The legal services market is established in developed nations and is growing at a steady pace at a global level led by globalization, emerging market growth, increased investments, and new legislation. The market is considerably fragmented with a limited number of global players. Challenges faced by the market range from skill shortages to rising costs and regulatory restraints.
Legal service companies serve an important role by advising clients on their legal rights and responsibilities, conduct transactional work, and represent their clients in any legal complication that comes up. With globalization, the legal process becomes more complicated as different countries have different legal systems, driving the need for a global legal service market. End-users of the global legal services market include individuals, manufacturing, financial services, mining and oil & gas, construction, and IT services.
The legal services market size is larger in North America and Europe with more than 60 percent of legal spend concentrated in the developed markets of these two regions. The maturity of legal service providers is higher in North America and Europe, led by the numbers of mergers & acquisitions, taxations, and regulatory requirements.
The APAC region has the highest growth potential for the legal services market, led by demands in China, India, and Japan. The growing population in the region, and the increase in Foreign Direct Investments (FDI) have led to an increased demand for legal services. The demand for legal services is also rising in the Middle East.
Several factors and trends can be considered to be driving the global legal services market, ranging from digitalization, to globalization and country-specific legislature. Increasing demand can be noted for transactional practices such as tax accounting, corporate work, and real estate. Having robust legal support is an asset for businesses in the long run, preventing extra costs of possible litigations and fines, resulting in higher demand for efficient legal service providers.
Globalization can be considered as the biggest market driver for the legal services market, as clients are now seeking complete legal solutions for their business while expanding internationally. Although legal knowledge is available online, it is more convenient and efficient to hire a professional rather than attempting the process independently. The need for legal documents such as sanctioned applications, tax details and legal grants in a foreign country is easily taken care of by outsourcing the process to a qualified legal service provider.
The legal services market is expanding at a steady rate, however, the high prices involved pose a challenge to growth. Due to increased competition, there is mounting pressure on the industry to reduce costs and add billing transparency. Legal service providers are also facing stiff competition from legal process outsourcing (LPO) units in low-cost destinations.
Changing regulations also pose a challenge to the legal services market, as they would need to update their processes frequently keeping in mind the current specifications. Entry of other countries into the world market will also require global legal service providers to expand their areas of application to remain up to date with current regulations in the concerned nations.
The legal services market is becoming an important part of the dealings of businesses domestically and at an international level. Globalization is further cementing the need for well-qualified and competent legal service providers. Competition, low-cost outsourcing and the need for regular updation of knowledge are factors that constrain the growth of the market.