UK legal services market 'second only' to the US
The UK’s legal services sector is strong and continues to grow in spite of Brexit, according to a detailed report from industry-led body
The report is rich in data revealing the extent to which the legal services sector and UK-based dispute resolution is booming.
The growth is due in part to intensified investment in lawtech, the UK’s global reputation as a leading legal centre, the international prestige of English common law and the strength of the UK’s judicial institutions.
The report follows in-depth research and analysis and revealed that revenue of the largest 100 law firms grew by 9 per cent to £26.4 billion in 2017.
And with more than 200 foreign law firms having UK offices, the country is second only to the US globally in terms of legal services fee revenue, totalling £35.5 billion last year representing a year-on-year increase of 6 per cent.
The report also found that the strongest growth within the top 100 firms was seen by specialised firms which mostly – and significantly - outperformed generalist firms
A key finding of the report confirms that the UK is still the world’s leading centre for international legal services and dispute resolution, with London considered the top preferred centre for arbitration.
It found 75 per cent of cases in the UK commercial court being international in nature in 2018.
Furthermore, English law is used in 40 per cent of all global corporate arbitrations.
In his foreword to the report, TheCityUK’s CEO Miles Celic said: “While it is clear that English contract law will be largely unaffected by a separation from EU law, it is vital that international parties understand that the many benefits of using English law will endure, regardless of the outcome of Brexit.”
Liberalisation of the legal services sector through alternative business structures (ABS) has, said the report, attracted more investment “boosting technology adoption and strengthening client offerings”.
The UK has now become a global hub for lawtech and is home to 44 per cent of all lawtech start-ups in the EU, reflecting the attractive environment for investment which prevails.
TheCityUK said the UK “benefits from a highly developed legal market, a technology talent pipeline, a competitive tax system, a liberal regulatory regime and the recognition of the importance of innovation by government”.
Investment in legal technology increased almost threefold over the past year, with start-ups receiving £61m in 2018 compared to £22.2m the previous year.
This is a huge jump in investment and is, the report said, “the result of an extensive network of ‘tech labs’ created by law firms, universities and other corporate organisations including financial services businesses”.
For example, Barclays transformed its UK-wide Eagle Labs into lawtech hubs to encourage co-working and mentoring and bring together lawtech entrepreneurs.
A number of City firms are also establishing their own lawtech incubators and innovation hubs.
Gary Campkin of TheCityUK said: “UK legal services are a truly world-leading industry and integral part of the ecosystem which makes the UK the foremost international financial centre.
“The rapid growth of lawtech, and a strong focus on regional centres of expertise are two clear trends emerging from our annual review of the UK legal services sector.
“They show that while the traditional strengths of the UK legal sector - such as English law, deep pools of talent and experience and a world class judiciary, court and dispute resolution system – remain important, they are now being augmented by additional strengths in innovation, technology and efficiency.”
The full report can be found here.