Impact of Brexit on Law Firms
Wondering about the impact of Brexit on law firms? The UK’s exit from the European Union is likely to affect almost everything, including the legal profession. While it is difficult to cover all the potential changes or predict exactly how they will manifest themselves, it is possible to cover the broad issues which are likely to arise as a result of Brexit.
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Impact of Brexit on Law Firms: How will it affect the law?
Most obviously, Brexit will affect the law itself. Changes to legislation may mean that some areas of law will be completely altered. For instance, a lot of UK employment law comes from European directives. Upon leaving the European Union, the UK will be able to choose whether to wipe the slate clean or keep select parts of the existing law.
Intellectual property would also be greatly affected by Brexit. After leaving the EU, the UK could still remain a member of the European Patent Office, however it could not be part of the Unified Patent Court which is trying to harmonise all European patent law. This would make it impossible to apply for and enforce patents simultaneously in all the member countries.
Instead, UK patent-holders would be stuck with the existing way of enforcing patents by going through each national court. Of course, the specific changes depend heavily on the type of deal the UK strikes with the EU, however it is almost certain that Brexit will only create more work for UK lawyers.
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Impact of Brexit on Law Firms: How will it affect clients?
In the wake of all the uncertainty caused by Brexit, clients are flocking to their solicitors’ offices for advice. Some major firms are operating 24-hour hotlines to deal with the massive levels of client demand. It is likely that an exit from the EU could result in increased costs and administrative hurdles for multinational companies, but the myriad of predicted legal changes will affect even the smallest businesses.
For instance, a small café business with one employee may be faced with changes to its employment obligations and additional costs of purchasing or importing stock. Since the exact content of a UK-EU deal is still unclear, UK-based businesses may face having to pay customs duties, tariffs and taxes for the first time since the establishment of the European Union.
Furthermore, Brexit will undoubtedly affect foreign property investments. This could impact many people, from those with large international real property portfolios to those with a small holiday apartment in the Mediterranean. Given the impact of Brexit on such a broad range of individuals and businesses, law firms will not only see increased business but may also have to consider how they can give legal advice in the face of uncertainty and help their clients plan for the future. To meet this challenge, many firms are encouraging their lawyers to attend training and conferences to ensure they gain as much knowledge as possible.
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Impact of Brexit on Law Firms: How will it affect business?
Some firms that rely heavily on cross-border transactional work in sectors such as finance and banking may see a decline in profitability. In light of the uncertainty, the number of big transactions with the UK has slightly declined. Therefore, while firms are busy advising many clients on the effects of Brexit, the decrease in the number of large profitable cases may affect their financial performance. However, if the value of the pound drops as a result of Brexit, UK law firms may appear cheaper to international clients which could attract more work – so this is a possible silver lining.
It is also important to remember that law firms are businesses themselves and have to plan for the potential effects of Brexit just like their clients. EU directives play a big role in how law firms operate in the UK. For instance, EU legislation allows US firms to open offices in EU jurisdictions and permits UK lawyers to plea before the European Court of Justice. It is likely that these privileges will disappear once the UK leaves the EU and consequently some law firms will be gradually reducing the size of their UK offices, or relocating some lawyers to EU jurisdictions.
In the wake of the June 2016 referendum, only one thing is currently clear – law firms will have to be more flexible and responsive than ever in order to respond to everything Brexit throws their way.
Words: Mariya Rankin