An unprecedented boom in demand for UK legal services has already passed its peak, official figures suggest, with a further decline in activity forecast for the rest of the year as recession looms.
UK legal industry turnover totalled £3.59bn in June – a rise of 10% on May, according to Office for National Statistics data released this month. But the June figure was down slightly on the £3.6bn posted by the sector for the same month last year. June 2021 was the third-best-performing month on record.
The figures are not a huge surprise given the financial outperformance of many large firms at the height of the pandemic, when demand for advice was high and overheads at record lows due to lockdowns. Unrelated trading figures for the US reported by Thomson-Reuters last week showed that the bigger firms are also taking a hit to profits from the sky-high pay rates now being commanded by associates on both sides of the Atlantic.
Julie Norris, regulatory partner at Kingsley Napley, which reports the ONS figures, said: ‘Interestingly June 2022’s figures are slightly down on June 2021, which was the third highest month for industry revenue on record. We are not seeing new highs this year. The performance peak has passed and given the threat of recession, the question on leaders’ minds right now is whether revenues will hold steady or experience bigger drops. Prudent cost and risk management is surely the name of the game in today’s uncertain environment.’