This report addresses the following key questions concerning the UK legal services market:

• 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?

The terms of reference for this report concern the UK legal services market.

Legal services cover a broad range of services, such as commercial law, employment law, family law, conveyancing, immigration, wills and probate, and personal injury. Legal services vary from the provision of legal advice or assistance to being represented in a court of law in connection with the resolution of a legal dispute. The nature of the legal service required will depend on the type of legal need in question.

Legal services include ‘reserved activities’ that can only be provided by persons authorised to do so by their relevant approved regulator (known as ‘authorised persons’). The Legal Services Act 2007 specifies six reserved activities:

• the exercise of a right of audience;

• the conduct of litigation;

• reserved instrument activities (undertaken when conveyancing property)

• probate activities;

• notarial activities; and

• the administration of oaths.

Persons authorised to provide reserved activities include solicitors, who need to be authorised by the Law Society, and barristers, who need to be authorised by the Bar Council.

Solicitors provide the great bulk of ‘first line’ legal advice, undertaking detailed advisory work on behalf of clients. While solicitors serving the local community are often in a general practice, solicitors serving business customers tend to be specialists in a particular area of law.

Barristers and advocates provide specialist legal advice and represent their clients in courts and tribunals. Often solicitors or other professional clients will refer work to a barrister or advocate but, with some exceptions, it is also possible for a member of the public to go directly to a barrister for advice or representation.

In addition to the six reserved activities, legal services also include both regulated and unregulated services:

• Regulated services encompass a number of activities that are regulated by a statute other than the Legal Services Act 2007. For example, immigration advice can be provided by immigration advisers who are regulated by the Office of the Immigration Services Commissioner (OISC). However, solicitors and barristers are exempt from having to be regulated by the OISC to provide immigration advice.

• Unregulated legal services can be provided by persons who are not authorised by an approved regulator or regulated under a specific statute. For example, the provision of will writing services to individual consumers is neither a reserved nor a regulated activity and can therefore be offered by unregulated providers and qualified lawyers. The provision of general legal advice, which is not a reserved activity, can be provided by a wide range of providers such as charities and accountants.

The ONS provides a breakdown of the legal activities industry’s turnover by profession. For the purposes of this report, the market is also segmented by the main professions, as provided by the ONS:

• Solicitors

• Barristers

• Other legal activities (includes activities of patent and copyright agents)

The report predominately focusses on the work categories of the solicitors profession, which account for the majority of industry turnover.

Value figures exclude VAT unless stated otherwise.

One billion refers to one thousand million.

Some numbers in tables may not add due to rounding.

Reports are researched and written by MBD’s in-house, specialist business-to-business consultants. Research is based on both an analysis of official information and on original, trade research, providing both a quantitative and qualitative view of the market. MBD’s unique range of frequently updated reports provide an integrated body of ongoing research, enabling deep understanding of the prevailing trends and the drivers of these trends based on trade opinion.

The following abbreviations have been used in this report:

The legal services sector is a significant contributor to the UK economy with an estimated turnover of some £32 billion in 2015. Some of the largest law firms in the world have their headquarters in the UK, with three out of the five largest law firms globally (based on headcount) having their main operations base in the UK. According to financial and related professional service industry body TheCityUK, the UK accounts for 7% of global legal services fee revenue and a fifth of European fee revenue.

The UK is also the world’s most international market for legal services, with the government allowing

almost unrestricted access for foreign firms. The UK’s strong global position is partly due to the popularity of English law. According to TheCityUK, 27% of the world’s 320 legal jurisdictions use English common law.

The legal services market has a number of regulators, such as the Solicitors Regulatory Authority (SRA) and Bar Standards Board (BSB); and professional representative bodies, such as the Law Society and Bar Council.

The SRA and BSB set accreditation, quality, and professional standards for the individuals and firms they regulate. Professional representative bodies, by contrast, do marketing and provide training for their members. Industry self-regulation has typically focussed on the suppliers of legal services (firms and

individuals) and on delivering particular regulated activities, such as advocacy in the case of the Bar.

The Law Society of Scotland is the professional body for Scottish solicitors. Scottish advocates, which are the equivalent of barristers, are subject to regulation by the Faculty of Advocates, under powers delegated by the Court of Session.

The Legal Services Board (LSB) is the oversight regulator for legal services approved regulators in the Legal Services Act 2007. These bodies directly regulate lawyers practising in England and Wales. Some approved regulators are also licensing authorities, which means they can license alternative business structures (ABS), introduced in 2011, that provide reserved legal activities.

The LSB oversees nine approved regulators, which in turn regulate individual legal practitioners. The approved regulators, designated under Part 1 of Schedule 4 of the 2007 Act, are the Law Society, the Bar Council, the Master of the Faculties, the Chartered Institute of Legal Executives, the Council for Licensed Conveyancers, the Chartered Institute of Patent Attorneys, the Institute of Trade Mark Attorneys, the Association of Costs Lawyers, and the Institute of Chartered Accountants in England and Wales.

The Institute of Chartered Accountants of Scotland and the Association of Chartered Certified Accountants are listed as approved regulators in relation only to reserved probate activities.

The LSB also oversees the Office for Legal Complaints, which was established to handle consumer complaints about lawyers. The LSB is independent of government and the legal profession.