Measuring the Impact of a "No Deal" Brexit on British Law


Markets may tumble, the pound may fall, but what about the law?



If the UK leaves the EU without a deal, our analysis suggests that

12.2%

of UK case law will be at risk.

1.2%

of substantive judicial decisionmaking will be invalid.

Putting a Number on Brexit's Legal Risk


London, United Kingdom: As the UK prepares for yet more uncertainty in the wake of Tuesday’s vote, legal AI startup CourtQuant has been able to set the legal risks of a ‘No Deal’ scenario in numbers. Run by two Cambridge grads, CourtQuant works with the largest players in the litigation funding and insurance spaces to provide quantitative litigation risk assessment. The team has used machine learning techniques to understand how pervasive EU law is in British case law, finding that on average 12.2% of last year's UK case law will be at risk following a hard Brexit. This gives a good indication of legal uncertainty in this scenario.

Cases only go into litigation if there is a lack of clarity about the position of the law on a certain matter. It can be said that the main function of the British courts is to clarify the law and they are famed the world over for producing legal certainty for litigants in a very business-like and consistent manner. However, a major part of this practice since the 1990s has been the application and referencing of EU law. According to CourtQuant’s analysis, 40-50% of UK Supreme Court judgments contain references to EU law.

In case of a ‘No Deal’ Brexit and the falling away of EU law, a large body of case law which British courts have referred to in the past will no longer be valid. This leaves a regulatory ‘gap’ that poses uncertainty and risk to litigants in areas where EU law previously provided guidance.

We analyzed 300,000 cases on different levels of the British court system and found the average percentage of cases referencing EU law every year.

This is the percentage of referenceable and partially precedential case law that in the case of a hard Brexit at the very least contains an inconsistency but may be invalid altogether. These figures provide a good indication of the regulatory risk and uncertainty litigants have to expect in such a scenario.

But what about substantive legal points? Measuring the substantive legal impact of a hard Brexit is difficult. Looking to the absolute number of regulations promulgated by the EU in comparison to the UK parliament, so often referenced by Brexiteers, is not a good reflection of the power EU law has had in the British legal system because it is difficult to weigh the relative significance of individual pieces of legislation.

We computed the average percentage of EU-specific legal points made by judges in the UK every year to show how pervasive EU-law has become as a device to craft rights and obligations. This technique provides a snapshot of the reality of litigation practice. Interesting differences between courts are shown below, but the prospect of invalidating 6.2% of last year's legal points on the level of the Supreme Court in the case of a hard Brexit remains a systemic risk.

No matter your opinion on Brexit, it’s important to know the impact of different scenarios on the UK. While strong measurements exist in the form of financial markets and economic data, the impact on the law is too often neglected. Litigation data analysis, as provided by CourtQuant, offers a better way to describe, change and improve the law.

Authors: Ludwig Bull, CTO (cto@courtquant.com), Alex Jost, Consultant (aj@courtquant.com)