London is set to lose up to 12,000 jobs in the wake of Brexit, and U.K. law firms will “absolutely” feel the effects, according to Catherine McGuinness, the City of London Corp.’s policy chair.
Speaking after giving evidence at a parliamentary committee evidence session on Brexit earlier this week, McGuinness warned of the dangers to law firms of a “no deal” Brexit.
In the EU Select Committee oral evidence session on the progress of the Brexit negotiations, McGuinness spoke of the hit the £188 billion ($246.44 billion) professional services sector could take if the U.K. government fails to agree to a withdrawal agreement that takes their needs into account.
“Absolutely, law firms could feel the effects [of possible job losses in financial services]. It of course depends on each firm’s arrangement and how they’re set up, but there needs to be mutual recognition of qualifications and greater certainty around mobility of people,” McGuinness told Legal Week, Law.com’s London-based publication.
McGuinness, herself a former partner at Fieldfisher predecessor firm Waterhouse & Co, highlighted an urgent need for the government to ensure that the planned transition period is ratified and to deal with issues such as contract continuity, passporting rights and mutual recognition of professional qualifications.
“The government needs to underscore the importance of recognizing professional business services, including law, in the agreement,” she said. “I am a former lawyer, and when I talk about professional services, often I’m talking about law firms and have English law in mind—in particular, the mutual recognition of judgments and enforceability.
“Customers want certainty—for example, the ability to rely on the enforceability of a judgment, which is in the interest of business parties across the EU,” McGuinness continued. “And for law firms, what’s particularly important is mobility of people—what will happen to the international talent pool on which firms rely, and the ability of lawyers to fly in and out to advise clients.”
Her warning comes after the publication of a letter from the Professional and Business Services Council, which represents professions including law, accounting, consultancy, architecture and advertising, calling on Theresa May to act immediately to protect the interests of professional business services in the Brexit negotiations.
In the letter, sent earlier this month, 42 business leaders, including Allen & Overy senior partner Wim Dejonghe, Clifford Chance managing partner Matthew Layton, Freshfields Bruckhaus Deringer senior partner Edward Braham, Slaughter and May senior partner Steve Cooke and Herbert Smith Freehills senior partner James Palmer, cite seven key requirements the government needs to meet to protect their businesses.
These include: the mutual recognition of professional qualifications, judgments and regulatory frameworks; maintaining an ability to continue recruiting the best talent from the EU and beyond; greater certainty during the transition period and the ability to continue providing fly-in, fly-out advice.
The letter highlights the contribution the professional services sector makes to the U.K. economy—providing some 4.6 million jobs and £188 billion ($246.55 billion) in gross value. Last year, the Law Society valued the legal sector’s contribution at around £27.5 billion ($36.06 billion)
McGuinness, who also signed the letter, said London-based law firms have “stepped up to play their part” in negotiations. She highlighted Braham’s work as leader of the Mutual Market Access Working Group, which looks to underline the importance of maintaining mutual market access for legal services across the U.K. and EU.
With fewer than 250 days until Brexit takes effect on March 29, 2019, McGuinness stressed that there remain a number of urgent issues that need to be dealt with to ensure the U.K. legal system remains attractive. “English law is one of our greatest assets, and this must be underpinned in the agreement,” she said.
In addition to urging firms to continue to push the government to meet the sector’s needs, McGuinness also warned that firms need to prepare themselves internally for Brexit.
“For law firms, there will be a lot of work around [Brexit] in the immediate aftermath,” she said. “But they will all need to think about what arrangements they must put in place in the long term.”