A quick glance at law firms’ websites suggests that they’re keen to highlight how they’re preparing for Brexit. Most firms now have dedicated teams focusing on the issue and many have published briefings, insight papers and bulletins to update current and potential clients on how the UK’s exit from the EU could affect them. Predictably, however, law firms have tended to be much less vocal about how they are preparing for the impact that Brexit will have on their own business.
As a result, it can be difficult to distinguish law firms’ efforts to prepare for Brexit from their normal business development activities. For example, many firms are currently seeking to consolidate and expand their international presence. Since the Brexit vote, Bryan Cave and Berwin Leighton Paisner have completed their transatlantic merger, CMS UK, Nabarro and Olswang have completed the largest ever merger in the UK legal sector and Macfarlanes and Bristows have both chosen Brussels as the location for their first offices outside the UK. At least some of these firms may well have been trying to protect themselves from the impact of Brexit.
According to a recent report by The Law Society, Brexit increases the risk that English and Welsh law will become a less popular choice as the governing law for international contracts. This is because it could be claimed that, when UK law is under purely domestic rather than EU control, it will be less stable. Countries such as Singapore, the UAE or European financial centres may use this fact to persuade more companies to choose their own legal systems as the governing law for their contracts. If they are successful, this would result in a loss of business for UK lawyers. Similarly, if, as many fear, multinational corporations move their headquarters away from London after Brexit, the demand for UK legal services could reduce further. Therefore, law firms’ international expansion could be seen as an attempt to insulate themselves from the effects of a fall in demand for UK lawyers’ services.
However, merging and opening new offices aren’t the only ways that UK law firms are preparing for Brexit. Currently, UK-qualified lawyers have the right to provide legal advice in the EU not only on English and Welsh (or Scottish), EU and international law, but also (as long as they are competent to do so, and with a few exceptions such as in probate law) on the host state’s law. After three years of doing so, lawyers can even apply for qualification in the host state, without doing extra exams. After Brexit, they are unlikely to be able to continue to do this, but qualifications already gained in this way won’t be lost. Therefore, some UK firms have taken steps to increase the number of their UK-based lawyers who are qualified in an EU country. For example, 132 of Eversheds’ lawyers and 25% of Latham and Watkins’ London lawyers are now registered in Ireland. This could also bring other advantages post-Brexit, such as the right to withhold certain documents disclosed by clients from investigating authorities.