UK Legal Services Market Report 2018, 8th edition
The UK Legal Services Market Report 2018 from IRN Research, now in its eighth year, provides a market review of the UK legal services market.
• Annual UK legal services market revenue has bounced back in 2017 after a decline in 2016. Market growth was just under 4%.
• Law firm numbers have stabilised but many have reduced costs, and staffing, while some have dropped under-performing practice areas.
• Brexit uncertainties remain the key issue for the corporate sector but it is still performing relatively well. There has been modest growth in most consumer law sectors and the weakest markets are personal injury and criminal law.
• Our forecasts are for a slight improvement in overall revenue growth in 2018, with stronger growth expected in 2019 and 2020.
• Our second annual survey of legal practitioners working in consumer law shows that a clear majority are expecting revenue growth in the next 12 months.
The UK legal services market (including private practice firms, barristers, patent agents, and other legal services providers) was valued at an estimated £32.7bn in 2017 and this is an increase of 3.8% on the market value of £31.5bn in 2016.
The introduction of the Legal Services Act 2007 in 2011 started to change the market landscape. Seven years on, the number of law firms has not fallen significantly but many have reduced costs, and staffing, while some have dropped under-performing practice areas. This is a response to some new competition, and client demands for more flexible services and pricing.
Business models for law firms have changed over the last decade. By the end of 2017, incorporated companies accounted for 44% of all law firms and the traditional partnership model accounted for only 17% and is still falling.
There are now over 1,100 Alternative Business Structures (ABS), the mechanism through which non-lawyers can invest in law firms and legal services. The number of ABS licensing bodies is now five but the Solicitors Regulation Authority (SRA) still accounts for a majority of ABS.
By far the largest segment in the UK market is legal work for business and commercial affairs (including commercial property) accounting for 46% of total market revenue and most of the high-value work in this segment is undertaken by the larger law firms. The largest consumer law segments are personal injury/accident/medical negligence work, and family law, contributing an estimated 11% and 7% respectively of UK market revenue.
This year’s report includes the second annual set of results from a survey of 150 legal practitioners working in four consumer law areas: conveyancing; family law; personal injury; wills and probate. Over the last year, the majority of those working in consumer law have experienced volume growth in their practice areas. Overall, 58% experienced revenue growth.
Looking ahead to the next 12 months, a clear majority are expecting to witness revenue growth in their practice area.
As in 2017, the personal injury market continues to be the consumer legal market facing the greatest pressure with further regulatory changes due in 2019 likely to take more work away from legal advisers. Most other consumer legal sectors will see some growth. Brexit uncertainty continues to be a concern for corporate law firms.
Our revenue growth forecast for UK legal services market in 2018 shows a slight improvement on 2017. In 2019 and 2020, market growth is forecast to be even stronger with the total market value forecast to reach over £40bn by 2021. Corporate law will continue to drive market growth.
The full report, The UK Legal Services Market 2018 (75pp, PDF), is available directly from IRN Research, priced at £400/€450/US$560. UK sterling price is plus VAT so total price is £480.
The report has sections for: industry overview; legal services timeline; market sizes and trends; market segments; key issues in the market; key players; primary research – practitioner survey; market forecasts from 2018 to 2021. See Contents Page on next page.
Established in 1991 in the UK, IRN Research is a full-service market research consultancy. IRN Research has a particular focus on the legal services market offering a range of bespoke research services, on an ad-hoc and continuous basis, to law firms and suppliers to the sector. These services include client satisfaction surveys, market studies and competitor intelligence, and strategic studies.
IRN Research (trading name of IRN Consultants Ltd), 60 Eastern Green Rd, Coventry CV5 7LH United Kingdom
THE UK LEGAL SERVICES MARKET 2018 (8th edition)
TABLE OF CONTENTS
6 EXECUTIVE SUMMARY
8 UK LEGAL MARKET TIMELINE
11 MARKET STRUCTURE
11Most legal advisers are regulated
12 Legal services sector split
13 Law firm numbers stabilising
17 Personnel numbers
21 MARKET DEVELOPMENTS
21 Brexit uncertainties still here
21 The brave new world of price transparency
23 MoJ response to CMA recommendations
24 Government review of LASPO
24 Freelance solicitors on their way?
25 Flexible and temporary lawyers on the increase, and international expansion
26 Business and Property Courts launched
26 Courts reform gathers pace
27 Technology as a differentiator, and AI use growing
29 Most SME law firms not prepared for AI
29 ABS sector – more licensing bodies and over 1,100 ABS
32 THE KEY PLAYERS
32 The Top 100
32 The Top 10
33 Acquisitions and mergers
37 Top 5 UK Law Firms – Profiles
40 Selected Other Legal Services Providers
42 Consumer Law Firms
46 MARKET SIZE AND TRENDS
46 Growth returns to the legal market in 2017
47UK is a net exporter of legal services
49 MARKET SEGMENTATION
50 Corporate, financial and commercial law
53 Personal injury
55 Commercial and residential property, including conveyancing
57 Wills, trusts and probate
59 Family law
61 Employment law
63 Criminal law
64 PRACTITIONER RESEARCH
64 Volume growth for a majority but not in personal injury
65 Improvements in revenue growth and prospects across all segments
66 THE FUTURE
66 Still an uncertain future
70 PROFESSIONAL BODIES AND REGULATORY AUTHORITIES