I spoke last week at a Brexit debate hosted by Thomson Reuters; the impact on bankers and lawyers was the subject of discussion. More specifically, the question was “would Brexit be bad news for these two industries?” The poll at the end of this lively debate showed around 72 per cent of the audience thinking this to be the case, so the answer was a resounding yes.
Just from looking at the legal sector, the warning bells have been sounding for a while. Take the research carried out by Oxford Economics for the Law Society that found that the legal sector would lose somewhere between £225m and £1.7bn of yearly output by 2030 if we voted Out. In this paper, the researchers stated that “the effect on the legal sector ultimately depends on the impact on clients” and that “legal services do not exist in a vacuum.”
Of course what we see when stats like this are wheeled out is instant rebuttal from both sides. A prime example was the recent Treasury analysis on what the costs will be to UK households if we left: £4,300 a year was the headline figure. The Leave camp disputed this, with former Conservative chancellor Lord Lamont saying that “such precision is spurious, and entirely unbelievable”.
So we must make up our own minds as to whether we believe these studies or not. For those in legal services, they should use their own judgement and decide if they agree with the same Law Society report that the British legal sector would be about 1.5 per cent smaller in the 10 years after Brexit than it would have been as part of the EU.
My view is that, in the short term, there might be a number of areas in the legal services industry that would find their staff burning the midnight oil and which may benefit from Brexit. Some law firms are anticipating a vast amount of work, especially in rewriting corporate contracts and in work for the government on treaty negotiations.
But this possible short-term boost would be undermined by the diminishing of our global standing. Larger law firms might adapt to changing circumstances by shifting some business away from the UK if their clients move away. Singapore is among a number of emerging rivals to London’s status as a leading centre for legal disputes to be resolved and the country would benefit here.
In addition, we would see examples where money and court time could be wasted on disputes over whether a case should be heard in an EU country or the UK.
Finally, the free movement of labour – a real strength of our membership of the EU – would be limited. The bonus of the Single Market for the legal profession is the directives which allow solicitors to cross borders either temporarily or permanently under our home title, and to practice everywhere and do practically everything in the EU.
UK law firms have probably benefited most, compared to legal services in other EU countries, from the Single Market. This is what is endangered by Brexit. These pieces of research may not sway our views but they do help inform the debate.