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The commercial year 2016-17

updated on 26 September 2017

Commercial awareness – that skill so prized by the firms which feature in these pages – means knowing what your client wants to achieve and how to use the law to do it. For experienced lawyers, this requires a strong understanding of the sector in which the client operates. 

While firms don’t expect those entering the profession to be experts, they do increasingly look for candidates with an active interest in the wider world of commerce and a common-sense understanding of what businesses do, as well as how their activities intersect with politics, social concerns and pretty much all other human activity.

Below we recap some important commercial stories of the last year to provide you with a basis for thinking like a lawyer in the months ahead.


Britain’s exit from the European Union is set to remain one of the most important issues for UK businesses for the next decade and beyond. Negotiations between EU and UK officials over the exit terms began in June 2017, but many fundamental questions still remain unanswered. There is still a debate about whether the country should pursue a hard Brexit – cutting ties with the European Union and seeking to replace lost EU trade by boosting trade elsewhere in the world – or a soft Brexit, where Britain accepts certain EU conditions to remain in the single market and customs union. In a report by the former shadow chancellor Ed Balls and Harvard University senior fellow Peter Sands, business leaders and academics warned that hard Brexit would be disastrous for Britain’s prosperity. The report observed that the United Kingdom already has strong trading links with non-EU countries, so any moderate strengthening in these areas is highly unlikely to compensate for losing free access to European markets. Meanwhile Lloyd Blankfein, chief executive of Goldman Sachs, one of the world’s largest investment banks, revealed in May that his firm was making “contingency plans” to move its 6,500-strong UK workforce out of the country if negotiations end with hard Brexit.

The devaluing of the pound following the EU referendum has further squeezed consumers, with wages failing to keep up with the rising cost of imported goods – June saw UK inflation reach a four-year high of almost 3%. In response, some household brands, including Doritos, Toblerone and Coco Pops, have adopted ‘shrinkflation’ – freezing the price of products but reducing the size.

Elsewhere, the weak pound created difficulties for farmers by making fruit picking a less attractive proposition for the low-paid migrant workers on which British agriculture relies. Some growers reported having insufficient workers to harvest their crops.


Even with so much uncertainty over Brexit, law firms’ mergers and acquisitions (M&A) teams have been kept busy. Among the big deals of 2017 was the purchase of Holland & Barrett, the United Kingdom's biggest health food retailer, by Russian businessman Mikhail Fridman for £1.8 billion. Fridman’s fund, L1 Retail, has promised significant investment in the business, so Holland & Barrett’s star could rise further in the year ahead.

Another British success story is that of craft beer maker Brew Dog, which sold a 22% stake in its business to a private equity firm in April for £213 million, £100 million of which will be reinvested in the company’s growth. While private equity may not fit the ‘punk’ aesthetic cultivated by Brew Dog as part of its brand, the deal means that we can expect more of its idiosyncratically named booze to appear on supermarket shelves.

However, not every acquisition in 2017 went smoothly. In fact one of the biggest – the proposed £21 billion merger between the London Stock Exchange and its German rival Deutsche Börse – was blocked by the European Commission on the grounds that it would create “a de facto monopoly”. The EU competition regulator’s decision marked the end of a third unsuccessful attempt at a merger between LSE Group, which owns the London Stock Exchange, and Deutsche Börse, with previous efforts scuppered in 2000 and 2005.

Rupert Murdoch’s 21st Century Fox has also faced difficulties in its latest attempt to take over full control of the subscription broadcaster Sky. The regulator Ofcom expressed concern that the deal would have a profoundly negative impact on media plurality in Britain by giving the Murdoch family even more influence over UK news and politics (Murdoch already owns The Sun, The Times, Fox and a large stake in Sky, and previously owned the now-defunct News of the World). Culture Secretary Karen Bradley bowed to pressure to some extent by referring the deal to the Competition and Markets Authority, which is conducting a six-month review. Due to allegations of influence that Murdoch has enjoyed over successive prime ministers and other prominent politicians, critics remain wary that a “grubby deal” over Sky could yet take place, but Bradley has held firm so far. In September she referred the bid back to Ofcom in a request for further evidence analysing Fox’s suitability to be part of the UK media landscape, following its sexual harassment scandal in the United States and claims that Ofcom had not taken into account all the relevant evidence relating to phone hacking at Murdoch’s News International (now News UK) staff.   


The consequences of the 2008 financial crisis (caused by reckless banking practices relying on dodgy financial instruments) continue to be felt across the financial sector nearly a decade on, as well as among the wider public. One of the year’s most important debates in the financial corridors of power has been whether the economy has recovered sufficiently for the Bank of England to raise interest rates. The United Kingdom, like the United States, has experienced strong growth with regard to the number of people in employment, but only weak increases in average wages. The Bank of England’s governor, Mark Carney, has resisted calls to increase interest rates while such uncertainty remains over the extent of the British economy’s recovery. However, Carney has been at odds with some Bank of England colleagues, as well as the head of the US central bank, Janet Yellen, who said in July that the US economy was strong enough for rates to continue increasing (albeit at a historically low rate). We should find out soon which argument wins out at the Bank of England.  

At least one long-running dispute stemming from 2008 appeared to be resolved this year, when RBS reached a £200 million settlement with its shareholders, who said they were duped into handing over £12 billion at the height of the crisis. The settlement means that the disgraced former chief executive of RBS, Fred Goodwin, will not have to appear in court.

However, more of the nefarious goings on at the height of the crisis came to light in June, when Barclays and four of its former executives were charged with fraud for their actions in 2008. The Serious Fraud Office case relates to the way the bank raised billions of pounds from Qatari investors which enabled it to avoid a government bailout – this story is certainly one to watch.

Elsewhere, the difficulties of the Co-Operative Bank continued into 2017 as it reported its fifth annual loss. Multiple attempts to sell the bank failed, but in September Co-Op finally sold the last of its stakes in the bank to US hedge funds.

Finally, although we are still dealing with the fallout of the last crash, bankers have warned that another crisis could hit in the next couple of years, due to risks building up in China and other emerging markets, such as Thailand. Claudio Borio, head of the Bank for International Settlements’ monetary and economic department, said that the current growth levels could end “with a vengeance,” adding that “leading indicators of financial distress point to financial booms that in a number of economies look qualitatively similar to those that preceded the global financial crisis”. It has also been revealed that Britain is sitting on a debt time bomb of £200 billion, meaning that a change of circumstances in the global economy could bring about another crash – the Financial Conduct Authority has urged the government to step into avert a crisis.

Austerity: a busted flush?

Since 2010, the austerity agenda has been the prevailing economic orthodoxy of successive governments. ‘Austerity’ is a catch-all term for the cutting of funding for public services, welfare and infrastructure in an attempt to reduce government spending and alleviate the national debt, while keeping taxes low. However, its alleged benefits came under serious question this year following June’s shock general election result in which the government lost its majority despite being projected to gain seats. Following the election, Chancellor Phillip Hammond said that the Conservatives were “not deaf” to the public mood and hinted that austerity could be eased, with tax rises mooted as a way to fund more spending on underfunded public services. 

Some feel that the spending cuts have gone too far in hitting the poorest and most vulnerable in society, particularly the disabled. Meanwhile, fresh data from the Office of National Statistics showed that Britain is experiencing a rapid decline in living standards, with the biggest squeeze in workers’ pay since 2014. Even Oliver Letwin, a key Conservative figure who was one of the architects of David Cameron’s austerity programme, has called for a change in direction. Letwin said in June: “It may well be, in one way or another, a large number of people will have to pay a little more tax if we are going to maintain the trend towards reduced deficits and yet spend a little more on the crucial public services that do need more spent on them.”

However, austerity still has its supporters. The former Tory chancellor, Norman Lamont, insisted in July: “Austerity is just another word for living within one’s means. It’s not really austerity.”

Protectionism versus free trade

On the other side of the Atlantic, one improbably coiffured ideologue has been swept to power on the promise that he has the answer to the squeeze being experienced by so many. President Donald Trump wasted little time after winning the US election in pursuing a Twitter-based agenda of protectionism for US jobs, in marked contrast to the free trade model of which the United States has been a constant champion for decades. One of Trump’s first economic moves was to threaten Toyota with hefty tariffs on cars built in Mexico rather than in the United States; manufacturing giant Ford abandoned plans to build a plant in Mexico following similar intimidation. Trump’s approach has been met with dismay by economic liberals, including those at the International Monetary Fund, which in July warned against the “myopic pursuit of zero-sum policies” which could damage all countries, including those which adopt them.  


One of Trump’s biggest controversies since assuming office has been to indicate that the United States will withdraw from the Paris Agreement on climate change, which obliges signatory countries to pursue emissions reductions targets in the interests of, you know, not killing the planet on which we all live. The move is a hallmark of Trump’s ‘America first’ agenda – this prioritises US jobs which rely on coal energy over the environment (Trump is also sceptical of the widely held scientific view that human activity is a cause of climate change). US firms – including General Electric, Facebook, Goldman Sachs and Walt Disney – are among the corporate giants to have condemned the move.

Back in the United Kingdom, the government has decided to press ahead with controversial plans to build a new nuclear power plant, Hinkley Point C, despite a warning from the National Audit Office that the project is “risky and expensive” for UK taxpayers and will yield “uncertain strategic and economic benefits”. Could a desire to chum up to the Chinese government, which is involved in the construction, have anything to do with it?

In better news for those concerned by human-influenced climate change, in May Scottish Power won the right to build two offshore wind farms in the United States which, it says, could eventually power 400,000 homes. The two sites combined are more than double the size of the energy giant's operations in the United Kingdom.

The gig economy

Conditions in the so-called ‘gig economy’ have been under major scrutiny, with drivers working for Uber and Deliveroo both banding together to challenge their assigned status as self-employed workers before tribunals – a status which Uber and Deliveroo are keen to promote so that they don’t have to give their workforce full employment rights. This year, a report to the government by Matthew Taylor was damning about disingenuous practices which exploit workers, many of whom earn less than the minimum wage. However, trade unions and other critics have said that the recommendations to reform employment law in the Taylor report merely tinker at the edges and will create more loopholes for unscrupulous operators such as Uber to exploit.

The recent litigation has been brought by individuals working for companies such as Uber, CitySprint and Deliveroo, claiming that the terms and conditions of their work mean that they should be classed as 'workers' rather than self-employed contractors, and thus benefit from the associated rights and protections. On 22 September Transport for London announced that Uber is to lose its license to operate in London, on the grounds that it is “not fit and proper” to hold a private hire operator license due to the organisation’s lack of corporate responsibility. It is clear that employment law has thus far failed to keep pace and adapt to modern trends and working methods brought about by rapid advances in technology. There will no doubt be further employment tribunal cases in the year ahead and there is potential for new legislation in the area stemming from the Taylor Review.


It has been a mixed year for tech companies. The most pre-eminent of them all, Google, received a record-breaking fine of more than €2.4 billion from the European Union over alleged abuse of its market dominance. European regulators said that by artificially and illegally promoting its own price comparison service in searches, Google denied both its consumers real choice and rival firms the ability to compete on a level playing field.

While Google licks its wounds, Apple and Nokia have buried the hatchet in their long-running patent row over smartphone technology. The companies have now agreed to cooperate, with Apple paying to use the technology and stocking Nokia’s digital health products in its retail stores.

Elsewhere, one of the flotations of the year was that of mobile app Snapchat, whose share prices leaped 40% when it debuted on the New York Stock Exchange in March, making it worth more than £24 billion.


In June regional airline Flybe hit turbulence, running up nearly £20 million in losses after previous expansion plans proved too ambitious. The airline’s costly mistakes included running too many loss-making routes and a series of failed joint ventures. In response, Flybe said that it would start to reduce the size of its fleet after it saw slowing growth in consumer demand. However, it insisted that the current year was going well and that efforts to turn a profit again were well underway.

British Airways has decided to outsource its call centres to Capita after a disastrous IT meltdown in May, which stranded 75,000 passengers and resulted in severe criticism for the airline’s beleaguered customer services. The latest move suggests that BA bosses are trying to kill two birds with one stone, continuing their cost-cutting plans and abrogating themselves of responsibility for a function at which the company does not appear to excel.

What lies ahead?

Let’s conclude this round-up by focusing on the legal profession itself, which is also facing challenges presented by both technological progress and changing client demands in the wake of the 2008 financial crisis. For one commercial solicitor we spoke to, the next few years will be defined by those commercial challenges, but also the opportunities that they offer: “Historically solicitors’ firms have been slow to modernise and there is a real threat to our market share posed by new entrants to the market. We have to be more outward facing and ask ourselves more challenging and probing questions about the ways in which our clients want us to deliver services. Improvements in technology year on year mean that we can find efficiencies – we need to get the pricing right. We are not the best at communicating why we charge the fees that we do. New entrants to the market who can provide certain services in a way that outwardly appears to be better are causing us significant challenges. Those challenges are good – they keep us sharp and reinforce that we must always modernise.”

Continued change is guaranteed in the next few years – potentially at a faster rate than has ever been seen before. But now that you are armed with a sense of what is happening in several key sectors, you should be in a good position to analyse and learn from the developments of the next 12 months. Until next time!

Josh Richman is the senior editor of LawCareers.Net.