Law firms remain unsure whether to treat Brexit as an opportunity or a threat. Many have chosen to focus on immediate practice management rather than the complexities of leaving the EU. However, it is clear some firms are choosing a different path.
Our 24th annual law firm survey shows that the majority of British law firms are in flux, unsure whether Brexit is an opportunity or a threat.It is more comfortable to focus on the day to day rigours of good practice management, than the unknowable strategic headache that is Brexit. There is much to keep them occupied, from high lock-up, to increased competition, to cost pressures.
However, it is clear that some law firms are taking a different path. Over 1,000 new practising certificates have been registered at the Irish Law Society since the Brexit referendum in June 2016. They are hedging their bets as policymakers negotiate, putting operations outside the UK. Ireland is a natural choice: it is English speaking, it is a common law jurisdiction and solicitors' qualifications are mutually recognised across the Irish Sea.
Irish firms are some way ahead in their strategic planning on Brexit. Our 6th Annual Survey of Irish Law Firms 2017/18 indicates that most of the Top 20 firms (83%) have prepared a Brexit strategy and that 73% of these have already executed this plan. This stands in notable contrast to many UK firms (69% of the market) who have not executed a Brexit-specific strategic plan. Admittedly firms may be waiting for more clarity, but if we have learned anything from the Brexit negotiations, it is that gaining clarity is a lengthy process. In the meantime, time and opportunity march on.
Our research also showed that all of the top Irish firms believe that Brexit will have a significant impact on the legal profession in Ireland over the next five years, with 86% of the top 20 firms and almost one in two of all other firms anticipating the entry of UK firms into the Irish market as the main source of potential competition over the next three years.
There is a question over whether lawyers will be willing to relocate. UK law firms that have set up, or are about to set up, greenfield offices in Dublin post-Brexit are, and will be, seeking to recruit talented partners and teams. When British firms start considering Ireland, one of the key decisions will be whether to relocate lawyers or hire the talent locally. It is inevitable that more lateral hires will result. This will lead to increased competition at all levels including post qualified and graduate levels and consequent salary inflation which has been raised as a key issue by managing partners we have spoken to in the last month. Partners’ salaries may have to be adjusted to attract the right talent and teams. Accommodation in Dublin can be an issue and there are also personal tax concerns. These costs must be factored into considerations and business plans.
Ultimately, however, a presence in Ireland could help ensure that Brexit is an opportunity rather than a threat for many UK firms. It allows them to look beyond their immediate marketplace to new opportunities further afield. It equips them to act on changes among their clients, who are also reexamining their business models.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.