Law firms worldwide have seen demand for their services slow over the first half of 2022, according to new research.
US law firms are however seeing stronger growth than their British and Australian rivals, the research from Thomson Reuters shows.
The situation has seen demand for US law firms’ services continue to grow over the first half of 2022 as demand for UK firms’ services has levelled off over the same period of time.
For reference, US law firms’ saw demand increase 1.1 per cent in the first six months of 2022, following 4.3 per cent growth in demand over the last half of 2021.
By contrast, UK law firms posted higher growth of 8.3 per cent in the second half of last year, before seeing demand for their services plateau over the past six months.
Australian firms saw demand for their services drop 2.1 per cent over the first half of 2022, after demand surged 6.4 per cent over the last half of last year.
Thomson Reuters’ analyst Bill Josten explained that “a strong last half of 2021 turned into a much tougher half 2022 as interest rates and inflation impacted global economies”.
The slowing of demand follows a boom in demand for legal services caused by the economic fallout of Covid-19, that sparked a surge in M&A activity.
However, the legal sector boom in turn led to fierce competition for staff, that saw law firms seek to tempt talent in with huge salaries.
The levelling off of demand for legal services comes as law firms are continuing to face problems in hiring and holding onto staff amid an industry-wide reluctance to make layoffs.
The ongoing battle for talent saw 20.7 per cent of UK law firms polled by Thomson Reuters say they still expect higher than average staff turnover this year, compared to 13.2 per cent of their US rivals.
Meanwhile, 34.8 per cent of Australian law firms said they expect higher than average staff turnover this year.
The figures come as the entry of high-paying US law into the UK market has pushed up salaries for City lawyers to heights of more than £170,000 a year for newly-qualified lawyers.