The long anticipated wait to see whether Brexit will or will not happen is over. After years of ongoing speculation as to if, when, or what will occur, we have our answer. We repeat, this is not a drill – Brexit is here!
As of 31 January, 2020, Brexit regulatory changes took effect and materially define the “new normal” of operating multi-national, cross border businesses. For many companies, Brexit represents a seismic regulatory event, the likes of which hasn’t been seen in the UK since the Government passed the European Communities Act in 1972.
Contracts, the very building blocks of business, are a source of tremendous exposure and need considerable attention. For UK and European-based companies who do not have the right processes, technology, or resources in place, the financial and reputational repercussions could be devastating.
Don’t put your head in the sand or dive under the covers. There are concrete steps you can take now to efficiently and cost effectively manage potential and known Brexit related risks. This will, however, require quickly implementing thoughtful and thorough processes, deploying the proper technology solutions to support the processes, and engaging the right resources including people with relevant expertise. Once in place, a systematic approach to determining the scope of what business relationships are effected, the impact, and the next steps to remediate or mitigate risk needs to be enacted.
The initial review of your portfolio of contracts needs to be comprehensive and include all active contracts to identify impacted contractual clauses such as choice of law and jurisdiction, force majeure, payment terms and currency provisions, and contracting parties and performance obligations.
Below are four critical steps companies should take to guide them safely into a post-Brexit world ensuring that business relationships are not adversely impacted.
Identify documentation affected by Brexit that must be transitioned and evaluate associated risk to the organisation. This includes determining criteria needed to assess risk and exposure. Once the full universe of Brexit related contracts and clauses have been determined, the filtration and prioritisation process can begin.
Determine transition activities required based on assessed risk and economic exposure, prioritising impacted contracts and clauses for remediation and repapering. The entire project’s scope should become clear by the end of this step.
Develop a robust project roadmap with well-defined metrics and milestones as well as a playbook that can guide the Brexit repapering process. The solutioning stage is an ideal time to determine which additional resources are necessary for timely completion of the plan.
Execute the plan and track to ensure all milestones and project objectives are achieved. This typically includes renegotiation and repapering for both standard and complex legal agreements.
Legal advisors, including law firms and alternative legal services providers, all offer specialised, proactive and technology enabled Brexit assistance. We encourage companies to partner with their trusted and experienced legal advisors today in order to guide them through the yet unchartered Brexit ground. This is not a drill – Brexit is here!