Brexit – what now? BigLaw v SmallTech
London’s vibrant and growing legal IT startup community looks to be under threat from Britain’s decision to exit the European Union, according to insiders who have voiced concerns over their future ability to access vital talent.
While lawyers at the UK’s largest firms have been coming out in droves to share their thoughts on how Britain’s decision to exit the European Union may affect business, legal IT business leaders have largely been quieter, watching along with the rest of the country as the establishment flounders in the face of unchartered and largely unexpected territory.
With shares and the value of the pound having plunged, the private discussions among established international IT businesses at the macro level has been how to weather the impact of falling exchange rates. The chief operating officer of one international business told Legal IT Insider: “Brexit doesn’t change our trading approach in the context of the markets we’re in: you have to assume that trade agreements will be reached. We have operations in Europe, where I think it’s unlikely we’ll have to negotiate on a case by case example. And in the United States nothing’s changed.”
Most are waiting for the impact of the referendum to become clearer – not least because at the time of going to press, there was no clear successor to David Cameron as Prime Minister and no clear plan as to when Britain would trigger Article 50 divorce proceedings from Europe.
Oh yes, and the Labour Party was in the midst of a rebellion against Jeremy Corbyn’s leadership that saw Game of Thrones viewing figures drop (not really).
When Article 50 is triggered, the UK will have two years in which to negotiate the terms of its exit from the EU. Law firms are already positioning themselves to capture that work, unpicking 43 years of EU partnership, which should lead to a period of heightened activity in the short term.
While it may still mean some tightened belts – uncertainty was never a trigger to spend big on external services and there is a very real prospect that the UK will be hit by a recession – London’s enviable position as the legal capital of the world, second to New York, can give a certain amount of reassurance that in the short term, BigLaw and the legal tech support network around it is unlikely to fall off a cliff.
However, it is the smaller end of the market, in particular London’s vibrant and growing legal IT startup community that could be immediately affected by Brexit. At Legal Geek, which was set up to organise LawTech events in London and San Francisco, founder Jimmy Vestbirk told Legal IT Insider: “Legal Geek’s mission is to make London the best place in the world to have a LawTech startup, but Brexit makes London less attractive as a global tech leader. The damage is hard to quantify at the moment but I have already had discussions with startups considering relocating to Berlin and/or Amsterdam.”
And at legal analytics startup Apperio, founder and CEO Nicolas d’Adhemar said: “The tech community was almost universally pro-Remain. The UK and London in particular has become a hub of tech companies, talent, capital and customers. The referendum result impacts each one of those elements collectively and individually. I am particularly concerned over our ability to access tech talent.
“The UK tech ecosystem is the best in Europe but there are not enough home-grown developers to service demand and the restriction of EU nationals from working here would impact our ability to grow. Our product and clients are international so we can adapt but it would be a shame for London to lose its previously envious position.”
Tweeting at the time news of the EU referendum results first emerged, contract lawyer provider Obelisk’s founder and CEO Dana Denis-Smith tweeted: “Most tech is built offshore where there are coders and skills we simply don’t have here. Will set back advance.”
In a note of optimism, d’Adhemar added: “The tech community is resilient and adaptable by its very nature and London will still continue to host the best law firms in the world and their clients.”
However, TechUK, which represents British tech firms, has warned: “Without the benefits of EU membership, the UK needs to be at its very best to succeed.”
Useful resources to understand the early impact of Brexit include:
Dan Tench, Head of Public Law at Olswang: 10 things to consider: http://www.olswang.com/articles/2016/06/the-brexit-votethe-friday-after-the-night-before-10-things-to-consider-today/
Practical Law, In-house Blog: UK votes out: après nous, le déluge http://in-houseblog.practicallaw.com/ukvotes-out-apres-nous-le-deluge/
BBC News: Brexit: UK tech sector reacts to leave vote – http://www.bbc.co.uk/news/technology-36621115