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Record numbers of UK lawyers register in Ireland

UK law firms have ramped up preparation for Brexit by registering a record number of solicitors in Ireland but confusion remains about how many of them will be able to practise in Ireland and the wider EU after Britain leaves.

The Law Society of Ireland said its solicitors roll had received 1,560 applications in the year to date — more than 31 times the average annual rate in the years before the 2016 EU referendum.

Some 3,706 lawyers from England, Wales, Scotland and Northern Ireland have been registered since the beginning of 2016 as City firms scrabble to insulate themselves from Brexit’s effects.

Those include UK lawyers potentially losing rights of audience in European courts and seeing their ability to advise on European legal matters curtailed.

In August the Law Society of England and Wales warned that the legal sector in the UK could face a £3.5bn hit as a result of a no-deal Brexit.

“Typically, major international commercial law firms are the source of these transfers, in some cases hundreds from one firm,” said Ken Murphy, director-general of the Law Society of Ireland. “It is an extraordinary development.”

Elite UK firms Allen & Overy and Linklaters have among the largest numbers of lawyers signed up to the Irish roll, according to the Irish Law Society, with 287 and 250 respectively. Latham & Watkins has registered 155.

However, only 981 UK lawyers hold a “practising certificate” which allows them to work in Ireland, according to the Law Society. Firms said they were waiting for the outcome of Brexit to determine whether to pay the annual cost of £2,650 per person required to take the final test.

One top-tier UK law firm said only a “handful” of the hundreds of lawyers registered in Ireland had practising certificates, because of the cost and “the lack of clarity as to whether this will actually function as a workaround in a no-deal Brexit scenario.”

In March the Law Commission in Ireland announced new hurdles for lawyers hoping to rely on Irish practising certificates after Brexit, including requiring firms to have a base in Ireland and indemnity insurance issued within the country.

Catherine Hudson, head of risk at Fieldfisher, said: “This was a surprise. A lot of people applied to be on the register in Ireland because they thought it would be a good plan B. But then the Irish Law Society published a note putting constraints on their practising certificates, suggesting they were concerned not to be used as a flag of convenience for people with no real professional connection to the republic.”

A number of firms including DLA Piper, Covington & Burling and Simmons & Simmons have opened offices in Dublin, and avoided those issues. Others, such as Fieldfisher, have merged with Irish firms to gain a permanent foothold.

DLA Piper launched a Dublin office in May and has so far recruited 11 partners, many poached from top-tier Irish firms.

Lawyers said the shift would create a more active transfer market and potential pay inflation in the traditionally conservative Irish legal market.

However Barry Devereux, managing partner of Irish firm McCann FitzGerald, said: “The large Irish law firms have always competed fiercely with each other, both for talent and for clients, so I don’t expect the entrance of US or UK law firms to have an enormous impact.”

London-based law firm Herbert Smith Freehills in China tie-up

London practice is sixth international group to be licensed in Shanghai initiative

London-based law firm Herbert Smith Freehills will affiliate its Chinese business with a local company in a new test for integrating foreign legal services with domestic law practice in China. The tie-up comes after nearly a decade of experimentation by foreign groups seeking to boost their presence in China by partnering local companies. Several affiliations, such as that of China’s King & Wood and Australia’s Mallesons, or global firm Dentons and China’s Dacheng, have formed some of the world’s largest practices but have yielded mixed results. Chinese regulation does not allow full integration of foreign and domestic legal teams. Foreigners are barred from practising Chinese law, as are Chinese nationals who work for foreign law firms.  Instead, some foreign companies, such as King & Wood Mallesons, have established so-called Swiss verein structures, where firms combine under a single brand but maintain separate finances. Others, such as HSF and Ashurst, have received formal licences to set up joint operations under a pilot programme in Shanghai. HSF will become the sixth global law firm to gain approval from Shanghai’s Bureau of Justice to integrate with a Chinese practice, allowing it and its Chinese partner, Kewei, to rebrand the China business as Herbert Smith Freehills Kewei.

The two firms will be able to work closely on individual deals and share the fees from such projects. HSF said the integration with Kewei would focus on cross-border mergers and acquisitions, banking and finance and financial services regulation. Kewei, which has 20 partners and lawyers, was launched in 1995 in Shanghai. HSF, which posted profits of £306m for the year ending in April, has more than 300 lawyers in the region. “When clients come to see us, we [HSF and Kewei] are now under one umbrella and we are both responsible for them,” said May Tai, HSF’s Greater China managing partner, noting that both firms’ reputations will now be formally linked. Such joint operations are still in a pilot phase and do not have full recognition as legal entities. HSF follows firms such as Baker McKenzie, Linklaters and Hogan Lovells to link up with Chinese practices under the Shanghai initiative. King & Wood and Mallesons in 2011 became the first test in which a Chinese firm merged with a large western one. In 2015, Dentons merged with Dacheng, one of China’s biggest practices, to form what was then the largest global law firm by attorney headcount.

Firms are fighting for a share of China’s cross-border legal work, which has grown rapidly over the past decade as Chinese companies invest more overseas. But integration has had a mixed record as global groups, often drawing on more than a century of history, mix with Chinese practices with just a few decades of experience, according to several lawyers with experience in such tie-ups. People close to the partnerships said that integration in overlapping jurisdictions often led to clashes, with firms continuing to compete internally despite attempts to integrate practice. “In some cases, the foreign firm ends up attracting lots of business for the Chinese firm but not the other way around,” said one Beijing-based lawyer familiar with the partnerships.