Confusion Surrounding Brexit
We are 4 months away from the UK’s withdrawal from the European Union and no closer to understanding what this will mean, either to the people of the UK or to the business community. How will borders, and, therefore trading be affected? What are the implications on our tax and legal obligations? What contracts will need to be novated to entities based in the remaining EU states? Will it even happen by March? (Many people can make an educated guess at the first three questions, but no-one, including the UK and EU politicians, can accurately predict the last one!!)
How Will Brexit Affect Business?
One thing is certain – when and if Brexit actually comes to pass, the implication on an organisation’s contractual obligations is huge. More importantly, the operational cost in terms of resource is going to be even bigger. I was talking to the General Counsel of a leading Investment Bank recently who has identified 19,000 contracts that will need to be re-papered, with an average resource requirement of 4 days per contract once all the contracting parties have been factored in. This means that over 208 man-years of effort would be needed to manually complete that mammoth task, and that is only for one bank! Now multiply that by the number of organisations that have cross-border contracts and you suddenly have a problem that is the size of the Millennium Bug scare of the late 90’s which, although it never actually transpired (no planes fell from the sky; the western world didn’t suffer a catastrophic blackout and consultants across the globe got to 1st January 2000 safe in the knowledge that they could bathe in the wads of cash the “problem” had generated for them), caused widespread panic in the years preceding the millennium.
How Does This Affect Contracts?
However, the UK’s withdrawal from Europe WILL create the type of problem described above. Without the deployment of technology-based solutions, there is no way that an organisation with significant numbers of cross-border contracts can deal with the issue – there simply isn’t enough resource to deal with it manually. As a result, the risk associated with those affected contracts will be in play for a while unless a solution can be found. Fortunately, there are contract management solutions that will help to put a significant dent in the task. The advances in AI have meant that data extraction engines can identify and extract those affected contracts (even the paper-based legacy ones) and place them into an intelligent, secure repository. Once the contracts have been turned into structured data, these can be searched; reported on and then amended. Indeed, with a system that provides a mass-action functionality, it becomes a simple process to create and approve an amendment that satisfies the need to novate contracts to an EU entity and then apply the amendment in bulk.
Add into that, powerful workflow and the 208 man-year problem suddenly becomes very manageable. Instead of the process taking days per contract, it will be reduced to minutes. Even at 5 minutes per contract (which is extremely conservative), then the General Counsel of the Investment Bank suddenly has a reduction in cycle times of 99.999%, reducing his problem to 65 man-days!!
Brexit is keeping many Executives awake at night. Wouldn’t it be a wonderful thing if you could help them sleep?