Concern about the rising demand for fixed-fee work is growing in bigger firms, research has found.

Results of a survey by Thomson Reuters' legal business found 48% of finance directors at top-100 law firms saw the rising number of requests for fixed-fee work as a high risk to profitability – up from 29% two years ago.

Just 12% dismissed the trend as posing a low risk to profits.

The hourly-rate model has come under increased pressure in recent months, with client expectations of reduced costs and new entities coming into the market promising fixed fees.

More than three-quarters of the 26 respondents saw downward pressure on fees as a high risk, while 48% expected profits to be threatened by competition between firms over fees.

‘The fact that fixed-fee work is still showing up as such a significant and increasing risk for so many finance directors illustrates that demand from clients has grown over the past few years,’ said Samantha Steer, head of large law for Thomson Reuters UK legal business.

Steer said many lawyers still struggle with accurate fixed-fee quotes due to the unpredictable nature of much legal work. But those who do it well, she maintained, will strengthen client relationships by giving certainty from the outset.

Steer added: ‘It will be critical for law firm leaders to focus on how their firms can respond effectively to client demands for more efficiency and cost-effectiveness in the delivery of legal services.

‘That will mean, among other things, a willingness to adopt more flexible approaches that can tailor staffing and leverage technology to support work processes, and it will mean pricing models that meet the needs of particular clients in particular situations.’

Respondents expected public sector, personal injury and PFI to suffer the biggest contraction in work, with regulatory and compliance work predicted to grow most quickly.

Just 8% of those surveyed saw competition from other legal services providers outside the traditional profession as presenting a high risk to profits.

None of those who responded was significantly worried about work being taken in-house, with 60% seeing it as a medium risk.