The Price of Time: The Hourly Rate Review

The legal profession in Northern Ireland has faced more than its fair share of challenges over the last decade, particularly with rising cost pressures and increased competition in the labour market. A persistent level of underfunding across the judicial system has not helped matters either, with the Hourly Rate remaining unchanged for over 10 years.

There’s no doubt that during this time the commercial viability of doing certain types of legal work has eroded, unfortunately contributing to a deterioration of legal services and the creation of the so-called ‘Legal Desert’.

The Hourly Rate

The Hourly Rate is viewed by many in the legal profession as being the foundation upon which solicitor fees are measured and negotiated.

After a decade of stagnancy, the Law Society of Northern Ireland led key stakeholders within the sector to challenge and realign the historic Hourly Rate. As a result of these efforts, on 29 April 2025, the Taxing Master announced an increase in the Hourly Rate from £102 to £155, effective from 1 June 2025.

This increase of over 50%, whilst long overdue, has been well received by Society members and goes some way to helping deal with the ongoing financial challenges facing the profession at present.

BDO Northern Ireland independent report

As part of the journey, BDO NI was engaged by the Society to prepare an independent, evidence-based Report to assess the Hourly Rate. Our work spanned a period of nine months and involved a detailed survey issued to the entire profession of 448 member firms, which was followed up by one-to-one interviews with 15 legal firms.

We worked closely with the Society to help prepare our findings, with our Report and presentation ultimately presented to Mr Justice McAlinden and the wider Working Group.

We would like to thank the Law Society of Northern Ireland and the wider Working Group chaired by Justice McAlinden for all their support and input into our independent Report. We also want to specifically thank the firms and individuals who completed the survey and took part in the interview process.

The evolution of the legal profession

Northern Ireland boasts almost 450 legal firms, and in 2022 accounted for 2.5% of all UK employment in the legal sector. Due to the region’s cost competitiveness, combined with an assured pipeline of world class talent and sound infrastructure, it is no surprise that there have been over 15 mergers in the last decade between existing NI firms and top 100 UK law firms, with this trend set to continue given the congruence between English, Welsh and Northern Irish law.

Whilst the influx in investment from international law firms has been welcomed from an NI economy standpoint, it has had a knock-on impact on indigenous firms who have struggled to compete on salary levels, resulting in staff retention issues. Noting the age-profile of partners in regional law practices, there is a real concern regarding the sustainability of the high street practice, with c. 25% of firms considering a merger at present.

Challenges faced by the legal profession

Since the last review was carried out over a decade prior, the legal profession and the environment in which law firms operate in NI, has changed considerably:

1. Underfunding

The justice system in NI has been impacted threefold: by persistent underfunding; the impact of COVID-19 on the courts; and the volatility in inflation. This ultimately has resulted in a reduction in access to justice for NI citizens.

2. Legal Aid deserts

As a direct result of underfunding, access to Legal Aid provision has deteriorated. Our research found that many of the firms interviewed were carrying out progressively less Legal Aid-related work, or, simply not taking on any more cases due to the service being commercially unviable. We understand that the Society is currently pursuing an increase in the Legal Aid rates linked to our research.

3. Staff retention

Our Report also highlighted the issue of staff retention in recent years. Many practitioners interviewed attributed the loss in staff to the competition with public sector jobs and the rise in international law firms that have established offices in NI in recent years.

Key Findings and Outcome of our Review

The primary purpose of our survey was to establish the composition of legal firms in NI, with the objective to determine the average cost of production for a professional fee- earner. Of the 131 firms that responded, we identified that:

• 87.84% of firms indicated that the cost of doing business had increased, with wages and salaries increasing the most, over 20% in the last 10 years.

• 68.81% indicated that the low level of Hourly Rate legal fees was restricting employment opportunities.

• The average professional salary across the profession was c. £87,000 for equity partner, £72,000 for salaried partner/director and £55,000 for a qualified solicitor.

• The average non-professional salary across the profession was c. £61,000 for a consultant, £26,000 for a paralegal, £23,000 for support staff, and £21,000 for an apprentice.

• The average overhead cost (excluding salaries) of a firm was £466,000, with insurance being the main office overhead averaging at c. £63,000 per annum.

• We were guided by Mr Justice McAlinden to use 1,100 chargeable hours as the basis for our fee-earner cost of production. However, from the research conducted and the interviews performed, fee-earners indicated that they were working fewer billable hours, having to spend more time dealing with business development, regulation, training and time away from the office.

• The blended Hourly Rate in England and Wales was found to be £207 at present, with the Hourly Rate in Scotland currently at £180, both well ahead of the existing rate in NI.

• Overall, the average cost of production for a fee-earner charging 1,100 hours per annum calculated at £151.17 across Northern Ireland. An additional four calculations were assessed within our Report to justify and recommend an Hourly Rate of between £150 and £160.

Feedback from Members

It is encouraging to hear from Law Society members that the uplift in the Hourly Rate is having a positive impact on firms going forward, with the cost of production from our Report being used to reassess staff hourly rates and produce enhanced firm budgets for 2025.

Future Proofing

Whilst the uplift goes a long way to address the historic lack of increase over the last decade, we were keen to ensure that the Rate was future-proofed, recommending that the Hourly Rate be index-linked to the Services Producer Price Index (SPPI) each year. This Index would appear to be the most appropriate rate to use going forward, with its relevance to legal services and its recent use by the Master of Rolls covering England and Wales noted.

The Master has confirmed that the Rate will be reviewed periodically; however, no formal commitment has been made as to the period, with the new rate of £155 now applicable for the 2 years to 1 April 2027.

BDO NI and the Legal Profession

For over 35 years, BDO NI has worked closely with the legal profession in Northern Ireland, and our clients within it, to help support and promote continued success. It is an area in which we have developed considerable experience, not only as accountants and tax advisors for many local practices, but also through our work as business advisors and forensic accountants.

Despite the headwinds being faced by legal practices in Northern Ireland, we believe that there are still opportunities to grow profitably. Through consolidation, we have already seen a number of legal firms benefit from cost synergies and extended service offerings.

In the months and years ahead, we fully expect more and more legal firms to avail of this opportunity, and with our experience, we would be happy to explore this with you.

David Warnock, Director in the Advisory team specialising in Corporate Finance, Forensics and Restructuring BDO NI