Diary news plus insights, commentary and appointments from the legal world
April 6 2023
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SHORT THOUGHT FOR THE WEEK: Stains on the Record?
The court of public opinion, looking on from afar, may want a quick verdict – like VAR
No doubt like many others, the Legal Diary’s email address is plagued by unwanted random communications. But when, on Tuesday, a message popped up, ‘Remove even old stains effortlessly’ we assumed it was a headline from a left-field journalist reflecting on events at the Trump legal circus in New York. Then the truth dawned that it was nothing more than an ad for a mattress stain remover. But it did set the tone for the week especially when news came of the Peter Murrell arrest in Glasgow. And it reminded us that Boris Johnson was also awaiting a possible career staining decision.
In none of these cases are we suggesting that it will simply be a matter of ‘Guilty as charged’ (after all, at time of writing Murrell has not been charged with anything). In liberal democracies ‘old stains’ cannot be removed effortlessly. A protracted and contested process is required to establish whether they really are dirt or just a trick of the light. So, vigorous scrubbing is the mark of a resilient justice system. The court of public opinion, looking on from afar, may want a quick verdict. But justice requires hard elbow grease.
In this week’s edition
+ LEGAL DIARY OF THE WEEK
– Hopes of Easter Rising
– Rite of Passage to India by Kennedys
– My-O-My! Poor M&A
– Morgan Lewis Marches on Munich
+ CONTRIBUTED ARTICLES OF THE WEEK
– THE CASEY REPORT: TELLING IT LIKE IT IS by Siobhán Crawford
– THE RIGHTS AND WRONGS OF SURROGACY REFORM by Liza Gatrell
– THE FAULT-LINES IN ‘NO FAULT DIVORCE’ by Stacey St. Clair
– MANDATORY MEDIATION NO CURE FOR THE BURGEONING FAMILY COURT CRISIS by Katie McCann
+ LEGAL COMMENT OF THE WEEK on No Fault Divorce, Capital Gains Tax reform, Surrogacy rules and The Workers Protection Bill
+ APPOINTMENTS OF THE WEEK at Dechert and Bird & Bird
+ E-VENTS at Cadwalader
LEGAL DIARY OF THE WEEK
Hopes of Easter Rising
No obvious borders here
Next Monday marks the 25th Anniversary of the Good Friday agreement. It may have had the effect of closing down the Troubles but. as we know from recent events, ‘they have not gone away’. Undeniably, though, Ireland is a different place from what it was a quarter of a century ago – including regarding legal business where the island now hosts a number of City law firms.
Allen & Overy, for example, now has offices in both Dublin and Belfast – probably unthinkable back in the 1990s – and is reaching out to the local community just as it would in London or elsewhere around the globe. Most recently a £2,000 donation from the Allen & Overy Foundation has been supporting young people in Northern Ireland through the an entrepreneurship and enterprise skills programme called Project Business.
“Supporting Project Business is a fantastic opportunity for students to discover and develop skills — team work, creativity, time management and communication — that are essential throughout their working lives, whilst reinforcing our core themes of advancing education and employment across Northern Ireland,” said Ciaran McCallion, the firm’s head of HR and member of the Belfast grants committee. “Alongside the financial support that Allen & Overy provides, our legal and business support staff will be making a significant contribution by volunteering their time and skills to help deliver Project Business in schools across Northern Ireland. Giving back is an important part of what we deliver locally with our team in Belfast recording 4,900 hours of volunteering or pro bono work last year.”
Meanwhile elsewhere in Ireland a solicitor from Tralee, Pa Daly, has been appointed as Sinn Féin’s justice spokesperson. A graduate of University College Dublin (UCD), Mr Daly spent some time in the US working for the Georgia Indigent Defense Council before returning home. In 2002 and 2003, Mr Daly travelled to Colombia to act as the independent legal observer for the ‘Colombia Three’ — Irish men who were acquitted of training left-wing rebels in the Latin American country on behalf of the Provisional IRA. Yes, indeed, times have changed.
Rite of Passage to India by Kennedys
Allen & Overy may be encouraging ‘Young Enterprise’ but Kennedys is backing ‘Fostering Innovation’. But this is not in the UK. Inspired, perhaps, by India’s opening up to foreign law firms Kennedys has invited the ‘next generation of trailblazers’ in Kerala to come up with innovative suggestions to help their community and the wider area
Kennedys’ primary partnership is with the Government Tribal High School in Idinjaar, Trivandrum and forms part of a community outreach programme, which has already seen the firm sponsor a ‘smart classroom’ where pupils can take advantage of high level technology. A reading club to improve language skills is also on offer.
At the heart of the project is Kennedys Kognitive Computing, the firm’s technology operation. This employs a team of 30-plus experts to develop smart technology such as rapid prototyping, application development, text analytics, machine learning and blockchain for its sister company Kennedys IQ.
“We have been really impressed by the enthusiasm and commitment shown by both teachers and young people at the school and were honoured to host this event and hear the students’ ideas, which ranged from security solutions to conservation,” said Tony Joseph, head of Kennedys Kognitive Computing,
“For many, it was their first time visiting the city, and their first time talking to an audience in English, but they embraced the opportunity and spoke so passionately about what innovation means to them that they inspired us all.”
Suzanne Liversidge, global managing partner, commented, “Kennedys has a long and proud history of supporting and inspiring young people who may be interested, but not have the means or opportunities to pursue a career in the sector.” Well, maybe they do now.
My-O-My! Poor M&A
The helter-skelter nature of the global economy right now has been been highlighted by the latest figures on mergers and acquisitions from Refinitiv Deals Intelligence. These revealed an unprecedented collapse (for this century) of 44% compared with with what was happening one year ago (when, of course, the business world was still enjoying the post-Covid adrenaline rush).
The precipitate fall since the New Year is evidenced by the 23% drop in the first quarter of 2023 compared to the fourth quarter of 2022. Hence the 12,700 deals announced during the first quarter of 2023 was a decrease of 17% compared to year ago and represented a three-year low.
Meanwhile, the figures specifically for Europe make even worse reading. European target M&A totaled US$90.3 billion during the first quarter of 2023, a decrease of 60% compared to 2021 levels and a 26-year low. By contrast Asia Pacific did rather well. Its decrease was ‘only’ a 23% decrease!
What was especially striking was the level of variation between sectors. For example, the Healthcare sector totaled an increase of 60% compared with 2022 levels. By contrast Technology M&A accounted for 16% of overall M&A – down a massive 64% compared to a year ago. Industrials deal making accounted for 13% of activity during the first quarter of 2023, a 22% decrease compared to a year ago. And cross-border M&A activity showed a 46% decrease compared to a year ago and was the slowest first quarter for cross-border M&A since 2013.
No doubt law firms’ M&A departments are seeing the repercussions of these dramatic changes. Let’s hope they can batten down the hatches and survive until the storm is over.
Morgan Lewis marches on Munich
Speaking of M&A, it is note-worthy that Morgan Lewis’s new office opening in Munich is focused on exactly that area of practice having poached a top regulatory and transactional team from Shearman & Sterling.
“Germany is one of the most significant legal markets in Europe, and its importance is only growing,” said Firm Chair Jami McKeon. “We have diligently eyed this market for some time to find the right high-caliber team that builds on our existing practice while adding to our strong culture of collaboration. We anticipate that the entire office, including the business professional team, will join us—enabling our new Munich office to operate at full speed on day one. Having two offices in Germany expands our broad global corporate practice and will further position us as an elite legal service provider and strategic partner for our clients in Germany and around the world.
The opening of a Munich office is strategically aligned with our global client base, as the city is home to many multinational companies, such as Amazon, Google, Siemens, Linde, Allianz, Audi, BMW, MunichRE, and Microsoft and is the seat of significant financial sponsors such as private equity funds and family offices.”
With all of Western Europe’s largest countries facing economic or political problems (and sometimes both) Germany’s industrial strength remains a reassuring ‘given’. “Munich is a dynamic hub with strategic importance to several industry sectors including private equity, infrastructure, energy, life sciences, and technology, and presents strong opportunities with intellectual property given that Munich is where the European Patent Office is headquartered,” said Steven Wall, Firm Managing Partner.
Older readers will recall that at one point London was tipped to be the HQ of the EPO. What were we thinking!
CONTRIBUTED ARTICLES OF THE WEEK
THE CASEY REPORT: TELLING IT LIKE IT IS by Siobhán Crawford
The Casey Report is by no means news to people who’ve dealt with the Met before. It simply reiterates what previous reviews have found: that a concerning number of police officers are misogynists, racists and homophobes, and their attitudes are putting people’s lives at risk.
We’ve seen far too many people die because this hasn’t been addressed. Time and again there have been recommendations for change after reports like this one are published. Time and again there is handwringing by the press, police force chiefs and politicians for a month or so and then the recommendations are consigned to the passages of time, left unacted upon.
As someone who represents survivors of sexual violence, the cases in the report could be taken directly from my filing cabinet. Individuals approach me after reporting their cases to the police, only to find their cases are delayed, dragged out and eventually dropped. So many of them have spoken about how the investigations process added to the trauma of their experiences. Many people are expected to be the “perfect victims”. Vital evidence is lost, or in one of my cases, not tested at all. It was not until the family pushed via a victim’s right to review for all of the evidence to be relooked at that it was uncovered that DNA evidence was completely ignored. That DNA evidence led to a conviction. But for the family’s tenacity, there is no doubt in my mind a miscarriage of justice would have taken place. How many other cases have slipped through the cracks because of egregious errors like this?
Proper funding is clearly needed. It should not take months and years to download information from a suspect’s mobile phone. Forces need more money. Officers need lighter caseloads, training in how to properly investigate and treat survivors of sexual assault. On the face of it, training seems routine but the report states one officer attends training and signs in everyone else so they can give it a miss. This is appalling. The problem is that previous action plans have not been followed – the police seem to believe that if they write some well-meaning words about stamping out discrimination, their work is done. That is simply not good enough.
Siobhán Crawford is a Senior Associate in the Abuse Claims team at Bolt Burdon Kemp
THE URGENT NEED FOR SURROGACY REFORM by Liza Gatrell
Last week saw the long awaited publication of the Law Commission’s recommendations for a comprehensive overhaul of surrogacy laws in the UK, following a public consultation in 2019. The recommendations include a draft bill, which could become law if approved by Parliament.
The use of surrogacy arrangements for family building has increased in recent years, but our laws have not kept up, and they are outdated and not fit for purpose. This causes an added layer of complexity and stress to what should be a happy time.
Currently, surrogacy agreements are unenforceable, and there is no scrutiny of surrogacy arrangements until after the baby has been born, and by then arguably it is too late. The inability to obtain a pre birth order in the UK leads many intended parents to travel overseas, adding expense, stress and concerns about violation of women and children.
The UK surrogacy laws have always been altruistic in nature, rather than commercial. Within the new pathway, this will continue, but the intended parents would be recognised as legal parents from birth, reversing the current law, which recognises the surrogate as the legal parent of the baby at birth. This is far more in line with the shared intentions that the surrogate and the intended parents have right from the start.
The recommendations also propose certain requirements and safeguards to be met, such as an agreement between the surrogate and the intended parents, legal advice, medical screenings and enhanced criminal record checks.
It is also recommended that the surrogate’s spouse should not be a legal parent, and so their consent will not be required.
The changes will apply only to UK arrangements. Intended parents who travel abroad, for example to the US, for their surrogacy arrangement will still need to apply for a parental order.
These recommendations for reforms do not go as far as some would have liked, but they do mean that UK surrogacy agreements are better supported and regulated. It is now for the government to consider these recommendations. Watch this space.
Liza Gatrell is a Partner at Stowe Family Law
THE FAULT-LINES IN ‘NO FAULT DIVORCE’ by Stacey St. Clair
The introduction of no-fault divorce in April last year has been one of the biggest shake ups in family law for decades. Inevitably, there have been some teething problems. For example, the new 20 week waiting period can seem painfully slow to some clients and there are some fundamental problems with the portal. However, the biggest issue is that while it is straightforward for couples to navigate to the final order stage without taking any legal advice whatsoever this may leave some spouses at risk of the “remarriage trap” whereby they re-marry without a Financial Order addressing the division of the matrimonial assets.
As a community, many family lawyers campaigned for the introduction of no fault divorce so while it’s time to embrace the change, it’s also critical that we offer solutions to help our clients through the new system.
One issue with the portal is that if a client appoints a lawyer after the application has been issued, it becomes extremely difficult and costly to add the lawyer at a later stage. I would recommend that the portal is updated so that a lawyer can be added at any point.
Whilst the new 20 week waiting period seems painfully slow, this does provide an opportunity for both parties to take stock and try and reach an agreement regarding the finances. As family lawyers it is our job to highlight this opportunity to our clients and also to recommend alternative dispute resolution methods such as arbitration and hybrid-mediation. The 20-week period is also an ideal time for parents to think about the children and for family lawyers to advise on practical child arrangements and a parenting plan.
No-fault divorce is not perfect, but client feedback is generally positive. While some clients are disappointed that they cannot cite blame, in my experience this does tend to reduce acrimony, a key aim of the legislation. The introduction of a joint application option is also a welcome change.
As family lawyers we need to tailor our approach to ensure no-fault makes positive changes for clients with the aim that that by the time the 20 weeks is up clients have a signed consent order ready to lodge with the Court once the condition order is granted. The risks for couples embarking on a “DIY divorce” without taking any professional advice remains a key concern.
Unfortunately, I do not see a solution; we can advise our own clients on the risks of proceeding without legal advice and the more we talk about these risks, the more we will raise awareness.
Stacey St. Clair is a partner with Debenhams Ottaway Solicitors
MANDATORY MEDIATION IS NO CURE FOR THE BURGEONING FAMILY COURTS CRISIS says Katie McCann
The government’s latest proposal to mandate mediation services in all low-level family proceedings disputes represents a step change in how family separation is handled in the British family justice system.
Against a backdrop of severe backlogs and thousands of families dragging out their disputes in the court room, this common-sense reform promises to ease the strain on the court system while streamlining the process of reaching an amicable agreement for both parties and, most importantly, for the children.
Mediation as an alternative to court is hardly a new idea in family justice; the current law stipulates that separating couples must at least consider using a mediator before advancing to court. The proposed changes, however, look set to greatly expand the role that mediation fills, where mediation services will no longer be a consideration but rather a mandatory prerequisite before escalating matters to the court room (provided that safeguarding is not a concern as in the case of domestic violence and abuse).
Mediation has always been far preferable to court proceedings in settling the affairs of separating couples. Not only is it cheaper, but it is also swifter, more effective at producing an agreeable outcome, and a less acrimonious process for all involved.
Children, who often find themselves stuck in the crossfire of bitter courtroom battles, stand to benefit greatly from this overhaul, and the changes should go a long way towards decongesting the over-burdened and under-resourced family courts. With more straightforward cases settled through mediation, the courts will be free to adjudicate on disputes which cannot be resolved informally or have complex issues to untangle.
Keen observers will rightly ask whether these new plans have been put forward solely because of their merits, or whether they are simply aimed as a release valve for a badly clogged courts system. There will still be couples who do want to head down a litigious path and see mediation as a dead end – their access to justice could arguably now be restricted by this policy directive.
It should be emphasised that it is because of the government’s prior shortcomings that the courts are in their current state. Public spending on legal aid for family cases has been neglected for too long, meaning that many have not been able to access the legal advice that could perhaps have averted an appearance in court in the first place.
Mediation being the first port of call for separating families is a welcome policy change, but it is no substitute for a well-resourced courts system that can capably handle all the cases that come before it.
Katie McCann is Managing Partner at specialist family law firm Lowry Legal
LEGAL COMMENT OF THE WEEK
TOPIC: The first anniversary of ‘No Fault Divorce’ and accompanying changes to the divorcee process
COMMENT BY: Nicola Beasley, lawyer at Stowe Family Law
“The context in which couples choose to go through divorce is changing, as more and more people turn to DIY divorce and ‘kitchen table settlements’ (where the couple sits at the table to decide the ins-and-outs of the separation) to make their breakup official.
Our survey into no-fault divorce revealed that 70% of couples would consider DIY divorce and receive no legal or financial advice. 37% say this is to save money, 30% because they can’t afford a lawyer, and 19% because they are trying to keep the breakup as amicable as possible.
However, it is important that couples take legal and financial advice to understand the full impact of the settlement, especially regarding their long-term needs.
One of the most common potential pitfalls of a DIY divorce, where people have not sought legal, pension or financial advice, is decisions around the family home and the division of pensions.
In the moment, a larger share of the family home in exchange for disregarding a pension share can seem like a good outcome, providing immediate security. However, pensions have long-term benefits, sometimes with financial uplifts or bonuses, making them more valuable than they seem on paper.
Not getting comprehensive advice in this area could mean people make ill-informed decisions, and potentially find themselves in a much more vulnerable financial position upon retirement.
I would urge caution on kitchen table and DIY divorces, and encourage separated couples to seek legal advice to ensure they get the best outcome for themselves, their finances, and any children they may have.
DIY divorces may seem like an easy and cheaper option, but they could cause harm in the long run.”
TOPIC: How this week’s Capital Gains Tax reforms (which mean that separating couples will have a 3-year window to transfer assets) will bring emotional benefits to divorcing families
COMMENT BY: Henry Crisp, Senior Partner, Crisp and Co
“The current CGT deadline is often impractical and adds further pressure to the separating couple during a challenging time. This is especially true for intricate financial agreements which involve prolonged negotiations or court hearings scheduled months in advance, rendering the April 6th deadline unrealistic for many.
“In reality, transferring assets before the end of the tax year following separation is often unfeasible and may result in a substantial tax liability that must be paid from the marital pot. This coincides with a time when funds are necessary for both parties to find new housing and meet future needs, including those of any children or dependents.
“These new measures will provide greater flexibility and reduce the financial burden for couples wishing to separate. It will also afford divorcees more time to find new housing arrangements and prioritise any childcare needs. This would be especially helpful for individuals and families who require financial resources to be allocated to these priorities the most.”
TOPIC: Proposals for change in surrogacy laws
COMMENT BY: Charlie Geyton, Solicitor at Winckworth Sherwood
Surrogacy is a high stakes area of law that requires appropriate consideration of the way it can appropriately protect the needs of parties who are making life-changing decisions. If implemented, the Law Commission’s reforms would bring clarity to the currently confused system. A well-regulated domestic surrogacy system would help improve outcomes for those contemplating surrogacy and encourage more people who cannot, or struggle to, conceive to consider surrogacy as a viable option.
Since 1990, there have been several Governmental committees and much parliamentary debate around the development of surrogacy law; but little legislative action. Whilst proactive discussions on reform are welcome, it remains to be seen whether the Commission’s calls will be answered by legislative reform.
TOPIC: The implications of Workers Protection Bill which passed through the House of Commons last week
COMMENT BY: Malcolm Gregory, partner in the employment team, RWK Goodman
“The Bill proposes an amendment to the Equality Act 2010 by reintroducing liability of employers for harassment of its employees by third parties. There will also be a proactive duty requiring employers to take all reasonable steps to prevent sexual harassment in the workplace.
Third parties includes suppliers, contractors and customers. It is sadly still the case that many women experience sexual harassment in their roles with some sectors being more susceptible to issues arising. Employees can feel pressured to turning a blind eye to unwanted conduct in order to keep the customer happy. The Bill should facilitate employees calling out bad behaviour. In sectors where the actions of third parties are difficult to predict or manage, we could well see an increase in claims.
Whilst employers are already liable for discrimination in the workplace, the Bill provides that if an employer fails to take reasonable steps to prevent sexual harassment and an employee brings a successful claim for compensation, there is scope for compensation to be increased by up to 25%. This may serve as an incentive for organisations to revisit this as a priority.
Employers would be well advised to start proactively identifying likely risks for their staff from third parties with a view to putting measures in place to protect them. There are many situations where employees are in contact with third parties and at high risk of being abused. For example, the hospitality sector in the night-time economy, has characteristics which mean that careful consideration will need to be given to balance the services provided to customers with the rights of employees. The employer will have to review their operations, assess all activities and plan to avoid issues occurring if they are to avoid claims.
A positive duty on employers to be proactive to prevent sexual harassment in the workplace will need employers to review and update training and reinforce existing anti-harassment policies. If organisations are clear about what is expected of their staff it will not only help to reduce inappropriate behaviour but also ensure that where it happens, employees have a clear path to follow to deal with it.”
COMMENT BY: Louise Attrup, partner and head of the employment law team, Debenhams Ottaway
“The Worker Protection Bill proposes that employees will be able take legal action against employers if they are harassed or offended by customers or a member of the public at work.
This will have big implications for employers who could be drawn into costly legislation if they unable to prove that they have proactivelytaken steps to prevent harassment, even in the case of a one off/unforeseen incident.
This will add yet more pressure to over-stretched public sector organisations such as the NHS and on embattled industries such as hospitality and retail. For example, bar and restaurant staff will be able to sue their employers if they are offended or pestered by drunk customers.”
APPOINTMENTS OF THE WEEK
BIRD & BIRD
Ján Kuklinca (above) and his team from Deloitte Legal are joining Bird & Bird’s Tech & Comms sector group in Prague. Kuklinca primarily advises on transformation projects as well as digitalisation, data management and processing matters. He has extensive experience in negotiating and implementing complex technology solutions, cloud computing, cybersecurity and digital market regulatory issues. He also supports clients on intellectual property, e-commerce and consumer protection law related matters.
Kuklinca will be accompanied by Counsel Lukáš Holub who specialises in IP and IT law, software contracts, brand protection, media and entertainment law, and e-commerce issues and by Associate Michaela Čejková whose focus is on IT law, data protection and intellectual property.
“Ján is an experienced, respected professional in the market and we are very pleased to welcome him to the team,” saidIvan Sagál, managing partner of Bird & Bird in Czech Republic and Slovakia. “His arrival, along with the rest of his team, is an important part of our strategy in the Prague office: To strengthen our growing Tech & Comms team and bolster the stellar reputation we have built over 15 years in the Czech and Slovak markets.”
Aaron Scott has joined Dechert’s global finance practice as a partner based in London. Originally from New Zealand Scott received a BSc in Psychology and a law degree from the University of Otago in 2012. He then trained and worked as a lawyer in New Zealand before moving to the UK.
Previously with Paul Hastings he specializes in structured finance and securitization with a focus on Collateralized Loan Obligations (CLOs) and has extensive experience on a wide range of transactions for global financial institutions. He has forged strong relationships with many European banks and advises on the EU regulatory aspects of U.S. CLOs (including risk retention and transparency requirements).
“As CLOs continue to be one of the global finance market’s most innovative and important asset classes, investor demand for highly skilled lawyers like Aaron will continue to grow,” said Laura Swihart, co-chair of Dechert’s global finance and real estate practice groups. “We are delighted that Aaron is bringing his expertise and entrepreneurial spirit to Dechert.”
Scott is the sixth partner to join Dechert’s global finance practice since the start of 2022.
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Managing and Structuring CRE-CLOs in Today’s Economy: Servicing, Re-investment, Tax and Eligible Assets
A live 90-minute premium CLE video webinar with interactive Q&A
Join Cadwalader partners Jeffrey Rotblat and Gary Silverstein and special counsel Matthew Pawling for a live webinar discussing the various nuances of CRE-CLOs, including CLO administration, loan modification and servicing concerns, with an emphasis on recent challenges presented due to a rising interest rate environment.
Tuesday, April 18, 2023 1:00 PM-2:30 PM EDT
The webinar will offer insights into:
What are the key servicing differences between a CRE-CLO and traditional CMBS?
How are borrowers and servicers navigating the rising interest rate environment?
How should the CRE-CLO be structured to avoid entity-level taxation?
What kinds of reinvestment are permitted during the reinvestment period?
What types of loans are eligible, and what are the structuring features of loans that typically go into CRE-CLOs?
CLE credit will be provided.
Cadwalader is pleased to offer our clients and friends a limited number of complimentary and discounted registrations.
Please contact Michael Masterton for more information. View event details here.