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The Road Ahead: How the French Election Might Impact In-house Counsel

I n the wake of Brexit, the future viability of the European Union may lie in the hands of isolationist politicians — who are increasingly making headway in countries around Europe. The latest instance involves the upcoming election in France, where National Front Party candidate Marine Le Pen, who ran on a platform that encouraged the country’s exit from the European Union, gained sufficient momentum to force a runoff vote against her centrist opponent, Emmanuel Macron. With France inching toward isolationism and the European Union inching toward another Brexit, the scenario begs the question: How will this impact my in-house practice?

According to the ACC Chief Legal Officers 2017 Survey, one in three in-house respondents stated that they have made at least one change to their legal department as a result of geopolitical events over the past 12 months. And with 86 percent of European respondents to the 2015 ACC Global Census reporting cross-border responsibilities, a French exit from the European Union could mean major changes are ahead for the global GC.

While it is seemingly unlikely that Le Pen will be elected, it would be shortsighted not to consider the possibility. If Le Pen became president, and France subsequently removed itself from the European Union, it would be critical for in-house counsel to set up precautionary compliance protocols to mitigate risk. Below are some considerations to keep in mind in order to prepare for the improbable, yet looming possibility of “Frexit.”

Data protection

For in-house counsel operating in the European Union, the impending General Data Protection Regulation (GDPR) — which is set to increase data protection in and out of the region — should be top of mind. At the 2016 ACC Annual Meeting session, entitled “Safe Harbor’s Rocky Shoals: Implementing GDPR, Alternatives to the Safe Harbor Scheme, and Recent Privacy Developments in the EU,” Mark Webber, partner of Fieldfisher, underscored the importance of setting up compliance protocols in preparation for GDPR regardless of any anticipated geopolitical shifts. For instance, companies operating in France would be wise not view Le Pen as a “get out of jail free card” for GDPR compliance.  

“It is futile to say ‘we are leaving, we are going to ignore this,'” Webber says.  

In addition, France has its own data protection authority — the Commission nationale de l’informatique et des libertés (CNIL) — which in-house counsel will need to account for. Authors Joseph Srouji and Marie Veillon discuss the importance of the CNIL in the September ACC Docket article entitled “The Brave New World of Fines, Myths, and Reality: A French Regulator Perspective.”

“The CNIL has since been a watchdog for both public and private sectors in the domain of personal data and processing. Its powers have significantly increased in recent years and will continue to under the GDPR,” the article states.  

Srouji and Veillon assert that the best practice for counteracting discrepancies between the CNIL and the GDPR is to appoint a data protection officer (DPO), who can observe policy changes and make appropriate edits to compliance protocol.

“With the GDPR, the DPO is going to be the key intermediary with the CNIL as well as with other groups. This means that it will be a workload in and of itself and not just an extra responsibility in addition to someone’s day job,” the article continues.

In the short term, in-house counsel can expect a certain degree of uncertainty to cloud European transactions. To quell this fear, companies can prepare data protection protocols for multiple scenarios, and train employees to ensure a smooth transition.  

Employment mobility

Another key area of concern is employment mobility, and in-house counsel should be increasingly wary of how changes to the European Union will affect talent retention in the region. In the article entitled “What Brexit Means for Multinational Employers,” authors Spiwe Pierce and Dr. Alexander Niethammer assert that one of the most substantial impacts that Brexit will have on the European Union is the restricted movement of employees working in and out of the United Kingdom.  

“Employers should watch closely for indications of changes in immigration laws over the next two years…However, it is likely that existing EU workers will be allowed to remain in the United Kingdom. Thereafter, employers can expect some changes to the pool of workers entering the country, and are likely to face greater bureaucracy and visa applications in recruitment,” the article asserts.  

With regard to France, however, employment restrictions will likely move at a much faster pace. If elected, Le Pen stated that she would immediately revoke France from the border-free zone — prohibiting non-visa holding EU citizens from working in France, and non-visa holding French citizens from working in the European Union. In-house counsel should be prepared for this stark change, and not expect a gradual transition.

The road ahead

Even as a hypothetical, it’s hard to dispute that a French-exit from the European Union would put the longevity of the entire socioeconomic bloc into question. According to CNN, the French Central Bank has estimated that the cost of refinancing France’s public debt would cost more than €30 billion in additional annual interest. As France is one of the key economic powers in Europe, the departure would send shockwaves through the continent.

And France is not alone. In December 2016, Austrian Freedom Party candidate Norbert Hofer, who also ran on a platform of departing the European Union, lost by an extraordinarily small margin to his opponent. In March 2017, anti-EU politician Geert Wilders ran a tight race in the Netherlands — with policy proposals appropriately dubbed as “Nexit.”

While the prospect of dissolution in the European Union may seem frightening, it’s important not to hit the panic button just yet. With only 21.7 percent of the preliminary vote, Le Pen is unlikely to become France’s next president. However, in-house counsel are trained to expect the unexpected, and should consider all possible legal scenarios to both mitigate risk and ensure a positive outcome for the company.

The information in any resource collected in this virtual library should not be construed as legal advice or legal opinion on specific facts and should not be considered representative of the views of its authors, its sponsors, and/or ACC. These resources are not intended as a definitive statement on the subject addressed. Rather, they are intended to serve as a tool providing practical advice and references for the busy in-house practitioner and other readers.