With the implications of Brexit on business still to be fully understood, many businesses are considering ‘protective’ steps to try to minimise any commercial impacts.
In particular, Northern Ireland law firms are likely to see a number of impacts, as clients require specific advice in this area. International law firms in the UK are turning some of their focus to Ireland which could have wider impacts on referral networks etc.
One certainty is that local law firms will be key advisors to the NI business community on the potential impacts for businesses and the Northern Ireland economy.
With one international law firm having filed to trademark the term ‘Brexit law’ many of the local commercial law firms will be bracing themselves for a Brexit bonanza, as businesses consider what Brexit and leaving the EU will actually mean for them. Already there will be legal teams busy unravelling the legal complexities of Brexit. However, transactional lawyers may see a decline in their workloads as the market and investors ‘hold tight’ in uncertain and increasingly volatile conditions.
Transactional practices are normally a key driver of performance and revenue generation for commercial law firms. If this splutters, firms will have to consider how they can maintain practice areas and maximise their ability to provide specialist advice on Brexit. It is questionable whether the scale of this ‘new work’ will replace any downturn in transactional work.
One factor of particular importance to local law firms – given the land border with the Republic of Ireland – is that many UK and NI qualified lawyers have already began applying to the Law Society of Ireland. Triggered by some as a precautionary measure – lawyers registered with the Law Society of Ireland should be able to continue to practice EU law in the event of Brexit. The registration of solicitors in Ireland should provide firms with access to European courts and privilege, with competition lawyers being particularly concerned about the UK’s impending EU exit.
Registering in Ireland does not necessarily mean that a law firm is required to establish operations in Ireland. Firms should properly consider the potential tax implications of whether their activities might create an Irish permanent establishment for tax purposes. If not properly considered, this could potentially lead to the business and all ‘partners’ being required to file Irish tax returns. Irish VAT, payroll and other regulatory considerations may also need to be addressed, which could result in a level of complexity that was not initially contemplated when the business undertook ‘a simple piece of work’. Specialist international tax advice should be sought.
The effect of Brexit on the legal sector will ultimately depend on the impact on clients. Whilst many law firms will be considering how best to advise their clients on Brexit they should not forget about managing their own business through complexities of the new era.