Hi everyone 
. This will be a guide at some point, but until then I thought I'd post Jaysen's article here. It was written some time ago (shortly after the referendum), which we then sent out on the mailing list. So keep an eye out for part 2, which will be more updated.
This popular interview question is difficult. There's plenty of information on the topic and it can be easy to spend hours getting bogged down in irrelevant detail. It tests your ability to form a coherent and structured answer and you'll be expected to have opinions and back these up with evidence. The interviewer will challenge your assertions or ask you to be your own devil's advocate.
This article is intended to be a high-level overview of some of the most important consequences of Brexit for law firms. This is the first of two parts; it was written early 2017 to assess the progressive impact of the referendum. Part 2 will compare how things have developed since and what we can expect for 2018.
Office relocations
Whilst many law firms have offices across the EU, a client wishing to transfer its headquarters to Frankfurt, Paris or Dublin may be unhappy dealing with a satellite office. Law firms may struggle to pitch themselves as a one-stop-shop to new firms or retain existing clients unless they can develop their presence in European financial districts. Some law firms, including DLA Piper and Pinsent Masons have already made plans to position offices in Ireland to practice EU and UK law, and this is likely to be a key business strategy for law firms over the next five years.
The uncertainty of Brexit negotiations in the short term was initially predicted to decrease the volume, value and scale of transactions that commercial law firms undertake, particularly in departments which tend to thrive in a bull market, including M&A, private equity and capital markets. The volatility of the market conditions make the UK an unattractive destination for companies to raise funding. After the vote, Pure Gym Group, Misys, Biffa and O2 either deferred or cancelled their proposed IPOs. The loss of the ability to passport prospectuses may continue to drive down IPO activity if there is no mutual recognition or the cost of dual listings increase. The total value of UK M&A activity is predicted to fall from $340bn in 2016 to $125bn in 2017 due to Brexit uncertainty and this fall in transactional work may decrease law firm revenue.
What can law firms do?
Commercial law firms are likely to increase investment in countercyclical practice areas to offset a drop in commercial activity. This includes bolstering their restructuring and insolvency practices or introducing new regulatory departments. Those law firms which are especially reliant on the UK and EU may look to merge or invest in the US or emerging growth markets in order to diversify their risk. In Legal Week's survey, 69% of partners expected revenues for the top 50 firms to fall over the next five years and 82% predicted law firm redundancies in the next two.
Law firms are likely to invest in a number of measures to develop their competitive advantage or cut their own costs in light of a fall in revenue. Law firms may also develop immigration or employment teams to reassure their existing European talent and clients against the threat of work permits and visa restrictions post-Brexit. For example, Clifford Chance and Linklaters have already begun to hire international trade law experts to advise clients
Post-Brexit trade: A positive future
If a new relationship can be forged with states outside Europe within the next two years, law firms will see a surge in previously deferred transactional activity from companies. The UK is likely to secure novel trade deals with new partners, with a rise in M&A, projects and infrastructure work across Asia. This may align with a growth in expansion activity by mid-sized firms and the recent trend of transatlantic mergers for others in order to have the scale or expertise to deal with a new post-Brexit economy.
In any case, London's low language and cultural barriers, skilled labour force and the prevalence of English law will continue to make it an attractive platform for multinational corporations to do business within the EU
That's all for now. Stay tuned for Part 2 where we re-assess these Brexit developments and look ahead to 2018.
All the best,
Jaysen"
. This will be a guide at some point, but until then I thought I'd post Jaysen's article here. It was written some time ago (shortly after the referendum), which we then sent out on the mailing list. So keep an eye out for part 2, which will be more updated.
"Merry Christmas All,A big welcome to all recent subscribers to this newsletter, particularly from The Student Room, where a number of aspiring lawyers have joined us. I hope you still enjoyed the break despite being in the midst of application season!
This popular interview question is difficult. There's plenty of information on the topic and it can be easy to spend hours getting bogged down in irrelevant detail. It tests your ability to form a coherent and structured answer and you'll be expected to have opinions and back these up with evidence. The interviewer will challenge your assertions or ask you to be your own devil's advocate.
This article is intended to be a high-level overview of some of the most important consequences of Brexit for law firms. This is the first of two parts; it was written early 2017 to assess the progressive impact of the referendum. Part 2 will compare how things have developed since and what we can expect for 2018.
The impact of Brexit on law firms: A post-referendum analysis
The loss of passporting rights
The fragmentation of the UK market may affect London's position as a key global financial centre and listing venue as foreign clients choose to bypass the UK to an EU with a vast international network and the benefit of 53 trade deals. Unless the UK can secure regulatory equivalence, the loss of passporting rights may force banks, asset managers and insurance companies to immediately restructure their headquarters to a subsidiary or relocate within the remaining member states, particularly if tariffs are imposed and the export of financial services is restricted. Corporates and investment banks may also choose to diversify operations overseas if they lose the ability to market securities across the EU.
Office relocations
Whilst many law firms have offices across the EU, a client wishing to transfer its headquarters to Frankfurt, Paris or Dublin may be unhappy dealing with a satellite office. Law firms may struggle to pitch themselves as a one-stop-shop to new firms or retain existing clients unless they can develop their presence in European financial districts. Some law firms, including DLA Piper and Pinsent Masons have already made plans to position offices in Ireland to practice EU and UK law, and this is likely to be a key business strategy for law firms over the next five years.
The uncertainty of Brexit negotiations in the short term was initially predicted to decrease the volume, value and scale of transactions that commercial law firms undertake, particularly in departments which tend to thrive in a bull market, including M&A, private equity and capital markets. The volatility of the market conditions make the UK an unattractive destination for companies to raise funding. After the vote, Pure Gym Group, Misys, Biffa and O2 either deferred or cancelled their proposed IPOs. The loss of the ability to passport prospectuses may continue to drive down IPO activity if there is no mutual recognition or the cost of dual listings increase. The total value of UK M&A activity is predicted to fall from $340bn in 2016 to $125bn in 2017 due to Brexit uncertainty and this fall in transactional work may decrease law firm revenue.
What can law firms do?
Commercial law firms are likely to increase investment in countercyclical practice areas to offset a drop in commercial activity. This includes bolstering their restructuring and insolvency practices or introducing new regulatory departments. Those law firms which are especially reliant on the UK and EU may look to merge or invest in the US or emerging growth markets in order to diversify their risk. In Legal Week's survey, 69% of partners expected revenues for the top 50 firms to fall over the next five years and 82% predicted law firm redundancies in the next two.
Law firms are likely to invest in a number of measures to develop their competitive advantage or cut their own costs in light of a fall in revenue. Law firms may also develop immigration or employment teams to reassure their existing European talent and clients against the threat of work permits and visa restrictions post-Brexit. For example, Clifford Chance and Linklaters have already begun to hire international trade law experts to advise clients
Post-Brexit trade: A positive future
If a new relationship can be forged with states outside Europe within the next two years, law firms will see a surge in previously deferred transactional activity from companies. The UK is likely to secure novel trade deals with new partners, with a rise in M&A, projects and infrastructure work across Asia. This may align with a growth in expansion activity by mid-sized firms and the recent trend of transatlantic mergers for others in order to have the scale or expertise to deal with a new post-Brexit economy.
In any case, London's low language and cultural barriers, skilled labour force and the prevalence of English law will continue to make it an attractive platform for multinational corporations to do business within the EU
That's all for now. Stay tuned for Part 2 where we re-assess these Brexit developments and look ahead to 2018.
All the best,
Jaysen"
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