The government’s commitment to reducing net migration to the UK will do long-term damage to the competitiveness of UK law firms and inhibit their ability to develop business internationally, the Law Society’s immigration law committee (ILC) has warned.

Law firms have told the ILC that, under new immigration rules, they will no longer be able to recruit the best global talent. And they have denied that the non-EEA migrants they want to hire would take jobs that British high-achievers would otherwise fill.

One City firm claimed that, even after recruiting from 30 UK universities and processing 4,000 applications, the standard of homegrown candidates was just not high enough to fill all its training contract vacancies.

The ILC criticised the government’s five-year cap on a migrant’s leave to stay in the UK. City firms believe this is not a good return on their investment in training because it gives a migrant just three years to practise as a qualified lawyer.

‘The longer-term impact of restricting mobility and the settlement of lawyers in this way is likely to make UK law firms less competitive in the global marketplace,’ the ILC said. It also stressed that the restriction is bad for the exchequer – with a non-EEA trainee in a City firm paying tax and national insurance of at least £15,000 a year, rising to about £50,000 after five years.

The ILC added that numerous changes to the points-based system (PBS) have created confusion for employers and migrants alike. In retaliation for the changes, it said, other jurisdictions have opted to keep their markets closed to UK law firms.

The committee’s comments came as justice secretary Kenneth Clarke prepared to update City lawyers on his plans to promote UK legal services abroad. ILC member Sharmila Mehta, a partner at London niche immigration firm Magrath, said it makes ‘no sense’ for the firm or migrant when qualification takes two of a migrant’s five years’ capped leave to stay. She added: ‘Add to that the fact that our tax rate is one of the highest in the world and it is no surprise that high-flyers are finding the UK an unattractive destination.’

She added that the confusion around PBS and other constantly changing rules might be good news for immigration lawyers, but not for businesses. ‘Law firms operate in a global economy and need to pick the brightest and the best, not candidates who are merely adequate,’ Mehta said.

The ILC’s comments are contained in its response to the UK Border Agency consultation ‘Employment related settlement, Tier 5 and overseas domestic workers’.

Last week, the chairman-elect of the Bar Council, Michael Todd, warned that the government's legal aid reforms could deter people from doing business in the UK.