Legal services add £60bn to UK economy: LSEW report

Legal services were worth nearly £60bn to the UK economy in 2018, according to new figures from the Law Society of England & Wales.

A report commissioned by the Society from KPMG finds that the total GVA (Gross Value Added) for the year amounted to £59.93bn. Direct GVA – the value of goods and services offset by costs – amounted to £39.79bn, while indirect GVA (generated through supply chain spending) contributed a further £11.87bn, and "induced GVA" (direct and indirect employees' spending of wages in the economy) £8.27bn. In addition, in 2017 legal services exports hit £5bn.

The report estimates about 92% of the total as coming from England, 5% from Scotland, and 2% each from Wales and Northern Ireland.

The Society said the figures show "just how vital it is that our trade negotiators put legal and other professional services at the heart of forthcoming talks on a new deal with Europe".

Its report updates similar research done in 2016, but for the first time includes the value of legal services provided by people such as in-house lawyers and general counsel employed in other business sectors.

It also shows the value of voluntary (pro bono) work done by legal professionals. In 2017 43,800 solicitors worked a total of 1,446,000 unbilled hours, worth an estimated £439m.

Other key figures reveal that:

• in 2017, the UK exported approximately £5bn worth of legal services and imported approximately £0.80bn – a positive net contribution of £4.29bn to UK balance of trade;
• legal services had the highest balance of trade among professional services sectors in the UK;
• legal services support around 552,000 full time employees – 358,000 in the sector itself, and 225,000 in the legal activities sector;
• legal services also support 550,000 employees indirectly in the legal services supply chain and 43,000 more from spend from sector wages;
• the sector accounts for 1.7% of the total UK labour force;
• the level of employment in legal services has fluctuated but was 0.7% lower in 2018 than in 2013; but
• over the same period productivity grew 17% – in legal services the average value of each employee’s contribution is £100,500, compared to the national average of £54,330 – and the sector grew by 20%, compared with just under 11% for the economy as a whole.

The report adds: "Evidence also points to the legal services sector having a significant impact on economic growth in the UK through the enabling role it plays in the functioning of the overall economy... through three main routes: establishing and protecting property rights; facilitating transactions; and permitting economic co-operation and organisation.

"The effective interpretation and implementation of the rule of law... has a central and critical role in delivering these functions, and therefore facilitating greater investment and economic growth."

Society President Simon Davis commented: "This report shows the value of our sector to UK plc – that is why we think it is vital our trade negotiators put legal and other professional services at the heart of forthcoming talks on a new deal with Europe.

"Legal services are not only incredibly valuable to our national economy but also to our global reputation. It is crucial the Government seeks to maintain access to the EU27 for our legal professionals as well as recognition of their qualifications once the post-Brexit transition period finishes at the end of 2020."

Click here to access the full report.