Brexit Aftermath: First Thing We Do, Hire All the Lawyers 

The U.K.’s decision to leave the European Union means years of uncertainty for bankers and investors—and years of extra work for lawyers.

Members of the bar and their colleagues at accounting and consulting firms are shaping up as the big winners after the U.K. vote, which promises a time-consuming overhaul of treaties, contracts and regulations.

The London office of Davis Polk & Wardwell LLP was buzzing with calls Friday, as clients with operations in the region grappled with the potential implications, said Thomas Reid,the firm’s New York-based managing partner.

“There will be plenty of clients, as we’ve found out, who want to understand what could change,” Mr. Reid said.

Untangling the complex relationship between the U.K. and the remaining 27 countries in the EU will be an unprecedented exercise. The move will demand a re-examination of everything from intellectual property and trademarks to competition rules, data protection and labor.

Then there will be the line-by-line reworking of the regulatory framework for the financial sector. Banking laws applied directly from Brussels could fall away, requiring substitutes to be written and debated in the U.K. British financial regulations may need to be amended to remove their dependence on EU banking or securities watchdogs.

The effort could be as all-encompassing as the one that followed the introduction of the Sarbanes-Oxley Act in 2002, said Fiona Czerniawska, co-founder of Source Global Research. That rewriting of laws on accounting, corporate governance and financial reporting led to tens of billions of dollars in compliance and consulting fees.

Banks and companies may cringe at reliving that enormous headache. But it may be the full-employment act for lawyers, accountants and consultants.

“In the short term, professional-service firms will earn a great deal of money through this,” Ms. Czerniawska said.

The U.K. is already Europe’s largest and fastest-growing market for consulting services, with spending up 8% to $14 billion in 2015, according to Source Global Research.

Accounting firm Ernst & Young Global Ltd. has 14,500 employees in the U.K. and expects to tap others in its quarter-million-strong global workforce to help clients deal with the impact.

Tax practices will be affected as well. The U.K. will have more opportunities to use taxation to help particular industries and regions, according to Kevin Nicholson, head of tax at PricewaterhouseCoopers LLC’s U.K. affiliate.

Law firms including Clifford Chance LLP, K&L Gates LLP and Dechert LLP have set up 24-hour hot lines staffed with lawyers across disciplines to help clients understand the implications of Thursday’s results. By Friday morning, emails from clients were flooding inboxes, and webinars on various topics were being quickly arranged by law firms’ marketing departments.

Dechert has a team of 30 lawyers to field client queries on regulation, trade, governance, capital markets and mergers after the U.K. vote. It has offices in the U.K., Belgium, France, Germany and the U.S.

“It’s a monumental task,” said Andrew Hood, a senior director at Dechert and former legal adviser to departing U.K. Prime Minister David Cameron.

The most demand could come when the U.K. renegotiates trade deals with the EU and its agencies, as well as bilateral trade deals and sector-focused agreements with individual countries.

Such work involves tedious hours spent by associates pondering hundreds of rules related to everything from the migration of honey bees to the making of cheese and the width of tire treads. The U.K. government hasn’t led its own complex trade negotiations in decades. That means it will need help from private firms, said Clif Burns, an attorney specializing in international trade with Bryan Cave LLP.

“There’s no question we’ll be hiring more,” said Mr. Burns. The firm has 42 lawyers in its London office.

Source: WSJ

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