Sheraz Akram, head of our corporate and commercial department, takes a look at what the recent referendum result and the ongoing uncertainty could mean for the legal sector
The legal sector is worth an estimated £26bn to the UK economy, employing around 370,000 people in well paid and highly skilled jobs. Brexit will undoubtedly have a negative impact on the sector but we will need to wait to see as to how far that fall out will go.
Brexit could initially spark an increase in advice requests from business owners about the potential legal changes but this process may be relatively short lived.
The impact of the result of the referendum on the legal sector will be seen more mid- to long-term.
The legal sector is heavily reliant on business to business advice, and the uncertainty surrounding the financial markets implies that we can expect a wider economic fallout as a result of Brexit.
As with most industries, the legal sector is heavily reliant on a healthy economy. While the UK economy is showing signs of finally recovering after a major recession, Brexit could drag us back to negative growth.
I wouldn’t be surprised if any expansion in the legal sector now happened in mainland Europe rather than the UK, because advisors are required to move freely within Europe. Contingency plans of major manufacturers and big businesses would suggest that investments would take place in mainland Europe in the event Brexit went ahead, and it would make sense for the legal sector to follow suit.
Most commercial law practices all have clients who are heavily reliant on Europe for their business and this could very well be significantly impacted leading to reduced instructions, less investment and mergers and acquisitions.
In the interim period before Brexit actually becomes reality uncertainty will continue which will leave investors and decision makers pulling back from major decisions. This will continue to have an impact until we are clear on what Brexit actually looks like practically and contractually.