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Drop in top-50 UK law firm deals suggests third-quarter economic decline

'The slowdown in China could well accentuate this trajectory,' warns Jonathan Smithers

28 August 2015

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The total value of business deals by the UK's top-50 law firms increased by 10.1 per cent year-on-year in the second quarter of 2015.

That's according to the Law Society City Legal Index, which also found that total deal value grew by 18.7 per cent quarter-on-quarter to £512 billion.

However, the total number of deals declined by 3.5 per cent year-on-year to 735 deals. On a quarterly basis, this figure increased by 10.7 per cent.

The Law Society has warned that this decline in the number of deals may indicate that UK GDP growth could slow down in the third quarter, but begin to pick up again in the last quarter of this year.

"The fall in the number of legal deals in the first half of 2015 followed by the slight pick-up suggest we may see a short term stalling in the recovery of the UK and international economy," said Law Society president Jonathan Smithers.

"The slowdown in China could well accentuate this trajectory."

The decline in the total number of deals took place across sectors, but was particularly sharp in the energy and utility sector because of the fall in oil prices.

There was also a decline in deals in the technology, media and telecoms sector compared to the particularly high level of deals in this sector last year.

Average deal value increased by 14.1 per cent year-on-year and by 7.2 per cent quarter-on-quarter, at £697 million in 2Q15.

The Law Society has suggested that this growth was partly driven by a large Royal Dutch Shell deal in April and by three large deals in the telecoms sector in February and March. The weakness of the pound against the US dollar in the first half of 2015 also increased the value of deals conducted in dollars.


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