Demand for legal services will grow by only 2% in 2024, falling from 6% this year, researchers have predicted – but say this represents a decent outcome given political and economic headwinds.
The biggest growth areas in demand for lawyers are expected to be in immigration, property and insolvency, with competition, criminal and employment law at the other end of the scale.
Despite “exceptionally challenging market conditions over the past three years”, researchers said LexisNexis’s latest Gross Legal Product Index showed that demand for legal services grew by 22% in 2021, 3% in 2022 and an anticipated 6% this year.
However, the latest data revealed that market challenges “may finally be catching up” with the legal sector.
“These findings align with other recent events in the legal market, such as several high-profile law firms considering redundancies.”
Steady growth in demand for immigration work is expected to continue next year, increasing by 7%, which the index attributed to an increase in work and student visas alongside settlement and citizenship applications.
Demand for property work was also predicted to grow by 7%, with researchers basing the figure on “everything from house building data, Help to Buy schemes, mortgage lending statistics, planning applications, and stamp duty taxes”.
Not surprisingly, demand for insolvency and restructuring services is expected to rise in 2024, by 6%.
“A turbulent economy has taken a toll on many businesses, generating plenty of work for restructuring and insolvency lawyers.”
Demand for private client work is expected to increase by almost as much, 5%, one of the drivers being an increase in capital gains tax for non-domiciled taxpayers, with 4% in general commercial law. “Digging into the key growth drivers, we saw strong trade import and export numbers.”
Despite a “rocky recession”, demand for family law is anticipated to grow by 3% next year.
The research said that, after three years of “exceptional growth”, including a rise of 32% this year, demand for competition law would “steady itself” in 2024, falling by 5%.
“Despite being in the red, the index shows there’s still a huge demand for competition law expertise moving forward.”
A fall of 3% in demand for criminal law was linked to a steady decrease in the number of defendants proceeded against, and offenders convicted and sentenced.
Researchers said there had been solid growth in demand for employment law, with increases of 6% in 2022 and 3% in 2023, as employment tribunal cases increased. They linked an expected fall in demand next year of 2% to a drop in the number of tribunals recorded for the latest financial year, and a much higher rate of disposals.
Dylan Brown, editor of the report, commented: “Considering the geopolitical and macroeconomic headwinds that have battered the professional services industry for the last 18 months, subdued growth is an overwhelmingly positive message to be sharing.
“Recent growth speaks more to the legal sector’s resilience, ability to innovate when needed, and drive to power forward than it does to its impregnability.”
In a separate study released this week, legal tech firm BigHand said 75% of law firms in the UK and North America reported that client demand had fallen over the last 12 months and believed it would decline further over the next year.
Researchers said: “The pressure this has put on firms’ profitability is being exacerbated by the increase in attrition and lateral hiring.”
A total of 825 firms with at least 50 lawyers were contacted for the report, which also found that 85% of firms had experienced greater pressure from clients to “resource matters with diversity in mind” in the last 12 months.