Commercial Awareness - April 2018

[Coralin96]

I thought I'd create a new thread for April 2018 . You can find the March posts here: https://www.thecorporatelawacademy....ommercial-news-update-march-2018.29/#post-466.

04/04/2018

Trump's escalating trade war

• The Story - In response to alleged intellectual property theft, the US government has announced plans for a 25% tariff on 1,333 Chinese products. The products include robots, vaccines, electric cars and military weapons. It also features components that US companies may use. China responded quickly with a 25% tariff on 106 products. That includes cars, soybeans and some aeroplanes.
• The impact on law firms - This is going to impact many US manufacturers and US-China trade relations. The growing trade war hurts companies looking to invest in the US and China or those who rely on international trade and there's a lot of uncertainty about what direction this will take. Law firms have already found it hard to operate in China and they may have to reconsider their expansion plans if this continues to escalate.

PSA to stay after Brexit

• The Story - PSA, the parent company to car companies like Vauxhall, Peugeot and Citroen is going to continue to manufacture vehicles until at least 2029. This follows a £9m investment by the UK to guarantee its competitiveness after Brexit.
• Impact on law firms: The UK's investment gives some certainty to carmakers on what's going to happen after Brexit. It's a sign of how interlinked the industry is with the EU as over half of vehicles that are made in the UK are exported to the EU and over half of the manufacturing parts come from the EU.

GDPR to come soon

• The Story - The General Data Protection Regulation will come into force on May 25 and gives regulators to power to fine companies to the highest of €20m or 4% of a company's annual turnover. It also includes penalties for failing to look after data from hackers.
• Impact on law firms - This regulation is going to significantly impact law firms, both directly and indirectly through their clients. Companies and firms will be required to follow stringent rules on how they process and store data and get customer consent. It affects both companies operating in the EU and those who employ EU workers or sell to EU customers. Regulatory and data protection lawyers who specialise in this field will be in high demand as companies will need detailed advice to avoid the significant penalties. The problem is it's going to be costly and it could impact the ability to do business.

Spotify flotation

• The Story: Spotify listed on the New York Stock Exchange and was valued at $26.5bn. But the company didn't go for a normal flotation in a sign of the uncertainty around tech stocks at the moment. Instead of hiring a bank and going through an extensive IPO process, Spotify's route involves a company going straight to the market and selling existing shares.
• Impact on law firms: The recent tech sell off in the stock market has shaken a lot of investors and caused prices to fluctuate a lot in recent weeks. This may be a broader sign of concerns about IPOs and companies may put flotations on hold over fears about the current political climate. Law firms may also support clients in different types of listings. Spotify's route to the market, a direct listing, is seen as a test case for future companies.

 

[Sofia]

I thought I'd create a new thread for April 2018 . You can find the March posts here: https://www.thecorporatelawacademy....ommercial-news-update-march-2018.29/#post-466.

04/04/2018

Trump's escalating trade war

• The Story - In response to alleged intellectual property theft, the US government has announced plans for a 25% tariff on 1,333 Chinese products. The products include robots, vaccines, electric cars and military weapons. It also features components that US companies may use. China responded quickly with a 25% tariff on 106 products. That includes cars, soybeans and some aeroplanes.
• The impact on law firms - This is going to impact many US manufacturers and US-China trade relations. The growing trade war hurts companies looking to invest in the US and China or those who rely on international trade and there's a lot of uncertainty about what direction this will take. Law firms have already found it hard to operate in China and they may have to reconsider their expansion plans if this continues to escalate.

PSA to stay after Brexit

• The Story - PSA, the parent company to car companies like Vauxhall, Peugeot and Citroen is going to continue to manufacture vehicles until at least 2029. This follows a £9m investment by the UK to guarantee its competitiveness after Brexit.
• Impact on law firms: The UK's investment gives some certainty to carmakers on what's going to happen after Brexit. It's a sign of how interlinked the industry is with the EU as over half of vehicles that are made in the UK are exported to the EU and over half of the manufacturing parts come from the EU.

GDPR to come soon

• The Story - The General Data Protection Regulation will come into force on May 25 and gives regulators to power to fine companies to the highest of €20m or 4% of a company's annual turnover. It also includes penalties for failing to look after data from hackers.
• Impact on law firms - This regulation is going to significantly impact law firms, both directly and indirectly through their clients. Companies and firms will be required to follow stringent rules on how they process and store data and get customer consent. It affects both companies operating in the EU and those who employ EU workers or sell to EU customers. Regulatory and data protection lawyers who specialise in this field will be in high demand as companies will need detailed advice to avoid the significant penalties. The problem is it's going to be costly and it could impact the ability to do business.

Spotify flotation

• The Story: Spotify listed on the New York Stock Exchange and was valued at $26.5bn. But the company didn't go for a normal flotation in a sign of the uncertainty around tech stocks at the moment. Instead of hiring a bank and going through an extensive IPO process, Spotify's route involves a company going straight to the market and selling existing shares.
• Impact on law firms: The recent tech sell off in the stock market has shaken a lot of investors and caused prices to fluctuate a lot in recent weeks. This may be a broader sign of concerns about IPOs and companies may put flotations on hold over fears about the current political climate. Law firms may also support clients in different types of listings. Spotify's route to the market, a direct listing, is seen as a test case for future companies.

I've been following your posts for a while, I just want to say thank you so much. I don't know how long these topic but they're going to be so so useful when it comes to training contract interviews.

 

[Salma]

I've been following your posts for a while, I just want to say thank you so much. I don't know how long these topic but they're going to be so so useful when it comes to training contract interviews.

I second this, thanks @Coralin96.

 

[Coralin96]

I've been following your posts for a while, I just want to say thank you so much. I don't know how long these topic but they're going to be so so useful when it comes to training contract interviews.

I second this, thanks @Coralin96.

Thank you guys . I'm quite surprised I've kept it up actually but it's really helped things to start clicking together. At the start it would take me a few hours (so my plan to do it every day was quite optimistic!) but now it doesn't take as long. It's also quite fun watching some of the stories develop, especially with Trump!

 

[MightyMoe]

I wish I could be so committed. I used to say I'd do this every couple of months and then I'd start and give up. Thank you!

 

[Coralin96]

Next update, enjoy

07/04/2018

Severe Russia sanctions from the US

• The Story: The US government announced its latest round of sanctions against Russia on Friday. They targeted prominent Russian billionaires, government or state-owned officials and companies. This is the US's toughest sanctions against Russia to date.
• Impact on law firms: Many Russian companies have been hit hard, with shares in EN+ falling by 22% in value and Rusal falling 18%. Rusal later released a statement that it is consulting with its legal advisers on the next steps. This follows the alleged Russian attack on a former spy in the UK, and Russian diplomats being expelled from over 20 countries.This is going to affect a range of companies that trade with Russian multinationals, for example EN+, which is listed in London. So depending on how long it lasts companies may be advised to consider finding alternative suppliers. The same applies to other Russian businesses, those with links to the government are concerned that they'll be targeted next, so they may need to consider how much connection they have with the Russian government.

Trump escalates trade war

• The Story: It didn't take long for Donald Trump to respond to the recent Chinese tariffs. He has called for tariffs on an additional $100bn of Chinese imports.
• Impact on law firms: It's clear that Trump won't be the one backing down from this escalating trade war and this suggests it's going to be a long one. Law firms should help businesses to prepare sooner rather than later including those that have the potential to be hit. Some alternative suppliers could adjust their portfolio and use this opportunity to offer their goods locally. The US, EU and Japan also joined the US in a case against China's alleged intellectual property theft at the World Trade Organisation. This puts more importance on the WTO to be able to resolve the dispute or that will significantly affect the future of trade if there limited international enforcement. Financial institutions have had different responses. BNP Paribas noted that there are risks to the Chinese banking system and little to benefit from a trade war. Blackrock said it's an opportunity for negotiations with China. Whilst UBS warned clients about the risk to global growth.

Merck announced failure of clinical trial

• The Story: Merck, one of the largest pharmaceutical companies in the world, announced the failure of a clinical trial. The trial included an experimental cancer drug from Incyte, a US biotech company, to treat melanoma patients. After the announcement Incyte's shares fell by 22%.
• The impact on law firms: Law firms get a significant amount of work from pharmaceutical clients, they have billions to spend on acquisitions develop drugs and therapies. But there is signification competition, which leads to fears that big pharmaceutical companies are spending millions on clinical trials without doing enough research first. Rival companies are also looking to combine drugs in order to improve existing therapies.

Europe to tell off Facebook

• The Story: The EU justice commission will be speaking with Facebook's COO, Sheryl Sandberg after finding that Facebook's written response "fell short" of their expectations.
• Impact on law firms: This is an update to the story and shows the strict stance we have in Europe with data protection laws. It is some of the word's toughest laws, although states are responsible for their own enforcement. Law firms will advise companies to be cautious because the data protection issue is very hot at the moment. There are also concerns because the EU is putting pressure on the US to improve privacy standards, so this threat could also extend to US companies. The EU also want to know how Facebook will comply with the GDPR.

Inflation and wage risks to the US economy

• The Story: The CEO of JP Morgan released his annual letter this week and commented on the risks of the US economy overheating because of higher inflation and wager. He suggested that the Federal Reserve may have to take 'drastic action' by raising interest rates quicker than anticipated.
• Impact on law firms: This one is a mixed bag, the suggestions that there are dangers in the US economy comes from the fact that it is growing too well, almost too fast. This suggests that whilst M&A and banking will be busy, firms need to prepare for the risks that the Federal Reserve does step in an raise interest rates. That could be a problem if lots of companies are borrowing to finance their activities whilst the interest rates are low.

 

[Jaysen]

Next update, enjoy

07/04/2018

Severe Russia sanctions from the US

• The Story: The US government announced its latest round of sanctions against Russia on Friday. They targeted prominent Russian billionaires, government or state-owned officials and companies. This is the US's toughest sanctions against Russia to date.
• Impact on law firms: Many Russian companies have been hit hard, with shares in EN+ falling by 22% in value and Rusal falling 18%. Rusal later released a statement that it is consulting with its legal advisers on the next steps. This follows the alleged Russian attack on a former spy in the UK, and Russian diplomats being expelled from over 20 countries.This is going to affect a range of companies that trade with Russian multinationals, for example EN+, which is listed in London. So depending on how long it lasts companies may be advised to consider finding alternative suppliers. The same applies to other Russian businesses, those with links to the government are concerned that they'll be targeted next, so they may need to consider how much connection they have with the Russian government.

Trump escalates trade war

• The Story: It didn't take long for Donald Trump to respond to the recent Chinese tariffs. He has called for tariffs on an additional $100bn of Chinese imports.
• Impact on law firms: It's clear that Trump won't be the one backing down from this escalating trade war and this suggests it's going to be a long one. Law firms should help businesses to prepare sooner rather than later including those that have the potential to be hit. Some alternative suppliers could adjust their portfolio and use this opportunity to offer their goods locally. The US, EU and Japan also joined the US in a case against China's alleged intellectual property theft at the World Trade Organisation. This puts more importance on the WTO to be able to resolve the dispute or that will significantly affect the future of trade if there limited international enforcement. Financial institutions have had different responses. BNP Paribas noted that there are risks to the Chinese banking system and little to benefit from a trade war. Blackrock said it's an opportunity for negotiations with China. Whilst UBS warned clients about the risk to global growth.

Merck announced failure of clinical trial

• The Story: Merck, one of the largest pharmaceutical companies in the world, announced the failure of a clinical trial. The trial included an experimental cancer drug from Incyte, a US biotech company, to treat melanoma patients. After the announcement Incyte's shares fell by 22%.
• The impact on law firms: Law firms get a significant amount of work from pharmaceutical clients, they have billions to spend on acquisitions develop drugs and therapies. But there is signification competition, which leads to fears that big pharmaceutical companies are spending millions on clinical trials without doing enough research first. Rival companies are also looking to combine drugs in order to improve existing therapies.

Europe to tell off Facebook

• The Story: The EU justice commission will be speaking with Facebook's COO, Sheryl Sandberg after finding that Facebook's written response "fell short" of their expectations.
• Impact on law firms: This is an update to the story and shows the strict stance we have in Europe with data protection laws. It is some of the word's toughest laws, although states are responsible for their own enforcement. Law firms will advise companies to be cautious because the data protection issue is very hot at the moment. There are also concerns because the EU is putting pressure on the US to improve privacy standards, so this threat could also extend to US companies. The EU also want to know how Facebook will comply with the GDPR.

Inflation and wage risks to the US economy

• The Story: The CEO of JP Morgan released his annual letter this week and commented on the risks of the US economy overheating because of higher inflation and wager. He suggested that the Federal Reserve may have to take 'drastic action' by raising interest rates quicker than anticipated.
• Impact on law firms: This one is a mixed bag, the suggestions that there are dangers in the US economy comes from the fact that it is growing too well, almost too fast. This suggests that whilst M&A and banking will be busy, firms need to prepare for the risks that the Federal Reserve does step in an raise interest rates. That could be a problem if lots of companies are borrowing to finance their activities whilst the interest rates are low.

This is great Coralin, well done!

 

[Campbell44]

I came across this story and thought I would share. Allen & Overy is apparently in talks to merge with a US law firm, O'Melveny & Myer: https://www.reuters.com/article/us-...-firm-omelveny-myers-legal-week-idUSKCN1HE01Y

 

[Nicole]

I came across this story and thought I would share. Allen & Overy is apparently in talks to merge with a US law firm, O'Melveny & Myer: https://www.reuters.com/article/us-...-firm-omelveny-myers-legal-week-idUSKCN1HE01Y

That's very interesting, thanks for sharing Campbell. If that goes through I imagine many of the magic circle will look to follow.

 

[Campbell44]

That's very interesting, thanks for sharing Campbell. If that goes through I imagine many of the magic circle will look to follow.

Now I'm not so sure. I was just looking into it and it may just be a rumour. The US firm was quite upfront saying there are no plans for a merger.

 

[Nick]

That's very interesting, thanks for sharing Campbell. If that goes through I imagine many of the magic circle will look to follow.

Now I'm not so sure. I was just looking into it and it may just be a rumour. The US firm was quite upfront saying there are no plans for a merger.

http://www.legalweek.com/sites/lega...talks-with-us-west-coast-firm-omelveny-myers/

More on the potential A&O merger.

 

[Salma]

http://www.legalweek.com/sites/lega...talks-with-us-west-coast-firm-omelveny-myers/

More on the potential A&O merger.

Allen & O'Melveny

 

[Sofia]

It must be frustrating when the press gets wind of it, makes the merger talks all the more official!

 

[MightyMoe]

http://www.legalweek.com/sites/lega...talks-with-us-west-coast-firm-omelveny-myers/

More on the potential A&O merger.

Hey out of interest, do you pay for a subscription to legal week or are you just using the free article limit?

 

[Nick]

Hey out of interest, do you pay for a subscription to legal week or are you just using the free article limit?

Hey! Nope I don't pay, I'm using the free article limit (which I believe is 5 articles per month)

 

[Nick]

Allen & O'Melveny

Haha it sounds weird. I'm personally not keen on the idea..

 

[Campbell44]

Haha it sounds weird. I'm personally not keen on the idea..

Allen & Myers sounds a lot better!

 

[MightyMoe]

Hey! Nope I don't pay, I'm using the free article limit (which I believe is 5 articles per month)

Ahhh okay that makes me feel better haha. It seems like it would help for applications and interviews but it's so expensive . What do you use to research firms?

 

[Nick]

https://www.ft.com/content/b9c96d04-376c-11e8-8eee-e06bde01c544

Quite an interesting read...

 

[Nicole]

https://www.ft.com/content/b9c96d04-376c-11e8-8eee-e06bde01c544

Quite an interesting read...

Wow what a fantastic article. That's a great find Nick, thank you for sharing. It's interesting because I don't see much of a way out of this for many UK firms. They lack the profitability of the elite New York firms, so even if they continued to modify their lockstep, they would still be unable to pay as much for rainmakers compared to firms like Kirkland. And if they do overhaul their compensation system it'll affect decades of tradition and all the partners that have been waiting to get to the top of the lockstep.

Keep them coming, I may have to start collating these articles in one place!