The legal services sector contributed £29.6bn ($39bn) to the UK in 2019, and posted a trade surplus of £5.6bn in 2020, new data revealed.
The UK is the largest legal services market in Europe, valued at £36.8bn in 2019, and is second only to the US globally, TheCityUK said.
The nation’s position in legal services is helped by the "international prestige" of English common law, which forms the basis of the legal systems for some 27% of the world’s 320 jurisdictions, the report said.
It added that the UK’s reputation as the leading centre for international dispute resolution is a strong driver for commercial parties to opt for their contracts to be governed by English law.
And London is seen as the world’s preferred centre for arbitration - the number of civil disputes resolved through arbitration, mediation and adjudication in the UK exceeded 43,000 in 2020.
“In the midst of dealing with challenges related to COVID-19, the UK-based legal services sector has shown great resilience while also continuing to play a key role in helping businesses in the UK and across the world negotiate the crisis, acting as trusted advisers and assisting firms to reorganise their affairs accordingly," said Miles Celic, TheCityUK's CEO.
"The sector remains a trump card in the UK’s wider competitive offer as a global hub for financial and related professional services.”
The report found that total revenue from legal activities in the UK was £36.8bn in 2019 and £17.8bn in the first half of 2020.
The report also said the past decade has seen a significant shift in the numbers of solicitors working in-house – almost a quarter (24%) of all solicitors in England and Wales, totalling over 31,000 people, worked in the in-house sector in 2020, up from 16% a decade earlier.
“The sustained trend towards companies deepening their in-house legal capacity demonstrates how vital legal expertise is to the success of globally competitive businesses” said Celic.
The UK’s top 100 law firms have also continued to grow total headcount, with year-on-year growth of 3% and total employment exceeding 77,000.
The UK’s legal services sector employed around 365,000 people in 2020 with much of this situated in regions outside London.