A treaty a day keeps the Brexit at bay - for 3 working years

A GC "must read" Brexit legal uncertainty risk report in Wednesday's FT…

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Bruce Macmillan on 02/06/17

Wednesday's FT suggests that there are at least 759 different agreements (i.e. pretty much one per working day from leaving the EU until the end of the next fixed term parliament) with 168 countries - of which 295 relate to trade, 202 to regulation, 65 to transport and 49 to customs controls i.e. potentially 611 that may have relevance to any business that buys, sells, staffs from or operates inside and anywhere outside of the UK (and not just with Europe). The FT states that the relevant department has 300 staff but initially only had 45 trade negotiators when it started (although, presumably, it is recruiting as otherwise these poor souls have nearly 17 treaties to look after each!).

Good lawyers know that negotiations take time, require good preparation and a good understanding both of your own and the other side's needs and, as a result, of the zone of likely mutually acceptable outcomes – and there must be such a zone otherwise there is no point in trying to negotiate. Understanding the approval mechanisms of the other side (e.g. the EU states and the European Parliament in the case of the deals with the EU) is also key as many provisionally done deals come unstuck when approvals/ratifications are sought. Internationally experienced lawyers also know that understanding cultural difference and building trust are often key pre-requisites to getting a reasonable deal done quickly – to adapt an old song: "it ain't [just] what you do, it's the way that you do it …and that's what gets results".

So what does this mean for GCs and their advice to management? Well; while it is possible that all of these deals will be done acceptably and without interruption to what your business does or how much it costs to do it; it would be foolish from an Enterprise Risk Management perspective to assume that this will definitely be the case and not have in place contingency plans and a clear date ahead of the Brexit deadline by which you need to activate those plans (if the position remains unclear at that date) so as to be sure that you have an effective solution in place at the Brexit date. 

611 treaties is an unmanageable number to monitor closely but it should be possible to assess each aspect of your business (buy, sell, staff, travel, licences, office locations etc) to identify the most critical risk areas (and remember that this is by business impact not by order value – so ambiguity over that IP licence may be every bit as important as whether your staff can travel, how dependent you are on "just in time" cross border logistics, the data storage locations of your cloud supplier, the needed regulatory licences etc) and focus on monitoring, "Plan B-ing", budgeting, resourcing and setting the "if we don't know by [date] then we will [action]"  for those areas. It is also sensible, where you can, to seek to spot where our negotiators may not be aware of your business sector's needs and if you spot knowledge gaps then seek to inform the government.

As so much of this Brexit risk relates to law and regulation and then impacts on contracts, licences and legal obligations that your company has, the GC unavoidably has a key role as a Navigator to help their management to find their way through what is to come – so it is wise to get a prepared as you can be now.

Read the full FT article here.


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