A new paper by TheCityUK, released today, underlines the importance of ensuring the continuity and competitiveness of the globally leading UK-based legal services sector following Britain’s exit from the EU. It particularly stresses the importance of the English courts remaining a hub for global businesses seeking to resolve international commercial disputes and of reasserting the value of choosing English law in commercial contracts.
The paper, ‘The impact of Brexit on the UK-based legal services sector’, draws attention to the need for urgent and clear articulation of how the Government will ensure the widespread enforceability of judgments of UK courts in EU Member States and beyond given the UK would no longer be bound by current EU regulation in this area. Failure to do so would undermine the primacy of English law in international commercial contracts, London’s role as the leading international centre for dispute resolution and the wider UK legal services sector.
Miles Celic, Chief Executive, TheCityUK, said:
The UK-based legal services sector is the leading global centre for the provision of international legal services and dispute resolution. The sector’s contribution to the UK economy was around £25.7bn in 2015, 1.6% of total UK GDP, and it employs 370,000 people across the country, around two-thirds of whom are outside of London. It is vital that the key challenges and opportunities for the sector are addressed in the Brexit negotiations and that its competitiveness is maintained and enhanced.
“The sector is working on these issues and providing that insight into Government, allowing Ministers to draw on the UK’s unique reserve of world-leading legal expertise. The best Brexit deal will be one which is mutually beneficial to the UK, the EU and globally and which allows for a clear and predictable shift from current business conditions to whatever new arrangement is agreed.
TheCityUK’s paper discusses the critical Brexit-related issues which could affect the competitiveness of the UK’s legal sector as well as identifying possible opportunities arising from Brexit. It identifies a number of key recommendations for the Government to consider to optimise the future legal framework and ensure the sector’s continuity and competitiveness. These include:
- Reaffirming the value of the choice of English law in commercial contracts and ensuring the English courts remain an attractive jurisdiction to resolve international commercial disputes. This will support the legal sector’s ability to maintain its direct contribution to the UK economy and the ecosystem that underpins the UK as the world’s leading global financial centre.
- Providing an urgent and clear articulation of how, post-Brexit, the future position of the UK in the area of cross-border civil justice within the EU will be addressed. This will be important in seeking to address uncertainty – and possible litigation – arising from the potential for parties to be in breach of contract due to possible regulatory variations after Brexit.
- Continuing to allow firms to access legal talent and skills on similar terms as they do now under the current unique set of lawyer-specific directives – important to maintaining and enhancing the UK’s strong tradition of being an open market.
- Continuing the productive engagement with sector-specific industry bodies to assess and understand knock-on impacts of Brexit on the legal sector. Key sectors supporting legal jobs and growth include financial services, energy & utilities, technology, media & telecommunications and real estate and construction.
Key facts about the UK-based legal services sector:
- Its contribution to the UK economy was a record high of £25.7bn in 2015, providing as much as 1.6% of total UK GDP.
- Its trade surplus has doubled in the past 10 years to £3.4bn. Within Europe, the UK’s leading position is illustrated by the its total turnover in legal activities which is two and half times that of Germany, and four times that of France, the next two closest competitors.
- The sector employs over 314,000 people in private practice across the UK – over two-thirds of whom are employed outside of London. This includes hubs of specialist legal expertise in Manchester (10,800 people), Leeds (8,200 people), Birmingham (7,600 people), Bristol (6,800 people) and Liverpool (5,500 people).
- Over a quarter of the world’s 320 legal jurisdictions are founded on English common law principles and 40% of governing law in global corporate arbitrations is English law. This is also partly driven by the UK’s reputation as a leading centre for dispute resolution, whether through litigation, arbitration or mediation with parties choosing to resolve disputes under English law in the UK.