The effect of Brexit on Legal Firms in London

Though London’s legal district hails its fundamentals back to the 14th century, the Legal Firms in London are contemporary, global businesses. Britain is known to have four of the world’s top biggest law firms in terms of revenue, and its firms have extended networks of offices across the world. The British legal industry gets almost 25bn ($33bn) a year, a fifth of it from exports. A major portion of its success is due to the supremacy of English law, which is often considered as the governing law for international commercial contracts and dispute resolution, even by parties that have no associations to Britain.

Brexit presents Legal Firms in London with two uncertainties. The first is how Britain’s upcoming relationship with the European Union will influence its operations in Europe, where they do most of their business. The second is how their clients will react to Brexit. With hardly more than a year left before Britain is due to exit the EU, Legal Firms in London are preparing for both qualms.

The chaotic scenario isn’t a perfect one for commerce, and most have been politicizing untiringly for a ‘soft Brexit’ – one that looks like the status quo as much as possible and which upholds key benefits such as passports for financial services and a detailed customs agreement for goods.

Talks between the UK government and Brussels stay ongoing and are heading for their final stages – or at least they should be. But notwithstanding the Prime Minister’s untamed efforts to garner support for her Chequers plan (a proposal that mixes a soft and hard Brexit), a concurrent refusal from both Barnier and Boris has made a no-deal Brexit look like much more of a possibility.

It’s a landscape not entertained by much of the legal domain: a recent survey by Legal Week discovered that three-quarters of City law firm partners supported a second referendum; a research by the Law Society predicted that the UK legal sector could suffer a 3 billion hit in revenue and a loss of 12,000 jobs by 2025 in case of a no-deal Brexit; and a report by Thomson Reuters and The Lawyer revealed that from a taster of over 300 partners across Europe and the UK, just 23% of those in the UK thought that a no-deal Brexit would lead to a long-term increase in workload (those in Europe had a rosier presentation of things, with 64% forecasting a long-term surge in workload).

However, it’s not considered as undesirable. The latest report gave above also discovered that more UK partners expected a major or slight increase in capacity in the short-term – primarily in the form of regulatory guidance – than those forestalling a significant or minor reduction. As Laura King, global head of people and talent at Clifford Chance, said: “Brexit is producing great amounts of work, and normal things like how clients label their products are needing a significant legal rethink.” A report prepared by Clifford Chance in collaboration with consultancy experts Oliver Wyman estimated that the cost of WTO tariff and non-tariff barriers for UK businesses is an estimated 27 billion.
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The Barrister Profession

There exists a wide array of professions that offer good salaries. However, many job aspirants do not just want money but also want prestige that comes from being part of a glorified profession. Take for example, the legal profession, specifically being a barrister. A barrister is distinct from a lawyer, although both have the same legal education. Barristers do not directly deal with individuals seeking legal help. Instead, they work with solicitors who act as the point of contact for general public.

Progressing to the role of barrister is possible only after doing hard work as a lawyer or attorney for several years, sometimes even decades. In these years, the aspiring barrister gains in-depth knowledge of the legal systems, administrative proceedings of courts of law, and the nitty-gritty of jurisprudence. These skill sets are mandatory requirements for becoming a barrister, often coupled with a minimum number of years spent as a practicing lawyer.

Barristers are much more adept at oration skills, debating skills, analytical skills, and reading between the lines. These skills ensure that barristers are fully prepared to represent their clients – solicitors in matters of debate during actual court sessions presided over by a jury. It may appear simplistic; however, being under the eye of court scrutiny can unsettle most lawyers. Barristers typically gain proficiency in doing so through years of painstaking practice.

Barristers cannot independently handle a client’s case. They require assistance from other legal professionals such as drafting clerks, solicitors etc. to prepare for the actual courtroom day. If it were not for these professionals, barristers would not win a single court case for their clients.

Barristers specialize in specific categories of law. The simplest distinction can be made between barristers that work on civil law suits and those that work on criminal law suits. However, even civil law barristers do not handle all kinds of civil law cases. In reality, barristers limit themselves to niche areas such as intellectual property and patents law suits, company law suits, individual taxation law suits etc. Similarly, criminal law barristers can specialize in homicide law, sexual offense related laws, juvenile delinquency laws etc.

While barristers can practice independently, most of them choose to associate themselves with one or the other professional law firms. Such an association helps the barrister to maintain a steady stream of court cases, and therefore, a steady source of income. It also helps them leverage the knowledge of other colleagues who are also attached to the same law firm.

Will the Rules on ABS for the Legal Sector Be Relaxed?

The news is that the SRA (Solicitors Regulation Authority) will not relax the rules on ABS (Alternative Business Structures) allowing legal firms in the UK to enter into contracts and deals with other businesses.

A paper which has been prepared by the regulator will be discussed at the SRA boards next meeting, a reason cited as being behind an unlikely alteration or relaxation of the law is that it may cause confusion to an already uncertain and in some circles unpopular act.

Instead of a relaxation of the act the SRA is now likely to focus on helping forms and giving them support and guidance with regards to their alternative business relationships.

Guidance issued in July 2009 has stated that firms may be in discussion with ABS potential business partners, this in turn can lead into non binding agreements and the formation of registering a company with domain names.

This does not allow firms to enter into an arrangement that involves selling of services until the act comes into force in October 2011.

Their is nothing set out in the current legislation that would stop an arrangement enabling the transfer of control in the future, so long as it is clear that a definite decision has been made by the firm at the “appropriate moment”.

Again the glibly termed “Tesco Law” will cause a lot of opportunity and confusion to what many perceive to be an industry that has stagnated in terms of adoption of new business models and technology, they are indeed very interesting times for the Legal profession in the UK.