As the UK government develops the UK’s post-Brexit relationship with the EU, the economic environment in the UK is experiencing considerable uncertainty.
Some commentators, including Janan Ganesh, Financial Times’ Chief political commentator, note that “Brexit won’t deliver a moment of crisis for the British economy or for British society but the consequences of Brexit will be severe, although noticed only gradually”.
Identify some of the current issues being considered in the Brexit negotiations and in light of the possible outcomes, analyse the business prospects of commercial law firms
in the UK over the next 5 years.
In addressing this question, you should consider:
• how the business of commercial law firms in the UK and their current business model may change in response to changes in their clients’ business’; and
• the long-term business prospects and strategic implications for commercial law firms and the key drivers affecting it. Please use one of the strategic tools to discuss the competitive pressures, uncertainties and predicament of commercial law firms.
Use either a SWOT or PESTLE analysis for issue 1.
Granier & Morris Legal Services (referred to as GMLS) is a commercial UK law firm. Alison Borkin, the managing partner, is concerned about the performance of the firm and its market position relative to one of its main competitors – Frederic & Ferdinand Solicitors (referred to as FFS).
You are a trainee solicitor working for Alison and she asks you to conduct a financial analysis of GMLS and its competitor, FFS. The financial reports of both GMLS and FFS are provided in Appendices A and B.
Provide a report to Alison incorporating your calculations and analysis of the financial ratios for the years 2015 and 2016 as listed in Table 5 (Appendix C). You should use the headings below to group your ratios appropriately:
• solvency and liquidity
• operational efficiency, and
Compare and contrast the performance of both firms. Please note that GMLS and FFS are fictitious firms so you do not need to conduct further research on them. The ratios must be calculated using the definitions provided in Table 5 which were covered in the module.
Please note that any calculations you undertake in your report should b
e rounded to the nearest two decimal points.
You are expected to comment on the ratios for each firm, considering the possible reasons for the figures and contrasting the performance of both firms. Where the term used in the ratios in Table 5 does not correspond with the terms used in Appendices A and B, you should apply your understanding of accounts to undertake the calculations.
The report should be written in clear and concise language and should aim to demonstrate critical evaluation, analysis and reflection rather than being merely descriptive of the topic covered. In particular, you will need to demonstrate your ability to carry out effective and relevant independent research as part of your assessment.
Over the years, GMLS has conducted business in China in collaboration with a local Chinese law firm. As the opportunities in China grow, the partners of the firm are looking at opening an office in the country. The current proposal is to open an office in Shanghai to serve the Chinese market and also the British firms which are increasingly interested in doing business in China, particularly following the recent talks about a potential free trade deal with China post-Brexit.
However, after a recent partners meeting, Alison is concerned with this venture. Alison has asked you to consider whether the political unrest, the rise in debt and slowing growth is a concern for establishing a permanent base in China.
(i) Please consider the economic environment in China, particularly the monetary and fiscal policies which may impact on GMLS’ business prospects.
(ii) Alison would also like you to assist her in evaluating the financial attractiveness of the Shanghai project. She would like you to: (a) calculate the NPV of the proposal and (b) provide your views on the financial viability and risks associated with the project, using the data provided in Appendix D.