A no-deal Brexit would cost the UK legal sector almost £3bn in lost turnover by 2025, according to new economic forecasts released by the Law Society of England & Wales today.
Using alternative Brexit scenarios developed in collaboration with Thomson Reuters, the Society predicts 2.2% average annual growth, in real terms, from 2019-2025 with a soft Brexit, giving total turnover of £33.8bn at constant 2010 prices, compared with £28.5bn in 2017. This drops to 1.5% with "harder" Brexit options such as a Canada-style free trade agreement, and only 1.1% if the UK had to fall back on World Trade Organisation rules – the "no deal" scenario.
The forecast suggests a steeper fall in employment even with a soft Brexit than predicted in a similar forecast last year, but a hard Brexit would bring lower growth and less investment in UK firms, leading to lower productivity growth in the sector.
It estimates that under the Canada-type free trade agreement, by 2025 employment in the UK legal services sector could be 4,000-5,000 less than it would be under a soft Brexit scenario, and under WTO rules potentially 8,000-10,000 less.
Society President Christina Blacklaws commented: "UK legal services look to have been relatively buoyant through 2017-18, thanks to a combination of Brexit-related work, steady demand from UK businesses and an uptick in business from non-UK clients taking advantage of the depreciation of the pound.
"However, Brexit is likely to have a significant negative effect on the legal sector in the medium and longer term. This is largely due to the knock-on impact of Brexit on the wider economy as demand for legal services relies on the success of other sectors of the UK economy."
She added: "Lack of agreement on Brexit negotiations combined with volatile global markets mean that we’re standing on thin ice publishing economic forecasts just now, so we are reviewing our figures regularly and looking at a range of Brexit scenarios.
"Our intention is to provide projections that are useful to the sector, to business and government as they steer a course for the years ahead."
Christina Blacklaws said: “Shifts in employment are less certain than other figures in our forecast due to the range of Brexit scenarios and the effects of these on productivity.
“However, the law of England and Wales underpins a vast number of global transactions and will continue to do so for the foreseeable future. Our laws and jurisdiction are renowned the world over for their relative certainty, our expert judiciary and the professional competence and independence of both judges and practitioners."