Partners at the UK's leading law firms expect the UK and Asia to be the best-performing markets over the coming year, Legal Week research has revealed.

The latest Big Question survey found 35% of partners would bet on the UK being the strongest market over the next 12 months, with another 29% believing Asia will be the top-performing region.

They expect both markets to outperform the US (which gained 20% of votes) and Western Europe (10%). Meanwhile, only 4% of partners believe North Africa and the Middle East will be the best-performing region, with 2% saying the same about Central and Eastern Europe, CIS and Russia.

These predications come as business confidence in the industry is high across the board. Virtually all respondents (86%) predict that their firm's revenue will increase in 2015-16, with 17.5% of these expecting growth of more than 10% and 45% predicting revenues to rise by between 5% and 10%.

"We expect to see continued strength in M&A, finance and disputes as conditions in Europe and the US continue to improve," comments Wim Dejonghe, Allen & Overy's (A&O) managing partner. "As always, exchange rates can impact final figures but there are positive signs generally."

Monica Burch (pictured), Addleshaw Goddard's senior partner, adds: "We expect continued growth and improvements in market activity in the 2015-16 financial year. This is a trajectory that started last year and which we continue to build upon."
With partners predicting that the economic stability that has boosted revenues in 2014-15 will continue, confidence is high for the performance of the UK top 50 as a whole, with 94% believing that the group will see revenue climb over 2015-16.

"Europe and the UK have been taking advantage of the most stable markets we've had for some time," says Adrian Cartwright (pictured below), Clifford Chance's London head of global capital markets.

And, although activity was more subdued in the first quarter of 2015 ahead of the UK election, it is expected to pick up again as the country prepares for the referendum on EU membership.

"Now the election is over and the City has breathed a sigh of relief given the certainty of who will govern, there is a palpable upturn in business confidence, although how short-lived this will be in light of the EU referendum debate remains to be seen," comments Burch.

Cartwright adds: "We came out of the UK election with what investors see as a positive window for a few months before markets start focusing on what the real effect of Brexit is."

Despite the positive show of hands in support of Asia in Legal Week's survey, some partners are anxious that activity there and in other emerging markets could be slow.
Dejonghe concedes emerging markets are "easing off slightly", but insists the firm takes a "long-term view" of these locations so is not concerned.

Meanwhile, Cartwright warns that cooling economic activity in China, despite a still buoyant M&A market in 2014, could eventually threaten the wider Asian legal market. "A significant amount of Asian business was developed on the back of double-digit growth rates in China. There are concerns about how much longer the growth can last."

Some UK and US firms are turning to Asia to help ease the fallout from the EU and US sanctions on Russia in relation to Ukraine, with partners pointing to increasing Russian work for clients in China.

In light of the recent economic trends, 70.5% of partners responding to the survey say corporate is one of their firm's top two investment priorities for the coming year, followed by litigation (41%), real estate (33%), banking (23.5%) and capital markets (15.5%).

By sector, partners say there is likely to be ongoing consolidation and M&A work in the energy space next year driven by lower oil prices.

"If you're cash-rich you might want to buy the small exploration companies for their reserves. On a bigger level, there could be more mergers between the majors as oil prices are generally depressed," says Nick Garland, London M&A partner at Linklaters. "We are also looking at the mining world and what sort of consolidation might come through there."

The focus on regulatory investigations, stemming from the financial crisis, is also expected to continue.

As numbers from the UK's largest law firms start to trickle in for the 2014-15 financial year, Paul Rawlinson, London managing partner of Baker & McKenzie, is cautiously optimistic about the wider picture for the next 12 months: "As a global law firm what happens across the rest of the world is just as important for us as what happens in the UK market, but the signs are that business confidence will continue to improve into next year."

Cartwright concludes: "I think business confidence will build on last year. We are not going back to pre-crisis growth levels, but confidence is higher than it was and people are developing growth strategies and aligning resources to address those opportunities."