International giant makes its forecast, as Law Society warns UK solicitors might be less desirable to US firms
One of the largest law firms in the world has predicted what impact Brexit and Donald Trump will have on global legal markets.
This uncertainty has a number of roots, two of which will not come as surprises to our readers. The report explains:
Following the US presidential election in November, financial markets have been bouyed by President Donald Trump’s pledges to cut taxes and boost infrastructure spending. But it remains unclear to what degree the new administration will pursue campaign promises to implement protectionist trade policies and increase the deportation of illegal immigrants. Moreover, as the UK government prepares to trigger Article 50 in March 2017, uncertainty about the UK’s future relationship with Europe will persist well into 2018.
This uncertainty will have an impact on global markets. The international outfit — which recently dropped its ampersand — predicts mergers and acquisitions (M&A) activity across the world will topple from $2.8 trillion (£2.3 trillion) in 2016 to $2.5 trillion (£2.1 trillion) in 2017.
In the UK specifically, the firm reckons M&A values will fall to $125 billion (£104 billion) in 2017 — down more than 60% from $340 billion (£282 billion) in 2016.
However, it seems this doom and gloom will not be felt by the rest of Europe:
We forecast deal values in Europe excluding the UK to rise from $319 billion (£264 billion) in 2016 to $459 billion (£380 billion) in 2017, and on to a peak of $613 billion (£508 billion) in 2018.
On the world stage, Baker McKenzie forecasts things will gather pace “once greater clarity emerges”. Global M&A activity, it predicts, will “pick up to a peak of $3 trillion (£2.5 trillion) in 2018”.
This forecast comes at the same time the Law Society has gone public with its Brexit fears, particularly over the UK solicitor title and its desirability post-Brexit.
Under EU law, UK lawyers are currently allowed to practise in other Member States which, the Law Society says, “provides a simple, predictable and uniform system of commercial and physical presence across the EU”.
Once the UK withdraws from the EU, Law Society members predict UK law firms and US firms based in the UK “may still” be able to practise in other Members States, but it will be “more complicated and costly” to do so. A “significant side effect” of this is that:
US law firms would have fewer incentives to employ UK qualified lawyers as a way to access European markets or EU practice areas, for example European competition, state aid and procurement work. The UK solicitor title might therefore be less desirable for US law firms.
The society has urged Brexit negotiations to support the legal sector, recommending that UK lawyers should maintain the right to practise in other Member States. As well as this, the report suggests the UK government should “provide legal certainty” by, for example, publishing a draft Great Repeal Bill.
Read the Law Society report in full below:
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