• Caroline

Legal Service Industry in the United States

Updated: Apr 1

Legal service has emerged as one of the most used services in the service industry. In today's times, the legal service industry contributes to 40% of the market share in the service industry and generates the highest revenue.


The legal services market comprises sales of law-related services and related goods by entities that advise clients on legal matters and represent them in cases, issues, and transactions where legal advice and other assistance are sought.


Human capital forms the legal process's primary input where individual skills, expertise, and knowledge are used to deliver services to clients, which is majorly in form of assignment or is case-specific.


The various fields which specialize in legal services and demand expertise in the related areas include but are not limited to finance, copyrights, litigation, property, taxation, corporate affairs, et al.

The role played by technology and globalization makes the legal service industry dynamic and fast-changing in nature. Adding to this the emergence and proliferation of the outsourcing industry, which again impacts the industry in more ways than one.


However, here we will discuss how the legal service market is shaping up abroad and the trend witnessed in the past and expected in the future.


What does the legal service industry comprise off?

The legal service industry comprises both dedicated law firms and businesses as well as in-house legal teams.


U.S. contribution to the legal service industry

Developed countries rule and dominate the legal service industry. The United States contributed to almost 50% of the global legal market in 2018 and 56% of the worldwide market in 2019. It was followed by Europe, comprising 24% of the market in 2019.

The largest segment of the U.S. legal services industry comprised spending on outside legal counsel, which summed up to 66 billion U.S. dollars in 2019. This figure has been steadily growing since 2015 and reached 68 billion U.S. dollars in 2020.

However, the economic slowdown driven by the Covid 19 pandemic in 2020 did not leave this segment of the industry untouched. The legal service industry had its fair share of impact and slowdown wherein, as per statistics, the global market declined from $734.1 billion in 2019 to $728.5 billion in 2020, the compound annual growth rate (CAGR) being -0.8%.


However, post-Covid, the global market is expected to grow again with a CAGR of 5% and reach $845.7 billion by 2023.


Lawyers in the U.S.

The number of lawyers in the U.S. has not seen a significant increase since 2015 in tandem with the visible growth in the legal service industry requirements. Much of this has to do with the fact that the supply of legal professionals has already been in surplus in the U.S. Adding to this, another primary reason for the above is the gradual invasion of technology and the process of replacing human resources with software's and automation to save on costs over the years.

With outsourcing gradually catching up, local lawyers and attorneys have an added task to ensure increased efficiency to stay in the race.

In this pursuit, as mentioned in a survey, 31.3 percent of law firms in the U.S. stated that they offer ongoing project management training and support to increase their legal service delivery efficiency.


Technology in Legal Services

Legal Technology improves service delivery, reduces costs, and is crucial for the future of the industry. It plays a vital role in the growth of the sector. In the last three years, since 2017, almost 50% of U.S. law firms have replaced human resources with technology to increase precision and reduce costs. The same story repeated in in-house legal teams wherein half of the teams moved to technology-driven document reviews, and over 30% automated their traditional processes.

With the visible impact evident to all, it can be safely concluded that the effect of technology in the legal service industry is expected to only increase in the coming years as the benefits outnumber its flaws if any.


What's in for the Future?

In the future, with outsourcing gradually picking up as a viable option amongst the law firms and businesses in the United States, Asia (notifiable India) is expected to outpace America and Europe in the global legal market share with companies outsourcing their legal work to save on costs primarily.




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