A new report from TheCityUK finds the UK legal sector continues to go from strength to strength, with revenue increasing by 6% year-on-year to £35.5bn in 2018, and export trade surplus up to £6.5bn in the same year, a figure which has more than doubled over the last decade.
The report ‘Legal Excellence, Internationally Renowned’ underlines some of the key trends contributing to this success, such as the growth of LawTech and investment in regional and national financial centres.
The UK is now home to 44% of all LawTech start-ups in the EU. Investment in UK legal technology has rocketed in the last three years with start-ups receiving £61m in 2018 compared to £22.2m in 2017 and just £2.5m in 2016. Much of this investment is going into an extensive network of regional ‘tech labs’ across the country, created by law firms, universities and other corporate organisations including financial services businesses.
Many law firms are setting up LawTech centres across the UK in areas such as the Midlands, North of England, Scotland and Northern Ireland. Regional legal services growth is also being driven by a trend for smaller regional and national firms to partner with leading global law firms to provide ‘Northshoring’ outposts for their larger clients effectively.
UK LawTech also benefits from the UK’s highly developed legal market, technology talent pipeline, a competitive tax system, a liberal regulatory regime and the recognition of the importance of innovation by the government.
Gary Campkin, Managing Director, External Relations & Strategic Issues, 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.”
Despite ongoing political uncertainty, and lower growth levels seen in some other sectors of the economy, legal services contributed £26.8bn to the UK economy in 2017, equivalent to 1.5% of Gross Value Added (GVA). The sector’s revenue increased by 6% year-on-year to £35.5bn in 2018 while posting a record trade surplus of £6.5bn.
In total, 338,000 people work in the legal services sector across the UK, two thirds of whom work outside of London. Major centres of legal services employment include Manchester (with 13,000 in employment), Birmingham (11,000), Leeds (10,000), Bristol (8,000), Edinburgh and Glasgow (7,000 each), and Liverpool and Cardiff (6,000 each).
The UK is the largest legal services market in Europe and is second only to the US globally. It accounts for a third of Western European legal services fee revenue and around 5% to 6% of global legal services fee revenue, which totalled between $680bn and $886bn in 2018, and is expected to grow to above $1trn by 2021.
The UK is home to a wide range of international law firms with more than 200 foreign law firms from around 40 jurisdictions - employing in excess of 10,000 people - operating across the country.