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Brexit uncertainty mirrored in legal deals

14 December 2017

Business deals handled by the top 50 UK law firms can provide a useful indicator of economic trends in the short-to-medium term, the Law Society of England and Wales said as it released its City Legal Index tracker.

The Law Society/Legal Monitor City Legal Index - produced regularly since 2009 - tracks publicised deals facilitated by the top 50 UK law firms.

"Legal services are used by all businesses and sectors when arranging deals, so the City Legal Index provides a useful overview of the economy, confidence levels and how different sectors are faring,” Law Society president Joe Egan said.

“But it can also be a useful tool to project economic performance six to nine months from the time of the index.

“Up to 25 June 2016 the economy reliably tracks the undulations of the index but, like other economic indicators, after the EU Referendum it becomes much harder to read as uncertainty over Brexit has led to more erratic activity.”

The number and average value of deals declined in the first half of 2017, following a spike in the second half of 2016. This occurred in most sectors and transaction types represented in the index, although it has been particularly marked for mergers and acquisitions.

Over the life of the index the proportion of work of large UK City law firms handled by the firms’ European (non-UK) and Asia-Pacific offices has increased significantly. Changes seen in the index since 2009 include:

  • Deals handled by offices located in the UK: 68% in 2009 to 46% in 2016
  • Deals handled by non-UK offices: 32% in 2009 to 54% in 2016
  • Deals handled by offices in (non-UK) European countries: 17% in 2009 to 25% in 2016
  • Deals handled by offices in the Asia-Pacific region: 7% in 2009 to 19% in 2016.

Joe Egan concluded: “UK law firms are world leaders and a UK PLC success story. Legal services generate £25.7 billion per annum for the UK economy, the sector grew by 3% per year over the last 10 years. UK firms currently account for 7% of the global legal services fee revenue.

“The Law Society is committed to maintaining the leading position of English and Welsh law firms across the globe, paving the way for firms of all sizes.

David Kekwick, director at Legal Monitor, said:

“The reduced volumes for deals seen in Q2 2017 would seem to reflect the uncertainty created through the Brexit decision.

“On a more positive note, the decline in the proportion of deals conducted by UK offices is offset by significant growth in the Asia-Pacific region and increasing growth in the Eurozone.”

Notes to editors

For a copy of the City Legal Index email:

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

The 7 broad industry sectors tracked are:

  • Finance & Banking
  • Fund/Investment Management
  • Technology, Media & Telecoms
  • Energy & Utilities
  • Real Estate & Construction
  • Manufacturing
  • Other (covers a range of sectors including Healthcare, Life Sciences & Chemicals; Government & Public Policy; Transport & Logistics; and Business Services)

The 5 broad transaction/matter type categories tracked are:

  • Corporate/Commercial
  • Banking & Finance
  • Mergers & Acquisitions
  • Property/Property Finance
  • Other (covers a range of matter types including Antitrust/Competition, EU & Trade; Planning & Development; and Intellectual Property)

See the City legal Index library

See the legal services sector forecasts

The data in the City Legal Index is taken from Legal Monitor's Market Tracker product, a comprehensive database of all publicly disclosed deals and representation activity. The product includes data on more than 80 leading global law firms by fee income, covering 17 key practice areas and 25 industries.

View the Legal Monitor website

About the Law Society

The Law Society is the independent professional body that works globally to support and represent solicitors, promoting the highest professional standards, the public interest and the rule of law.

Press office contact: Harriet Beaumont | | +44 (0)20 7320 5830