Legal Excellence, Internationally Renowned Uk Legal Services 2017
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www.thecityuk.com LEGAL EXCELLENCE, INTERNATIONALLY RENOWNED UK LEGAL SERVICES 2017 1 November 2017 @thecityuk www.thecityuk.com UK legal services 2017 About TheCityUK TheCityUK is the industry-led body representing UK-based financial and related professional services. In the UK, across Europe and globally, we promote policies that drive competitiveness, support job creation and ensure long-term economic growth. The industry contributes nearly 11% of the UK’s total economic output and employs over 2.2 million people, with two-thirds of these jobs outside London. It is the largest tax payer, the biggest exporting industry and generates a trade surplus greater than all other net exporting industries combined. 2 www.thecityuk.com contents Foreword . 5 Key findings . 6 Legal services in the UK . 6 The UK’s position internationally . 7 English law and UK legal services post-Brexit . 8 TheCityUK and legal services . 9 Legal services in the UK . 11 UK legal activities revenue . 11 UK law firm fee revenue and key market trends . 12 International practice of barristers and advocates . 18 International legal services firms in London. 19 Legal services across the UK . 22 Dispute resolution in London and the UK . 27 Courts-based dispute resolution . 27 International work in the Business and Property Courts . 27 Alternative dispute resolution . 31 Contribution to the UK economy. 35 The UK’s position internationally. 39 Sources of information . 46 3 UK legal services 2017 LEGAL EXCELLENCE, INTERNATIONALLY RENOWNED UK legal services 2017 Legal services contributed Legal services employ 311,000 people, 2/3 25,872 outside London disputes were resolved by alternative dispute resolution in the UK £24.1bn to UK economy in 2015 THE revenue of the UK’s largest 100 law FIRMS English law is used in There are over grew by 7%* to 200 40% foreign law FIRMS £22bn of all global with offices in The UK corporate arbitrations Legal services’ *(2016/17) trade surplus nearly doubled over the The UK is second past 10 years to 70% £4bn of cases in the Admiralty and Commercial Court globalLY were international for legal services in nature fee revenue 4 www.thecityuk.com Foreword The UK’s world-class legal services sector is a vital national asset, and this report underscores the important contribution that it makes. It generates 1.5% of UK gross value added (GVA) and employs over 311,000 people across the country, two-thirds of whom are based outside of London. For the first time, this report sets out the scale of the contribution made by the sector in the nations, regions and cities of the UK. The UK-based legal services sector forms an integral and crucial part of the wider financial and related professional services ecosystem which makes the UK a truly globally-leading international financial centre. It is the most international legal sector in the world, with a trade surplus worth nearly £4bn in 2016. This is driven by the primacy of English law which is the leading choice of governing law for, and resolving disputes in, cross-border trade and investment. Some 27% of the world’s 320 legal jurisdictions use English common law. When disputes arise, international parties know that they can rely on world-leading dispute resolution services, whether through litigation, arbitration or mediation. Indeed, some 70% of cases in the Admiralty and Commercial Courts, part of the newly launched Business and Property Courts, were international in nature in the year ending July 2017. However, this primacy, and the ability of UK-based practitioners to provide best-in-class legal and advisory guidance for global clients, could be impacted by Brexit. The mutual recognition and enforcement of court judgments is critical to the international use of English law. The UK government has given a strong signal of its intention to maintain close judicial cooperation with the EU on civil matters. It should put these commitments into action as soon as possible by mapping out the process of accession to the Hague and Lugano Conventions, and consulting on draft legislative texts. There should also be a commitment to progress the incorporation into domestic law of the Rome I and II instruments on choice of law and applicable law in contractual and non-contractual matters. A key part of TheCityUK’s Brexit work has focused on delivering continued mutual access to skills and talent for both the UK and EU-27. This includes practice and establishment rights of UK-qualified legal practitioners. It is essential that the government places a high priority on this, together with a rapid agreement of transitional arrangements and a bespoke future relationship that delivers mutual market access based on mutual regulatory recognition and cooperation. As we look beyond Brexit, as a country we must determine the shape of our national economy. We need a vigorous debate on how we play to our strengths as a country. TheCityUK has made a start to this process with our publication of a ‘Vision for a transformed, world-leading industry’ in July 2017. Underpinning this vision is the UK’s internationally trusted legal system and rule of law, which must be maintained and enhanced. More broadly, our industry and the UK’s long-term economic prospects are closely linked to the ability of the legal services sector to offer a full range of enabling legal services to clients from across the world. Aligned to this, as the UK develops its own independent trade and investment policy, there is a unique opportunity to pursue new market access arrangements and to ensure that services – including legal services – are part of the next generation trade and investment agreements concluded with partners from around the world. TheCityUK’s Legal Services Group, chaired by James Palmer of Herbert Smith Freehills, provides a senior strategic reference point for TheCityUK-wide legal related activities. It is critical that the world-leading expertise of UK-based legal practitioners can be harnessed – working in partnership with government and regulators – to address the challenges and opportunities that our industry and Britain as a whole faces as it moves to leave the EU and shape its destiny in the years ahead. Miles Celic Chief Executive Officer, TheCityUK 5 UK legal services 2017 Key Findings Legal services in the UK • The UK has a strong reputation as the leading global centre for the provision of international legal services and dispute resolution. It is also an important centre for legal education and training. In addition to firms and other practitioners based in London, there are high-quality providers offering choice and value in cities such as Belfast, Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle. • Revenue generated by legal activities in the UK was £31.5bn in 2016. The top 100 UK law firms generated over £22bn in 2016/17. The majority of large firms saw an increase in revenue during this period, with growth less consistent among mid- tier firms. However, the depth and breadth of the sector was evidenced by the fact that many niche and boutique firms – for example, those focused on insurance and shipping – recorded growth. • The business of law remains a significant contributor to the overall UK economy. The sector employs around 311,000 people, two thirds of whom are located outside London. Major centres of legal services employment include Manchester (with 12,000 in employment), Birmingham and Leeds (8,000 each), and Bristol (7,000). These jobs are highly skilled with clusters of expertise which attract investment and drive growth. The sector’s trade surplus has nearly doubled over the past decade to £4bn in 2016, helping to partially offset the UK’s trade in goods deficit. Legal services’ contribution to the UK economy was £24.1bn in 2015, equivalent to 1.5% of GVA. • The legal services sector is becoming more complex as law firms, alternative legal services providers (ALSP) and technology firms both compete and collaborate. This ongoing evolution is a response to client-led demand and the increasing disaggregation of service delivery across the spectrum of legal services providers. • In-house legal functions are looking across legal, advisory, professional and technology services providers to source integrated cross-border advisory expertise. This, coupled with continued fee pressure and the prevailing view of legal services as a buyers’ market, has intensified the need for law firms to differentiate their offering. • Technology is increasingly viewed as a strategic enabler to proactively offer client- centric solutions. Firms are analysing key practice areas, for example financial regulation and derivatives transactions, to identify potential technologies that can deliver scalable and cost-effective solutions and improved client outcomes. Collaboration and joint ventures (including through equity investment) between legal and technology firms continue to grow and are an increasingly important driver of technology utilisation across the sector. 6 www.thecityuk.com The UK’s position internationally • The UK accounts for around 7% of global legal services fee revenue, which totalled between $580bn and $640bn in 2016. It is by far the largest market for legal services in Europe and second globally only to the US, which accounted for around 45% of total legal services fee revenue. The UK is very open in allowing virtually unrestricted access for foreign law firms. Over 200 foreign law firms from around 40 jurisdictions – employing in excess of 10,000 people – operate in London and other cities across the UK. • The popularity of English law is an important factor contributing to the UK’s strong global position and attractiveness to foreign law firms. Some 27% of the world’s 320 legal jurisdictions use English common law. The choice of English law for global commercial contracts is in part driven by the UK’s reputation as the leading centre for international dispute resolution – whether through litigation, arbitration or mediation.