Friday 4 March 2022 

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

SHORT THOUGHT FOR THE WEEK: MORAL HAZARD IN TIME OF WAR

This morning Eversheds Sutherland announced that, “Through our internal processes and controls, we are alerted to any requests for advice from Russian entities which we intend to decline.”

Likewise when questioned on the BBC’s World at One yesterday former Supreme Court judge Lord Sumption said that in the circumstances of today he probably would not represent Roman Abramovich. Of course, a decade ago it was very different. Then, he proved highly successful on behalf of the owner of ‘Chelski FC’ in his battle with rival oligarch Boris Berezovsky.

During the trial Sumption painted a vivid picture of business life in the 1990s in Russia when Abramovich and Berezovsky rose to fortune. “There was no rule of law,” said Mr Sumption. “The police were corrupt. The courts were unpredictable at best – at worst open to manipulation by major political or economic interest groups. Nobody could go into business without access to political power.”

The moral implications of this are now coming home to lawyers across London. Against the background of the ruthless invasion of Ukraine these oligarchs and their businesses are no longer acceptable as clients. But before the invasion they were perfectly legitimate.

So one needs to figure this out. As Lord Pannick comments in The Times this morning, “People are entitled to advice from solicitors and barristers on their legal rights and duties, and they are entitled to legal representation in court, however reprehensible their alleged conduct.” In other words, in our indignation, we should not forget the rule of law. Difficult – but maybe essential.

The LegalDiarist

In this week’s edition

+ LEGAL DIARY OF THE WEEK

-A Good Story from Linklaters

-Flawed Post Office Prosecutions Eviscerated

-Wading In To Media Defence

-Reader Alert: You might find this article upsetting

+ CONTRIBUTED ARTICLES OF THE WEEK

– Developers to face the music as Government seeks to end the cladding crisis, says Gurpreet Sanghera, Partner at Simkins LLP

– Practical steps for employers to achieve gender equality

by  Lucy Flynn, Director of Employment, Beyond Corporate Law

LEGAL COMMENT OF THE WEEK

TOPIC: The Government’s failure to fight fraud effectively

COMMENT BY: Richard Hyde, Senior Researcher, Social Market Foundation

TOPIC: The introduction by the Government of ‘the most generous visa system in the world’ for company founders and high-skilled workers

COMMENT BY:  Charlie Fowler, Senior Associate, Collyer Bristow

TOPIC: The sale of Chelsea Football Club by Roman Abramovich

COMMENT BY: Stephen Taylor Heath, Head of Sports Law at JMW Solicitors

+ Appointments of the Week at Nexa and Excello

LEGAL DIARY OF THE WEEK

A Good Story from Linklaters

“Lawyers are inveterate story-tellers,” says Ian Rodwell, Head of Client Knowledge at Linklaters (by which we don’t think he meant tellers of untruths) in an article in the current edition of Information Professional. “They swap tales of the deals they are working on, the client relationships they are trying to build, and the legal problems they’ve encountered and solved.”

It is this informal spraying around of information and insights which assist the ‘diffusion of organisational culture’ . “They comprise the social glue, the ‘connective tissue’ that enables us to collaborate and work more effectively,” says Rodwell. “And what’s more most of these exchanges take place in the informal areas around offices – kitchen areas, changing rooms even toilets and car parks.” It’s what the anthropologists call the ‘liminal’ spaces.

So, you can see where this is going. Lockdown pretty well put a stop to all that. And hybrid working will make it less common, more stop-start and stilted.

“How can we best introduce serendipity, unplanned interactions between diverse groups, or the creation of spaces where hierarchy dissolves?” asks Rodwell. “Or to take a more pessimistic stance, will the predicted flight from offices to remote and hybrid working signal the decline of story-telling and, worryingly, the benefits it gives us all.”

A good question – particularly at Linklaters which is planning to move to a new base in Ropemaker Street. Where will tell the stories about the good old days in Silk Street?

Flawed Post Office Prosecutions Eviscerated

The ramifications of the hundreds of cases of miscarriage of justice which constitute the great Post Office Horizon scandal are likely to roll on for years. The part played by lawyers is now coming under scrutiny and there is a public appetitive for anyone who behaved unethically or illegally to be held to account.

To get under the skin of this it is worth watching the analysis provided by Richard Moorhead of the School of Law at the University of Exeter on YouTube in ‘Post Office Scandal: An Absolute Catastrophe in Litigation’.

“How were the Post Office Lawyers managed and how did they, in turn, manage the civil litigation?” asks Moorhead. “Who was making what decisions and what was the responsibility of lawyers to act ethically? On what basis was the conduct of the litigation roundly condemned by Justice Fraser?”

Moorhead is part of the ‘Evidence Based Justice Lab’ at Exeter and his specialism is professional ethics among lawyers. He highlights how factors such as the corporate culture at the Post Office shaped the lawyers’ conduct and, indeed, how their influence shaped the way the organisation pursued the innocent. And he is, to put it bluntly, scathing about how the litigation itself was conducted. It is, sadly, a stand-out indictment of the moral corruption in British corporate life.

“It ought to be required listening for everyone involved in litigation or interested in the failure of the civil/criminal justice system in the UK,” says lawyer Nick Gould. “But not particularly pleasant if you happen to be on the receiving end of his comments.”

See Post Office Scandal: An Absolute Catastrophe in Litigation at https://www.youtube.com/watch?v=15MiwVKXhts

Wading In To Media Defence

Alex Wade – boxer, surfer, Times legal journalist, novelist, football pundit. How many other metiers can you squeeze into a life? Well, in Wade’s case he is also a very successful lawyer and as the Head of Reviewed and Cleared a boutique media law practice, he is now a partner at Wiggin.

Reviewed & Cleared is an interesting story in its own right with its previous top lawyers being lured away to leading in-house jobs – David Burgess joined Netflix and then Julian Darrall joined TikTok. Meanwhile law firm Wiggin had taken a part-share in the ownership of the business and then, after David Burgess departed, there was a full take-over.

‘I’ve known Caroline Kean [head of litigation at Wiggin who acted for journalist Catherine Belton recently] for many years and her commitment to helping creators get their work into print or on screen is second to none,” said Wade. “I was thrilled that Caroline wanted me to head up Reviewed and Cleared – a success story with the best collective of pre-publication and pre-broadcast lawyers in the UK – and become a partner at Wiggin. Our work is ever more important given that, for all the supposed improvements flowing from the Defamation Act 2013, London remains the libel capital of the world. On a daily basis what should be a simple right – freedom of expression – is threatened. It’s a privilege to be in a role where, working with so many excellent lawyers, we can make a difference to creators’ lives.”

With oligarchs and autocrats now very much on the defensive there should be no shortage of work ahead.

Reader Alert: You might find this article upsetting

Announcements and releases by law firms are often complex but never completely baffling. Until, that is, Cadwalader hit the send button on Tuesday of this week for ‘Made for TV: The SEC’s Regulatory Posture on Climate Risk’.

The first couple of lines – the heading – were moderately sensible – And then there was the date – March 01, 2022: Fair enough. But then appeared what must be described, presumably, as a woke bad joke.

Warning:  This article may describe new regulations that could upset the audience.  Discretion advised.

It then went on to a long ramble about ‘Climate change-related risks to the U.S. financial system’. Now had there been dramatic depictions of the ‘worst case’ consequences of climate change (the end of the human species as we know it ) that warning might have made some sense. As it was the most chilling section the Legal Diary could find read, “The physical impacts associated with climate change might trigger disclosure requirements.  For example, it might be material for a particular registrant to disclose the risk of severe weather caused by climate change if the severe weather might affect the registrant’s operations and results.”

Upset? More like hilarious incredulity

CONTRIBUTED ARTICLES OF THE WEEK

Developers to face the music as Government seeks to end the cladding crisis, says Gurpreet Sanghera, Partner at Simkins LLP

Four and a half years since the Grenfell Tragedy, the Housing Minister Michael Gove has announced that developers will be forced to face the music and accept responsibility for the costs of fixing the cladding crisis.

Many developers have sought to avoid liability by relying on legal loopholes as many leaseholders have no direct cause of action against them or simply cannot afford to fund the costs of litigation.

Whilst commending several developers for doing the right thing, Gove made it clear that the time has come for developers to end the misery they have inflicted on innocent leaseholders faced with endless bills from their freeholders.

There is no doubt that many developers will have taken a step back in the hope that the government would step in and provide funding to fix the problem that they created. However, in a letter addressed to the Residential Property Developer Industry, Gove makes it clear that the government is prepared to take all necessary steps including restricting access to government funding and the imposition of a solution in law if necessary.

Developers are seeking to resist the proposed action by arguing that it would be unfair to place the entire cost on the developer without considering the roles of other parties, including the building safety regulator and cladding construction companies. The one shoe fits all approach may not be the best way forward. One possible way to redress the balance may be to create a mechanism that would enable developers to seek remedies from third parties, where it is subsequently established that they are also at fault.

What does seem to be clear however is that leaseholders should not be the ones to incur the costs and headache associated with fixing the problem and developers that have behaved badly should be penalised.

The introduction of a new 4% tax to be applied to larger developers on profits from 1 April 2022 will include those developers who have done the right thing. It may therefore seem unfair to penalise the entire industry for the failings of a few.

Practical steps for employers to achieve gender equality

by  Lucy Flynn, Director of Employment, Beyond Corporate Law

“Gender pay gap reporting has now been in place for around five years and companies with 250 or more employees are obliged to report their gender pay gap; namely the difference between what a man is paid on average per hour and what a woman is paid on average per hour within that organisation, irrespective of their job role. Despite its intention, this doesn’t always give an accurate representation of the level of gender pay equality – or equal pay – within an organisation, which is a different issue to the gender pay gap.

It has been unlawful to pay people performing the same or similar work differently based on gender for decades. However, commentators agree that lack of transparency regarding pay; organisationally, nationally and personally is a real barrier to understanding whether there is real equality of terms for the same work across the genders.  It is this which the government was trying to overcome by introducing the regulations regarding gender pay gap reporting.

So, how can equal pay be both understood and achieved? Is transparency the answer? In part, it probably is. But it’s not the full picture and being transparent about pay doesn’t overcome other factors at play, such as the uneven distribution of “unpaid work” preventing women engaging more fully in paid work and workers in lower paid sectors, such as care, being largely women. And given that the gender pay gap still stands at somewhere between 14 – 15%, there is clearly still a long way to go.

However, there are ways that the pay gap can be tackled at an organisational level. For example, advertising a job with its pay and benefits from the outset, rather than stating that salary is “negotiable” and confirming pay at the offer stage would avoid any gender bias over pay. Being open both internally and externally regarding a particular role and what it attracts in terms of salary and benefits – and even addressing openly from the outset the basic issues such as how maternity benefits, flexible working arrangements and shared parental leave work in practice – can massively help to level the playing field. Dealing with the questions that someone looking at your organisation is often scared to ask could be the deciding factor in whether someone wants to work for your organisation.

It has also been suggested by HR experts that interviewers should consider asking interviewees the qualities they would bring to the role; and consider NOT asking them what they are currently being paid. If a candidate is coming from a low-paying organisation, or is returning from maternity leave, a career break or a period of part-time working, preserving such terms can simply exacerbate the gender pay gap. If a salary for a role is in line with the value it brings to a business, and is not dependent upon what someone was paid beforehand, then an organisation can leave pay disparity at its doors and is more likely to achieve equal pay and equality in terms.”

LEGAL COMMENT OF THE WEEK

TOPIC: The Government’s failure to fight fraud effectively

COMMENT BY: Richard Hyde, Senior Researcher, Social Market Foundation

“Fraud is now Britain’s dominant crime, but policing has utterly failed to keep up with its rapid and painful growth. That means too many people are suffering the distress and loss that fraud inflicts. We are trying to fix a 21st Century problem with a policing system devised for the 19th Century. We need major change.”

“Too much debate about policing is still about bobbies on the beat. While visible policing to reassure people is important, it’s not what’s needed to tackle the biggest group of crimes being committed in Britain today. Politicians should be honest with voters about the nature of crime today and the major changes that will be needed to deal with it.”

TOPIC: The introduction by the Government of ‘the most generous visa system in the world’ for company founders and high-skilled workers

COMMENT BY:  Charlie Fowler, Senior Associate, Collyer Bristow

 “The current Innovator visa route (for entrepreneurs coming to the UK to set up a business here) is not always straightforward and will certainly benefit from the simplifications that are in the pipeline. 

 “The UK remains a key location for new businesses, in particular in sectors like fintech and technology more broadly. A pre-pandemic report noted that half of the fastest-growing companies in the UK had at least one founder or co-founder who was born outside the UK, compared with less than 15% of the population who are foreign-born.  Migrants are job creators as well as wealth creators, so the Government is right to do all it can to attract these individuals to the UK.”

TOPIC: The sale of Chelsea Football Club by Roman Abramovich

COMMENT BY: Stephen Taylor Heath, Head of Sports Law at JMW Solicitors

 “It is understood Abramovich does not own the club directly but rather controls the corporate entities that do. For a takeover the first legal issue would be whether the sale was of the club as an asset of that company or the company itself. There may be shareholder agreements in place that could be relevant requiring the cooperation of third parties.

“A sale would likely require consideration of the structure and what was being sold. The right to run the football operation may be in the hands of a different corporate entity to say the ground or hotel or training ground etc.

 “Any would be buyer would need to undertake due diligence which would establish the ownership structure and any issues with the club. And so a very quick immediate sale would be very difficult in practice.

“Further the prospective buyers would have to complete the Owners and Director test to show that they were fit and proper persons for owning/running the club. This would involve an analysis of the proposed owners including their interest in other clubs and The Premier League would be particularly keen to establish the source of funding and if any third parties were involved that had not been declared who would be in effective control of the club. That process may be eased if the executives currently running the club remain in situ however new owners normally want to bring in their own team for the key positions.

“Clearly the substantial loans that have been reported would be a key issue if the club was saddled with substantial debt that could be called in at any time on an ongoing basis. That would also bring into focus the leverage that the lender had in relation to the operation of the club as a result of that debt.

“The prospective owners have to complete reports establishing the ongoing financial viability of the club as part of the documentation to be submitted for approval by the Premier League.”

APPOINTMENTS OF THE WEEK

Gideon Moore the former Linklaters’ Global Managing Partner, is joining Nexa Law Limited as a non-executive director. Moore was Global Managing Partner of Linklaters for 6 years before retiring as a partner in November 2021.  Meanwhile on 1 April, he also starts as Chief Legal Officer and General Counsel at NatWest.

“We are thrilled to have Gideon join our board,” says Nigel Clark, nexa’s CEO. “He is uniquely placed to help accelerate nexa’s growth and help us deliver on our ambitions to become the UK’s best platform for lawyers pursuing alternative career paths.”

Gideon Moore added, “I am very impressed by nexa’s ambitions and its people and I’m really looking forward to contributing to its future.  It’s such an exciting time for the legal industry.”

Jessie Williams has been appointed as head of risk and compliance at‘disruptor’ law firm Excello. She joins from from law and business advisory firm Ince (formerly Gordon Dadds) where she was senior manager, risk and governance during a significant growth and acquisition period for the business.

Williams has experience in the banking sector and extensive knowledge of anti-money laundering regulations and FCA rules. She will act as a key point of contact for lawyers and their teams. Comments Joanne Losty, director at Excello, “We have significant plans for growth and expansion over the next five years and the appointment of Jessie to our leadership team, and the enhancement of resource within our 360 team, confirms our commitment to investing in the depth and breadth of our central business resources.”

We intend to publish next week – but who knows what might happen between then and now! – so please continue to send your diary news, insights and legal comment to

fennell.edward@legaldiarist

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