Pay freeze at London law firm brought on by Brexit 'uncertainty'
Despite recently posting its second highest profit per equity partner, London law firm Berwin Leighton Paisner has frozen pay and bonuses for its UK-based staff until November, according to Reuters and The Lawyer. This decision comes after Britain voted last month to leave the European Union.
The law firm’s managing partner, Lisa Mayhew, wrote in an email to staff that the reason for the pay freeze was “political and financial uncertainty in the UK following the recent vote to leave the EU.”
The Lawyer reported that a spokesman for the law firm said this decision was a “prudent thing to do,” adding that “employees who have been promoted will still receive related salary raises, and bonuses referable to the prior financial year will also be paid.”
Berwin Leighton Paisner is particularly hurt by Britain’s exit as it specializes in commercial real estate, Reuters reported, which is one of the most negatively impacted sectors. But the adverse effects of Brexit might include the rest of the legal industry in Britain.
According to Reuters, a study by consultancy Oxford Economics found that Britain’s exit would hurt its legal services more than its economy as a whole. The country’s legal industry generates about 23 billion pounds ($30.5 billion) annually, or 1.6 percent of GDP, the wire service reported. In the worst-case scenario, the legal industry’s contribution to Britain’s economy would drop by 4 percent by 2030, while in the best-case scenario, the drop would be 0.5 percent.
Britain’s departure from the European Union also poses a risk to British-registered lawyers who will no longer have the EU’s legal privilege protection. Reuters stated that lawyers without membership in EU states may worry because “the European Commission has extensive enforcement powers that allow its inspectors to demand or seize documents.”
Simon Gleeson, a banking and finance partner at London law firm Clifford Chance, told Reuters that large London law firms benefited from having clients and offices across the European Union.
“Historically, the English law firms have said, ‘come to us and we’ll sort you out across the whole of Europe,’” said Gleeson to Reuters. “That becomes a lot more difficult with the UK outside the EU.”