Despite a UK economic contraction, the legal services sector posts strong revenue growth, signalling resilience in a challenging environment
The legal services sector has proven resilient amidst a broader economic downturn, with law firm revenues reaching £5.26 billion in October, an 8% increase from September and a 3.5% rise compared to October 2024. This marks a significant contrast to the UK economy, which contracted by 0.1% in October, following only a modest 0.1% growth in the previous quarter.
The legal sector’s performance stands in stark contrast to the wider services industry, which saw a 4% month-on-month decline and only a 2.5% annual growth rate. This shows that legal services continue to outpace the overall UK economy, offering a glimmer of hope in otherwise uncertain times.
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Economists attribute the wider economic contraction to uncertainty surrounding the upcoming budget. Julian Jessop, economics fellow at the Institute of Economic Affairs, remarked, “The further contraction in the UK economy in October confirms that budget speculation has killed growth,” adding that the outlook for November seemed even worse.
Julie Norris, legal services regulatory partner at Kingsley Napley, commented on the legal sector’s performance, noting, “We now know that most of the UK economy was in pause mode in October awaiting the autumn budget, but legal seems to have bucked the trend.” She highlighted that the legal sector achieved its highest-ever revenue figure in October. However, she urged caution, stating, “Leaders must clearly continue to be prudent in their financial planning for 2026,” as law firms are not immune to the challenges of the wider economy.