How would a Brexit affect law firms in the UK?
As with many sectors, the implications of a Brexit for law firms in the UK are largely unknown and heavily dependent on the UK's relationship with the EU. Law firms will need to be alive to the impact across different practice areas as well as on the business as a whole.
An influencing factor as to whether a firm will struggle or flourish post-Brexit depends on its range of practice areas. The impact is likely to be greater in certain practice areas such as Intellectual Property (IP), Employment and Financial Services Regulation.
UK IP rights are heavily influenced by EU law. Whilst national IP rights would not be affected by a Brexit, all pan-EU IP rights - such as the European trade mark - would cease to apply in the UK. IP lawyers will need to help their UK clients with the transition to ensure existing IP rights continue to benefit from protection in the EU.
Much of UK employment law emanates from the EU, including discrimination rights and transfer of undertakings. Whilst the government could repeal these laws, this is realistically unlikely to happen. The biggest likely concern is the restrictive impact that a Brexit could have on the free movement of workers. Employment lawyers will need to assist their clients with the effects on both existing and future migrant workers.
Financial Services Regulation
The legal framework governing UK financial institutions is largely derived from EU law. In particular, financial firms benefit from the EU financial services "passport" which allows firms authorised in the UK to carry on business in other EEA states. Lawyers will be asked to advise on how the post-Brexit regulation model will affect businesses with operations elsewhere in Europe.
Whilst advisors to financial institutions may see a flurry of work in the immediate aftermath of a Brexit, the UK's position as the EU's largest financial centre could be jeopardised by a Brexit which may lead to a re-positioning of financial services.
As noted above, a Brexit will likely result in a restriction on the free movement of workers between the UK and the EU. As with many other businesses, law firms are equally as susceptible to this risk, losing out on current talent and future potential.
Access to the EU
EU services "passports" and the free movement of workers have encouraged companies to invest in the UK as an access point to the EU internal market. Many law firms have developed their reputations and expertise through being able to provide cross-border advice to those businesses and are permitted to do so under EU rules. A Brexit may result in companies relocating to another EU member state, meaning UK law firms can no longer provide the cross-border legal advice that clients need. On the other hand, firms that already have a presence in an EU country will see this as an advantage over competitors.
ConclusionIn September 2015 the Law Society warned us that legal services would be disadvantaged disproportionately compared with the UK economy as a whole in the event of a Brexit. Whether that warning comes to fruition remains to be seen, as the impact of a Brexit on law firms is just as uncertain as the effect of a Brexit on other sectors.