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Legal Services - UK - April 2017

EXECUTIVE SUMMARY 
The market
Figure 1: Turnover of UK legal services industry, 2012-16
Figure 2: Turnover of UK solicitor firms, by type of work, 2016
Market factors
Companies
Figure 3: Breakdown of solicitor firms, March 2014 and February 2017
What we think
KEY INSIGHTS 
What are the implications of Brexit on the legal services market?
Is the move by the big accountants into legal services posing a threat to traditional firms?
Is the trend towards unbundling of legal services set to continue?
What are the current technological developments in the legal services market?
INTRODUCTION 
Definitions
Methodology
Abbreviations
Market positioning
UK ECONOMY
Overview
Figure 4: Forecast GDP development, 2017-21
Figure 5: UK GDP quarterly development, 2003-16
Figure 6: UK GDP in economic downturns and recoveries since 1979
Inflation
Interest rates
House prices
Figure 7: UK House price changes, 2004-16
Consumer spending
Manufacturing
Figure 8: UK manufacturing, 2014-16
Business investment
Figure 9: UK GFCF 2003-16
Imports
Exports
MARKET FACTORS 
Key points
Regulation and government policy
The Legal Services Act 2007
Legal Services Act opens up market to non-lawyers
Barriers for ABS to be further reduced to boost competition
The Solicitors Regulation Authority (SRA) relaxes the Separate Business Rule, making it easier for solicitors to provide other professional services, such as accounting
SRA proposes to remove further restrictions for solicitors in its phased review of the SRA Handbook
CMA concludes that the legal market is not working well for consumers and small businesses
Legal Aid, Sentencing and Punishment of Offenders Act cuts legal aid funding
Government scraps major reform of Legal Aid system in England and Wales
Steep rise in court fees could discourage people from bringing legitimate cases
Nearly a fifth of all courts and tribunals in England and Wales to close
Other factors
Residential and Commercial Property Transactions
Figure 10: UK residential property transaction completions, by country, 2012-16
Figure 11: UK residential property transaction completions, 2012-16
Figure 12: UK non-residential property transaction completions, by country, 2012-16
Figure 13: UK non-residential property transaction completions, 2012-16
Trends in M&A activity
UK M&A market remains resilient in 2016, with a weaker sterling attracting foreign investment
Brexit-induced uncertainty to potentially result in slowdown in M&A activity
Figure 14: Mergers and acquisitions involving UK companies, 2004-16
Number of IPOS down in 2015 and 2016
Figure 15: Number of main market and AIM listed companies, 2009-16
Figure 16: Number of main market and AIM listed companies, 2009-16
Figure 17: Number of company IPOs on London Stock Exchange, 2011-16
Rise in active businesses as UK economic recovery becomes more robust
Figure 18: Number of private sector businesses in the UK, 2002-16
Figure 19: Number of private sector businesses in the UK, 2002-16
Figure 20: Number of VAT and/or PAYE registered enterprises in the UK, by industry group and turnover size band, 2016
Public and political scrutiny surrounding corporate tax
Measures put in place to crack down on tax avoidance
Finance Bill 2017
MARKET SIZE 
Key points
Overview
Legal services sector has shown resilience in recent years, partly reflecting the UK’s strong standing in the global marketplace
Legal services sector is undergoing a period of significant change
Downward pressure on prices for legal services is forcing firms to evolve business models
Mid-tier firms emerged stronger following the recession...
... but the mid-tier is becoming squeezed due to increased competition from large accounting firms and magic circle law firms
Figure 21: Turnover of the UK legal services industry, 2012-16
Figure 22: Turnover of UK legal services industry, 2012-16
MARKET SEGMENTATION 
Key points
Market segmentation by profession
Figure 23: Turnover of UK legal services industry, by type of business, 2012-16
Segmentation by category of work (solicitors only)
Figure 24: Turnover of UK solicitor firms, by type of work, 2016
Figure 25: Turnover of UK solicitor firms, by type of work, 2016
Figure 26: Breakdown of UK solicitor firms, by type of work, as of April 2015
Demand for legal services by end-use sector
Figure 27: Top sources of business demand for legal services
Conveyancing market
Figure 28: Average number of transactions by conveyancing firms, 2011-16
Wills & Probate
Probate market sees shift towards DIY, but opportunities for professionals remains
Figure 29: Grants of probate issued in England and Wales, 2010-15
MoJ announces major hike in probate fees in 2017
Solicitors continue to dominate the will-writing market, despite unauthorised providers generally being cheaper
Personal injury
Recent reforms restrict growth potential of personal injury market
Proposed introduction of fixed legal fees for clinical negligence
Other areas of work
Employment law
Family law
Regional analysis
Figure 30: Regional analysis of the UK legal services sector, 2015
Overseas trade in legal services
Figure 31: International trade in legal services, 2008-15
Figure 32: Net exports of legal services, 2007-15
MARKET TRENDS 
Key points
Increased demand for non-traditional legal services
Unbundling of legal services increasingly popular among corporate purchasers and the public
Legal service providers need to become more efficient as clients expect better value and fixed prices
Legal service providers face increased competition from accountants
Some firms move towards more integrated service offerings
Technological developments and innovation
Growth in DIY law set to continue
Online dispute resolution and proposed online court
SME business sector offers growth potential
INDUSTRY STRUCTURE 
Key points
Industry development
Legal service providers are highly diverse
Rise in the number of overseas law firms in London
Top 20 commercial legal firms
Figure 33: UK top commercial law firms, by turnover, 2016
Structure of UK legal activities industry
Figure 34: Analysis of the changes in the structure of the UK legal activities industry, 2012-16
Solicitor firms
Figure 35: Number of practising solicitors in the UK, 2011-16
Figure 36: Population of practising solicitors, 2011-17
Figure 37: Breakdown of solicitor firms, by type, March 2014 and February 2017
Practising barristers
Figure 38: Total barristers in practice, 2010-15
Structure by employment
Figure 39: Analysis of the employment structure of the UK legal activities industry, 2015 and 2016
Structure by turnover
Figure 40: Analysis of the financial structure of the UK legal activities industry, 2015 and 2016
COMPANY PROFILES 
ALLEN & OVERY 
Company strategy:
Advanced Delivery
Figure 41: Financial analysis of Allen & Overy, 2012-16
Figure 42: Allen & Overy practice breakdown by sector, 2015
Figure 43: Allen & Overy practice breakdown by geographic segment, 2015
CLIFFORD CHANCE 
Company strategy
Figure 44: Financial analysis of Clifford Chance, 2012-16
Figure 45: Turnover analysis of Clifford Chance, by geographic segment, 2016
CMS CAMERON MCKENNA 
Company strategy
Figure 46: Financial analysis of CMS Cameron McKenna, 2012-16
DENTONS UKMEA 
Company strategy
Figure 47: Financial analysis of Dentons UKMEA, 2012-16
DLA PIPER INTERNATIONAL 
Company strategy
Figure 48: Financial analysis of DLA Piper International, 2012-16
Figure 49: Turnover analysis of DLA Piper International, by geographic segment, 2015
FRESHFIELDS BRUCKHAUS DERINGER 
Freshfields opens Global Centre in Manchester
Company strategy
Figure 50: Financial analysis of Freshfields Bruckhaus Deringer, 2012-16
HERBERT SMITH FREEHILLS 
New global alternative legal services business launched in 2015
Beyond 2020 Global Strategy
Figure 51: Financial analysis of Herbert Smith Freehills, 2012-16
HOGAN LOVELLS INTERNATIONAL 
Company strategy
Figure 52: Financial analysis of Hogan Lovells International, 2012-16
LINKLATERS 
Company strategy
Figure 53: Financial analysis of Linklaters, 2012-16
NORTON ROSE FULBRIGHT 
Company strategy
Norton Rose Fulbright announces merger with Chadbourne & Parke in February 2017
Figure 54: Financial analysis of Norton Rose Fulbright, 2012-16
SLAUGHTER AND MAY 
MARKET FORECAST 
Key points
The Market 2017-21
The Brexit effect
Technological developments
Trend towards fixed-fees services structure and unbundling of services set to continue
Competition from non-legal firms set to further intensify
CMA sets out package of measures for consumer and small business legal services sector to drive competition and consumer engagement
Figure 55: Forecast turnover of the UK legal services industry, 2017-21
Figure 56: Forecast turnover of the UK legal services industry, 2017-21
FURTHER SOURCES & CONTACTS 
Regulatory bodies and professional associations
Advocate General for Scotland
Solicitors Regulation Authority
The Bar Council
The Commercial Bar Association
The Law Society
The Law Society of Northern Ireland
The Law Society of Scotland
The Sole Practitioners Group
Trade exhibitions
LAW 2017
London Law Expo ‘17
Legalex 2017
Trade magazines
Lawyer Monthly
Legal Business
Legal Week
New Law Journal
Solicitors Journal
The Journal of the Law Society of Scotland
The Law Gazette
The Lawyer

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