Understand Your Rights. Solve Your Legal Problems
With the dust settling on the UK’s decision to leave the EU, Blacks Solicitors’ Phil Gorski takes a closer look at the impact this will have on cybersecurity and intellectual property for businesses.
How Brexit will affect data protection in the UK?
UK businesses have for some time now been thinking carefully about what they will have to do to comply with the EU’s General Data Protection Regulation (GDPR). Brexit has not made their deliberations any easier.
Data protection law in the UK, as with many of our laws, is based on legislation which originates in the EU. The GDPR is a modernisation of the current, slightly rusty, regime, put in place by the Data Protection Act 1998. It introduces new and stricter obligations and a system of increased fines to go with them and is due to come into force, this time without the need for any enacting UK legislation, on 25 May 2018.
The obvious question facing businesses, following the result of the referendum last month, is whether the GDPR will come into force in this country at all. The most likely answer is that it will. As everyone will by now know, the exit clock formally starts ticking once the UK gives notice of its intention to leave the EU under Article 50 of the Lisbon Treaty. As Article 50 provides a minimum two year period for formal exit negotiations to take place, even if notice had been provided immediately, the GDPR would still come into force.
Whether the GDPR remains in the long term, however, depends on what alternative relationship with the EU is eventually put in place. It is the uncertainty here that makes planning for the future difficult.
It is difficult to predict what obligations either would impose on businesses. A system which provides an adequate level of protection could take a number of forms and it is almost impossible to know which parts of the GDPR might be retained.
What does all this mean in practice?
Phil Gorski, a lawyer specialising in IP at Blacks Solicitors says: “Businesses should work on the basis that the GDPR will come into force in May 2018 and that it will stay in force for some time afterwards.
“There are a number of ways that businesses can protect their online data, the most basic of these being: making sure company’s anti-virus software is up to date and that all staff are correctly trained in online security and data protection.”
For more information about what Brexit will mean for data protection in the UK, read Phil’s latest blog post here.
(Source: Blacks Solicitors)
The legal sector is currently in a state of flux. Research1 has shown law firms are aware technology must be embraced to meet their full growth potential, but very few have taken the plunge and tackled this issue head on. Here to talk to Lawyer Monthly about this is Simon Michie, CTO at Redcentric, a leading managed services provider delivering innovative technology to businesses to improve productivity and efficiency through careful consultation.
It’s worrying that there are legal firms which haven’t realised the benefits of embracing the latest technological advances, especially when 24% of legal professionals cite enhancing operational efficiencies as a main priority. Due to the vast amount of rules and regulations in place within the sector, lawyers can spend days at a time completing admin, rather than adding value to their clients and the company as a whole. Updating the technology used to complete these tasks is now becoming critical to the future success of the business.
Recent statistics show 74% of legal firms plan on investing in new technology to address business and IT challenges over the next two years. Such investment has the potential to turn the hard work already in place within the sector into increased business growth. However, to do so law firms must implement technology with these growth goals in mind, to ensure they achieve the greatest return possible.
Which legal sectors are currently in need of the most investment in new technology to facilitate its operations? What factors/ considerations contribute to this?
While many law firms are already investing in new technology to transform their businesses, a significant number still carry out tasks with a traditional mind-set. I see senior employees and founders are often wary of implementing new technology because it’s alien to them. In reality, they are ignoring significant productivity gains. Many are put off by the necessity of training and believe it’s quicker to remain as they are, but it’s actually affecting their growth.
Those with many years’ experience in legal firms must embrace change instead and move away from their traditional methods. Only an hour learning about a new technology could save a business days and days’ worth of time taken up by laborious tasks - time which can instead be spent adding value to the clients and growing the business.
How can law firms explore new ways of operating with various new technologies? How does a law firm find out what the best way to do things is?
Law firms can explore new ways of operating with various technologies in a variety of ways. Whether it be an application, infrastructure or voice, firms can utilise trials of the systems and get hands-on experience without committing to pay an ongoing fee. Law firms can also attend workshops for different technologies, learning about what’s on offer and obtaining an in-depth understanding of how they could benefit their business.
Networking is key to investigating how effective implementing a new technology is. Often, bigger firms will use similar technology to smaller companies as a result of positive referrals from other firms. By discussing the options out there with other businesses and their customers who also use new technologies, law firms can gain an unbiased understanding of how best to strengthen their strategy.
Building a Legacy
The first step is to take stock of the technology used within a law firm and ask if it is truly fit for purpose. Systems that only meet the bare minimum requirements to carry out a task may seem perfectly viable, but legal professionals may be doing themselves and their clients a disservice due to time wasted using inefficient systems. This is shown by a staggering 42% of law firms stating their business growth plans are hampered by the legacy IT systems they have in place. Clearly, investment must be made to remedy this issue, even by firms aiming to keep expenditure low to increase profit margins.
When looking at investment, it’s clear there is a fine line between smart financial planning and removing funding from key arms of the business. Investing in new technology is the perfect example – many budget holders will be more interested in spending on recruitment to facilitate new business goals, which in turn can drive growth. However, if the technology used is hampering productivity, the business is setting itself up for failure as clients may look elsewhere for firms which offer more competitive service level agreements.
Legacy hardware will be slow running, while legacy software will fail to integrate to any new industry services or applications; from free digital storage to the latest database management tools. The time dedicated to research ahead of trials, communication with clients and even powering up hardware is exacerbated. Additional minutes spent on individual tasks quickly add up and equate to time wasted, which could be spent adding value to the business.
Do you have examples of a specific technology that is outdated and still in use, thus contributing to said disservice or time-waste?
Businesses using old hardware, from outdated PCs to servers, will inevitably suffer as time goes on. They must ensure their hardware is up to date or replaced if possible, when it’s more than five years old and beginning to slow down every day processes.
Applications must evolve to stay ahead of the game or catch up if they’re behind to avoid wasting a business’ time. If a law firm is running an on-premise infrastructure on its own hardware, the IT team must be delivering these applications and customising them so they are seamless. The workforce must be given the tools to work as efficiently as possible to see the benefits of marginal gains.
Do you have examples of technologies or strategies firms could make use of, even with a small investment budget?
The most effective strategy law firms can make use of is not a specific technology – but a service. It’s far more powerful to give an IT director a concise understanding of the IT estate than invest in the latest technology. Law firms should instead invest in understanding exactly what the business needs, how their operations are currently running and where the pain-points are. They should ask themselves ‘what actually needs upgrading?’ Is the hardware in place nearing its end? Often, legal IT teams are also understaffed - they are asked to introduce huge systems, without the necessary time. If most time is spent making the hardware work, undoubtedly this will never be done effectively.
Every Cloud has a Silver Lining
Legacy hardware is relatively easy to replace but for law firms to remain competitive, they must update their technology to ensure their services continue to evolve. Lawyers today may need to access trialcritical documents on the move, rather than just from the office. This is why it’s so important that law firms securely embrace Cloud computing and mobile devices to ensure the workforce is working as smartly as possible. If lawyers are spending tens of hours every week out of the office, accessibility to an office server becomes an essential part of their armoury.
Growing a firm with a Cloud-based infrastructure ensures lawyers can easily work on upcoming cases securely while travelling. If technology is utilised well, the ability to work from any location with an internet connection will see law firm productivity increase noticeably.
The law firm’s IT team will also have a clearer view over the entire system, as updates can be efficiently deployed over a Cloud infrastructure, rather than tackling devices separately. There is absolute peace of mind that each and every corporate device, whether it be a desktop, laptop, tablet or smartphone, will be secure and users have access to business critical files and applications. The IT team can then invest its time in adding value to the business, rather than constantly fighting against issues caused by legacy systems.
Do you think firms stray clear of Cloud based systems due to privacy or security concerns? How can this stigma be addressed?
Cloud computing is one of the fastest growing segments of the IT industry. Only last year, there was said to be a steep increase in the rate of adoption of cloud computing applications, with some of the biggest movers found in the government and regulated industries.
However, many law firms are staying clear of implementing Cloud-based systems due to privacy or security concerns. Law firms must decide which operational architecture best suits their business in order to thrive in the long-run – and if this involves the Cloud, they must shake off their doubts and worries. Understandably, in-house systems provide visibility and control while there is still a stigma to Cloudbased systems, where security is considered a problem.
Businesses must ensure they are fully aware of the risks of data breaches with the Cloud and be vigilant at all times once they are in place. If the workforce is knowledgeable and prepared from the out-set, there is no real reason they cannot introduce a Cloud-based strategy to immediately transform their business. Wary firms should also consider a hybrid-approach, where data storage is shared between MSPs and on-premise systems, further calming security fears.
What is your forecast for the proliferation of Cloud based systems for various operations, based on current growth of this technology and the correlating increased need for it in the legal industry?
Technology is growing and advancing all the time. The growth of mid-tier law firms is often driven by acquisitions and this approach would be far more successful if they used Cloud-based systems as well due to the scalable nature of this technology. The M&A process inevitably results in additional employees and new working environments – working on the cloud means these new elements of the business can be aligned in no time at all. Those who are not embracing this approach may thrive due to a positive reputation in the sector, but won’t have the same level of growth or potential than if they did implement a more flexible system. As more and more of their clients become media-savvy, law firms must meet their expectations and ensure they are utilising technology to add value to the business. While many firms are still hesitant to leave behind traditional methods, the time will come when only businesses truly implementing new technologies will be able to survive in the competitive industry. Law firms will be forced to embrace technology to survive and will reap the rewards as a result.
Embracing New Technology
Once a law firm has embraced the Cloud, it is in a position to build on its competitive advantage. Productivity gains will be clear once a remote server is available, but applying emerging technology on top of this will further increase business efficiency.
An example of this is the AI technology which is revolutionising the way lawyers conduct research into previous cases and legal precedents ahead of trials. Traditionally, this saw lawyers spending hours pouring over text books and journals with very little steer as to where the information they need is located. New technology enables lawyers to simply type a question into an app and the required information will be available in a matter of seconds. Reducing the research process from days to hours or potentially even minutes is having a vast impact on legal firms which have already adopted this technology, enabling them to take on more cases and increase the scale of their growth plans. The competitive advantage which can be gained through technology will then become apparent.
The UK’s legal firms are at a pivotal fork in the road, down one path are mediocrity and a continued reliance on legacy IT and age-old processes, while the other path increases productivity and facilitates business growth. Clearly, the time has come to invest in technology and revolutionise the legal sector for the better. Those who fail to do so will be left behind by their competitors and quite simply won’t survive to tell the tale.
As you believe lawyers are easily able to find answers on legal matters with a few clicks nowadays, does this mean self-representation could consequently grow in frequency in future?
While lawyers are easily able to find answers on legal matters with only a few clicks, I don’t believe technology will truly enable selfrepresentation or impact on it growing in frequency. People will always require specialist advice which law firms can readily and expertly provide. However, advancing artificial intelligence (AI) is making workplace processes faster and more efficient, as seen by the work carried out by Blue Prism in creating an AI customer services workforce. The efficiency gains this use of AI offers highlights the amount of time lawyers will save to then spend on other critical processes, such as the potential outcomes of a trial. Technology will therefore become a firm’s unique selling point rather than resulting in increased self-representation.
The skills of lawyers will remain key to the success of the firm and technology will enhance this. Their productivity levels will increase, driving a more cost-effective firm.
If law firms adapt from the lengthy and attentive methods of the past, and cases become solvable in little time, leaving space for more clientele, would the public not pick up on this and be dissatisfied with the potential lack of detail and care gone into the service provided to them?
New technologies enable lawyers to drill down to the detail of a case much quicker and deliver faster, more accurate services which in turn, costs less for their clients. Lawyers will have access to detailed real-time information to support better and smarter decision making overall. Firms must embrace technology to aid and create efficiencies in their own work. This will eliminate human error and have a beneficial knock-on effect to their clients as a result.
This month, Lawyer Monthly hears from Elena Servini, Associate Solicitor, Corporate & Commercial, and Acuity Counsel Director at Acuity Legal Limited, a commercial firm headquartered in Cardiff and with an office in London, UK. Elena answers some questions about her role and about the firm’s diverse legal services, but specifically confronts the question: ‘Is it better to outsource legal counsel, or hire an in-house lawyer?’
How have you witnessed the evolution of legal services over the last few years?
Acuity’s focus is on commercial transactions, primarily corporate and real estate. We have seen that clients are not just looking for us to provide them with legal services – technical legal knowledge is a given – they also want added-value services such as increased efficiencies in the form of project management skills backed up by technology. Gone are the days of five trainees indexing boxes of documents for weeks at a time, which was one of my first ever jobs. Clients are also looking for us to work smarter to save them money.
One of the ways we do this is by looking at how we staff a transaction. We now use transaction managers (who are not qualified lawyers) to manage the non-legal aspects of transactions and help them run more smoothly, freeing up the lawyers to deliver on the technical aspects of the deal.
How do you think lawyers can work more efficiently and better engage with their clients?
Transactional lawyers need to learn other skills to complement their legal knowledge, for example project management skills, and widen the skill set of a team by creative employment; not all members of a team working on a transaction will be lawyers.
Lawyers can also cut down on the admin burden on clients and be prepared to take on some of the risk. We are a regulated profession and we have to do certain things to engage with our clients, which can be perceived by the client as obstructive. So the challenge is to achieve a balance between following the rules and not annoying your clients.
What do you believe should be the primary considerations and priorities of an in-house lawyer?
Only thing I can say is that feed back from our clients indicates that in-house-lawyers are expected to participate more at board level in the strategy of the business, rather than getting bogged down in day-to-day legal work.
Can you explain to LM what the Acuity Counsel service involves and what impact it has had?
We developed the Acuity Counsel service in response to the amount of day-to-day work we were doing for our clients (as opposed to transactional work for which we are better known).
We identified a need to develop an offering as a trusted legal partner to support a finance director or an in-house legal team. It is aimed at mid sized businesses – big enough to have day-to-day legal needs but not big enough for significant inhouse resource.
We work with our client to establish their anticipated legal spend over the coming year and break that down into a monthly allocation which is charged at a flat hourly rate. If the client does not use their hours they roll forward to the next month and if they overuse their hours in one month they are deducted from the next month’s allocation.
Most businesses find legal work comes in peak and troughs and this way of working gives clients plenty of flexibility. We don’t tie anyone in – there is no annual commitment; we want our clients to enjoy working with us and for us to get to know their business and become their first point of call on legal issues. We give monthly or more regular updates on hours so clients can keep a close eye on their legal spend.
Why can outsourcing the right legal counsel at times be more beneficial than instructing an inhouse lawyer?
Outsourcing helps you get the right specialism for the right piece of work. A mid-sized business without the resources to employ a team of in-house lawyers will find they are unable to cover every specialism, or manage the volume of legal work they are likely to generate.
A law firm such as Acuity has experts in a variety of areas – for example commercial contracts, dispute resolution, employment and real estate – who are up to date with the latest legal developments and supported by teams of people and technology.
Accessing this in the right way and at the right pricemeans a business can avoid the uncertainties, commitment and overheads that come with employment.
Rather than choosing to work either with an outsourced legal counsel or your in-house legal counsel, is it possible that the two could work best together to meet the needs of a business?
Yes and we do this at Acuity through Acuity Counsel. The inhouse lawyer can direct strategy and manage the legal workflow of the business while we support them in specialist areas and tackle the day-to-day work, which frees them up to look at the bigger picture.
We can also help on the project management side by, for example, helping to put in place contract procedures, protocols and lines of communication between the in-house lawyer, ourselves and other teams in the business to ensure the work gets done efficiently but with all the necessary checks and approvals.
For the business itself, the board has the reassurance that a specialist law firm is supporting its in-house legal team at a fixed cost. This gives certainty that legal risk is being effectively managed.
You believe client autonomy is important; can you please explain why?
Directors and managers of businesses are sophisticated individuals. We work in particular with a lot of owner-managed businesses and these clients need to be involved in every aspect of their business. Many managing or finance directors with whom we work have knowledge of what it takes to negotiate a contract or of how to protect their brand.
We do not believe legal services are a ‘dark art’, to be delivered in an impenetrable way to preserve their mystery. We prefer to work on an open and transparent basis with a view to developing a partner relationship with our clients – as if we are part of their team, rather than just a service provider.
To this end we have developed and recently launched the Acuity Counsel Client Portal, which contains a wealth of precedent documents, tool kits, checklists and articles. This enables clients to access information and carry out certain tasks (such as preparing a first draft non-disclosure agreement) themselves if they wish, with us available at the end of the phone to answer questions or check off the final version.
The portal also contains copies of documents we have concluded for our client so the client can avoid having to come back to us to ask for copies once they have become buried in an exemployee’s email in-box.
How can outsourced legal counsels also reduce the burden of administrative processes on their clients and what impact could this have?
We try really hard to make Acuity Counsel as accessible as possible. One of the ways we do this is by having a one-stage engagement process at the start of the relationship. We do not repeat this before each piece of work – the client is free to pick up the phone to anyone in the firm at any time in the knowledge that they are being charged the same rate if they are speaking to a senior partner as they would be speaking to an associate.
There is no need to agree a fee for each piece of work, and we do not stop work once the core monthly hours have been used. As we report to the client on a monthly basis (more often if required), there are no surprises when it comes to fees.
How do you think the proliferation of practising women in legal counsel has affected the legal services landscape?
I think it’s fairly well accepted that businesses have been quicker than law firms to adopt flexible working policies. These are attractive to everyone, not just women, given the demands of caring for others that are placed on many who nevertheless wish to continue with a professional career.
Businesses that are able to look forward in this way are in a position to attract some great talent, which would otherwise be tied up in private practice. These individuals are going to bring a great deal of experience and knowledge to a business, as well as introducing smarter ways of working, particularly on the transaction management side.
When working with outside law firms, expectations are likely to be high and this can only encourage law firms to raise standards to compete for the best work.
What are commonly the challenges of your role at a digital transaction management company and how do you navigate these?
One of the key challenges I currently face in my role at DocuSign is providing assurances about the legality and validity of electronic signatures to customers. As with any technological innovation, change takes time to affect and electronic signatures are no different. Using an e-Signature tool to complete transactions offers huge benefits for customers (both economic and environmental), but first and foremost, trust services such as DocuSign must be able to prove to customers that electronic signatures are a secure method of authenticating transactions.
This challenge has been compounded by the fact that until recently, legislation around eSignatures in the EU was based on the E-signature Directive (1999).The directive was confusing, and failed to take into account recent developments in mobile and cloud technologies. Fortunately, the implementation of the eIDAS regulations on July 1st embodies a significant step in the right direction in terms of encouraging the adoption of electronic signatures and pushing the region closer to the ideal of the Digital Single Market.
Could you describe what a work day in your shoes looks like?
My overarching focus is providing advice and consultancy on legal and regulatory issues in relation to the DocuSign electronic signature platform, and ensuring the business complies with, inter alia, its global data protection, data security, privacy and cyber-security obligations. On a daily basis, this involves drafting and negotiating cloud service/SaaS agreements for subscribers in the EMEA region, and advising on EU electronic signature laws. Currently one of the biggest focuses in my role is making customers aware of the new eIDAS regulation and how it applies to their business. It is important that businesses understand when they are required to use certain signatures as well as how they can take advantage of what is now a more predictable regulatory framework for electronic trust services. As such, advising companies on how they can work with eIDAS is now a central part of my role.
How are you currently working towards expanding the positive impact of your role on clients and the business?
Since joining DocuSign, generating growth across EMEA has been a key aspect of my remit. Thus far, the team has grown from 20 people in London to more than 200 employees across London, Dublin, Paris and Tel Aviv. DocuSign now counts more than 225,000 customers and 85 million users generating almost 950,000 transactions per day.
Can you tell LM about the recent implementation of eIDAS, what this is, your involvement and how it will affect regulatory procedure?
The eIDAS Regulation aims to enable citizens, businesses and public sector bodies to carry out convenient and secure electronic transactions across EU borders. The regulation comes in two component parts. Firstly it will enable mutual recognition and acceptance of electronic identification systems across EU borders. The second part of the regulation is concerned with establishing a common legal framework for a selection of ‘trust services’, consisting of electronic signatures, electronic seals, time stamping and website authentication.
There are three types of signatures as defined by the regulations: electronic, advanced and qualified. Whilst a simple electronic signature is adequate for the vast majority of transactions, there are some situations where advanced or qualified electronic signatures may be required, due to matters of national law, because they afford more security and a higher level of authentication.
It will be in the best interest of businesses operating within the EU, to work through secure electronic signature platforms in order to add the highest levels of security and evidential weight to their electronic transactions. The businesses that do so will play an important role in pushing the EU towards its ideal of the Digital Single Market.
How will this then affect private businesses, non-profits and government transactions?
Whilst eIDAS is to be welcomed, I do not think its implementation will have a profound impact on the current market practice in the UK. The business community favours – and UK jurisprudence supports – the use of simple electronic signatures for transactions under UK law. Having said that, there are some industry sectors – notably banking and healthcare – where we have seen a marked preference for digital signatures and the Regulation may reinforce this trend.
I also think that the Regulation could potentially spur greater adoption of electronic and digital signatures by public sector bodies offering online services. From a business perspective, eIDAS will establish a more predictable regulatory framework for electronic transactions. Therefore, I anticipate rising demand from businesses for trust services and for secure electronic signature platforms like DocuSign.
Are there any risks to be aware of regarding the application of the eIDAS?
It is important to remember that eIDAs does not standardise EU laws on what form of signature is necessary for valid execution of an electronic contract. The Regulation provides that a qualified electronic signature has the equivalent effect of a handwritten signature but otherwise leaves it to national law to define the legal effect of electronic signatures.
This means that an EU Member State (or its courts) may prohibit use of electronic contracts for certain transactions and require a paper-process. For instance, a land transfer in the UK can only be registered with HM Land Registry if it is signed by hand. And, of course, in civil law countries such as Germany and Italy, some documents must be formally notarised in the presence of a public notary.
You previously spent many years working as the senior legal counsel for Inmarsat; how did your experiences there contribute to your achievements at DocuSign?
At Inmarsat, I advised on a wide array of commercial, corporate, M&A, telecom, IP/IT, regulatory, SaaS, data protection and compliance matters. In particular, I focused on advising on global data security, cyber-security, data retention and lawful interception of Inmarsat traffic. This left me acutely aware of the importance of developing and maintaining customer trust and confidence in digital processes, and this remains central to what my role at DocuSign entails.
Do you have any further goals for your role as GC at DocuSign, and for the development of new legal strategies and regulations in the wider practice?
My current goal is to build on the partnerships that DocuSign has established with leading law firms such as Linklaters and Allen & Overy, and encourage additional firms across the legal sector to adopt electronic signatures. In doing so, I hope to demonstrate the wide-ranging benefits that the use of digital signatures allows law firms to offer their clients when assisting in digital transformation.
The Insurance Act 2015 came into force on 12th August 2016. It applies to all contracts of insurance and reinsurance (or variations to current contracts) subject to UK law – covering the laws of England, Wales, Scotland and Northern Ireland - underwritten on or after that date.
It is important to note that it is the applicable law of the contract, not where the contract is underwritten, that determines whether the act applies. A contract underwritten in London that will be construed in accordance with US state law will not be covered by the Act, whereas a contract underwritten in Bermuda that contains an English law clause will be.
Awareness of the Rome Convention is also key, as it may override the choice of law if the insurance is of a mass risk (i.e. not a Large Risk) and the insured/insured property is in the EU, not the UK. A Large Risk includes a Marine, Aviation, or Transport risk or where the insured is a large organization.
Presentation of the Risk
Those parts of the Act concerned with the presentation of the risk to underwriters apply to non-consumer insurance contracts and reinsurance. Consumer insurance is where the buyer is an individual and requires insurance wholly or mainly for purposes unrelated to the individual’s trade/business/profession. The insured is under no duty to disclose material information in this case.
If the contract is for non-consumer insurance or reinsurance, the (re)insured must make a fair presentation of information material to the underwriting of the risk to the (re)insurer, and has a duty not to misrepresent material information.
If the (re)insured is a corporate entity, they are under a duty to disclose material information known to senior management, those procuring the insurance, and what would be disclosed by a reasonable search of information. It is thought prudent for the policy to include a clause identifying those in senior management positions (such as LMA Model Clause 9120) to avoid any doubt. Has the (re)insured identified those procuring the (re)insurance (e.g. its risk manager)? The knowledge of these individuals will also count as the knowledge of the (re)insured entity.
What amounts to a reasonable search, touched on above, is likely to depend on the particular circumstances of the (re)insured. The search may be conducted by looking through hardcopy or electronic files or by making enquiries or by any other means, and is not limited to the (re)insured’s own organisation. Underwriters should consider:
The presentation will be fair even if not complete if the underwriter is put on notice that he or she needed to make enquiries to elicit material information. The underwriter must consider:
Under the Act, the (re)insured need not disclose information that is known to the (re)insurer - this focuses on what is known by the underwriting team. Underwriters should check:
The (re)insurer may have remedies if the (re)insured’s presentation of the risk is not fair depending on what the underwriter would have done had all the material information been disclosed. The following matters will be relevant when assessing what the underwriter would have done:
Contract Terms
The Insurance Act changes the law as regards the enforceability of certain terms in both consumer and non-consumer contracts.
Does the proposed contract contain a ‘basis of contract’ clause? These are no longer enforceable, but the insurer may list information of which the truth is critical and a condition precedent to insurer’s liability (such as LMA Model Clause 5253).
Insurers cannot contract out of the Act as regards consumer insurance contracts. Provided the insured or their broker is aware of the clear contracting-out clause, the insurer can contract out of the Act in non-consumer insurance. For example, the insurer can contract out of the Act so that:
The Insurance Act has already seen legislative changes. The Enterprise Act 2016 has introduced a remedy in damages for late payment of an insurance claim. However, these changes will not come into force until 4th May 2017, at which point further challenges will manifest that underwriters must be aware of.
Written by David Kendall, Partner, Cooley LLP
About Cooley LLP
Clients partner with Cooley on transformative deals, complex IP and regulatory matters, and high-stakes litigation, where innovation meets the law.
Cooley has 900 lawyers across 12 offices in the United States, China and Europe.
Arena Books has published a book for members of the public when they deal with Lawyers which also helps trainee Solicitors understand how to provide the best service possible to them. The book is titled ‘How to Tell if your Lawyer is C.R.A.P.’
Do not be fooled by the play on words in the title. It is a serious and frank talking book where ‘C.R.A.P.’ is an acronym for a key 4 step formula to help Trainee Solicitors understand the expectations of Clients and provide the best possible service to them. C = COST, R = RISK, A = ASSESS and P = PROCEED (or not). It is believed that this type of book has never been published before as it is written from the perspective of a Client from the outside in, rather than by a Lawyer writing about the profession from the inside out.
The book has been written by B J Nelson, a lay-person with considerable experience in seeing Solicitors at work. Nelson wrote the book after witnessing the variable standards of service and excessive costs charged by some Lawyers. Nelson believed something needed to be done to help Clients but also members of the legal profession in order to improve the service they provide. The book is easy to read and contains valuable information for the public explaining their rights when dealing with Lawyers, ways to minimise Client’s costs, ways to protect their interests and provide inside knowledge to the legal world.
The book not only helps Trainee Solicitors but also members of the public and gives the Solicitor a better understanding of the Client’s needs and expectations when acting for them. The book is written for the UK but it is also relevant in the English speaking Commonwealth countries such as Canada, New Zealand, Australia, South Africa, India, Singapore and Malaysia to name a few.
The book is published in paperback and is available in bookshops worldwide. The cost is £12.99 in the UK ($20.99 in the USA and €18.60). ISBN number is 978-1-909421-85-1. The book is also available on Kindle. Further information is available from James Farrell at Arena Books (Tel: 01284 754123 and arenabooks@tiscali.co.uk).
B J Nelson can be contacted via blairjnelson@gmail.com.
Responses from over 600 participants from 180 sectors revealed that almost 50% fear the biggest risk post-Brexit is added costs through duties or taxes, followed by customers and suppliers having a potential negative view of the UK (19%) and exchange rate issues (18%).
The Institute of Export (IOE) - the only professional body in the UK offering recognised, formal qualifications in International Trade - invited members, established exporters and importers and trade association members to take part in a post Brexit questionnaire and help shape how future trading should work.
Further results show that nearly 54% of those surveyed expect their business growth to remain the same with almost 47% projecting growth to shrink in the medium term - and over 42% forecasting a long-term growth decline.
Almost 47% of recipients say the current UK and EU customs procedures are suitable for UK traders. When asked what changes and developments they required in their respective business sectors, responses spanned free movement of goods between countries, financial support for new and established exporters - and clear information about regulations.
Nearly half rated continued access to the EU single market for goods and services as 10 on a scale where ten is most important.
When asked how UK export controls and licensing procedures can be made more user-friendly for their businesses, most said they were content with the current system and hoped the arrangements could remain on an EU-wide basis. However, there were calls to streamline the UK's system - with either IT enhancements or additional support making license application faster and more efficient. The need for help to navigate the procedures was also voiced.
On transit and security arrangements, the importance of any deal negotiated with the EU not having clauses that could delay shipments was also expressed. If the government failed to achieve this, the feeling is that it must proactively prevent UK exporters losing out by committing extra resources to lessen the impact of the new rules and speed up the process.
There was a noticeable difference between the needs of SMEs and larger organisations when it comes to the support they require. SMEs find it harder to access the resources needed to deal with the unavoidable administrative processes necessary to international trade. It is therefore the SMEs, who are the life-blood of UK business, who will feel the hardest impact of any increased financial or administrative burden imposed on the UK as a result of negotiations with the EU.
Additional results highlighted that in the medium term, almost 88% saw resolving the UK's trade relationship with the EU as a priority and that this should be dealt with before trying to enter into any new agreements with other nations or trading blocs.
Thereafter, Free Trade Agreements with USA (77%), Canada (62%), China (61%), Australia (57%) and India (51%) were seen as important medium term objectives.
When asked the same questions about the longer term perspective, India came out on top (61%) followed by Australia (56%), China (52%), Canada (48%), USA (44%) and the EU (42%).
IOE Director General, Lesley Batchelor OBE, said: "The results of the survey will inform and influence government and civil servants and we urge businesses to harness trade associations and business groups to continue to make their voice heard, tell them what they need to ensure that they can compete effectively in the global market - and let them know which regulations are stopping them from doing it properly or are impeding their companies' growth.
"While our relationship with the EU won't change overnight - and Brexit could now be delayed until 2019 - there is no time to waste as fallout from the vote won't wait for us to invoke Article 50. For example, many EU clients have profound fears and will need reassuring, while a number of other immediate uncertainties could bring benefits or extra costs - for example, short-term currency fluctuations.
"It is vital that businesses are aware of all this so they can resolve problems quickly and capitalise on opportunities."
(Source: Institute of Export)
The European Commission recently opened an in-depth probe to assess whether the proposed merger of Dow and DuPont is in line with the EU Merger Regulation. The Commission will investigate further whether the deal may reduce competition in areas such as crop protection, seeds and certain petrochemicals.
Commissioner Margrethe Vestager, in charge of competition policy, said: “The livelihood of farmers depends on access to seeds and crop protection at competitive prices. We need to make sure that the proposed merger does not lead to higher prices or less innovation for these products.”
The proposed merger between Dow and DuPont, both of the US, would create the world's largest integrated crop protection and seeds company. It would combine two competitors with leading herbicides and insecticides portfolios and with a strong track record of bringing innovative crop protection and seeds products to the market. It would also create a leading integrated producer of certain petrochemical products that are widely used in packaging and adhesive applications. The transaction would take place in industries that are already globally concentrated.
“The Phase II review is a common next step in the review process for a transaction of this size and scope under EU Merger Regulation. Under this regulation, Phase II generally provides the Commission with 90 working days to review the pending transaction. Dow and DuPont will continue to work constructively with the Commission to address their concerns and to obtain clearance for the merger, which we are confident will be achieved,” reads Dow’s press statement.
On June 22, DuPont and Dow began the formal process to obtain merger approval from the European Commission by submitting the required filing to obtain regulatory clearance in connection with the proposed merger of equals. Dow and DuPont continue to expect the transaction to close by year-end 2016, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals.
(Source: Europa.eu + Dow)
New research from the Federation of Small Businesses (FSB) suggests half (52%) of small firms have been stung by unfair contract terms with suppliers, costing nearly £4 billion in the last three years.
Suppliers are failing to make auto-rollover clauses clear up front (24%), tying businesses into lengthy notice periods (22%), charging high early termination fees (20%) and concealing details in small print (20%).
Two in five (40%) respondents said they felt powerless to do anything about unfair contract terms because the supplier was too important or powerful to challenge. This highlights that small firms can be just as vulnerable as consumers when buying goods and services, and they need better protections.
Mike Cherry, FSB National Chairman, said: “Small firms on the bad end of a deal are losing out to the tune of £1.3 billion each year. We have identified persistent problems with suppliers, across sectors, treating small firms unfairly. This suggests the market is failing to deliver value for money products and services for small business customers.
“Small businesses don’t have the time, expertise or purchasing power to scour the market to find and negotiate the best deals. Small business owners behave in a similar ways to consumers, but they don’t have the same guarantees of quality or legal redress in an unfair situation.”
The FSB research, ‘Treating Smaller Businesses Like Consumers – Unfair Contract Terms’, sheds light on the scale of the problem, suggesting 2.8 million small firms have suffered because of unfair contract terms. Most (75%) of those affected had been stung twice or more in the past three years.
One in ten (11%) small businesses affected by unfair terms were set back by more than £5000 dealing with a single problem. Two in five (37%) lost more than £1000 through an unfair agreement with a supplier.
To drive change in this area, Government and regulators of energy, financial services and telecoms should more routinely and explicitly focus on small business vulnerabilities. Trading Standards should also be given the power to take action against suppliers imposing unfair terms.
Mike Cherry concluded: “If small firms were better protected when entering a contract with a supplier, they would have more confidence and trust in the market. Suppliers would be more accountable and businesses would spend less time and money dealing with the fallout. Tackling unfair contract terms would lead to a more efficient and competitive economy.”
(Source: FSB)
According to recent figures from the ONS, there were 3.8 million fraud offences committed last year. Fraud has become the most common crime committed in the UK. But when it comes to serious fraud – the big ticket crime committed by banks, companies and their employees – there is little serious data, only broad brush estimates. In combatting it, the Serious Fraud Office confines itself to taking on only the largest and most prominent criminal matters: just a few dozen cases each year.
All well and good. But does the SFO always play the game according to the rules, or has it been actively trying to shift the existing framework of the law to suit its own agenda? If that helps the successful investigation and prosecution of criminal conduct in the end, does this really matter?
One key area where the SFO has sought to redress the balance in its favour is legal professional privilege (LPP): a long-established legal principle which ensures that communications between clients and their lawyers remain confidential, facilitating the frank disclosure of information between them. It is a privilege belonging to clients, and which they alone can waive.
The SFO has said that assertions of privilege are not always properly made. Last year, SFO Director David Green QC, complained that some companies are obstructing investigations by hiding behind LPP, preventing access to all communications with their lawyers. He indicated that the SFO would be willing to make applications in the courts, both civil and criminal if necessary, to override privilege and gain access to relevant material.
He told ‘The Times’ that although it was not seeking to dispense with LPP, the SFO was preparing to target companies “whose lawyers obstructed investigations by hiding behind the shield of legal professional privilege. We believe that, in some instances, professional privilege is claimed artificially and, in cases where that is over a matter of importance to the investigation, we will pursue it.”
He added: “These companies call in outside lawyers, who make a lot of money by doing an investigation and are the first to interview key witnesses at the coal face, then claim privilege - it is absolutely ludicrous.” Lawyers, he added, were effectively “ploughing up the crime scene.”
In February, Barclays Bank, which had vigorously resisted legal attempts by the SFO via the courts to access communications the bank said were covered by LPP, eventually agreed to make them available. The SFO has been investigating Barclays for nearly four years over its 2008 payment of £322 million in advisory fees to Qatar Holdings, a subsidiary of Qatar’s sovereign investment fund. The Barclays' concession to release documents followed another High Court victory for the SFO in January over a challenge by Colin McKenzie to the way in which it handles the identification of material potentially subject to LPP.
Alun Milford, SFO General Counsel, recently clarified the agency’s position on LPP in a speech: “We have no interest in communications between client and lawyer on questions of liability or rights,” he said. “We are focused on the underlying facts, including the accounts of witnesses spoken to in corporate investigations. We do not regard ourselves as constrained from asking for them even if they are privileged…and our experience is that at least some corporates are not themselves constrained from letting us know what their investigators were told.”
Should we therefore be concerned if the SFO appears to want to sidestep LPP? The answer must be positive. These attempts come against the backdrop of the Investigatory Powers Bill, promoted by Theresa May whilst she was Home Secretary, which increases the surveillance powers not only of the police, but also other agencies including the SFO. The Bill is currently progressing through parliament, with various amendments tabled, but looks set to pass.
The government recognises that LPP, likely to be impacted by key elements of the Bill, is insufficiently protected by the draft legislation. A joint committee of the Bar Council and the Law Society has stated that there should be provision made “for the protection of LPP" and that the protection should be included in the Bill itself, not simply in and as part of a code of practice.
The widespread concern of lawyers is that giving greater investigatory powers to agencies such as the SFO may well undermine LPP, and prevent them from being able to assure clients that their communications are confidential. They say that the status quo should be preserved in the Bill, to ensure that clients have total confidence that they can communicate with complete candour and without fear of information being shared with a third party without their consent.
Indeed, recent guidance published by The Law Society shows the importance of LPP to the legal profession. LPP is variously referred to as “one of the highest [legal] rights”, a “fundamental common law right”, “precious” and “sacrosanct.” The guidance confirms that LPP is the right of the client, rather than the lawyer. This undermines David Green’s comments that lawyers themselves are abusing the “shield” of LPP. A lawyer who discloses privileged information without client consent “would be in breach of his professional duties,” and the Law Society opines that cases where abuses of LPP are proven are “few and far between.” In fact, contrary to the position taken by the SFO, it continues: "If clients justifiably assert their privilege… they should not in any way be criticised or penalised for doing so, nor regarded as being uncooperative – nor should their legal advisers.” This point is returned to repeatedly, the Law Society stating: “No regulator or investigator is entitled to pressure a client to waive LPP…no client can be criticised, let alone treated detrimentally… however helpful a waiver might be to the regulator or investigator” and “no adverse inferences should be drawn from a claim to privilege or a refusal to waive privilege.”
The legal profession generally is increasingly frustrated by attacks on LPP by the SFO and government. While it is important to thoroughly investigate and prosecute criminals successfully, investigatory agencies should not attempt to undermine or circumvent accepted legal practice simply to make their task easier. The original justifications for LPP have not changed. The government – in particular – should take note and ensure that appropriate statutory protection is given to LPP, stopping the erosion of and guaranteeing the rights of all of us, which are entitled to be properly protected.
(Source: Adam Rooney, Partner at Signature Litigation)
