The opportunities are increasingly appealing, for law firms and their people – but it is unclear whether the message has got through to UK firms.
According to the latest Irish Law Society Annual Report (2016), there are 10,349 practising solicitors in Ireland, up 6% from 2015, of which 20% are employed in the Top 20 firms. A further 20% of practicing solicitors are in-house or public sector solicitors.
Over 1,000 new practising certificates have been registered at the Irish Law Society since the EU referendum in June 2016. Whether this continues has yet to be seen, but clearly the EU Referendum has had an impact.
The opportunity for UK and Irish law firms and others was discussed at a seminar held by Smith & Williamson on April 24, which brought together representatives from leading law firms from both sides of the Irish Sea, as well as the British Irish Chamber of Commerce and the Paul Keane of Charlton.
Focusing more on today than tomorrow
UK legal firms are operating in an increasingly challenging environment. As we pointed out recently, firms are struggling to differentiate themselves within their own market. Moves such as accountancy firms setting up legal practices are starting to have an impact on the marketplace, and while income levels may be increasing, profit margins are down. The day-to-day, practical challenges are more tangible than the long term unknowns of Brexit – but this does not mean that firms should be ignoring it entirely.
Mutterings of movement
Our latest research into Irish law firms indicates that all of the top firms believe that Brexit will have a significant impact on the legal profession over the next five years, with 86% of the Top 20 firms and almost one in two of all other firms anticipating the entry of UK firms into the Irish market as the main source of potential competition to their firm over the next three years.
In terms of strategy, our research indicates that most of the Top 20 firms (83%) have prepared a Brexit strategy and that 73% of these have already executed this plan. However for the rest of firms only 3% have prepared a Brexit strategy in spite of most firms seeing Brexit as either a threat to, or opportunity for, their firm.
Although many of the larger UK law firms (e.g. Pinsent Masons, Simmons & Simmons) have increased their footprint in the Irish market in the last twelve months, our latest research into UK law firms found that only 23% had a strategy in place for the impact of Brexit. Many firms are clearly holding off on making substantive changes to their operations as they wait for more clarity.
Will the people come?
When the UK firms start considering a new EU base and decide upon Ireland, one of the key decisions will be whether to invest in registering new lawyers or hiring the talent already on the ground.
UK law firms that have set up, or are about to set up, greenfield offices in Dublin are, and will be, seeking to recruit talented partners and teams. It is inevitable that more lateral hires will result. This will lead to increased competition at all levels and consequent potential salary inflation.
When providing incentives for talent to move from one country to another, there are key aspects to bear in mind. Accommodation in Dublin can be an issue, as housing stock is in short supply. There are also structuring and tax concerns, such as at what level income tax is incurred and these are all factors that firms will need to consider to provide an attractive proposition.
Firms seeking to establish an office in Ireland have to provide incentives for talent looking to move. One such incentive is helped by Dublin’s pension schemes, which can be more favourable than the UK and this can be used as part of a package to attract talent. If a firm is to consider this avenue, it is important to consider it in light of the firm’s overall remuneration structure.
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.