Nicole Keeling
Albeit the increased costs, the UK legal sector is not moving an inch, with its growth standing firm as it contributes importantly to the country’s economy. Recent studies indicate that law firms are still recording good profits, though at a reduced rate than they were the previous year.
According to the latest figures by the Law Society, the mean income of law firms increased by 6.1% in 2024. While the growth is still strong, it is less than the 6.8% figure for 2023. Rising costs, particularly in business expenditures, have been the principal driving force behind this slowing down of growth. The mean cost per legal expert is now at £67,476, from the previous year’s £63,614. Much of this growth is due to increased overheads, which show the financial burden law firms are under.
Even with these problems, however, the legal industry is strong. In 2023, it contributed an incredible £74.4 billion to the economy of the UK. It’s a market that continues to demonstrate its value, even through times of uncertainty, and is essential to maintaining the stability of the UK’s economy.
Growth in Employment and Demand for Legal Services
Likewise, the same survey also reported an increase in the legal workforce. Solicitors and other legal personnel have increased by 3.4% and are now demonstrating an increased demand for lawyers across the nation. The improved staffing is required to cater to increasing business and individuals’ demands and requirements, primarily since legal issues are becoming increasingly complex across the world today.
As there are increasingly more individuals within the workforce, costs in terms of salary have also risen. The sector, however, is managing well, as demand for many companies’ services still remains, feeding through to more chargeable time and additional revenues.
A Healthy Sector in a Changing Landscape
Richard Atkinson, President of the Law Society of England and Wales, said that despite these rising costs and a slight moderation in growth rates, the legal sector is still robust. “The legal sector is still a powerhouse of the UK economy, underpinning jobs and driving prosperity,” he added.
But law firms are not problem-free. The survey did see a small increase in “lock-up days” – the days it takes to get money from clients. That has risen from 143 to 146 days, so law firms are taking longer to receive payment, although not long enough to really have an impact on their performance.
Expanding Beyond Borders
Along with the home-grown growth, UK law firms are also making their presence felt globally. In 2023, they earned £9.5 billion of revenue from overseas business. Overseas growth is important for the sector, and the UK government has made efforts to assist it by introducing new acts like the Arbitration Act, with the aim of improving the country’s position in international dispute resolution.
In fact, it is only recently that Richard Atkinson joined UK Foreign Secretary David Lammy on a trade mission to Japan. It was as part of an initiative to forge stronger global links, especially with the $5 billion Japanese legal market. Global expansion to destinations such as Japan has bright prospects for UK law firms to become more dominant in the world.
Looking Ahead
All of that, however, is not necessarily smooth sailing. The City of London Law Society (CLLS) raised alarm at a slowing rate of growth in some areas. They’ve also planned potential regulatory changes from the Solicitors Regulation Authority (SRA), which they fear would strangle the industry’s ability to keep generating a significant impact on the economy.
Despite these challenges, there is no doubt that the legal profession continues to be a major contributor to the UK’s economy. With increasing numbers entering the profession, a growing international presence, and the capacity to evolve to meet new challenges, the future of the UK’s legal profession is rosy.
In short, while law firms are experiencing rising costs and a modest slowdown in growth, the legal profession is a robust and growing force in the UK economy with a rosy future for the years to come.