LexisNexis: Could the last two years of growth in the legal market be a bubble?
Forget COVID-19. Law firms have a whole new set of challenges on the horizon. The latest LexisNexis GLP Index predicts that the corporate, commercial and competition segments of the market will slow significantly through to 2024. But it also predicts that the rate of growth is likely to equal where it was before COVID.
Today, LexisNexis Legal & Professional, a leading global provider of legal information and analytics, has released an updated version of its Gross Legal Product (GLP) Index, focusing solely on the predicted growth in corporate, commercial and competition law. Inspired by the Gross Domestic Product (GDP), the Gross Legal Product framework pulls data from a wide range of different datapoints to predict growth across multiple practice areas of the law.
The report reveals that, after a ferocious post-COVID return to growth, the market is likely to cool substantially. The post-lockdown boom that saw demand for legal expertise go through the roof in the second half of 2021 may be short-lived. A new set of challenges including rising inflation, new regulations and sanctions, and the threat of a recession appear to have stagnated growth for some practice areas – although not all.
The Index measures growth from Q1 2016 through to predictions for Q1 of 2024 – showing how each practice area has performed throughout major events including Brexit and the COVID-19 pandemic. It predicts growth figures across the economically uncertain times that lie ahead.
The Index predicted that demand for corporate law will decline by -22% by the end of 2022 when compared to 2021. Last year saw pent-up demand for corporate transactions and IPOs create a surge in activity, but 2022’s economically uncertain market has already taken a toll on the practice area.
The workloads of commercial lawyers will have risen by 1% by 31st December 2022 when compared to all of 2021. The GLP Index predicts that this will rise again in 2023. Demand is being driven by a rebound in activity for imports and exports, foreign investments and new companies being created.
Competition law is predicted to grow by 17% for the full 2022 year in comparison to 2021. Growth is expected to continue into 2023, with an annual forecasted growth of 32% when compared to this year. The UK’s departure from the EU, the Competition Markets Authority’s (CMA) heightened stance towards competition enforcement, and new security and sustainability measures coming into play have created a hefty workload for competition lawyers.
The report’s editor, Dylan Brown, says: “The GLP Index is useful in highlighting areas of the law that are growing or falling in demand. It gives law firms and in-house teams some helpful hints as to where they could invest or reposition their resources. However, it is purely prediction, as we have drawn conclusions from publicly available data.”
“Today’s economically uncertain times have caused a great deal of unrest in the corporate world. There’s a constant barrage of conflicting reports coming out, and despite everything still being up in the air, the default setting for most businesses right now will be risk aversion. It will be up to lawyers to instil confidence by guiding clients through the months and years ahead with accurate insights on economic activity, new legislation and regulations, and worthwhile growth opportunities.”
