A View from the UK Legal Sector – September 2020

As with other jurisdictions, COVID-19 has had considerable effects on the UK and its legal sector. After the initial lockdown and adapting to “the new normal”, or at least the normal for now, I thought it would be useful to share some views from the legal sector. This is based on our experiences and those of our clients and contacts, and feedback from other law firms and those who work with them.

A key point to make is that there is no one picture; different sectors have been affected in varying ways.

For many of our clients, it has been business as usual, or they are recovering: for example some developers, house builders, payment services providers, and those who deal with consumer goods. A smaller number of other city-centre retail and hospitality clients have been quieter or found it harder.

Some law firms have ceased business or are in trouble. Others, that are well run and have clients that have felt less impact, have done far better than the negative scenarios predicted by finance directors in March. We are pleased to say that to date we have felt fortunate in that respect.

Some features of the UK are:

1. The first quarter of 2020 was one of great growth and activity for many businesses. This was due to pent up demand due to the uncertainty of Brexit, which suspended or slowed decision making up until the end of 2019. We and our clients were very busy indeed with transactions from the end of 2019. That also created a pipeline of work going forward.
2. In the UK, residential real estate, a key part of the UK economy, was stimulated by the above and also by a government-introduced holiday for stamp duty land tax paid on the acquisitions of property. The market is very active.
3. Like other jurisdictions as a result of COVID-19, the UK Government introduced steps to:

  • Retain employees.
  • Provide loans to business.
  • Suspend legal action to put companies into insolvency.
  • Suspend landlords taking possession of property for non-payment of rent.

At the time of writing, some of the above measures seem likely to come to an end in the coming weeks and, as regards stamp duty land tax, in March.

Some commentators say it is too early to predict the future. In our view, the next six months is going to be a key time.

It has been interesting to see how institutions, people and the world have adapted to COVID-19. For example:

  • Lawyers and clients have found ways to carry on business and execute documents, working around restrictions and formalities.
  • The Courts work online, including full large trials. The Court expects parties and their lawyers to co-operate and provide trial bundles, as well as other documents, in a convenient, easy-to-use electronic format.
  • In England, a law has been introduced to temporarily allow the execution of wills to be witnessed by Zoom or the equivalent.
  • Mediation has continued online: successfully, in our experience.

From our point of view, although a couple of sectors have seen a drop in activity, most of the firm’s work has been steady and some areas increased, particularly finance, litigation, and private client.

Some examples of the kind of work we have been doing this year are:

  • The acquisition of a site in Hampshire with a development value of GBP 100 million with 300 residential units.
  • The acquisition of a London development site for GBP 42 million.
  • A refinancing of a portfolio of 40 properties.
  • A number of financings for between GBP 20 and GBP 30 million each.
  • Sale of an insurance brokerage for GBP 17 million.
  • The sale of a number hotels at various values.
  • The sale of an iconic UK spring water producer following a videoconference bidding process.
  • Fighting claims as regards IT projects for software suppliers and for customers.
  • Successfully resisting attempts to place into insolvency a chain of 50 leisure outlets.
  • Disputes over sale and purchase agreements of shares or assets of companies.
  • Acting on behalf of or against companies controlled by insolvency officer holders and dealing with claims.
  • Advice on the legal effects of COVID-19, such as frustration, force majeure clauses, nonperformance, cancellation, and business interruption insurance.
  • Advising on situations post Brexit: for example, data protection.
  • Successfully urgently overturning local government and police decisions to prevent a site inspection for due diligence based on their misunderstanding of COVID-19 laws.
  • Recovering portfolios of debts.
  • Acting for the estate of an artist and setting up a trust to hold his works.
  • Countering identity fraud arising from the death of a client and attempted sale of his property.
  • Being appointed by the Court to act as independent administrator of estates of dead persons.

For most of our clients, it is business as usual, because of their position in the market, or because they take a long-term view. For example, our housebuilder clients buy land 10 years ahead. Whilst it is uncertain what will happen next, we remain positive going forward.


XLNC MAGAZINE | No. 06 | October 2020

 

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