While the UK legal market has been growing recently, with revenues up again in 2018-19, the market is facing rising competition from U.S. law firms and alternative legal service providers, including the Big 4 consulting firms.
Those are among the conclusions of the 2020 State of the Legal Market in the UK report from Acritas and Peer Monitor, both part of Thomson Reuters, and the Legal Executive Institute. The UK legal market remains dominated by some of the world’s largest law firms, and many of those firms are also dominant players in the global field, including the Magic Circle firms.
But the report notes that “the next decade clearly is not going to be plain sailing for UK law firms.” It notes a surge of new entrants in the market, including a renewed focus on legal services from the Big 4 accounting firms, as well as U.S.-based law firms aggressively pursuing market share. Of the top 100 UK Star lawyers as rated by Acritas that changed firms last year, 30 went to U.S. firms. Many had been associates at their previous firm and moved to partner positions at their new firm. Overall, U.S. firms grew their UK lawyer headcount by 5.8 percent last year, especially in tax, employment, litigation and corporate practices.
“As talent becomes increasingly mobile, firms need to be mindful of how lateral moves mean not only loss of talent but also negatively impact the ‘employer brand’ of the firm,” said Lisa Hart Shepherd, vice president of Research and Advisory Services at Thomson Reuters. “When a firm loses a top-performing lawyer, they lose both their expertise and strength in their client relationships, which are two of the top drivers of how a law firm’s brand is favorably viewed by its clients.”
“The competitive landscape is shifting rapidly,” continued Hart Shepherd, “Firms need to take a more pro-active approach in retaining both talent and clients. More than ever, competitors stand ready to take market share at every opportunity.”
Competitive pressures are growing in other areas as well. A 2019 Thomson Reuters survey found that the Big 4 and other alternative legal service providers (ALSP) now account for more than four percent of client budgets, and are growing at double-digit rates.
In spite of the growing competition, the report concludes that UK law firms with a global presence and strong reputations are more likely to face a positive outlook as they will be better positioned to balance growth across multiple global markets.
IN-HOUSE COUNSEL GET INVOLVED:
Acritas can provide further benchmarking data on other topics such as, legal spend and remuneration on its online platform for legal departments. We provide this for free as an incentive to participate in our global research in return for participating in a 25-minute Sharplegal telephone interview discussing your perspectives of the legal services market. The Analytics tool also provides access to a database of exceptional Star Lawyers, as recommended by other survey participants, across more than 50 countries worldwide. You can see why the Star is recommended and the demographics of the client making the nomination.
To participate and access Acritas Analytics, please email firstname.lastname@example.org with your preferred time and phone number. You can also click here to use the online booking app. You must fit our qualifying criteria to gain free access which includes a minimum revenue of $50m and being a decision-maker when it comes to procurement of legal services. Paid access is available for $995 per annum.