Brexit? Are You Prepared?

February 20, 2016

Late on Friday night in Brussels, European leaders agreed on a package they hope will keep the United Kingdom as part of the EU. The British people will now be asked whether they want to stay in the EU or leave, in a referendum expected in June. Whilst the shape of the deal is now settled, if the UK votes to leave the effects are likely to be felt immediately and the decision will raise more questions than it answers. 

Companies need to make the most of the little time they have to understand the immediate and long-term regulatory and economic impact that any vote to leave may have on their business and how they can help secure the best outcome as the UK and the EU negotiate a new relationship for the future. 

Planning ahead: key questions to consider 

There are many uncertainties surrounding the UK’s referendum on whether to remain in the European Union. However one thing is certain: if the vote is for the UK to leave the EU, the impacts will be felt broadly, both in the UK and in the remaining EU. 

As the referendum approaches, all companies which operate in or do business with the UK should be asking themselves some questions: 

  • Have we identified the key potential changes relevant to our business? 
  • Will those changes be an opportunity for us or a risk (or both)? Will those changes equally affect our competitors? 
  • Are there any steps we could or should be taking in advance (or immediately after a vote) to mitigate adverse impacts? 
  • If the result is for the UK to leave the EU, will we be able to reassure our investors that we have considered and taken measures to best prepare for any anticipated risks? How will the legal and economic uncertainty of the negotiation period impact on us? 
  • If the vote is for the UK to leave the EU, what should the UK’s and EU’s priorities be in the negotiation of UK/EU future relations for our sector? Are there particular EU laws which it would be important to us that the UK should retain or replace? 
  • Do we rely on any EU free trade agreements with third countries, and how would we be affected if the UK ceased to benefit from them? 

With Brexit being such a prominent and forseeable event which could affect any business operating in the UK, assessing the opportunities and risks that Brexit could create is of paramount importance. These are among the issues on which all companies should have a position for consideration at Boards and audit/risk committees as well as, if necessary, with investors. 

How can Dechert assist? 

Dechert’s International Trade and EU law team offers not only high quality legal analysis which understands the commercial pressures and context in which our clients operate, but our team have also worked on EU legal and policy issues for the European Commission and have negotiated on behalf of Member States in the Council, bringing an essential and in-depth practical insight into the functioning of the EU institutions and the development, negotiation and application of EU law. Our team also has extensive experience in various parts of the UK Government prior to joining Dechert, including HM Treasury and the Prime Minister’s Office that help to provide a unique perspective into the legal and policy considerations across industry which is coupled with the knowledge and expertise from across the firm to ensure that we bring relevant sectoral expertise and insight to any analysis we do. 

We can assist clients to: 

  • Identify their exposure to the potential changes in the legal framework in which they operate (including but not limited to those aspects listed above). 
  • Identify and evaluate the risks and opportunities which Brexit may bring. 
  • Identify potential mitigation steps whether before or after the referendum result. 
  • Develop clients’ strategies for engagement with investors, customers, or (during the negotiation phase) the UK government or EU negotiators. 
  • Report to the Board on the risks and opportunities and any recommended mitigation steps. 

Dechert also collaborates closely with leading firms of accountants for clients who are looking for an evaluation not only of the legal implications for them and their sector, but also the economic implications. This combined approach can often assist clients in understanding the relative importance of risks identified. We would be pleased to arrange such a collaborative approach for clients, and to recommend accountancy firms who with whom we have successfully collaborated previously.

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