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Legal Services - UK - April 2017

“While the current market outlook carries a higher degree of uncertainty following the Brexit vote, the UK legal services market will remain intensely competitive and face continued price pressures. The trend towards unbundling legal instructions will also continue, further eroding the margins previously available for traditional legal services providers.”
– Claudia Preedy - B2B Analyst

This Report answers the following key questions:

  • What are the implications of Brexit on the legal services market?
  • Is the move by the big accountants into legal services posing a threat to traditional firms?
  • Is the trend towards unbundling of legal services set to continue?
  • What are the current technological developments in the legal services market?

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Table of contents

  1. Executive Summary

      • The market
        • Figure 1: Turnover of UK legal services industry, 2012-16
        • Figure 2: Turnover of UK solicitor firms, by type of work, 2016
      • Market factors
        • Companies
          • Figure 3: Breakdown of solicitor firms, March 2014 and February 2017
        • What we think
        • Key Insights

            • What are the implications of Brexit on the legal services market?
              • Is the move by the big accountants into legal services posing a threat to traditional firms?
                • Is the trend towards unbundling of legal services set to continue?
                  • What are the current technological developments in the legal services market?
                  • Introduction

                      • Definitions
                        • Methodology
                          • Abbreviations
                            • Market positioning
                            • UK Economy

                              • Overview
                                • Figure 4: Forecast GDP development, 2017-21
                                • Figure 5: UK GDP quarterly development, 2003-16
                                • Figure 6: UK GDP in economic downturns and recoveries since 1979
                              • Inflation
                                • Interest rates
                                  • House prices
                                    • Figure 7: UK House price changes, 2004-16
                                  • Consumer spending
                                    • Manufacturing
                                      • Figure 8: UK manufacturing, 2014-16
                                    • Business investment
                                      • Figure 9: UK GFCF 2003-16
                                    • Imports
                                      • Exports
                                      • Market Factors

                                        • Key points
                                          • Regulation and government policy
                                            • The Legal Services Act 2007
                                              • Legal Services Act opens up market to non-lawyers
                                                • Barriers for ABS to be further reduced to boost competition
                                                  • The Solicitors Regulation Authority (SRA) relaxes the Separate Business Rule, making it easier for solicitors to provide other professional services, such as accounting
                                                    • SRA proposes to remove further restrictions for solicitors in its phased review of the SRA Handbook
                                                      • CMA concludes that the legal market is not working well for consumers and small businesses
                                                        • Legal Aid, Sentencing and Punishment of Offenders Act cuts legal aid funding
                                                          • Government scraps major reform of Legal Aid system in England and Wales
                                                            • Steep rise in court fees could discourage people from bringing legitimate cases
                                                              • Nearly a fifth of all courts and tribunals in England and Wales to close
                                                                • Other factors
                                                                  • Residential and Commercial Property Transactions
                                                                    • Figure 10: UK residential property transaction completions, by country, 2012-16
                                                                    • Figure 11: UK residential property transaction completions, 2012-16
                                                                    • Figure 12: UK non-residential property transaction completions, by country, 2012-16
                                                                    • Figure 13: UK non-residential property transaction completions, 2012-16
                                                                  • Trends in M&A activity
                                                                    • UK M&A market remains resilient in 2016, with a weaker sterling attracting foreign investment
                                                                      • Brexit-induced uncertainty to potentially result in slowdown in M&A activity
                                                                          • Figure 14: Mergers and acquisitions involving UK companies, 2004-16
                                                                        • Number of IPOS down in 2015 and 2016
                                                                          • Figure 15: Number of main market and AIM listed companies, 2009-16
                                                                          • Figure 16: Number of main market and AIM listed companies, 2009-16
                                                                          • Figure 17: Number of company IPOs on London Stock Exchange, 2011-16
                                                                        • Rise in active businesses as UK economic recovery becomes more robust
                                                                          • Figure 18: Number of private sector businesses in the UK, 2002-16
                                                                          • Figure 19: Number of private sector businesses in the UK, 2002-16
                                                                          • Figure 20: Number of VAT and/or PAYE registered enterprises in the UK, by industry group and turnover size band, 2016
                                                                        • Public and political scrutiny surrounding corporate tax
                                                                          • Measures put in place to crack down on tax avoidance
                                                                            • Finance Bill 2017
                                                                            • Market Size

                                                                              • Key points
                                                                                • Overview
                                                                                  • Legal services sector has shown resilience in recent years, partly reflecting the UK’s strong standing in the global marketplace
                                                                                    • Legal services sector is undergoing a period of significant change
                                                                                      • Downward pressure on prices for legal services is forcing firms to evolve business models
                                                                                        • Mid-tier firms emerged stronger following the recession...
                                                                                          • ... but the mid-tier is becoming squeezed due to increased competition from large accounting firms and magic circle law firms
                                                                                              • Figure 21: Turnover of the UK legal services industry, 2012-16
                                                                                              • Figure 22: Turnover of UK legal services industry, 2012-16
                                                                                          • Market Segmentation

                                                                                            • Key points
                                                                                              • Market segmentation by profession
                                                                                                  • Figure 23: Turnover of UK legal services industry, by type of business, 2012-16
                                                                                                • Segmentation by category of work (solicitors only)
                                                                                                  • Figure 24: Turnover of UK solicitor firms, by type of work, 2016
                                                                                                  • Figure 25: Turnover of UK solicitor firms, by type of work, 2016
                                                                                                  • Figure 26: Breakdown of UK solicitor firms, by type of work, as of April 2015
                                                                                                • Demand for legal services by end-use sector
                                                                                                  • Figure 27: Top sources of business demand for legal services
                                                                                                • Conveyancing market
                                                                                                    • Figure 28: Average number of transactions by conveyancing firms, 2011-16
                                                                                                  • Wills & Probate
                                                                                                    • Probate market sees shift towards DIY, but opportunities for professionals remains
                                                                                                        • Figure 29: Grants of probate issued in England and Wales, 2010-15
                                                                                                      • MoJ announces major hike in probate fees in 2017
                                                                                                        • Solicitors continue to dominate the will-writing market, despite unauthorised providers generally being cheaper
                                                                                                          • Personal injury
                                                                                                            • Recent reforms restrict growth potential of personal injury market
                                                                                                              • Proposed introduction of fixed legal fees for clinical negligence
                                                                                                                • Other areas of work
                                                                                                                  • Employment law
                                                                                                                    • Family law
                                                                                                                      • Regional analysis
                                                                                                                        • Figure 30: Regional analysis of the UK legal services sector, 2015
                                                                                                                      • Overseas trade in legal services
                                                                                                                        • Figure 31: International trade in legal services, 2008-15
                                                                                                                        • Figure 32: Net exports of legal services, 2007-15
                                                                                                                    • Market Trends

                                                                                                                      • Key points
                                                                                                                        • Increased demand for non-traditional legal services
                                                                                                                          • Unbundling of legal services increasingly popular among corporate purchasers and the public
                                                                                                                            • Legal service providers need to become more efficient as clients expect better value and fixed prices
                                                                                                                              • Legal service providers face increased competition from accountants
                                                                                                                                • Some firms move towards more integrated service offerings
                                                                                                                                  • Technological developments and innovation
                                                                                                                                    • Growth in DIY law set to continue
                                                                                                                                      • Online dispute resolution and proposed online court
                                                                                                                                        • SME business sector offers growth potential
                                                                                                                                        • Industry Structure

                                                                                                                                          • Key points
                                                                                                                                            • Industry development
                                                                                                                                              • Legal service providers are highly diverse
                                                                                                                                                • Rise in the number of overseas law firms in London
                                                                                                                                                  • Top 20 commercial legal firms
                                                                                                                                                    • Figure 33: UK top commercial law firms, by turnover, 2016
                                                                                                                                                  • Structure of UK legal activities industry
                                                                                                                                                    • Figure 34: Analysis of the changes in the structure of the UK legal activities industry, 2012-16
                                                                                                                                                  • Solicitor firms
                                                                                                                                                    • Figure 35: Number of practising solicitors in the UK, 2011-16
                                                                                                                                                    • Figure 36: Population of practising solicitors, 2011-17
                                                                                                                                                    • Figure 37: Breakdown of solicitor firms, by type, March 2014 and February 2017
                                                                                                                                                  • Practising barristers
                                                                                                                                                    • Figure 38: Total barristers in practice, 2010-15
                                                                                                                                                  • Structure by employment
                                                                                                                                                    • Figure 39: Analysis of the employment structure of the UK legal activities industry, 2015 and 2016
                                                                                                                                                  • Structure by turnover
                                                                                                                                                    • Figure 40: Analysis of the financial structure of the UK legal activities industry, 2015 and 2016
                                                                                                                                                • Company Profiles

                                                                                                                                                  • Allen & Overy

                                                                                                                                                      • Company strategy:
                                                                                                                                                        • Advanced Delivery
                                                                                                                                                            • Figure 41: Financial analysis of Allen & Overy, 2012-16
                                                                                                                                                            • Figure 42: Allen & Overy practice breakdown by sector, 2015
                                                                                                                                                            • Figure 43: Allen & Overy practice breakdown by geographic segment, 2015
                                                                                                                                                        • Clifford Chance

                                                                                                                                                            • Company strategy
                                                                                                                                                              • Figure 44: Financial analysis of Clifford Chance, 2012-16
                                                                                                                                                              • Figure 45: Turnover analysis of Clifford Chance, by geographic segment, 2016
                                                                                                                                                          • CMS Cameron Mckenna

                                                                                                                                                              • Company strategy
                                                                                                                                                                  • Figure 46: Financial analysis of CMS Cameron McKenna, 2012-16
                                                                                                                                                              • Dentons UKMEA

                                                                                                                                                                  • Company strategy
                                                                                                                                                                      • Figure 47: Financial analysis of Dentons UKMEA, 2012-16
                                                                                                                                                                  • DLA Piper International

                                                                                                                                                                      • Company strategy
                                                                                                                                                                          • Figure 48: Financial analysis of DLA Piper International, 2012-16
                                                                                                                                                                          • Figure 49: Turnover analysis of DLA Piper International, by geographic segment, 2015
                                                                                                                                                                      • Freshfields Bruckhaus Deringer

                                                                                                                                                                          • Freshfields opens Global Centre in Manchester
                                                                                                                                                                            • Company strategy
                                                                                                                                                                              • Figure 50: Financial analysis of Freshfields Bruckhaus Deringer, 2012-16
                                                                                                                                                                          • Herbert Smith Freehills

                                                                                                                                                                              • New global alternative legal services business launched in 2015
                                                                                                                                                                                • Beyond 2020 Global Strategy
                                                                                                                                                                                  • Figure 51: Financial analysis of Herbert Smith Freehills, 2012-16
                                                                                                                                                                              • Hogan Lovells International

                                                                                                                                                                                  • Company strategy
                                                                                                                                                                                    • Figure 52: Financial analysis of Hogan Lovells International, 2012-16
                                                                                                                                                                                • Linklaters

                                                                                                                                                                                    • Company strategy
                                                                                                                                                                                        • Figure 53: Financial analysis of Linklaters, 2012-16
                                                                                                                                                                                    • Norton Rose Fulbright

                                                                                                                                                                                        • Company strategy
                                                                                                                                                                                          • Norton Rose Fulbright announces merger with Chadbourne & Parke in February 2017
                                                                                                                                                                                            • Figure 54: Financial analysis of Norton Rose Fulbright, 2012-16
                                                                                                                                                                                        • Slaughter and May

                                                                                                                                                                                          • Market Forecast

                                                                                                                                                                                            • Key points
                                                                                                                                                                                              • The Market 2017-21
                                                                                                                                                                                                • The Brexit effect
                                                                                                                                                                                                  • Technological developments
                                                                                                                                                                                                    • Trend towards fixed-fees services structure and unbundling of services set to continue
                                                                                                                                                                                                      • Competition from non-legal firms set to further intensify
                                                                                                                                                                                                        • CMA sets out package of measures for consumer and small business legal services sector to drive competition and consumer engagement
                                                                                                                                                                                                            • Figure 55: Forecast turnover of the UK legal services industry, 2017-21
                                                                                                                                                                                                            • Figure 56: Forecast turnover of the UK legal services industry, 2017-21
                                                                                                                                                                                                        • Further Sources & Contacts

                                                                                                                                                                                                          • Regulatory bodies and professional associations
                                                                                                                                                                                                            • Advocate General for Scotland
                                                                                                                                                                                                              • Solicitors Regulation Authority
                                                                                                                                                                                                                • The Bar Council
                                                                                                                                                                                                                  • The Commercial Bar Association
                                                                                                                                                                                                                    • The Law Society
                                                                                                                                                                                                                      • The Law Society of Northern Ireland
                                                                                                                                                                                                                        • The Law Society of Scotland
                                                                                                                                                                                                                          • The Sole Practitioners Group
                                                                                                                                                                                                                            • Trade exhibitions
                                                                                                                                                                                                                              • LAW 2017
                                                                                                                                                                                                                                • London Law Expo ‘17
                                                                                                                                                                                                                                  • Legalex 2017
                                                                                                                                                                                                                                    • Trade magazines
                                                                                                                                                                                                                                      • Lawyer Monthly
                                                                                                                                                                                                                                        • Legal Business
                                                                                                                                                                                                                                          • Legal Week
                                                                                                                                                                                                                                            • New Law Journal
                                                                                                                                                                                                                                              • Solicitors Journal
                                                                                                                                                                                                                                                • The Journal of the Law Society of Scotland
                                                                                                                                                                                                                                                  • The Law Gazette
                                                                                                                                                                                                                                                    • The Lawyer

                                                                                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                                                                                    To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                                                    Legal Services - UK - April 2017

                                                                                                                                                                                                                                                    US $1,288.43 (Excl.Tax)