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UK’s top-50 law firms recorded flat deals volume in 2014

Economic growth may be slowing down in 2015, Law Society warns 

9 February 2015

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By Manju Manglani, Editor (@ManjuManglani)

Despite promising signs of growth in the first half of 2014, the UK's top-50 law firms recorded flat deals volume growth in the full year.

The significantly lower level of deals completed in 2014 compared to 2013 could indicate a slowing down of UK economic growth in 2015, according to the Law Society of England & Wales.

"Legal deals can be an indicator of future growth in the economy as a whole in the six to nine months ahead," commented Law Society president Andrew Caplen.

"It seems that the strength of the pound against the euro and the dollar and slower than expected growth in overseas markets are taking their toll on exports."

The UK achieved 0.5 per cent quarter-on-quarter GDP growth in the last quarter of 2014, according to government data. This followed growth of 0.8 per cent in 2Q14 and 0.7 per cent in 3Q14.

The slowdown in the number of deals may indicate that GDP growth could drop further in 2Q15 or 3Q15.

The number of deals completed by the UK's top-50 law firms increased by 2.2 per cent year-on-year in 2014, compared to 12.4 per cent growth in 2013.

Meanwhile, the total value of deals was down 10.6 per cent, following a 13.2 per cent decline in 2013.

There was a promising start to the year, with the top-50 firms recording 7.1 per cent year-on-year growth in the number of deals completed in the first half of 2014. However, deals volume subsequently dropped by 2.3 per cent in the second half.

The research found that the main source of the slowdown was the financial sector. Deals in the finance and banking sector in 2014 were 3.4 per cent lower than in 2013, in which 19.8 per cent growth was recorded. In addition, the fund/investment management sector recorded a decline of 0.6 per cent following 7.3 per cent growth in 2013.

The manufacturing sector also took a hit on the number of deal completed in 2014, down 15.4 per cent in 2014 after a 32.3 per cent increase in 2013.

There was also a substantial slowdown in the real estate and construction sector, with the number of deals completed up 5.5 per cent in 2014, compared to an 82.2 per cent increase in 2013.

The technology, media and telecoms sector bucked the trend, with the number of deals increasing by 13.5 per cent in 2014, following a decline of 13.7 per cent in 2013. Also recording growth was the energy and utility sector, with deals up 22 per cent after a decline of 11.2 per cent.

The full research findings are published by the Law Society in the City Legal Index.







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