UK law firm clients are placing an increased emphasis on the ability of outside counsel to grasp strategic business challenges and demonstrate skill in packaging up commercial solutions, Thomson Reuters’ State of the UK Legal Market 2022 report has found. The shift away from relying purely on historic relationships – a trend that we saw emerge before the pandemic – is accelerating, the report says, with tech-savviness and efficiency high up on the priority list when it comes to clients’ shifting demands.
Other findings include:
Increasing optimism on outside legal spending — The UK legal market is experiencing its highest level of spend optimism in the last five years, and the portion of UK legal buyers that say they’re anticipating their overall legal spend will grow in the coming months has itself seen a huge increase in last 12 months, especially in practice areas like Regulatory. Law firms need to target their services to the areas in which clients most need assistance in order to better capture a larger share of this spending.
Focusing on strategic priorities — In-house law departments are primarily concerned with helping their businesses recover from the COVID-19 pandemic, staying on top of the rapidly changing regulatory landscape, and leveraging digitalisation to work more efficiently within the organisation. To this end, UK law firms need to present themselves as able and proactive partners and collaborators that can help law departments further this focus.
Engaging drivers of favourability — UK legal buyers continue to favour those outside law firms that demonstrate commerciality and a deep understanding of clients’ businesses, research showed. Not surprisingly, these are also the skills clients want to see in the next generation of lawyers — both in-house and external counsel. This represents a big departure from clients’ attitudes during the crisis phase of the pandemic when they turned towards the tried-and-tested historic relationships that they had formed over many years, mostly with key lawyers. Now, those outside law firms that can offer strength and depth to service clients’ holistic needs will be the ones most favoured.
The rise of the new law sector — The increasing use of new law service firms or alternative legal service providers (ALSPs) has made great headway over the past year in the UK legal market. However, the lion’s share of that growth was the increased use of the Big Four accounting and consulting firms, a trend that has been growing significantly since 2015. The Big Four continues to dominate the alternative legal brand landscape with large gains in client favourability in the past 12 months. Clearly, traditional UK law firms need to be wary of this development and demonstrate their own ability to handle clients’ work efficiently and effectively.
Meeting clients’ service expectations — Since even before the pandemic, the service needs of UK legal buyers were becoming more complex and intertwined. Outside law firms are continually pushed by their clients for better efficiency, with any increases in this area correlating closely to increased client satisfaction. Law firms should take note — the data shows that client satisfaction rests on the ability of outside law firms to provide consistency and innovation, which in turn, can provide law firms with opportunities to differentiate themselves in the competitive UK market.
This year’s State of the UK Legal Market report combines research of more than 265 senior corporate counsel and the financial results of 29 global law firms’ operations in the UK, varying between US and UK based firms.
“After having bounced back strongly in 2021, the UK legal market is poised for continued growth this year,” said Lucinda Case, head of Legal Professionals Europe, Thomson Reuters. “Businesses anticipate an increased need for legal services such as regulatory work, mergers and acquisitions, and labour and employment. In particular, firms that emphasize a holistic approach that focuses on thoroughly understanding a client’s business and applying business acumen supported by efficiency-enhancing technologies are likely to be sought after.”
Download the State of the UK Legal Market 2022 report here