Midlands' law firms are reporting another year of strong growth, with increasing fee income and profits, according to the 16th annual law firms' survey from accountants PricewaterhouseCoopers.

In line with other law firms around the UK, they have benefited from a buoyant UK economy and have reported strong performance from their corporate, banking and property practice areas.

While the 2007 survey points to particularly strong growth and some signs of a break away in terms of profitability among the Top Ten law firms in the country, firms in the Midlands have experienced a relatively consistent performance with last year in respect of fees per partner - 80 per cent of firms in the region reported an increase.

Profits per partner have improved significantly over the past year - 80 per cent of Midlands' law firms have reported profit increases, compared with 60 per cent in 2006.

However, the profit increases reported by firms in the region are more moderate than those of last year - the majority reporting increases of ten per cent or less.

Despite the growth in fees and average profit per partner, profit margins remain under pressure.

This is mainly due to the continued rise in staff costs but high levels of associates' turnover is also likely to be a significant contributory factor. The survey indicates that the largest firms achieved the best margins.

David Waller, Midlands' chairman of PwC, said: "2007 has been another good year for many law firms in the Midlands, particularly for larger firms.

"The increase in profits reported by the majority of firms in the region is being driven mainly by the continued restriction on equity partner numbers and

for some larger firms this is leading to an even greater differential in levels of fee income and profits."

International expansion has continued this year, particularly in China and France, with the majority of Top 25 firms now having a presence in those countries.

Overseas fee income growth has continued to be strong, with two thirds of the Top 25 reporting increases of over 15 per cent and as many as 37 per cent recording more than 25 per cent.

Mr Waller added: "Firms in the region are again budgeting for a strong performance in 2007-2008 and it will be interesting to see if profit levels can be maintained; this will no doubt be a strategic focus for many.

"This is all the more so given the uncertain international economic and banking environment we are experiencing at the moment."