Sun, Jun 26, 2016 page13

• Law firms see opportunity in Brexit peril

  RED TAPE: Britain’s decision to leave the EU means lawmakers must decide on new legislation covering everything from transport and public health to human rights

  • Reuters, New York
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  As the reality of Britain’s vote to exit the EU sank in on Friday, international law firms began sending out e-mails, warning actual and potential clients of issues that could arise due to Brexit. Some set up 24-hour hotlines to field queries.

  However, behind the marketing push, lawyers on both sides of the Atlantic said that any spike in advisory work might be short-lived and the long-term impact of Brexit on law firms could be adverse.

  The uncertainty that comes with it has the potential to sap business and threaten London’s leading position in the global profession.

  US and UK firms dominate legal advisory work on large international transactions and London has long been their European hub. In recent years, the promise of more work in the British capital has led firms from New York, Chicago and other US cities to expand their presence in London.

  Christian Leathley, a New York partner with British law firm Herbert Smith Freehills, said Brexit would likely produce an “initial flurry of activity” as clients raised questions about what it would mean for their business in the UK and Europe, but Leathley, whose firm has set up a Brexit task force, said there were still few clear answers.

  “We’re in a black hole,” he said, adding the UK had adopted EU law in a host of areas, including public health, transport, competition, intellectual property and human rights.

  With Brexit, those laws will become “blank sheets of paper,” and the UK Parliament now faces the monumental task of passing new laws before Britain leaves the EU.

  Leathley said he thinks that could take years, possibly far longer than the two years envisioned for withdrawal under the EU treaty.

  Tony Williams, a former managing partner of British law firm Clifford Chance, said the long period of uncertainty was bound to make international companies eying British investments think twice.

  “A certain level of [mergers and acquisitions activity] will be put on hold, possibly indefinitely,” said Williams, who now works as a legal industry consultant.

  Lucinda Low, the head of international offices for US firm Steptoe & Johnson, which has an office in London, said there might be bright spots for some lawyers.

  She said the newly separated UK would need to negotiate new trade deals with EU nations. That would invariably increase regulatory red tape and complicate disputes, creating work for law firms with large trade practices, like Steptoe.

  However, she said she thinks the overall impact of Brexit on the profession is likely to be negative.

  A major concern about Brexit is whether it might diminish London’s status as a global financial hub.

  Low said she believes London would remain an important trade and legal center, but said the economic climate ahead would be rocky.

  “I wouldn’t expand in London now,” Low said, “though I wouldn’t pull out either.”

  Williams said he thinks any advisory work Brexit produces in the short-term would be outweighed by the loss of work in mergers and acquisitions and other areas.

  It was to handle such work in UK and across Europe that many US law firms expanded in London, recruiting top local partners and even forcing British firms to compete with New York associate salaries, but Williams said that US-led growth might come to an end as the London deal flow slows after Brexit.

  “Most of these offices are now quite large and they need a certain number of shovelfuls of coal coming in to keep going,” he said. “I think they will be looking hard at layoffs and redundancies.”
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