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Impact of Brexit on legal sector

16th March 2016

Jonathan Djanogly warns that up to £1.7bn of annual legal services output could be lost following Brexit.

Almost all declared commercial law firms have chosen to stay “in” the EU. England has by far the largest law firms in Europe and provides by far the largest legal services market; currently estimated at 1.5% of the UK’s GDP or £23bn annual contribution. The Law Society estimate that up to £1.7bn of annual legal services output could be lost following Brexit.

Brexit would affect legal services in two main areas. Firstly, by removing specific types of work and secondly, indirectly, as a result of following the implications of Brexit for British trade generally. When business is poor, generally, advice required proportionately declines. As with all sectors, the main concern for lawyers is the uncertainty in the short to medium term; in particular on their clients, but also for their own businesses. Will the young British lawyers being sent across Europe to work in the EU branches of their firms be subject to visa requirements and new practicing certificates?

The EU is of great concern to those large number of firms that work with the financial services sector. Here the concern is that Brexit could damage the City of London’s position as a world financial centre. This could, following, threaten the City’s current position as a global centre for conducting legal business. Larger firms could respond by moving their focus of operations away from the UK.

Many midsized and larger firms have built their reputations over the last two decades, based on their expertise in law in key EU jurisdictions, ie that goes beyond being expert in EU law itself. For instance, the American or Chinese client wishing to speak to a lawyer in English to conduct an acquisition programme across Europe. The client in this example would probably not have any particular knowledge of the laws in the jurisdictions concerned, and they would expect the British firm to provide the expertise as required to the relevant jurisdiction. But following Brexit the credibility of the English City firm to provide that complete service could be undermined.

In a legal world of increased globalisation, increased cross border travel and complex regulation – affecting lawyers and their clients; there is little support for Brexit amongst the British commercial legal sector.

This article first appeared on the Politics Home website.

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