How will a no-deal Brexit affect the legal market?
With the prospect of the UK leaving the EU on 29 March 2019 without an agreement looking increasingly likely (though by the time you read this… who knows!), what would the impact on the legal market be? Who would be affected, and what could the repercussions be?
One fundamental issue is the ability of UK solicitors to practice in the EU (or EFTA). Will you be able to continue to practice? If you “have not fulfilled the requirements of the Lawyers’ Establishment Directive (i.e. registration with the host bar as per Article 3) in a host EU/EFTA state”, you will lose the right to practice. However, don’t panic just yet, there are a number of things you can do to mitigate these risks, and now is the time to start!
You might want to consider registering, seeking to re-qualify (if you are eligible), or becoming a full member of the bar of your host nation. There are a number of different bar admission rules in different countries, so make sure you check with the local legal regulatory body. Many UK lawyers have sought qualification through the Law Society of Ireland, for example.
The other key point to consider is your ability to move around Europe when practicing – so depending on your eligibility, the SRA suggests that gaining nationality of your host nation would be prudent.
That’s clear, then. Register if you can, re/cross qualify if you can, or become a EU member citizen.
What about the legal sector as a whole?
The Law Society suggests that the UK legal sector could suffer fall in revenue of £3bn and, by 2025, over 12,000 jobs could be lost. There are a number of reasons for this, but one of the key issues is the inability of law firms to continue their operations as usual and the migration of work from UK HQ firms to EU HQ firms.
Firstly, UK-qualified lawyers will lose their rights of audience before the EU courts after the
withdrawal date, unless you hold an alternative EU/EFTA qualification. Furthermore, communications between UK qualified lawyers and their clients will cease to have the protection of the legal professional privilege (LPP) in front of EU courts and EU institutions, so involving EU/EEA-qualified colleagues will be key to maintaining this.
Those of you that travel around the EU for work on a regular basis will be taking advantage of the ability to temporarily practice under your UK qualification (FIFO) but, if there is a no-deal exit, this will cease and you will have to check that you are complying with the national law of the EU/EEA state concerned. In addition, it may be that immigration controls that come in as a result of a no-deal Brexit will affect your ability to work in the EU, so you (and your firm) will have to be aware of any visa/work permit requirements.
Law firms will, of course, have considered these issues, but being personally aware of what you are able to do and the issues you may have to overcome will help you to mitigate the professional risks around what could be difficult few months for the UK…
Law firms themselves will have to be aware of a number of other issues, such as whether existing structures that enable their operation in the EU/EFTA comply with national laws/professional regulations for third-party lawyers. UK LLPs that have EU branches will have to consider whether they can continue to operate, and may have to restructure to become a branch of a firm with its HQ in a EU state. Whatever their structure, a no-deal Brexit has the potential to impact far wider than its structure and the ability of its lawyers to practice. Equity, profit sharing, tax, and liability will all be affected.
Let’s hope that we don’t leave without a deal, that the deal is a good one – or perhaps that we don’t leave at all! Whatever your opinion on if or how we should leave, the next few months and years are likely to result in some significant challenges to the practice of law. So, whilst lawyers and law firms are helping their clients to navigate the biggest change the UK has seen in our time, they will also have to keep one eye on their own operations… I wonder if they know any good lawyers who can advise them?
Route1 Head of Engagement