The Brexit topic has been in the heart of UK citizens discourse since 2016. Following the last elections with the conservative’s most historic victory since 1987, Boris Johnson lead the UK to Brexit as promised. After 47 years, the UK officially stopped being a member of the European Union (EU) on the 31st of January 2020.
Brexit is expected to bring many new opportunities and challenges that will affect the British economy and will reshape the legal framework in the UK and in Europe.
So how will Brexit affect different law firms and the international business and trade in the UK and Europe?
The first and most obvious fact – Brexit is changing the law itself. Disconnecting the British legislation system from the EU’s is the hardest challenge, especially when deciding what laws to keep and which systems to recode. Separating from the EU will affect UK law firm branches throughout Europe – the EU liberalized the legal services market so much that it was easier for a lawyer from London to provide legal advice in Madrid than it is for a Californian lawyer to provide legal advice New York. Following Brexit, Law firms will now have to rethink how and where they should keep their branches open, UK offices throughout Europe, and other European offices in the UK alike.
The changes in legislation will affect business, immigration, tourism, tax treaties, the banking and finance sectors and will reconstruct the whole way investments and trades are made in Europe. In the short term, this means that we will see that British law firms will experience a significant increase in workload. Over the last couple of years, we’ve seen British law firms expanding their offices and launching special hotlines and teams to deal with the implications of Brexit. All of the big law firms in the UK have recorded profit increases of at least 4% over the last couple of years as well, and with Brexit in action, law firms can expect to see a larger increase within the following years, especially in the competition area of law, where proficiency in both EU law and British law is needed. Brexit may also increase the appetite for foreign investment in the UK, with interest rates going up, and the pound strengthening.
With some British law firms not feeling all too concerned, some firms worry about London’s role as a center for international dispute resolution and a start-up central. With English being a global lingua franca, the UK is leaving Ireland to be the only country in the EU with English as the first official language. Many start-ups and companies may choose Ireland now as supposed to the UK due to the language, pro-business approach, employer-friendly regulatory environment, their common law jurisdiction and more. Many lawyers are seeking to register themselves in Ireland. The banking and finance sectors fear that there may see a decline in profitability, due to the uncertainty that Brexit may cause in the within the first few years.
How and which of these changes, concern and effect Israeli law firms and businesses and how can Israeli lawyers prepare themselves for the repercussions of Brexit?
Israel is celebrating Boris Johnson’s win, and can finally take a breather now that Jeremy Corbyn (who is not a fan of Israel, to say the least) is out of the picture. The effect of Brexit on Israel will not be direct. For nearly two decades, Israeli-British trade has been conducted through the EU-Israel Association Agreement, following Brexit, Bilateral UK -Israel agreements on trade, tax and immigration will be made to replace the EU ones, causing short term confusion and uncertainty, but no major affects in the long term. The banking and finance sectors will also be affected by Brexit. Israeli financial bodies have a relatively large presence in the UK, to name some – Bank Leumi, Bank Mizrahi-Tefahot, and many other banking and investment institutions have british branches, so we can expect to see a rise of Israeli investment in the UK.
The UK recognizes that Israel as a great start-up nation, offering a plethora of opportunities and advantages of being a friend and partner with Israel. We may also see an increase in cooperation between the countries in sectors such as agriculture, science, health, technology and innovation. Deepening these links and new trade deals between the UK and Israel means more work for Israeli law firms, and especially law firms with a British desk. Europe accounts a third of Israel’s trade, and while Brexit might take a blow on the economy at first, the economy will adjust with time.
On the other hand, fact being that Europe, even without the UK, still accounts a large chunk of Israel’s trade, Israel will still need a friend in the EU, and an English-speaking partner. Following Brexit, we can expect to see an increase in Israeli companies, hence law firms, working with or within Ireland. Israeli startups may very well choose Ireland as supposed to the UK, as Ireland is a member of the EU, holds a pro-business approach and h employer-friendly regulatory environment.
We can also expect to see an increase in Israeli real estate investors in the UK. The UK has attracted significant investment into its real estate market over the last few years, with Israel being no exception- that are great news for UK law firms that hold a dedicated Israeli desk in the field of real estate, Howard Kennedy being one of them.
Brexit is a fast-moving, immensely complicated and uncertain situation, causing social, economic and also longer term political and institutional changes. In house legal teams in Israeli companies and start ups as well as law firms must monitor and review changes in the British and the EU legal systems, choose the best strategic ways to handle these changes, and learn how they can provide new and extensive legal advice to both Israeli clients in the UK, and British clients in Israel, with accordance to the new laws and new trade agreements .