Legal tips for the uncertainty with Brexit
Practical steps your business can take now
Every business in every sector has to deal with issues of all kinds to survive and thrive in normal market conditions. Brexit creates an unprecedented problem due to uncertainty.
It is common consensus that it will take several years for Brexit implications to become fully apparent.
Given this uncertainty, what can your business do now to stay ahead of the game?
Plan ahead and have a plan B – think through the implications and consider the nuances
- With any business contract, timing, payment and exit provisions are key but now they should be paramount – wherever possible and practical, consider including get out provisions, early termination clauses, tight payment provisions and the ability to extricate yourself.
- Contract clauses –You may even consider including contract clauses which provide different options and outcomes depending on defined possibilities which may arise due to Brexit – option clauses, currency clauses may be things to consider.
- Review your contracts – there may be opportunities to renegotiate where the other party is also concerned about Brexit. There may also be clauses in existing contracts which may be of use already such as a “material adverse consequence/effect” clause or an early termination clause.
- Consider the immigration law aspects of Brexit – what is the make up of your employees? Things may change considerably and key employees who are not UK nationals may face difficulties – what’s their status? Can you assist them now such as with applications for permanent residence?
- Should you ringfence assets or liabilities? – You may be able to restructure so that if business conditions deteriorate this only impacts parts of your business and not all of it. Possibilities might be to create a group company structure with key assets in different legal wrappers. Complications such as bank borrowings, security, existing contracts may well mean that careful planning and early action are key if this is an attractive proposition for you.
- Keep your ear to the ground and relay on contacts and friends – what we’ve seen so far is that it’s a rollercoaster – waves of minor panic are being followed with stoicism or joy at good news. It’s early days yet but, in addition to your industry contacts, keep in close contact with advisors such as accountants and lawyers. They may well have wider insights. For example, our head of property, James Swede, has many contacts in the property sector in both residential and commercial, from agents to developers to builders. James could well be a great barometer and sounding board for an up-to-date opinion on current market conditions and thinking.
- Consider the upside as well as the risks – times of increased uncertainty and risk often also have a flip side of greater opportunity. Planning ahead, analysing risk/reward, regular reviewing, getting good advice, coupled with smart thinking, may put you in a better position than your competitors.
- Don’t act in haste – there may be some aspects of EU law, which many businesses dislike, that will no longer apply in a few years. If you can wait, you may reap rewards. A good example is the Commercial Agents (Council Directive) Regulations 1993. Many businesses utilise agents. The Regulations require significant compensation to be paid to agents on termination which many businesses consider unfair and prohibitive. Brexit may well mean that in a few years these Regulations will not apply and you may be able to extricate yourself as a business without paying compensation if you can watch and wait.
- Jurisdiction and choice of law – ensure that any new contracts, especially those with businesses outside the UK, include a clause proving that English law applies and that any disputes should be resolved in the English Courts.
Haven't found what you need yet?
Why not search the whole site?