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Feature

www.legalservicesdirectory.org.uk

While the global legal services market is outperforming the world economy, UK firms face the challenge of opening doors in foreign jurisdictions, reports Eduardo Reyes

Distant horizons

INTERNATIONAL LEGAL market

Domestic headlines include their share of doom and gloom for the UK economy and sections of its legal sector. But the global legal market is outperforming the world economy. It is forecast that the value of the global legal services market in 2013 will be £450bn – an increase of 23.3% since 2008. Exports of law firms in the UK tripled over the past 10 years, and UK firms currently generate 14% of the global 100’s gross revenue. At home we may fret that too many household-name businesses are now foreign-owned, but the legal market does not currently give the same cause for concern. But in a highly regulated market, which includes pockets of strongly protectionist rules, international growth is not a rising tide that simply floats all ships. To that, one can add an environment where governments, authorities and international institutions seem intent on changing lawyers’ professional status. There are global opportunities in abundance, but also some pretty serious challenges to be met for lawyers seeking to take advantage of them.

As the Law Society’s head of international, Julia Bateman, puts it: ‘Notwithstanding the slow progress of market access and liberalisation of services negotiations in some markets, there are huge business development opportunities for UK lawyers to work with lawyers and clients overseas.’ For larger commercial firms, overseas opportunities have become an imperative. Although they remain hugely profitable in mature markets, firms are also subject to what US lawyer and author Michael Trotter describes as ‘extraordinary competition’. In a mature market, he argues, there are simply too many firms chasing not enough work. In that environment, Trotter notes ‘resistance to increasing costs’, with clients opting to do more work in-house. The visible signs of that stress are the collapse of major law firms such as Dewey & LeBoeuf, he suggests. Not all would agree with his prognosis that the model adopted by leading firms is fatally flawed. But the stresses Trotter alludes to are real. As Allen & Overy’s senior partner David Morley notes in the global elite firm’s 2012 annual review: ‘The centre of gravity for the legal industry is becoming more diffuse. We expect to see super-hubs emerging to rival London and New York, notably Singapore, Hong Kong and Dubai.’

He adds: ‘As partners we’re strongly agreed that we need to continue building a presence in key high-growth markets – not least Africa, other parts of Asia and Latin America.’ UK firms, like US firms, have a head start in looking to the global market to grow, as Bateman notes: ‘Currently fewer than 10 of the global top 100 law firms are non-US or UK firms.’ But, she adds: ‘The emerging markets are driving international trade and producing more lawyers every year, the LPO market is growing rapidly and legal services are becoming more commoditised.’

Hence the importance of key foreign jurisdictions fully opening up to UK lawyers. The current free-trade agreements on which the Law Society, Continued on page 8

There are huge business development opportunities for UK lawyers to work with lawyers overseas

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Julia Bateman