What Steps Are Firms Taking for Brexit?
16 August 2016
Industries: Aerospace, Defense and Government Services, Automotive, Consumer, Education, Energy and Natural Resources, Financial Institutions, Infrastructure and Transportation, Insurance, Life Sciences and Healthcare, Real Estate, TMT
Jurisdictions: United Kingdom
On June 23, 2016, British citizens voted by a tight margin of 52 percent to 48 percent to leave the European Union (EU). The referendum result was unexpected — opinion polls and early indications of the results on the evening of June 23 were that the United Kingdom (UK) would “remain.”
The “leave” result took many by surprise and triggered a monumental series of political events. Imagine “House of Cards” meets “Game of Thrones” — and all this in the world’s fifth largest economy.
So, where are things now?
Prime Minister May has said that the UK is going to stand by the referendum result: “Brexit means Brexit.” In other words, the UK will leave the EU, but it won’t be anytime soon.
The mechanisms for leaving are laid out in Article 50 of the Treaty on European Union. Article 50 can only be triggered by a country wishing to leave the EU in accordance with its constitutional requirements. This is important, as once Article 50 is triggered, a two-year clock starts ticking on the withdrawal negotiations. The Prime Minister has said that she has no intention of triggering Article 50 in 2016.
In other words, there is still a long way to go and the final shape of the relationship between the UK and the EU is very unclear, although we can speculate as to what it might look like.
While many have focused on the risks associated with Brexit, what is now emerging is a sense of the opportunities that it presents. The International Monetary Fund had originally predicted a UK recession and has now shifted its position to say that the British economy is expected to grow by 1.7 percent this year and 1.3 percent next year. That would make the UK the second-fastest growing economy to the United States in the Group of Seven industrialized nations this year.
What steps are law firms taking? The first one is a very simple one — provide information and reassurance to clients and their own people. Nothing is likely to change in a hurry.
The next is protecting their right to advise clients in front of the European Commission and the Court of Justice of the European Union. A number of international firms, including Hogan Lovells, have made applications for qualified lawyers in England and Wales to also be admitted to the roll of solicitors in the Republic of Ireland. This would help preserve their rights of audience and professional privilege.
The third is helping clients to make their case. The UK is about to enter an intense period of negotiation with the EU, and other countries and trading blocs around the world. Clients need support in understanding what is happening and making sure that they are putting forward what they need the politicians and trade negotiators to take into account when seeking to achieve a deal. This is a once-in-a-lifetime economic and social event, and we could be about to see a boom in public policy and advocacy advice — not just in the UK but around the world.
This is going to run and run.
Author: Chris Hinze, Global Head of Communications. Originally published on the Legal Marketing Association.