The recovering economy and greater investment activity will drive demand for law firms
Los Angeles, CA (PRWEB) March 06, 2013
Over the past decade, the Law Firms industry has experienced steady and continuous growth due to expansion in international trade and the emergence of new areas of practice, particularly in business law. During the past five years, industry revenue is expected to grow at an average annual rate of 2.1% to $26.7 billion. In 2013, revenue is expected to rise 3.2% on the back of improving business activity across many different sectors that increase demand for legal services. “Industry demand has been facilitated by corporate restructuring, privatization, mergers and acquisitions, intellectual property rights and new financial instruments that require legal advice,” says IBISWorld industry analyst Anna Son.
Despite stable revenue growth, the Law Firms industry has undeniably felt the pinch of the recession, with revenue contracting 2.9% in 2008. As the economy entered the recession, the number of mergers and acquisitions and initial public offerings slowed tremendously, causing some casualties along the way. Furthermore, as corporate profit plummeted and businesses looked to trim operating costs, demand for legal services declined proportionally. “Canadian law firms, however, have come out of the recession stronger, without significant damages to their bottom lines and employment contractions experienced by their US counterparts,” adds Son. “Canadian law firms tend not to focus on a single practice area and instead diversify their law practices.” Many law firms found shelter in countercyclical work, as the weakened economy forced many businesses to seek legal advice related to restructuring, bankruptcy and insolvency.
The industry is highly fragmented and composed of a few large law offices, a large number of mid-sized firms and numerous small and individual practices. IBISWorld estimates industry concentration to increase over time due to the increasing level of merger and acquisition activity. The globalization of major international firms prompted many law firms to follow suit. In 2011, Canadian Ogilvy merged with London-based Norton Rose, resulting in a global network of about 2,500 lawyers and making Norton Rose one of the top 10 law firms in the world by size. This merger may be a precedent for more mergers between Canadian firms looking to expand internationally and international law firms seeking to establish their presence in Canada.
During the next five years, improvement in overall economic performance, investment activity and corporate profit will drive demand for legal services. IBISWorld forecasts that revenue will increase in the five years to 2018. Canadian law firms, which have traditionally shied away from exploring business opportunities outside their borders, and international firms that have rarely ventured into Canada, are expected to stimulate merger and acquisition activity. Given Canada's abundant natural resources and sophisticated legal market, demand for legal services will be spurred by increased international investment and trade. Profitability is expected to recover with growing work volume, combined with the cost reductions implemented during the recession. For more information, visit IBISWorld’s Law Firms in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry comprises offices of legal practitioners, such as lawyers, barristers and solicitors, primarily engaged in the practice of law. The industry’s establishments provide expertise in a range of areas of law, such as criminal, corporate, family and estate, patent, real estate and tax.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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