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How legal exports are powering the UK economy

This Whitehall department will continue to champion our outstanding legal sector

By Antonia Romeo  

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Built on 1,000 years of history, English law has an exceptional reputation in international commerce. English law and the UK’s legal services sector are hugely important contributors to our economic growth and position on the world stage, and drivers of international commercial success.

English common law forms the basis of the legal systems for 27 per cent of the world’s 320 jurisdictions. Its many benefits are recognised worldwide—so much so that it is the preferred governing law for business transactions, regardless of where in the world the transaction is taking place.

This choice of English law for international and cross-border contracts rests with its reputation for clarity, certainty, commerciality, and market acceptability through the consistent use of precedent. And when it comes to matters of arbitration, UK legal services operate on the basis of a clear legislative framework which has allowed us to develop a reputation for fair, effective and transparent resolution of international commercial disputes.

The UK’s legal services sector is extremely important to the UK economy. Employing around 400,000 people—just under two thirds of whom are based outside of London—the sector brings in around £35bn in revenue and is worth £29.2bn in gross value added to the UK economy. It also plays a crucial role in underpinning our world- renowned financial services.

And it’s not just British firms that are benefiting from the UK’s legal excellence: international firms see benefits from being here too. Today, there are more than 200 foreign law firms based in the UK from over 40 jurisdictions, and five of them are among the 15 largest global law firms. The head count of the largest 50 foreign law firms in London reached a record 7,150 in 2018.

And at the same time, demand for UK legal services is continuing to increase abroad, with around 2,000 barristers and 10,000 practising lawyers working overseas, a figure that has risen 80 per cent in the last decade. The flexibility of English law has allowed it to evolve and adapt to suit international business practices, helping the UK to become the largest market for legal services in Europe, second globally only to the US. The UK exported £7bn and imported £1bn in legal services in 2019.

As we continue to deliver ministers’ trade policy agenda of securing free-trade agreements in markets around the world, the Department for International Trade and the Ministry of Justice will continue to champion our legal services sector in future trade agreements and at the World Trade Organisation.

The aim is to ensure that UK professionals face as few barriers as possible when seeking to practise in other jurisdictions, where demand is rising. We can do this through traditional market access commitments in FTAs, as well as wider trade policy tools such as dialogues on regulatory issues. We are working to secure ambitious provisions on the movement of professionals, the recognition of their qualifications and the free flow of data. And we will continue to advance the interests of UK legal services overseas, and support growth in the market share for British businesses, through the already successful “Legal Services are GREAT” campaign.

The technological transformation that is reshaping the global economy has not bypassed the legal services sector; significant opportunities have opened up for firms that have been able to adapt their business practices and operations. One example of an emerging sub-sector is lawtech, which is now worth $15.9bn globally and growing at a phenomenal rate. Investment into UK lawtech businesses has tripled in the last two years, to £290m, and the UK is home to 44 per cent of all lawtech start-ups in Europe. Our ministers’ ambition is to ensure that the UK remains at the forefront of the lawtech sector as it grows, and that companies are able to invest in innovation and play their role in developing our leading global hub.

According to the Law Society, technology adoption could increase the productivity growth of the legal sector from 1.3 per cent to 2.7 per cent per year—and every £1 spent on legal services supports nearly £1.50 in spending across the entire UK economy.

That is one of the reasons why the UK government is investing just over £2m into LawtechUK, a collaborative initiative between Tech Nation, the Lawtech Delivery Panel and the Ministry of Justice, to support the digital transformation of our legal sector.

UK legal services are a source of institutional strength and global influence, and the sector has major opportunities ahead. Our trade policy approach will continue to put legal and other professional services at the heart of forthcoming talks with our future trade partners.

 

This article features in Prospect’s new legal report in partnership with the Bingham Centre for the Rule of Law, Jones Day and the City of London Corporation

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