Despite the pandemic, corporate law experienced huge growth during 2020

Despite the pandemic, corporate law experienced huge growth during 2020

At a glance:

  • Corporate law has had a volatile but overall positive year in 2020, with IPOs (+39% on the LSE’s Alternative Investment Market) the biggest driver of growth
  • While M&A fell for 2020 as a whole (-27%), there are signs of this softening in Q4 (+47% value of outward M&A)
  • An economic boom in 2021 should see M&A activity return to previous levels – or perhaps even further growth.

2020 was a volatile year for corporate law, and while it was hectic and the challenges were aplenty, it ended with positive growth according to the recently released LexisNexis GLP Index, which used anonymised and aggregated data from the Bar Council.

This was despite the mergers and acquisitions (M&A) market experiencing a major decline in work volumes. M&A volumes in Q1 and Q2 2020 declined by -42% inward and -53% outward, however, the decline softened significantly in Q3 and Q4 2020, down to a reduction of -23% inward and -27% outward.

Why was there such a huge demand for corporate law expertise?

The main driver for corporate growth in 2020 was the enormous number of IPOs, bonds and financing work that came about as a result of the pandemic.

READ THE LEXISNEXIS GLP INDEX REPORT FOR FREE IN-DEPTH INSIGHTS INTO CORPORATE LAW AND OTHER LEGAL PRACTICE AREAS.

In Q4, IPOs listed on the UK Main Market grew +157% and those listed on AIM grew +433%. Companies have taken on plenty of debt in 2020 (+24%), particularly at the onset of the crisis as they battened down the hatches.

While this receded in H2 (-2% vs H2 2019), overall borrowing by SMEs rose +83% for the year. Financial work proxies have been mixed, but derivatives have seen a lot of action and ending the year +34% on 2019.

Will corporate law continue to grow in 2021?

In the longer term, the outlook for corporate is positive. We expect to see M&A return to growth. There may be a dampening in IPO activity, given the enormous growth in 2020 and some high-profile flops.

The growth in alternative listings, such as SPACs, is likely to continue well into 2021. Their popularity soared in the US over the past year and proposed FCA changes would allow the UK to take advantage of this trend (and perhaps tempt UK tech businesses to list in the UK rather than across the Atlantic).

Our advice for the corporate law practice area

If you are quick to grasp the legal intricacies of fast changing areas of the law, such as alternative listings, you could open up new opportunities for your practice.

At the very least, building a deep understanding could be a powerful conversation topic with clients and a business development tool for more prosaic matters.

Clients are increasingly open to innovations that will transform legal services – are there opportunities to grow your footprint with a client?

Gain more In-depth analysis by downloading the free LEXISNEXIS GLP INDEX REPORT

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About the author:
Dylan is the Content Lead at LexisNexis UK. Prior to writing about law, he covered topics including business, technology, retail, talent management and advertising.