Washington Lawyer - August 2017 - 29

the creation of a multilateral investment court
system as an alternative to international arbitration.

if they actually agree on some type of framework,
the real work will start then," Burdick says.

"It will be interesting to see whether and to what
extent any changes in international law and dispute
settlement mechanisms are going to have an effect
on investment flows," Rubinstein says. "If you have
investors that have grown accustomed to certain
levels of guarantees and treaty protection to date,
to what extent will the absence or reduction of
those guarantees affect decisions on where to
invest? And will these alternative constructs be
sufficient to meet the demands of globalization?"

In the short term, however, there's already been
a visible impact on London's financial market, which
last summer saw a downturn in finance and corporate transactions. While London is likely to remain
a major global financial center, it's not entirely clear
what the outcome of Brexit will mean. Already,
international banks and the law firms that serve
them are gradually shifting resources to Germany.

To be sure, capital markets will continue to find
ways around new obstacles, and that means a
stream of client work for international practices.
"The capital markets are much healthier than
they were seven or eight years ago," says Paul
F. Sheridan Jr., a partner at Latham & Watkins LLP
in Washington, D.C. (where the firm's international
practice is based) and also a member of the firm's
executive committee.
"Capital markets have gotten stronger both on
the equity side and the high-yield side. That plays
to a natural strength of ours. M&A activity - where
it's been in 2016 versus 2009 - is much stronger,
both on the private equity side and on the corporate side," says Sheridan. Latham's clients include
the private equity firms Carlyle Group, based in
Washington with $178 billion in assets, and the
Toronto-based Onex Corporation, with $6.4
billion in assets.
Shifting international regulatory regimes make
the work of private equity firms much more
complicated, he says.
"Complexity requires clients to think more
and more about risk, about change, and to seek
guidance in confirming that. That's an opportunity
for us, whether it's on the transactional side or on
the litigation side, to do more work for our clients,"
Sheridan says.

THE BREXIT EFFECT
Looking ahead, one of the big wildcards in forecasting international regulatory issues revolves
around Brexit, the UK's withdrawal from the
European Union. Many of Washington's international firms have posted white papers on their
websites since the June 2016 historic vote.
In the aftermath, the U.S. and the UK would have
to negotiate a new bilateral free trade agreement
to accommodate Brexit. And there are a range
of options confronting new British Prime Minister
Theresa May, who has promised to push for a hard
Brexit - essentially a clean break from the EU and
its regulatory regime.
"Right now we are just basically advising clients on
what's going on and what could be likely to happen,
but until Brexit actually occurs in two years, or sooner

In May, in response to Brexit, the EU proposed new
rules designed to streamline and ease derivative
transactions. The new regulations would deprive
London of exclusive control of one its most lucrative trading businesses, post-Brexit. Even though
Brexit would seem to be a European matter, the
effects are already influencing regulation in the
United States.
The EU derivatives proposal drew concern from the
acting chair of the U.S. Commodity Futures Trading
Commission, J. Christopher Giancarlo, who told a
trade association audience in Lisbon that the CFTC
is reviewing rules for U.S. swaps markets. Any EU
move to tighten control over the clearing of derivatives would "undoubtedly inform the evolution of
U.S. regulatory policy," he said.

HOW TO RESPOND
For D.C. law firms, problems like the potential difference
between EU-UK and U.S. derivatives trading regulations
represent a kind of globalization sweet spot in the crossover between government and business.

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"The question for law firms is, how are you going
to respond to globalization?" says Carter Phillips, a
partner at Sidley Austin LLP and chair of the firm's
executive committee. "Are you going to put boots
on the ground in all of those jurisdictions, or are you
going to go at it in a different way? At least so far for
us, our focus has been East-West, and we think now
and in the foreseeable future more opportunities
kind of North-South. And you kind of have to invest
where it makes sense, short run versus long run."
"I see us continuing to refine those major commercial and financial centers and doing that on an
incremental basis," adds Phillips. "That will be one
of the big challenges to try to figure out the extent
to which you have to have physical operations
in those markets as they continue to expand and
where's the tipping point. Is there enough business
generated that you get in at the right time as
opposed to missing the boat?"
William Roberts is a regular contributor to
Washington Lawyer.

How are firms abroad dealing with
international upheaval? Find out at
dcbar.org/news.

Alvin M. Guttman, Esq.
(202) 293-3595
www.lawofficespacedc.com

http://www.dcbar.org/about-the-bar/news/global-unrest.cfm http://www.lawofficespacedc.com http://www.dcbar.org/news

Table of Contents for the Digital Edition of Washington Lawyer - August 2017