THE UK’s legal sector is set to contract this year, with up to 3,000 lawyers leaving the profession as revenues remain flat at most firms.
According to research by RBS, a further five per cent of fee-earning lawyers need to be stripped out of the market in order for firms to return to levels of profitability seen before the financial crisis, on top of those already let go during restructurings over the past few years.
RBS surveyed 60 senior executives across 40 UK law firms for the report, with the majority expecting their revenues to either remain broadly unchanged or fall during 2012, with just over one-third predicting revenue growth of more than five per cent.
“We expect the currently depressed levels of transactional activity and revenue growth to be a feature of the market for the medium term,” said James Tsolakis, the head of the legal services team at RBS who compiled the report.
As the legal market continues to liberalise following the introduction of alternative business structures (ABS) at the start of the year, Tsolakis also said it won’t be long before we see a firm take advantage of the opportunity to raise money on the stock markets.
“I would expect …the first AIM listing likely within 18 months,” he predicted.