A bullish UK legal sector added 30,000 jobs last year, but achieving the ‘best possible’ mutual market access after Brexit is critical to future growth. Nearly a third of all legal services workers now work in London.
These are among the findings of the latest legal services report from lobby group TheCityUK, which will be launched by justice secretary David Gauke at an event in London tonight.
Powered by global multinationals choosing the UK to resolve disputes, the UK market is second only to the US and now accounts for a third of Western European legal services fee revenue and around 6.5% of global revenue. The UK sector posted a trade surplus of £4.4bn in 2017.
Despite the encouraging figures, the report calls on the UK to ensure it secures a ‘bespoke future relationship’ with continued cross-border recognition and enforcement of judgments in the EU after Brexit. Similar calls have been made by both the Law Society and Bar Council amid the present Brexit impasse.
Employment in the UK legal services sector grew to 342,000 jobs (8% up on 2016). Total revenue generated by the UK’s largest 100 law firms was up 10% to £24.2bn, while over 200 foreign law firms from around 40 jurisdictions now operate in the UK.
The report also noted the growth of international litigants that continue to flock to England and Wales, while noting that other common law jurisdictions are keen to establish their own litigation centres.
According to the report, out of 1,200 claims lodged in the Admiralty and Commercial Courts in 2017, four out of five (78%) involved a party based outside England and Wales (up 8%). In 51% of claims all of the parties involved were from overseas. In 2017, over 32,800 disputes were resolved by alternative dispute resolution in the UK – up 27% on the previous year.
TheCityUK noted that new export markets have been created by helping emerging financial centres create their own English-language courts governed by English law. TheCityUK partnered with the government of Kazakhstan to develop the Astana International Financial Centre and is in discussions with other financial centres about similar projects. ‘Dubai has launched a similar system … and other emerging centres, such as Casablanca are interested in following suit,’ the report notes.
As the Gazette has previously reported, a number of European capitals including Paris are incubating English-language courts to try and compete with London for cross-border dispute resolution work after Brexit.
The report also warns that of potential ‘disruption’ posed by the entry of the so-called ‘Big Four’ accounting firms (Deloitte, EY, PwC and KPMG) into the legal services sector and of their commitment to investing in legal technology to ‘improve and speed up routine legal work’.
‘Globally, the Big Four’s legal divisions are already considerable. Deloitte has about 2,000 lawyers, while PwC has 3,500. In the UK alone, PwC ’s legal practice has a headcount of 320 and revenues of £60m (putting it just outside the UK’s top 50 law firms by revenue),’ the report notes. EY has around 85 UK lawyers, while KPMG has approximately 100, with UK revenues of roughly £15m and £20m respectively.