The global legal services market experienced a slow-down in growth during 2016, resulting in a compound annual growth rate of 2.2% between 2012 and 2016, to reach a value of $584.4bn (£450bn), according to data from a business research company.
MarketLine’s latest report states that North America continued to be the largest region in terms of value, accounting for 52.9% of the global market. Despite being home to some of the largest economies in the world, Asia-Pacific achieved only 14.3%, less than Europe’s share of 26.8%. The US accounted for 94% of the North American market.
Christopher Leyman-Nicholls, analyst for MarketLine, says: ’Although the market is forecast to grow in the near future, the rate of consolidation in the US suggests the legal services market is struggling to generate growth opportunities, explaining why the US market stood still in 2016. Given the dominance of this market, its decelerating growth harms the sector’s global value, encouraging large-scale mergers around the world.’
An absence of growth in 2016 has encouraged the trend of mergers and acquisitions, the report states, citing the example of Sutherland and Eversheds, which has created a business of 2,300 legal professionals across 29 countries. Although growth is expected to return to the global market from 2017 onwards, the speed of recovery will be relatively slow compared with growth achieved before 2016. Consequently, the market should expect to undergo further mergers in the coming years.
Leyman-Nicholls said: ’MarketLine expects the US to be the main driver behind future growth, despite failing to grow in 2016. The US occupies nearly half of the global market, denying any other single country an influencing role. Were the current trend for mergers and acquisitions in the US to stop or slow down without the return of sustainable growth, the global market would likely decline in value.’