A lot has been said about Brexit over the last few months and yet we are all still wondering what it will mean in practice. In this blog, Exigent CEO David Holme examines what impact Britain’s planned exit from the EU will have on legal, as well as procurement and finance. Law firms have been focusing on selling Brexit advice to their clients, and in-house counsels have been wondering just how much of the change will be their responsibility. David suggests that a holistic approach is needed, along with a good dose of preparation and help from technology.
The process is far too opaque for all involved at present. What we do know is that vast swathes of European legislation will be written into UK law to provide some certainty; but there will also be holes in the regulatory environment. We also know that ownership of some areas will go straight to devolved administrations which will add a layer of complexity few have acknowledged.
Contracts are not just legal territory
Ownership of the contracting process is often shared between legal, finance and procurement. Surveys show that there is a fair split between the three. Whether or not company directors wish to acknowledge the fact, this confusion in responsibility for legacy contracts and the lack of investment in contract software means that many companies cannot assess the impact accurately. They need a strategy to assess material risks from likely changes.
Stressful, but manageable change
Nevertheless, change is coming; it’s just that no-one knows what that will look like. This has the potential to put an awful lot of stress on those responsible for the process. In some ways it feels a little like Y2K (remember that?), except it isn’t. Most of the regulations will change over time rather than on a specific date in March 2019 and will cover all clauses regarding two or more contracting parties – and your computer will still be working regardless of the deal struck.
Technology and what to do
That doesn’t mean that we ignore this inevitable change. Technology exists to automatically identify risks in existing contracts. Each and every business will know, or should know, that if there is a material change in the regulatory and trading environment, suppliers will be affected. I would argue that, in any event, this should be part of day-to-day risk management.
So I would advise companies to identify these factors; identify those affected and centralize the contract information in a systematic manner. This will allow rapid reaction to likely changes in the business environment – fail to prepare and prepare to fail, really. Is that going to place extra pressure on procurement, legal and finance? Yes, it is; but there are companies that can do this for you and it need not cost a fortune.
Make the challenge an opportunity
As with Y2K, there is an opportunity to clean house and relook at the way that contracts are managed. It is one of the few times that budget – more accurately, the risk budget – can deliver a better process with a real ROI, even if the risks are more real than imagined.