What’s going on here?
Aviva, Britain’s second-largest insurance company, announces plans to move €9 billion (£7.8 billion) worth of assets to Dublin, in preparation for Brexit.
What does this mean?
Aviva, currently based in Britain, has received approval from the High Court to move these assets to the Irish capital. In approving the shift, Mr Justice Snowden said: “the uncertainty over the Brexit negotiations means that if it delayed further and did nothing, there is a real risk that substantial numbers of policyholders would be materially prejudiced in the event of a hard Brexit by the loss of [Aviva’s] EU passporting rights.” The company had previously arranged this move to take place at 22:59 on 29th March - just one minute before the UK was due to leave the European Union. Since recent parliamentary votes seem to have extended the Brexit period, it is yet to be seen whether Aviva sticks to such pressing deadlines for the move.
Why should law firms care?
Aviva (represented in this matter by London law firm Slaughter and May) is not the only large company making contingency plans. Several banks (including Barclays, RBS, and Lloyds) have set up hubs elsewhere within the European Union in preparation for Brexit. Firms must be aware of these plans and must also be aware of the potential impact this may have.
Hundreds of jobs and billions of pounds worth of assets may be shifting out of London as a result of Brexit, damaging the city’s reputation as a world financial centre, and impacting heavily on firms’ client bases. This puts law firms in a difficult position, as they will wish to fulfil their clients’ desires to move elsewhere but may push clients to new firms that are more established in their desired destination. Law firms could find themselves experiencing long term, falling demand as the largest companies move elsewhere, adding another strain to the constant pressure to gain more, high-end work.
Other European financial capitals, such as Dublin and Frankfurt, look to benefit greatly from London’s potential demise. One way in which law firms could minimise the potential effect on their revenue could be to expand globally, growing their international presence with offices in other financial capitals, particularly around Europe.
How law firms handle Brexit will undoubtedly have a huge impact on their viability moving forwards. Is it time to follow Aviva’s lead and insure against the future? Time will tell.
Report written by Elizabeth C.
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