In the wake of the UK's decision to exit the European Union, questions abound for any business or organisations with interests in Europe. We are into a period of extended uncertainty.

With the inevitable information overload that arises with the wide ranging speculation as to what could unfold over the years to come, I have been thinking about what is the structured approach for a general counsel to take to try and provide clarity. This is a key moment for general counsel to guide and support their businesses and organisations through the uncertainty and change, and at the same time seize opportunities that may arise.

  • The first step is dealing with the immediate impact. There has been an immediate substantial weakening of the pound. There will inevitably be volatility and weakening in the financial markets. This is likely to continue in the short-term as the rest of the world reacts and waits to see how we deal with the initial aftermath.

Therefore, considering the legal and commercial impacts of swings in exchange rates will be high on the agenda. Consideration also needs to be given to assessing any immediate threat to access to capital and funding - there may, after all, be a tightening of credit as lenders respond to high levels of risk. Any material transactions which have not yet signed will now need to be reviewed, which may mean delay to allow for consideration.

That immediate impact will bring solvency risks to the supply chain and customer base. Do credit exposures need review? Do contingency plans need to be made to anticipate a faltering customer or supplier? What do key contracts say about insolvency and pre-insolvency events?

  • Those immediate challenges may also bring opportunities - good businesses might be available cheaply, competitors may be distracted.
  • As crucial as dealing with the immediate impact is, general counsel need to consider the potential impact of Brexit on their business models. That could be the regulatory impact - for example, for financial services the key question and threat is how post-Brexit they can do business in and with the EU should "pass-porting" fall away. For life sciences, there is considering the impact of the potential for the UK and EU to have different regulatory regimes.

Organisations dependent on EU funding (e.g. research, arts) will obviously have concerns about securing alternative funding.

And, of course, there will need to be consideration of the economy and projected economic trends, including the risks of reduced inward investment with a potential impact on asset and property values.

All that leads to assessing what steps can be taken to mitigate risks. This might include considering setting up a subsidiary in Paris, Dublin or Munich.

  • Given there is a significant risk of recession, businesses need to review headcount, solvency and finance issues for the business, as well as analysing the health of their supply chain and any trading partners. The agendas for action as the 2008/09 recession bit will need to be brought back out.
  • Businesses are faced with managing several years of uncertainty:
    • they need to identify and consider the options for longer term contracts and relationships (including joint ventures) and map out their impact and the safest path through the challenges ahead.
    • they need to keep an eye on managing the impact on any European distribution/agency/licensing arrangements and also the impact on IP protection.
    • workforce issues will be high on the agenda given the prominence of immigration in the political debate.
  • Finally, in a period of shock, panic and huge change, it's important to keep an eye out for opportunity, and not to be swallowed up by the potential risks:
    • identify areas of legacy EU legislation which increases cost or creates barriers and lobby for its repeal;
    • identify areas for growth - the UK government is going to inevitably be seeking to drive trading relationships with non-EU partners. How well is your business/organisation positioned to take advantage of those opportunities?