Lawtech boosts UK's legal sector primacy

Investment in legal technology in the UK has 'rocketed' in the past three years with the nation now home to almost half the LawTech start-ups in the European Union, according to a new report.

David Sapsted

5 December 2019

The report, ‘Legal Excellence, Internationally Renowned’ from the lobby group TheCityUK, says the UK legal sector continues to go from strength to strength, with revenue increasing by 6% year-on-year to £35.5 billion last year.

Legal services provision: the UK is second only to the US

The sector reported an export trade surplus up to £6.5 billion in 2018 - a figure that has more than doubled over the past decade. Overall, the UK is the largest legal services market in Europe and is second only to the US globally.More than 200 foreign law firms from around 40 jurisdictions - employing in excess of 10,000 people - now operate across the country.And the report says that the UK is also now home to 44% of all LawTech start-ups in the EU with investment growing sharply in regions of the country, as well as in London.

Investment in UK legal technology

"Investment in UK legal technology has rocketed in the last three years with start-ups receiving £61 million in 2018 compared to £22.2 million in 2017 and just £2.5 million in 2016," says the report."Much of this investment is going into an extensive network of regional ‘tech labs’ across the country, created by law firms, universities and other corporate organisations including financial services businesses."

A growing trend for regional law services

The report added that many law firms were setting up LawTech centres across the UK in areas such as the Midlands, North of England, Scotland and Northern Ireland. Regional legal services growth, it added, was also being driven by a trend for smaller regional and national firms to partner with leading global law firms to provide ‘Northshoring’ outposts for their larger clients.In total, 338,000 people work in the legal services sector across the UK, two-thirds of whom are outside of London. Major centres of legal services employment include Manchester (with 13,000 in employment), Birmingham (11,000), Leeds (10,000), Bristol (8,000), Edinburgh and Glasgow (7,000 each), and Liverpool and Cardiff (6,000 each)."UK LawTech also benefits from the UK’s highly developed legal market, technology talent pipeline, a competitive tax system, a liberal regulatory regime and the recognition of the importance of innovation by the government," said TheCityUk.

Legal services sector defies Brexit uncertainty

Despite political uncertainty surrounding Brexit and lower growth levels in other sectors of the economy, the report said legal services contributed £26.8 billion to the UK economy in 2017 before surging to £35.5 billion last year.This meant that the legal services market in Britain accounted for a third of Western European legal services fee revenue and between 5-6% of global legal services fee revenue, which totalled between $680-$886 billion in 2018 and is expected to exceed $1 trillion in 2021.