UK-based business law firms and chambers generated revenues of around £16bn in 2018, an increase of 4.1% on 2017. Some of this revenue comes from overseas work and the UK market itself is worth between £11bn and £12bn.Despite steady revenue growth in recent years, the business legal services market is an increasingly competitive one. Many clients of law firms have become competitors as well as clients as more legal work has been taken in-house. Other competitors include accountants, employment and HR consultants, online legal services, industry associations and business groups (although most of these are working with law firms to provide a service), and legal helplines. Alternative legal service providers (ALSPs) such as legal outsourcing companies, flexible lawyer businesses, and legal software and automation businesses, are taking some routine legal work away from law firms, plus starting to add new more added-value services. The larger UK business law firms are facing more competitive pressures from the Big Four accountancy firms – all of these now have separate legal businesses alongside their established business streams. Plus, US law firms expanding in London have provided even more competition.
An IRN Research survey of 160 businesses – 80 large businesses and 80 SMEs – in early 2019 found that a majority expect their demands for legal services to remain the same in the next 18 months but over a third of large businesses and almost one in five small businesses are expecting an increase in their need for external legal advice.