Every part of our economy relies on the advice, expertise and support of solicitors. The continued uncertainty of what the UK’s divorce from the EU will bring is a topic of significant interest for both economists and those of us directly involved in the legal services industry.
With the second largest legal services market in the world and the largest within the EU, the impact of Brexit on the UK’s legal sector is undeniably of significant interest and something that should be closely considered. Put into perspective, the UK’s legal sector was valued at £25.7bn in 2015 by The Law Society. Without any guarantees of our ability to provide cross-border legal services post-Brexit, the UK could be putting a significant part of its economy at risk.
London: The Central Hub For Professional Services In Europe
There is a critical knowledge capital amassed in the UK’s professional services, especially within the legal and financial sectors. Based on strong human capital and a concentrated pool of experience and talent, it is largely considered one of the cornerstones to the UK’s reputation as Europe’s leading position in corporate and professional services.
- The UK has well over 300,000 people employed in private legal private practice, and over 107,000 of those are based in London
- Every 1% of growth within the legal services ecosystem directly contributes £379m and 8,000 new jobs to the UK economy
- 4 of the world’s largest law firms (by revenue) have their main office(s) in the UK and 2 of the top 4 largest (by headcount) base their main operations in the UK
The importance to retain access to the EU market is paramount for the UK’s professional service industries, and especially when it comes to legal advice and representation:
- UK law firms currently have a presence in 25 of the 27 EU member states
- 72% of the UK’s top 50 law firms have at least one office in another EU member state
- UK legal billings account for 10% of the global total, and 20% of all European revenue figures
Good For Business: The UK’s Comparative Corporate Advantage
As mentioned, the vast scale and experience found within the UK legal sector has accrued a world-renowned reputation, and for businesses operating at home and abroad within the EU, this is a considerable draw.
In size alone, the UK’s legal services has overshadowed the rest of Europe, even in 2014 our market was 3x the size of Germany, and 6x that of France – the two next largest legal economies in the EU.
Overall the UK economy currently leads by a long way in this sector, but with many things still looking uncertain when it comes to Brexit and the terms around it, the UK could lose its own competitive advantage, which would be detrimental for all. One of the single most important areas to gain clarity and understanding of is, in many legal professionals’ eyes, the conditions around retaining the ability to act as a gateway to Europe and the EU markets.
Access To The Single Market
London-based law firms have not only the established reputation but more importantly the capabilities to practise throughout the EU. The single market, particularly when it comes to law, is imperative to UK law firms being able to deliver services on cross-border matters, but Brexit has the potential to change all of that.
Access to the single market, in terms of the legal sector, enables firms to operate within a relatively simple and uniform system that is not easily deviated from with the addition of local or regional variations. All EU member states are bound to it, and it is not yet any clearer as to whether the UK will have access to this single market once it officially leaves the EU in 2019.
The repercussions, should the access to the single market be revoked, would be cataclysmic and would certainly redefine the UK’s legal services landscape. Questions are already being discussed internally amongst the world’s law firms, such as would they still base their European operations out of London if it could no longer guarantee access to the EU’s single market and how will this affect our ability to recruit (and retain) the best legal talent to stay ahead of our competitors.
In a similar way to how migration, sponsorships and cross-border trade would be affected by the EU divorce, international law firms may begin to see the UK as an additional corporate burden with the levels of legal admin increasing post-Brexit. The result of this could see many of the top legal players leaving the UK, along with their greatly diverse and talented workforces that were once the jewel in the crown for London and the UK being the capital of European professional services.
Ricardina Pedeneira is Solicitor Avogada at Ricardina Bridges Solicitors, experts in all aspects of corporate, commercial and employment law. If you or your business require any further information regarding the effect of Brexit on the UK legal economy, you are encouraged get in contact via info@rbsolicitors.com.
This article is not designed as a form of legal advice and does not necessarily deal with every topic in this area.
Copyright Ricardina Bridges Ltd 2017
