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Legal Services - UK - May 2016

“The adoption of Alternative Business Structures (ABS) has not resulted in an immediate transformative change in the legal services industry. However, it has started to drive much needed innovation to the legal sector, with firms delivering more client focussed and cost effective services as competition starts to intensify. Some traditional law firms are responding to these changes by introducing new business models, new routes to market, and new ways of working.”
– Claudia Preedy - B2B Analyst

This report answers the following key questions:

  • Has the market recovered since the economic downturn?
  • How are legal service providers responding to increased competitive pressures?
  • What are the implications of increased buyer power for the industry?
  • How have the key industry players performed have the past five years?
  • What is the outlook for the market over the next five years?

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Table of contents

  1. Executive Summary

      • The market
        • Figure 1: Turnover of UK legal services industry, 2011-15
        • Figure 2: Turnover of UK solicitor firms, by type of work, 2015
      • Market factors
        • Companies
          • Figure 3: Breakdown of solicitor firms, March 2014 and February 2016
        • What we think
        • Key Insights

            • To date, what has been the impact of ABS 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: UK GDP quarterly development, 2003-16
                                • Figure 5: UK GDP in economic downturns and recoveries since 1979
                              • Inflation
                                • Interest rates
                                  • House prices
                                    • Figure 6: UK house price changes, 2004-16
                                  • Consumer spending
                                    • Manufacturing
                                      • Figure 7: UK manufacturing, 2013-16
                                    • Business investment
                                      • Figure 8: UK GFCF 2003-15
                                    • 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
                                                  • CMA launches study into legal services market
                                                    • Legal Aid, Sentencing and Punishment of Offenders Act cuts legal aid funding
                                                      • Government scraps major reform of Legal Aid system in England and Wales
                                                        • Rise in court fees may deter users from bringing high value disputes to London
                                                          • Nearly a fifth of all courts and tribunals in England and Wales to close
                                                            • Other factors
                                                              • Residential and commercial property transactions
                                                                • Figure 9: UK residential property transaction completions, by country, 2011-15
                                                                • Figure 10: UK residential property transaction completions, 2011-15
                                                                • Figure 11: UK non-residential property transaction completions, by country, 2010-15
                                                                • Figure 12: UK non-residential property transaction completions, 2011-15
                                                              • Trends in M&A activity
                                                                  • Figure 13: Mergers and acquisitions involving UK companies, 2004-15
                                                                • Number of IPOs down in 2015
                                                                  • Figure 14: Number of main market and AIM listed companies, 2008-15
                                                                  • Figure 15: Number of main market and AIM listed companies, 2008-15
                                                                  • Figure 16: Number of company IPOs on London Stock Exchange, 2011-15
                                                                • Rise in active businesses as UK economic recovery becomes more robust
                                                                  • Figure 17: Number of private sector businesses in the UK, 2001-15
                                                                  • Figure 18: Number of private sector businesses in the UK, 2001-15
                                                                  • Figure 19: Number of VAT and/or PAYE registered enterprises in the UK, by industry group and turnover size band, 2015
                                                                • Public and political scrutiny surrounding corporate tax
                                                                  • Measures put in place to crack down on tax avoidance
                                                                  • Market Size

                                                                    • Key points
                                                                      • Overview
                                                                        • Legal services sector undergoing a period of gradual but significant change
                                                                          • Downward pressure on prices for legal services is forcing firms to evolve business models
                                                                            • Mid-tier firms have emerged stronger following the recession
                                                                                • Figure 20: Turnover of the UK legal services industry, 2011-15
                                                                                • Figure 21: Turnover of UK legal services industry, 2011-15
                                                                            • Market Segmentation

                                                                              • Key points
                                                                                • Market segmentation by profession
                                                                                    • Figure 22: Turnover of UK legal services industry, by type of business, 2011-15
                                                                                  • Segmentation by category of work (solicitors only)
                                                                                    • Figure 23: Turnover of UK solicitor firms, by type of work, 2015
                                                                                    • Figure 24: Turnover of UK solicitor firms, by type of work, 2015
                                                                                    • Figure 25: Breakdown of UK solicitor firms, by type of work, as of January 2015
                                                                                  • Demand for legal services by end-use sector
                                                                                    • Figure 26: Top sources of business demand for legal services
                                                                                  • Conveyancing market
                                                                                      • Figure 27: Average number of transactions by Conveyancing firms, 2011-15
                                                                                    • Wills & Probate
                                                                                      • Wills market offers considerable growth potential
                                                                                        • Probate market sees shift towards DIY, but opportunities for professionals remains
                                                                                            • Figure 28: Number of applications for grant representation, 2010-13
                                                                                          • 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 29: Regional analysis of the UK legal services sector , 2015
                                                                                                      • Overseas trade in legal services
                                                                                                        • Figure 30: International trade in legal services, 2010-14
                                                                                                        • Figure 31: Net exports of legal services, 2007-14
                                                                                                    • Market Trends

                                                                                                      • Key points
                                                                                                        • Increased demand for non-traditional legal services
                                                                                                          • Trend towards unbundling of legal services continues
                                                                                                            • Pricing pressures and the continued shift towards the fixed pricing model
                                                                                                              • Legal services providers face increased competition from accountants
                                                                                                                • Firms move towards more integrated service offerings
                                                                                                                  • Current technological developments in the legal services sector
                                                                                                                    • Growth in DIY law set to continue
                                                                                                                      • Online dispute resolution and proposed online court
                                                                                                                        • International presence of law firms is becoming increasingly important
                                                                                                                          • SME business sector offers growth potential
                                                                                                                          • Industry Structure

                                                                                                                            • Key points
                                                                                                                              • Industry development
                                                                                                                                • Types of legal service providers is highly diverse
                                                                                                                                  • Rise in the number of overseas law firms in London
                                                                                                                                    • Top 20 commercial legal firms
                                                                                                                                      • Figure 32: UK top commercial law firms, by turnover, 2015
                                                                                                                                    • Structure of UK legal activities industry
                                                                                                                                      • Figure 33: Analysis of the changes in the structure of the UK legal activities industry, 2011-15
                                                                                                                                    • Solicitor firms
                                                                                                                                      • Figure 34: Number of practising solicitors in the UK, 2011-15
                                                                                                                                      • Figure 35: Population of practising solicitors, 2009-16
                                                                                                                                      • Figure 36: Breakdown of solicitor Firms, by type, March 2014 and February 2016
                                                                                                                                    • Practising barristers
                                                                                                                                      • Figure 37: Total barristers in practice, 2010-14
                                                                                                                                    • Structure by employment
                                                                                                                                      • Figure 38: Analysis of the employment structure of the UK legal activities industry, 2014 and 2015
                                                                                                                                    • Structure by turnover
                                                                                                                                      • Figure 39: Analysis of the financial structure of the UK legal activities industry, 2014 and 2015
                                                                                                                                  • Company Profiles

                                                                                                                                    • Allen & Overy

                                                                                                                                        • Company strategy
                                                                                                                                            • Figure 40: Financial analysis of Allen & Overy, 2011-15
                                                                                                                                            • Figure 41: Allen & Overy practice breakdown by sector, 2015
                                                                                                                                            • Figure 42: Allen & Overy practice breakdown by geographic segment, 2015
                                                                                                                                        • Clifford Chance

                                                                                                                                            • Company strategy
                                                                                                                                              • Figure 43: Financial analysis of Clifford Chance, 2011-15
                                                                                                                                              • Figure 44: Turnover analysis of Clifford Chance, by geographic segment, 2015
                                                                                                                                          • CMS Cameron McKenna

                                                                                                                                              • Company strategy:
                                                                                                                                                  • Figure 45: Financial analysis of CMS Cameron McKenna, 2009-13
                                                                                                                                              • Dentons UKMEA

                                                                                                                                                  • Company strategy
                                                                                                                                                      • Figure 46: Financial analysis of Dentons UKMEA, 2011-15
                                                                                                                                                  • DLA Piper International

                                                                                                                                                      • Company strategy
                                                                                                                                                          • Figure 47: Financial analysis of DLA Piper International, 2011-15
                                                                                                                                                          • Figure 48: Turnover analysis of DLA Piper International, by geographic segment, 2015
                                                                                                                                                      • Freshfields Bruckhaus Deringer

                                                                                                                                                          • Recent company developments
                                                                                                                                                            • Company strategy
                                                                                                                                                              • Figure 49: Financial analysis of Freshfields Bruckhaus Deringer, 2011-15
                                                                                                                                                          • Herbert Smith Freehills

                                                                                                                                                              • New global alternative legal services business launched in 2015
                                                                                                                                                                • Figure 50: Financial analysis of Herbert Smith Freehills, 2011-15
                                                                                                                                                            • Hogan Lovells International

                                                                                                                                                                • Company strategy
                                                                                                                                                                  • Figure 51: Financial analysis of Hogan Lovells International, 2011-15
                                                                                                                                                              • Linklaters

                                                                                                                                                                  • Company strategy
                                                                                                                                                                      • Figure 52: Financial analysis of Linklaters, 2011-15
                                                                                                                                                                  • Norton Rose Fulbright

                                                                                                                                                                      • Company strategy
                                                                                                                                                                        • Figure 53: Financial analysis of Norton Rose Fulbright, 2011-15
                                                                                                                                                                    • Slaughter and May

                                                                                                                                                                      • Market Forecast

                                                                                                                                                                        • Key points
                                                                                                                                                                          • The market 2016-20
                                                                                                                                                                            • Technological developments
                                                                                                                                                                              • Fixed-fees services structure becoming common place
                                                                                                                                                                                • Competition from non-legal firms set to further intensify
                                                                                                                                                                                    • Figure 54: Forecast turnover of the UK legal services industry, 2016-20
                                                                                                                                                                                    • Figure 55: Forecast turnover of the UK legal services industry, 2016-20
                                                                                                                                                                                • Further Sources and Contacts

                                                                                                                                                                                  • Regulatory bodies and professional associations
                                                                                                                                                                                    • Trade exhibitions
                                                                                                                                                                                      • Trade magazines

                                                                                                                                                                                      Companies Covered

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

                                                                                                                                                                                      Legal Services - UK - May 2016

                                                                                                                                                                                      US $1,236.29 (Excl.Tax)