It was late in the day, as opinion polls narrowed alarmingly, that English lawyers took notice of Scotland’s independence vote last month and entertained the huge implications of a split in the UK’s 300-year-old union.
As several major Scottish institutions warned they would relocate operations to London, sterling buckled and one mortgage-backed securities deal went so far as to exclude Scots real estate, the implications began to sink in for business.
In the end, of course, Scotland opted against independence 55.25% to 44.65%, not a huge win but larger than many predicted in the final weeks and with a high enough voter turnout to put the question off for the foreseeable future.
The issue remains live with the three national parties making last-minute pledges to extend devolution, but for Scots lawyers, who have generally faced a torrid time in the post-Lehman market, the outcome will feel positive. Full independence would have promised a flood of work supporting the emergence of a fully independent state but risked an investment freeze, falling asset prices and higher finance costs in the short term until uncertainty passed.
The potential spectrum of how things could have gone is unknowable but it was huge. In contrast, a settlement for greater devolution takes out most of the dangerous uncertainty while heralding the likelihood of a major expansion in tax-raising powers and policy making.
Still, there is plenty of uncertainty left on the table, with a 2015 general election and a charged constitutional debate ahead. A timetable has been laid out with Lord Smith of Kelvin appointed to run the process, a commission created aimed at reaching an agreement in November and draft legislation due to be published by the end of January 2015. However, there can be many a potential slip constitutionally between this cup and lip.
Scots lawyers’ general lack of enthusiasm for such matters is understandable – the profession already enjoys considerable self-determination, while the rise of London as a global hub over the last 15 years has battered Edinburgh and Scotland’s traditional legal elite. With the 1997 devolution package doing little demonstrably for Scottish lawyers, there was limited enthusiasm to have to compete more directly with England as a professional services hub or destination for talented commercial counsel.
Should devolution proceed it will add powers to those being transferred under the Scotland Act 2012, already a substantial extension in income tax and borrowing powers. But it also poses greater uncertainty for England with proposals for a written constitution, federalism and more powers for London all being floated and potentially affecting clients.
One area which has largely avoided mention in devolution discussions is energy but that is also set to see greater power being held in Scotland should the Wood Review be implemented and a new Oil and Gas Authority created in Aberdeen. This would contribute further to the shift in Scotland’s centre of gravity from financial services towards energy – a trend underlined by Aberdeen’s rise and Edinburgh’s relative decline. It would also lead to more regulation and compliance work as the UK shifts to the new framework, though in the longer term the regulator is aimed at creating a simplified licensing arrangement for offshore drilling.
And if that wasn’t enough, then after two years of considering the constitutional aftermath of the Scottish referendum, contemplation can start on the impact of a possible UK vote on EU membership by 2017. What’s that Scots poem about plans in uncertain times?