Although rife with uncertainties, Brexit offers the more adventurous firms the opportunity to expand to the Irish market - although careful consideration needs to be given as to how this is structured.
In the impending storm of Brexit, one of the key questions for UK professional services firms is whether to set up an office in the EU and whether the opportunity offered by moving to Ireland is the most favourable. The initial response to Brexit in the UK across the board was that we must do something, although a significant number of firms are still waiting to see.
Our Irish law firm survey anticipates that more UK firms will look to establish a presence in Ireland post-Brexit, either through mergers or new offices. Some UK-based firms will be seeking just a foothold in the Irish market, while others will be looking to hire and scale very quickly.
This was one of the themes of a seminar held by Smith & Williamson on April 24, which brought together representatives from leading UK and Irish law firms, as well as the British Irish Chamber of Commerce and the Paul Keane of Reddy Charlton.
Our research indicates that 44% of the Top 20 Irish firms surveyed (and 12% of those outside the Top 20) were approached by a UK law firm in 2017 with a view to a merger or acquisition.
89% of firms surveyed expect more UK firms to open offices in Dublin as a result of Brexit and anticipate the entry of these firms as the main source of competition over the next three years for legal firms in Ireland.
Alternatives to merging
Discussion at the event suggested that a formal or informal partnership could be the next big step forward for many firms operating in both the UK and Irish markets. This form of expansion should reduce the risk, particularly if uncertainty over the opportunity exists.
This ‘best friends’ arrangement could work for firms seeking legal advice from a firm within the EU and for those firms in Ireland specific UK related laws. The obvious benefit to this form of arrangement is that the firm keeps its options open and is not committed to expenditure, where the return may be uncertain.
This situation gives both parties more certainty, the expectations on both of them and, potentially, a certain amount of guaranteed income depending on the arrangement of the contract.
However, as there is so much uncertainty around the amount of work that will be generated in a post-Brexit world, one firm could find itself locked in to a contract which quickly becomes an anchor around its neck. An Ireland based firm could be overwhelmed with the legal advisory work required or a UK firm could end up paying a continuous fee for advice that is simply not required.
If the formal route is the way firms wish to progress then it is vital that the commercial nature of any contract is considered at an early stage with backstops built in as a matter of course.
Not the only customers in the market
Our research indicates that more UK firms will look to establish an Irish presence, and therefore competition for talented staff will increase. However, the UK firms are not the only buyers in the market. Increasingly, US firms are showing an interest in Ireland and will have significant resources to invest.
With our range of services and our established presence in both markets, Smith & Williamson offers real support for any firms seeking to expand either way across the Irish Sea.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.