UK Legal Prices - Heads Up
- James Markham
- Jan 26
- 4 min read
After a brief hiatus from March - October 2025, the ONS SPPI is back with a corrected methodology. Let's look at what it shows for UK legal price inflation, and then cover off what's practically changed with the revised methodology.
Legal Services Prices increased by 5.6% in 2025
First up, we can see that UK legal prices increased by 5.6% across 2025, down from its 2023 peak of 7.5% and close to the Post-Covid Average (2021 - 2025) of 5.8%
As we'll see shortly in the quarterly data, there's good reason to believe that legal price inflation will remain elevated around the 'new normal' in the coming months - the ~3% rates of yesteryear do not look like they are coming back soon.
And if you were looking for signs of AI leading to cost deflation, you're not going to find them here.
Legal Services Inflation Running Hotter than Aggregate Services
As I've previously highlighted, Legal Services price inflation has run hotter than the Aggregate Services (G - N, i.e. excluding public services) for 13 successive quarters. Broadly, for corporate counsel this means that their lawyers are consistently asking for higher prices compared to their other service providers.
The latest data point (December 2025) suggests that external counsel are achieving a 6.7% increase, compared to an average of 2.9% for all other services.
I suspect that this is increasingly on the radar for corporate CFOs, let alone GCs, and I think it's reasonable to assume that there will be greater pressure for GCs to resist further price increases, or to starting insourcing work that was previously sent to law firms.
Solid lines are actual ONS data points, dotted lines are the four period moving average for the relevant series.
Legal Services prices are notably lumpy comparing the quarter to same quarter in the prior year, compared to the broader index. Back in January 2024, I suggested that a potential downward trend may have been established heading towards 4%.
Nothwithstanding ups and downs from the change in methodology (see below), we can see that Legal Services prices continued to bounce downards - hitting 5.9% in Q1 2025, followed by 4.3%, before heading back up to 5.4% in Q3 and finally 6.7% in Q4.
Aggregate Services inflation also cooled quicker than the four period moving average indicated; ending Q4 at 2.9% compared to the 3 - 3.5% range I'd suggested a year ago.
Forecasting is always problematic, especially about the future(!), but I'm inclined to believe that, in part because of the Q4 bounce in the less volatile Aggregate Services, higher Legal Services price inflation may be sustained into 2026.
I'm certainly revising my opinion from 12 months ago that Legal Services prices are cooling towards 4%. With the benefit of another year of data it feels more to me that the Post-Covid Average of 5.8% is a more realistic anchor.
For firms considering standard rate cards for 2026/2027, it's worth bearing in mind that the ONS data is comprised of actual prices, not rack rates. So grossing up the market achieved increases of 5.6% (2025 annual) to 6.7% (Q4 2025 vs Q4 2024) for a realisation rate of, say, 75% implies a standard rate increase of 7.5% - 9% for the new financial year.
Punchy.
Methodology Issues
The ONS stopped publishing PPI and SPPI data from March 2025 to October 2025 after identifying a misalignment between base prices and weight changes in the basket of goods and services. The restatement primarily affects data from December 2013, with minor amendments made between December 2008 and December 2013.
The accredited official statistics status remains suspended (since May 2025), pending a review by the Office for Statistics Regulation (OSR).
Rather than rehash it here, the impact on PPI and SPPI is well-explained here, and Figure 15 replicated below illustrates the impact on SPPI in particular:
i.e. the impact on SPPI is relatively minor because, as the ONS says "The SPPI data is less volatile and more consistent within index groups than the PPI, EPI, and IPI data; this means the impact of the index methods correction on the headline series is minimal [and t]he SPPI weights were not changed, so there are no corrections because of weights changes."
Beneath the aggregate SPPI, I've taken a look at the data under the old (incorrect) and new (correct) methodology for legal services in particular.
Over the 20 quarters from Q1 2020 to Q4 2024 the smallest variation from old to new was -0.3% (Q1 & Q2 2020) and the largest was 1.2% (Q4 2021 & Q1 2022). By the time this washes through the Legal Services (HSGL) index to Q4 2024 there's just a 0.8% difference between old (148.8) and new (147.6).
Clearly, you're free to take your own views on the reliability of the dataset in light of the changes.
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