The legal market contracted by 4.3% last year - but many areas have bounce backed well, according to a study by information provider LexisNexis.
The gross legal product (GLP) index – a measure which tracks hundreds of metrics related to legal activity levels – revealed a year-on-year market decline of 4.3%. Between 2017 and 2019, the market grew by 2.7%.
However, LexisNexis reported stark discrepancies between the performance of different practice areas. While risk and compliance grew 22% in 2020, with double digit growth in every quarter, civil litigation saw the greatest decline, falling 35% over 2020. Property, immigration and crime also faced ‘critical decline’.
The study, supported by the Bar Council, found that the expected boom in restructuring and insolvency has yet to materialise, with demand down 18% at the end of 2020. However, it said there could be ‘significant expansion’ ahead as government support is withdrawn and so-called ‘zombie’ companies go under.
Chris O’Connor, head of segment marketing at LexisNexis and co-author of the GLP index report, said: ‘The report brings data and rigour to measuring the impact of Covid-19 on the legal industry. Whilst it’s been a difficult year for the industry, the GLP Index demonstrates that many practice areas have bounced back as of Q4 2020. Now is the time for law firms specialising in those areas to seize this opportunity, and plan for further growth in the coming year.’
Earlier this month, a study by the Law Society found that medium-sized firms have weathered the Covid crisis reasonably well despite unprecedented disruption to their business.
The financial benchmarking survey, which involves 145 medium-sized firms from across England and Wales, revealed that solicitors expect an average fall in profits of 24% for the 2021 fiscal year. However, the Society said many firms had produced ‘overly pessimistic financial projections’, with smaller overheads helping to maintain profitability.