It’s nice to see that some City folk are still making a living. Clifford Chance’s 369 equity partners pocketed an average of £1.15 million in the year to April, a tidy 13 per cent increase on the year before.

So much for predictions that the end of the private equity mergers and acquisitions party would bring penury for the City’s top lawyers. Some smaller firms, such as Herbert Smith and Norton Rose, have done even better, recording turnover increases of more than 25 per cent.

But the figures disguise a sharp downturn in the second half and the outlook for the current year is much less rosy.

The lack of M&A will be partly offset by work on rescue rights issues and distressed debt deals. In due course, there may also be some big corporate casualties that will require restructuring. But the expected wave of mis-selling actions against banks after the credit crunch has failed to materialise. And JPMorgan Chase’s victory in a long-running case this week may deter potential litigants.

More important for the big firms such as Clifford Chance will be continued growth in Asia, the Middle East and Eastern Europe, where it has been investing heavily.

The downturn is likely to be tougher for second-tier firms that do not have the international reach of Clifford Chance or Linklaters or the reputation of a Slaughter and May.

Combined with the new legislation that will allow outsiders to invest in law firms for the first time, this seems certain to strengthen the hand of the big firms.

The law business will not become dominated overnight by a few international giants as in accounting. But the future looks more challenging for companies in the middle of the pack.

david.wighton@thetimes.co.uk

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