The real challenges will come once May v Corbyn battle is over
Leading solicitors from the London office of US giant Shearman & Sterling took part in a General Election debate on Monday in which the Conservatives’ showdown with Labour proved secondary to the potentially much greater challenges of Brexit that lie on the horizon.
Days before the UK goes to the polls, competition law partner James Webber and finance associates Andrea Hutchinson and Tim Waterson considered the implications of the snap election. A larger majority will give Theresa May a stronger mandate, and may give her more room to manoeuvre in her ability to impose her will on Brexit — potentially reducing uncertainty in the business world.
Students in the audience wanted to know what a Labour government could mean for the City. Waterson and Hutchinson explained the potential effect of the proposed changes to corporate tax that may be on the cards if such an outcome materialises. They highlighted that higher tax rates could reduce the attractiveness of investment in the UK. However, Webber also noted that corporate tax is a smaller concern in advanced economies since it doesn’t necessarily reflect companies’ total profits, which are often spread across a series of jurisdictions.
The bigger question on the table was Brexit. Theresa May’s mantra, ‘No deal is better than a bad deal’, was explored. Webber suggested that without a deal there may be “mind-boggling levels of disruption”. That said, the prospect of not securing a deal with the EU is enough , he reckons, to put pressure on the future Prime Minister to do so by the closure of the Article 50 negotiation window. But Waterson questioned whether such a ‘no deal’ was credible.
Fears over a no deal apocalypse aside, a broad sense of confidence in the City united the panel. London, they said, enjoys a “cluster of synergies” — unlike any single EU member state — which embodies all the characteristics that a financial capital needs to exist and thrive. In addition, a first rate judiciary, an unparalleled body of case law and a relatively efficient system of litigation make our legal system inviting for companies and individuals throughout the world.
It’s also worth considering, explained Webber, that leaving the EU won’t fundamentally change the dynamics of the business of Shearman & Sterling and other firms like it. Indeed, he suggested that it may create some opportunities — particularly in regulatory practice, where work will certainly be generated. Although some clients may face some disruption, from a purely legal services perspective, the UK’s membership of the EU makes little difference, Webber pointed out, as no single market rules or trade barriers operate to regulate the legal profession. It’s as easy to sell legal services to Brazil as it is to Belgium, he added.
The bottom line, Webber continued, is that elite firms with a major presence in both London and New York — the two largest and most profitable legal markets in the world — will continue do well, in spite of the political turmoil we have been seeing in the West of late. In this environment, Webber was certain that values of openness and internationalism will continue to prevail, as he urged EU and overseas students to continue to apply for training contracts with Shearman & Sterling.
There was less optimism about a swift US-UK trade deal. Reminding the audience of the snail-like pace that such agreements tend to be arrived at, Hutchinson said that she didn’t expect any major deal until significantly after the conclusion of Brexit in 2019. Still, with the US remaining Britain’s largest overseas market beyond the EU, there a clearly some major opportunities if an agreement can be forged.
In the meantime, unpredictable variables including a late-cycle economy and technological change threaten to shake things up further. Those hoping for a quiet life after June 8 may be disappointed.
Law, politics and the City: An interview with Tim Waterson [Legal Cheek Careers]
Shearman & Sterling’s training contract application deadline is on 31 July. Find out more about the firm here.
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