What current UK foreign policy means for law firms

English student Rachael Shepherd explores how UK foreign policy with the US and China could soon affect the way law firms do business

The UK is on the verge of making a forever friend, out of China or the United States, but not both. Since the tenure of President Trump re-began, the UK, despite trying to maintain the special relationship by inviting the President for the state diner and remaining uncritical of the President’s actions, has now taken a different turn.

Upon Trumps’s demands for Greenland and his criticism of and rejection of NATO for not complying to his demands Kier Starmer launched one of his first criticisms of Trump since their tenures collided calling Trumps tariffs in an attempt to swindle Greenland out of Denmark’s hands “completely wrong”. This comes after Starmer called the comments Trump made about troops that died and fought in Afghanistan “insulting and appalling”.

Less than a month after this speech, Starmer extended a hand of friendship to long-term US enemy China; the first time a British Prime Minister has visited China in nearly a decade. As a result, for the UK, tariffs on Scotch Whisky were halved and among other things, sanctions of UK MPs were lifted. Trump, in response criticised the UK’s hand stretching calling the move “very dangerous”, with a lack of specificity whether the danger came from China or him.

So, beside the obvious schoolyard antics at play here:

What does this mean for UK law firms?

Currently UK-based law firms have a slightly different relationship with both countries. In interactions with China, law firms need specific approvals from the Chinese government to set up a new firm and a presence in the country. Indeed China has not committed to allowing foreign law firms to provide full advisory services independently, firms must work through joint ventures or partnerships with local firms. In fact, China prohibits foreign law firms from interpreting Chinese law at all.

Understandably due to geo-political tensions, when receiving instructions from Chinese companies, UK-based law firms often need to seek advice from government to approve acting on these instructions. In contrast, with the US, UK law firms face far fewer formal barriers to interaction, and the market is much more open in allowing them to advise on American law.

However, with this blossoming relationship there is a possibility these rules could relax and perhaps much less compliance would be needed, both on the UK and Chinese end, to allow UK-based solicitors to accept and act on instructions from Chinese companies.

This would give UK-based firms a significant edge over US law firms who recently have been raiding City firms of their partners at an alarming rate due to more desirable pay packages.

If Kier Starmar’s hand shaking and polite interaction weakens the sanctions placed on Uk legal and political personnel (China have already agreed to reduce sanctions on MPs so it isn’t impossible to imagine them reducing the rules on solicitors) UK firms would have more access to Chinese business, trade and deals potentially boosting their workload and global outreach and influence.

While this wouldn’t necessarily (or even plausibly) stop solicitors moving to US-based law firms for the more desirable pay, it would give British solicitors an area of the market to profit from that the US might not be able to access, especially if the weakening rules aren’t also applied to the US; after the tariff wars it seems unlikely they would extend to the US.

Indeed, we could even see a repeat of the great Atlantic shift as many businesses shifted their headquarters towards the USA after the UK economic climate became “sluggish” and started to lack “vision or even economic optimism” but, if the Chinese markets become more open and friendly, after this diplomatic move, we could see an onslaught of businesses moving towards China; many are currently de risking from America “when rules no longer protect you, you must protect yourself” and so it isn’t unimaginable that they could turn their sights on China.

While, as can be argued, the previous visit of a UK prime minister Theresa May to China did not see these results and indeed her tenure did overlap with Trumps, his actions arguably did not shift, jolt and rupture political tensions as much as his secondary tenure. Additionally, China in this secondary tenure of the President, is arguably much more likely to capitalise on the shifting alliances in Europe, particularly if they weaken their long-term enemy, America, which a shift of the UK towards China away from the US would do.

Looking to the future?

While any immediate change is highly unlikely, a more prolonged and slower shift away from America towards China is a future law firms do need to consider. The special relationship is crumbling, and law firms must follow where any next relationship may form in order to stay in business. Indeed, as Chinese EV company BYD is now dominating the global EV market, and AI tech developments from China ar beginning to rival ChatGPT, the opportunities for business and development and to get out of the lack of “economic optimism” for firms, it might be mandatory to engage in this market to avoid collapse.

Rachael Shepherd is studying English at the University of Liverpool. She has an interest in litigation, arbitration and investigations and run a website, lackoflaw.com, dedicated to helping non-law students propel their legal careers.