TheCityUK’s annual UK legal services report indicates a deceleration in growth, dropping to 5.6% from the previous year’s 12.5% in 2021.
According to TheCityUK’s 2023 legal services report, the UK legal sector exhibited resilience in 2022 by experiencing increased revenues from the preceding year, albeit at a reduced rate of growth.
The report disclosed that sector revenue rose to £43.7 billion in 2022 from £41 billion in 2021, marking a 5.6% increase following a 12.5% rise in 2021 compared to 2020. This indicates a cumulative growth of roughly 60% for the UK’s legal sector since 2012.
In 2022, the legal services sector contributed £34 billion to the UK economy, upholding its 1.6% share of gross value added, and achieved a trade surplus of £5.7 billion.
City law firms showcased significant internationalization, notably due to the robust presence of leading global law firms in London and the surge in UK exports of legal services, reaching a record high of £7.3 billion in 2022.
Moreover, the combined revenue of the world’s top 100 law firms, where two-thirds are American-based, surged by 15% in 2021/22 to $147.5 billion. Among these firms, 20 reported turnovers exceeding $2 billion.
Miles Celic, CEO of TheCityUK, emphasized that the achievement couldn’t be assumed, stating, “To uphold the UK’s leading position in global legal services, safeguarding and improving our reputation for the rule of law is crucial. Encouraging innovation in legal services, particularly within the rapidly growing LawTech sector, is essential to drive job creation and foster economic growth across the nation.”
During this period, employment in the sector saw a slight decline, dropping to 368,000 from 375,000 in 2021. Similarly, the number of training contracts decreased by 10% in the year leading to July 31, 2022, down to 4,952.
Interestingly, two-thirds of legal sector employees operated outside London. Among these, Manchester held the second-largest workforce with 13,000 employees, followed by Leeds with 11,000, Birmingham with 10,000, and Bristol with 9,000.
The report discovered that City law firms were contemplating alterations to their operational frameworks, leaning more towards mergers and acquisitions to expand their scope, enhance expertise in specific practices, and venture into new geographic markets. This trend was exemplified by recent agreements like Allen & Overy’s merger with Shearman & Sterling.
Furthermore, the report emphasized the global importance of English common law, noting that parties from 78 different countries engaged with the English commercial courts in 2021/22.
Luke Harrison, co-chair of London International Disputes Week (LIDW) and a partner at London disputes boutique Keidan Harrison, commented, “The report showcases the substantial contribution of the legal services industry, particularly in international dispute resolution, to the UK’s GDP.”
He further mentioned that the upcoming LIDW in June 2024 aims to bring together top practitioners worldwide, offering participants an opportunity to delve deeper into the reasons behind London’s remarkable success.
Nick Vineall KC, chair of the Bar Council, remarked, “This insightful report underscores the global significance of English law and UK dispute resolution.” He emphasized that while legal services play a substantial role in the economy, there’s a critical need for the government to acknowledge the severe underfunding of the court service and lawyers involved in publicly funded cases.
Justice Secretary Alex Chalk MP, scheduled to attend the report’s launch, which was postponed due to urgent Parliamentary matters, highlighted “the remarkable achievements of the UK’s legal sector and its crucial economic contribution.”
Chalk further mentioned, “We don’t assume these accomplishments as given and will persist in advocating for English and Welsh law, as well as promoting the UK’s legal sector worldwide whenever possible.”
