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Since 2015, The Lawyer has been compiling and comparing the UK revenues of international firms. The past six years has seen the number of US firms in the upper half of the UK Market Index increase by half, from ten in 2015 to 15 in 2020. With the collapse of KWM’s European arm and the separation of Slater and Gordon’s UK operations from the Australian, as of 2020 the UK legal market is comprised only of firms with at least one of their head offices in the UK or the US.
Accordingly, the number of firms in the top 50 of the UK Market Index that generates more than 90 per cent of their revenue in the UK has dropped, from 15 to ten. Part of this is the creation of joint dual-headquartered firms, for example Eversheds Sutherland and Gowling WLG. However, part of this is due to US firms increasing their London revenue generation, surpassing native firms.
As the total market value of the top 50 has grown since 2015, the amount of that revenue generated in the UK has dropped. In 2015, 35 per cent of the top 50’s global revenue was generated in the UK, £9.45bn out of £27bn. Come 2020, that proportion had dropped to £12.6bn out of £46.2bn, or 27 per cent.
How much of this is due to investment in London, and how much to firms just growing faster as a whole? While some firms have seen the proportion of revenue generated in the UK increase, the trend shows a lack of momentum in UK revenue generation. With Brexit making the UK a less attractive European base, we may see revenue grow incidental to worldwide growth, rather than a concerted effort.
Despite this, native firms are being pushed out of the top of the UK legal market. As space at the top of the market index become more crowded, UK firms are going to have a fight on their hands to resist being pushed out by US-headquartered firms and Transatlantic mergers.