Description
The UK Legal Services market report identifies consumer attitudes towards legal services, evolving consumer demands, increased competition and legal service industry analysis in the UK. The UK Legal Services market research report covers the market size, market forecast, market segmentation and industry trends for the Legal Services Market in the UK.Â
Current Market LandscapeÂ
While COVID-19 caused significant disruption to the legal services market in 2020, the sector has shown itself to be relatively robust, with the current uk legal services industry turnover remaining unchanged at £36.7 billion. However, there has also been significant variations across practice areas and different types of firms, with regional firms reporting a drop in revenue compared to the more resilient City firms.
- Corporate and commercial affairs accounted for 31% of solicitors’ revenue in 2020.
- Total B2B work accounted for 65% of solicitors’ turnover, while B2C work accounted for 22%.
- The legal services market is expected to grow by 4% in real terms in 2021.
While the legal services sector has been slow to adopt digital transformation compared to other industries, COVID-19 has accelerated the digitalisation of the sector. The importance of IT and digital technologies came to the fore at the start of the pandemic, and firms who already had strong digital capabilities were able to adapt quickly.
Future Market Trends in Legal Services
Legal service providers will continue to face competitive pressures, driven by the growth of alternative legal service providers (ALSPs), new entrants, rapidly evolving technology, new business models, changing client buying patterns, and new working practices. The legal services sector is also becoming more complex as law firms, ALSPs and technology firms compete and collaborate.
Technology adoption and innovations will play key roles in ensuring that firms thrive in an ever-changing environment. Corporate clients will continue to squeeze margins, while demanding faster turnaround times and greater use of innovation, meaning that legal services firms will need to embrace ongoing innovations and take advantage of emerging technologies.
Read on to discover more details or take a look at all of our UK Consumer Lifestyles market research.
Quickly understand
- The impact of COVID-19 on the legal services sector
- How the market is expected to develop over the next five years
- Lawtech adoption in the legal services sector
- How providers are responding to evolving consumer demands and increased competition
Analysis from a specialist in the field
This report, written by Claudia Preedy, a leading analyst in the B2B sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.
Technology adoption and innovation will play a key role in ensuring that legal services firms thrive in an ever-changing market landscape.
Corporate clients will continue to squeeze margins while demanding faster turnaround times and greater use of innovation, which puts pressure on legal services firms to embrace ongoing innovation and take advantage of emerging technologies.
Tech innovation is also expected to increasingly open up opportunities for new types of services and products.
Claudia Preedy
Senior B2B Analyst
Table of Contents
-
Overview
- Key issues covered in this Report
- COVID-19: market context
- Economic and other assumptions
- Covered in this Report
-
Executive Summary
- Impact of COVID-19 on the legal services sector
- Figure 1: Short-, medium- and long-term impact of COVID-19 on the legal services market, 6 May 2021
- The market
- Legal services sector shows resilience during COVID-19 crisis
- Figure 2: Turnover of UK legal services industry, 2016-20
- B2B work accounts for majority of solicitors’ turnover
- Figure 3: Turnover of UK solicitor firms, by type of work, 2020
- Legal services sector forecast to grow by 4% in real terms in 2021
- Figure 4: Forecast turnover of the UK legal services industry, 2021-25
- Market trends
- Law firms launch their own tech-driven alternative legal services ventures in response to changing legal landscape
- Legal firms collaborate with other professional service providers
- Investment in digital and emerging technologies to remain key priority for legal services providers
- Companies and brands
- Nearly half of law firms set up as corporate entities
- Figure 5: Breakdown of solicitor firms, by type, January 2021
- Top legal firms deliver robust financial performance despite COVID-19
- Client demand for truly global capability drives international expansion in the sector
- Impact of COVID-19 on the legal services sector
-
Issues and Insights
- COVID-19 crisis accelerates digitalisation of the legal services sector and is expected to be a catalyst for Lawtech adoption
-
The Market – Key Takeaways
- Legal services sector shows resilience in 2020
- But performance varies by practice area and type of firm
- Importance of digital capabilities came to the fore during COVID-19 crisis
- Investment in digital and emerging technologies to remain key priority for legal services providers
-
Market Size
- Overview
- Legal services sector shows resilience during COVID-19 crisis
-
- Figure 6: Turnover of the UK legal services industry, 2016-20
- Figure 7: Turnover of UK legal services industry, 2016-20
- UK legal services sector enjoys strong position internationally
- UK firms continue to look for international expansion
- The rise of alternative legal services providers drives innovation across the sector
-
Market Segmentation
- Market segmentation by profession
- Solicitors account for the majority of turnover in the UK legal services sector
- Figure 8: Turnover of UK legal services industry, by type of business, 2016-20
- Segmentation by category of work (solicitors only)
-
- Figure 9: Turnover of UK solicitor firms, by type of work, 2020
- Figure 10: Turnover of UK solicitor firms, by type of work, 2020
- Private practices face increased competition from in-house teams
- Demand for legal services by end-use sector
-
- Figure 11: Top sources of business demand for legal services, (% of total UK business sales)
- Conveyancing market
- Stamp duty holiday helps conveyancing market to recover in second half of 2020
-
- Figure 12: Average number of transactions by conveyancing firms, 2017-20
- Wills and probate
- DIY probate gains in popularity, but opportunities remain
-
- Figure 13: Grants of probate issued in England and Wales, 2015-20
- While the pandemic has encouraged more people to make a will, the majority of adults have yet to make one
- COVID-19 leads to increased demand for online wills
- Wider market is beginning to undergo a digital transformation
- Video-witnessed wills made legal during COVID-19 crisis
- Personal injury
- Reforms drive consolidation and restrict market growth
- Firms adopt new business models and embrace technology in preparation for whiplash reforms
- PI claims fall by nearly a third between 2017 and 2020
- Figure 14: Personal injury claims issued in county and magistrates’ courts in England and Wales, 2014-20
- Other areas of work
- Employment law
- Family law
- Family courts adapt well to remote working during COVID-19 crisis
- Move to online divorce services
- Regional analysis
-
- Figure 15: Regional analysis of the UK legal services sector, 2018-19
- Overseas trade in legal services
-
- Figure 16: International trade in legal services, 2014-18
- Figure 17: Net exports of legal services, 2015-19
-
Market Forecast
- Short-, medium- and long-term impact of COVID-19 on the legal services sector
- Figure 18: Short-, medium- and long-term impact of COVID-19 on the legal services market, 6 May 2021
- Market drivers and assumptions
- Figure 19: Key economic drivers affecting MBD’s market forecast, 2019-2025 (prepared on 6 May 2021)
- Forecast methodology
- The impact of Brexit
- The market 2021-25
- Forecast turnover of UK legal services industry
- Figure 20: Forecast turnover of the UK legal services industry, 2021-25
- Short-, medium- and long-term impact of COVID-19 on the legal services sector
-
Market Trends
- Increased demand for non-traditional legal services, new delivery models and integrated solutions
- Types of ‘non-traditional’ legal services
- Unbundling of legal services
- Fixed-fee models become more prevalent
- CMA reports limited impact of price transparency rules to date
- CMA calls on improvements to better facilitate the role of digital comparison tools in the sector
- Rise in virtual legal services
- Big four accountancy firms are making inroads into the legal market
- Insourcing of legal work and DIY law
-
Lawtech Adoption in the Legal Services Sector
- Investment in digital and emerging technologies to remain key priority for legal services providers
- ‘Big four’ at forefront in investing in Lawtech
- While traditional providers have been slow to adopt Lawtech, COVID-19 is expected to catalyse legal tech adoption
- Technology can play an important role to improve access to legal services for consumers and small businesses
- UK is the hub of European legal tech firms
- Adoption of Lawtech will increase demand for new types of skills
- Blockchain in the legal sector
-
Regulatory and Legislative Changes
- Industry regulation
- Legal Services Act
- Legal Services Act opens up market to non-lawyers and leads to new business models
- SRA relaxes the Separate Business Rule, making it easier for solicitors to provide other professional services
- SRA gives green light to freelance solicitors and solicitors in unregulated firms
- CMA sets out package of measures aimed to help customers better navigate the market and get value for money
- CMA’s progress review of competition in legal market
- Legal Services Board sets out 10-year strategy for legal sector
- Cuts to legal aid funding
- Post-implementation review of LASPO
- Court modernisation programme will introduce new technology, working practices and shrink the court estate
-
Market Drivers
- Residential and commercial property transactions
-
- Figure 21: UK residential property transaction completions, by country, 2016-20
- Figure 22: UK residential property transaction completions, 2015-20
-
- Figure 23: UK non-residential property transaction completions, by country, 2016-20
- Figure 24: UK non-residential property transaction completions, 2015-20
- Trends in M&A activity
- M&A activity set for resurgence in 2021
-
- Figure 25: Mergers and acquisitions involving UK companies, 2007-20
- Number of listed companies on a downward trend, but uptick in IPO activity expected in 2021
- Figure 26: Number of main market and AIM-listed companies, 2010-20
-
- Figure 27: Number of main market and AIM-listed companies, 2012-20
-
- Figure 28: Number of company IPOs on London Stock Exchange, 2014-20
- Private sector business population up by 1.9% in 2019
-
- Figure 29: Number of private sector businesses in the UK, 2006-20
- Figure 30: Number of private sector businesses in the UK, 2006-20
-
- Figure 31: Number of VAT and/or PAYE-registered enterprises in the UK, by broad industry group, 2015 and 2020, (Number and %)
-
Companies and Brands – Key Takeaways
- Top legal firms deliver robust financial performance despite COVID-19
- Client demand for truly global capability drives international expansion in the sector
- Alternative legal service providers drive innovation in the legal services market
- Legal firms collaborate with other professional service providers
-
Industry Structure
- Industry development
- International legal services firms in London
- Six law firms listed on the stock market
- Top 20 commercial legal firms
-
- Figure 32: UK top commercial law firms, by turnover, 2020
- The rise of alternative legal services providers
- Structure of UK legal activities industry
- Figure 33: Analysis of the changes in the structure of the UK legal activities industry, 2016-20, (number of local units and businesses)
- Solicitor firms
-
- Figure 34: Number of practising solicitors in the UK, 2012-20, (number and % change)
- Figure 35: Population of practising solicitors, 2017-21
-
- Figure 36: Breakdown of solicitor firms, by type, January 2016 and January 2021
- Practising barristers
- Figure 37: Total barristers in practice, 2015-20
- Structure by employment
- Figure 38: Analysis of the employment structure of the UK legal activities industry, 2019 and 2020, (local units and employees)
- Structure by turnover
- Figure 39: Analysis of the financial structure of the UK legal activities industry, 2019 and 2020, (£000 and number of companies)
-
Competitive Strategies
- Focus on harnessing technology and innovation
- Allen & Overy develops a range of technology capabilities
- Pinsent Mason is taking a tech-based approach to legal work across the firmPinsents Mason’s ‘advanced delivery team’ drives the delivery of innovative solutions for clients using its people, process and technology. The unit was initially set up to service the firm’s financial services practice but has now expanded to real estate and energy. The unit works directly with clients on tech-based solutions to problems and has reportedly doubled in size in 2019/20.
- Freshfields steps up investment in digitalisation and tech-based solutions
- Law firms launch their own tech-driven alternative legal services ventures in response to changing legal landscape
- Launch of tech-focused practices to meet evolving needs of clients
- Clifford Chance’s Tech Group helps businesses in all industries tackle the risks and opportunities that technology brings
- DLA Piper launches new tech-focused practices to meet the evolving needs of clients working with and in technology
- Dispersed law firms use technology and modern working practices to drive growth
-
Company Profiles
- Allen & Overy
- Advanced Delivery & Solutions
- Company strategy
- Financial performance
- Figure 40: Financial analysis of Allen & Overy, 2016-20, (£ Million)
- Clifford Chance
- Company strategy
- Clifford Chance Tech Group advise clients on the risks and opportunities that technology brings
- Financial performance
- Figure 41: Financial analysis of Clifford Chance, 2016-20, (£ million)
-
- Figure 42: Turnover analysis of Clifford Chance, by geographic segment, 2020 (% of turnover)
- CMS Cameron McKenna Nabarro Olswang
- CMS combines with Nabarro and Olswang in largest legal merger to date
- Financial performance
- Figure 43: CMS Cameron McKenna Nabarro Olswang, 2016-20 (£000)
- DLA Piper International
- DLA Piper launches new tech-focused practices to meet the evolving needs of clients working with and in technology
- DLA Piper expands its Law& enhanced legal offerings
- Company strategy
- Financial performance
- Figure 44: Financial analysis of DLA Piper International, 2016-20, (£ million)
- Freshfields Bruckhaus Deringer
- Global Centre in Manchester delivers process-oriented legal services
- Digital transformation programme
- Company strategy
- Financial performance
-
- Figure 45: Financial analysis of Freshfields Bruckhaus Deringer, 2015-19, (£ million)
- Herbert Smith Freehills
- New global alternative legal services business launched in 2015
- Beyond 2020 global strategy
- Financial performance
- Figure 46: Financial analysis of Herbert Smith Freehills, 2015-19, (£ million)
- Hogan Lovells International
- Company strategy
- Financial performance
- Figure 47: Financial analysis of Hogan Lovells International, 2016-19, (£000)
- Linklaters
- Company strategy
- Financial performance
- Figure 48: Financial analysis of Linklaters, 2016-20, (£ million)
- Norton Rose Fulbright
- Merger with US-based Chadbourne & Parke
- Company strategy
- Financial performance
- Figure 49: Financial analysis of Norton Rose Fulbright, 2016-20, (£000)
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Appendix – Data Sources, Abbreviations and Supporting Information
- Abbreviations
- Methodology
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Further Sources and Contacts
- Regulatory bodies and professional associations
- Trade magazines
- Trade events
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