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.
Ever since the UK gave notice of its intention to leave the EU, there would always come a point at which people would stop talking about the theoretical outcomes and instead work out how to deal with the hand they have been dealt. Most businesses do tend to work out how to adapt to change eventually, but it is the most agile that will reap any early benefits.
Relatively few law firms have absorbed this message, remaining focused on immediate practice management rather than the unknowns of Brexit. However, firms cannot afford to ignore this strategic issue. In particular, the danger is that firms miss an opportunity. To secure longterm growth, regional and indeed large firms will need to consider new opportunities further afield.
They also need to track what their clients are doing. Their businesses are changing as a result of Brexit and law firms need to react flexibly. We see UK businesses responding to customer demand on inventories, for example, with buyers wanting to mitigate the extent of any slowdown in the supply chain after the 29 March 2019. We also see UK businesses either setting up within Europe to expand their existing facilities or to counter the impact on migration for lower skilled workers. There will be implications for warehousing, logistics, people and cash flow, and this will be a source of fees for lawyers.
For law firms, this may mean looking at setting up in new markets to harness these opportunities. In Ireland for example, there has been a much-publicised increase in UK lawyers applying for practising certificates due to language and common law benefits.
In our survey, it is clear that some respondents believe the threats from Brexit to be reducing, but there are also distinct regional variations. This may tie into the geographic distribution of sectors across the UK, as well as the state of readiness of firms. The anticipated threat to legal businesses in both the short and long term suggests that respondents consider that either UK based businesses will be less active and/or EU businesses will do less in the UK.
Starting a new business in another country is not for the faint hearted. Looking to join forces with overseas law firms — which might take a variety of forms — may be a way of taking some market share through referrals. While there is a natural desire to focus on the European market, there is benefit in orchestrating strategic tie ups with firms in other markets. We have seen evidence of success with commercial arrangements with law firms in North America, for example.
History has shown us that people will adapt and succeed in times of change and it is those that are fittest that will thrive. Time does not stand still and neither should law firms that value their future.
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.