Edward Fennell’s LEGAL DIARY

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

1^st November 2024

Editorial contact: fennell.edward@yahoo.com

SHORT THOUGHT FOR THE WEEK:

NO BUDGING REEVES OVER BUDGET

From small farmers to small businesses and religious schools this week’s Mammoth Budget seems to be crushing all kinds of valiant but vulnerable innocents as it sways clumsily across the economic landscape.

Also highlighted particularly by lawyers is the plight of those who want a divorce. “The announced change to Capital Gains Tax (CGT) in the Autumn Budget could have an unconsidered impact on couples where financial abuse and coercion are being utilised to trap vulnerable people in an unhappy relationship,” comments Judit Kerese, an Associate at Stowe Family Law. “It is absolutely essential that family law professionals are vigilant when it comes to potential victims of abuse, and pointing them in the right direction for support.”

The honeymoon period with the Labour Party is certainly over. Many voters already want a divorce. Sadly, there seems little by way of a ‘right direction for support’ for them.

The LegalDiarist

In this edition

+ LEGAL DIARY OF THE WEEK

LegalTechTalk 2024 Report Now Out

Crisis Management Writ Large by FTI Consulting

Black History Month Marked By Dechert

Coming Soon – the International Law Book Facility’s Annual Essay Competition

+ LEGAL COMMENT OF THE WEEK

on the Budget (Farming, AIM, Housing, SEND, Divorcing couples and the NHS) plus the ‘Non-Divorce’ fiasco and Football Governance

+ APPOINTMENTS OF THE WEEK

at Fladgate LLP and RWK Goodman

LEGAL DIARY OF THE WEEK

LegalTechTalk 2024 Report Now Out

Just published is the report from the LegalTechTalk 2024 {‘Europe’s event for legal Transformation’]conference held in the Summer in partnership with DLA Piper and Imanage.

While it has taken four months to produce the report it has been worth the wait by including insights and comments from 300+ industry leaders covering a spectrum of top-of-the-range issues and questions facing law firm management from Generative AI toE-Discovery, Disputes & Litigation.

“The traditional ways of doing business are being challenged like never before,” said Bradley Collins, the CEO of LegalTechTalk. “Law firm leaders must now consider how to implement AI effectively, rethink billing practices, and better understand their clients’ businesses to provide superior service… The legal industry is on the brink of a revolution, and those who are prepared to innovate and adapt will be the ones who not just thrive in the years ahead, but also to have the best chance of surviving (think Kodak, Blockbuster & Blackberry!).”

So it is a very useful report – and here’s a few further morsels.

“Law firms are bad at measuring things full stop, including efficiency”, says Dan Hoadley, Head of R&D at vLex. “The revolution that we’re seeing at the moment with genAI, I think, has thrown into even starker focus just how unprepared law firms are at understanding what they actually do.”

If you’re considering implementing any kind of tech to become more efficient, Hoadley notes, it will only work if you’re sure it’s flexible.

“Many lawyers see themselves as trusted advisors,” says Peter Lee, CEO at Simmons Wavelength, “but my view now is that it’s not just lawyers who hold these trusted roles. Until around 5-10 years ago, law firms were very traditional in the way that they were delivering legal services, and partners tended to lead those relationships. What I’m seeing now, and what I’m trying to promote in the industry, is a multidisciplinary approach, where data scientists, designers, business people and technologists all hold those trusted roles as well.”

Meanwhile Sally Craxton, Regional Vice President of Professional Service at Salesforce advises, “Leverage social media, whether that’s Instagram or LinkedIn, or whichever.,Every time you say no to [using] social media, you’re saying no to a free means of reaching thousands and thousands of people… I think law firms that don’t leverage their partners’ personal profiles are doing themselves a disservice.”

To read the report go to: https://www.legaltech-talk.com/wp-content/uploads/2024/10/LegalTechTalk-2024-wrap-up-report.pdf

Crisis Management Writ Large

Another compelling report just out is Turbulent Waters, Trusted Anchors:: The General Counsel’s Evolving Role in Navigating Crises, an Economist Impact Report Sponsored from FTI Consulting.

If you feel uncomfortable in a crisis then look away now because the message of the report is that due to the increasing frequency, complexity and globalized nature of crisis events over the past five years, the role of the general counsel (“GC”) has become more demanding, strategic and multifaceted.

In short, in these challenging conditions it is the GCs who must ‘LEAD THE WAY.’

For example, in financial services (particularly banking and insurance)the hot seat is frequently filled by a lawyer when turbulence arises. Indeed, at least in the US and EMEA territories, nearly 60% of surveyed GCs reported being more involved in their organization’s crisis management strategy than five years ago. As Steven H. Gunby, President and Chief Executive Officer of FTI Consulting, points out, “The general counsel is not only the chief legal officer, but also is being asked to play the role of the chief line manager in charge of the crisis. Everyone is looking to them to lead.”

Among a dozen types of crisis identified by the research it was operational and reputational events which were reported to be the most worrying. And yet, ironically, these were the ones also cited as being the least well prepared for. And, as is becoming the norm, the role of digital technology in crisis preparedness is increasingly important given the widespread adoption of emerging technology across all business areas.

“As AI continues to evolve, GCs will need to refresh their thinking about how they can best shape their company’s AI approaches to balance risk and innovation,” commentsClaudio Calvino, Global Head of Data Science at FTI Consulting. “AI tools can be particularly useful for companies to scan for risks and mitigate a crisis. But GCs will need to be sure they understand the maturity level of their companies when it comes to AI so they know exactly how to maximize those opportunities.”

Of course exactly how AI might respond in times of crisis in the long term is something we have yet to understand. Would AI throw a wobbly or always remain cool under pressure? In short, just how far do we trust it?

For more go to: https://www.fticonsulting.com/insights/reports/turbulent-waters-trusted-anchors-general-counsels-evolving-role-navigating-crises

Black History Month Marked By Dechert

October was Black History Month and one of the most significant contributions to the annual event came from Dechert who invited some 40 students aspiring to be lawyers into their London office last week.

Under the theme of ‘Celebrating Black Excellence’ the aim of the event was to ‘fuel a passion for law’ in Black students and enable them to begin navigating their own path to a successful legal career from a basis of understanding the sector.

Key to the event was a panel discussion chaired by Gus Black, London Managing Partner and Global Co-Chair of the firm’s Financial Services and Investment Management practice, and featuring of a group of highly experienced legal professionals who shared their career journeys and insights on diversity within the legal profession. This included Vince Cohen, Dechert’s Global Managing Partner and Enforcement and Investigations Partner in Washington DC who highlighted that clients increasingly expect diverse representation across race, gender, socio-economic backgrounds, and demographics, reflecting a broader societal push for inclusivity.

Melissa Ayeltigah, London Corporate and Securities Associate urged the audience to join affinity groups that provide a space to ‘be your authentic self’, ask questions, build meaningful relationships, and to commit to continuously learn. And Joseph Kariuki, London Financial Services Associate, highlighted the importance of showing up, listening and taking initiative as a mentee.

Looking ahead, the panellists shared their best advice with the students with Vince Cohen emphasising that they should make their default answer ‘Yes’ by being open when accepting roles and responsibilities. Added to that they should ‘master your craft’ by becoming an expert in something that makes you stand out, enabling you to excel in your specialisation and career.

Above all they were encouraged not to be intimidated by feelings of imposter syndrome. Cohen advised accepting roles with confidence, “They are offered because they are well-deserved,” he said

Coming Soon – the International Law Book Facility’s Annual Essay Competition

For those law students out there who can’t get enough of hard work there is a new opportunity for them to display their talents. Open for entries shortly will be the International Law Book Facility (ILBF) charity’s 2025 law undergraduate essay competition sponsored by Brown Rudnick.

ILBF provides good quality second hand legal textbooks, donated by the UK legal community, to not-for-profit organisations in need of legal research resources across the globe. The essay competition is complementary to that by ‘supporting the rule of law and access to justice through sharing legal knowledge’. Now moving into its fourth year the competition is is open to all law undergraduates studying at UK universities (including presumably apprentices) and provides students with the challenge of researching and formulating their ideas about an important topic.

Exactly what that topic will be remain remains a secret until revealed later this month by the Lady Chief Justice of England and Wales, Rt. Hon. the Baroness Carr of Walton-on-the-Hill.

As well as the kudos of winning the competition the student who comes out on top will also have a guaranteed full week’s internship at Brown Rudnick – in itself a massive career boost.

“Gaining a work placement is invaluable but often hard to come by experience for a law undergraduate,” said Jane Colson, Partner, Brown Rudnick and co-chair of Litigation and Arbitration.“It affords them the opportunity to decide finally that law is for them and to gain experience which will aid their studies, job applications and future careers. Supporting and encouraging future lawyers’ careers, while contributing to the ILBF’s important mission, is part of our commitment to address issues around social mobility and to drive positive change. We wish all entrants to the competition the best of luck and I look forward to reading the submissions!”

Details of this year’s competition will be published on https://ilbf.org.uk/about-the-ilbf-2/

LEGAL COMMENT OF THE WEEK

TOPIC: THE BUDGET

+ OVERVIEW

COMMENT BY: Mark Pinder, Corporate Partner, Birketts

“This Budget will send many in the corporate world back to the drawing board in terms of having to navigate the new measures announced by the Chancellor. How the costs associated with increases to National Insurance coupled with the plethora of new employment laws UK businesses must now adhere to and the increase in capital gains tax on the sales of shares impacts on the attractiveness of the UK market to overseas investment will be critical to the Government’s investment and growth agenda. Too much red tape and taxes can prove detrimental to international investment whether that be from cross-border M&A, private equity or otherwise.”

+ AIM

Rosamond McDowell, Partner, Payne Hicks Beach 

“Anyone with AIM listed stock, or for that matter other business or farming assets has been waiting with bated breath for this budget, expecting the absolute worst news.  The cap at £1M on relief at 100% was expected, but very few were expecting that relief on the value above that would be preserved, albeit reduced to 50%.   For those with AIM stock, confirmation that relief will apply at 50% has been a huge weight off the proverbial shoulders, with an immediately positive effect on the market in certain holdings.  It will take some time for the dust to settle and the detail to be absorbed.  I suspect the current feeling of elation will begin to dissipate, as people begin to calculate the impact for them and their businesses of a charge to inheritance tax where previously there was none. Nonetheless, it has to be said, the news could have been much worse!”

+ FARMING

Tom Hewitt, a private client partner specialising in farming and landownership, Burges Salmon

“Rachel Reeves has announced a cap to APR and BPR which will mean the heirs of farmers will have 20% IHT to pay on farm values in excess of £1m. The Chancellor says this will continue to “protect small family farms”. But will it?

“Even small family farms tend to be worth significantly more than £1m. A typical such farm might extend to 200 acres which with a modest farmhouse (on which a 30% IHT relief disallowance is already likely to apply) might have a value of about £2.2m.These changes are likely to result in an IHT bill of around £275,000 which for many families will be very difficult to find (even if paid by instalments). Many family farms will be worth a lot more and carry a larger potential IHT bill.

“The changes to APR and BPR are not unexpected: there have been rumours that the Chancellor was looking at these so called “loopholes”  for the last year. But these reliefs have long existed for good reason – ensuring that farms and other businesses are not broken up on death. Given the government cites supporting business as one of its priorities there will be family business owners who will be worried and confused by these changes.”

+ HOUSING

Matthew Tucker, senior associate, Burges Salmon

“The Budget includes an increased allocation of £500 million (up to a total of £3.1bn) towards the Affordable Homes Programme of grant funding for affordable housing providers. This sum is intended to address longstanding concerns about the funds available to providers to purchase and deliver affordable homes, which has been a key constraint on the delivery of both market and affordable housing nationwide. This funding will be welcomed by affordable housing providers, and is expected to unlock the delivery of up to 5,000 additional homes.

“The Budget also includes an allocation of £47 million of funding for local authorities to support the delivery of homes affected by “nutrient neutrality” requirements. Those requirements prevent new schemes of development from adding more nutrient pollution (primarily by way of phosphates or nitrates) to the water in their locality. This financial support will be welcomed by the affected developers and local authorities, and is expected to enable up to 28,000 homes to be delivered.”

+ SEND  (Special educational needs and disabilities) funding

COMMENT BY: Laura Thompson, Senior Associate, Browne Jacobson

“It’s refreshing to see SEND placed at the centre of the education agenda, and commanding a significant slice of the core schools budget, given the acute nature of the challenges facing the SEND system.

“Parents, as well as school and local authority leaders, will be eager to hear more from government about its plans for reform and how it envisages government will ensure investment in a system that currently costs £10.7bn a year, as set out in the National Audit Office’s recent report, can be spent better.

“Special school places are at a premium and mainstream schools have been struggling to support pupils with increasingly complex levels of SEND for far too long. It is no coincidence that there has been a 24% increase appeals to the SEND tribunal and a 71% increase in disability discrimination claims in the 2022/2023 academic year, compared to the year before.

“It will be interesting to see how the investment can be realised in ‘real terms’ and whether it will alleviate the pressure on the SEND tribunal.

“Whilst the level of funding is significant, it is – unfortunately – only likely to paper over the cracks of a system that requires longer-term investment and, as the NAO report highlighted, requires whole-system reform. When special schools say they are ‘at capacity’, they mean it.

“DfE guidelines make clear that ‘medical and therapy rooms … are essential to supporting teaching and learning’. But we are increasingly hearing about special schools that have converted every last morsal of space to try create viable teaching spaces in buildings designed for significantly less pupils, which includes spaces such as therapy rooms.

“The signal of prioritisation of the SEND system in today’s announcement of a £1bn investment is a welcome start but, just as the government is launching a 10-year plan for the NHS next year, it needs to quickly follow up with a plan for reform of the SEND system to make it work better for all stakeholders – as is so desperately required by those most in need.”

+ IMPACT ON DIVORCING COUPLES

COMMENT BY: Kiran Beeharry, Partner in the Family Team, SA Law

“Separating couples will be breathing a sigh of relief as the transfer of the family home between spouses as part of a divorce remains Stamp Duty exempt. Given the overall cost of Stamp Duty, from a tax and cost efficiency point of view there will always be savings if one party can retain the family home, however this will depend on whether it is affordable to maintain and the release of other capital to the non-occupying spouse.

The changes to Capital Gains Tax mean that people will now have a bigger tax bill to pay and so divorcing spouses may need to reconsider the split of assets if settlements have not been reached and ahead of the implemented changes.

Businesses will now have a bigger employer NI contribution to make and unless this cost is passed on to consumers – which may increase costs and inflation – if it is absorbed then profits in turn will fall. For parties going through divorce and who have businesses, the underlying valuation of their business may be impacted by the increased cost of NI.”

COMMENT BY: Nicholas Fairbank, Barrister at 4PB

“High income families will be pleased to see that many of the feared tax increases affecting the wealthy have not materialised. This is particularly the case for those going through a divorce or separation and the difficult financial discussions that come with the process.

However, the new private school VAT and removal of business rate relief on private schools will significantly increase school fees.  Presumably many parties who were borderline (either in principle or for affordability reasons) will now elect for state education, thereby freeing up funds.  But this change could also create animosity for separated parents if one of them wants to pull the child out of school to save money but the other refuses to do so. There may be an increase in ‘specific issue’ applications where separating parties are unable to agree what to do.

Meanwhile, the allowance for carers to rise to £10,000 could have a marginal effect in low-income cases, and the increase in minimum wage could have an impact in financial remedies in particular where one spouse is an employer of low-paid workers, e.g. in the social care sector.

Those who are unsure of how these changes will affect them would be wise to consult advice in order to figure out where they stand.”

+ THE NHS

COMMENT BY: Carly Caton, Partner, Browne Jacobson

“Any new funding that helps to add capacity will of course be welcomed within the NHS but to prevent this just being a sticking plaster, we must also identify new avenues to generate additional revenue for trusts and their NHS patients.

“The government should actively encourage trusts, backed by funded support programmes, to develop a commercial mindset and explore how to maximise their available resources, while simultaneously improving healthcare services for the general public.

“Increasing private patient activity within NHS hospitals is one of the easiest routes to achieving this. Most trusts already do this to some extent with private patient units but these tend to be relatively small, meaning they provide untapped potential in terms of raising additional income to plough back in to NHS services.

“There are numerous ways of expanding these units and it doesn’t necessarily require significant capital investment if a trust is willing to partner with a private provider. Partnership structures can extend from commercial agreements to developing some form of physical expansion to estates, and all whilst creating new income streams for NHS patients at no cost to the taxpayer. 

“Many of our decision-makers are all too keen to shout from the rooftops about the NHS being broken but this isn’t necessarily the case – it boasts world-leading assets and expertise that, if harnessed correctly, provide ample opportunities for healthcare to help drive economic growth as opposed to hampering it.”

TOPIC: Divorce Fiasco Due To Computer Error

COMMENT BY: Nick Gova, partner and head of family law, Spector Constant & Williams

“Is there one rule for the court and another for the lawyers? Not too recently where a junior solicitor erroneously applied for a final order on divorce, the courts refused to overturn the final order. In that case, Sir Andrew McFarlane stated: ‘There is a strong public policy interest in respecting the certainty and finality that flows from a final divorce order and maintaining the status quo that it has established’.

“We now have a situation where there is an error of the court and its systems, rather than ‘human error’. Surely, consistency must prevail. There remain significant legal and practical considerations which stem from any decision. Not least, the toll on those believing they were divorced.”

COMMENT BY: Katie McCann, founder and managing partner, Lowry Legal

“It is quite frankly ridiculous that a ruling in these circumstances could result in these divorces not standing, when it is very clear it is NOT the fault of the couples involved.

“So much happens around the time of a divorce that would be affected if these divorces were found not to stand;  such as financial final orders, setting out who owns the family home for example. Some parties may be remarried which in effect would mean that they were committing bigamy!

“The list of things that would need to be unravelled is extensive. Let’s hope that sense prevails and the judgement finds that in these unfortunate circumstances an exception can be made and the divorces stand.”

TOPIC: The Football Governance Bill

COMMENT BY: Tim Williamson,  Clarke Willmott LLP.

“By establishing an independent regulator, the legislation will bring accountability to clubs and owners in a way that fans, who are often the lifeblood of these institutions, have long called for.

“The bill lets the regulator assess how so-called parachute payments impact the overall health of the game as part of its mandatory review every five years.If they find these payments are shaking up financial stability, the regulator has the authority to step in and address them through its backstop powers.”

“Legally, the bill raises the bar on governance requirements, ensuring a higher level of financial scrutiny and fan participation that could help stabilise the sector over the long term.”

APPOINTMENTS OF THE WEEK

RWK Goodman

Rhodri Glyn has joined RWK Goodman as a partner  in the Real Estate team in the firm’s Bristol office. Formerly with Shoosmiths and Eversheds Sutherland, Glyn has extensive experience across a wide range of Real Estate work, specialising in investment, finance, development and energy/infrastructure advising various stakeholders across the life cycle of property assets (including acquisitions, lettings, funding and disposals). He has lead on a variety of projects including portfolio investment / refinance and large-scale developments.

“I am delighted to join RWK Goodman’s burgeoning Real Estate team, servicing clients regionally and nationally,” said Glyn. “It’s an exciting time to be joining the firm which is clearly growing. I look forward to developing client relationships and working with the team in supporting the continued growth of the practice and firm.”

Commenting on his appointment, Richard Roth, South West lead for Real Estate at RWK Goodman said, “We are thrilled to welcome Rhodri to our Real Estate team in Bristol. Rhodri’s broad and extensive experience, along with his impressive contact base, will greatly complement our Real Estate offering as a firm and our continued growth in Bristol.” 

FLADGATE

Matt Akers has joined Fladgate LLP as a Partner in its Dispute Resolution team where he will work alongside Fladgate’s established Dispute Resolution team across International Arbitration, Commercial Litigation, and Restructuring & Insolvency practices.

Previously with DMH Stallard and Weil, Gotshal & Manges, Akers has particular experience in insolvency and restructuring related disputes as well as extensive arbitration experience having represented clients before ad hoc and at institutional tribunals under all major arbitral rules including London, Hong Kong and Singapore.

Akers’ career has covered commercial disputes, including high-value cases involving breaches of contract, fraud, shareholder disputes, and financial matters arising from insolvencies and restructurings as well as advising clients in complex cross-border disputes.

“Matt’s arrival is a great addition to our Dispute Resolution team,” said John Evans, Head of Dispute Resolution at Fladgate. “His depth of expertise in complex commercial litigation, particularly in insolvency-related disputes, aligns perfectly with the strategic direction of our practice. His understanding of both UK and international markets will be invaluable to our clients as they navigate increasingly complicated legal landscapes. We look forward to seeing the positive impact Matt will have as we continue to strengthen our dispute resolution offering.”

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In any case, please continue sending your diary-type stories, legal comment and insights plus latest appointments to fennell.edward@yahoo.com