Scottish independence referendum: T minus 3 weeks ...

Yesterday businesses said 'no':

https://twitter.com/UK_Together/status/504618192736878592

Today businesses are saying 'yes':

https://twitter.com/YesScotland/status/504891268384948225

Both the UK and Scottish governments are showering the Scottish electorate with oodles of statistics to rally the undecided to their causes:

https://twitter.com/AFP/status/504262782410579968

So what will happen if the 'Yes' team succeeds and the UK splits into Scotland and the rUK?

What will this mean for lawyers?

We wrote about this in July: Scottish independence: what commercial lawyers need to know. We were even good enough to set out our top ten things for lawyers south of the border to muse over.

But things are moving quickly in this debate.

So last week Lexis®PSL Commercial interviewed James Lloyd, commercial partner and head of the insolvency team at Scottish law firm Harper Macleod LLP. James says the biggest threat to business is, and will continue to be, uncertainty. Here's an extract from his interview:

What are your key concerns as the referendum draws near? Are you taking any practical steps ahead of the referendum?

My key concern is the effect that it may have for business in Scotland. There can’t be any doubt that if an independent Scotland is to prosper it will require a strong and vibrant business sector. The biggest threat to business is uncertainty. At the moment there is uncertainty about the outcome of the referendum and that has undoubtedly had an effect on investment.

A Yes vote will not end that uncertainty, it will continue as discussions take place between a Scottish Government and that of rUK as to how the family silver should be divided. It will not end on independence taking effect as the market and investors will want to see what effect independence actually has.

The risks of prolonged uncertainty on a business sector that has not fully recovered from recession are business failures and job losses (which will be exacerbated if, as has been suggested, large employers relocate south of the border in the event of a Yes vote). Such events would give rise to an increase in personal and corporate insolvencies at a time when we would be just getting to grips with new insolvency regimes.

In relation to the currency issue (ie whether there will be a change to Euros if a currency union cannot be agreed), what would that mean in practice for existing contracts and arrangements?

I think it doubtful that any currency change will have any real impact in the insolvency field. Clearly, cross-border commercial transactions will be affected particularly on issues of pricing. However, at present many contracts, particularly standard form ones, recognise the separate legal systems and specify which will apply.

I would expect that to continue post-independence and although the effect may be marginal, solicitors and clients will have to remain alive to that issue.

Do you think there are any issues that haven’t received enough attention or consideration?

Not really. At the moment the Scottish Government (through the office of the Accountant in Bankruptcy) is considering what changes would be required to a Scottish Corporate Insolvency Regime as a consequence of a Yes vote. The personal insolvency regimes (and indeed of debt relief in general) have undergone significant changes in recent years, most recently with the Bankruptcy and Debt Advice (Scotland) Act 2014 and therefore further material changes are unlikely regardless of the outcome. I understand that other government departments are taking similar steps as are most large and medium-sized organisations. Despite the best endeavours of all concerned there will, of course, be unexpected consequences of independence if it happens.

What would a Yes vote mean in practice for lawyers in your field?

In practice, there is the potential for a huge amount of work for solicitors that would result from independence, not just in the insolvency field but in almost every area of work. Although there is a substantial body of Scot’s law that will not require any change, new legislation will still be required. Solicitors and the courts will then have the task of deciding if the politicians and Parliamentary draughtsmen have gotten things right.

What would a Yes vote mean in practice for clients in your field?

For clients, as with solicitors, a Yes vote will involve getting to grips with new statutory regimes and regulations and implementing these. The day-to-day practice of insolvency is however likely to be more prosaic—individuals and companies will go bust and insolvency professionals will continue with the task of winding up their affairs much as they have always done.

Any other thoughts?

Despite the rosy hued promises of the nationalists and the doom laden predictions of the unionists the reality of independence will probably be much the same as now and it will be ‘business as usual’. The one thing for certain is that the weather in Scotland will not improve regardless of the result!

Interviewed by Nicola Laver. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor