December 16, 2020 Senior Lawyers Division Committees

Practicing Law in London Amidst COVID-19 and BREXIT

Notes by Robert L Brown

Watch What It Is Like to Be a Lawyer in London During BREXIT 

Stephen Denyer is Director of Strategic Relationships at The Law Society of England and Wales. He spoke to the International Committee of the Senior Lawyers Division on December 9, 2020 at its monthly meeting. The committee is chaired by Bob Lutz and Aaron Schildhaus.

Stephen emphasized his talk reflects his personal viewpoints. Later, he noted attorneys in England have lots of opinions on the topics he will discuss, and many are likely to be very different.

BREXIT unexpected but less impactful

He felt BREXIT was both unexpected and unwelcome for attorneys in United Kingdom (UK), with the vast majority of his contemporaries not seeing it coming. Nevertheless, he noted the arguments pro and con are over and done – the referendum was 4 years ago. Later he stated Brits are not fighting old battles. The train has left the station. BREXIT is happening, so UK must get on with circumstances as it continues with the transition.

He felt in some ways BREXIT will have less of an impact and there may be some long-term benefits. As to the first point, he noted UK is overwhelmingly a service economy – much more than manufacturing – while BREXIT’s focus is on the trading of goods.

Advantage of EU for legal community

For years, EU membership has meant a great deal for UK legal sector. It allowed free movement of lawyers and firms within the EU and allowed attorneys to practice law and belong to a firm in any EU country even if they were qualified in another EU jurisdiction. EU attorneys also benefited from EU trade-in-services agreements with other nations such as the EU-Japan Free Trade Agreement (FTA). Stephen, for instance, practiced in many countries such as Poland and Italy as a result of EU rules and found it easy to do so.

Effect of BREXIT on UK laws

Stephen also cautioned that a sudden rewriting of UK law to eliminate EU influences and rules will not happen. He stated the UK will retain all of those EU compliance changes until the judiciary or Parliament takes affirmative, specific steps to change them. He emphasized the UK will remain a common law country.

The influence of the EU on UK Law, however, will change in the long term. Ultimately, UK law may shift from EU standards and adopt new rules that are more oriented to international trade. This will open new opportunities for the legal profession.

Effect of BREXIT on legal practice

He warned that there may be less legal business in the UK as a result of BREXIT. He noted it has allowed new competitors to arise regarding the use of English law. France, Germany and Netherlands have sought to promote agreements governed by their laws and to have disputes settled there by establishing English-speaking and English-oriented courts. The courts are having limited success. To him, English law has plenty of inherent benefits that outweigh civil law system.

On a global scale he believes NY and Singapore law are real competitors for major deals. For two-country jurisdictional disputes, he thought other EU countries may gain ground.

In the run up to BREXIT, major London firms with large EU practices are boosting the number of their German and Dutch qualified partners. This does not necessarily mean a reduction of the number of UK lawyers. It is only a shift in the balance.

English lawyers and law firms are also seeking to maintain their overseas practices by looking for dual nationalities even going back several generations. The best example and approach have been finding earlier generations with Irish ties and using them to become EU qualified. This approach is being restricted and has become more complicated.

Other jurisdictions continue to recognize UK law firms. German and French local bar associations allow UK law firms to continue practicing in their jurisdictions with some small changes

The ultimate seat for settlement of disputes is the EU Court of Justice. There is an uncertainty as to whether UK lawyers will continue to have rights of audience there or must team up with a local attorney.

Lawyers in UK

He noted the number of in-house attorneys is now ¼ of all lawyers in the UK. Many legal departments are reacting to BREXIT by shifting noticeable numbers to other jurisdictions. This is linked to regulation of other sectors such as banking, finance and insurance. He expects international banking and finance will continue to be regulated from UK; Europe practice will be from Frankfort.

The staff of large London law firms are not all British. They have many nationalities, who up to now could go/leave without issue. This will now change under BREXIT. Firms must now consider immigration status of present and future employees. The immigration regime will become a part of global scene, with firms being less able to hire EU employees. Hiring employees from Commonwealth countries may be somewhat easier.

Future effect of FTAs

UK is trying to negotiate FTA covering services, including legal services, with many countries. Many government agencies which spent the last several decades dismantling their international operations (such as in EU countries) are now rushing to reestablish those operations to assist UK businesses. The UK government understands how much legal services market helps UK economy. This has become an important focus of the government.

Relationship with EU bar associations

The Law Society of England and Wales (LSEW) is maintaining positive relations with other EU bar associations. They all recognize the benefits of cooperation with LSEW and London firms. Many are very sorry for LSEW, and recognize BREXIT was not supported by the majority of UK lawyers.

Social divide revealed by BREXIT vote

Most of his colleagues were shocked to find they did not have influence and bandwidth with UK citizens. He sees the referendum as reflecting a social divide between the London-Oxbridge-Scotland-Northern Ireland who overwhelmingly opposed BREXIT, and everyone else who favored it. Those who went for BREXIT may have wanted to reject the upper class whom they felt primarily benefitted from it.

A big job of social inclusion and readjustment awaits UK in the post-BREXIT era. He believes people will stick together and understand advantage of staying together. He is not seeing an increase of social divide.  Instead, COVID has become a common challenge.

Effect of COVID-19

As to COVID, he does not believe staff will return to offices at least before Easter. Firms have adapted pretty well to the pandemic. While one could criticize government for its actions, COVID has been a unifying influence. People for the most part comply. All wear masks, although there is some flexibility on how far 2 meters is. There is also great support for the public health service, which has received a lot of government support. The support has continued.

On the issue of inclusion, COVID has not been beneficial. It has increased the challenges for those seeking inclusion. As an example, mothers with children find it difficult to work since schools are closed.

Business of law firms

On a related topic, there has been a mega impact on law tech especially for law firms. The UK is seen as a leader of law tech, so a lot has been happening.

On the growth side, COVID and BREXIT has been a boom for law firms’ incidental businesses; many have created subsidiaries to handle law tech or other businesses. Some major law firms are even acquiring law tech businesses.

Questions and Answers

Answering a question on the dichotomy between common and civil law, he felt the fundamental part of UK law – freedom of contract – and the common law’s legacy will remain, even with some civil law concepts imbedded in UK law. He felt the reverse would also be true as EU members retain common law principles even after BREXIT. As an example, he noted France allows a trust structure.

As to the courts, he believes the fundamental change under EU of the UK Supreme Court moving beyond the former House of Lords limiting itself to individual disputes will continue.

In response to questions, he noted the last Scottish referendum was very close. In the foreseeable future, he does not believe a majority of Scots will vote to make themselves less well-off which would happen if it left UK – Scotland is a net recipient of UK funds. Those opposing ties with England have adjusted to the same concept and argue not for freedom now, but for devolution of public health for instance. Nevertheless, he expects Scottish independence in 10 years. The decision is likely to depend on what signal they receive from EU on how it would allow them back in. Northern Ireland is less likely to devolve since it is an ever greater taker and cannot stand alone. Religious differences would prevent it from uniting with Ireland, so its best choice is to remain part of UK.

Regarding a question on UK solicitors practicing in the US, he noted they are allowed to do so in many states. For instance, there are hundreds of UK solicitors practicing in NY, CA and DC. Many states, however, do not allow solicitors. Whether a solicitor can be in partnership with US lawyers is less certain since solicitors are not necessarily law graduates, which is why NY does not allow. He does believe there are definite opportunities.

According to Stephen, the legal profession is not growing much. The pyramid structure in law firms is, however, changing because of technology. The fastest growing sector is in-house. He noted the LSEW is about to have its first in-house counsel as its president.

As to LSEW relationship with Council of Bars and Law Societies of Europe (CCBE), LSEW will remain a member but on different basis. Its relationship with the Bar Council for UK barristers has been strengthened as COVID pulled them together. Same change has occurred with LSEW’s relationship with Bar regulators.

Post-Brexit, non-lawyer ownership will remain, although there will be some shifts. He noted some legal providers are listed on the stock exchange. Some have substantial investors. These changes have not been sudden moves – the availability has been around for 10 years. For major law firms, their main competitors are not alternative business structures (ABS) but are NY firms. He does not believe ABS will become popular in EU.

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