London Increases its Share of International Legal Services Market
Jan 15, 2003
A recent report by International Financial Services of London (FSL)
indicates that London legal firms have increased their share of the world legal services business in 2002. Based on a headcount methodology, the report finds that for the first time, five of the six largest firms were from the UK, while on revenue four of the top six were UK firms. The largest law firms in London also have more lawyers overseas (top four between 50% and 65%) and a bigger international network than most US law firms.
Since 1994, the largest 100 firms in London increased the number of solicitors employed by over 75% and reached over 16,000. The fees income generated by these firms in the UK more than doubled to reach just over £8.4bn.
During the last decade a large number of foreign legal services providers have also established a commercial presence in the UK market. Currently over 200 foreign firms are established in London. The largest international law firms in London are leading advisers in deals taking place in international capital markets. They held, for example, the top two places for global M&A advisory and top three places for project finance advisory in the first three quarters of 2002. While US firms may benefit from their historic close links with US investment banks, they tend not to have the depth of legal capability internationally.
The slowdown in the global economy has affected legal services less than some other sectors. Revenue of the largest 50 firms in the UK was up a further 9% in the last year, although profits fell by 1%. This compares with growth of 21% and 18% in these indicators in the previous year.
Profits were constrained by a rise in negligence insurance provision as premiums have at least doubled since September 11th and Enron. Law firms have largely maintained staffing levels but reduced costs in other areas.
The increasing business in financial markets has helped to drive growth in exports of UK law firms to £1,339m in 2001, three times up on the 1990 total. Exports of commercial barristers that are members of the Commercial Bar Association (COMBAR) totalled £77m in the same year. Legal services provide employment for over 246,000 people in the UK and account for 1.3% of national output.
Law firms face major restrictions in many markets around the world, an issue that is being addressed at the current round of negotiations taking place under the General Agreement on Trade in Services at the World Trade Organisation scheduled to finish in January 2005. The emphasis of UK requests has been to enable non-resident law firms to establish offices, enter into partnerships with, and to employ local lawyers in other countries. This would enable them to practice the widest possible range of law for the benefit of international clients.
The report in full is available here.
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