Edward Fennell’s LEGAL DIARY
A weekly diary of news events, analysis, insights and expert commentary from the legal world
May 27 2022
SHORT THOUGHT FOR THE WEEK – AN AGE OLD STORY?
This week we have seen two senior lawyers – Mark Mifsud, London managing partner at Fried Frank Harris Shriver & Jacobson and Marnix Leijten, managing partner of De Brauw Blackstone Westbroek – saying they needed a timeout. It is understandable. Law firm management is tough at the best of time and after what’s been happening over the past year or so it’s no surprise that people are feeling stressed.
But is this an age issue?
It’s a complicated story. At the junior end there has been alarm and controversy recently about the number of billable hours which associates need to put in to secure a partnership at a time when many of the younger generation are already burned out.
Meanwhile, a recent survey by law firm Winckworth Sherwood has suggested that almost a quarter of employees believed that their leaders were not equipped to lead a multi-generational workforce – and the top bias that employees felt in the workplace was against workers aged over 55.
There is no easy way to reconcile these different strands of analysis. Maybe the reality is that if you survive the trial by fire in your 20s and 30s then you have just twenty years before age starts to count against you. So the only sensible answer is for law firms to adopt systematic flexible working. It’s an old solution yet less than half of businesses countenance it. Surely now is the time for flexible working to be accepted culturally in the legal sector for all age groups and genders.
The LegalDiarist
IN THIS WEEK’S EDITION
+LEGAL DIARY OF THE WEEK
– CMS Backs Kyiv with new Managing Partner
– ‘You Don’t Understand Me’ Claim Lawyers in Tech Companies
– These are hard times and no mistake, says DAS
– Harneys is having a Party as it reaches Twenty in London
LEGAL COMMENT OF THE WEEK on financial penalties on law firms and facial recognition software
CONTRIBUTED ARTICLES OF THE WEEK on the future of class actions and the state of the criminal justice system
APPOINTMENTS OF THE WEEK by Two Birds in Dublin
THE LEGAL DIARY OF THE WEEK
CMS Backs Kiev with new Managing Partner
The outcome of the Russo-Ukraine War is still finely-balanced but CMS is demonstrating its commitment to the embattled Ukrainian cause by its appointment of Vitaliy Radchenko as the new Managing Partner of its Kyiv office. Underlining the firm’s respect for its Ukrainian lawyers Radchenko is taking over from the highly experienced English lawyer Graham Conlon who will now switch his attention more towards activity linked to the Middle East.
“Vitaliy is a proven leader, with a strong track record across the region,” says Dóra Petrányi, CEE Managing Director for CMS. “We have no doubt that Vitaliy will do a standout job leading our superb Kyiv team, increasing our excellent standing on the market, and capitalising further on the future growth opportunities that we expect to come in Ukraine as soon as the current hostilities have come to an end.”
Observers of the Eastern European legal scene will recall that CMS was one of the most active Western law firms in Russia from the 1990s onwards. Now of course things are rather different. But the firm was quick out of the blocks at the start of current hostilities in publishing its very useful briefing ‘Business during the Martial law in Ukraine’.
First question: Does military aggression by the Russian Federation against Ukraine and the subsequent adoption of martial law in Ukraine constitute force majeure?
Answer: Yes.
Radchenko is recognised as “a standout figure for energy law in Ukraine”, supported by band 1 rankings in Chambers & Partners and, despite all the obvious problems, the Kyiv team remains fully operational.
“I look forward to leading the talented Kyiv team, who over the last months in particular, have shown incredible resilience, strength and commitment to the firm and our clients during what are extremely challenging and unprecedented times,” Radchenko said. “We have every confidence that we can and will play an important role in supporting our clients as we look to the future and begin the rebuilding phase.”
Let’s hope there is something to rebuild.
‘You Don’t Understand Me’ Claim Lawyers in Tech Companies
A recent survey from legal technology business Juro has thrown up an interesting paradox. Looking at technology companies and their increasing reliance on in-house lawyers it discovered that while the lawyers themselves were keen to invest in legal technology they had difficulty in persuading their bosses to back them.
“The poll noted an appetite to invest in technology,” reported Juro. “A majority (54%) of in-house lawyers have a defined legal budget, but 32% struggle to get buy-in from decision makers and 59% cite limited funds as a major obstacle to improve their contract process.”
This is not the only mismatch. More than four out ten of the companies canvassed observed that ‘finding lawyers with the right experience and business acumen is the biggest challenge’.
So it comes back to a familiar theme. However expert a lawyer might be in the law it does not mean they they will cotton on to the commercial context in which they are operating.
“In-house lawyers at high-growth tech companies still suffer with familiar issues – alignment with the business, low-value work crowding out strategic projects, and the feeling that they’re falling behind peers at law firms when it comes to training,” commented Richard Mabey, CEO and co-founder of Juro.
One of the key features of the survey is that sense of ‘lawyers’ exceptionalism’. For example, 66% of GC respondents do not track metrics, like time and cost per legal matter. Yet these are the kind of Key Performance Indicators valued corporately. To which the reply is “ 81% of the survey believed legal teams should have their own KPIs, instead of the same KPIs as the rest of the business.”
No wonder almost half of survey respondents were open to leaving their jobs in the next six months, and 35% of the in-house lawyers said their business ‘doesn’t understand them’. Sounds like an unhappy marriage.
To download the report in full, click here: https://juro.com/library/in-house-legal-report-2022
These are hard times and no mistake, says DAS
It is no surprise that with one crisis following another with increasing rapidity DAS UK Group (DAS), a legal expenses insurance company, has revealed a huge surge in calls from businesses to its legal helpline over the past year.
For example in December 2021, enquiries relating to employment issues increased from 800 per month to over 1200 – an increase of 50%. And for the same period, enquiries relating to Landlord and Tenant problems increased from 676 to 900.
“The overall figures clearly demonstrate that the repercussions of the pandemic and the rising cost of living is putting pressure on businesses,” comments the firm. “This, in turn, has meant that they are having to deal with an increase in the number of legal issues they are faced with and are seeking legal advice to help navigate these challenging times.”
Of course the real pain is being felt by the people at the bottom. As DAS points out between October 1 and December 31, 2021, there was a 168% rise in the number of households threatened with homelessness from the same quarter the previous year.
A representative from DAS UK Group said: “These figures remind us of the stark and pressing needs that many businesses are facing during a cost of living crisis. With Employment and Landlord & Tenant claims experiencing sharp increases since the latter part of last year, it’s clear that concerns over jobs and property are causing legal uncertainty and concern.”
How far, if at all , the Chancellor’s announcements yesterday will help remains to be seen.
Harneys is having a Party as it reaches Twenty in London
When the financial history of this period is written the lure to ‘off-shore’ will be seen to have played a deep role in the lives of many ‘high net worth’ individuals.
There is no need to rehearse here the ‘why’ and ‘how’ of the off-shore phenomenon. But law firms have clearly been crucial ‘enablers’. The row around Appleby and the Paradise Papers a few years ago speaks for itself.
But, of course, not all law firms operating off-shore are the same and Harneys is this year celebrating the 20th anniversary of the opening of its London office. Set up by Harold Harney in the British Virgin islands way back in 1960 it took over 40 years before the outfit arrived in the City. As it describes itself ‘Harneys is a global offshore law firm that provides advice on British Virgin Islands, Cayman Islands, Cyprus, Luxembourg, Bermuda, Anguilla, and Jersey law to an international client base which includes the world’s top law firms, financial institutions, and investment funds, as well as high net worth individuals’.
The firm’s London Managing Partner Rachel Graham is enjoying the anniversary. “I am delighted to be celebrating this important milestone with my colleagues,” said. “The London office is an important hub for Harneys, not only bridging the time zone between our Asia and Caribbean offices but playing an integral part in continuing to provide top notch legal and related fiduciary services to our clients.”
Exactly who those clients are we shall never know (unless, of course, the firm suffers the same fate as Appleby).
LEGAL COMMENT OF THE WEEK
TOPIC: The SRA’s plan to increase the maximum fine it can issue internally for traditional firms, and those working in them, from £2,000 to £25,000, without a referral to the SDT following the consultation on Financial Penalties
COMMENT BY: Andrew Pavlovic, Partner at CM Murray LLP:
“The SRA’s decision to increase its internal fining powers from £2,000 to £25,000 will be considered controversial by some, given that both The Law Society and the Solicitors Disciplinary Tribunal opposed an increase to this level. The concern is that firms will decide to accept SRA fines rather than appealing them to the Tribunal, given the high profile and reputational stigma of Tribunal proceedings and the costs which they would incur in those proceedings (which they are unlikely to recover).
“The increase in fines follows on from the SRA’s recently launched consultation on the extent to which investigations and sanction decisions are publicised. Now the SRA have these additional powers it will be important that the SRA provides transparency about its decisions and the basis upon which fines have been issued.”
TOPIC: The ICO’s decision to fine facial recognition software company, Clearview AI, £7.5 million for breaching data protection laws
COMMENT BY: Alexander Dittel, Partner at Wedlake Bell
“The ICO fine does not come as a surprise following previous news about similar investigations of Clearview in Australia, Canada and Sweden.
It is very difficult to reconcile the way Clearview operates with the GDPR. Indiscriminate scrapping of images from the web for purposes which may have a direct impact on individuals will likely be unlawful.
Clearview is directly liable because it processes data for its own purposes as a controller in order to develop its service. It is unable to hide behind the processor status which is often used by service providers who act on client instruction.
A parallel can be drawn with many other technology providers who use data for research and product development. The UK Government’s data reform is hoped to further encourage innovation. However, the present case offers a clear view of the risks of elevating the importance of research above our fundamental rights.”
CONTRIBUTED ARTICLES OF THE WEEK
WHAT IS THE FUTURE FOR CLASS ACTIONS IN THE ERA OF THIRD PARTY FUNDING? asks John Evans, Head of Dispute Resolution at Fladgate
Class actions – made possible by the third party funding that underpins them – are about access to justice and holding corporates and others to account.
Whilst there is a mature opt-out class action system in the USA, there is nothing nearly as extensive or established in the UK. The introduction of the class action procedure in the Consumer Rights Act 2015 for the pursuit of actions on an ‘opt-out basis’ via the CAT (Competition Appeal Tribunal), was a step towards the US model but we remain some way behind.
There have also been some bumps in the road. Most notably in the Supreme Court’s Judgment in Lloyd v Google [2021] UKSC 50 where the Supreme Court endorsed the use of CPR (Civil Procedure Rules) Rule 19.6 for a representative class action on behalf of others with the same interest, but rejected the claim that damages should be calculated on a uniform ‘lowest common denominator’ basis. The result – damages needed to be individually proven which for millions of claimants is not at all feasible.
There is no single solution to reboot representative class actions where damages are to be assessed on an individualised basis. Bi-furcation, with an opt-in for the quantum trial, simply isn’t good ‘funder economics’ and is unlikely to take off.
More likely to fly is a combination of opt-in book building, which could breathe life back into GLOs (Group Litigation Order) which have been in decline since 2017, and the development of technology to drive efficiencies around the book build and sign up process.
Technology is already playing its part. In a relatively short space of time tech can now offer a significant reduction in sign up costs. This is likely to mature further, so it’s only a matter of time before funders get more comfortable with the economics for larger opt-in claims.
The practical reality in the competition space has been one of high complexity, delay and cost. Early trailblazers such as Merricks and Gutmann have opened up this space for those that follow. The consumer association ‘Which’ is the latest beneficiary of a CPO (Collective Proceedings Order) from the CAT in a claim on behalf of 29 million consumers seeking £480 million from Qualcomm over its chip licensing practices.
The absence of a book build and the size of these claims makes them attractive for third party funding, so this will undoubtedly be an area for further growth. As well as competition and consumer claims we are seeing the growth of class actions in aviation, insurance, data privacy, Covid 19, ESG and others. CPR 19.6 representative action will continue to work for those matters where it is not necessary to provide individualised damages
A maturing sector will require corporates and others affected to move past the ‘scorched earth’ defence strategies, to a place where they engage more effectively to address the claims and the root cause of the claims.
So the future is bright and whilst the road will undoubtedly have further bumps, the journey will certainly not be dull.
THE UK CRIMINAL JUSTICE SYSTEM IS ‘ON THE BRINK’ OF DISASTER
argues Abigail Ashford, Solicitor, Stokoe Partnership Solicitors
The UK has long been admired as a bastion of justice and as one of the world’s major legal hubs, its criminal justice system has historically been upheld as something to be proud of. However, years of systemic underfunding have taken their toll on the system, and the pandemic has only served to fundamentally expose and exacerbate already deep-rooted inadequacies.
Delays are arguably one of the most glaring symptoms of chronic underfunding, and have affected the entire criminal justice system, from top to bottom. Defendants, including youths or other vulnerable individuals, routinely find themselves in limbo due to police backlogs in investigation and a lack of Court time post charge. One client waited nine months for the Court to find time to simply deal with his sentence once he had pleaded guilty, long after lockdown measures were relaxed. There is an ever growing disillusionment with the system, and victims and potentially vital prosecution and defence witnesses perhaps understandably lose faith faced with constant adjournments.
Those in custody awaiting trial during the pandemic found themselves confined to cells for 23 hours a day, with limited access to education, social interaction or support from their loved ones. Sadly this has shown no sign of abating in recent months, and not only does this inevitably impact on prospects of rehabilitation, it also has an impact on wellbeing in general. One client has seen their mental health deteriorate to such an extent since they have been in the custodial environment that there are now grave concerns from medical professionals about the risks of suicide, and no doubt many others in that environment sadly share that same position.
Warnings and recommendations from across the industry and outside, including the report of Sir Christopher Bellamy, have largely fallen on deaf ears, and what limited investment there has been, is slow and wholly inadequate. The criminal Bar have been forced to take action for the second time in recent years, through the “no returns” policy to draw attention to the urgent need for investment. Criminal defence solicitors are also now considering whether they can justify accepting certain cases because the funding for them is so poor. The loss of experienced professionals over appalling working conditions has raised concerns that an exodus of experience, coupled with a lack of incoming young talent, may have dire consequences for diversity and access to justice in the near future.
Despite a pandemic-induced shift to remote hearings and video links, this has not been enough to materially reduce delays or ease the system’s burden. Court closures, combined with a lack of judges, prosecutors and lawyers, makes tackling backlogs impossible without urgent investment.
The situation is dire, and without significant support, criminal law is increasingly at risk of becoming accessible to only those who can afford it.
APPOINTMENTS OF THE WEEK
Bird & Bird has got lift off with its new office in Dublin with the appointment of two data protection, IP and technology specialists….
Deirdre Kilroy joins the Two Birds from Matheson where she was a partner in the Technology and Innovation team.
Kilroy has over 20 years’ experience in technology, data privacy and intellectual property law, particularly for clients in the data and technology, life sciences and pharmaceuticals sectors. “I am looking forward to helping clients doing business in Ireland unlock the expertise and knowledge flowing through the global Bird & Bird team of lawyers,” she said. “Innovative businesses in Ireland are experiencing rapid growth. Our role at the firm will be key in supporting the wide-ranging needs of our clients in this digitally driven and ever-changing regulatory environment.”
Meanwhile Anna Morgan was formerly at the Irish Data Protection Commission (DPC) where she was a Deputy Commissioner and the Head of Legal Affairs for the past five years.
Morgan had previously worked in private practice for 10 years, specialising in data protection and commercial and regulatory litigation. She is a well-known expert in data protection, and is a regular speaker at international conferences, as well as lecturing on the topic. She was the lead rapporteur for the EDPB’s Guidelines on Transparency under the GDPR and also led the DPC’s work on children’s data protection issues. Her arrival will boost the Privacy & Data Protection practice both in Ireland and across the firm’s international network.
“Practitioners at Bird & Bird are well known for their industry leading knowledge as well as their expertise and full-service approach to advising and supporting their clients,” she said. “The strength of the firm’s global brand will continue to enhance its offering in Ireland.”
Christian Bartsch, CEO of Bird & Bird, commented, “Deirdre and Anna’s extensive expertise in data protection, IP and technology will be a key strength that will set Bird & Bird’s Irish office apart from the outset and shape our future in Ireland.”