Fee income at the UK’s top 100 law firms increased by 4% in the first quarter of the financial year compared with the same period in 2010, according to figures from Deloitte.

But the business advisory firm warned that the figures mask continuing weakness in the UK market and stark variations in the performance of different firms.

The firm’s Q1 legal sector survey reveals that one-sixth of firms enjoyed revenue growth exceeding 12% in the three months to 31 July, but a similar proportion suffered a decline of 4% or more.

Firms with an international presence tended to achieve higher growth on the back of more buoyant overseas markets.

Higher revenues were generated through a combination of increases in productivity and in fee-earner headcount, which rose by 2.8% and 3.1% respectively.

Jeremy Black, partner in Deloitte’s professional services group, 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 mean 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.’