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Geographic diversification critical objective for UK law firms

08 May 2012 08:46 GMT

The UK’s largest law firms are looking to international markets to achieve growth in 2012, with Asia possessing the greatest opportunities according to a survey carried out by Barclays.

The findings show a significant increase in confidence for international expansion with only 15 per cent of firms surveyed not planning any international expansion over the next 12 months. This figure has halved when compared to the number of firms who did not expand internationally last year (31 per cent).

Barclays carried out a survey amongst the UK’s largest law firms in order to understand firms’ expectations, plans and attitudes around international expansion.

When looking at where firms are focusing their growth this year, over half of the firms surveyed (54 per cent) state they will be expanding into the Asia Pacific region over the next 12 months, with China and Singapore in particular identified as key destinations. Western Europe (38 per cent) and the Middle East (27 per cent), particularly Germany and Dubai, will also see more UK law firms entering the market.

Interestingly the findings show that although there is perception that South America is a key destination for international growth, almost twice as many firms (15 per cent) expanded into South America last year than those who are planning to over the coming 12 months (8 per cent). Central and Eastern Europe (CEE) however is gaining attraction, with 12 per cent of firms expanding into CEE over the next 12 months compared to none last year.

Jane Galvin, Managing Director and Head of Professional Services at Barclays said: “The UK’s larger law firms have recognised how crucial international expansion is in order to achieve growth. Synergies between the UK and other markets have made it possible for firms to go where their clients want them, enabling firms to protect their client relationships as well as grow them.”

The survey highlights that in addition to client demand, revenue is a main driver to international expansion with 24 per cent of firms stating that over half of their current turnover comes from operations outside of the UK. When looking at the year ahead, 65 per cent of firms surveyed expect an increase of up to 10 per cent of their turnover to come from their international operations.

The strongest growth market for firms over the past 12 months has been Asia (38 per cent) along with the Middle East (15 per cent). This is mirrored with predictions for growth over the next 12 months with 50 per cent of firms surveyed expecting Asia to be their strongest market followed by the Middle East (19 per cent).

The survey also revealed that when considering their entry approach, over half (54 per cent) of firms state they intend to first form a strategic local alliance with 42 per cent preferring to open an office straight away and 12 per cent look to buy a local firm. However of those who first form a local alliance, only 16 per cent use this as a bridge to open their own office in the same location.

International expansion is of course not without its challenges and there are certainly a number of issues facing firms considering international expansion. Of those surveyed 62 per cent state the biggest challenge is regulation. This is followed by costs (58 per cent), culture (58 per cent) and talent (54 per cent), with firms less concerned about competition.

Jane Galvin continues: “The strength of the UK legal brand is driving increasing demand from overseas. International expansion will continue to be high on the agenda for UK law firms over the coming years, but as firms enter new geographies, they will be faced with new risks that will need careful consideration if they are to be successful.”


About Barclays

Barclays is a major global financial services provider engaged in personal banking, credit cards, corporate and investment banking and wealth and investment management with an extensive international presence in Europe, the Americas, Africa and Asia.

With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs approximately 140,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.

For further information about Barclays, please visit our website www.barclays.com.