The decision of the UK, by a slim majority during 2016’s referendum, to leave the European Union (EU), has raised many unexpected challenges — not least for neighbouring Ireland. How is Ireland’s legal system poised to react to seismic shifts across the Irish Sea? And how are solicitors in England and Wales preparing for a new relationship with Ireland, no longer based on common EU citizenship?
Just four days before the surprising outcome of the UK’s referendum on membership in the EU, there was little sign in Ireland of the storm brewing a few miles away. The nation’s football team was battling valiantly at the European Championships over in France; on the 22nd of June, Robbie Brady rose to head home a Wes Hoolahan cross in the dying minutes to give Ireland a victory for the ages over tournament superpower Italy. A few days later, Ireland confronted an even more surprising result, as the Leave vote won the day in the early hours of the 24th of June; it fell to Ireland’s lawyers to advise a concerned client base on the consequences for their businesses, and to ready their operations for an EU without the UK.
“There’s no doubt that the referendum result took business by surprise, and there was a need for a certain element of education,” says Norman Fitzgerald, head of Dispute Resolution and Litigation at Eversheds Sutherland in Dublin. “We ran a number of events and training initiatives for businesses in areas where there was a lack of understanding, such as trade tariffs.”
How is Ireland’s legal system poised to react to seismic shifts across the Irish Sea? And how are solicitors in England and Wales preparing for a new relationship with Ireland, no longer based on common EU citizenship?
Before the result, there had been signs that the legal profession was preparing for both outcomes. Cross-border transfer of legal professionals between the UK and Ireland is well-established. Solicitors from England and Wales need only to apply for a certificate of admission and pay an administrative fee to join the Irish roll, and vice versa, but the direction of travel tended to be from Ireland to the City of London, rather than the reverse. However, Ken Murphy, director general of the Irish Law Society, had noticed an unusual phenomenon. “Four to six weeks in advance of the vote, I was receiving reports that the normal rate of transfer of English and Welsch solicitors to our roll had surged,” Murphy explains. “It then spiked extraordinarily: having been 50 or fewer solicitors transferring per year, we received more than 800 in 2016.”
UK firms — led by Eversheds Sutherland, and Freshfields Bruckhaus Deringer – were doing everything they could to be ready to serve clients in a post-UK EU. “Lawyers are often regarded as pessimists — we try to see around corners and prepare for the worst,” says Fitzgerald. “The thinking was to make sure our English and Welsch lawyers would still be able to represent clients in the European Court of Justice (ECJ), and advise with privilege on EU, competition and antitrust matters.” Eversheds had 86 solicitors transfer to the Irish roll in 2016 – only Freshfields transferred more, with 117 practitioners applying to transfer.
Consensus formed quickly around the areas that worried clients the most about the reality of Brexit. “Passporting in financial services was very much top of the list of concerns, in terms of our client base. They started talking to us immediately — for example, UK banks wanted to explore plans, such as what would be involved in moving to Dublin,” says Fitzgerald. “For our SME clients, currency was the biggest immediate impact, and employment law issues too. Suddenly they faced different regimes applicable to their workforce, tax arrangements, and competition and antitrust matters.” Uncertainty is commercial kryptonite, and staying ahead of the latest developments was a challenge for all parties. “I’m aware of clients who’ve held back issuing proceedings in the UK on the basis of not knowing if the judgement will be enforceable outside the UK, post-Brexit,” says Fitzgerald. “You’d hope there’ll be replacement/mutual recognition/enforcement agreements put in place, but so far we just don’t know.”
What is clear, however, is the commitment of the leading firms to maintain a consistent service level for clients, regardless of the negotiated outcomes. “A majority of the English and Welschsolicitors transferring to our roll are specialists in antitrust, competition and trade law,” clarifies Murphy. “They’re clearly being good lawyers, making arrangements for their own and their clients’ future, in anticipation of an EU without the UK.”
Ready to Compete
Will this influx of UK solicitors result in English accents flooding the Irish capital? Probably not, according to Murphy: Although huge numbers have transferred, “a much smaller number of solicitors have applied for a practising certificate. I’d say almost none have travelled here and commenced practice.” Rights of audience and reassured clients are much more important in the short and medium term than a physical base in Ireland, although Pinsent Masons is establishing in Dublin, with three prominent practitioners joining the firm.
That being said, the Irish legal profession stands ready to react and to benefit, if the UK becomes a less attractive destination for legal work. Ireland is already the jurisdiction of choice for the European headquarters of several major international companies, particularly in the technology sector. Google®, Facebook®, Apple® and Twitter® all have significant operations in Ireland, attracted by its highly skilled workforce, English language, convenient time zones, proximity to the EU and a competitive corporate tax regime. Brexit — particularly the kind of “hard Brexit” to which the UK may well be heading – would only make those differentiators more compelling.
Alongside those advantages, Ireland could now throw in a legal system familiar to clients used to dealing with the UK. “Much of our legal system generally was inherited from the UK,” explains Fitzgerald, “so we’re the closest to the UK legal system in terms of common law.” Ken Murphy agrees: “Just as the Irish economy is a globalised economy, and as much as Brexit is regretted here, there may also be opportunities for Ireland. After Brexit, we’ll remain the only English-speaking common law jurisdiction of a significant size with a legal profession very much in the Anglo-Saxon/American mould in the EU.” As the last game in town for clients looking for a common law regime in the English language, Ireland will be well-placed to step into the breach the UK leaves with its withdrawal. The Irish economy is used to punching above its weight: “We’ve competed very effectively for a jurisdiction of our size in the international marketplace, and have done so for many decades,” says Murphy. “We’re a sophisticated market with a proven record in handling the legal requirements of the great many global businesses that have invested in Ireland over the years. We’re ready to compete for more.”