Brexit's challenges & opportunities for international law firms
Wednesday, January 18, 2017
Stanley Rowe and Yancho Yanchev manage the European Practice Group at Cubism Law. They have significant experience in European and cross-border company and commercial matters in a variety of sectors and provide specialist advice in EU Public Law, EU Trade Law, EU Competition Law and EU Consumer Law.
Brexit, the portmanteau of Britain and exit, possibly first coined in May 2012, that may seek roots in December 2007, gathered real popularity in June 2016 when the catchy phrase turned No.1 search term on Google.com. To the dismay of some and to the delight of others, Brexit actually became reality. Although, public opinion may have been divided over the vote, it is generally agreed that the wide-ranging effects will take some time to be appraised properly.
The UK’s £25.7bn legal industry, which accounts for ten per cent of the worldwide legal services revenue, is no exception to the affected sectors of economy. Brexit presents both opportunities and challenges for international law firms, thus it is highly likely that it will be up to the organisations themselves to ‘chose’ whether to sink or swim, or as some put it more bluntly, ‘to adapt or to die.’
(regulatory; immigration; restructuring)
Brexit produces ambiguity by definition. The Financial Times considers that in the short term at least, law firms are braced for a spike in advisory work that may range from immigration and employment for private clients to international trade, tax and corporate restructuring for business clients. According to the Bar Council of England and Wales, the legal uncertainty is likely to keep the profession busy for several years, especially for specialist EU and regulatory lawyers. According to a City law firm partner, Brexit is likely to produce an initial flurry of activity as clients raise questions about what it would mean for their businesses in the UK and Europe. This can be illustrated by the effort to capture prospective income immediately after the vote, when some firms set up 24-hour hotlines to field queries on 24 June 2016.
(investment; choice of law & jurisdiction; financial services)
According to another ex-City law firm partner, the prolonged period of uncertainty is bound to make international clients considering more cautiously new British investments. Brexit is likely to produce a slow-down in corporate transactions work. However the advisory work Brexit produces in the short-term may outweigh the loss of work in M&A and other areas.
The Brexit uncertainty has already led to redundancies and pay and bonus freezes in a number of City law firms. Many of these have already put forward applicants to join the roll of solicitors in Ireland, so that they continue practising both European Union and English law and appearing before the European courts in Luxembourg.
According to another City law firm partner, post-Brexit-Britain raises the question of how easily an English judgment will be enforced in Europe which may affect appetite for bringing disputes in English courts. Similarly, the status of the currently preferred choice of English law to govern contracts seems unclear. Finally, it is important to see what the implications for Britain’s financial services would be at the end of the process, since these are often key clients for many international legal practices.
The Future Outlook
(not as grim, or different as it may look)
Possibly the most objective statement on Brexit’s impact on law firms is that whether this is a ‘friendly demerger’ or a ‘contested divorce’ remains yet to be seen. Many legal professionals insist on the importance of distinguishing the short and the long-term effects of the phenomenon. What is sure however, is that the well-established traditions of British diplomacy and propriety will do its absolute best in safeguarding London’s position as the ‘top city to do commerce in,’ thus City law firms will not be on their own when it comes to ensuring business continuity. It is worth remembering, after all, that London has been a leading legal centre for hundreds of years before the United Kingdom joined the EU.