The UK legal services market was valued at £35.1bn in 2018, increasing by 6.3 per cent at current prices on the previous year. When inflation is taken into account then market value increased by 3.7 per cent. The findings come from the 9th annual edition of the UK Legal Services Market Trends Report.

State of the market

The number of law firms in the UK has stabilised in recent years at around 12,000, although the business model is changing: almost half of all firms are now incorporated companies and the traditional partnership model has declined dramatically. There are almost 1,300 firms operating as alternative business structures (ABS) in England and Wales, compared to an overall total of over 10,000 law firms in England and Wales. Revenue growth for the top 100 law firms continues to outperform growth in the legal market overall. This is due to a number of factors: acquisitions by the top 100 firms have grown sales; most of their work is in the corporate sector which is performing better than most consumer law sectors; a significant percentage of the revenue of the top 100 comes from overseas. By far the largest segment in the UK market is legal work for business and commercial affairs (including commercial property) accounting for almost half of total market revenue in 2018 (nearly 47 per cent) and most of the high-value work in this segment is undertaken by the larger law firms. The largest consumer law segment is personal injury/accident/medical negligence work contributing an estimated 11 per cent of UK market revenue, despite the sector facing falling claims numbers and the repercussions of the ban on referral fees.

Optimistic forecasts

Looking ahead to the next 12 months, over six out of ten firms are expecting to witness volume growth in their practice area, and this increases to 74 per cent of family law practitioners. The revenue growth forecast for UK legal services market in 2019 is 5.4 per cent (at current prices) and year-on-year growth of between 5 and 6 per cent is expected from 2019 to 2022. Looking ahead to the next 12 to 18 months, some key changes likely to have an impact on the market are increases in price transparency, online legal services, freelance solicitors and qualified solicitors working in unregulated practices, public listing, and, range of services offered. Finally, more litigation funders are likely to move into smaller cases, plus more consumer cases.