Less than 10% of partners think law firms are fully prepared for a no-deal exit from the EU, according to new Legal Week research.

The latest Big Question survey – which comes as MPs debate amendments to Theresa May's Brexit deal ahead of voting this evening – found that just 8.5% of respondents thought law firms were fully prepared for no deal, as the prospect looms ever larger following the recent rejection of May's proposals. 

While steps are being taken to avert a no-deal Brexit with just two months to go, more than 30% of respondents to the survey – which canvassed more than 100 law firm partners – said their own firm had stepped up its contingency planning for no deal after May's proposals were rejected. Only 8% said their firm was not planning for no deal.

One anonymous respondent to the survey said their firm was preparing two annual budgets for the 2019-20 financial year – one "business as usual" budget and an alternative "no-deal" budget, which would include contingency planning for potential redundancies.

The partner said: "A no-deal budget will look at what we could do on costs if we did have a large drop in revenues as a result of a no-deal Brexit – for example, at what point we can continue to absorb revenue falls based on the current cost structure, and at what point we would start needing to take more radical steps to restructure our business in reaction to external events."

Jomati consultant and former Clifford Chance managing partner Tony Williams said he was aware of contingency planning taking place throughout the market, including firms admitting lawyers to the Irish roll and encouraging lawyers who can apply for a European passport to do so.

"The challenge law firms now face," Williams added, "is how will they operate across the EU, based on the UK's participation in the European market. They're trying to work out whether they're going to need a separate legal entity in the EU and which people these entities will be made up of.

"We're hearing about more and more bankers disappearing to places in Europe – so how much more of that is going on behind the scenes at law firms? Some might be moving people now as a precaution in case there is the need later on."

Eversheds Sutherland managing partner (international) Keith Froud added that while his firm has not drawn up separate budgets, lots of contingency planning has taken place, with different Brexit scenarios in mind.

"For certain European jurisdictions," Froud said, "we might have to come up with a different ownership model, moving away from using a UK LLP, which may not be recognised in the same way in EU jurisdictions after the UK leaves. And while the change shouldn't be too noticeable from the outside, it will take a fair bit of planning and work from the inside – transferring the business and assets to a different entity."

The Law Society of Ireland reported in December 2018 that just over 2,000 solicitors from England, Wales, Scotland and Northern Ireland had been admitted to the Irish roll since 2016, the year of the Brexit referendum.

Froud added: "We've registered some of our lawyers in other jurisdictions to preserve their ability to claim legal privilege in the EU, and have considered the potential scenario where UK-qualified lawyers will find it harder to fly in and out of other jurisdictions."

Fifty-seven percent of survey respondents said they expected a no-deal Brexit would push down their revenues for the current financial year (2018-19), including 15% that said it would have a double-digit percentage impact. Twenty-eight percent of respondents said a no-deal Brexit would have no impact, while 15% said it would actually boost revenues.

A larger proportion of respondents expect revenues to be impacted in the longer term in the event of no deal, with 63% predicting a turnover hit in 2019-10, including 19% who said revenues would fall by double digits.

One partner said: "Full-service firms, which have a well-balanced offering, may well see little change in revenue this financial year. But that will mask stark differences between departments, where transactional teams and real estate are likely to see a marked decline in revenue, offset – one hopes – by firms' litigation/employment practices seeing a sharp uptick in work."

When surveyed last summer, 75% of respondents said they backed a second Brexit referendum, but that figure has fallen to 53% as the clock runs down to the Article 50 deadline in two months.

Twenty percent of respondents now think the Brexit deal should be renegotiated and voted on by MPs, while 11% said there should be a deal renegotiation and a vote on it by the general public. Just 2% of respondents said they wanted a general election.

On the question of May's leadership, responses were mixed, with 37% expressing support and 32% calling for a new Conservative Prime Minister. Of the 31% calling for a change in government, just 4% said Labour should take over.

One creative respondent did suggest an alternative plan of action: "Let's buy a time machine, go back to 2013 and tell Cameron not to call a referendum."