Edward Fennell’s LEGAL DIARY

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

April 28 2023

Editorial contact: fennell.edward@yahoo.com

SHORT THOUGHT FOR THE WEEK: ‘RETURN TO SENDER’

Once upon a Time A Sub-Postmaster Lived Here

It has been very slow and very uneven but it looks as if the weight of the law and professional discipline is now rolling backwards towards the architects and the facilitators of the Post Office Sub-Postmasters’ scandal. And that might include, in some cases, the lawyers and law firms who acted for the Post Office itself. As Timothy Young KC, of Twenty Essex chambers, said this week. “Justice requires that the individuals who perpetrated relevant falsehoods should themselves be prosecuted, at least for perverting the course of justice if not under the Fraud Act 2006.”

No-one, however, high their position or how mighty their law firm should feel immune from this. However imperfectly, it feels as if there is now a hunger for justice to be done.

The LegalDiarist

In This Week’s Edition

+ LEGAL DIARY OF THE WEEK

– Flogging Off the Family Silver

– Lifting The Lid on LIDW23

– Nuanced Approach to Equity

– Nice Weather for Ducks – but not on the Somerset pitch

+ CONTRIBUTED ARTICLES OF THE WEEK

– The UK Government’s Online Safety Bill: What might be its impact and why the tech companies are concerned?

by Brett Lambe

– The Government’s plans to protect children under mediation reforms by Swati Somaiya

– Lessons for Lawyers from Xanthopoulos v Rakshina

by Rebecca Alexander

+ LEGAL COMMENT OF THE WEEK

on Mike Lynch’s extradition, the Gambling White Paper, the status of Elders in the Jehovah Witnesses, the CMA on Microsoft and Activision and delays in probate applications.

+ APPOINTMENTS OF THE WEEK

at Shakespeare Martineau and Fladgate

LEGAL DIARY OF THE WEEK

Flogging Off the Family Silver

Anyone for a sell-off – or maybe a sell-out? According to a survey of 200 law firm partners commissioned by Harbour, the world’s largest independent litigation funder and law firm lender, three quarters of law firms would consider selling a percentage of their business to an external buyer.

So far, it must be said, the track record of firms going public has been less than glittering. But maybe the prospect of a one-off lottery-style win has seduced partners especially in smaller firms – the group most willing to sell a percentage were the firms with a turnover of between £5m and £10m. (Amazingly ALL those questioned saying their firm would consider it).

In fact, there was a clear pattern that the bigger and more profitable the firm the less likely partners were to back a sell-off. Those least likely to sell were those with turnovers of £400m – £500m (22%) and £100m – £400m (48%).

Of those who said they would not consider external ownership, loss of control was most cited (51%) as the key issue that would need to be resolved before they would consider selling. Other factors included future partner compensation (47%), obtaining partner consensus (37%) loss of employees (33%) and loss of culture or ethos (31%).

Clearly, though, there is enough interest out there to warrant that this should be a matter for discussion at partners’ meetings. “These results show that the legal sector is well and truly open for investment from external sources,” said Ellora MacPherson, Managing Director and Chief Investment Officer at Harbour. “With 75% of law firms considering external ownership, it is a fascinating time in the market with the trend for mergers and acquisitions set to continue. Our survey shows this isn’t just the smaller firms, but also those with substantial turnovers.

“In addition, with law firms and their partners having weathered turbulent economic times during the pandemic, it is clear that many are looking at alternative forms of investment. At a time of high interest rates, specialist lenders to the legal sector, who understand lawyers and law firms, are well-placed to provide attractive finance options.”

Lifting The Lid on LIDW23

I

A Great Place for Opening Drinks

London International Disputes Week 2023 is probably coming to a law firm near you in a couple of weeks’ time. LIDW23, as it terms itself, wants tobuild on its previous track record and “Strives to be a forward-thinking and inclusive forum for discussion embracing legal London’s commitment to diversity.”

With the Core Conference taking place on Tuesday 16th May the theme will be ‘Adapting to a Changing World’ – a long way maybe from last year’s mantra of ‘Global, Sustainable, Ethical’ but then we have had quite a lot of upsets over the past 12 months. Meanwhile there will be satellite events taking place at Mayer Brown, Herbert Smith Freehills and Allen & Overy – each of whom, no doubt, will be displaying their disputes credentials.

As we adapt to our new Brexit lives, however, the hard reality is that London must continue to proclaim its world-leading position (if that is, indeed, still the case). Hence there will be an International Arbitration Day – a ‘flagship arbitration event showcasing the importance of London as a global arbitration centre’. High-profile keynotes will open the day, followed by 12 in-person panels on jurisdictions and regions spanning the world from China to Latin America.

If that all sounds a bit frightening delegates can at least look forward to opening drinks in the Royal Courts of Justice co-hosted with the Commercial Litigators’ Forum in support of the National Pro Bono Centre. There will also be a fine finale drinks reception for attendees following the main conference, and an event, featuring the ‘ever popular’ Law Rocks, organised for our ‘young and young at heart’ delegates. Are yes, those days of youth – where exactly did they go?

For more go to: https://lidw.co.uk/lidw-2023-adapting-to-a-changing-world/

Nuanced Approach to Equity

With so many women entering the law can we expect to see a step change in the number who secure equity partnership? That’s the next challenge in the drive for equality in the profession. Currently 69% of partners in private practice are men and it is believed that among those who have equity in the UK’s top 100 law firms just 24% are women.

To break down the barriers Networking Nuance – which runs an e-mentoring programme for female lawyers to fast track their trajectory to senior leadership – hosted an event this week to help participants ‘navigate the opaque world of remuneration in law firms’. Also involved was Burford Capital whose Equity Project was launched in 2018 and which has committed over $150 million to finance commercial litigation and arbitration led by women and racially diverse attorneys. 

“Equity (and how to get there) is one of the greatest hidden secrets,” says Kate McMahon, lawyer and co-founder of Networking Nuance. “For a change to occur, a shift in culture is required. The current traditional structure of a typical law firm and the conventional path to partnership is simply not compatible with other responsibilities. As such, many women believe that partnership within a law firm is simply not a viable option for them, especially when they have families to take care of.

We aim to help stamp out the erroneous belief that equity level is unattainable for women. There is a cultural shift occurring (albeit slowly) and we aim to speed this up so that we can reduce the steadily increasing number of women who drop off the corporate ladder as the roles become more senior.”

For more go to: www.networkingnuance.com

Nice Weather for Ducks – but not on the Somerset pitch

Change the world for £7.99 at Amazon

Rumour has it that the cricket season is starting imminently despite the country still seemingly stuck in last year’s Autumnal damp and cold. But evidence that Spring really is here comes from the announcement by Clarke Willmott that it has renewed its partnership with Somerset County Cricket Club.

From what appears in the media the future of cricket seems bright – albeit not necessarily on this island. In India, of course, it’s a blast and even the USA is tipped to be expecting a moment of revelation with talk of an improved state of mind stemming from fielding. But even the LegalDiarist can vouch for the extraordinary loyalty of the cult’s adherents. That is why, deep in the west, Clarke Willott will extend its 30 years relationship with Somerset CCC and remain as the club’s Preferred Legal Partner and as a matchday sponsor during the LV= Insurance County Championship season.

“Everyone at the club is delighted that one of our longest standing partnerships is set to continue,” said Caroline Herbert, Somerset County Cricket Club’s commercial director.“The relationship that the two organisations have nurtured over the years is one that we hold dear, and we hope that it will continue for many years to come. We would like to take this opportunity to thank the staff of Clarke Willmott for their outstanding support, and we look forward to sharing a successful 2023 campaign with them.”

Meanwhile Kirill Bingham, head of office and partner at Clarke Willmott in Taunton, said: “We are extremely proud to continue to support Somerset County Cricket Club and to be their preferred Legal Partner for 2023. We wish the club every success and look forward to cheering the teams on from the stands!”

CONTRIBUTED ARTICLES OF THE WEEK

The UK Government’s Online Safety Bill: What might be its impact and why the tech companies are concerned?

by Brett Lambe

The Online Safety Bill aims to increase user safety online, which is undoubtedly a positive ambition.

A key part of this aim is to improve law enforcement’s ability to intercept illegal online content (such as the activities of organised criminals, terrorists and the exploitation of vulnerable groups including children).

To help achieve this, the Bill would give Ofcom, the UK’s telecoms regulator, the ability to force tech companies to scan people’s phones for messages, images and videos with “accredited technology” to identify unlawful material.

It is this power to inspect everybody’s private messages that has caused concern amongst a number of tech companies.

In an open letter published last week, WhatsApp, Signal, Element, Session, Threema, Viber, and Wire, addressed “anyone who cares about safety and privacy on the internet” and urged the Government to “urgently rethink” the proposal.

Several of these companies, who have millions of users in the UK, have said they will remove their services from the UK if the Bill becomes law.

In simple terms, end-to-end encryption means that only the sender and recipient can access WhatsApp messages (meaning WhatsApp or its employees cannot see them). The only way anyone else can see those messages would be to physically access the sender or recipients’ device.

The concern, echoed by organisations such as the British Computer Society and the United Nations, is that, despite the government’s best intentions, the Bill could create a back door for governments, oppressive regimes and criminals to access private citizens’ phones and data, without their knowledge.

In the government’s favour, many people are keen to see stricter regulation of this area, particularly given the increasing power of technology companies. Recent polling by YouGov shows huge public support for tougher measures to enforce safety online, where encrypted messaging offers communication channels to criminals which is currently inaccessible to the authorities.

The current stand-off is a battle between the government’s desire to prevent certain types of crime, against the tech companies’ concerns that this will simply open the door to other types of crime.

While historically it has often been the case that criminals are able to stay one step ahead of the law, the government is clearly keen to take robust steps to tackle this area of legitimate concern.

For the tech companies, on the face of it there are limited legal avenues for them to challenge the government’s actions. No doubt WhatsApp and others will be keen to explore where such opportunities may lie, but the truth is that if they withdraw from the UK market, this may increase pressure on the UK government to reconsider.

While the Government wishes to make the UK a technology powerhouse, it is clear that tech companies could exit the UK market altogether if they become subject to regulation that they see as threatening their customers’ security. The Government has historically looked to reduce red-tape for businesses, but now faces a dilemma in achieving its aims in trying to tackle another issue.

Furthermore, the Bill has experienced over 5 years of delays since it was first proposed, passing through the inboxes of four Prime Ministers, and the draft law has been through a large number of changes in that time. The government has made concessions previously, so it remains to be seen whether the tech companies can force a rethink or whether the government stands firm in tackling an increasing problem.

Brett Lambe is a Senior Associate in Ashfords Technology team

Government introduces plans to protect children under mediation reforms

by Swati Somaiya

The UK Government has made excellent strides to further protect children whose parents are separating by introducing new mediation reforms which would make mediation mandatory in all suitable low-level cases. The primary aim of these reforms is to shield children from the damaging impact of bitter courtroom battles, following studies showing the detrimental impact of adversarial court proceedings on children’s quality of life, school work, and mental health.

By making mediation mandatory in all separations – other than those in which domestic abuse has, or is alleged to have, taken place -the reforms are intended to prioritise children, as well as assist parents in finding a swift resolution to their separation without costly and lengthy court proceedings. The proposals come alongside confirmation that the government’s Family Mediation Voucher Scheme will be extended to April 2025, with separating couples given vouchers worth up to £500 to be spent on mediation.

As a result of the changes and the extension to the voucher scheme, the Government has signalled a positive movement towards structuring individual plans to share children’s care based on the most beneficial outcome for them, rather than on what is more practical for parents. The proposed reforms will extend the use of co-parenting programmes across the UK by making them compulsory before court, enabling more parents to take steps to put their children’s needs first during the process of separation.

The move to mandatory mediation will also allow parents to explore solutions that the court may not be able, or are unlikely, to order, which are often the most beneficial outcomes for their children. At the same time, the reforms could introduce a new power for judges to order parents to make a reasonable attempt to mediate, with possible financial penalties if they act unreasonably, and in the process harm a child’s wellbeing by prolonging court proceedings.

If implemented, following the consultation period which ends in mid-June, the mediation reforms will be effective, not only in ensuring that children are far less impacted by divorce proceedings, but also that parents themselves are not left dissatisfied with court outcomes, as is often the case. The reforms will also free up court time so that high-priority cases, such as those involving domestic abuse, will be heard sooner, to the benefit of some of the most vulnerable users of the court system.

Swati Somaiya is a partner and family lawyer at Excello Law www.excellolaw.co.uk

Lessons for Lawyers from Xanthopoulos v Rakshina

by Rebecca Alexander

Xanthopoulos v Rakshina [2023] EWFC 50 has been a long-running international financial remedy case which reached a conclusion only earlier this month when judgment was handed down by Sir Jonathan Cohen. The outcome contained warnings for litigants and their solicitors alike.

Both parties are Russian nationals with the former husband also having Greek nationality. It should be noted that despite the current geopolitical situation, it is quite possible for Russian individuals to litigate in England and, unless an individual is sanctioned, the current position is that a UK lawyer is able to act for them. My firm, Family Law in Partnership, advised the former wife. The former husband engaged seven separate English law firms to act for him through the proceedings at different stages.

The key developments relevant to English law in this case are: first, the impact of a Russian post-nuptial agreement; second, the impact of the former husband’s litigation conduct; and third, Legal Services Payment Orders for costs during the litigation.

In respect of the Russian Post-nuptial Agreement, the parties had executed a post-nuptial agreement in Russia entirely in accordance with strict Russian law and procedure. It was therefore found to have been freely entered into by the parties entirely voluntarily and with knowledge of the financial situation. Sir Jonathan Cohen stated that “It is not for the English court lightly to overrule what the former husband chose” and in this case the post-nuptial agreement was a decisive factor.

Regarding litigation conduct, it is now well established under English law that this can be relevant to the final award. In this case, the former husband changed solicitors on seven occasions (thereby increasing costs materially), made eleven applications for Legal Services Payment Orders and breached nearly every order that was made.

This impacted significantly on his award. Future litigants must be advised that litigation conduct will have consequences on a final order and will reduce what the offending party receives, which may be less than their needs.

On the point of Legal Services Payment Orders the former husband made eleven applications. He also had outstanding liabilities of £900,000 with firms of solicitors who overshot the sums granted by the orders. No order was made to provide these solicitors with their overspent costs and the judge made clear that it is the solicitors’ duty to apply to the court for a further order if they run out of funds.

Following this judgment, solicitors must advise litigants making such applications cautiously, and overspend at their own risk.

Sir Jonathan Cohen’s judgement on these issues are new developments which warrant careful consideration by the legal community.

Rebecca Alexander is an Associate with Family Law in Partnership. She was a member of the team led by Director David Allison who represented the former wife in this case

LEGAL COMMENT OF THE WEEK

TOPIC: Autonomy founder Mike Lynch’s failure in his bid to appeal extradition to the US

COMMENT BY: Thomas Garner, partner and extradition lawyer at Fladgate

“Lynch appears to have reached the end of the road.  It is difficult to see the Strasbourg Court intervening in this case and it should be remembered that any application to Strasbourg can only be founded on narrow human rights grounds – much of his argument in the UK was that the US was not the proper forum for any trial.

If an application is made to Strasbourg then he can also seek an order effectively injuncting his removal to the US – such orders are very rare and are typically reserved for cases in which the Court is concerned that there is an imminent a threat to life or ill-treatment amounting to torture or inhuman or degrading treatment.”

TOPIC: The Government’s Gambling White Paper published this week

COMMENT BY: Nick Nocton, Head of Betting and Gaming at Mishcon de Reya 

“The White Paper contains some potentially significant proposals. In particular, the Government’s analysis of the potential impact on remote gambling gross gambling yield (GGY) of key measures relating to affordability and online slot limits is eye-catching (at between 8% and 14% GGY).

 What is also striking is the rebalancing of regulation in favour of land-based gaming and there are real wins for the casino sector.

 As expected, however, much of the reform will be subject to consultation, so there will be scope for the industry and others to influence these changes.”

TOPIC: This week’s Supreme Court judgment that in cases of alleged abuse those who are (volunteer) Elders in the Jehovah Witnesses community are akin to employees, for the purposes of applying the principle of vicarious liability.

COMMENT BY:Thomas Beale, Partner in the Abuse team at Bolt Burdon Kemp

“Today’s judgment, confirming that volunteers can be akin to employees is helpful. In many cases that my team work on, those who carry out abuse are often closely connected to the survivor through an assigned role, for example teacher/pupil, doctor/patient, carers, scout leaders, and so on. Establishing that an organisation can be held vicariously liable for those who are given positions of authority on an unpaid (aka voluntary) basis is a victory for all survivors who have been affected by abuse in this way. My firm continues to challenge the legal landscape in respect of the laws and principles applicable to survivors of abuse and to fight for justice for all survivors of abuse.”

Bolt Burdon Kemp LLP represented the Respondent in the case.   Thomas Beale, Partner in the Abuse team at Bolt Burdon Kemp

TOPIC: The Competition and Markets Authority’s announcement that it has blocked Microsoft’s proposed purchase of Activision

COMMENT BY: Alex Haffner, competition partner at Fladgate

“The CMA’s investigation of this merger has had as many twists and turns as one of Activision’s computer games. In prohibiting the deal, the CMA has not only put itself in the firing line of the merging parties, but also set an important precedent for the EU Commission and US FTC whose deliberations are ongoing.

Interestingly, the CMA confirmed in its release that its competition concerns with the tie-up focussed on the relatively nascent cloud gaming market and not the games console market in which the parties had waged an aggressive and very public campaign to persuade regulators that it would not harm post-merger competition by making it more difficult for rivals (e.g. Sony) to access Activision’s core titles.

Nonetheless, the CMA’s release also reveals that the merging parties proposed remedies to address the CMA’s concerns but those remedies did not go far enough.

Whether the CMA’s decision causes the entire deal now to fall apart must be open to question, but no doubt the parties’ advisers will be thinking very carefully about how they might be able to salvage it.”

COMMENT BY: Jason Mitchell, partner at MHA

“We shouldn’t take the President of Microsoft’s statement too much to heart. The CMA’s decision was not ‘bad for Britain,’ and shouldn’t shake confidence in the UK technology sector. It really doesn’t mean it is better to do business in the EU.

“Reading between the lines it seems likely the deal would have been blocked by someone else (in the US or Europe): it just so happened the UK was the one to do it.

“More importantly, the CMA ruling on Microsoft’s bid to acquire Activision pertains to a pretty niche issue around competition. There’s a lot more to having a thriving technology sector than precise rulings about very contentious competition issues.”

TOPIC: The post-COVID delays by HM Courts and Tribunal Service (HMCTS) in processing probate applications

COMMENT BY: Fiona Dodd, private client partner at Mayo Wynne Baxter

“These delays are, rightly, causing huge frustration and anxiety for bereaved families who are having to pay the price as a result of faults within the system.

“In the past few months, we’ve seen clients losing out on property sales as buyers have been unwilling to put up with the long wait times for a grant of probate to be issued, which is needed before a transaction can proceed. In a couple of cases, I have had to ask for an emergency application to save the sale of a large number of plots of land.

“Due to stock market volatility arising from the war in Ukraine, we’ve also seen a deceased’s investment portfolio significantly lose value as executors have had to wait for the grant to be issued before being able to sell the shares.

“These lengthy delays are exhausting for grieving families, who are already going through a difficult time dealing with their loss and trying to sort out the complex admin related to the death of a loved one. They are being left in limbo.”

“It is basically a waiting game – there is no shortcut or way to avoid the delays when applying for grant of probate. Despite these types of applications being daily bread and butter for probate practitioners, legal teams up and down the country are experiencing the same problem.

“Pre-Covid, if probate had not been granted, we would follow up with HMCTS after just 10 days. However, now, there is a 16-week purdah in place where we are unable to chase the registry to find out what is happening with an application.

“The onus is on the government to come up with a way to get through the backlog and speed up the current process. In the meantime, we recommend seeking legal assistance with the estate administration to ensure the application is carefully prepared, and completed and submitted correctly.

“Longer term, if clients are wanting to avoid problems in the future, we recommend they seek legal advice, have joint accounts, and make sure their pensions and insurance nominations are up to date.”

LEGAL APPOINTMENTS OF THE WEEK

SHAKESPEARE MARTINEAU

Anita Rasaratnam is to join  Shakespeare Martineau as a Partner and new legal director in its social housing development team in London.

Formerly with Penningtons Manches Cooper, Rasaratnam has more than 12 years’ experience specialising in the development and regeneration of affordable housing. She has worked with a wide range of housing associations and charities, assisting them with development and regeneration projects. She also has expertise in shared ownership, right to buy and right to acquire sales, which has given her extensive commercial insight into the practicalities of the affordable housing market.

As part of her new role Rasaratnam will be acting for registered providers in their development site acquisitions. She will also be supporting the social housing development team’s organic growth in London.

“Over the past two years, we have received a rise in instructions from clients and been successful in winning tenders in the sector, which have required a need to increase capacity within the team,” said Joanna Lee-Mills, partner and head of social housing development at Shakespeare Martineau. “We are delighted to welcome Anita to the team – her experience will ensure our clients’ actual and aspirational objectives are met.”

FLADGATE

Tessa Trevelyan Thomas has joined Fladgate as an M&A Partner in its Corporate practice.

Previously with BDB Pitmans, Thomas has extensive experience working with clients on a broad range of domestic and cross-border transactions, including public takeovers, the UK Takeover Code, private M&A, private equity investments and disposals, joint ventures and reorganisations.

Thomas had developed a specialist practice advising on e-commerce and Amazon aggregation M&A and acted for both businesses acquiring Amazon and other e-commerce brands and ecommerce service providers, as well as sellers of e-commerce brands and services, Amazon FBA and other DTC businesses.

“Tessa’s arrival is another important hire for our firm,” said David Robinson, Partner and Head of Corporate at Fladgate. “Her experience and specialisms, particularly concerning e-commerce M&A, highlight our commitment to working at the forefront of emerging sectors and areas of law.”

Thomas added, “Fladgate is well known in the market for advising entrepreneurial clients in fast-moving and growing sectors, and I am excited to be joining and adding to this alongside my new partners and colleagues.”

E-VENTS

We hope that you have found this edition of the Legal Diary interesting (and even useful). If so, please circulate to colleagues.

Meanwhile please continue sending your legal diary stories, legal insights, comments and appointments news to

fennell.edward@yahoo.com

And enjoy the May Day Bank Holiday Weekend (for those not compelled to come back to the office).