Legal Services

Overview:

The UK legal services market offers legal services for individuals, governments, and companies that range from criminal advice and representation, family law, tax services, international law, commercial law, and much more. Almost everyone will require legal services at some point in their lives, whether it's to purchase a home, establish a will, or start and manage a business. Therefore the firms in legal services market must adjust to the individual needs of their consumers in order to operate successfully.
 

Classification of the Major Players in the Legal Services Market: 

Purchaser: central and local government, large corporations, small companies, repeat customers, partnerships, and individuals includes estates and trusts
Barrister: A barrister is a lawyer who has been admitted to "plead at the bar," meaning they are allowed to represent clients in higher courts. Barristers have almost no contact with the public and are commissioned by solicitors to perform more complex services.
        Process of becoming a Barrister:
1.     Get an undergraduate degree in law (the LLB, or Bachelor of Laws),or an undergraduate degree in something else followed by a year studying for a post-undergraduate Diploma in Law
2.     Get admitted and become a member to one of the four Inns of the Court
3.     Complete the one-year Bar Vocational Course
4.     Testing
5.     Pupillage training - training working under barristers to get hands on experience with the UK court system
6.     Obtain Tenancy - receive title of Barrister by the Bar [association]
Solicitors: provide advice directly to the public on all matter of law. Solicitors represent the general public and represent their clients in thelowercourts.
**It is a much easier process to become a solicitor. After completing an undergraduate law degree, individuals must only apprentice with a licensed solicitor for two years to become licensed.
Legal Executives: qualified lawyers who specialize in a particular area of law. Legal executives tend to do similar work to solicitors, although normally less complex.
Licensed Conveyancers: specialized property lawyers who are able to complete the processes involved in transferring buildings and/or land between owners.
Law Firms:the organizations that employ solicitors and barristers

As noted earlier representation in the higher courts of the UK is reserved to barristers only. Reasons for this include:        

• Having an independent barrister reviewing a cause of action gives the client a fresh and independent opinion from an expert in the field 
• A barrister acts as a check on the solicitor conducting the trial. If it is apparent the claim or defence has not been properly conducted by the solicitor prior to trial, the barrister can advise the client of a separate possible claim against the solicitor.
• Having trials conducted by experienced specialist provides for smoother, more professionally run trials. 
  

Key Statistics of the Legal Services Market:

• Revenue generating £14.3 billion in 2005 (an increase of 3.8% over 2004)
• The UK market accounts for 21.6% of the European legal services market, making it the most lucrative individual country market in the region
• Over 267,000 people were employed in legal services in 2003 which includes about 81,000 solicitors and 14,000 barristers
• Based on gross fees, four of the largest six law firms in the world are international law firms based in London

  Firm	Headquarters	Gross Revenues (£m)	# of Lawyers
  1. Clifford Chance	International - London	950	2,684
  2. Skadden Arps Slate Meagher & Flom	New York	814	1,650
  3. Freshfields Bruckhaus Deringer	International - London	785	2,225
  4. Linklaters	International - London	720	2,000
  5. Baker & McKenzie	International - Chicago	694	3,053
  6. Allen & Overy	London	652	1,879
  7. Jones Day	Washington D.C	633	1,970
  8. Latham & Watkins	Los Angelas	632	1,513
  9. Sidley Austin Brown & Wood	New York	567	1,421
  10. Mayer Brown Rowe & Mawe	Chicago	498	1,249

         *figures based on 2003 data
   

The Legal Services Market in London:

London has a strong reputation as a leading centre for providing international legal services. Most of these international services are provided by foreign law firms which are based in the City of London. There are over 200 international law firms in London, including five of The Global 100's seven largest firms.  

Services Provided by International Law Firms in London:

• Corporation Finance
• Commercial Law
• Banking and Project Financing
• Tax
• Dispute Resolution
• Insurance and Reinsurance
• Property Sales
• Employment and Pension
• World Bank Projects
• Private Clients  

** Red denotes the largest areas of practice for law firms in the UK
Green represents growing areas of importance for the UK market

Special Note on International Dispute Resolution-

English law and the English language are commonly used in international commerce and international dispute resolution. As a result, London as long been recognized as a primary centre for international and commercial litigation and arbitration. Up to 4,000 international disputes a year take place in London. About 90 percent of the disputes handled by law firms in London involved at least one party that was based elsewhere in the world with values in dispute totalling over $40 billion in 2002. The recent popularity of international dispute resolution in London has led to the establishment of the International Dispute Resolution Centre (IDRC). The IDRC is the largest specialist centre developed for London's legal services market and has hosted over 1,000 arbitrations, mediations, and other disputes since it opened in 2000.

U.S. Law Firms Operating in London:

Currently, there are more than 100 American law firms with offices in London. This is partly due to the higher fees that they charge for their services since most US firms in London tend to specialize in highly profitable sectors such as corporate and banking work. In approximately 95 percent of US firms in London, lawyers bill more in London than their firm's global average. 

While London remains the headquarters of many international law firms and the principal hub for their commercial and financial services, most larger firms have developed a global network.  US law firms on the whole have not used their large domestic market as a basis for international expansion equivalent to that of the US investment banks.  The global expansion of legal services has been a reflection of law firms' need to support the increasingly international activities of their clients and also to capitalize on the expanding international marketplace for their services.

As you can see in the above chart, the United States has the highest percentage of law firms operating in the UK than any other country.  There are over 200 foreign law firms in London, many of which have developed capability in both English law and other forms of law.  The Establishment of Lawyers Directive (1998) requires EU lawyers practicing in the UK to register with an appropriate professional body such as the Law Society or Bar Council and to comply with its regulations.  EU lawyers may qualify as UK solicitors by having their qualifications recognized after three years of practice in the UK.

Reasons why law firms choose to operate in London:

• English law is used in international commerce and dispute resolution.  Disputes can be resolved by litigation, arbitration, or an alternative method.  Members of COMBAR (Commercial Bar Association) help solve these disputes.  The barristers that compose COMBAR provide advice and opinions on English law.
• Industries that law firms represent, such as finance, insurance, and accounting are becoming more global.  It makes sense for law firms to follow their clients to other cities, such as London, so they can continue to represent them.  Additionally, once the firm has been established in London, they can broaden their market.
• London provides unrestricted access for foreign firms

Methods by which firms expand in London:

• Mergers--have been the preferred option in recent years, as some law firms see this as the optimum way of achieving cricital mass in major overseas markets and accessing high quality local skills
• Acquisitions
• Establishing offices--this has been the preferred route in some centers, staffed by a combination of locally recruited lawyers and English lawyers.  Typically, these include Paris, Brussels, New York, Tokyo, Hong Kong, and Singapore, as well as offices in emerging markets
• Instruction of foreign offices--favored by smaller London firms. This approach has afforded greater flexibility as different types of problem may require the services of different firms, even within the same jurisdiction.

Future of Legal Services in London:

As long as institutions such as accounting, insurance, and finance continue to operate internationally and use London as a financial center, legal services will have a place in London.  Law firms who have clients operating in London are likely to start operating there to keep that firm's business, as well as be able to open up to new markets.  The regulation of markets, such as the Sarbanes-Oxley Act, requires firms to need more lawyers to ensure that they are practicing proper accounting methods.  This allows for growth in the legal services market. With this said, as legal services become more and more prominent in London, London will in turn increase its standing as the global financial capital of the world. As law firms continuously increase their presense in London, a domino effect will take place, creating the need for more accounting firms, insurance companies, and financial institutions to come to work in the City.