UK law firms see continued growth while ABSs make headway
A financial and professional services lobbyist has reported continued financial growth for UK-based legal services firms, with gross fees up 1.3 per cent to a record £30.9 billion in 2014/15, as well as significant structural reform which has seen alternative business structures (ABS) make gains in the market.
TheCityUK’s UK Legal Services 2016 report, released today, shows the fifth successive year of growth for legal services firms. This has been supported by an increase in net exports of UK legal services, up 11 per cent in 2014 to a record £3.6bn, while the sector’s contribution to the UK economy increased to a record £25.7bn in 2015 (1.6 per cent of GDP).
According to TheCityUK estimates, the UK accounts for around 10 per cent of the global market for legal services, second only to the US. It is also the largest market in Europe, accounting for around a fifth of its legal services fee revenue.
The UK is the world’s most international market for legal services and the virtually unrestricted access it offers foreign firms has seen over 200 foreign law firms from around 40 jurisdictions establish offices here, as well as the main base of operations of two of the four largest international law firms, based on headcount.
Chris Cummings, chief executive, TheCityUK, said: “The UK is the leading global centre for the provision of international legal services and dispute resolution, employing over 314,000 people and bringing significant benefits to the wider economy. Securing this position should be a priority for the forthcoming Brexit negotiations. This means maintaining the strongest possible trading links with the EU and beyond and ensuring the UK remains a globally attractive place in which and from which to do business.”
He added: ”The report highlights the significant restructuring across the industry over recent years, with newer entrants to the market – including the major accountancy firms, innovative smaller law practices, contract and on-demand lawyers and due diligence specialists – increasingly competing for traditional law firms’ business. In 2014/15, mid-tier and niche firms continued their robust performance for the third year running, with firms ranking 25-50 by revenue seeing a six per cent increase, and those in the top 25 seeing a slight decline.”
“These changes are accelerating the need for law firms to innovate and reconsider their offering and potential client base. We’re also seeing an increasing number of large firms choosing to locate operations in cities across the UK to take advantage of the skilled workforce and lower labour costs.”