Hi ZipLawyer! I'm Ludo Lugnani and this is ZipLaw: an independent newsletter covering unique news stories. We explain how each story impacts law firms and their clients so that you can stand out in interviews and applications and develop your Commercial Awareness!
Today's newsletter is an 8 min read:
- 🇬🇧 Budget Time: What was announced and how does it impact law firms?
- ➕ Plus: Credit Suisse gets some help, TikTok faces US ban and Banks may be in trouble.
📰 News Briefing
- 📈 Credit Suisse borrowed $53.7bn from Switzerland’s central bank to boost liquidity. Saudi National Bank, its largest shareholder, ruled out further investment causing a 30% drop in share prices. First Republic, an American lender, lost 20% of market value after a credit rating downgrade.
- 🌎 North Korea launched its fourth missile in a week, just before South Korean and Japanese leaders' talks in Tokyo. The intercontinental ballistic missile landed in waters near Japan. South Korea's president condemned North Korea's actions.
- 🚫 TikTok may face a ban in America unless its Chinese owners sell their stakes in the company. American officials and legislators are concerned about data privacy and potential government ties. TikTok's CEO will testify before Congress on data security and Chinese relations.
- 💰 Concerns over banks' stability spread across the sector, leading to a demand for safe-haven assets like gold or government bonds. In the meantime, investors predict the Federal Reserve will maintain interest rates later this month.
🤿 Deep Dive
Today we're taking a look at the UK's budget and what it means for law firms and their clients. We've included an ultra-brief and a slightly more detailed summary below to get started!
We then discuss how 3 key areas will provide an increase in work for law firms!
⏱️ Budget in Short
- Energy price guarantee remains at £2,500 until July
- Inflation expected to drop to 2.9% by end of 2023
- Public sector net debt to peak at 97.3%, then fall to 94.6%
- 12 new investment zones will be pursued with £80m support
- £400m for "levelling up partnerships"
- Corporation tax increase to 25%
- £20bn investment in carbon capture and storage
- Nuclear power classified as environmentally sustainable
- Measures to tackle economic inactivity
- Focus on employment for over-50s
📝 And in a bit more detail
Helping with Energy Prices and Support: Martin Lewis and some charities fought to keep the energy price guarantee at £2,500. Chancellor Hunt said it would stay that way until July. This will help the average family save £160. Hunt also wanted to help people with prepayment meters, give £63 million to leisure centres and pools, and £100 million to charities with high costs.
Economy: Growth and Less Inflation: Hunt wanted a budget that made the economy grow in a healthy way. The Office for Budget Responsibility (OBR) predicts inflation will go down to 2.9% by the end of 2023 and that the economy would shrink by only 0.2% in 2023 but then grow in the next years.
Investment and Funding: The government wants to create 12 new investment zones. Successful areas will get £80 million of support and keep some local taxes. Hunt will also give an extra £400 million for "levelling up partnerships" and £8.8 billion over five years for city region transport settlements.
Taxes and Support for Businesses: Even though corporation tax increased to 25% from 19%, Hunt introduced a £9 billion plan to help businesses with expenses. He also created a new credit for research-focused businesses.
Energy and Environment: Nuclear Power and Carbon Capture: Hunt announced £20 billion of investment in capturing carbon and making nuclear power good for the environment. Environmental groups criticised this, saying it's not enough.
Jobs: Hunt created plans to help people who didn't have jobs, like ending the work capability assessment and giving £400 million for health support.
AI and Quantum: Hunt announced funding for the UK's technology sector, including a quantum computing hub, a £1 million annual AI research prize, and £3 billion for high-growth businesses over 10 years.
How does this Impact Law Firms and their Clients?
Note: In this section, we consider how law firms' clients may be affected by the story we discussed. We then explain how law firms can help, and which particular legal departments could see an increase in work and why.
Time to Build
We can expect real estate and infrastructure departments to see an increase in instructions due to the proposed creation of 12 new investment zones and the allocation of funds for city transport settlements. Here are some things they could advise on.
- Advising on property acquisitions and development: The real estate department would assist developers and investors in acquiring and developing properties within the new investment zones. They would help clients navigate zoning laws, negotiate contracts, and advise on the tax implications of the transactions.
- Infrastructure projects within the investment zones: The real estate department would work with clients involved in the city region transport settlements in select areas such as West Yorkshire or Greater Manchester to advise on land acquisition, leasing agreements, and other property-related matters that may arise during the development of new transport infrastructure.
- Advising on public-private partnerships (PPPs): The infrastructure law department would play a crucial role in advising clients on the legal aspects of entering into public-private partnerships for the development of infrastructure projects within the investment zones. This could involve negotiating and drafting contracts, ensuring regulatory compliance, and managing disputes.
- Procurement and tendering process: The infrastructure law department would assist clients with the procurement and tendering process (with assistance from commercial colleagues) for projects funded by the "levelling up partnerships" and city region transport settlements. They would help clients navigate the legal requirements of the tendering process, advise on risk management, and ensure that the contracts awarded are compliant with relevant laws and regulations.
Tax and corporate law demand would increase due to corporation tax changes, new research-focused business credit, and the £9 billion expenses support plan. Businesses would seek legal guidance to navigate, optimize, and comply with these new measures.
- Advising on corporation tax increase and compliance: The tax law department would assist businesses in navigating the complexities of the corporation tax increase, ensuring compliance and identifying tax-saving opportunities. They would help clients understand the implications of the tax increase and advise on optimizing their tax strategy.
- Assisting with research-focused business credit: The tax law department would provide guidance on the new research-focused business credit, helping businesses understand eligibility criteria and the process of claiming the credit. They would advise on maximizing the benefits of this credit and ensure proper reporting and compliance.
- Supporting businesses with expenses relief plan: The corporate law department would help businesses adapt to the £9 billion plan for expenses support by reviewing contracts, restructuring agreements, and ensuring compliance with the plan's requirements. They would guide clients through the legal aspects of participating in the program and optimize their benefits.
AI and Quantum Technology
Corporate, Intellectual Property and Data Protection are key departments that will benefit from the government's increased funding in AI and Quantum Technology. Here's why.
Data Protection Department
- AI-powered Healthcare Solutions: As AI is increasingly used in healthcare, such as for diagnostics, treatment recommendations, and patient monitoring, the Data Protection Department would need to ensure that all health-related personal data is handled securely and in compliance with data protection regulations.
- AI-driven training: Training an AI model requires vast amounts of data which needs to be stored and fed to the AI. Data protection lawyers will advise on the lawful basis for collecting the data (e.g. necessary to perform a contract, or for a legal obligation) and advise on the requirements in relation to storing, protecting and confirming the accuracy of the data.
Intellectual Property Department
- AI-generated Content: AI systems are being used to create music, artwork, and written content. The Intellectual Property Department would need to advise on the protection of intellectual property rights related to AI-generated content, including issues surrounding copyright ownership and licensing. The recent case of Getty Images v Stability AI over a breach of copyright in relation to AI-generated images showcases the potential problems with this. The Vallance report quoted by Hunt proposed further clarity on this via adequate policies.
- AI-based Inventions: As AI systems contribute to new inventions and discoveries, the Intellectual Property Department would need to help inventors and businesses navigate the patenting process for AI-assisted inventions, ensuring that innovations are adequately protected under current patent law.
- AI Start-up Investments and Acquisitions: The Corporate Department would be involved in advising investors and companies engaging in investments, mergers, or acquisitions of AI start-ups, ensuring that deals are structured in a way that complies with regulations and protects the interests of all parties involved.
- Investment in Quantum technology: The UK government is to invest £900m in a cutting-edge supercomputer as part of an artificial intelligence strategy that includes ensuring the country can build its own “BritGPT”. This could drive an increase in deal activity in the sector on which corporate lawyers will advise.
- NSIA: The National Securities and Investment Act requires deals in specified protected industries to be notified to the government. AI is one of these areas. Corporate lawyers will need to advise clients involved in deals in this industry on the notification process (e.g. mandatory vs voluntary), compliance with regulations and what to do if the deal gets blocked by the government.
Low on Energy
The Budget was criticised for insufficient support for renewable energy and home insulation, focusing on carbon capture and nuclear reactors. Environmental groups claim that due to this the UK risks missing climate targets.
- Policy Challenges: Environmental lawyers can advise green campaigners and climate charities on legal avenues to challenge government policies misaligned with climate goals, and represent clients in court cases related to climate change.
- Regulatory Compliance: Environmental lawyers can help clients navigate complex environmental regulations and laws, advising on compliance and representing them in litigation related to environmental issues.
- Inflation Reduction Act: A growing number of UK companies in the renewables space will be looking to make a move to the US to take advantage of the Inflation Reduction Act (IRA) tax credits. Tax lawyers can help businesses understand the tax implications of the IRA and the potential tax credits available for low-carbon energy sources and consumer products.
- Tax Policies for Renewables: Tax lawyers can advise the UK government on developing tax policies that incentivise the adoption of renewable energy and electric car production.
- Carbon Capture & Nuclear Reactors: Energy lawyers can advise the government and businesses on the legal aspects of carbon capture and storage, small modular nuclear reactors, and corporate energy efficiency schemes, ensuring compliance with existing energy regulations.
- Nuclear Energy Reclassification: Energy lawyers can provide guidance on the legal implications of reclassifying nuclear energy as "environmentally sustainable," helping attract private investment in the sector.