Post-Brexit, 58% of law firm partners and 42% of in-house counsel plan to move elements of their operations to a jurisdiction within the EU, according to new research.
One-third favour a German city as a potential destination for the move, while 29% prefer a Spanish city. Overall, 61% of 100 senior in-house lawyers and partners at law firms surveyed say they believe another city could rival London as Europe’s leading legal centre once Brexit takes place.
The lawyers were surveyed by MLex with independent market research company Censuswide for the survey, Brexit & the British Lawyer. The respondents included 50 senior in-house lawyers at companies with over 500 employees, and 50 partners at UK law firms with employees ranging from ten to more than 1,500.
There have been some upsides since the referendum—some 60% have already hired extra staff to deal with the influx of client requests as companies scramble to understand the implications and outline a workable timetable for any changes they are likely to experience. However, nine out of ten fear losing talented lawyers to international firms, and 86% of in-house lawyers fear an end to passporting into the single market will have negative consequences for their company.
Robert McLeod, chief executive officer, MLex, said: “The results of our survey highlight the concerns that are weighing heavily on the City in the wake of the UK’s decision to leave the EU. It has been suggested that Brexit will cause an exodus of law firms as they explore relocation options to overcome trade restrictions and follow their clients should they wish to move. If London’s five dominant law firms, which posted a combined global revenue of £5.14bn in 2015, were to move significant parts of their operations, it could result in permanent decline for the UK economy.
“The legal framework governing UK financial institutions is largely derived from EU law, and many of those firms benefit from passporting, which allows them to conduct business in other EEA states. Without a passporting agreement in place, the UK's position as the EU's largest financial centre could be jeopardised by Brexit. Both in-house and external legal experts are expected to be called upon to advise on how the post-Brexit regulation model will affect the operations of financial firms.
“It is clear from these findings that law firms and corporate legal departments are making contingency plans that pre-empt international trade restrictions. Post-Brexit, lawyers could potentially lose their rights to EU professional legal privileges. In an attempt to protect these rights, several major law firms have already pre-emptively registered their lawyers in other jurisdictions. Our results highlight that many others may now follow suit, whether new agreements are negotiated before Britain formally leaves the EU or not.”
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