Growth: Fortune 1000 legal budgets to hit record high - with favourable fall-out for the UK


The US legal market is set to grow 13% to a staggering $86 billion (£44 billion) this year, a report forecast this week, as commentators also predicted 'robust' growth in the UK.



Interviews conducted by BTI Consulting Group with more than 250 corporate counsel at Fortune 1000 companies revealed that clients intended to boost spending in almost every area of practice. This represents a powerful incentive for UK firms to develop a US strategy, say leading legal consultants.



Spending on outside counsel is predicted to rise 20% to $56.4 billion (£29 billion), with the large multi-nationals bolstering their 2007 budgets by 33%. Growth is being driven by a surge in mergers and acquisitions (M&A) activity - particularly in the energy, hi-tech and pharmaceutical sectors - as well as a tougher compliance environment, the understaffing of legal departments, and concerns over high-profile fraud investigations.



Nick Jarrett-Kerr, founder member of UK consultancy Kerma Partners, said: 'The growth in M&A work is possibly even higher in Europe, and recent reports suggest that London is taking over from New York as the strongest financial centre in the world. I think we will see a rise in the legal market here, but not to the same extent as in the US [as there is less litigation].'



He added: 'The Fortune 1000 is where you see firms such as DLA Piper making their moves. The top-50 law firms in the UK have either already developed or are thinking about a strategy to become more global in their reach. Regional players with, say, 20 partners might want to think about setting up a best-friends relationship [for] when a US client invests over here.'



Tony Williams, consultant at Jomati and former managing partner at Clifford Chance, said: 'I'd expect a robust [growth] figure for the UK - probably not 13%, but possibly 10%.



'The question for firms is whether we are now approaching the top of this cycle for the legal industry or whether it has a couple of years more to go. Given that law tends

to lag behind the economy, it is reasonable to expect that there could be two years left; however, markets have a tendency to go up by the stairs and down in the lift.'



Rachel Rothwell