For months I’ve refrained from adding to the reams of pointless Brexit commentary given that until developments develop, not much can reasonably be said. But now article 50 has been triggered, there is a little more to work with.
Actually, I could have taken a break from banging on about King & Wood Mallesons a little earlier since by January it was clear that the UK government was tilting towards a hard Brexit and the UK losing access to the single market.
It barely needs saying that this stance dramatically increases the variables and risks for the UK economy. That also puts front and centre for the legal profession – one of the UK’s most successful industries – a number of thorny issues, among them recognition of practice rights, enforcement of judgments and London’s position as a disputes centre.
There will be soothing noises about how the government is listening to representations from the profession and various legal bodies. They will amount to nothing. This process will be defined by politics, events and the brutal realities of the EU negotiations. Some industries will have moderate success influencing government thanks to size, political visibility, lobbying skill and propensity to attract headline-grabbing foreign investment. Expect the automotive industry, banking and agriculture to score a few wins. The legal industry – which couldn’t lobby its way out of a paper bag – will be nowhere in that process.
The profession will be spectators in this – making a number of salient technical points on the sidelines – but nothing more. Accept that now and strap in for a fairly bumpy ride.
For law firms that means tough trading conditions will likely continue as investment decisions are delayed and clients put off deals. The post-Brexit rush of activity that boosted advisers after last June’s vote has already faded and 2017 will likely remain subdued.
The wider consideration is what this means for the City. Despite personally believing Brexit is on balance a bad call, I don’t subscribe to the sunny uplands or doomsday scenarios. London has many advantages, not least entrepreneurial spirit and the absence of a single direct rival hub. Some business will go – and Dublin may be a key winner – but the City will have considerable scope to reinvent itself.
Still, a working assumption is that the utter dominance of London in Europe over the last decade must be somewhat eroded. This may perversely play to the global law firm model, since it was built for precisely that purpose on a Maastricht integration play that never quite materialised.
Another working notion is that the UK economy and legal markets will tack closer to the US in the years to come. Expect the dramatic growth in the numbers of US lawyers in London over the last five years to continue.
The other thing to watch is the state of the Labour Party. This nation’s political settlement is built on a power concentration mechanism (first-past-the-post voting) that is supposed to deliver stable government and effective opposition. For political pragmatists, which is most City lawyers, it should be worrying that there is a lack of robust parliamentary opposition, since that is the basis on which our government and legislatures are supposed to function.
In the absence of those checks and balances, things can get out of hand. Quickly. Still, the legal profession gets the fun and fees of unpicking the excessive law-making that has dominated Western economies since the 1970s. So, swings and roundabouts.
For more coverage of Brexit, please see The blueprint