The triggering of Article 50 last month has officially started the clock, giving Britain until April of 2019 to leave the EU. This means that within two years, the British Government would need to negotiate a new deal with Brussels, score multiple bilateral trade deals with countries around the world and sort out its governance as it will not be long before EU law no longer becomes effective. No country has ever left the EU before and there was no way to leave the EU before the Treaty of Lisbon was signed in 2007.
As a result, Brexit has created a ‘mini-boom’ for international law firms as clients seek advice on how it will affect their businesses. Paul Rawlinson, the first British chairman of US law firm Baker McKenzie, says during an interview with the Financial Times that “the short-term impact of Brexit has been a mini-boom” and “investors [are taking] advantage of cheaper real estate, cheaper opportunities and some sweetheart deals [that] the government might [be extending] behind closed doors”.
Mr. Rawlinson said that Baker McKenzie is seeing a surge in advisory work in trade, taxation and other areas as clients plot their way forward and begin lobbying the UK government. Banks, pharmaceutical companies and other businesses overseen by EU regulators were thinking about who were going to regulate them, antitrust issues and how the looming EU divorce would affect their supply chains.
Similarly, international law firms like Freshfields Bruckhaus Deringer and DLA Piper are taking steps to prepare for the unprecedented move by the UK and have announced new high-profile Brexit hires. Freshfields has appointed Jonathan Hill, the UK’s former European commissioner for financial stability, financial services and capital markets union as a senior adviser, while DLA has appointed Paul Hardy, former EU legal adviser to the House of Lords as the firm’s new legal director and lead Brexit specialist.
The drastic measures taken by these few law firms to prepare for Brexit are representative of the many other law firms in the UK setting out to weather the storm and are instead taking advantage of this ‘mini-boom’. Officials expect the scrapping of EU law could result in an avalanche of new legislation in every corner of Whitehall – perhaps 25 Bills in every Queen’s Speech for a decade. As such, hundreds of Treasury lawyers and experts would need to be hired for areas – such as health and safety, financial services and employment – where Britain had lost competence to Brussels. Meanwhile, a Trade Ministry will be required, with hundreds of new negotiators, to establish new deals around the world.
However, as cautioned by Mr. Rawlinson, this boom may be temporary and a failure to negotiate a trade agreement between the UK and EU would result in a ‘Brexit hangover’ that could stall corporate deal-making. Because of Brexit, Baker McKenzie’s forecast merger and acquisition activity for this year in the UK would fall by two-thirds from £340 bn to £125 bn, due to the fall in value of IPO transactions.