Strategic analysis - PWC’s UK Legal Services Market Report 2025

September 22, 2025|Kim's Blog, Lawyers, Management Skills, Statistics and trends|

Strategic marketers and business developers constantly monitor and analyse their markets. It is an ongoing part of our market research and external analysis within our situational analyses. It allows us to monitor our position (against competitors) and alerts us to opportunities and threats. It helps us understand the needs and concerns of the firm’s leaders, partners and managers. This insight in turn informs, guides and aligns our marketing and business development strategy – which needs to be based on evidence and data. I’ve extracted the key points for ease of use. Strategic analysis – PWC’s UK Legal Services Market Report 2025

Market size and growth

The UK legal services market is large, profitable and growing well ahead of GDP
- Real UK gross domestic product (GDP) grew by 0.2% in the three months to July 2025 compared with the three months to April 2025 GDP monthly estimate, UK – Office for National Statistics
- Services output grew by 0.4% in the three months to July 2025, compared with the three months to April 2025, and was the main contributor to GDP growth over this period
UK legal services market is one of the most significant contributors to the national economy – generating over £40 billion annually and employing more than 300,000 professionals through more than 9,000 firms
5% pa growth expected until 2029 – corporate services to grow at 6% pa
21% growth of corporatised law firms from 2022-2024
Growth drivers include volume (increased M&A activity, new immigration and employment regulations) and pricing growth
Consumer services are expected to grow at a slower rate of 3%
Across the Top 100, 97% of firms achieved double digit growth – many also grew profit in line or ahead of fee income with national/regional firms performing particularly strongly

New external investment (private equity) and technology

Since 2011 liberalisation (ALSPs – Alternative Legal Service Providers), there has been an influx of private capital and the emergence of new business models (the LLP model is under pressure)
Digital transformation and technology have lifted productivity yet demands sustained investment – which will rise as law firms increasingly adopt AI tools. Few firms appear to lead in this area: “Tech is at a watershed but the commercial benefits have not yet been fully realised”
Private equity and other investors are increasingly attracted to corporatised law firms that can deploy capital over long horizons and through consolidation with mergers and acquisitions (M&A)
Over the last five years, the professional services sector has seen a real surge in deal volumes. 70 legal deals in 2024 out of 475 professional services deals
During 2024, there was a record number of PE-backed legal platform deals including:
- Stowe Family Law acquired by Investcorp
- Harrison Goddard Foote acquired by CBPE
- Horwich Farrelly acquired by CBPE
- Beyond Law Group acquired by Waterland
- Right Legal Group acquired by Vespa Capital
- Adeptio Law Group acquired by Horizon Capital

Innovation

Innovation’s greatest impact is within the consumer-focused (B2C) legal services and national/regional market
Perceptions of competitive threats were larger in the B2C sector. More corporate-focused firms remain relatively unconcerned by disruptors
Yet more corporate-focused disruptors within the regional consolidators (achieving highest revenue growth (27%) and EBITDA margins (25%) category are outperforming the market and capturing market share
Specialist law firms have pushed innovation within the core legal framework, refining marketing strategies and diversifying into non-legal services to create additional revenue streams
Consultant-based firms, subscription pricing and digital-first legal services are bringing unprecedented flexibility and efficient to the sector
Most firms are trialling AI solutions (estimated that 11% of hours could be saved with current AI tools) – but facing challenges in realising the benefits. 19% are seeing productivity gains – only 2% have monetised benefits
Whether AI is a risk or opportunity is still undecided. Attitudes have shifted over the 12 months towards an increased concern of price erosion (especially in smaller firms).

Impact on partnership priorities

Reassess partnership economics, refine operating models and review organic and inorganic growth strategies
Firms need to define a clear strategy – where they want to play and how they expect to win (Strategy – From the 2013 book called “Playing to Win: How Strategy Really Works” by A.G. Lafley and Roger L Martin)
Partners need to decide on strategies for AI adoption – bearing in mind the concerns about risks and price erosion

The full report: UK Legal Services Market Report | Strategy& UK