UK law firms hold back on layoffs as legal sector revenues continue to soar
The UK’s legal sector continued to grow in the final months of 2022 despite a downturn in the wider professional services sector.
Legal sector revenues increased six per cent from November to December 2022, to heights of £4bn, figures from the UK’s Office for National Statistics show.
The uptick came as the UK’s wider services sector saw its sales drop 7.5 per cent, to £223bn, as businesses across the country were hit by the global economic downturn.
Revenues in Britain’s accounting sector plummeted 13 per cent, to £3.3bn, from November to December 2022.
However, legal sector revenues continued to rise, as analysts said counter-cyclical aspects of the sector bolstered lawyers’ income.
Kingsley Napley partner Julie Norris said “demand in areas like litigation, insolvency, and employment” likely ensured the sector “remained resilient despite the wide UK economy struggling”.
Litigation disputes and insolvency cases often increase in economic downturns as business deals fall apart and firms collapse into bankruptcy.
As previously reported by Morning Wire, City litigation funders are still seeking to channel money into the UK’s legal sector with a view to profiting on an uptick in legal battles.
The financiers are hoping to bankroll more lawsuits on a “no win, no fee” basis with a view to capturing a cut of any winnings.
The continued uptick in the legal sector’s revenues comes as British law firms have so far held back from making layoffs, even as top US firms have begun letting go of lawyers.
UK law firms’ reluctance to make redundancies comes as top US firms including Cooley, Goodwin Proctor and Shearman and Sterling have all laid off staff in recent months.