Law firms see short-term opportunity, long-term peril in Brexit

Fri Jun 24, 2016 7:06pm EDT
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By Anthony Lin

New York (Reuters) - As the reality of Britain's vote to exit the European Union sank in on Friday, international law firms began sending out emails, warning actual and potential clients of issues that could arise due to "Brexit." Some set up 24-hour hotlines to field queries.

But 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.

U.S. and U.K. 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 U.S. 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 U.K. 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, noting the U.K. 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 Parliament now faces the monumental task of passing new laws before Britain leaves the EU.

Leathley said he thinks that will 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 eyeing 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 U.S. firm Steptoe & Johnson, which has an office in London, said there may be bright spots for some lawyers.   Continued...

A vote leave supporter holds a Union flag, following the result of the EU referendum, outside Downing Street in London, Britain June 24, 2016.     REUTERS/Neil Hall