The government’s plan to impose an annual cap on immigration will ‘strangle’ City law firms, the Law Society warned today.

The cap will ‘severely restrict’ firms’ ability to conduct overseas work; prevent firms from attracting overseas lawyers and moving employees to London from their international offices; and damage the UK legal sector’s reputation, Chancery Lane said.

The cap could force firms and their clients to relocate transactional work to offices in other jurisdictions, the Society cautioned.

From next year, the government wants to impose an annual cap on immigration from non-EU countries. Prime minister David Cameron has said that he wants to reduce net immigration from its current level of more than 160,000, to tens of thousands.

The Society is canvassing the profession over the proposals, and will feed its findings into consultations being run by the Home Office and the UK Border Agency’s Migration Advisory Committee (MAC). Alongside representatives from 70 UK and US law firms, the Society has met the UK Border Agency and the MAC to discuss the proposals.

Law Society chief executive Desmond Hudson said: ‘Just when we are pulling ourselves out of a crippling recession, imposing this cap now will strangle City law firms and, in turn, hit the businesses they act for.

‘City law firms operate in a global market and need to be able to recruit and relocate staff around the world. Having access to quality talent from other jurisdictions ensures the legal sector is better placed to carry out its work in the international marketplace. By imposing a cap, there is a mistaken assumption that there will be lawyers of equal expertise in the UK and EU, but it is often the knowledge of a particular overseas jurisdiction which is of particular value to a firm.

‘The UK legal sector is a huge employer of domestic legal talent, and restrictions on future international business development will mean fewer opportunities for UK lawyers to gain employment and international experience. The cap will effectively sever links to some of the world’s most important and growing economies, such as India and China, and there is a risk that large amounts of the transactional work that UK law firms engage in will go overseas as a result. It is therefore not surprising that the business community in the City also shares our concerns.

‘Migrants brought in to work in the legal sector are highly qualified, well-paid individuals who make a significant contribution to the UK economy. Further, any perception that the English legal market is becoming more closed to overseas lawyers and law firms is likely to result in further restrictions on the ability of UK lawyers to do business abroad.

‘The points-based system was introduced to control levels of immigration and has been working well. It has helped maintain the UK legal sector’s standing and presence throughout the world. Imposing a cap will bring that trend to a halt.’

The Society has engaged with the City of London Immigration Working Group, the Greater London Authority, the London Chamber of Commerce and Industry, the British Chamber of Commerce and Industry, and London First to gauge the potential impact of the proposals on the City as a whole.

The Society will make a submission to the Home Affairs Select Committee inquiry on the cap. Those wishing to contribute to sector-wide submissions on the issue are asked to contact Julie.Lovell@lawsociety.org.uk.