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Aspiring Lawyers - Interviews & Vacation Schemes
Commercial Awareness Discussion
Commercial Awareness Update- September 2019
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<blockquote data-quote="Alice G" data-source="post: 13630" data-attributes="member: 1160"><p><strong><u></u></strong></p><p><strong><u>The Government’s Intervention in Cobham’s Takeover and National Security Review Regimes [USER=1562]@ELA[/USER]</u></strong></p><p><strong></strong></p><p><strong>The Story:</strong></p><p></p><p>Last week, the British government intervened in the takeover of aerospace and defence group Cobham by US private equity firm Advent International, to assess whether there are national security concerns.</p><p><strong></strong></p><p><strong>Impact on Businesses and Law Firms:</strong></p><p></p><p>It is possible to see this intervention as an example of the trend towards increasing regulatory scrutiny in M&A, particularly with regards to foreign investments (i.e. when a domestic company is being acquired by a foreign company) and their national security implications.</p><p></p><p>In 2018, new rules were introduced in the UK, which broadened the scope of government regulatory intervention on grounds of national security: the intervention threshold was cut from £70m to £1m for transactions in advanced technology and in the military sector. Additionally, a white paper published last summer mentioned the UK government’s intention to introduce a ‘voluntary notification regime’, which would push dealmakers to notify the government of any transaction with a potential national security risk.</p><p></p><p>Changes in foreign investment screening regimes directly affect corporate lawyers and their clients, who face increasing complexity, uncertainty, and risk. Firstly, though I have focused on the UK here, a range of countries are updating their control regimes. If more regulatory bodies follow different review procedures, have different requirements and operate according to different benchmarks, compliance will be complicated for parties to multi-jurisdictional transactions. Secondly, increased regulatory scrutiny and changes in regimes are likely to lead to more uncertainty for dealmakers, who will wonder how the new rules will operate in practice and how strictly they will be applied. Ultimately, enhanced regulatory scrutiny increases the risk that a transaction will fall through or that remedies will be required. Given the potential impact on deal timetables, deal value and deal completion, even more importance will be placed on transactions’ planning stage, on due diligence and on the negotiation of risk allocation provisions.</p><p><strong><u></u></strong></p><p><strong><u></u></strong></p><p><strong><u>Back to Basics: Law Firm Partnerships [USER=1]@Jaysen[/USER]</u></strong></p><p><strong></strong></p><p><strong>The Story:</strong></p><p></p><p>UK commercial law firms have long been run as partnerships. Partners band together, sharing the benefits and risks of running a law firm.</p><p></p><p>These partnerships resemble a pyramid. At the bottom, you have a large number of juniors. As you move up the structure, the number of lawyers decreases, while the pay and seniority increases. The incentive is that you work your way up to become one of few limited equity partners who participate in the profits of a law firm.</p><p></p><p>However, recent trends have been challenging what it means to be a true partnership, which leads to the question: are partnerships a suitable structure for the law firms of the future?</p><p><strong></strong></p><p><strong>Impact on Businesses and Law Firms:</strong></p><p></p><p>The business of law firms has changed over the last decade. Clients have pushed back on excessive legal fees and taken more work in-house. </p><p></p><p>Some law firms now transfer high-volume process work to alternative legal service providers and use technology to deliver more cost-effective legal services. Others have opted to change their structure entirely, becoming an Alternative Business Structure to access outside investment.</p><p></p><p>As profitable US law firms swooped into London, some top UK law firms have adjusted the way they pay partners. Instead of the pure lockstep model (where pay increases according to partner seniority), merit-based pay is increasingly a consideration.</p><p></p><p>The employee market is also different. Partners move around firms far more than they used to, and a shot at the equity partnership isn’t enough to attracts juniors. Attracting and retaining talent is one of the biggest challenges right now.</p><p></p><p>All these changes have disrupted the traditional pyramid structure of a law firm. While the partnership isn’t going anywhere yet, law firms must consider how to adapt their structure to cope with the modern world.</p></blockquote><p></p>
[QUOTE="Alice G, post: 13630, member: 1160"] [B][U] The Government’s Intervention in Cobham’s Takeover and National Security Review Regimes [USER=1562]@ELA[/USER][/U] The Story:[/B] Last week, the British government intervened in the takeover of aerospace and defence group Cobham by US private equity firm Advent International, to assess whether there are national security concerns. [B] Impact on Businesses and Law Firms:[/B] It is possible to see this intervention as an example of the trend towards increasing regulatory scrutiny in M&A, particularly with regards to foreign investments (i.e. when a domestic company is being acquired by a foreign company) and their national security implications. In 2018, new rules were introduced in the UK, which broadened the scope of government regulatory intervention on grounds of national security: the intervention threshold was cut from £70m to £1m for transactions in advanced technology and in the military sector. Additionally, a white paper published last summer mentioned the UK government’s intention to introduce a ‘voluntary notification regime’, which would push dealmakers to notify the government of any transaction with a potential national security risk. Changes in foreign investment screening regimes directly affect corporate lawyers and their clients, who face increasing complexity, uncertainty, and risk. Firstly, though I have focused on the UK here, a range of countries are updating their control regimes. If more regulatory bodies follow different review procedures, have different requirements and operate according to different benchmarks, compliance will be complicated for parties to multi-jurisdictional transactions. Secondly, increased regulatory scrutiny and changes in regimes are likely to lead to more uncertainty for dealmakers, who will wonder how the new rules will operate in practice and how strictly they will be applied. Ultimately, enhanced regulatory scrutiny increases the risk that a transaction will fall through or that remedies will be required. Given the potential impact on deal timetables, deal value and deal completion, even more importance will be placed on transactions’ planning stage, on due diligence and on the negotiation of risk allocation provisions. [B][U] Back to Basics: Law Firm Partnerships [USER=1]@Jaysen[/USER][/U] The Story:[/B] UK commercial law firms have long been run as partnerships. Partners band together, sharing the benefits and risks of running a law firm. These partnerships resemble a pyramid. At the bottom, you have a large number of juniors. As you move up the structure, the number of lawyers decreases, while the pay and seniority increases. The incentive is that you work your way up to become one of few limited equity partners who participate in the profits of a law firm. However, recent trends have been challenging what it means to be a true partnership, which leads to the question: are partnerships a suitable structure for the law firms of the future? [B] Impact on Businesses and Law Firms:[/B] The business of law firms has changed over the last decade. Clients have pushed back on excessive legal fees and taken more work in-house. Some law firms now transfer high-volume process work to alternative legal service providers and use technology to deliver more cost-effective legal services. Others have opted to change their structure entirely, becoming an Alternative Business Structure to access outside investment. As profitable US law firms swooped into London, some top UK law firms have adjusted the way they pay partners. Instead of the pure lockstep model (where pay increases according to partner seniority), merit-based pay is increasingly a consideration. The employee market is also different. Partners move around firms far more than they used to, and a shot at the equity partnership isn’t enough to attracts juniors. Attracting and retaining talent is one of the biggest challenges right now. All these changes have disrupted the traditional pyramid structure of a law firm. While the partnership isn’t going anywhere yet, law firms must consider how to adapt their structure to cope with the modern world. [/QUOTE]
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Commercial Awareness Update- September 2019
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