The Law Society and business lobby group the CBI held an inaugural joint event last night calling on government to safeguard the UK’s pre-eminence in legal services in a ‘head-to-head’ battle with other jurisdictions.
Chancery Lane is seeking certainty about the UK’s relationship with the EU, amid fears that access to European markets could be inhibited by withdrawal, while also demanding that immigration rules are flexible enough to attract top talent to commercial practices.
In a speech at the CBI’s Centre Point headquarters in London, Society chief executive Desmond Hudson outlined the contribution of international law firms to the UK economy, warning that the UK’s competitive edge is under threat.
Legal services contribute over £20bn to the UK’s gross value added and last year exported £4bn worth of services, contributing to a net positive trade balance of £2.85bn.
‘Our legal services sector has been one of the UK’s overwhelming success stories over the last 20 years, thriving when times were better - and bucking the trend when things get worse,’ he said.
‘Government and industry need to work more closely together, because we face growing competition from developed and emerging markets which are making inroads into areas where we once comfortably dominated. I’m thinking of arbitration for example, where we used to have a stranglehold.’
Hudson outlined key areas where the Society wants government to act. On immigration, it wants the cooling-off period which prevents most sponsored workers from returning to work in the UK for 12 months to be relaxed for migrants in the top tax bracket. This would allow law firms to plan their people requirements over the long term.
‘More business people cannot be without their passports for an extended period of time - the “passport passback” scheme should be extended to more migration categories,’ said Hudson.
Society members also want certainty about the UK’s relationship with the EU, which is ‘critical’ if England and Wales is to sustain its position as the largest legal services market in Europe.
Hudson also called for a reduction in the regulatory burden on law firms. He welcomed the lord chancellor’s review of regulation as an ‘opportunity to recognise that a “one-size-fits-all” approach is not appropriate for a jurisdiction where around 70% of all legal activity is servicing business’.
SRA chair Charles Plant, a former partner at Herbert Smith, raised the issue of regulating the City during a Q&A session. He outlined the efforts which the regulator has made to establish its credibility with the City, such as opening a City office and appointing relationship managers for the biggest firms.
But he added: ‘I recognise that City firms pay a disproportionate amount [in regulation costs]. But there are hundreds of firms in this country on the edge of collapse. There are firms in the top 100, indeed the top 50 we are worried about, and alot of others that are going nowhere fast. This is what we are spending the money on. Do the major firms want to continue to pay a disproportionate amount to ensure we continue to protect the public? It’s a difficult issue.’
For the CBI, Sara Parker, director for member relations and London, said the lobby group would work with the Society to get its concerns on to the government’s agenda, and raised in trade negotiations, to the extent of establishing whether ‘individual clauses should be in or out’.
‘We must ensure UK law wins the battle with US law,’ she said. ‘More should be done to support your success. We still do not hear ministers championing the legal sector often enough, compared to sectors such as automotive, creative and technology.’
Parker also stressed that business should better exploit lawyers’ commercial nous, pointing out that in the US lawyers are much more likely to be appointed non-executive directors.