a similar proportion suffered a decline of 4% or more.

Generally, it was the larger firms with international presence which achieved higher growth – benefiting from more buoyant overseas markets.

These firms also benefited from Sterling’s weakness, resulting in overseas revenues contributing more in Sterling terms.

Those firms with a larger proportion of their business generated in the UK continue to find the markets tough.

Higher revenues were generated through a combination of increases in productivity and in the number of fee earners, which rose by 2.8% and 3.1% respectively.

Stephen Hall, tax partner for Deloitte in West Yorkshire, said: “The increase in fee income will be welcome, but should not mask the fact that conditions generally are challenging.

“Litigation has performed reasonably well, but low levels of M&A activity means that corporate revenues remain lacklustre.

“There is a general feeling of nervousness about the prospects for the months ahead with domestic demand expected to remain weak and continued pressure on rates.”