Understand Your Rights. Solve Your Legal Problems
Below Nick highlights that whilst some offences of unintended consequence may appear to criminalise conduct irrespective of mens rea, the courts have repeatedly decided that these are not strict liability offences and that some proof of culpable mental state is required.
Consider the following statements:
The first three will receive universal approval, but the fourth requires some thought.
Whilst (4) may be an effective means of enforcing (3), it tramples on the presumption that serious criminal sanction should only result from a guilty mind, whether that is characterised as intention, knowledge, recklessness or suspicion.
The Supreme Court judgment in R v Sally Lane and John Letts (AB and CD) [2018] UKSC 36[1] makes clear that providing financial support for terrorism is an offence, where Parliament intended to create criminal liability notwithstanding the absence of any of the above four types of mens rea.
The Supreme Court judgment in R v Sally Lane and John Letts (AB and CD) [2018] UKSC 36[1] makes clear that providing financial support for terrorism is an offence.
The judgment has implications far removed from any terrorist scenario. In particular, for regulated professionals, who may encounter an analogous scenario in the form of their obligations to report knowledge or suspicion of money laundering under s330 Proceeds of Crime Act 2002 (‘POCA’). This article will explain why.
Ms Lane and Mr Letts (‘the Defendants’) were charged with entering into funding arrangements connected with terrorism contrary to s17 Terrorism Act 2000 (‘TACT’). They sought dismissal of their prosecution which the trial judge rejected. They launched an interlocutory appeal concerning the judge’s ruling on the meaning of s17 TACT. The Court of Appeal upheld the first instance decision and the matter came before the Supreme Court on 19 April 2018.
Section 17 TACT reads as follows:
A person commits an offence if -
The question for the Supreme Court concerned (b) and whether ‘the accused must actually suspect, and for reasonable cause, that the money may be used for the purposes of terrorism? Or is it sufficient that on the information known to him there exists, objectively assessed, reasonable cause to suspect that may be the use to which it is put?’ (per Lord Hughes at para 4).
The Defendants argued that the presumption that an offence-creating provision should be construed to include a mens rea was not displaced by the wording of s17 TACT, and so the former was the correct interpretation. This was particularly so given that the offence was a serious one in comparison with minor and/or regulatory offences, where it was obvious that Parliament had intended to impose strict liability. The words were capable of either meaning and so the court should resolve the ambiguity in their favour.
Having considered the authorities on the presumption of mens rea relied upon by the Defendants, Lord Hughes turned to the evolution of terrorist funding offences in the UK. Such offences were introduced by the Prevention of Terrorism (Temporary Provisions) Act 1976, which made no reference to ‘reasonable cause’ for suspicion. Rather, a defendant had to actually know or suspect the eventual use of the property for terrorism purposes in order to be convicted.
This drafting survived the subsequent 1984 statute but was revised by the Prevention of Terrorism Act 1989, which provided for guilt where the defendant made assets available ‘knowing or having reasonable cause to suspect’ that they would or might be use for terrorism purposes. This change, considered Lord Hughes, could only have been deliberate and showed an intention by Parliament to widen the scope of the offence and ‘remove the requirement for proof of actual suspicion’ (para 19). Such drafting had remained in TACT, and it was ‘not open to the court to ignore this kind of clear Parliamentary decision’ (ibid.)
Lord Hughes compared the wording of s17 TACT to that of s18 TACT, which concerns laundering property connected to terrorism and includes a defence of not knowing and not having ‘reasonable cause to suspect’, and s19 TACT, which concerns failure to report suspicions of terrorism and can only be committed where the defendant ‘believes or suspects’. Parliament had clearly given some thought to the differing mental states which should apply to the various TACT offences. He held that had it been intended that s17 could only be committed by those with actual suspicion, the wording of s19 would have been applied.
The point was further emphasised by the drafting of a subsequent addition to TACT (s21A, added by the Anti-terrorism, Crime and Security Act 2001), which created an offence for those operating in the regulated sector of failing to disclose information suggesting terrorist offences committed by another. The first condition required to commit the s21A (2) TACT offence is as follows:
“(2) The first condition is that he -
Lord Hughes held that ‘it is plain beyond argument that the expression “has reasonable grounds for suspicion” cannot mean “actually suspects” (para 22).
Lord Hughes rejected the argument that his construction of the offence meant that it was one of strict liability. He observed that it could not be committed where the defendant was completely ignorant of the circumstances that formed the actus reus of the offence. Rather, the relevant exercise for the jury was to consider the information the defendant had at the time of the alleged offence and to decide whether this should have given a reasonable person grounds for suspicion. For this reason, s17 TACT was not an offence of strict liability because the mind-set of a person with such knowledge could not be ‘accurately described as in no way blameworthy’ (para 24).
As such, the Supreme Court concluded that the Crown Court and Court of Appeal were correct in their interpretation of s17 TACT, and so it was open to the jury to convict even if they conclude that the Defendants did not actually know or suspect the eventual use of the funds.
Implications for failure to report suspicions of money laundering
Those working in the regulated sector will recognise that the wording of s330 POCA mirrors that of s17 TACT:
330 Failure to disclose: regulated sector
(1) A person commits an offence if [the conditions in subsections (2) to (4) are satisfied] 1 .
(2) The first condition is that he—
(a) knows or suspects, or
(b) has reasonable grounds for knowing or suspecting,
that another person is engaged in money laundering.
With this in mind, Lane & Letts supports the argument that s330 is not an offence of negligence (i.e. one which can be committed in ignorance of information related to the substantive offending). In particular, it would be incorrect to contend that the prosecution need not prove any mental element on the part of the defendant. Rather, the prosecution must prove that the defendant was actually aware of the information that the prosecution says constitutes reasonable grounds for knowledge or suspicion. As such, both s17 TACT and s330 POCA have a mens rea closer to recklessness than negligence. Although the defendant might deny that he saw the ‘risk’ (i.e. had a suspicion), he is guilty if the prosecution can successfully prove he was nonetheless aware of the facts which, when objectively assessed, would have provided the reasonable grounds for knowledge or suspicion.
The jury should not decide its verdict based on what the defendant ought to have known if he or she had acted competently.
This approach is also supported by the recent Court of Appeal decision on an offence with a markedly different actus reus but a similar approach to mens rea. In quashing the gross negligence manslaughter conviction of Honey Rose in 2017, the Court of Appeal held that, when assessing whether there was a serious and obvious risk of death (a necessary element of the offence), the jury should refer to the knowledge actually held by the defendant at the time. The jury should not decide its verdict based on what the defendant ought to have known if he or she had acted competently. In the case of Honey Rose, this meant that the jury should have disregarded what she would have known had she acted competently and carried out the examination which would have revealed symptoms indicative of her patient’s fatal condition.
The lesson to be drawn from Honey Rose and Lane & Letts is that, whilst some offences of unintended consequence may on first reading appear to criminalise conduct irrespective of mens rea, the courts have repeatedly decided that these are not strict liability offences, and that some proof of a culpable mental state is required. As such, both judgments are good news for regulated professionals, who can take comfort that a prosecution under s330 POCA is unlikely to succeed where the suspect information is merely available but not actually known to the defendant.
[1] https://www.supremecourt.uk/cases/docs/uksc-2017-0080-judgment.pdf
But what if there was a serious incident between staff members? Would their employer be legally responsible for that?
Clive Bellman was a sales manager for Northampton Recruitment and was seriously injured in an assault after the firm’s 2011 Christmas Party. What had happened was that a small group of senior staff left the venue after the main part of the evening and headed to nearby hotel, arriving at about half past midnight. Taxis there, and accommodation, had been booked there for many of them by the company. Further drinks in the hotel bar were also paid for there by the company. The late-night conversation started on general matters but in due course, it devolved to work. Towards 3am Mr Major, the MD of the company, had an argument with Mr Bellman about the placement of a new employee. It ended with him punching Mr Bellman, who fell to the ground and sustained a serious head injury (he had been knocked out and was bleeding from his ears).
He brought a claim against the company arguing that it was vicariously liable for the actions of the MD. It was heard in November 2016 and judgment - Bellman v Northampton Recruitment Ltd [2016] EWHC 3104 (QB) - was given on the first day of the Advent Calendar that year, ie 1 December 2016. As the judge put it, this office party was “an ordinary or usual work Christmas party of the type no doubted dreaded by some and an annual highlight for others. Not surprisingly alcohol was consumed by many attending.”
The judge examined the legal test for vicarious liability in light of what was then the most recent Supreme Court case Mohamud v Morrisons. He summarised it as making employers liable for wrongful acts of employees which were (a) carried out in the course of employment and (b) sufficiently closely connected with the employment so as to justify the imposition of liability on the employer. For him, the actions of the MD that evening were not necessarily in the course of his employment. In any event, however, he decided that Mr Bellman’s claim should fail because the test of sufficiently close connection with employment was not satisfied. He concluded that what happened at the hotel was “an entirely independent, voluntary, and discrete early hours drinking session of a very different nature to the Christmas party and unconnected with the defendant's business.”
Mr Bellman - who conducted the claim via a litigation friend because his serious head injury had permanently deprived him of legal capacity - appealed and the matter was heard by the Court of Appeal in October 2018. The court overturned the initial decision, with Lady Justice Asplin concluding that Mr Major “chose to wear his metaphorical managing director’s hat” as MD when he assaulted Mr Bellman, meaning he would now be entitled to substantial damages for his injuries.
While the judge had been content to characterise what happened as “an impromptu drink” rather than “a seamless extension of the Christmas party”, the Court of Appeal’s very clear view was that Mr Major was “not merely one of a group of drunken revellers whose conversation had turned to work” and that “the nature of the interchange outside and inside the hotel lobby was naturally an assertion or a re-assertion of [his] managerial role”.
Given the very different outcomes in this case at first instance and on appeal, it is far from easy to offer definitive guidance on vicarious liability should the office Christmas party go wrong, or indeed should subsequent informal gatherings turn nasty. That said, it will always be sensible advice to:
Expressing some caution about employees gathering elsewhere to continue drinking the after the organised element finishes may also be sound advice - even if some might regard doing that as a little un-festive.
The taking of steps such as those above could, depending on the particular circumstances, mean that an employer’s vicarious liability for an employee’s wrongful acts at or after a Christmas party is not going to be engaged. That said, each instance is going to depend not on the terms of the advice or guidance given by the employer but on the facts as established and on how a court might apply the law to those facts. So be careful, plan well and ahead and, above all, try and enjoy your own office Christmas parties this year.
When the federal, state or local government, or any agency possessing the power of eminent domain such as the Massachusetts Highway Department or the Massachusetts Bay Transportation Authority, need a piece of property for a public purpose, it can take the title to that property from the owner by law of eminent domain.
To better comprehend this law and how it works, here are 10 important facts to be aware of about eminent domain.
The Constitution did not give the sovereign the right to take private property by eminent domain, that right preexists any Constitution. It is an elemental, intrinsic right of the sovereign, which includes both the federal and state government.
This means: the only eminent domain rights they have is what a sovereign has delegated to them. If one of these entities makes an eminent domain taking, which exceeds the scope of what the sovereign has delegated, the eminent domain taking is then invalid and void.
The 5th Amendment’s eminent domain protections extend not just to individuals, they extend to all “private property”.
The Bill of Rights is sometimes referred to as providing “anti-majoritarian” or individual protections against the sovereign’s overwhelming power. (It was called a revolution for a reason). The last 12 words of the 5th Amendment provide only certain of those protections from the sovereign’s exercise of its eminent domain power.
The 5th Amendment’s eminent domain protections extend not just to individuals, they extend to all “private property”. The entire 5th Amendment consists of just one sentence. It begins with the words “No person”, repeats that phrase, and carries it through most of the Amendment. But then, at the last clause – the eminent domain clause – the phrasing shifts, and the object of the last clause, and of what now is being protected, is “private property”. Otherwise put: the constitutional protections afforded in the eminent domain context apply to all holders of “private property,” not just individuals.
The two key protections contained in the 5th Amendment each consists of just two words. But, to quote a great American poet a bit out of context, those two two-word phrases “contain multitudes.” Entire libraries are filled with case law and legal rulings interpreting these phrases, as you might expect. A great deal rides on what they mean and how they are applied to “facts on the ground.”
At first, this wording seems fairly straight-forward. But as the well-known U.S. Supreme Court case Kelo v. City of New London, 545 U.S. 469 (2005) made clear, it is not so clear at all. “Public Use” is now widely interpreted by the Court’s to mean “public purpose,” a phrase many consider to be broader than the actual wording of the 5th Amendment. Needless to say, this issue is hugely controversial, and one which will continue to be very widely litigated.
As we all know, these two powerful constitutional protections also exist, and they too can sometimes apply to an eminent domain taking.
This too would seem fairly clear, though, it too has engendered a great deal of litigation. The Constitution is silent as to, for example, in whose eyes the word “just” should be analyzed – the private property owner’s or the government’s? It is also not obvious on its face what “just compensation” encompasses. Must there be a cash payment in all cases of eminent domain, even if only part of a property is taken and the taking actually increases the value of the remaining land so as to make the value of that remaining land greater than the value of the original parcel? Does a private property owner’s subjective opinion of the “unique value” of the land taken pay a role? These and other questions are frequently the subject of dispute and of litigation.
As we all know, these two powerful constitutional protections also exist, and they too can sometimes apply to an eminent domain taking. In short, how the sovereign makes an otherwise proper “public use” taking can sometimes be of crucial importance. Did the sovereign follow proper procedures? Were all its citizens treated equally in the processes underlying and leading up to the taking? Thus, while the sovereign’s power of eminent domain is quite broad, these additional constitutional rights are not eliminated. In fact, they may, in certain circumstances, provide additional protections to a private property owner.
Eminent domain is one of those areas of law where subject-matter experts are often crucial to proving a case, whether you are a property owner or its representative, or working on behalf of the taking entity.
A very actively litigated area and subject of great controversy for many decades, and seemingly becoming increasingly more so, is “locating the dividing line” between these two inherent sovereign rights. The “police power” is broadly understood to mean the sovereign’s right to take all necessary steps to protect the public from harm. These rights include the right of the police to take actions that can, at times, be averse to an individual. The same is also true for fire departments, boards of health and other governmental departments.
More commonly, in the eminent domain context, the “police power” includes the right of government to restrict the use of private property via zoning laws, planning board rules and regulations, environmental laws and the like. Because these restrictions necessarily limit how a property owner can use his/her or its property, there often can be economic consequences to these restrictions. Do those restrictions constitute a “taking by eminent domain”? It is an understatement to say that this is a hotly contested area of law and it is a growing area of contention and therefore, litigation. The law is clear that a regulation can go “too far” and by doing so, morph into an actual taking by eminent domain. But, that is where much of the clarity in this area ends: determining where that point is led, and will continue to lead, to a lot of litigation.
Finally, eminent domain is one of those areas of law where subject-matter experts are often crucial to proving a case, whether you are a property owner or its representative, or working on behalf of the taking entity. Not only might there be questions of whether a taking occurred at all – i.e., in the ‘regulatory taking’ scenario. But, there will very often be significant questions about “just compensation”, which will require the assistance of engineers, environmental scientists, title experts, and others. Essentially, anything which can affect the use of land and/or its value – and there are many such things – is in play when an eminent domain taking occurs.
This is, of course, by no means an exhaustive or all-encompassing list. Eminent domain is simply too vast and complex. Instead, it’s meant as a basic primer of a series of touch stone questions, or a kind of introduction, to an all-important area of government power and citizen’s rights.
John E. Bowen serves as Counsel in the Boston-based law firm Rackemann, Sawyer & Brewster. He is an experienced trial and appellate lawyer in the firm’s litigation practice representing businesses, individuals and institutions with a focus on real estate-related civil litigation. This includes eminent domain and other real estate and business valuation issues as well as land use, permitting, environmental and other regulatory matters.
But, whilst there is strong recognition within the sector on the importance of embracing lawtech, research has shown that adoption is particularly difficult for law firms compared to other industries.
Olive Communications recently commissioned an independent UK study on 1000 consumers and 500 law firms and found that one in three (34%) clients would like their solicitors to offer digital services such as video conferencing, chat and Instant Messaging (IM). 66% said such services have never been made available.
The study also found that nearly three quarters (69%) of UK law firms are embracing technology internally, with the same number of solicitors using IM and chat to communicate with one another. Yet few are utilising the speed and convenience these digital channels offer when liaising with clients, despite clients’ preference for digital platforms over more traditional means like email.
Recent research from the AI powered conversational platform, LivePerson found that 65% of millennials and Generation Zs prefer to communicate digitally, rather than in person.
It’s no surprise that half of all law firms worry about keeping up with the latest technology and fear falling behind the competition when it comes to digitally enabling their customer services. A staggering 66% expressed specific concern over how lagging behind the technology curve will affect productivity, billable time and client response rates.
What’s driving the digital demand?
Recent research from the AI powered conversational platform, LivePerson found that 65% of millennials and Generation Zs prefer to communicate digitally, rather than in person. Dubbed the ‘instant’ generation, today’s busy, always on and mobile first consumer wants to engage with their solicitor, to seek advice, resolve an issue or purchase a service without the frustration of having to wait days for paper documents to arrive in the post or for an email to come through with the answer to a question that could be easily resolved with an IM or automated response.
Consumers want more control over their legal affairs and are seemingly prepared to sacrifice human interaction, favouring instead the speed, efficiency and security that multiple channel web-based communications offer.
The Government is recognising this digital demand with the launch of a £1 billion investment programme to digitalise the court service to make it quicker, simpler, and easier. An automated financial disputes claim for disputes up to £10,000, a digital divorce applications service and, an online system for appealing tax bills are among these court reforms – all of which, according to reports, have been piloted successfully with positive consumer feedback.
19% would also like access to a purely online, automated residential property and conveyancing legal service with no intervention from a human lawyer
Olive too discovered, when polling consumers, that insurance claims (46%), financial disputes (23%) and tax appeals (23%) were the three legal services that consumers most wanted to be digitalised. 19% would also like access to a purely online, automated residential property and conveyancing legal service with no intervention from a human lawyer, whilst 14% would happily use a ‘lawbot’ to make a divorce application. 11% are even happy to use an online automated system to make an unfair dismissal claim against their ex-employer.
Why law firms are struggling to digitalise?
While consumers are clearly embracing new automated, online legal services, Olive found that data breaches and cyber-attacks are two of the biggest concerns for law firms when it comes to digitalising their communications in line with consumer demand. More than a quarter (27%) worry about contravening GDPR, and 40% fear disclosure failings and regulations around custodian driven data collection.
There’s no doubt that unified, cloud-based communications can improve efficiency and security, for both the client and the firm, by becoming paperless. Web-based document sharing systems like Microsoft SharePoint, are not only an instant way to exchange documentation but also feature advanced encryption and permission controls that ensure clients’ information is safely and securely stored – eliminating the need to put paperwork in the post. Having a totally collaborative communications system also means that such documents can be updated live and exchanged safely with colleagues and clients through other integrated digital channels such as through the convenience of web conferencing instead of having to meet.
Any digital transformation must also be incorporated within the firm’s overall strategic vision and not be treated as an ‘add-on’ or ‘after thought’.
Research by Olive found that the benefits of installing the latest digital communication systems from web conferencing to cloud file sharing systems are significant. 15% of law firms claim it improves talent retention, 34% have increased their billable time, and nearly three-quarters (73%) have seen improvements in people efficiency, productivity and business agility, leading to a majority (47%) boosting their bottom line by between £20,000 and £200,000 a year.
Widespread adoption of lawtech is often hampered by the way many technology companies sell the benefits of digital communications without firstly understanding the law firm’s risk profile and how the new technology can alleviate this risk. This lack of understanding casts fear and doubt into the minds of the partners. As with any change comes new ways of working, which require firms to agree on safeguards, such as training and educating employees, to ensure any potential risks and challenges are fully mitigated and to ensure that the company reaps the full benefits of the new system.
Any digital transformation must also be incorporated within the firm’s overall strategic vision and not be treated as an ‘add-on’ or ‘after thought’. If not, it is much harder to embrace this transformation, and risks complex change management impacting on project timescales and deliverables. Firms are advised to take a step by step approach and avoid too much, too soon. As a sector built on years of traditional working practices, heavily wrapped in compliance and regulation - transforming systems methodically; backed by education, training and continuous service support, will ensure that the adoption of new technology is easier and the transition smoother.
The future of AI in law
We’re seeing, in particular, a rise in the use of Artificial intelligence (AI) used in natural language processing programmes which enables the system to answer or even anticipate a user’s question or need. AI enabled call centre solutions such as Mitel and Google’s Contact Centre AI, use virtual agents to handle clients’ general questions more quickly and cost effectively, freeing up solicitors’ time for more time and knowledge intensive, billable tasks.
Chatbots are also beginning to be used to analyse vast quantities of historical data to support lawyers in fact findings, to help to draw conclusions and to even predict case outcomes.
As we look to the future - on our journey to the fourth industrial revolution and the advances in AI - unified, digital communication services will be the norm within the legal sector. So, now is the time for law firms to get ahead by digitally engaging with staff and clients, and in the way that they want, need and expect.
By Nick Beardsley, Enterprise Director of Olive Communications, the UK’s leading managed cloud communications provider dedicated to advising law firms on their transformative growth strategies.
As is often the case and due to the unique nature of the mid-market, it [the M&A market] behaves differently than publicly traded bonds, currency or stock markets. Sentiment is very important and public markets are sometimes critical influencers. However, most of the transactions in this market are private, cover a very broad range of opportunities and happen for a wide variety of reasons, strategic or otherwise.
The number of deals completed in the UK with a transaction value of under £500m has reduced by around 12% in the year-to-date 2018, when compared to the same period in the prior year, however the cumulative value of these deals is only down by around 2%.1 In contrast, the Office for National Statistics (ONS) reported that there were no transactions with a value of more than £1bn completed between July and September of 20182.
In addition to top line numbers, there are always winners and losers in any of the mid-market sectors.
While statistics will never tell the whole story, our experiences of 2018 in the mid-market have seen many happy sellers, buyers paying full prices, strong transaction multiples sand international buyers remaining very interested in UK businesses. Brexit, and the political and economic uncertainty it brings, has been one of the biggest macro diligence issues of 2018, but buyers and sellers alike seem to be more focused on the micro impacts, investigating the components of the potential Brexit threat on a business-by-business basis.
In addition to top line numbers, there are always winners and losers in any of the mid-market sectors. For example, the divergence of success in retail between those in bricks-and-mortar, those that have moved to ‘clicks-and-mortar’ and e-commerce retailers is much more pronounced than some of the general gloom around consumer sentiment. Equally, in the industrial and business services sectors, the gap between winners and losers is widening, with technology often at the centre of some part of the manufacturing, supply or distribution chain process.
So, will 2019 be better or worse than 2018? Much may depend on what happens in Westminster between the time of writing this article and publication, but from an adviser’s perspective, it feels like it will likely be a tougher environment, but equally interesting. We sense there may be a widening of the gap between buyer and seller expectations, which means adviser’s may need to be smarter about how transactions are structed and executed. There may also be a tightening in the debt markets, although the flexibility of approach from the increasingly varied lender community continues to grow. The private equity investor community may become more conservative in deploying capital, but given there is more dry powder in the UK private equity community than ever before, there is a pressure to invest.
While 2018 cannot necessarily be any guide for 2019, the themes of Brexit, business investment confidence and consumer confidence will continue to dominate the minds of buyers and sellers, and the mid-market in 2019 could be a good place to be, while all around looks uncertain.
Sources: 1. Capital IQ data, deals that include a UK target and transaction value < £500M, between January 1, 2017 and December 13, 2017 and 2018.
2: ONS data – https://www.telegraph.co.uk/business/2018/12/04/overseas-firms-making-fewer-ma-deals-uk-british-firms-still/
Written by Henry Wells, Managing Director and Head of UK Mergers and Acquisitions at Duff & Phelps
Those outside the industry may truly believe so, but those who work in the legal sphere, where they may sometimes wake up thinking they can tackle the world and all its evil, are just like the rest of us; so why do the regulatory organisations, such as the SRA, give lawyers such a hard time? We speak to Emma Brooks who commonly represents solicitors subject to investigation by the SRA, about if the sanctions for solicitors who breach conduct rules are too harsh.
This was the extremely high standard set for solicitors in the leading case of Bolton v The Law Society [1993] EWCA Civ 32. When explaining why solicitors who had been found to have acted dishonestly should expect to face a severe sanction, the then Master of the Rolls, Lord Bingham, said it was essential ‘to maintain the reputation of the solicitors’ profession as one in which every member, of whatever standing, may be trusted to the ends of the earth.’
But is this level of expectation realistic? Perhaps more importantly, do the public really believe that solicitors should be held to such a high a standard and indeed to a far higher standard than almost any other profession? Are they super human?
The recent case of Sovani James has divided opinion across the profession. Ms James’ case has confirmed, yet again, the strict approach that the regulator and the courts take when dealing with solicitors who commit serious breaches of the conduct rules, particularly when their conduct is deemed dishonest.
Sovani James was a solicitor who was found to have backdated correspondence to make it appear that she had progressed a clinical negligence case when she had not. Ms James’ misconduct was only discovered once she had left the firm. Though Ms James accepted the allegations, she sought to explain her actions by blaming the negative culture of the firm, including the extreme pressure on junior solicitors there to increase their chargeable hours. Ms James introduced evidence by way of an email she had been sent by the Managing Partner of the firm, which suggested she should work weekends, evenings and Bank Holidays to cover the shortfall of hours against her target. Ms James explained that the firm would publicly compare the performance of all junior lawyers through league tables.
Is there really no room in the legal profession for a junior lawyer who, in these kinds of extreme circumstances, makes a mistake right at the start of their career? It seems not.
Ms James’ mitigation was that the culture at the firm had led to her losing confidence in her own ability to do the job. That together with stress and anxiety she was experiencing in her personal life, including her mental health problems, had resulted in her misconduct. Though the Solicitors Disciplinary Tribunal (SDT), who heard the case at first instance, found that she had behaved dishonestly, they accepted that her working environment was ‘toxic’ and they took the highly unusual step of suspending Ms James, rather than striking her off.
However, this was not the end of the matter. The Solicitors Regulation Authority (SRA) disagreed with the sanction imposed by the SDT (whose quorum is two lawyers and one lay person) and they appealed the decision to the High Court. Despite the Judges who heard the appeal in the High Court describing Ms James’ working conditions as ‘abominable’ and hearing the extremely compelling mitigation put forward on her behalf, the High Court overturned the sanction imposed by the SDT and ordered Ms James to be struck off.
This decision to strike off a relatively young, inexperienced lawyer who had presented such convincing mitigation for conduct which had taken place three years previously has led many in the profession to wonder if there are really any circumstances in which a solicitor can escape the severest sanction following a finding of dishonesty. Is there really no room in the legal profession for a junior lawyer who, in these kinds of extreme circumstances, makes a mistake right at the start of their career? It seems not.
In order to escape a strike off when dishonesty has been found, a solicitor must argue that ‘exceptional circumstances’ apply in their case. In an era when solicitors are under increased pressure, it isn’t surprising that many solicitors have tried and failed to run the argument that their misconduct arose as a direct result of their inability to cope with the demands of the job. However, in the James case, Lord Justice Flaux said that mental health issues, specifically stress and depression suffered as a result of work conditions, could not amount on their own to ‘exceptional circumstances’ required to avoid a strike off. ‘Whilst in no sense belittling the stress and depression from which the respondents suffered, it was in no sense exceptional. It is sadly only too common for professionals to suffer such conditions because of pressure of work or the workplace or other, personal, circumstances.’
The James case also highlights the irony of a situation where a solicitor is sanctioned such a long time after the misconduct has occurred. Most cases investigated by the SRA take at least a year, if not a lot longer, for the case to actually get to the Tribunal. During this intervening period, most solicitors are able to continue to practise unfettered (often not even being subject to conditions on their practising certificate) until the day of the hearing. At the hearing, solicitors will introduce a number of credible and compelling witnesses who will attest to the solicitor they have now ‘grown into’. Senior partners at their current firm will confirm their unwavering support and wish for them to be able to continue practising and working at their firm. Yet still this is very rarely enough to avoid a strike off.
The SRA’s mantra on dishonest conduct is that a strike off is the only punishment in these cases to ensure the protection of the public. However, it is hard to imagine that the public need protection from someone like Ms. James, who admitted what she had done, had addressed her mental health problems and had moved to a firm where she was thriving. Does the public really require protection? Whilst I imagine that the public and those within the profession would agree that a solicitor who steals client money deserves, at the very least, not to work again, would the public agree that Ms. James’ case needed to end in this way?
Whilst the James case related to misconduct within her professional life, solicitors need to be aware that a significant number of cases that the SRA bring, relate to serious misconduct within the solicitor’s private life, usually, but not exclusively, when solicitors have been convicted of criminal offences. Indeed, solicitors need to be ever more acutely aware that even allegations of misuse of social media on a person’s private account may lead to disciplinary action by the SRA. This was seen in September this year when the SRA announced that they intended to refer the case of Mark Lewis (the high profile media lawyer who helped secure the £3m settlement for the family of Milly Dowler in relation to phone-hacking), to the SDT for allegations of posting ‘offensive and profane communications’ on his Facebook account. The allegations are unproven and will be contested by Mr Lewis at an SDT hearing.
Worryingly for solicitors, it is not necessary for the SRA to prove that a solicitor has acted dishonestly in order for them to be struck off. An alternative, much wider allegation with a far lower threshold, is that they have acted with a ‘lack of integrity’, a finding which will also often lead to the ultimate sanction of a strike off.
When considering the issue of protection of the public, would a member of the public expect that solicitors should be held to a far higher standard than other professionals, for example, doctors?
The recent case of Hadiza Bawa-Garba, a doctor who won an appeal and was able to continue practising medicine despite a criminal conviction for gross negligence manslaughter, highlights the different approach taken by those regulating individuals in the healthcare sector.
Ms Bawa-Garba was working (similarly to Ms James) in what all accepted to be an extremely difficult environment. In Ms Bawa-Garba’s case, the errors which led to the death of a young child were, she argued, caused by a combination of matters – she was working on a short-staffed and chaotic unit, where she was fulfilling the role of two registrars on the day in question. She had just returned from maternity leave, was lacking adequate supervision and a defective IT system failed to flag abnormal test results. She had, since the child’s death, continued to work at the same Trust for a number of years.
This case shows how those regulating medical professionals seemingly give far greater credit to those it regulates if they can show ‘insight’ into their failures and demonstrate that they have taken steps to rehabilitate themselves. The Court of Appeal took into account all of these factors and decided that despite a criminal conviction for gross negligence manslaughter, as a direct result of her misconduct at work, it was not necessary in order to maintain the trust of the public, to stop the doctor from continuing to work.
Whilst there are some similarities and some differences between this case and that of Ms James, Ms Bawa-Garba’s case resulted in unarguably far more serious consequences for those involved. Can the public reconcile the two different approaches taken by the courts in these cases? Whilst many will have sympathy for Ms Bawa-Garba’s position, do the public really believe that a solicitor should be held to a far higher standard of professional conduct than a doctor who quite literally holds the people’s lives in their hands?
Emma Brooks is a Partner at Byrne and Partners LLP specialising in corporate fraud and regulatory work. She has significant experience in representing solicitors subject to criminal investigation and those being investigated for misconduct by the Solicitors Regulation Authority.
From constantly assessing whether you are adapting to the ever changing world, we speak to Ludovic Doutreleau about how matters regarding obtaining suitable funding, restructuring your company and keeping trademarks, are also pinnacle to ensuring your business is the best it can be.
Prior to gaining funding, what ‘boxes’ should businesses tick?
Funding is not a brick, it is the cement that holds the bricks together. Frequently, when called to assist and advise a party to a funding transaction, whether on the side of shareholders or directors of a company, or on the side of investors, there is a common misconception that we employ ourselves to evacuate: the business is not about funding, it is about getting clients and cashflow and streamlined innovation and new products, and so on. In other words, since funding will not raise a house without the bricks and a good construction plan, I generally say to our clients, "let's walk through the house before inviting investors in, and make sure they feel comfortable when sitting in your kitchen".
Despite the fact that a holistic approach is obviously necessary when looking to gain funding, we generally suggest our clients to at least make sure that their business has a purpose, a plan, a route to implement their plan, one or more contingency plans, a leader, and a board with communication skills; then, they might get funding on board.
Planning is essential and so is the route to reach the various stages of business development. This said, having contingency options and alternative routes are all the more essential.
Clearly identifying the purpose of the business to avoid confusion between goals and processes, is essential, for example: are we selling innovation, or selling a product that requires innovation? From an investor's standpoint, funding is for a purpose, generally not just to run the business. Also, purposes can be challenged usefully when they are first clearly defined.
Planning is essential and so is the route to reach the various stages of business development. This said, having contingency options and alternative routes are all the more essential. Plans are generally drawn to lead to success and routes are often designed as smooth and short. In reality, roads are bumpy and plans are misleading. As a result, we would insist on showing the business and its management team's agility to contend with the unexpected and drive opportunities from problems. This begins when fighting the deal through and what better opportunity than negotiating a deal for developing agility skills: so start early.
Independent leadership is probably the keystone here.
This brings us to leadership and communication. Clearly, many of the deals that never saw the light are deals where leadership was not clearly defined and communication was poor. Having an idea, a plan to make it live and a route to progress towards, is not enough without someone steering the course and having unlimited access to weather predictions. Behind the metaphor, we believe that businesses should look for qualified independent leadership and that the flow of information should be carefully designed, not only to ensure that the CEO gains access to data, but also to make sure that investors are not left in the dark.
Independent leadership is probably the keystone here. It is always important to remember in this respect that a business, once incorporated, is an independent entity by itself: independent from its shareholders, independent from its management and independent from its investors, and so should the CEO as he will vouch for all.
Restructuring is always an option when business development is a necessity.
When is restructuring a good option when regarding business development?
Restructuring is always an option when business development is a necessity. The rationale for restructuring is, however, likely to differ between the CEO, the CFO, the tax attorney, the brand manager, the human resources manager, etc. For each, it will carry a possibly slightly different goal or requirement, all of which certainly make sense. Now there are costs associated and one way to look at it, would be to simply admit that restructuring is an option when it derives profits.
Among the "boxes" a business should tick prior to gaining funding, should be the redesign of the business to ensure that the funding may be directed at what it is meant to finance. At some point, investors will prefer to spend part of the money to restructure a business than risking a loose end.
Once it is agreed that a corporation is an organisation conceived to create added value and profits and certainly one of the most reliable tools in this respect, restructuring should be envisaged as a permanent and necessary process to maintain the efficiency and the performance of the business itself, and management teams should be at the lookout to seek improvements derived from restructuring. A company needs to adapt quickly to new forms of business, to international development, to different market needs, and as such, business development and restructuring have to be viewed as closely connected.
Contrary to a widespread perception, restructuring can be run in a smooth and efficient way, sometimes even as a background upgrading process, from company version 2.0 to version 2.6.
Restructuring may have many purposes, sometimes it's also time for a clean slate and a new name. In most cases, however, restructuring will be without impact on a company's trade registry identification, its name or commercial brands.
Our clients increase their competitiveness and develop market and business agility through a close-working relationship with our Firm, as we are able to regularly review potential restructuring options and keep tabs on legislation changes and opportunities.
Working in an international environment, as many of our clients do, makes this capacity to adjust at all times and adapt to global and local changes an essential part of the way they build their sustainability and profitability over their competitors.
Also, particular care should be given to intellectual property rights when restructuring, notably to avoid unwillingly separating a business from its brand.
When restructuring, do companies need to apply for a new business number, and, or trademark?
Restructuring may have many purposes, sometimes it's also time for a clean slate and a new name. In most cases, however, restructuring will be without impact on a company's trade registry identification, its name or commercial brands. When the restructuring implies to set up one or more divisions incorporated as different companies, or requires to merge two or more companies, then, of course, since new entities are set up or former ones winded up, business numbers may change and trademarks may be transferred from one entity to another, or simply change.
When it comes to trademarks, restructuring will often be an opportunity to rethink the ownership and the royalties flow for trademarks and patents. At some point it might make sense, for example, to regroup the trademarks and patents to a dedicated holding and redesign an efficient licensing organisation. Also, particular care should be given to intellectual property rights when restructuring, notably to avoid unwillingly separating a business from its brand. In any event, restructuring is often a perfect occasion to think branding, trademarks, patents and IP management. And when you think about the efforts to raise funding or go through restructuring, it is clearly worth the time discussing whether or not to revamp the brand.
Furthermore, what further legal requirements are needed if businesses are restructuring in order to develop internationally?
Travel light, travel smart: a likely motto for business developers expanding a business abroad.
As a Swiss and French law firm, many of our clients have initially contacted us when looking forward to acquiring or setting up a business abroad to expand their activities. Almost on every occasion it also becomes obvious that there was simultaneously a need to restructure the way they had initially set up their operations, their accounting and tax, their assets, their IP, etc. Growth calls for restructuring, but so does international competition.
When restructuring as part of their international expansion, groups need to be particularly careful with their tax organisation, export procedures, VAT management, and employment costs - especially when seconding employees.
This is an area where the advice of knowledgeable corporate lawyers will become invaluable. One will easily understand that options chosen hastily or based on ill-advised plans will become extremely difficult to adjust at a later stage -especially in an international environment, dealing with multiple jurisdictions.
As a result, we strongly advise our clients to plan in detail international restructuring before going ahead. Such decisions require to be benchmarked against a seasoned professional's review.
Pick a strong team of close-working individuals to set up the management team having in mind that merging or restructuring also means building with a change of mentality.
What employment issues arise when developing a business post restructuring?
Take care of the sailors after the storm. This could be a human resource saying upon completing a business restructuring. Restructuring takes its toll on the people and legitimacy issues arise along with the resistance to change. In addition, mergers - for example - also lead to redundancy issues that aggravate with the lack of time to deal with such problems after the deal is completed. We generally tell our clients that they should focus on building the legitimacy of their managers throughout the deal, by providing to all individuals within the business a chance to be part of the change, instead of becoming sitting ducks in a hunt for novelty, and on careful human resources modelling to avoid as much as possible post-restructuring redundancies.
Finally, what three things would you advise companies to address when aiming to take their business to the next step whilst merging or restructuring?
Pick a strong team of close-working individuals to set up the management team having in mind that merging or restructuring also means building with a change of mentality.
Retain investors or partners who understand business agility and who will support your company when it will contend with the unexpected.
Expect Murphy's law's events to rise exponentially with the change and develop "what if" scenarios with the advice of your corporate lawyer.
Ludovic Doutreleau is a member of the Bar practising in Paris and Geneva and a Partner of WAN Avocats. He is based in Geneva and he is the Managing Partner of WAN Legal Geneva that provides legal corporate services to companies and investors for acquisitions, restructuring, and for private equity and venture capital deals in Switzerland and France. Ludovic Doutreleau also has a specific focus on the maritime and aviation industry where he offers independent advice to operators in those sectors, including for the sale and leasing of aircraft and vessels.
With the House of Lords examining the effectiveness of the Bribery Act, Aziz Rahman at Rahman Ravelli, considers the issues surrounding corporate liability and bribery.
This claim was made by lawyers to a House of Lords committee. They told the committee that some in business felt it was unfair that the authorities could easily identify the controlling mind of a smaller company, thus enabling a prosecution, whereas they struggled to do this with larger companies, who could then avoid being prosecuted.
The committee, which has the task of examining and reporting on the effectiveness of the 2010 Bribery Act, has had to consider this issue of the controlling mind. It is not merely bribery where the issue of corporate liability could be said to be more troublesome for smaller companies. But the evidence does suggest that its effect in bribery investigations has been notable in the UK.
The law on corporate liability in the UK means that it can be very hard to prove that a company is criminally liable for the criminal activity of an employee. That is the case even if the company benefits from that conduct, as is likely to be the case when bribery is committed. The company will only be liable if it can be established that the person or persons who carried out the illegal activity were sufficiently senior that they could be considered the ‘controlling mind and will’ of the company. For the purposes of corporate liability this tends to mean someone at or around board level in a company.
In the UK, the fact that illegal acts were committed by an employee while they were working for a company does not automatically make the company liable for those actions. Apart from a few exceptions, vicarious liability or poor corporate governance cannot form the basis of a prosecution based on establishing corporate criminal liability.
In the UK, the fact that illegal acts were committed by an employee while they were working for a company does not automatically make the company liable for those actions.
This means there are very obvious difficulties when it comes to establishing criminal liability against companies where it is hard to determine exactly what the management structure is; due to either its size or complexity. With smaller companies, however, with fewer employees and a more straightforward and identifiable management structure, establishing corporate liability is far easier.
This is the case with many offences. And bribery is no different: a fact that has been borne out by the Bribery Act investigations we have witnessed so far. The only prosecution has been of a modestly-sized company, Skansen, whereas the engineering giant Rolls-Royce escaped with a fine and a deferred prosecution agreement.
The Skansen case should certainly be viewed as a cause for concern for both the House of Lords committee and anyone in business who is determined to tackle or prevent bribery.
Skansen was an office refurbishment company, employing about 30 people. It won two contracts in 2013 after its managing director paid two bribes to gain the work. When a new chief executive officer was appointed, an internal investigation began, an anti-bribery policy was devised and the managing director and its commercial director were dismissed.
The company also filed a Suspicious Activity Report (SAR) to the National Crime Agency, reported the matter to the City of London Police and cooperated fully with the police investigation. But it was still charged with failure to prevent bribery, under Section 7 of the Bribery Act.
Skansen’s argument that it had policies in place that emphasised honesty, did not require a sophisticated anti-bribery procedure due to its size and had financial controls in place failed to persuade the jury that it had had adequate procedures to prevent bribery - which is the only defence against a Section 7 charge. Skansen was convicted in February this year, even though by then it was a dormant company with no assets; resulting in it being given an absolute discharge.
To summarise, therefore, the Skansen case saw a small company that had both tried to prevent bribery and cooperated fully with the authorities convicted of bribery after it had ceased to function.
It is a stark contrast to the case of Rolls-Royce. The UK's Serious Fraud Office (SFO) found conspiracy to corrupt or failure to prevent bribery by Rolls-Royce in seven countries - Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia. Tens of millions of dollars were spent in order to secure business over almost 25 years.
The four-year investigation into systematic bribery over three continents was the biggest in the history of the SFO. Sir Brian Leveson, President of the Queen's Bench Division, stated at the conclusion of the investigation that "the conduct involved senior (on the face of it, very senior) Rolls-Royce employees".
Thirty eight employees faced disciplinary proceedings. Eleven left the firm during the disciplinary process and six were sacked. Rolls-Royce also reviewed 250 intermediary relationships across the company – of which more than 80 were suspended – and apologised "unreservedly" for the bribery, which it openly admitted.
And yet Rolls-Royce was not prosecuted. Instead, it paid £497m plus costs to the SFO under the terms of a deferred prosecution agreement (DPA). A DPA involves a company meeting certain conditions in order to avoid prosecution. With Rolls-Royce, its huge fine – which it is paying over a five-year period – may well be a bitter pill to swallow. It also has to pay £141M to the US Justice Department, and a further £21.5m to Brazilian regulators. But, crucially, it has avoided a criminal prosecution.
If we consider that Rolls-Royce gained a DPA after more than two decades of multi-million dollar organised bribery across the world while Skansen was convicted over two bribes that totalled £10,000, the scales do seem to be tipped more favourably towards the big corporates. While it may not be as clear cut as saying that there is one rule for the big boys and another (much tougher rule) for the smaller companies, the two cases highlight the difference in approach that has been taken.
The cooperation provided by Rolls-Royce when the investigation began has been highlighted as helping it secure a DPA. Yet Skansen cooperated with the authorities. It also reported its bribery to the authorities – which is more than Rolls-Royce did.
The two cases have been cited by those who argue that prosecutors are looking for the easier convictions, which will most likely mean the smaller companies are the ones being prosecuted. But the situation may not be as black and white as saying there is a clear preference for prosecuting the smaller companies.
As we mentioned earlier, prosecutors may simply believe it is too difficult to secure the conviction of a company for bribery if they think they will struggle to prove that the directing mind and will of the company was involved in the offence. When it comes to proving this, there can be little doubt that the large and multinational management structure of Rolls-Royce would present a greater challenge than that of Skansen.
...prosecutors may simply believe it is too difficult to secure the conviction of a company for bribery if they think they will struggle to prove that the directing mind and will of the company was involved in the offence.
But there is also the question of resources. Bigger corporates have deeper pockets and are more capable of making long-running legal representations to the authorities regarding the reasons why they should not be prosecuted. Taken to their most cynical conclusion, such representation could even involve the corporate arguing that they were not to blame as the wrongdoing was all the fault of rogue individuals. The result can then be certain employees within a corporate being prosecuted while the corporate remains conviction free. In contrast, smaller companies will rarely have the time or easy access to the relevant expertise to put up such a sustained defence to the allegations.
The Bribery Act was a necessary piece of legislation. But the challenge facing the House of Lords committee is to make sure it is being implemented in an even-handed way so that companies of all sizes can be sure they are being treated equally fairly.
The digital conveyancing platform, When You Move has recently commissioned some nationally representative research reveals the true extent of the deficit between homebuyers’ savings plans for a new property versus the actuality of unexpected fees.
A sample of 2,003 UK homebuyers were questioned and the data found that there is an average of £8,113 in unexpected fees, in addition to their deposit. The research found that a quarter of consumers believe their conveyancer was “not transparent” on fees and 13% of UK homebuyers felt “trapped” by their solicitor with “unexpected fees”.
The research also found that the Bank of Mum and Dad may not be a choice, but rather, the only way out of the fee trap UK homebuyers become victim to. On average, home buyers need to ask for around £16,712 in funds from the Bank of Mum and Dad. Around a fifth of the population are reliant on close family and friends in order to cover all the costs associated with a property transaction, ranging from surveyors and conveyancers to estate agents and logistics.
An astonishing 28% of home buyers would have pulled out of the property purchase if they were fully aware of the true extent of fees they would be expected to pay.
Simon Bath, CEO of When You Move, said: “These statistics are very alarming. In the current political turmoil, the industry as a whole should be working towards making the home purchasing and selling process a lot more accessible for all parties involved. Homebuyers should be aware of the full extent of costs associated with their transaction. This should not be a longwinded and outdated process through which a consumer has to wait until a service is engaged to know the cost of the service provided.
“Transparency and efficiency should be the fundamentals of the service estate agents, conveyancers and mortgage brokers offer. The new SRA and CLC regulations mark an exciting opportunity for property professionals to improve the service they provide to their consumers. The most popular time for people to search for conveyancing quotes is between 8pm and 10pm, but the majority of law firms do not have online quote widgets, so all they can ask their consumers to do is email them and reply by email or spreadsheet the following day. As a result of the new regulations, potential homebuyers can access a full breakdown of the costs of their conveyancer, surveyor and so on, within seconds and 24 hours of the day. This is a massive step forward for the industry, which is renowned for archaic processes and sluggish reactions.”
(Source: When You Move)
We speak with attorney Eldridge Suggs IV, who discusses what you should do if you have been involved in an accident.
What should be the first course of action for someone to take if they have been involved in an accident?
Once you determine that everyone is physically ok, photograph the vehicles involved inside and out, and photograph any obvious physical injuries including scrapes, cuts and bruises and also photograph the scene. A picture or video can often tell the story, as it was at the time of the crash. Look for witnesses and secure the information necessary to reach them again for their eye witness testimony. Secure as much information and evidence as possible, including insurance coverage information from the person who crashed into you. As soon as you can, seek a medical evaluation in order to immediately document any symptoms you are feeling from possible injuries.
Insurance companies are mega rich for a reason: the majority of them do not play fair!
How long can someone sue, after being involved in an accident?
A victim of someone’s safety rule violation (in this case the traffic laws) has the right to sue at the time the violation injures the person. Typically the attorney will file a claim with the at fault drivers insurance company; allow time for the insurance company to accept responsibility for their insured’s safety rule violation and after all of the injuries are documented and treated to maximum medical improvement, the attorney will make demand upon the insurance company for complete accountability and compensation for all of the injuries caused to the person’s body, mental state, and loss of enjoyment of life, and any economic losses including lost wages, and medical costs.
Is it advisable for clients to take payouts offered by the insurance company, prior to consulting a legal expert?
Of course, my answer is no! The reason for this is that the insurance company is the beast wearing the “Black Hat” and in most cases have much more experience than the victim of a motor vehicle crash. Insurance companies are mega rich for a reason: the majority of them do not play fair! They take our monthly premium payments, but when it comes to being fully accountable for people’s injuries they will cheat, lie and deceive. Get a very good lawyer to deal with them so that they are made to be fully accountable.
How long, on average, does it take for disputed parties to conclude a settlement?
Depending on the jurisdiction, typically a settlement occurs within a range of 3-8 months depending on the injuries involved. If the case must be litigated, the case might not be heard in the court for up to two years in most Georgia Jurisdictions.
Attorney Eldridge Suggs IV has served his community starting with enlistment in the U.S. Navy and then serving as a Police Officer. Later, he served as a Civil Rights Lawyer for Justice. Now at Suggs Law Firm, P.C., he is completely committed to making our community a safer place to live.
Contact him on: 404-242-6855 to ensure insurance companies are held fully accountable for full compensation.
