The legal services industry is becoming a larger part of the major accounting firms' offerings. Deloitte recently launched its Legal Business Services, which provides in-house legal departments with legal tech support to track client contracts, invoices, electronic discovery, and other core functions. Right now, the big four do not offer legal services because the American Bar Association prohibits attorneys and firms from sharing "legal fees" with non-lawyers. A partnership is also prohibited if one of the activities consists of the practice of law.
Recent changes to these regulations have been made by Arizona, California, and Utah. According to research conducted by the California state bar task force in 2019, non-lawyers can now invest in law firms and tech companies for the limited legal services industry. California has taken measures to move the US legal market in the direction of counties that allow non-lawyers to own legal service providers and to provide certain services.
A two-year sandbox for regulatory experimentation offers lawyers and nonlawyers the opportunity to test new business models. Arizona's Supreme Court approved changes to "regulation of the practice of law," which will allow non-lawyers to own law firms from January 2021. After undergoing a licensing process, non-lawyers, called "legal paraprofessionals", will also be able to provide "limited legal services."
Legal Services Market Definition
The legal services market consists of sales of law-related services and related goods by entities (organizations, sole traders, and partnerships) that advise clients (individuals, businesses, or other entities) about their legal rights and responsibilities, and represent clients in civil or criminal cases, business transactions and other matters, in which legal advice and other assistance are sought. Providers of legal services employ human capital as a major input. In the delivery of services to the client, an individual or a team uses the knowledge and expertise of the firm's employees, usually on an assignment basis.
Legal Services Market Size
A compound annual growth rate (CAGR) of 3.4% drove the market to a value of more than $713.7 billion in 2020. In 2025, $808.26 billion will increase from $713.7 billion in 2020, an increase of 4.9%. In 2030, the legal services market is expected to reach $1,145.9 billion at a CAGR of 4.8%.
Economic growth in emerging markets, mergers and acquisitions (M&A), an increase in consumer spending, and an increase in disposable income contributed to the growth in the historic period. Growth was negatively affected in the historic period by regulatory challenges, skills shortages, and the increasingly critical role played by in-house legal departments.
Future growth will be driven by an increase in transactional practice areas, a growing legal technology industry, and globalization. The market could be hindered by rising costs and decreasing margins, lack of transparency and inconsistent service quality, data security concerns, reduction in free trade, and the impact of COVID-19.
See Also: Major Legal Markets
Legal Services Market Trends
Major trends influencing the legal services market include:
Emergence of Alternative Legal Service Providers (ALSPs)
An emerging trend in the market is the rise of alternative legal services providers (ALSPs). The ALSP industry provides high-demand legal services, such as document review, contract management, litigation support, electronic discovery, contract lawyer and staffing, legal research, and intellectual property management. By combining legal, business, and technology skills, they provide services to both businesses and law firms. A growing number of businesses are using ALSPs for many routine legal services, and law firms are outsourcing projects, business analysis, billings, expenses, and other non-revenue generating tasks to ALSPs. Deloitte, EY, KPMG, and PwC are among the largest and fastest-growing ALSPs. Allen & Overy, Axiom, Clifford Chance, Consilio, Elevate, Integreon, and Update Legal are some of the other ALSPs in the market. In the USA, ASLs are widely adopted. ALSPs are used by around 65% of large U.S. law firms for e-discovery. ALSPs are also being used by businesses in the UK. Approximately 25% of corporate law departments in the USA responded to surveys conducted by EY Law practices and Thomson Reuters Legal Managed Services in 2019 by saying they will spend more on ALSPs in the next five years, up from only 16% two years ago.
Since the rise of information communications and technology, legal service providers are moving rapidly towards the digitalization process. Organizations face increasing pressure to digitize their processes and management due to investor expectations, rising competition, new regulations, and increasing opportunities. To streamline the process, reduce operational costs, and enhance efficiency, law firms are investing in various technologies, including machine learning, mobility, cloud computing, performance tracking, and artificial intelligence. According to LexisNexis DiscoveryIQ, companies are using machine learning and cloud computing to digitalize data, records, client history, briefings, reports, testimony, and other information that enables them to quickly find relevant information. A LexisNexis survey found that 41% of the legal community believes that data stored in the cloud is protected, and 72.4% of legal firms are supporting cloud adoption.
Opportunities And Recommendations In The Legal Services Market
Opportunities – In the legal services market segmented by type of service, the B2B legal services segment will gain $104.3 billion of global annual sales by 2025. By 2025, the largest firms segment will generate $154.7 billion in sales, which is the segment with the greatest opportunity. Segmenting by end-user, the top opportunity will arise in the financial services sector, which will gain $61.8billion of global sales by 2025. In the USA, the market for legal services will grow by the most at $72.9 billion.
Recommendations – For the legal services companies to profit from these opportunities, Business Research Company recommends offering cybercrime consulting services, offering online legal services, adopting digital technologies, expanding in emerging markets, offering alternative billing/pricing solutions, leveraging social media, and acquiring other companies.
Legal Services Competitive Landscape
Major Competitors In The Legal Services Market Are:
- Kirkland & Ellis LLP
- Latham & Watkins LLP
- DLA Piper
- Baker & McKenzie
- Skadden, Arps, Slate, Meagher &Flom LLP and Affiliates
Other Competitors In The Legal Services Market Include:
- Clifford Chance LLP
- Sidley Austin LLP
- Morgan, Lewis & Bockius LLP
- Allen & Overy LLP
- Linklaters LLP
- Beijing Yingke Law Firm
- Dacheng Law Offices
- Rajah & Tann
- Allen & Gledhill LLP and
- Tilleke & Gibbins
- ZICO Law
- Nishimura & Asahi
- Amarchand & Mangaldas & Suresh A. Shroff & Co
- Kim & Chang
- Clifford Chance
- Allen & Overy
- Linklaters Garrigues
- Hengeler Mueller And Fidal
- Advokatfirman Vinge KB
- Advokatfirmaet Thommessen AS
- Castrén & Snellman
- Wikborg Rein
- Egorov Puginsky Afanasiev & Partners
- VJT & Partners Law Firm
- Pepeliaev Group
- Hoskin & Harcourt
- Latham & Watkins
- Cravath Swaince & Moore
- Baker McKenzie
- Skadden, Arps, Slate, Meagher & Flom
- Norton Rose Fulbright LLP
- Hogan Lovells
- Jones Day
- Demarest Advogados
- Carpena Advogados Associados
- Lobo de Rizzo Advogados
- Pinheiro Guimarães
- Clyde & Co LLP
- Edward Nathan Sonnenbergs
- Yigal Arnon & Co
- Herzog Fox & Neeman
- Al Tamimi & Company
- GB Attorneys
- Webber Wentzel
- Erward Nathan Sonnenbergs
- Norton Rose Fulbright South Africa
- Cliffe Dekker Hofmeyr
- B M Musau & Company
- Bitala & Co Advocates
See the following article for more information:
- The 2021 State of the Legal Market Report
- How to Easily Determine the Best Attorneys and Law Firms: The Five Prestige Levels of Attorneys and Law Firms
- Partner Business Plans: Key Elements
- You Need to be Self-Managing and Responsible
- The Importance of Finding and Creating Demand
- The Importance of Asking the Right Questions, Self Improvement, and Perception
- Seven Sample Attorney Business Plans: Why Attorneys Must-Have Business Plans
- The Top Five Objections Partners Give to Preparing a Business Plan — Overruled!
- Law Firm Partner Business Plans: Key Elements