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UK Legal Services Market Report 2013

  • September 2013
  • -
  • IRN Research
  • -
  • 64 pages

The UK Legal Services Market Report 2013 from IRN Research provides a market review of the UK legal services market. Amidst all the changes in the legal market, one thing that stands out about the last 12 months has been the pace of M&A activity and not just involving larger law firms. Some larger firms are using M&A to grow their market share globally. Others in the private client sector are focusing on the UK and particularly in segments such as personal injury and corporate work. Smaller law firms often see M&A as a defensive measure to join forces and deal more effectively with the challenges of the new legal market. M&A activity on the legal high street has been limited until now but this looks set to change.

Annual growth of only 1.6% in market value in 2012 suggests that the recovery in the legal market is still struggling to gather pace. In 2013, revenue growth in the UK legal services market overall is likely to show some improvement over 2012 although market growth will still be modest. Stronger growth is expected in 2014.

There are almost 12,000 law firms in the UK. Numerically, the sector may be dominated by small firms but, in revenue terms, power is heavily concentrated amongst the top players. The top 200 law firms claimed 53% of private practice revenues generated in the UK in 2012. Lower down the market many medium and smaller law firms are struggling to grow revenues significantly and are working on low margins and financial pressures.

Part of this struggle can be attributed to larger players, especially in personal injury and conveyancing, taking a larger market share while there are a growing number of new players entering the market. Some of these are core legal service providers while there are many hundreds more brands that offer white-label legal services under their own brand name but supplied by a law firm or other provider. In truth, only a few of the new entrants are having a major impact on the market so far but the influence of these few is likely to grow.

As competition grows in the legal services market, and consolidation in certain segments increases, the number of private practice law firms in England and Wales has started to fall for the first time. So far, the decrease has been relatively small with around 300 law firms disappearing from the total numbers between 2010 and 2012. If this rate of decline continues, over 750 law firms would disappear in England and Wales by 2015. However, the rate is likely to increase as more aggressive competition, coupled with recently announced decreases in legal aid funding and radical changes to the personal injury market in particular impact on smaller law firms. IRN Research is forecasting a decline of between 1,500 to 1,700 in law firm numbers from 2011 to the end of 2015.

Also on the increase is the number of mergers and acquisitions in the UK legal services sector. In 2011, this number increased by 31% compared to the previous year and M&A activity has been maintained in 2012. Larger firms are using M&A to grow their market share in the UK, particularly in segments such as personal injury and corporate work, while smaller law firms often see M&A as a defensive measure to join forces and deal more effectively with the challenges of the new legal market.

Key issues impacting on the market in the next year or so include: the referral fee ban and changes to the “no win, no fee” regime in the personal injury market; legal aid funding cuts and a potential reduction in the number of providers able to be licensed for criminal legal aid; client demand for more fixed-fee pricing models, or at least more flexible pricing models; further financial pressures on some law firms.

The report has sections for:

industry overview
market sizes and trends
market segmentation
key issues in the market
key players, PEST analysis
research on in-house legal work areas, preferences , concerns, purchasing criteria
market forecasts for 2013 and 2014

Table Of Contents

UK Legal Services Market Report 2013

Executive Summary 5

1. Industry Overview 8
1.1 Report Coverage and Introduction 8
1.2 Market Size 10
1.3 Market Characteristics and Trends 11
1.4 Market Segmentation 12
1.4.1 Market Segments 12
1.4.2 Business/Corporate Affairs 13
1.4.3 Personal Injury/Accident 14
1.4.4 Commercial Property 16
1.4.5 Residential Property 16
1.4.6 Family Law 17
1.4.7 Wills and Probate 18
1.5 Industry Structure 18
1.6 Solicitor and Barrister Numbers 20

2. Key Trends 22
2.1 Alternative Business Structures (ABS) -almost 200 22
2.2 ABS in Scotland 24
2.3 Big changes to no-win/no fee and referral fees 24
2.4 Legal aid reforms continue 25
2.5 Outcomes focused regulations - the first year 26
2.6 Concerns over financial stability of some firms 27
2.7 End of the Assigned Risks Pool 28
2.8 Direct access to barristers 29
2.9 Legal executives may work independently 29
2.10 Fully digitised courts by 2016 30
2.11 Claims Management Companies - numbers falling 30

3. Selected Bodies and Associations in Legal Services 31

4. PEST Analysis 33
4.1 Political 33
4.2 Economic 33
4.3 Social 34
4.4 Technological 34

5. IRN Primary Research - In-house Counsel 36
5.1 Introduction 36
5.2 Key areas of law 36
5.3 Outsourcing legal work 37
5.4 Key issues 38
5.5 Key criteria when choosing legal advice 39

6. Competitive Structure 39
6.1 The Marketplace 39
6.2 Traditional law 43
6.3 Leading law firms 45
6.4 Leading chambers 47
6.5 Law firms in Scotland 48
6.6 Mergers and acquisitions 48
6.7 Top 5 Law Firms - Profiles 52
Clifford Chance 52
Freshfields Bruckhaus Deringer 53
Linklaters 54
Allen and Overy 54
DLA Piper 55
6.8 UK Legal Providers - Profiles 56
BGL Group 56
Clyde and Co 56
Cooperative Legal Services 56
DWF 57
Irwin Mitchell 57
Parabis Law 58
Pinsent Masons 58
Quindell Portfolio 59
RPC 59
Slater and Gordon Lawyers 59
Stewarts Law 60
Wedlake Bell 60

7. Future Trends 61
7.1 General Trends 61
7.2 The Legal Market 61
7.3 Forecasts 2013-2014 63

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