According to forecasts based on alternative Brexit scenarios, produced by the Law Society in collaboration with Thomson Reuters, Brexit could cost wipe almost £3bn from legal sector turnover by 2025.
Commenting on the forecasts, Law Society president Christina Blacklaws said:
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.
The forecasts indicate that, in the event of a so-called 'soft' Brexit, the average annual growth from 2019 - 2025 would be 2.2%. This drops to 1.5% with 'harder' Brexit options such as a Canada-style free trade agreement, and to just 1.1% in the event of a 'no deal' scenario in which the UK falls back on World Trade Organisation rules.
The forecasts also explored the possible impact on jobs in the sector, finding that under a Canada-style arrangement there could be 4,000 - 5,000 fewer people employed in the legal sector by 2025 than there would be under a soft Brexit scenario. Under WTO rules this figure could double to 8,000 - 10,000 fewer jobs.
As with any forecast, there is a degree of uncertainty to the figures fuelled by the lack of clarity about progress in Brexit negotiations, and volatility in global markets. Ms Blacklaws added:
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.