Brexit as a concept has been around for a long time. But recently, and understandably, politicians have been wielding their arguments for staying or going like battering rams on the nation's consciousness.
Most of what we hear about is the likely impact on issues such as migrant's eligibility for child benefit, holidaying abroad, and the cost of living and a string of carefully contrived barbs, delivered to the masses, are designed to move us one way or another in a ruthless ‘push me-pull me' dance on the borders of Brexit/Bremain.
But what of the impact on those in other spheres? Ones not in such high relief? Sadly, they don't seem to feature in the mass marketing of the Yes or No arguments.
Wisely, a number of commercial law firms have begun to create their own advice teams ready to advise clients on strategies for dealing with an exit from the EU. Politicians, it seems, and the opinion pieces in the media, which are currently deluging into the communal headspace, can't be trusted - they all have an agenda and it's not to prioritise commercial law clients.
How should commercial lawyers be preparing in the face of such uncertainty about Britain's future role in the EU?
The word ‘groundwork ' just about encapsulates it. The legal world has been saturated in Brexit whispers for months and savvy commercial law firms have been hammering out briefing documents for clients and hosting seminars on the impact of Brexit, market volatility and the inevitable prolonged uncertainty. It's a well-established notion that you know people are taking a situation seriously when they start spending money on it and, as commercial lawyers, we are beginning to see the green shoots of strategy planning in the big law firms. Understandably so, as we creep ever closer to the Referendum on June 23rd the fires are fuelled for potentially one of the biggest constitutional changes this country will see in our lifetimes, and although no-one can be sure of the exact implications, it's pretty certain that huge swathes of UK legislation are going to become unsettled, from contracts to mergers and acquisitions, cross-border insolvencies to financial regulation.
Yes, we are still several weeks away from the Referendum, but industry uncertainty is escalating. And why is this? It starts with the particular volatility of exchange rates - certainly Sterling and, possibly, the Euro will continue to be unsteady in the run-up to the vote - and the unknown consequences in the immediate aftermath of a LEAVE vote are all in the speculation. But one thing is certain, now is the time to plan; to assess your exposure to forex risks, payment obligations, revenues, funding requirements and precise location of funds. As just one example highlights, having significant unhedged dollar debt, but mainly Sterling revenues, calls for the construction of a solid approach. These type of financial dealings are vulnerable and need to be protected.
Onwards and upwards
It's pretty much a given that the first thing that will happen in the event of Britain resigning from the EU, is the post-Referendum rush that commercial law firms are currently bracing themselves for. Much of this is going to involve the re-writing of commercial contracts; re-drafting designed to haul them into a Britain-shaped format. Some of these issues are absolutely critical from a client perspective, and therefore a priority for the lawyers:
- Will the same access to European markets and clients be maintained?
- How will the inevitable legislation gap be successfully plugged?
- How will uninterrupted business continuity be implemented?
Happily, more and more commercial law firms are getting savvy and devising contingency plans which will stem any flow of business loss. But we want to look at the possible solutions for securing commercial safety? With little certainty of what a post-Brexit commercial world would look like, here are a number of hypothetical situations which may be on the cards:
- The relationship between the EU and Britain will be overseen by World Trade Organisation obligations
- The UK becomes a member of the European Free Trade Area
- The UK becomes a member of EFTA and there are a number of bilateral agreements put in place concerning market access in certain sectors
- The UK becomes a member of an EU customs union
Although uncertainty is likely to be a huge factor in most people's decisions, a fear of change and of the unknown, should not be the deciding factor in a voting decision. In fact, the hypothetical situation in which Britain retains its fiscal sovereignty entirely could be an extremely strong foundation for commercial dealings and could reach far broader boundaries than EU funding alone.
The key to making the right choice for voters and businesses alike is knowledge. For an in-depth analysis of, and advice regarding, your company's position if the UK does exit the EU, contact experienced, Oratto member commercial lawyers today.
As they say, forewarned is forearmed.
Contact Oratto on 0845 3883765 to speak with an adviser or use our contact form to arrange a call-back.