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New economic index shows signs of UK recovery

31 March 2014

There has been a significant recovery in the number of business deals secured using top City law firms.

According to a new index launched by the Law Society and Legal Monitor, technology, media and telecoms, and energy and utilities have been the fastest areas of growth in terms of number of deals clinched since 2009.

The figures show that 2013 was a positive year for the UK's largest law firms with an overall volume of deals increasing by more than 12 per cent. The biggest areas of growth in 2013 were finance and banking, real estate and construction and manufacturing.

The Law Society/Legal Monitor City Legal Index tracks publicised business deals facilitated by the top 50 UK law firms. The index launched today with data from quarter 4 of 2013.

The number of deals being completed grew by 10.1 per cent each year on average from 2009 to 2012, boosted further with a 12.4 per cent increase in 2013. However, the average value of deals fell, from £945m per deal in 2009 to £714m per deal in 2013. The exception was the Technology, Media and Telecoms sector which bucked the trend with average values of deals increasing by 23.8 per cent per year on average since 2009.

Even though the number of deals increased steadily over the period 2009-2013, the fall in the average value of deals meant that the total value of deals has showed more moderate growth, and the total value of deals increased by 3.2 per cent per year on average over the period 2009-2013. In real terms, the total value of deals increased by 1.4 per cent per year on average over the period. This is marginally higher than the overall growth in the UK economy, which grew by 1.2 per cent per year on average over this period.

Law Society president Nicholas Fluck said:

'The legal services industry is worth over £20bn every year to the UK economy and a large percentage of this is generated through our City members. Meanwhile, our global trade in legal services is the biggest in Europe thanks to an impeccable reputation for excellence.

'The profession took a hit during the downturn, so it is good to see its resilience demonstrated so clearly by the figures in this report.

'This deals index, the first focusing on City law firms, offers lawyers and business people a new barometer of the UK economy, where they can see emerging trends and plan their business strategies around them.'

David Kekwick, director at Legal Monitor said:

'It is very encouraging that demand for complex legal services continues to grow, impacted by the recent improvements in the IPO market. However, with relatively slow economic growth predicted for western economies over the next few years firms need to identify profitable legal niches that will outperform the overall legal market.

'Generally, we expect demand for legal services to grow in key sectors such as energy, utilities and natural resources and TMT (technology, media and telecoms). To achieve double digit revenue growth in the coming years, we will certainly see City firms continue to invest in emerging markets.'

Background

The next index is expected in July and will be based on data up to the end of June 2014.

The total number of deals, average value and total value are all analysed by the main industry sectors generating the deals and by matter type of deals.

The seven broad industry sectors tracked are:

  • Finance and banking
  • Fund/investment management
  • Technology, media and telecoms
  • Energy and utilities
  • Real estate and construction
  • Manufacturing
  • Other (covers a range of sectors including healthcare, life sciences and chemicals; government and public policy; transport and logistics; and business services)

The five broad transaction matter/type categories tracked are:

  • Corporate/commercial
  • Banking and finance
  • Mergers and acquisitions
  • Property/property finance
  • Other (covers a range of matter types including anti-trust/competition, EU and trade; planning and development; and intellectual property)

Ends

Notes to editors

Further information and download the City Legal Index

About the Law Society of England and Wales

The Law Society is the independent professional body, established for solicitors in 1825, that works globally to support and represent its members, promoting the highest professional standards and the rule of law.

Press contact
Rebecca Kiernan
+44 (0)20 7320 5764
Rebecca.Kiernan@lawsociety.org.uk