A newly-released study highlights concerns that in-house lawyers and partners in law firms share over relocating their operations, being able to trade with other European Union (EU) countries, and London losing its title as a leading legal centre post-Brexit.
The research was conducted by market insights and analysis firm MLex, part of LexisNexis Legal & Professional and independent market research firm Census Wide, which canvassed the views of 100 senior legal decision-makers in the UK. Respondents included 50 senior in-house lawyers at companies with over 500 employees and 50 partners at UK law firms with employees ranging from 10 to 1,500+.
A major concern expressed by respondents was their ability to conduct business internationally post-Brexit. The survey found that as passporting into the Single Market is unlikely to still be possible for financial and professional services firms after Brexit, 86% of in-house lawyers said that they are concerned that it will have an impact on the size of their company’s future operations and headcount.
One in five in-house lawyers also said that they are not confident in their company being able to trade with other EU countries whilst Brexit is on-going.
The survey also highlighted that although global businesses have historically chosen the UK legal system to resolve disputes, the legal community feels that Brexit could undermine this status. Fifty-eight per cent of firms said that they already have plans to move elements of their operations to a jurisdiction within the EU after Britain formally leaves the EU, while 42% of businesses said they would definitely relocate in-house legal staff after formal departure.
As a result, the survey found that 61% of in-house lawyers and partners at UK law firms felt that another city could rival London as Europe’s leading legal centre. Cities in Germany (33%) and Spain (29%) were favoured by both groups for rivalling London as Europe’s leading legal centre.
Despite these growing concerns, only 46% of the partners at law firms said that they have set up a dedicated steering group to examine how Brexit will impact the business and to make key decisions for its future stability and growth.
“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,” said Robert McLeod, chief executive officer (CEO), MLex. “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 (US$6.4bn) 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 European Economic Area (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.”
The competition commissioner said it approved the bail-out of Banca Popolare di Vicenza and Veneto Banca to “avoid an economic disturbance”.
Europe’s fourth AML directive should make the prevention of money laundering easier, a poll of UK finance professionals suggests.
Regional foreign exchange dealers have become more prevalent, while the top four have lost market share year-on-year.
As the first anniversary approaches of the UK’s decision to leave the European Union, Thomson Reuters has assessed the impact over the past year on investment banking.