The Legal Services industry is expanding at a fairly solid pace, driven by the increasing legal requirements of corporations. According to The American Lawyer, Clifford Chance were the market leaders worldwide in 2006 ($1.85bn in gross revenues with 2,912 lawyers), followed by Linklaters ($1.68bn in gross revenues with 2,488 lawyers) and Skadden, Arps, Slate, Meagher & Flom ($1.61bn in gross revenues with 1,750 lawyers).

Legal Services make a dramatic contribution to the UK economy. According to data from IFSL, the industry generated £14.9bn (1.4% of the UK’s GDP) in 2004. There were 286,000 employed in legal services in 2006, including around 117,000 solicitors and over 16,000 barristers. Exports of law firms in the UK amounted to £2,167m in 2005, nearly four times that of 1995.

A notorious trend in this industry is the merging of smaller firms to achieve better economies of scale, or to enter into strategic alliances with other small firms, particularly across geographical areas.

Another commonality in most countries is for a small number of large firms to be involved in providing a range of services to corporate clients, and a much larger number of small firms (usually in the form of a sole proprietor or partnership) servicing household and small business needs.

On a basic and immediate level, the legal profession has become increasingly consolidated. This represents a dramatic break from the past. Historically, law has been dominated by sole practitioners and small partnerships. According to the Lancaster University Management School, today, over a third of all solicitors (36%) work for very large firms, which employ at least 25 partners and, on average, over 500 employees.

More interestingly, these firms, despite accounting for 2% of the overall professional population, generate half of its revenues. Over the last 10 years, this particular occupational segment has expanded by a dramatic 57% in headcount terms and by a considerable 31% in financial significance.

The legal profession is increasingly consolidating around larger productive units. Often described as 'multinational law factories', they employ thousands of salaried legal and support staff throughout a network of offices across the five continents.

Changes in labour force composition

Consolidation has implied that today the majority of the profession works in large organisations. Following dramatic developments in the professional division of labour, the majority of solicitors are in salaried employment. This represents a fundamental departure from the profession's traditional configuration.
Partner headcount has expanded by less than a third between 1986 and 2000. This is overshadowed by associate headcount growth, which has expanded by 170% during the same period. Associates have been growing over 5 times more rapidly than their profit-sharing colleagues.