Competition Growing in UK Legal Market: New Entrants and US Firms Pursue Market Share
The UK legal market has a good track record of growth, with revenues up again in 2018-19. Yet the market faces rising competition from U.S. law firms and alternative legal service providers, including the Big 4 consulting firms.
These are among the conclusions of a new 2020 State of the Legal Market in the UK report issued by Acritas, Peer Monitor and the Legal Executive Institute, all part of Thomson Reuters.
The UK legal market remains dominated by some of the world’s largest law firms, including the Magic Circle firms. The competition is intensifying as a surge of new entrants, including legal services from the Big 4 accounting firms, as well as U.S.-based law firms are aggressively pursuing market share.
The report identified internal challenges – mobility of talent, utilization and investing in new technology – and external forces, including new entrants into the market and meeting client needs, that UK firms must understand as they plan for the future.
For example, 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.
“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.”
Competitive pressures include external challenges as well. The Big 4 and other alternative legal service providers now account for more than four percent of client budgets and are growing at double-digit rates, according to a 2019 Thomson Reuters survey.
Top UK media outlets highlighted the new report findings, with City A.M. noting how “aggressive hiring by US law firms in London” is winning market share. Law Society Gazette reported on alternative providers seizing opportunities, and Legal Futures is concerned “[c]ommercial law firms based in the UK are falling behind their global rivals in adopting new technology.”
The report concluded with this guidance: UK law firms with a global presence and strong reputations are more likely to face a positive outlook as they are better positioned to balance growth across multiple global markets.
Download the full report for more UK legal market insights.