April 14, 2022

Clients Expect to Increase UK Legal Spend This Year: Thomson Reuters State of the UK Legal Market 2022 Report

  • Highest outlook for outside legal spend increase in five years
  • Average UK corporate client spends £10 million (US$13 million) annually
  • Understanding of clients’ business and use of technology are top drivers of firm favourability

LONDON, April 14, 2022 – Corporate clients expect to increase their UK legal spend this year, according to the State of the UK Legal Market 2022 report, published today by Thomson Reuters. The survey of corporate buyers of UK legal services found the percentage of clients planning to increase their outside legal spend is at a five-year high. The report noted that firms must grasp their clients’ strategic business challenges to earn and retain their business.

Currently, corporate buyers of UK legal services spend an average of £10 million (US$13 million) on outside legal services annually – compared to the global average spend of £14.6 million (US$19.9 million). Part of this is attributed to the fact that buyers of UK legal services, on average, keep a higher percentage (44%) of their legal work in-house than the global average (38%).

Helping fuel this surge in anticipated legal spend is a shift in corporate legal priorities as businesses emerge from the depths of the pandemic. While COVID-related issues remain the top legal priority, other top legal needs include dealing with complex and changing regulations, such as those related to the aftermath of Brexit, along with helping manage company growth. The global economic recovery is also helping drive legal spend in the UK, with 70% of global multinationals saying they have legal needs in the UK, up from 68% a year earlier.

While the UK operations of global law firms are only a slice of the overall UK legal market, they provide some perspective on how the market has resumed growth mode. Demand for legal services in the UK grew 8.7% in 2021 compared with 2020, and was up 6% compared with 2019 – the last pre-pandemic year.

Understanding Clients’ Business and Use of Technology Key to Client Favourability

Clients report that a deep understanding of their business is the most important skill for their law firms to have. A close second factor driving favourability is the desire for firms to have competency in legal technologies, including artificial intelligence. Less than one-quarter of corporations surveyed that use UK firms are currently using technologies such as legal analytics, AI-driven smart contracts, or legal project management, making it important for their law firms to possess such expertise.

“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.

Thomson Reuters

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Jeff McCoy