Could law firms bail on Britain?

Britain’s divorce with Europe has been filed

After many months of political and legal wranglings and debate on whether Brexit does in fact mean Brexit, Mrs May has finally written to the European Council to inform them we intend to leave the EU.

Putting aside the politics, from a business planning perspective we can now finally bank on Britain leaving the EU by 2019, and decide what to do about it.

Does Brexit mean Bailing on Britain?

Won’t quit on Britain? Some of us may be taking a sneaky look at the Law Society of Ireland‘s website this weekend as we review some overseas options, just in case.

Post-Brexit our clients will continue to need advice on European issues including buying property, establishing businesses, immigration and cross-border probate and family law. Does that mean we need to re-locate part of our business to the EU? Much of this work can surely still continue from the UK.

But whether we can continue as usual may depend on how much of our work comes from EU Member states and how things pan-out with key issues such as VAT, and how much we rely on the Lawyers’ Establishment Directive; which provides the right for lawyers to practice law on a permanent basis in another Member State using their home professional title. The Law Society has identified some key issues that arise for law firms due to Brexit.

What plans can we make now?

UK law firms have some difficult choices. We need to assess what EU Directives we rely upon now to operate effectively both in delivering services to clients and operating as an efficient business, then take a bet on whether we may still be able to benefit from some or all of the provisions of these Directives post-Brexit as a result of any deal that may (or may not) be negotiated.

What about the Great Repeal Bill?

We could meet some immovable ground when negotiating.

We are told that the “Great Repeal Bill” will some convert any residual EU law into UK law at the time of our exit. That’s good news for business continuity.

On the other hand, we know that may of the Directives we rely upon including the free movement of workers, the EU’s common system of VAT, and the Lawyer’s Establishment Directive all require cooperation and agreement between Member States, and cannot operate unilaterally even if they do become UK law.

We also know that Member States have no real interest in agreeing a deal with the UK that will give us some of the benefits of EU Membership but without the burdens. That has already been made clear by the European Council.

Do our lawyers need to be registered to practice in an EU Member State?

Ireland could provide a solution to every EU dilemma

The Law Society of Ireland has already announced a record number of UK solicitors admitted in Ireland; 810 were admitted to the roll last year. These are reported to be mainly lawyers dealing in EU law including competition, anti-trust and trade law.

Any solicitors who do wish to be admitted on the roll as a solicitor in Ireland can do so easily – no exams, a 300 Euro fee for a Certificate of Admission which upon being granted would entitle them (so I understand) to practice both in Ireland and the UK without the need to physically relocate to Ireland or practice within an Irish law firm.

Could we relocate part of our business overseas?

But what if we’ve completed our assessment and have come to the reluctant conclusion that we rely on key EU Directives and cannot bank on any favourable deal?

Relocating our law firm overseas could be tricky unless you don’t need to travel frequently to see clients, or you are not reliant on a UK High Street location for new business.

But what if part of your business would be better off relocating to a country within the EU? This could be considered by many UK law firms if:

(a)  A large proportion of their legal services are based on EU law

(b) Most of their client base are within the EU, or trade with EU countries,

(c) They have a lot of clients who are VAT registered in EU member states and need to reclaim VAT charged for legal services.

(d) Employees and Partners want to benefit from lower individual tax rates.

(e) You require the benefit of current EU Directives for any other reason.

In Part 2 of this post I take a look at Ireland as a potential location for relocating part of our law firm. Comment and debate on any aspect of this opinion post is welcome – please use the comments facility below.

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Martyn

Ben

I set up Law Practice Manager because I enjoy sharing fresh and original opinions and posts on law management issues. Facebook and Twitter: @LawManager1 LinkedIn group: https://www.linkedin.com/groups/8538343

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