Brexit readiness for businesses has slowed considerably. A combination of uncertainty and GDPR preparation has pushed it to the back of the agenda for in-house lawyers. But with only seven and a half months to go before the leave date (and a potential no deal scenario) we must find some certainty before we run out of time to make decisions and enact contingency plans.
In our recent survey with Acritas, Attitudes to Brexit – In House Lawyer Perspectives Across Europe, we found that three quarters of European in-house lawyers are spending less than 10% of their time preparing for Brexit, with some spending none at all. A huge 63% of respondents are expecting Brexit will be business as usual for them with no increase in legal work. But in the UK we cannot assume it will be business as usual and we do not have the luxury of waiting for certainty on the legal framework of Brexit.
In-house lawyers have a key role to play in Brexit planning as they can get risks and solutions on the agenda at very senior levels of a business; and those same lawyers often end up tackling those same issues when things go wrong. It was no surprise that in our previous Brexit survey, In House Approach – the UK In House Survey, 93% of Brexit steering groups had a lawyer on them and one fifth of them were led by a lawyer.
This leads us to the inevitable question: what should in-house lawyers be doing? According to the Acritas survey, proactive in-house lawyers are focusing on areas such as:
- Taking external legal advice.
- Setting up Brexit steering groups.
- Conducting internal risks reviews.
Getting clear information on the state of your business is an essential first step, but with time running out, what is next?
We have identified four areas that are primary Brexit risks for most industries. Creating solutions to these risks can be started today, regardless of the type of Brexit we get and will allow you to impose some control on the process. In most cases implementing these solutions is simply a matter of sound business management – just the sort of action that falls in the ‘important but not urgent’ box when busy people are squeezing their time.
Disruption to the workforce
This is already a problem in the agricultural and healthcare sectors and will likely spread. Do you know what proportion of your workforce comes from the EU? Do you know the areas where skills gaps might emerge? What plans have you got for reassuring EU staff and making it easy for them to stay in post-Brexit Britain? Are you putting aside a pot of money to pay for future visa requirements? How are you going to manage training and upskilling to plug skills gaps? These questions will help you create a workforce plan to ensure you maintain the same level of expertise that you currently enjoy – perhaps even improve it.
Recession or recession-like conditions
This area may create the opposite problem to the first risk. If business growth slows or contracts then redundancies may become necessary. Now is the time to ensure your knowledge management systems are strong and resilient. Do you have good redundancy handover protocols? Do you know where all your contract documentation is kept, in a central location or in the desks of individual members of staff? Is vital information trapped in silos or found only in employee memory – can you unlock that information now, capture it and make it retrievable? Once a redundancy exercise starts it can become very hit or miss as to whether all the important information is passed on and that can cost a lot of money in the long term.
Increased regulatory burden
We are expecting around 1000 Brexit statutory instruments in the run up to 29 March 2019. Practical Law has a tracking alert system to keep lawyers up to date, but dealing with the business implications is still a huge task. In addition, legislation in the UK and the EU will (eventually) start to diverge and many businesses will need to comply with both regimes. It is likely that companies will need to increase their legal resource at a stage when they can least afford to do so. Now is the time to look at managing that burden by perhaps recruiting and training a specialist paralegal resource, using an outsourced provider of legal services or buying in a technological solution such as document automation, case management or even AI. All these proposals could save money in the long term, but they come with a teething period and it is better to get that process completed before 30 March 2019.
Disruption to supply chain
For many businesses the supply chain is a huge area of weakness and exposure, not just Brexit, but bribery, corruption, fraud or even simple contract delivery. Being reliant on a third party, outside your direct control, is always a risk and conducting a review of your supply chain is a vital part of Brexit preparation. But solutions will not be quick wins. Lead-in times for procurement can be lengthy (especially in industries relating to security and others). If you are hyper-reliant on a small supply chain, now is an excellent time to look at bringing on board new suppliers to spread your risk. Alternatively, if you are a major supplier, now is the time to share your Brexit risk planning with customers and show them how you are more resilient and better prepared than your competitors.
The key to Brexit preparedness, in the absence of certainty, is to look at those areas where you know you should already be “doing better” to spread risk, invest in people and improve technology. Fix those issues today while there is money and people in the business to get it done. Any areas of weakness will only become amplified after Brexit and could develop into fully blown fires that will be harder and more costly to deal with.
For a summary of recent Brexit developments, see the July round-up.