Top law firms are coming under increasing pressure from clients to reduce fees, a poll has revealed, while a growing number fear that Legal Services Act reforms will pose a risk to profits.

Finance directors from the top-100 UK firms, surveyed by legal information provider Sweet & Maxwell, said scrutiny of hourly rates poses a high risk to profitability in the next year.

Firms have always come under pressure not to raise rates, but since the recession many clients have actively pursued a cut in fees.

Almost half of law firms’ finance directors also fear the effect of a downturn in corporate work, with deal activity falling significantly since the credit crunch.

Research also found a significant jump in levels of concern among the top-100 firms about the impact of Legal Services deregulation.

The so-called ‘Tesco law’ is seen as a high risk to profits by 13% of finance chiefs in 2011, compared with none in 2010.

This challenges the assumption that alternative business structures will only affect high street firms, with some City practices concerned that new capital in the sector will increase competition for commercial work.

But while firms live with uncertainty over future profits, the lawyers employed by them appear to be in a stronger position.

The survey revealed a rise of 10% in firms concerned about the poaching of staff by competitors, giving staff a the upper hand when it comes to negotiating pay increases and bonuses.