Edward Fennell’s Legal Diary – Edition 77
Friday October 15 2021
Diary news, commentary, insights, appointments and e-vents from the legal world
SHORT THOUGHT FOR THE WEEK
To vax or not to vax?
Across Europe and North America the move towards the simple principle of ‘No vax, no job’ is gathering pace. In Britain, meanwhile we are doing the usual shilly-shallying and tying ourselves up in bureaucratic knots. As Rustom Tata, chairman and head or employment at law firm DMH Stallard, explained, “In the absence of legislation, it is highly unlikely that it would be considered a lawful and reasonable instruction to require staff to be vaccinated.”
In short, employers in the UK do not have much power over this. The paradox, of course, is that employers also have the responsibility for maintaining a healthy workplace. It’s an intractable problem and whatever you do is wrong. Emblematic of our times.
The LegalDiarist
In this week’s edition
LEGAL DIARY OF THE WEEK
A Question of Privilege
Faire Enough
Well payed, City
Here’s what Diversity of Opportunity Looks Like
Miss this and face the penalty
LEGAL INSIGHT OF THE WEEK
– GO FOR THE PRE-NUP (whoever you are)
CONTRIBUTED ARTICLES
FAIRNESS IN ARBITRATION IN A POLITICAL WORLD
by Daniel Powell is a Senior Litigation Paralegal and Leigh Crestohl
FAILURE AND FAULT: NATWEST AND MONEY LAUNDERING by John Binns
SWEETHEART DEALS, THE SILICON SIX AND SECURING TAX JUSTICE IN A GLOBAL GIG ECONOMY by León Fernando Del Canto
LEGAL BOOK COVER OF THE WEEK
APPOINTMENTS OF THE WEEK by Hunters Law and Clarke Willmott
LEGAL DIARY OF THE WEEK
A Question of Privilege
It’s always a minefield trying to work out which documents are privileged and which are not. So Herbert Smith Freehills has stepped into the breach and created a new web-based app to help in-house counsel traverse quickly and safely this particular hazard.
The ‘English Law Legal Privilege’ web app – entirely developed in-house by the firm – provides clients with the information they need both on their mobile phones and via their desktops.
By analysing answers to a series of questions it can determine whether a document is likely to be covered by legal advice privilege and/or litigation privilege under English law. An on-screen report then provides a summary of its status.
The app was created by a partner Alexander Oddy along with Professional Support Lawyer Maura McIntosh, Senior Legal Automation Specialist Bilal Syed and Senior Associate Andrew Wells and the project stems from what was originally a hard copy (remember those?) version of the Herbert Smith Freehills ‘Handy Client Guide to Privilege’. The new technology makes the analysis quicker, easier and more convenient for in-house counsel wanting guidance on-the-go. “This is an exciting example of digital transformation of our business in practice,” said Alexander Oddy. “We’ve built this app entirely in house on a no-code platform in a matter of weeks through Practice Group, Innovation and Legal Ops collaboration. I think it will be a real help for busy in house lawyers.”
To find out more, click here.
Faire Enough
Congratulations to Browne Jacobson for clinching the Innovation award at the fifth annual UK Social Mobility Awards 2021.
Designed to promote social mobility the awards give recognition to businesses and organisations that demonstrate innovative ways of advancing social mobility within the workplace.
Browne Jacobson’s success was based on its FAIRE (Fairer Access into Real Experience) initiative which was devised by the firm’s recruitment manager, Tom Lyas to offer students equal access to work experience that can pave the way for a career in the legal sector.
It what was the UK’s biggest virtual work experience and legal career insights event ever to take place FAIRE worked in partnership with the organisation Young Professionals to engage with over 10,000 participants across the UK.
“We are incredibly passionate about creating and delivering genuinely innovative solutions that help aspiring legal professionals from under-represented communities get equal career opportunities,” said Tom Lyas. “We know people from lower socio-economic and minority backgrounds are still hugely under-represented within the legal profession and we know we want and need to be part of that change so I am delighted our work around FAIRE and championing social mobility has being recognised.”
Browne Jacobson is currently ranked 5th in the Social Mobility Employer Index across all employers.
Well payed, City
Lawyers and accountants probably live in different universes culturally and spiritually but nonetheless they are usually lumped together economically. And that is certainly so as far as CityUK is concerned. The high profile lobbying group for the City has been making the point in its latest report that legal and accounting activities form a ‘Key part of the ecosystem which underpins the UK’s status as global financial centre’ and they punch far above their weight when it comes to tax.
In total, 755,800 people are employed by the UK’s legal and accounting sectors, 2.3% of the total UK workforce. According to the report these groups along with financial services, contributed an estimated £96.1bn in tax in 2020, 12.9% of total UK tax receipts, while making up 10% of total UK economic activity. “This underlines the disproportionate positive contribution the industry makes to the UK’s capacity to pay for key public services,” says CityUK to imply that without private sector lawyers, accountants and bankers Britain’s welfare state would be even more threadbare than it is already.
Indeed, the report, ‘2021 Total tax contribution study for UK legal and accounting activities,’ shows that the tax contributed by the two sectors made up 2.8% of total UK tax receipts in 2020. This is, apparently, equivalent to the combined capital spending budgets for the Departments of Health, Education and Housing, Communities & Local Government , providing an ‘important and resilient source of government revenue which can support its levelling-up ambitions’.
“Legal and accounting activities are a key part of the UK’s world-leading financial and related professional services ecosystem, and a source of high-value jobs right across the UK,” said Anjalika Bardalai, Chief Economist & Head of Research, TheCityUK.
“This report highlights the continued and increasing fiscal contribution the legal and accounting sectors make to the UK. This contribution has become even more striking in light of the economic damage wrought by the Covid-19 pandemic. The relative resilience of the legal and accounting sub-sector make it well-placed to make a strong contribution to the UK’s post-pandemic economic recovery.”
Here’s what Diversity of Opportunity Looks Like
It won’t attract much coverage in the wider legal press but the appointment Selina Gonzalezas a Dispute Resolution solicitor for Cartmell Shepherd Solicitors in Northumbria offers an insight into what increasing diversity means in practice.
As a teenage mum Selina gave up on her ambitions of becoming a lawyer. But twenty years later, thanks to a lot of grit and the chances given by an Access to Higher Education Diploma at Carlisle College and then admission to the University of Cumbria to get a law degree, she gained a second shot at qualification. Taking full advantage of every opportunity she then gained the backing of Mark Aspin, Head of Dispute Resolution at Cartmell Shepherd, to complete the process and secure a job.
So what’s the message? The educational system must be in place to support ‘non-traditional’ entrants. Employers must be open minded and supportive. And the individuals themselves need to be passionate and persevering. It’s not easy but it should not be impossible.
Miss this and face the penalty
And finally, there’s yet another scandal around an innocent Brit being given an attrociously heavy sentence by the courts in the Gulf But, predictably, the British Government seems to stand aside and does nothing.
Read the story and be appalled at https://detained-in-dubai.prowly.com/160000-billy-hood-what-will-the-british-fcdo-do-to-help-the-footballer-sentenced-to-25-years-for-cbd-oil
LEGAL INSIGHT OF THE WEEK
– GO FOR THE PRE-NUP (whoever you are)
Kirsty Bertarelli was smart enough to write the All Saints No 1 hit “Black Coffee”. So how come she did not have the wit to negotiate herself a substatial pre-nup when she married mega-rich billionaire Ernesto resulting in her pathetically small divorce settlement of £400M? Yes, she’ll be on the tills at Tesco next week. It’s an object lesson in the need for advance planning argues Jo Carr-West, Partner at Hunters Law.
“With assets like these at stake, I cannot imagine that Kirsty Bertarelli did not take legal advice about the possibility of proceeding with a divorce in this jurisdiction. It is likely that she was advised that the court here would have given the existing Swiss prenuptial agreement considerable weight and the outcome might not have been any different, despite the purported generosity of the English divorce court.
“Clients and family lawyers alike should take this as a sign that a good prenuptial agreement, entered into with all the right safeguards, is worth its weight in gold.”
CONTRIBUTED ARTICLES OF THE WEEK
FAIRNESS IN ARBITRATION IN A POLITICAL WORLD
by Daniel Powell and Leigh Crestohl
An arbitration panel at the International Centre for the Settlement of Investment Disputes (ICSID) recently awarded Air Canada repatriation of outstanding profits held up by Venezuela. This is yet another example of an international investor relying on a bilateral investment treaty (BIT) to pursue a state for losses. Like many such disputes, it occurred against the backdrop of turbulent economic and political factors: the devalued Bolivar; and a political leadership crisis which, following US sanctions, added to the country’s economic crisis.
Political factors create challenges for arbitration tribunals. Due to sanctions, a party may be unable to engage and pay lawyers and experts, creating an “inequality of arms”. Quantum and valuation issues are essential features of investment arbitration. Here, Venezuela’s quantum expert was unable to be cross-examined at the hearing on its report, leading the Claimant to try unsuccessfully to exclude it. The Tribunal also had to consider a request from representatives of “interim President” Guaidó to exclude counsel appointed by the Maduro Government from acting further in the case. This contest between Presidents, each claiming legitimacy, has led to similar requests in a number of cases. Here it was denied.
For the investor-state dispute resolution system to have continued legitimacy, arbitrators need to do justice to the parties and be seen to act fairly. Parties and arbitrators should do all they can to reduce the potentially disruptive impact on proceedings of sanctions and external political factors. Where a party is perceived to have been placed at a significant disadvantage, the process is undermined. Venezuela was permitted to rely on its quantum expert report in this case, but a differently constituted Tribunal might have decided differently where a party had other alternatives. It can only be hoped that parties and arbitrators will generally take actions to reduce the disruptive impact of sanctions and political events.
Daniel Powell is a Senior Litigation Paralegal and Leigh Crestohl, a Partner at Zaiwalla & Co.
FAILURE AND FAULT: NATWEST AND MONEY LAUNDERING
Last week NatWest pleaded guilty to money laundering failures – but was it a ‘failure to prevent’? asks John Binns
Did NatWest just admit ‘failure to prevent’ money laundering? Headlines seem to suggest it did, in the first prosecution under money laundering regulations (‘MLRs’). But the truth is more nuanced.
Companies can generally be guilty of offences only via their ‘directing minds’. In money laundering, that person must either know or suspect that property they are dealing with represents the proceeds of crime.
NatWest pleaded guilty not to this, but to breaching the MLRs, which transpose the EU’s money laundering directives (‘MLDs’). These made breaches a criminal offence but gave supervisors powers to deal with them civilly.
Importantly, such a prosecution requires no proof of money laundering. This is different from the ‘failure to prevent’ offence in the Bribery Act, which makes a company liable for bribes by an ‘associated person’.
So, what did NatWest do in this case? Their customer was a jeweller and gold dealer, which said it expected a turnover of £15m a year and would make no cash deposits. The bank failed to institute ongoing monitoring, and the customer deposited £264m in cash.
Interestingly, while the investigation proceeded, the UK was opting out of the latest MLD, which requires a corporate offence of money laundering, but also exploring ways to make corporates more liable for economic crimes, including via the Bribery Act model.
The scale of the activity in this case doubtless justifies the decision to deal with it criminally. Putting a bank through this sends a message about the seriousness of its obligations. But is it wise to call it ‘failure to prevent’?
Ultimately, the question is what role we want companies to have in tackling crime. For decades, we have required strict procedures of banks, but dealt with failures civilly. This case may prompt a rethink of our answer. Perhaps the better question is whether we call it corporate money laundering – and if not, why not?
John Binns is a financial crime partner at BCL Solicitors LLP in London. BCL specialise in domestic and international corporate crime, financial crime, regulatory enforcement, and serious and general crime.
SWEETHEART DEALS, THE SILICON SIX AND SECURING TAX JUSTICE IN A GLOBAL GIG ECONOMY by León Fernando Del Canto
Global tax reform has been at the forefront of ministers and finance leaders’ agenda for some time now, with calls to change international rules so that large multinationals are paying their ‘fair share of tax’.
But while the UK’s Chancellor of the Exchequer talks about ‘milestone progress’ being made in ensuring multinational corporations are properly held to account where their tax liabilities are concerned, are these ‘sweetheart’ tax deals really so sweet?
The answer, of course, for the ordinary taxpayer who runs the risk of becoming collateral damage, is ‘No’. However, a glimmer of hope shines in the darkness with renewed calls for a crackdown on dealings between governments and multinational corporations.
A report has published recently, as part of ongoing demands for the drastic improvement of public scrutiny of corporate taxes from MPs of the All-Party Parliamentary Group on Anti-Corruption and Responsible Tax, in which MPs have asked for transparency and an end to sweetheart deals between tax authorities and the corporate giants.
This follows on from the G20 agreement to introduce a 15% corporation tax as a direct attack on the tyranny of the Gig Economy, imposed mercilessly by the so-called Silicon Six (Google, Amazon, Facebook, Apple, Microsoft and Netflix).
But what does the G20 agreement mean in practice, for the Silicon Six and the average taxpayer?
I do not believe that the G20 agreement will deter multinationals, despite their threats, to operate domestically. What is clear is that they will need to invest more locally to optimise their tax payable in each country. The situation will improve local business sales as the Silicon Six will increase their costs. It will also increase domestic tax receipts and equalise tax pressure across the board.
We are facing a revolution in the global economy. The G20 finance ministers, backed by the OECD, have agreed a radical departure from a century old international tax bargaining souk, where multinationals forced States to offer the lowest possible corporation tax rate and advantages to attract their millionaire investments.
Once the initial adjustments have been made, the main beneficiaries will be domestic businesses as some of the Silicon Six will lose their unfair competitiveness. The job market will be impacted as the zero-hour type of economy will be heavily challenged when multinationals have lost control and power.
León Fernando Del Canto is an expert in international tax and legal affairs. He heads Del Canto Chambers and is a dual qualified English barrister and Spanish abogado.
LEGAL BOOK COVER OF THE WEEK
APPOINTMENTS OF THE WEEK
Mark Stiebel has joined Hunters Law LLP as a Partner in the Family Department.
Stiebel was formerly at Charles Mia, a boutique Mayfair firm, where he built up a substantial following of High Net Worth and Ultra High Net Worth clients, many of them based abroad. Originally from South Africa, Stiebel is admitted to practice there as well as in England and Wales. He advises clients on all aspects of private family law, with extensive experience in complex financial remedy cases, with a particular expertise in cases involving onshore and offshore trusts and family arrangements. He also has a complementary practices in trust and private client litigation, commercial litigation and art law.
Commenting on his move to Hunters, Henry Hood, Head of the Family department said, “Mark is a fantastic lawyer who brings a wealth of experience to our highly skilled team. I am thrilled that he has chosen to join us and look forward to working with him as we continue to develop Hunters’ family department.”
Kim Klahn is joining the corporate and commercial team at Clarke Willmott in Birmingham where she will advise on a broad range of corporate matters.
She joins from Lodders Solicitors LLP where she was partner and head of the company’s corporate and commercial department and gained particular expertise in the sale and purchase of care homes.
Rayner Grice, head of Clarke Willmott’s Birmingham office, said, “Kim’s appointment strengthens our corporate offering in Birmingham and is part of the next stage of our Birmingham office growth plans.
“The firm’s commitment to continuing a flexible approach to working will enable us to maximise our development of the office and we are delighted that Kim will be working with us on this.”
E-VENTS
HOGAN LOVELLS – AFRICA FORUM 2021
| Africa Forum 2021 Africa: Connected We are pleased to invite you to the Hogan Lovells Africa Forum which returns for its 8th edition on Wednesday, 20 October 2021. This year, we look towards the continent’s recovery and the importance of a Connected Africa. Watch our video invitation to find out more. Places are limited, so register today. We look forward to seeing you there. Kind Regards, Andrew Skipper Partner and Head of Africa PracticeRegister here. |
Date Wednesday, 20 October 2021 Time Registration – 8.30 a.m. BST Conference – 9 a.m. – 5 p.m. BST Followed by networking drinks Venue Online and in-person: Venue and joining details to be provided upon registration. Register today Hayley Reynolds Events Adviser Events.UK@hoganlovells.com S’mamkele Labane Marketing & Business Development Adviser – Africa Events.UK@hoganlovells.com Update your Preferences hoganlovells.com/africaforum21 |
| CADWALADER Finance Forum Focus Series: Spotlight on LIBOR Transition Be sure to tune in to our upcoming webinar, “Spotlight on LIBOR Transition,” on Wednesday, October 20. Cadwalader partners Lary Stromfeld and Jeff Nagle will discuss the latest LIBOR transition developments, including: The deadlines for the rest of 2021 (and beyond) and a discussion of the ramifications for Q4 2021; Various rates in the market; and Legislative solutions, including the statute enacted in New York and Federal legislation currently pending. You won’t want to miss it! Lary StromfeldPartner Financial Services Jeffrey NaglePartner Finance Stay Tuned! Sign up if you want to receive updates on future installments of the Finance Forum Focus Series. In Case You Missed It! Listen to last week’s podcast, “ESG Trends in the CMBS Market.” Listen Having trouble downloading? Try listening here. |