The UK Business Legal Services Market Report is the second edition of an annual Legal Market Report from the author and provides an overview of the market and its core market segments.
New content this year includes:
- A survey of 180 UK businesses (90 large/90 SME) on use of, and perceptions of, legal advisers.
- Analysis of the top 200 law firms, and leading chambers, and the specific verticals they advise.
Market size and segments
UK-based business law firms and chambers generated revenues of £15.4 billion in 2017, an increase of 4% on 2016 revenues. Some of this total includes international revenue but the UK legal business market was worth over £11 billion (turnover, less exports plus imports).
The two main segments of the business legal market are corporate/ commercial law and dispute resolution/litigation. Other important market segments are employment law, commercial property, mergers & acquisitions, and patents and trademarks.
There is likely to be a net increase in demand for business legal services in the next 18 months. A majority of businesses surveyed expect their demands for legal services to remain the same in the next 18 months. 29% of large businesses and 16% of small businesses are expecting an increase in their need for external legal advice, compared to 9% of large firms and 11% of small firms expecting a decrease.
Six out of ten small businesses use just one law firm for all their legal needs but a majority of large businesses are using more than one law firm.
Some businesses build a relationship with their legal adviser outside of a specific legal matter: 27% of individuals in small businesses come into contact with their legal adviser at business networking events, and 31% of individuals in large businesses attend events arranged by a law firm.
Sector expertise of top 200 UK law firms
Most of the top 200 UK law firms have created vertical sector teams to emphasise their expertise in specific sectors and to get closer to their clients in these sectors. The author has looked at the websites of 182 of the top firms (i.e. those that list their sector expertise) to detail the key verticals covered. There are 13 vertical sectors listed by more than 50 law firms, led by real estate (101 firms), financial services & insurance (97 firms), and hospitality, leisure and sport (91 firms). Another 10 sectors reach double figures, i.e. mentioned by more than 10 firms.
Some vertical sectors are already starting to become crowded in terms of the number of law firms offering advice for the sector. The next step, starting to emerge, is a move to more niche sector expertise.
The forecast for the market value of the business legal market shows steady growth in 2018 with higher growth expected in 2019.
- Law firms will have to become more flexible and market-savvy as competition increases. Major clients seek to unbundle more legal services by buying-in only certain legal services, and ALSPs take on more routine legal work and offer support services to corporates.
- Controlling costs will remain a top priority.
- There will be more mergers as firms seek to cut their back office, property and support costs and as UK firms become more attractive financial targets given the decline in the value of the pound. More UK mergers will create integrated professional services firms offering a range of support services particularly for SMEs.
- The development of vertical sector teams in law firms and the growth of niche/boutique law firms specializing in specific sectors or practice areas are likely to continue. Broad sector expertise may not be enough for some clients and more law firms are likely to focus on niche market segments.
2. EXECUTIVE SUMMARY
3. MARKET STRUCTURE AND TRENDS
- The structure of the market
- The key players
- The top 200 - vertical sector expertise
- Leading chambers - verticals
4. RECENT DEVELOPMENTS
- Still limited use of legal advisers by SMEs
- New Business & Property Courts launched in 2017
- Market for litigation funding continues to expand
- Big commercial law firms not delivering value for money
- Survey shows modest growth and limited use of advanced technology
- Big four accountants are here
5. THE BUSINESS LAW MARKET
- Turnover over £15bn and UK market of £11bn
- A growing market but one that is increasingly competitive
- Corporate/commercial law and litigation are key markets
- SMEs are largest volume users but large companies spend big bucks
6. BUSINESS USER SURVEY
- Less than 20% are regular users of external legal advice
- Employment, pensions, contracts - main areas for advice
- Most large firms use more than one law firm, most small businesses just one
- Some networking between business users and legal advisers
- Net increase in demand for legal services in next 18 months
- Hourly rates still the fee model for a majority
7. THE FUTURE
- Market forecasts 2017-2019
- Law firms will have to be more flexible and market-savvy
- Controlling costs will be a major priority
- More mergers
- More specialist teams and niche practices
8. CORPORATE, FINANCIAL & COMMERCIAL LAW
9. EMPLOYMENT LAW
10. INTERNATIONAL LITIGATION & DISPUTE RESOLUTION
11. INTELLECTUAL PROPERTY, PATENTS & TRADEMARKS
12. COMMERCIAL PROPERTY LAW