The 5 fastest growing industries law firms should target

The 5 fastest growing industries law firms should target

Compared to other industries, the pandemic was relatively kind to those who practice the law. But that being said, it was kinder to some legal practice areas than others.

Industries such as Banking and Finance, Technology, Media & Telecommunications (TMT) and Consumer Goods fared well - but the same cannot be said for the likes of Aviation, Hospitality and the Not-For-Profit industries.

As a part of the latest ÀÏ˾»úÎçÒ¹¸£Àû GLP report, which looks at the fastest growing legal practice areas, we also honed in on the best performing industries that law firms should target.

Download the Gross Legal Product Index Report (GLP)
We looked at performance metrics across 18 key industries and 30 different countries to help legal professionals to identify and evaluate the most promising opportunities for growth in their practice area on both a local and global level. As you can imagine, the data available and its accuracy varied by country. We have used our UK model to educate this global viewpoint. (Note: It should be used for direction and debate rather than as gospel.)

 

1) Automotive

When looking at the growth of the automotive industry throughout the year 2020 on a global scale, we saw the vast majority of countries experience positive growth. Poland (+90.3%) and Brazil (+70.9%) were the obvious leaders, followed by Chile (+57.5%), Italy (+51.5%), South Korea (+51.9%) and Switzerland (+50.7%).

Poland’s sharp growth – a stark increase from the +45.7% in 2019 – appears to be direct result of energy vehicle investment, which grew +116.6% in 2020. Brazil’s results told a similar story. In 2019, the country’s automotive sector experienced +36.4% growth – and in 2020 it saw growth triple, which again appears to be a result of energy vehicle adoption which grew +98.1% in 2020.

There were only two countries that experienced a decline in growth: Argentina at -31.6% and Russia at -3.6%, which both come as a result of a decrease in motor vehicle production figures. It’s also worth pointing out the disruption the pandemic caused to the automotive industry, which may have had a more noticeable impact in some countries than in others. One of the most widely publicised challenges was the global shortage of chips for electric cars, which had a significant impact on supply chains across the globe.

2) Banking and Finance

2020 was a challenging year for the banking and finance industry as banks attempted to support their customers and clients through unusually tough financial times while continuing to operate through the lockdown period. Most countries seem to have escaped the year unscathed, with minor peaks and troughs taking place across the globe. One exception to that rule was Argentina, which the model identified as having an outstanding period of growth throughout 2020 at +43.0%, a steady increase from +31.8% it experienced the year earlier. Key drivers included a +85.4% increase in bank nonperforming loans to total gross loans, as well as a +39.4% increase in the lending interest rate and a +22.7% increase in bank capital to assets ratio.

Another exception was Chile, which turned from -2.5% in 2019 to +5.9% in 2020. The country’s lending interest rate grew from -25% in 2019 to +19% in 2020. Countries that saw the most dramatic drop were Nigeria (-16.4%), Angola (-16.2%), and Egypt (-10.4%).

The key driver behind Nigeria’s loss was a sharp drop in the ratio between bank nonperforming loans to total gross loans, which fell by -48%. Angola also experienced the same problem falling -24%, as well as a drop in the ratio between bank capital and assets, which dropped to -18%.

3) Consumer Goods

The consumer goods industry experienced strong growth in most countries included in our analysis throughout 2020, and this trend is predicted to have continued throughout 2021. Out of the 30 countries we analysed, 15 experienced above +10% growth.

The clear leaders were Spain at +83.2%, which also experienced strong growth in 2019, and Italy at 70.0%, which dipped from incredibly strong growth in 2019. Japan also had an impressive +33.9% increase, although this comes after a three year average of -45.4%.

In Spain, the number of secure internet servers rose by +58.9% in 2020. This comes at the same time Spanish telecommunications giant, Telefonica, which owns O2, committed to ensure that by 2025 fibre optics will cover one hundred percent of the country, and be a leader in the implementation of 5G technology.

Only five countries in our analysis encountered negative growth, with Algeria (-17.7%), Nigeria (-13.2%) and France (-13.0%) experiencing the largest decline.

4) Technology, Media and Telecommunications (TMT)

2020 was a big year for the technology, media and telecommunications industry, with 26 out of the 30 countries included in our analysis experiencing growth upwards of +10%.

Cuba saw the most growth, with figures averaging at +84.4% following an impressive annual average of +116% growth between 2017 and 2019. The model picked up the sharp number of secured internet servers, which rose by +120.3%, and fixed broadband subscriptions, which rose by +85.6%. India also experienced strong results, growing +82.8% and continuing a strong growth trend that spans across several years. South Korea’s technology, media and telecommunications industry also grew by +59.9%, as did the USA at +49.3% which follows an average annual increase of +49.8% between 2017 and 2019.

Only two countries experienced negative results during 2020. Nigeria’s technology, media and telecommunications industry dropped -31.6%, while Algeria’s dropped -16.3%.

 5) Business and Professional Services

The business and professional services sector experienced mainly positive or neutral results on the global stage. Russia had the highest growth rate by far, growing +63.9% throughout 2020 – a sharp increase from +4.2% the year earlier. The most obvious driver behind this growth was the percentage of firms using banks to finance investment, which rose +86.8%, while the percentage of firms using banks to finance working capital also grew by +46.4%. 

Poland also experienced a rise of +48.3% in 2020, up from -9.4% in 2019. Like Russia, the most obvious driver behind this growth was the percentage of firms using banks to finance investment, which rose +46.5%, while the percentage of firms using banks to finance working capital also grew by +15.2%. Other winners were Indonesia (+25.0%), Columbia (+20.2%) and Peru (+20.6%).

On the other hand, we saw Sweden fall -26.5%, as did India at -26.2%. Both of these countries were impacted by the falling percentage of firms spending on research and development, using banks to finance investment and using banks to finance working capital.

Download the GLP report for the fastest growing industries and legal practice areas


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About the author:
Ashton leads on the marketing strategy developed to enhance ÀÏ˾»úÎçÒ¹¸£Àû’ relationships with medium and large law firms across the UK. He is a qualified marketer with a demonstrated history of executing Account Based Marketing strategies across financial services and SaaS companies.