The number of law firms in England and Wales has dropped below 9,000 for the first time in recent history amid continuing consolidation, a long-running regular market study has revealed. However the consolidation came amid continued growth in the market for legal services, which rose by 6.1% in 2025 at current prices.
According to the 16th edition of the UK Legal Services Market Trends Report, published by IRN Legal Reports, turnover of all businesses engaged in legal activities amounted to £55.5 billion in 2025. This represents a rise of 50% since 2020. Legal services inflation in 2025, while lower than in 2024, 'was still some way above the general UK increase in prices', the report states.
The largest practice area is legal advice for business and commercial matters (including commercial property) accounting for 51% of the total market.
In the consumer legal services market, the largest sector is personal injury/accident/medical negligence work, valued at £4.6 billion. This sector is showing 'some limited signs of improvement', with the market growing by 4.5% to £4.6bn, the research found. Family law and employment law are the next largest segments, valued at between £3bn and £4bn respectively.
The residential property market enjoyed 'steady improvement', with activity backed to pre-Covid levels.
All core practice areas in both the business and consumer markets are expected to show some growth in 2026, IRN Legal predicts.
The report also notes that the growing private equity presence in the UK legal services market has been a continuing theme in the past year. An estimated 31% of mergers and acquisitions involved either new investments by private equity businesses or private-equity backed law firms. This is an increase from 25% in 2024 and 20% in 2023.
The UK Legal Services Market Report 2026 is available from IRN Legal Reports, priced at £420.
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