Deputy Prime Minister David Lammy
Lammy's 'war room' aims to keep the UK at the forefront of global legal markets through strategic research and targeted promotion. Foreign, Commonwealth & Development Office/Wikimedia Commons

Deputy Prime Minister David Lammy has convened a group of 20 leading legal and business figures today to safeguard the United Kingdom's position as the world's premier legal system for international contracts. The expert panel, comprising senior judges, presidents of prominent law firms, and senior business leaders, has been tasked with ensuring Britain maintains its competitive edge against emerging rival legal hubs abroad.

At stake: a £42.6B sector employing 364,000 people. Lammy describes it as a 'hidden super-power' that generates approximately £9.8B annually in exports. However, the industry faces mounting pressures from two significant sources: international competitors establishing legal centres abroad and the rise of artificial intelligence (AI), which could potentially automate over 11% of legal work.

Sector at Record Highs

The legal sector in the UK is currently experiencing robust growth. According to a summer report by PwC Strategy&, the UK legal services market was valued at £40B in 2024 and is projected to grow by around 5% annually until 2029. An impressive 97% of the country's top 100 law firms increased their fee income last year, many achieving double-digit growth figures. This momentum underscores the sector's importance to the economy and its resilience amidst global competition.

Protecting 'Jurisdiction of Choice' Status

English law continues to be a dominant force on the international stage. It is estimated to govern around 40% of all global business and financial transactions, underpinning approximately £250B worth of mergers and acquisitions worldwide. Additionally, it forms the legal foundation for roughly 40% of international corporate arbitrations, cementing the UK's reputation as a trusted jurisdiction for cross-border commerce.

The initiative to protect and promote English law was first announced in September, with the panel meeting for the first time today. Their primary objective is to develop a strategic plan that enhances the global promotion of English law, supported by research quantifying its commercial value and identifying new markets. This aligns with the government's Modern Industrial Strategy, which aims to foster sustainable economic growth and ensure the sector's continued global leadership.

Key Panel Members

Notable members of the panel include Mark Evans, president of the Law Society of England and Wales; Lord Sales, a justice of the Supreme Court; and John Foster, Chief Policy Officer at the Confederation of British Industry. Also involved are Professor Richard Susskind, an academic expert on the future of legal services, and Dame Elizabeth Gloster, chair of LegalUK.

The Future of Legal Work and AI

While the panel's focus is on maintaining England's 'jurisdiction of choice', an equally significant transformation is underway within the legal sector itself. Law firms are increasingly adopting AI tools, which, according to estimates, could automate more than 11% of legal work—equating to roughly £4B in productivity enhancements, as reported by PwC.

This technological shift is creating a divide. Around 83% of the top 10 law firms see AI as an opportunity to expand their service offerings to existing clients. Conversely, 60% of smaller firms ranked between 51st and 100th are concerned that clients will demand lower fees as efficiency improves, threatening profit margins and traditional billing models.

Challenges and Opportunities

To date, only around 2% of law firms have succeeded in converting AI's productivity gains into tangible profits. The majority remain in trial phases, experimenting with how best to harness the technology while navigating the disruption it brings to conventional billing practices based on hours worked.

Looking ahead, the panel will develop a comprehensive strategy to promote English law on the global stage, supported by new research and targeted marketing efforts. Lammy emphasised that the 'war room' initiative aims to keep the UK 'ahead of the game' and to ensure it 'remains the jurisdiction of choice' for international legal work.

The sector's 364,000 employees face significant challenges from rival centres abroad and the domestic impact of AI, which could automate a substantial part of their work. Yet, with only a small fraction of firms currently capitalising on AI's potential, the industry's future depends on how quickly and effectively it adapts. As Lammy's team plots its course, it is clear that the legal landscape is already being reshaped—those who move swiftly will be best positioned to thrive in this rapidly evolving environment.

Writer's pick