Edward Fennell’s LEGAL DIARY

Diary news plus insights, commentary and appointments from the legal world

February 23 2024

Editorial contact: fennell.edward@yahoo.com

In this month’s edition of ‘Reports Legal’ the editor, Dominic Carman, highlights that, “Beyond the big three diversity issues – gender, ethnicity, and sexual orientation – social mobility has received less media attention.”

That is certainly true in the law sector although, as Carman points out, the announcement by Slaughter and May recently that it intends to boost its recruitment of those from ‘lower social backgrounds’ did cause a flurry of interest.

But how to do so?

There needs to be a package of measures but the short cut to quick results is by targetting schools with pupils in that category and then developing high quality apprenticeships which offer the prospects of full qualification at the end. In short, adopt policies which mean what they say.

The LegalDiarist

In This Week’s Edition

Buddy, Can You Spare a Dime (I’m a Lawyer)

Financial Advisers to Exit the Market, warns lawyer

British Property Federation Gets Lawyer Reddy to Play a Constructive Role

Civil Legal Aid is Now a Desert

THE TRUTH ABOUT ACTING FOR ADVERSARIES

by Kartik Mittal (Partner at Zaiwalla & Co.)

at Allen & Overy and Boodle Hatfield

Buddy Can You Spare a Dime (I’m a Lawyer)

Access to finance and a cautious approach by partners to investing in their own firms is one of the key factors which might hold back growth in the sector over the next year according to research by  Harbour, a litigation funder and lender to law firms. Based on extensive interviews with leaders from the Top 200 law firms two-fifths of respondents said persuading partners to make investment in the firm from their own capital, or seeking external investment, was one of the top barriers to expansion. Meanwhile 50% of respondents cited economic uncertainty as the most significant deterrent.

Even as law firms have become more entrepreneurial, their underlying partnership structure can reassert itself when it comes to profits and investment,” says Harbour. The reality remains that most firms distribute most, if not all, of their profits in the traditional manner.” Unlike other businesses, therefore, investing in the growth of the firm needs to be done in a different way.

In fact a mere 2% of respondents to the survey said that they finance themselves entirely from operating income. Instead they turn to bank overdrafts, litigation funding and private equity investment with a third commenting that their firms were actively considering using credit facilities from litigation funders, from whom they already source funding for their clients’ claims.

Despite this the outlook was felt – by a small majority – to be fairly encouraging. Around 56% of respondents expected increased turnover, and 60% higher profits, in 2024. Even so there was an admission that clients often have their backs against the wall either asking for more time to pay their bills or seeking flexible fee arrangements. Four in 10 of respondents said they thought that their clients are ‘increasingly shopping around for better rates’. Sounds like competition for value for money is going to be increasingly common.

The full whitepaper can be found here 

Financial Advisers to Exit the Market, warns lawyer

A minority of law firms might be feeling somewhat tentative about the year ahead but a significant number of financial advice firms are looking to sell or even exit the market in 2024 according to the corporate team at  Clarke Willmott LLP . A period of consolidation is certainly on the cards.

This is based on research undertaken by CISI, PIMFA and NextWealth which is now available in NextWealth’s financial advice business benchmarks survey,

 “An industry containing a shrinking, but still sizeable number of directly authorised firms and a market with inherent value have led to an influx of buyers – often supported by private equity houses – seeking opportunities in this category as the market shifts,” said Ed Foulkes, a financial services lawyer at the firm.

 “Despite some challenging conditions, smaller firms are more likely to be looking to sell or exit, with sole traders most likely to have been approached.” But, adds Ed, “This puts owners in a great position.

The figures are striking. The share of firms looking to sell over the past three years has increased from 4% in 2021 to 14% in 2023. Meanwhile, those saying they will exit the market is at 8% in 2023, up from 1% in 2021 and 2% in

2022.The reason why? The report found “tepid markets” may be “dampening optimism”

“On the positive side, this means that firms are well set up for growth when markets recover; that can be a key value driver, with acquisitions structured to adjust pricing accordingly,” commented Foulkes.

British Property Federation Gets Lawyer Reddy to Play a Constructive Role

The future of the construction industry in the UK is likely to be one of those issues which features pretty prominently in the General Election – as evidenced by the recent debate over brownfield versus greenfield building strategies. Playing a key part in this will be the British Property Federation which has already launched its own General Election manifesto Building our Future to set out the property industry’s ‘offer’ to the next Government. “With the right policy and regulatory framework we can do much more: invest more of our money in the priorities that matter to local communities, create more wealth and also deliver safer, healthier, places for people to live, work and relax,” declares the BPF.

A new and important member of the BPF’s Development Committee is Clare Reddy, a Construction Partner in Farrer & Co’s Commercial Property practice. This follows an ever-closer relationship between the firm and the construction industry and the BPF in particular. As reported in the LegalDiary last month, Farrer & Co has released an industry report ‘Placemaking Two: A stewardship approach to creating communities while it has also backed the BPF in commissioning research into the ‘net zero’ data challenges facing the built environment.

In her new role on the Development Committee Reddy will contribute to driving its policy and research initiatives, including plans to offer best practice guidance on public and private partnerships, and helping deliver sustainable communities. “The British Property Federation is the voice for the built environment sector, and is at the forefront of thought leadership and policy proposals for the industry,” she says. “I am delighted to be joining the Development Committee and to be playing a part in supporting the Federation’s valuable work – which includes promoting stewardship as key to delivering sustainable communities. This strongly aligns with Farrer & Co’s work in this area.

Civil Legal Aid is Now a Desert

Demands for improvements and investment in civil legal aid continue to be made as legal aid ‘deserts’ are appearing across the country according to a recent survey by the Chartered Institute of Legal Executives (CILEX). Almost three-quarters of CILEX members believe that it is not easy for clients to find civil legal aid providers and almost all felt the current fee system did not incentivise lawyers to offer services. Added to that, a massive 97% of CILEX members consider that legal aid fees should be index-linked. Civil fees which – almost incredibly – have not increased since 1996 (the year before the thirteen year Blair/Brown Labour government commenced) need to increase by at least 60%.

CILEX President Emma Davies (above) commented: “The civil legal aid system is currently facing the real possibility of collapse. Vulnerable people are already struggling to access legal advice and without much needed reform, even more will be left without access to justice.

“We would like to see the government take a serious look and the impact the current system is having on the public and the legal profession and make changes to thresholds, fee levels and the means-tested system as a whole to ensure the availability of quality, specialist legal advice for those in most need.”

CILEX is now proposing the setting up of a Civil Legal Aid Review Board, to fulfil s similar role to the Board for criminal legal aid in order to “de-politicise the issues around civil legal aid and focus on building the best possible and most efficient system”. Such a Board would then have the statutory right to set civil legal aid fees and oversee the work of the Legal Aid Agency in relation to civil fees. It also suggest that the scope for civil legal aid should be expanded to improve coverage of employment, education and private family law. Any hope that a future Labour government would remedy the down-grading which its predecessor set in train?

THE TRUTH ABOUT ACTING FOR ADVERSARIES

by Kartik Mittal (Partner at Zaiwalla & Co.)

Acting for Individuals and/or entities associated with countries who are considered as adversaries of the UK government, on the international scene, is always more challenging.

The most difficult aspect of acting on such cases is the social stigma that comes from members of public. This maybe for several reasons including that they may not be very well versed with the duties/professional ethics associated with being a lawyer, their understanding of the legal profession being misguided by movies/tv shows which sometimes portray lawyers in a manner which is far from reality and/or not appreciating the fluid and ever evolving nature of foreign relationships between countries.

I recall that, very recently, I was asked by a non-lawyer at a social gathering if I was involved in any important case ongoing in the UK Courts. I told them that my firm was acting for the Central Bank of Venezuela in a dispute against the Bank of England relating to Venezuelan gold reserves, which was well publicised by the media. The person immediately replied saying “I hope not for the Maduro Government?” to which I responded explaining not the government itself but those appointed by President Maduro to the board of directors of the Central Bank of Venezuela. The person ended the conversation by saying “that’s a shame” and left.

The response that you receive sometimes from the members of the public is in stark contrast to that you receive from your peers including legal adversaries. I have always found my peers including legal adversaries to be polite, courteous, and friendly. I guess that this is because as part of the legal profession it is clearly understood that the role of a lawyer is simply to present his/her client’s case (whoever it maybe) in a coherent manner, and in accordance with the rules and procedures prescribed by the Court, with a view to assist the Court to arrive at a fair and just decision. It is not the role of lawyer to judge their clients, nor are they allowed to have their personal views affect the legal services they provided to a client. Access to courts is a fundamental tenant on which our society is built, and the lawyers play a crucial role in ensuring that everyone has a right to put their case forward before our courts. It is fundamental in any democratic setup for government actions to be capable of being scrutinised. The judiciary plays an important role in reviewing government decisions and the lawyers play an essential role in assisting the court to conduct such reviews.

Kartik Mittal is a Partner at Zaiwalla & Co.

TOPIC: The appeal by Julian Assange against his extradition from the UK

COMMENT BY: Nick Vamos, Head of Business Crime, Peters & Peters

If Mr Assange is refused leave to appeal, that exhausts all of his domestic challenges to extradition.  His only option for preventing being put on a flight to the US would be an application for “Rule 39 interim relief” to the European Court of Human Rights in Strasbourg which is an order to the UK not to extradite him whilst it considers his case. 

However, there is a very high threshold for Rule 39 relief ,namely that there is “an imminent risk of irreparable damage” to his human rights, which of course is one of the arguments the High Court in London would have just rejected.  The Strasbourg Court won’t grant relief just because it thinks Mr Assange has an arguable case.  Therefore, I think he will find it very difficult to persuade the Strasbourg Court to grant Rule 39 relief.  In that event (or if he doesn’t apply to Strasbourg), the US Marshalls have 28 days to collect him.  In reality, I expect them to be on the tarmac and ready to go in a matter of days.”

TOPIC: Proposals for a new legal requirement for those in regulated positions of responsibility (e.g. teachers, healthcare professionals and so on) to make a report to the authorities if they are made aware that a child is being sexually abused. Also that the police will be given the powers to block registered sex offenders from changing their name.

COMMENT BY: Alan Collins, Partner, Sex abuse team at Hugh James

This announcement is welcome and long overdue as mandatory reporting of child abuse is a much needed requirement in the child protection fight. However, sadly, this is a missed opportunity because the government proposals are weak and are likely to be ineffectual.

Regarding the proposal to ban sex offenders from changing their names, there is nothing to stop anyone from changing their name or using any name that they like. We know that many sex offenders have fallen off the radar by being able to easily change their name. Making it a crime to do so is only a partial deterrent. If the offender thinks he/she will get away with sexually abusing children by changing their name, they will not be dissuaded from committing such a crime. There is no 100 % solution, but one suggestion would be to make it practically more difficult to change a name by registering the offender using their National Insurance number, which never changes. Claiming benefits and so on would then become much more difficult if the offender wishes to stay off the radar, as they could be traced.

Regarding mandatory reporting, again, this proposal is weak. The whole purpose of mandatory reporting is to drive cultural change so that suspicions and concerns are reported. It would be very unusual (if not unique) for a professional to have witnessed child sex abuse. It is the concern that needs to be reported.

Time and again we have seen offences committed because concerns were not reported. It would be complacent to think that social services and the teaching profession have got their act together. They might be better trained, but that is far from the point. We see through all the tragic child murders a trail of failed opportunities because concerns were not acted upon.

Unless you have a requirement to report concerns – as opposed to knowing a child has been abused – we are not going to see the cultural change that is needed.

To be very cynical, this ties in with the Victims Bill which explicitly excludes accountability for failure on the part of the State. I wonder whether there is a concern that the politicians who have responsibilities in child protection fear being held accountable for the failures of the social services departments? Just look at Rochdale, Rotherham and the like.”

TOPIC: The Body Shop Insolvency

COMMENT BY: Rebecca Hallam, Associate, Clarke Willmott LLP

Insolvencies are on the rise again across the UK and The Body Shop is the latest big name casualty on the High Street, following the demise of Wilko last year.

English law provides very little protection for suppliers trading with insolvent companies and these situations always highlight the importance for suppliers of having robust contracts in place to protect against a worst case scenario.

If your business is owed money by an insolvent company, your options to secure payment are likely to be limited. Instead, your business may look to try and mitigate its losses by suspending future supplies or reclaiming goods which have not been paid for (where title to those goods has not passed to the insolvent company).

Ultimately you may also feel that your business has no option but to terminate its contract with the insolvent company. Unfortunately, none of these options may be available, or easy to exercise, if they are not contained in the contract.”

TOPIC: That menopause symptoms can be considered a disability and that employers could face being sued if they do not make “reasonable adjustments”,

 COMMENT BY: James Townsend, Head of Employment Law, Payne Hicks Beach

The UK government has remained clear that it does not intend to make any menopause related changes to the Equality Act 2010 and has ruled out making menopause a protected characteristic in its own right.

 Depending upon the facts, it remains possible for those experiencing discriminatory treatment by their employer arising from the menopause to bring claims before an Employment Tribunal relating to protected characteristics of age, gender or disability. 

As a team we have been working with larger employers who have implemented specific policies giving guidance on menopause in the workplace to managers and staff.  Recent EHRC guidance will give further clarity on employer obligations in relation to menopause at work.”  


TOPIC: The latest figures from the Office for National Statistics which show that divorces granted in England and Wales have reached their lowest level for 50 years. 

COMMENT BY: Nick Gova, Partner and Head of Family, Spector Constant & Williams

“The cost of living crisis has played a big part in the falling divorce rate. Uncertainty in the housing market, increasing mortgage rates, concerns over job security and rising bills will worry many couples and lead them to put big life decisions like separation and divorce on hold. It will be interesting to see if the divorce rate increases again when the economic situation improves.”

TOPIC: The increase in the frequency of tinnitus featuring as a significant symptom in road traffic accident claims since the whiplash reforms came into force.

COMMENT BY: Graeme Mulvoy, Partner, HF 

Since the whiplash reforms we’ve seen a huge increase in claims featuring additional injuries.  Instances of tinnitus have seen a particularly significant increase and it’s a condition which is subjective. However we are confident in our strategy focused on defeating them and other non-genuine claims. 

 In [a recent] case we were able to prove that the c. £4,000 of ENT therapy claimed had not in fact taken place. 

 Utilising Section 57 of the Criminal Justice and Courts Act 2015 can lead to the claimant losing their entire award, even for the legitimate injuries, once they’re found to be fundamentally dishonest.”

ALLEN & OVERY

John Goldfinch (left) is joining Allen & Overy as partner in its global structured finance practice ahead of the merger with Shearman & Sterling (to become A&O Shearman).His appointment is designed to support A&O’s continued growth and investment in private capital activity.

Previously with Milbank, Goldfinch is well-respected as one of Europe’s leading structured finance advisers, with a particular focus on the CLO and related markets. The aim is that his team will work with A&O’s multidisciplinary Private Capital group, together with members from the Capital Markets, Private Equity, Leveraged Finance, High Yield, Funds and Asset Management and ABS teams to support clients.

A&O’s structured finance practice is a global market leader providing clients with unparalleled knowledge and experience across a network of 44 offices worldwide, adept at responding to regulatory change and market evolution,” said David Lucking, global head of International Capital Markets (ICM) at Allen & Overy. “John’s arrival will further strengthen our bench working with private capital sponsor clients accessing the structured capital markets. We look forward to welcoming him to the team.”

BOODLE HATFIELD

Naomi Heathcote (left) has joined Boodle Hatfield as a Partner within its 12-partner Real Estate practice. Formerly with Charles Russell Speechlys, Heathcote’s practice is largely concerned with advising urban and rural estates on residential property matters. She has a particular focus on leasehold enfranchisement, where she has extensive experience, a loyal base of real estate clients and is recognised as a leading specialist in this area of law.

In her new role Heathcote will support the firm on estate management cases and strategy, with her expertise in the niche area of leasehold reform expected to be useful to clients given the Leasehold and Freehold Reform Bill making its way through Parliament.

“We are thrilled to welcome Naomi to the firm,” said Andrew Wilmot-Smith, Head of Real Estate at Boodle Hatfield.Her experience and understanding of some of the key issues facing residential landlords continues our strategy of building up our urban estates practice and offering a full service to such estates across the residential and commercial spectrum.”