Author: Mintel Group Ltd.
Last saved by: HTTP server

Legal Services: Inc Impact of COVID-19 - UK - May 2020

OVERVIEW
What you need to know
Key issues covered in this Report
Covered in this Report
EXECUTIVE SUMMARY
The market
UK legal services market shows robust performance in 2019 amid backdrop of sluggish economic growth
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
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
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
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
Short, medium and long-term impact on the industry
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
Figure 6: UK residential property transaction completions, 2014-19
COVID-19 has introduced a further significant disruptor to the commercial property market
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
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
Investment in emerging technologies to remain key priority
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
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
Overview
Despite a backdrop of sluggish economic growth, UK legal services market shows robust performance in 2019
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
Market segmentation by profession
Solicitors account for the majority of turnover in the UK legal services sector
Figure 11: Turnover of UK legal services industry, by type of business, 2015-19
Segmentation by category of work (solicitors only)
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
Figure 14: Top sources of business demand for legal services, (% of total UK business sales)
Conveyancing market
Figure 15: Average number of transactions by conveyancing firms, 2016-19
Wills and probate
DIY probate gains in popularity, but opportunities for professionals remain
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
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
Figure 18: Regional analysis of the UK legal services sector, 2017-18
Overseas trade in legal services
Figure 19: International trade in legal services, 2014-18
Figure 20: Net exports of legal services, 2014-18
MARKET FORECAST
The impact of COVID-19
The impact of Brexit
The market 2020-24
Forecast turnover of UK legal services industry
Figure 21: Forecast turnover of the UK legal services industry compared with expectations prior to COVID-19, 2019-24
Economic assumptions
MARKET TRENDS
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
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
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
The impact of COVID-19
Residential and commercial property transactions
Figure 22: UK residential property transaction completions, by country, 2015-19
Figure 23: UK residential property transaction completions, 2014-19
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
Figure 26: Mergers and acquisitions involving UK companies, 2006-19
Brexit uncertainty drives big drop in IPOs in 2019
Figure 27: Number of main market and AIM-listed companies, 2009-19
Figure 28: Number of main market and AIM-listed companies, 2011-19
Figure 29: Number of company IPOs on London Stock Exchange, 2013-19
Private sector business population up by 3.5% in 2019
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
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
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, 2019
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, 2015-19, (Number of local units and businesses)
Solicitor firms
Figure 34: Number of practising solicitors in the UK, 2011-19, (number and % change)
Figure 35: Population of practising solicitors, 2015-20
Figure 36: Breakdown of solicitor firms, by type, February 2015 and February 2020
Practising barristers
Figure 37: Total barristers in practice, 2014-19
Structure by employment
Figure 38: Analysis of the employment structure of the UK legal activities industry, 2018 and 2019, (local units and employees)
Structure by turnover
Figure 39: Analysis of the financial structure of the UK legal activities industry, 2018 and 2019, (£000 and number of companies)
COMPETITIVE STRATEGIES
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
Allen & Overy
Advanced Delivery & Solutions
Company strategy
Financial performance
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
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
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
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
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, 2015-18, (£000)
Linklaters
Company strategy
Financial performance
Figure 48: Financial analysis of Linklaters, 2015-19, (£ million)
Norton Rose Fulbright
Merger with US-based Chadbourne & Parke
Company strategy
Financial performance
Figure 49: Financial analysis of Norton Rose Fulbright, 2015-19, (£000)
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Methodology
FURTHER SOURCES AND CONTACTS
Regulatory bodies and professional associations
Trade magazines
Trade events

M B D | © MBD Limited.