How is Brexit affecting in-house lawyers?
Recent headlines will not make for pleasant reading for UK prime minister Theresa May and her government.
Brexit is never far away from the front page, and the harsh glare of the media spotlight on negotiations continues to paint the process as slow moving and shambolic.
Sir Ivan Rogers, the UK’s former ambassador to the EU, last week (October 26th) said the country is “screwed” because Ms May triggered Article 50 without a clear plan.
Some businesses fear the confusion and uncertainty surrounding the UK’s exit from the EU may not be resolved until the March 2019 departure date is imminent. This is likely to have an impact on recruitment, and we’re already seeing a number of Brexit-related trends for in-house legal hiring.
Let’s take a closer look at how Brexit is affecting the market.
1. Recession planning on the rise
A recent Eversheds and Winmark report, The Looking Glass, revealed that a growing number of in-house departments are preparing for a potential recession.
In 2015, just six per cent were planning for an economic downturn, but this figure climbed to 19 per cent last year. Similarly, the proportion of in-house lawyers expecting economic growth dropped from 81 to 53 per cent over the year.
While the report doesn’t specify that Brexit is the cause, the results coincide with the announcement of the EU Referendum decision. However, despite the decline in confidence, the majority of in-house lawyers remain optimistic about the state of the economy.
2. Brain drain could hit employers
Our research found that nearly one-quarter of the in-house lawyers we polled were non-UK EU citizens. This is a significant proportion, and could leave employers struggling to replace talented staff if a ‘hard’ Brexit occurs and EU workers aren’t guaranteed a right to remain in the country.
Some 56 per cent of in-house lawyers told us they were willing to relocate to another country in the EU if Brexit had a negative impact on their role or career progression. This figure jumped to 100 per cent among EU citizens.
Employers may therefore have no choice but to relocate roles abroad in order to fill key in-house legal positions and retain their best people.
3. Ireland becomes an attractive alternative
British in-house lawyers are more likely to speak a second European language than other corporate governance professionals (65 per cent compared to approximately 20 per cent, respectively), according to our figures.
Nevertheless, Ireland has become an attractive location for lawyers, with the Law Society of Ireland revealing a spike in British lawyers registering to practice in the republic.
Speaking before the referendum last year, the organisation’s director-general, Ken Murphy, said: “We are both English-speaking, both common law jurisdictions and our legal institutions are much the same.
“This makes Ireland the destination of choice for solicitors in England.”
4. Staff morale slumps
The Looking Glass report found that while it’s too early to tell what the economic impact of Brexit will be, staff spirit is one area where the effects are already beginning to show.
One-third of departments reported that the UK’s looming departure from the EU has negatively affected morale, while just three per cent believe the news has provided an emotional lift for employees.
Our research found that 27 per cent of in-house lawyers believe Brexit has made their role less secure. In fact, 22 per cent of professionals who switched jobs in 2017 cited job security as a reason, compared with only four per cent who did so last year.
5. Investment banking lawyers particularly wary
Brexit’s impact on in-house lawyers is especially noticeable across investment banking firms. As mentioned, 27 per cent of professionals believe their job security is at risk because of the UK-EU split, but this figure jumps to 70 per cent among lawyers working in investment banking.
Meanwhile, just eight per cent of respondents said Brexit is already having a significant impact on their work, yet nearly double the proportion of investment banking in-house teams said the same (15 per cent).
On the plus side, we’ve found that investment banking recruitment increased steadily in the first six months of the year, suggesting Brexit hasn’t halted hiring plans in the industry just yet.
What does the future hold?
One of the most consistent themes regarding Brexit among the in-house legal profession is the difficulty of predicting its economic, social and political impact.
The Eversheds and Winmark research showed that 34 per cent of businesses believe it’s too early to tell how the UK’s exit will affect investment in overseas and UK-based staff. More than four in ten said the same about the effect on their long-term financial performance.
Clearly, many organisations are taking a ‘wait and see’ approach, although – understandably – it’s business as usual at many enterprises until more details about negotiations are released.
If you’d like to discuss your recruitment needs in light of Brexit, or are concerned about your future job security, please contact Barclay Simpson today.
Our Market Reports combine our review of the prevailing conditions in the corporate governance recruitment market together with the results of our latest employer survey.
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