New research commissioned by the Law Society has found the legal services sector would be ‘disproportionately disadvantaged’ as a result of complete UK withdrawal from the EU.
The report, which was carried out by Oxford Economics, found that stronger negative effects on the legal services sector are due to its reliance on other sectors which are likely to be adversely affected by Brexit.
‘In the downside scenario, projected annual output loss for the legal services industry in 2030 (£1.7bn in 2011 prices) equates approximately to the current combined annual UK revenue of Linklaters, Freshfields Bruckhaus Deringer, Clifford Chance and Allen & Overy.’
The report added: ‘The upside scenario implies an annual loss of £225 million legal services input in 2030 – approximately the current annual income of the tenth largest law firm ranked by UK revenue.’
Oxford Economics said in particular reliance on the financial services sector, other professional services sectors and subsequent lower levels of business investment would affect legal services. And that the scale of the impact would depend on economic drivers shaped by the UK’s withdrawal negotiations and subsequent UK government policy actions.
The analysis focused on four key drivers underpinning changes in legal services and UK output and employment as a result of UK withdrawal from the EU: trade tariffs on goods; foreign direct investment; net migration and fiscal contributions to the EU budget.
The government has pledged to hold a referendum on EU withdrawal by the end of 2017, with the effects of a UK withdrawal on key economic drivers assumed to start in 2020. The report said the full effects on output and employment on the legal sector would be felt by 2030, with the losses following a gradual erosion of legal services output.
Read the full report here.