New rules 'hobble City law firms'

The society said the new "points-based" system being introduced would make it harder to bring international lawyers to Britain and "hobble" the ability of City law firms to do business worldwide.

It accused the Home Office of failing to understand how law firms operated and warned that a "lack of clarity and consistency" over the rules threatened to make the problems worse.

It said that British law firms' international appeal - and their estimated £18billion a year contribution to national GDP - could be put at risk.

Ministers say the reforms are needed to improve control of Britain's borders, but insist they will work efficiently and fairly and allow those who can benefit the country to come here to work.

But chief executive of the Law Society Des Hudson warned that London, which has four of the world's top six law firms, could suffer lasting harm unless ministers overhauled the new system.

He said it would create potential difficulty for UK law firms with international offices which wanted to move foreign employees based overseas to London.

He said this often brought in "highly qualified, well paid" staff who contributed to the economy, as well as helping City law firms develop and share expertise. It also made it easier to secure reciprocal agreements with foreign governments. The Law Society says further problems include excessive inspection powers, the threat of heavy penalties for minor technical breaches of the rules, and a plan to "grade" law firms.