LexisNexis study reveals legal industry has turned tide of 2020 and is seeing green shoots of growth
The latest iteration of the LexisNexis Gross Legal Product index shows that the legal market shrunk by 4.3% over the last year. As government support eases, key metrics indicate buoyant times for Insolvency and Risk & Compliance practitioners are on the horizon, whilst the Litigation picture remains bleak.
LexisNexis, a leading global provider of legal intelligence and analytics, has today released the latest version of the Gross Legal Product (GLP) Index. This report tracks a basket of metrics which are representative of legal activity levels. It looks at how demand in the legal sector changes over time. The report reveals that the legal industry saw a strong rebound in the second half of 2020, leading to an overall year-on-year market decline of 4.3%. With legal market growth prior to 2020 at 2.7%, full recovery is still some way off.
These metrics offer a welcome contrast to the bleak picture of early 2020. As COVID-19 dug deep scars across the legal industry, demand fell across the board. Whilst some parts of the legal industry rebounded significantly in Q3 and Q4 2020, a few practice areas such as Property, Immigration, Crime and Litigation have faced critical decline.
The enormous change that COVID-19 brought to personal and business lives have made 2020 the year of Risk & Compliance, with 22% growth in that practice area. Commercial, too, has seen healthy growth throughout 2020, levelling out at 11%. The extra work companies have faced in managing the crisis has generated demand for advisory work, particularly in Employment and Tax. Companies remain hungry for legal advice that helps them interpret the fast-changing environment.
The anticipated boom in Restructuring and Insolvency hasn’t yet materialised. As of the end of 2020, demand in this practice area had fallen 18%. With government support schemes staving off insolvencies, there is less work for these teams to do. Individual insolvencies, typically a leading indicator, returned to growth in Q4 2020. This suggests significant expansion in work ahead as government support is withdrawn and so-called ‘zombie’ companies go under. Good news for the lawyers – an added concern for the law makers.
Unsurprisingly, 2020 has seen a catastrophic decline in people movements, which has crashed legal activity for Immigration. The model shows that Immigration work was 47% lower than in 2019. Comparing the impact of COVID-19 to other analogous global events doesn’t point to a brighter future ahead for Immigration work. 9/11, the 2008 recession and the SARS pandemic in 2003 were all followed by a drop in travel volumes, which took years to recover.
Litigation has consistently been the most seriously impacted legal area. The latest edition uses a Litigation-specific GLP Index model, developed with support from the Bar Council, which shows that Litigation has declined by 21% during COVID-19. Civil Litigation has seen the greatest impact, falling 35% over 2020. Lockdowns and social distancing have prevented cases from progressing through the courts, leading to a rapid expansion in case backlog which will take years to resolve.
Chris O’Connor, Head of Segment Marketing at LexisNexis and co-author of the GLP Index report, said, “The report brings data and rigour to measuring the impact of COVID-19 on the legal industry. Whilst it’s been a difficult year for the industry, the GLP Index demonstrates that many Practice Areas have bounced back as of Q4 2020. Now is the time for law firms specialising in those areas to seize this opportunity, and plan for further growth in the coming year. The GLP Index help firms measure their growth against the market, see how they are performing and identify where to focus their efforts.
Chris continued, “The report will bring concern to lawyers in Property, Immigration, Litigation and Crime. But, with visibility of this challenge, they can take the steps now to insulate their business and forge new roads to growth.”
The latest report can be downloaded from www.lexisnexis.co.uk/research-and-reports/gross-legal-product-index-q1-2021.html
