Table of Contents
Executive Summary
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- The market
- UK legal services market shows robust performance in 2019 amid backdrop of sluggish economic growth
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- Figure 1: Turnover of UK legal services industry, 2015-19
- Industry turnover expected to fall by 12% in 2020 as a result of COVID-19 economic impact
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- Figure 2: Forecast turnover of the UK legal services industry compared with expectations prior to COVID-19, 2019-24
- Impact of COVID-19 on the UK legal services sector
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- Figure 3: Expected impact of COVID-19 on legal services, short, medium and long-term, 29 May 2020
- Market trends
- Legal services providers collaborate with other professional service providers
- Investment in digital and emerging technologies to remain key priority for legal services providers
- Technology can play an important role in improving access to legal services for consumers and small businesses
- Companies and brands
- Nearly half of law firms set up as corporate entities
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- Figure 4: Breakdown of solicitor firms, by type, February 2020
- Client demand for truly global capability continues to drive merger activity and expansion in the sector
- Providers expand use of low-cost hubs driving growth in regional centres
- What we think
Impact of COVID-19 on Legal Services
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- Short, medium and long-term impact on the industry
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- Figure 5: Expected impact of COVID-19 on legal services, short, medium and long-term, 29 May 2020
- Short-term
- Medium-term
- Long-term
- Opportunities and threats
- Small law firms under threat as a result of COVID-19
- COVID-19 to boost restructuring and insolvency work
- While many M&A deals have been postponed, opportunities will arise
- Opportunities to offer new innovative services in direct response to the needs of business clients hit by COVID-19
- Marked slowdown in residential conveyancing work with recovery anticipated next year
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- Figure 6: UK residential property transaction completions, 2014-19
- COVID-19 has introduced a further significant disruptor to the commercial property market
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- Figure 7: UK non-residential property transaction completions, 2014-19
- Crisis could lead to modernisation of Wills Act, potentially increasing demand for will writing services
- Impact on the legal services market
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- Figure 8: Forecast turnover of the UK legal services industry compared with expectations prior to COVID-19, 2019-24
- How a COVID-19 recession will reshape the legal services sector
- Technology and digital transformation will support recovery in the longer term
- Increased focus on digital communication and online marketing
- Delivering law services remotely to become more common
- Possible accelerated move to online courts and remote hearings
- COVID-19: UK context
Issues and Insights
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- Investment in emerging technologies to remain key priority
- The facts
- The implications
The Market – What You Need to Know
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- UK legal services market shows robust performance in 2019 amid backdrop of sluggish economic growth
- The impact of COVID-19
- Fixed-fee models become more prevalent
- Increased collaboration with other professional services providers
- Investment in digital and emerging technologies to remain key priority for legal services providers
Market Size
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- Overview
- Despite a backdrop of sluggish economic growth, UK legal services market shows robust performance in 2019
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- Figure 9: Turnover of the UK legal services industry, 2015-19
- Figure 10: Turnover of UK legal services industry, 2015-19
- UK legal services sector enjoys strong position internationally
- Alternative legal services providers are gaining market share
- Firms adopt innovative business models in response to increased price pressure and evolving customer demands
Market Segmentation
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- Market segmentation by profession
- Solicitors account for the majority of turnover in the UK legal services sector
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- Figure 11: Turnover of UK legal services industry, by type of business, 2015-19
- Segmentation by category of work (solicitors only)
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- Figure 12: Turnover of UK solicitor firms, by type of work, 2019
- Figure 13: Turnover of UK solicitor firms, by type of work, 2019
- Private practices face increased competition from in-house teams
- Demand for legal services by end-use sector
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- Figure 14: Top sources of business demand for legal services, (% of total UK business sales)
- Conveyancing market
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- Figure 15: Average number of transactions by conveyancing firms, 2016-19
- Wills and probate
- DIY probate gains in popularity, but opportunities for professionals remain
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- Figure 16: Grants of probate issued in England and Wales, 2014-19
- Over half of adults in the UK have yet to make a will
- DIY and online will-writing services gain in popularity, but solicitors remain most common providers
- New tech-based companies enter the wills and probate market
- Law Commission consults on ways to make it easier for people to make wills and to pave way for electronic wills
- Personal injury
- Major reforms to drive consolidation and restrict market growth
- PI claims fall by 23% between 2013 and 2019
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- Figure 17: Personal injury claims issues in the county and magistrates’ courts in England and Wales, 2013-19
- Firms adopt new business models in response to market reforms
- Other areas of work
- Employment law
- Family law
- Move to online divorce services
- Regional analysis
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- Figure 18: Regional analysis of the UK legal services sector, 2017-18
- Overseas trade in legal services
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- Figure 19: International trade in legal services, 2014-18
- Figure 20: Net exports of legal services, 2014-18
Market Forecast
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- The impact of COVID-19
- The impact of Brexit
- The market 2020-24
- Forecast turnover of UK legal services industry
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- Figure 21: Forecast turnover of the UK legal services industry compared with expectations prior to COVID-19, 2019-24
- Economic assumptions
Market Trends
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- Increased demand for non-traditional legal services and multi-disciplinary services
- Types of ‘non-traditional’ legal services
- Unbundling of legal services
- Fixed-fee models become more prevalent
- Rise in B2C legal services being delivered online
- Big four accountancy firms move into legal services
- Growth in DIY law set to continue
Lawtech Adoption in the Legal Services Sector
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- Investment in digital and emerging technologies to remain key priority for legal services providers
- ‘Big four’ legal teams at forefront in investing in Lawtech …
- … while traditional legal services providers lag behind in Lawtech adoption
- Most established Lawtech products in the UK include eDiscovery and legal research
- 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
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- Industry regulation
- Legal Services Act
- Legal Services Act opens up market to non-lawyers and leads to the creation of 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 market study concludes legal services market lacks transparency
- CMA sets out package of measures aimed to help customers better navigate the market and get value for money
- SRA makes published prices for certain legal services mandatory
- Cuts to legal aid funding
- Government publishes post-implementation review of LASPO
- Court modernisation programme will introduce new technology, working practices and shrink the court estate
Market Drivers
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- The impact of COVID-19
- Residential and commercial property transactions
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- Figure 22: UK residential property transaction completions, by country, 2015-19
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- Figure 23: UK residential property transaction completions, 2014-19
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- Figure 24: UK non-residential property transaction completions, by country, 2015-19
- Figure 25: UK non-residential property transaction completions, 2014-19
- Trends in M&A activity
- UK M&A market more subdued in 2019, following buoyant activity between 2014 and 2018
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- Figure 26: Mergers and acquisitions involving UK companies, 2006-19
- Brexit uncertainty drives big drop in IPOs in 2019
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- Figure 27: Number of main market and AIM-listed companies, 2009-19
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- Figure 28: Number of main market and AIM-listed companies, 2011-19
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- Figure 29: Number of company IPOs on London Stock Exchange, 2013-19
- Private sector business population up by 3.5% in 2019
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- Figure 30: Number of private sector businesses in the UK, 2005-19
- Figure 31: Number of private sector businesses in the UK, 2005-19
Companies and Brands – What You Need to Know
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- Client demand for truly global capability continues to drive merger activity and international expansion in the sector
- Changing customer demand leads to emergence of innovative business models
- Providers expand use of low-cost hubs driving growth in regional centres
- Alternative legal service providers drive innovation in the legal services market
Industry Structure
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- Industry development
- International legal services firms in London
- Six law firms listed on the stock market
- Top 20 commercial legal firms
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- Figure 32: UK top commercial law firms, by turnover, 2019
- The rise of alternative legal services providers
- Structure of UK legal activities industry
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- Figure 33: Analysis of the changes in the structure of the UK legal activities industry, 2015-19, (Number of local units and businesses)
- Solicitor firms
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- Figure 34: Number of practising solicitors in the UK, 2011-19, (number and % change)
- Figure 35: Population of practising solicitors, 2015-20
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- Figure 36: Breakdown of solicitor firms, by type, February 2015 and February 2020
- Practising barristers
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- Figure 37: Total barristers in practice, 2014-19
- Structure by employment
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- Figure 38: Analysis of the employment structure of the UK legal activities industry, 2018 and 2019, (local units and employees)
- Structure by turnover
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- Figure 39: Analysis of the financial structure of the UK legal activities industry, 2018 and 2019, (£000 and number of companies)
Competitive Strategies
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- Launch of new tech-focused practices to meet evolving needs of clients
- Clifford Chance launches Tech Group to help 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
- DWF launches new specialist business division Connected Services
- Focus on harnessing technology and innovation
- Allen & Overy has developed a range of technology capabilities
- Freshfields steps up investment to develop tech-based solutions and accelerate innovation
- Eversheds Sutherland launches tech-driven ABS
- Focus on delivering cost-effective solutions
- HSF’s global alternative legal services business offers cost efficient legal products and technology services for clients
- Firms expand their use of low-cost centres
- Dispersed law firms use technology and modern working practices to drive efficiencies
- Legal services providers become more sector-focused
- HSF aims to make every lawyer a ‘sector specialist’
- DLA reduces its focus to seven industries
Company Profiles
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- Allen & Overy
- Advanced Delivery & Solutions
- Company strategy
- Financial performance
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- Figure 40: Financial analysis of Allen & Overy, 2015-19, (£ Million)
- Clifford Chance
- Company strategy
- Clifford Chance Tech Group advise clients on the risks and opportunities that technology brings
- Financial performance
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- Figure 41: Financial analysis of Clifford Chance, 2015-19, (£ million)
- Figure 42: Turnover analysis of Clifford Chance, by geographic segment, 2019 (% of turnover)
- CMS Cameron McKenna Nabarro Olswang
- CMS combines with Nabarro and Olswang in largest ever merger in UK legal services market
- Financial performance
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- Figure 43: CMS Cameron McKenna Nabarro Olswang, 2015-19 (£000)
- DLA Piper International
- DLA Piper launches new tech-focused practices to meet the evolving needs of clients working with and in technology
- Company strategy
- Financial performance
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- Figure 44: Financial analysis of DLA Piper International, 2015-19, (£ million)
- Freshfields Bruckhaus Deringer
- Global centre for support services established in Manchester
- Digital transformation programme
- Company strategy
- Financial performance
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- 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
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- Figure 46: Financial analysis of Herbert Smith Freehills, 2015-19, (£ million)
- Hogan Lovells International
- Company Strategy
- Financial performance
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- Figure 47: Financial analysis of Hogan Lovells International, 2015-18, (£000)
- Linklaters
- Company strategy
- Financial performance
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- Figure 48: Financial analysis of Linklaters, 2015-19, (£ million)
- Norton Rose Fulbright
- Merger with US-based Chadbourne & Parke
- Company strategy
- Financial performance
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- Figure 49: Financial analysis of Norton Rose Fulbright, 2015-19, (£000)
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Methodology
Further Sources and Contacts
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- Regulatory bodies and professional associations
- Trade magazines
- Trade events
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