This post origianlly appeared on LinkedIn.
January 24, 2017
As we embark on a new year, it’s perhaps a good time to look ahead to some of the key trends that will impact London’s legal landscape during 2017.
The Government is expected to trigger Article 50 of the Lisbon Treaty by the end of March, which will pave the way for the two-year EU exit process. As Theresa May has now indicated, Britain will leave the EU and pursue a so-called ‘hard’ Brexit, creating some uncertainty and potentially new hurdles for firms looking to sell services into Europe beyond 2019.
Cause for Optimism
While the situation is far from clear, in the absence of a new trade agreement during the Brexit negotiations, it is possible that organisations will become jittery using London law firms if the capital were to lose its status as a hub for legal work. Nonetheless, many of our law firm clients remain optimistic. London is not merely a gateway to Europe, but home to one of the most reliable and commonly used legal systems in the world. A glance at the cases listed for the High Court during 2017 confirms that the UK courts already play host to litigants from around the world, many of these from beyond the EU.
A concern for litigators is continued access (or lack thereof) to the Judgments Directive. As we exit the EU, disputes partners and potential litigants will be watching to see how UK judgments can be enforced across Europe in the future. Should the process become too burdensome, some firms have suggested that they may advise their clients to consider Dublin as a potential forum. Given both its geographic and procedural proximity to London, the Republic of Ireland’s capital has experience of applying English precedents to material issues, and an Irish judgment will continue to benefit from the automatic enforcement granted by the Directive.
Towards the end of 2016, large numbers of English lawyers applied for membership of the Irish Bar. Several firms have indicated that they see this as a way to circumvent the loss of standing in European courts for their lawyers, that will take place once we leave the EU. While this loss may impact many areas of practice, it is particularly relevant for anti-trust and litigation lawyers, groups that have been quickest to apply to transfer in recent months.
Tighter Market, Tighter Candidate Pools
In terms of specialist legal recruitment, an interesting paradox has emerged. Teams that were expected to struggle following the vote, for example real estate, finance, and M&A have proven fairly resilient. On the other hand, areas such as regulatory, restructuring, and litigation, that many expected to do well, have been relatively flat. A major cause of this is due to the confusion that still reigns surrounding the terms of our eventual exit from the EU.
Dispute resolution in particular has been a tale of two halves. Unsurprisingly, the market for international arbitration talent has been largely unaffected as international parties and law firms continue to dominate this field, using London more for the LCIA than its membership of the Union. Recruitment into litigation teams has, however, slowed compared to the first quarter of 2016. Although there is little sense that there’s a shortage of work, we have spoken to a number of partners whose firms are asking them to utilise their current teams more efficiently rather than adding headcount, while management waits for the medium term economic outlook to become clearer.
As a result, firms are now being somewhat more selective when looking for candidates. Whereas previously they would often hire foreign lawyers (particularly from Australia and New Zealand) we’re now seeing a growing preference for individuals with a solid track record of working in the UK and a familiarity with the CPR. There is also a greater emphasis being placed on specific types of disputes experience, so partners now seem more willing to wait for a candidate with (for example) banking disputes experience rather than hiring a strong commercial litigator who can be trained up. All this means that, despite fewer options being available to them, when strong candidates with a desirable skill set become available they are still being snapped up quickly.
This significantly candidate short market is not likely to change any time soon. It’s very difficult to entice a lawyer to move from one firm to another given a natural aversion to risk across the profession. There is often a perception among candidates that reward, culture and benefits are pretty much uniform across the sector, so that’s where recruiters with a good understanding of their clients can help differentiate between the different options available. One area where firms can stand out is by offering flexible working practices – as you’ll read in our report, some law firms are making real progress.
Overall, much like the UK economy and despite Brexit uncertainty, private practice firms should register positive growth figures in 2017. If you’d like to have a confidential discussion to learn how Hydrogen can support your team’s growth over the coming year, you can call me on 0207 002 0203 or email to [email protected].