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UK Legal Services Market

UK Legal Services Market

This is the 6th annual edition of the UK Legal Services Market report which provides a market review of the UK legal services market.

The UK legal services market (including private practice firms, barristers, patent agents, and other legal services providers) was valued at an estimated £32.1bn in 2015 and annual growth was 6.7%.

It is now almost five years since the introduction of the Legal Services Act 2007 (LSA) in October 2011, which enabled non-lawyers to invest in law firms and other legal services providers for the first time. The introduction of the LSA has had a gradual rather than a “big bang” impact on the sector.

First, there are over 200 core legal services providers that have joined the market in recent years. Alternative Business Structures (ABS), the mechanism through which non-lawyers can invest in law firms and legal services, now number almost 700 and their numbers have increased noticeably in the last two years as new ABS licensing authorities have appeared. These ABS include traditional law firms that have become ABS plus other owners such as accountants, insurance companies, consumer brands, IT companies, legal publishers, legal consultants, and membership groups. The Solicitors Regulation Authority (SRA) still licences the majority of these but a growing number are being licensed by the Institute of Chartered Accountants in England and Wales (ICAEW).

Increased competition in the legal services market has impacted on the number of private practice law firms in England and Wales but the expected dramatic decrease in law firm numbers post LSA has not really materialised. From 2012 to the end of 2015, the number of law firms in England and Wales has fallen by just over 600 but there are still over 10,000 law firms operating in England and Wales and almost 12,000 in the UK. By contrast, around 1,000 claims management companies have gone from the sector.

There have been more significant changes in law firm business models. Traditionally, the partnership structure has dominated but, by October 2015, traditional partnerships only accounted for 21% of all law firms. The largest group is now incorporated companies taking 37%.

By far the largest segment in the UK market is legal work for business and commercial affairs accounting for an estimated 33% of all UK legal market revenue in 2015. Most of the high-value work in this segment is undertaken by the larger law firms. The second largest segment is legal work associated with commercial property and this market segment has seen a significant improvement in fortunes in the last year. This segment accounts for over 11% of total UK legal market revenue. Not far behind is personal injury/accident/medical negligence work, accounting for around 11% of the total UK market value. Employment law, family law, wills & probate, and residential conveyancing each generate around 7% of the total market value per year.

Some segments are starting to polarise, led by conveyancing and personal injury: larger firms are using M&A to grow their market share while smaller law firms and more firms are starting to make increasing use of main media advertising and Internet marketing techniques to boost brand awareness and use.

While law firm numbers are falling, the number of solicitors with practising certificates in England and Wales continues to increase. Numbers grew by 2.2% in 2015, following similar annual increases in 2014 and 2013. The number of barristers in England and Wales is also increasing year-on-year. More and more qualified solicitors are also turning to the corporate world for work rather than moving into private practice. By 2015, 21% of all practicing solicitors were employed outside private practice compared to only 15% in 2003.

In 2016, revenue growth in the UK legal services market overall is likely to be around 5.6% followed by growth of around 5.9% in 2017. Competitive pressures will continue and the move to “flexible law” will gather pace in the next year or so, i.e. more DIY law by individuals, more unbundling of legal services, increased use of online dispute resolution (ODR) and more use of freelance and temporary legal professionals by corporate clients.

1. Executive Summary
2. Report Coverage and Introduction
3. UK Legal Market Timeline
4. Market Size, Sectors, and Trends
4.1 Market Size
4.2 Market Segmentation
4.2.1 Market Segments
4.2.2 Business/Commercial Affairs
4.2.3 Personal Injury/Accidents/Clinical Negligence
4.2.4 Commercial Property
4.2.5 Residential Conveyancing
4.2.6 Employment Law
4.2.7 Family Law
4.2.8 Wills & Probate
5. Industry Structure
5.1 Law Firms
5.2 Solicitor and Barrister Numbers
6. Key Trends
6.1 ABS – Almost 700 by the End of 2015
6.2 More Competition from Accountants
6.3 Legal Services Market Investigation
6.4 Claims Management Sector Shrinking and Investigated
6.5 Fixed Fees for Low Value Clinical Negligence Claims
6.6 MoJ U-Turn on Crime Legal Aid Reform
6.7 Court Closures and the Rise of Digital
6.8 Government Sets Sights on Increasing Competition
6.9 Complaints to Legal Ombudsman Declining
7. Competitive Structure
7.1 The Marketplace
7.2 Traditional Law
7.3 Leading Law Firms
7.4 Acquisitions and Mergers
7.5 Top 5 UK Law Firms – Profiles
7.6 Selected Other Legal Services Providers – Profiles
8. Law Firm Research
8.1 Marketing Mix Moving Towards Digital
8.2 Net Increase in Marketing Spend in Next 12 Months
8.3 Majority of Law Firms Use Twitter
8.4 Monitoring Client Comments on Social Media
9. Selected Bodies and Associations
10. Future Trends
10.1 The Economy – Still Growing but Some Uncertainties
10.2 Legal Sector – Growing but Competition/Consolidation
10.3 Market Forecasts – 2016 and 2017

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