New economic forecasts from the Law Society of England and Wales predict that almost £3 billion could be stripped from legal sector turnover by 2025 if the United Kingdom crashes out of the European Union without a deal.
The forecasts used alternative Brexit scenarios developed in collaboration with Thomson Reuters.
“UK legal services look to have been relatively buoyant through 2017-18, thanks to a combination of Brexit-related work, steady demand from UK businesses and an uptick in business from non-UK clients taking advantage of the depreciation of the pound," says Law Society President Christina Blacklaws.
“However, Brexit is likely to have a significant negative effect on the legal sector in the medium and longer term. This is largely due to the knock-on impact of Brexit on the wider economy as demand for legal services relies on the success of other sectors of the UK economy.
“Our econometric model predicts 2.2% average annual growth from 2019 – 2025 with a soft Brexit. This drops to just 1.5% with ‘harder’ Brexit options such as a Canada-style free trade agreement. If the UK had to fall back on Word Trade Organisation (WTO) rules – a ‘no deal’ scenario – growth would only be 1.1% per year on average over this period.”
“A hard Brexit could have a significant impact on employment in the sector, with lower growth and less investment in UK firms leading to lower productivity growth in the sector. Even based on a soft Brexit modelling our forecast suggests a steeper fall in employment than in last year’s forecast," Ms Blacklaws says.
Under the Canada-type free trade agreement, Law Society forecasts estimate that by 2025 employment in the UK legal services sector could be 4,000-5,000 less than it would be under a soft Brexit scenario. Under the WTO rules by 2025 employment could be 8,000-10,000 less than it would be under a soft Brexit scenario.
“Shifts in employment are less certain than other figures in our forecast due to the range of Brexit scenarios and the effects of these on productivity," Ms Blacklaws says.
“However, the law of England and Wales underpins a vast number of global transactions and will continue to do so for the foreseeable future. Our laws and jurisdiction are renowned the world over for their relative certainty, our expert judiciary and the professional competence and independence of both judges and practitioners."