The global legal services market reached a value of nearly $713.12 billion in 2021, having increased at a compound annual growth rate (CAGR) of 2.52% since 2016. The market is expected to grow from $713.12 billion in 2021 to $998.73 billion in 2026 at a rate of 6.97%. The market is then expected to grow at a CAGR of 5.60% from 2026 and reach $1311.63 billion in 2031.
Growth in the historic period resulted from strong economic growth in emerging markets, an increase in government initiatives and the deregulation of the legal industry. Factor that negatively affected growth in the historic period were in-house legal teams increased pressure on traditional law firms, impact of COVID-19, skills shortages and lack of transparency. Going forward, increasing demand for civil legal services, growth in fraud and other economic crimes and increasing demand for transactional practice areas will drive the growth. Factors that could hinder the growth of the legal services market in the future include rising costs and decreasing margins and data security issues.
The legal services market is segmented by type of service into B2B legal services, B2C legal services, hybrid legal services and criminal law practices. The B2B legal services was the largest segment of the legal services market segmented by type of service, accounting for 54.8% of the total in 2021. Going forward, the hybrid legal services segment is expected to be the fastest growing segment in the legal services market segmented by type of service, at a CAGR of 9.0% during 2021-2026.
The legal services market is also segmented by size of law firm into large law firms and SME law firms. The large law firms segment was the largest segment of the legal services market segmented by size of law firm, accounting for 64.2% of the total in 2021. Going forward, the large law firms segment is expected to be the fastest growing segment in the legal services market segmented by size of law firm, at a CAGR of 8.1% during 2021-2026.
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The B2B legal services market is further segmented into B2B legal services – large law firms and B2B legal services – SME law firms. The B2B legal services – large law firms segment was the largest segment of the B2B legal services market in 2021 at 43.4% or $309.63 billion. The B2B legal services – large law firms segment is expected to be the fastest-growing segment going forward at a CAGR of 7.8% during 2021-2026.
The B2C legal services market is further segmented into B2C legal services – large law firms and B2C legal services – SME law firms. The B2C legal services – SME law firms segment was the largest segment of the B2C legal services market in 2021 at 14.9% or $106.52 billion. The B2C legal services – large law firms segment is expected to be the fastest-growing segment going forward at a CAGR of 10.8% during 2021-2026.
The criminal law practices market is further segmented into criminal law practices – large law firms and criminal law practices – SME law firms. The criminal law practices – SME law firms segment was the largest segment of the criminal law practices market in 2021 at 10.4% or $74.46 billion. The criminal law practices – large law firms segment is expected to be the fastest-growing segment going forward at a CAGR of 8.2% during 2021-2026.
The hybrid legal services market is further segmented into hybrid legal services – large law firms and hybrid legal services – SME law firms. The hybrid legal services – large law firms segment was the largest segment of the hybrid legal services market in 2021 at 7.0% or $50.25 billion. The hybrid legal services – large law firms segment is expected to be the fastest-growing segment going forward at a CAGR of 10.2% during 2021-2026.
The legal services market is also segmented by mode of online and offline. The offline segment was the largest segment of the legal services market segmented by mode, accounting for 97.0% of the total in 2021. Going forward, the online segment is expected to be the fastest growing segment in the legal services market segmented by size of law firm, at a CAGR of 12.0% during 2021-2026.
The legal services market is also segmented by type of practice into litigation, corporate, labor/employment, real estate, patent litigation, tax, bankruptcy and others (regulatory, M&A, antitrust, environmental). The corporate segment was the largest segment of the legal services market segmented by type of practice, accounting for 28.2% of the total in 2021. Going forward, the patent litigation segment is expected to be the fastest growing segment in the legal services market segmented by type of service, at a CAGR of 7.9% during 2021-2026.
The legal services market is also segmented by end-user into individuals, financial services, mining and oil & gas, manufacturing, construction, IT services, other services and others. The individuals segment was the largest segment of the legal services market segmented by end-user, accounting for 39.3% of the total in 2021. Going forward, the IT services is expected to be the fastest growing segment in the legal services market segmented by end-user, at a CAGR of 14.3% during 2021-2026.
North America was the largest region in the legal services market, accounting for 55.0% of the total in 2021. It was followed by Western Europe, and then the other regions. Going forward, the fastest-growing regions in the legal services market will be South America, and Middle East, where growth will be at CAGRs of 11.1% and 10.6% respectively. These will be followed by Africa, and Eastern Europe where the markets are expected to grow at CAGRs of 9.8% and 8.9% respectively.
The legal services market is highly fragmented, with a large number of small players operating in the market. The top five competitors in the market made up to 4.32% of the total market in 2019. The key players in the industry are focusing on expanding their geographical presence in market through strategic partnership and collaborations with existing domestic players. Major players I the market includes Kirkland & Ellis LLP, Latham & Watkins LLP, DLA Piper, Baker & McKenzie, and Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates.
The top opportunities in the legal services market segmented by type of service will arise in the B2B legal services segment, which will gain $155.5 billion of global annual sales by 2025. The top opportunities in segment by size will arise in the large law firms segment, which will gain $216.5 billion of global annual sales by 2025. The top opportunities in segment by end user will arise in the financial services segment, which will gain $92.2 billion of global annual sales by 2025. The top opportunities in segment by mode will arise in the offline segment, which will gain $269.3 billion of global annual sales by 2025. The top opportunities in segment by type of practice will arise in the corporate segment, which will gain $83.3 billion of global annual sales by 2025. The legal services market size will gain the most in the USA region at $72.9 billion.
Market-trend-based strategies for the legal services market include strategic partnerships and acquisitions, alternative billing models, adoption of artificial intelligence (AI), launch of legal learning programs and platforms by law firms, launch of legal learning programs and platforms by law firms, emergence of alternative legal service providers (ALSPs), legal process outsourcing to cut costs and changing purchase patterns.
Player-adopted strategies in the legal services market include expanding M&A practices in other geographies, expanding business operations through partnerships and collaborations and focusing on the diversification of the firm to capitalize on growth opportunities globally.
To take advantage of the opportunities, Altus Market Research recommends the legal services companies to use online legal research resources, adopt artificial intelligence (AI), launch legal learning programs and platforms, expand in emerging markets, focus on regions with high crime rates, offer competitive pricing, offer alternative billing models, provide affordable legal services in low-income countries, continue to participate in events and conferences, leverage campaigns through online platforms and increase focus on online consumers.
