The threat of a ‘no-deal’ Brexit could leave a £840m shortfall in the UK’s legal services sector, it has been claimed, as two new reports say firms are increasingly concerned at the prospect.

A report by Thomson Reuters on the impact of Brexit, as well as an annual benchmarking survey by advisory firm Crowe, both warn that while firms appear in relatively good health at the moment the prospect of leaving the EU without an agreement on legal services still poses a major threat.

Reuters, in partnership with Oxford Economics and The Law Society, said that although the value of legal services increased by 5% between June 2016 and December 2017, a major factor was due to increased demand for advice resulting from the uncertainty created by Brexit. If the UK leaves without a deal the UK legal services sector’s turnover could be 2.1% smaller by 2025 – the equivalent of £840m, the report warned.

The report was based on conversations with legal professionals. Meanwhile, a majority (63%) of the 257 respondents to a concurrent survey said Brexit represented more of a threat than an opportunity in the short-term.

Jim Leason, vice president of market development and strategy for Reuters’ legal business, said: ‘The UK legal services sector has performed well partly because of the legal challenges Brexit presents but this could change as negotiations reach crunch time.’

Meanwhile, according to the ‘Law firm Benchmarking’ survey by Crowe, 56% of participants from City firms viewed exiting the EU as a threat and 55% said the threat had increased since last year. Just 6% said they believed Brexit will be a positive thing.

Louis Baker, head of professional practices at Crowe, said: ‘Understandably, uncertainty remains the key word in the industry this year. Given the protracted Brexit negotiations, this is not unsurprising; indeed, with the series of European leader summits lined up between now and the New Year, many firms may not have firm plans for the next month, let alone beyond that.’

Last week, the Solicitors Regulation Authority warned that European lawyers will no longer be fast-tracked into the England and Wales system after next March in the event of a no-deal Brexit.