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Continental Breakfast: your daily update on what’s happening in Europe.
The U.K. faces having to pay the European Union as much as 60 billion euros ($65 billion) in order to leave the political bloc in a process that could take longer than five years to complete, the Financial Times reports.
European negotiators will demand that the U.K. meets various EU financial liabilities before exiting the union, including unpaid budget commitments, loan guarantees and spending on U.K.-based projects, senior officials told the newspaper.
The EU will also resist holding detailed trade talks with Britain until a draft exit agreement is already in place, with negotiators aiming to have divorce terms finalized by mid-2018 in order to allow at least six months to ratify and prepare for Brexit in 2019. (That timescale assumes that U.K. prime minister Theresa May will be able to follow through with her plans to trigger Article 50 in March 2017. That has now been thrown into doubt after a recent landmark High Court ruling that the Brexit process must be subject to a parliamentary vote. U.K. politicians, the majority of which wanted the country to remain within the EU, could theoretically delay or even block the process. The government is set to appeal the ruling before the U.K. Supreme Court next month.)
A transitional agreement is likely to be sought to cover the period between the U.K.’s withdrawal from the EU and its negotiation of new trade deals, during which time Britain would continue to make full contributions to the EU budget.
Negotiators will also tell Britain that its continued access to the European single market will be contingent on it allowing citizens of other EU member countries to freely live and work in the U.K., and it accepting EU rules and the jurisdiction of EU courts. They would be politically difficult concessions for the British government, with the Brexit campaign partly run on the basis of gaining greater control over immigration. But there are fears that losing single market access could result in banks and other companies—including global law firms—shifting business away from London to other European cities. A private report by accounting giant EY has stated that it could cost London 83,000 jobs—including 18,000 in legal and accounting services.
Some European officials are concerned that such a hardline approach could lead to a breakdown in negotiations and result in Brexit occurring without an agreement between the U.K. and the EU. “There is a serious risk the Brits say ‘to hell with it, you can sue us’,” one official told the FT.
Magic Circle Firm Continues Cost Cutting Drive
Clifford Chance is seeking to further cut costs and improve efficiency after such efforts saved the firm 7 million pounds ($8.7 million) in the last fiscal year.
The magic circle firm is set to increase its use of technology, legal project managers and its support center in India in an attempt to boost its bottom line.
Clifford Chance’s continuous improvement team, which was set up in 2013 to identify inefficiencies in the firm’s practice and provide training to lawyers, has been tasked with designing working processes that make effective use of new technology and innovations. Earlier this summer, the firm signed a deal with artificial intelligence software provider Kira Systems, while it entered into a partnership with Thomson Reuters in September that will give its banking clients access to the media organization’s automation software. (AI is becoming increasingly widespread in Big Law, with growing numbers of major U.S. and international law firms turning to machine learning technology to aid areas such as document review. A group of U.S. and U.K. scientists have even created AI software that can accurately predict lawsuit results.)
Clifford Chance’s India support center, which opened in 2007, provides a combination of back office and legal process services. The firm is currently considering opening a second support center in a different country in order to handle work in additional languages such as French, Spanish, German or Mandarin.
W&C Ramps Up London Growth
White & Case’s strategic investment in London continues with yet another high-profile hire.
The firm has brought in a number of partners in the U.K. capital since introducing a new strategy to expand its office in the city to more than 500 lawyers by 2020—something no other U.S. law firm has achieved—and recently recruited Clifford Chance banking co-head Patrick Sarch as its new London corporate chief.
The latest arrival is Marc Israel, the head of antitrust at elite London firm Macfarlanes. His departure follows the resignation of Macfarlanes’ financial services chief David Berman, who is set to join Quinn Emanuel Urquhart & Sullivan in January to lead its regulatory and financial services practice.
U.S. firms have been systematically poaching partners from U.K. rivals for decades and now dominate the market for high-profile hires in London. American firms’ higher profitability, more flexible compensation systems and greater access to U.S. markets and clients has helped them outmuscle U.K. rivals when it comes to lateral recruits.