Cross-border connectivity will help law firms prosper post-Brexit.
A surge in export activity and growing interest in establishing facilities in mainland Europe ahead of Brexit, are causing demand for cross-border professional services to soar. In the legal services market, this sharp increase in demand could lead to more strategic hiring.
The legal services sector has changed markedly in recent years. The mid-tier in particular has become a hotbed of merger activity as firms struggle to compete with their larger counterparts. Those firms that have succeeded in growing their market share have recognised the need to strengthen their specialist teams and focus on client service.
Even those that have chosen not to jump on the M&A wagon have understood the importance of keeping their structures and capabilities under review. They can then reach out to the right people, making the right hires at the right time to meet existing and anticipated market demand in markets strategically targeted.
With the countdown to Brexit under way, many firms are finding that demand for cross-border services is getting stronger by the day. But should they be considering bringing on extra resource now or waiting a while longer?
In the immediate aftermath of the EU referendum, when the value of sterling fell, overseas investors from countries such as China and the US flocked to acquire assets while exchange rates were in their favour. Thus was a significant uptick in demand for property conveyancing and advisory services in London and other parts of the country.
Since then, demand for legal services in relation to high-value property transactions has fallen back.
For many firms, the focus now is on making sure they have the right breadth and depth of cross-border know-how. This is to meet demand for new legal agreements and contracts, once the terms of future international trade agreements are known.
Some businesses may also be considering establishing an off-shore hub as part of their contingency plans. Advisory services linked to this and other restructuring initiatives may be required.
Advice for employers in relation to immigration laws is also likely to experience a surge in demand.
As Britain’s negotiations with the EU progress, businesses will be watching and waiting for some certainty about what the post-Brexit future will look like.
Once they have this, they will want to adapt their own operating models and teams accordingly. Those firms that are ready and equipped accordingly could experience growth and first-mover advantage.
However, before rushing to invest in extra cross-border capacity, it is important to consider the firm’s international connectivity.
Those that are already part of a global network, such as Multilaw, ADVOC or Law Firm Network, for example, could have an advantage due to their ability to leverage established overseas relationships.
Those without access to a global network but with more informal overseas relationships in place could also benefit.
Without this framework of connectivity, importing a team of cross-border specialists may not have the desired result – and could even be a costly strategic error if that connectivity does not follow.
Mid-tier law firms should continue to plan for Brexit, weighing up the risks and opportunities it could bring in the future. While strategic hiring may be a priority for some, it is important that cross-border connectivity is given equal consideration.
Peter Noyce is legal services sector specialist at accountancy firm Menzies LLP and author of Brighter Thinking for Law Firms