Their clients may be cutting jobs and reeling from millions of pounds in losses, but Britain’s corporate lawyers enjoyed record profits last year.

The top 100 commercial law firms earned combined revenues of £13.96 billion in the past financial year, according to a report published today, an increase of 14 per cent on the previous year. Collectively they made £4.35 billion in profits, an average of £473,000 for each equity partner.

However, lawyers are being told today that the good times may be over. The CBI is issuing a bleak assessment of trading prospects in the services sector, including legal firms. In July and and August profitability fell at its sharpest rate since early 2002, the organisation says.

According to Legal Business magazine, the highest paid partners at Slaughter and May, one of the City’s oldest and most prestigious firms, earned £2.4 million each last year.

Slaughter and May acts for many of Britain’s biggest companies, including a quarter of the FTSE 100. Its top earners include Christopher Saul, the senior partner, Charles Randell, who advised the Treasury on the rescue of Northern Rock, and Nigel Boardman, who represents Marks & Spencer and Arsenal Football Club. The firm posted revenues of £421 million, up 16 per cent, driven by major deals such as British Airways’ proposed merger with Iberia, Banco Santander’s £1.25 billion takeover of Alliance & Leicester and BHP Billiton’s $147 billion bid for Rio Tinto.

Paul Olney, the firm’s practice partner, declined to confirm the figures. He said: “We’ve been very busy in the past year and we continue to be very, perhaps even surprisingly, busy, given the current circumstances.”

Slaughter and May is notoriously reticent about its earnings, which has led to claims that it is aloof. It is fiercely protective of its reputation and heritage and has resisted the aggressive expansion and corporatisation of many of its rivals. Its partners are said to eat together every day in their private dining room at the firm’s offices on Bunhill Row, in Moorgate, and it refuses to hire lawyers from other firms. It is also the only leading City law firm without a public-relations department.

It is much smaller than “magic circle” rivals such as Allen & Overy, Clifford Chance, Linkaters and Freshfields Bruckhaus Deringer, each of which billed in excess of £1 billion last year. However, Slaughter and May remains far more profitable. Its profit per equity partner, a key measure of a law firm’s financial performance, was £1.7 million last year, compared with £1.4 million at Freshfields, £1.2 million at Linklaters and £1.1 million at Allen & Overy and Clifford Chance.

Not all partners at the 100 biggest firms enjoyed such rich rewards. According to Legal Business, equity partners at Thompsons, a personal-injury specialist, earned about £83,000 last year. Jim Baxter, the magazine’s editor, gave warning that even the biggest firms would struggle to maintain their record profits beyond this year. “Taken at face value, [the industry] looks to be in rude health,” Mr Baxter said. “UK firms compete well overseas, firms are billing well and clients are broadly happy paying, but dark clouds are on the horizon.”

Law firms typically took longer than other businesses to feel the impact of an economic downturn, but the impact was starting to be felt, Mr Baxter said. “The credit crunch, while not showing much impact on this year’s figures, has UK law firms worried. There are precious few deals being done, the usually lucrative financial services market has dried up and the commercial property market has all but stalled. Law firms are beginning to look at one of their costliest overheads — their staff — and ask questions. We have begun to see a trickle of redundancies and more are expected.”

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