Law Society: Legal services productivity on the rise

Davis: Legal services incredibly valuable to economy

Productivity in the legal services sector rose by 17% in the five years from 2013 to 2018, a report by accountants KPMG for the Law Society has found.

At the same time, the level of employment fell slightly, by 0.7%.

The society commissioned the research to highlight the importance of the sector to trade negotiators when they come to discuss the UK’s post-Brexit relationship with Europe.

KPMG said the increase in productivity to £100,500 per employee, almost double the UK average of £54,330, was higher than other professions, such as architecture, advertising and accounting, and second only to management consultancy.

The report estimated that if productivity improved by 1% this year, for example because of technological change, it could boost the UK’s GDP by up to £1.2bn by 2050.

KPMG said improvements in legal services productivity benefited the wider economy due to the important role they played in the supply chain of other sectors, particularly “high-value exporting services”.

It estimated the number of full-time employees in legal services by 2018 at 552,000, made up of 358,000 directly employed, 150,000 in the supply chain and 43,000 more supported by the spending of wages in the wider economy.

The accountants said the legal sector’s gross value added (GVA) contribution to the economy was £59.9bn by 2018. GVA is the value of goods and services offset by the costs incurred in producing them.

This was made up of £39.8bn of direct GVA generated by legal services in the UK, £11.9bn generated through the supply chain, and £8.3bn generated by the spending of wages.

KPMG said the legal sector had the highest balance of trade among UK professional services sectors in 2017, exporting around £5bn of legal services and importing only £0.8bn.

The report added that the figure of £5bn could underestimate the true contribution of legal services, as it included only activity in the legal services sector itself and not other sectors that relied on it, such as financial services.

The accountants also calculated the value of pro bono work done by solicitors, by applying average charge-out rate data. It estimated the value of 43,800 solicitors working 1,446,000 unbilled hours in 2017 at £439m.

Law Society president Simon Davis commented: “This report shows the value of our sector to UK plc – that is why we think it is vital our trade negotiators put legal and other professional services at the heart of forthcoming talks on a new deal with Europe.

“Legal services are not only incredibly valuable to our national economy but also to our global reputation. It is crucial the government seeks to maintain access to the EU27 for our legal professionals as well as recognition of their qualifications once the post-Brexit transition period finishes at the end of 2020.

“This will not only support the UK economy but it will help clients in the EU who currently benefit from being able to choose law firms from this jurisdiction.”

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