Understand Your Rights. Solve Your Legal Problems
The proposed deal would give Nvidia — one of the largest chip companies in the world — control over designs and computing technology that competitors rely on to develop rival chips, the FTC said.
“The proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice, harming the millions of Americans who benefit from Arm-based products,” the FTC alleged.
The deal has already faced major opposition by chip companies and has been widely expected to fall apart. Last month, regulators in the UK said they would launch an in-depth probe of the deal.
If the deal does fall apart, Nvidia will owe a $1.25 billion fee. Since the deal was first announced in September 2020, it has more than doubled in value with Nvidia shares rising on the performance of its data centre business.
William Poole-Nelson, founder and managing director at WILL+Partners, explains how the pandemic helped establish greater “teamship” in the legal sector.
Much like other sectors, the role of the legal office and what it offers has changed. Throw in the issues of complex cases, the handling of highly sensitive information, and court case rehearsals, then you have a myriad of factors that make it difficult to please everyone, clients to boot.
The recent State of the Legal Market 2021 report from Thomson Reuters revealed that lawyers have enjoyed less commuting and the work-life balance that home working has provided them. Even before the current crisis, there was a sense that lawyers coveted solutions to combat the job’s long hours and demands.
Widespread change is no easy task, particularly when you’re dealing with a sector that, historically, has been somewhat traditional. Young lawyers now entering the industry have more clout in the decision-making process when it comes to where to conduct their work. Something they probably didn’t anticipate when studying at the Bar. They have largely proven they can work effectively remotely but still want to collaborate at an office workplace and are now playing a game of tug of war with those in more senior roles who are finding that old five days a week habits are hard to break.
The future of workplace design in law firms is about understanding the AI and technology changes versus the Human Experience needs, that we have faced as a society over the past two years, making office-based activities as seamless as possible, finding creative solutions to address occupancy issues, and building, what I like to call, ‘teamship’ throughout the firm. At Will+Partners, we are seeing an increasing demand for lawyers to be working in teams, and a driving need for them to collaborate and work in the physical. Our designs have had to reflect that.
We have also seen a shift in the hierarchy of how they work. It’s brought individuals together whose paths may not have even crossed in the office before, let alone share a room. The doers, makers, and getters are now all in one space aiding productivity and driving efficiency. This creates complex needs for quiet spaces and changed behaviours.
Addressing hierarchy is about good leadership, and leadership is about good collaboration, storytelling, and ‘teamship’. From our experience with law firms, the employees who want to get back to the office are the associates, along with PAs and other support services. The senior partners are also back, but the middle tier is struggling with their ‘return to work’ decisions.
Law firms have adapted well to address the ever-changing needs of their workforce, and their clients. But with the conversation only just starting about how to best address hybrid working, more work and change is yet to come.
The practices we have been working with have found solutions that incorporate the best of the pre-Covid way of working and the benefits of working from home into the office. This offers a form of agile working which is fundamental to attracting and retaining talent – a pivotal point given the well-publicised ‘Great Resignation’. If a law firm can’t offer an individual what they want when it comes to working arrangements, then a competitor down the road just might.
The suggestion isn’t that all offices must go open-plan or lose their offices. However, for law firms, it is a discussion worth having.
One thing we are seeing is that some firms have used the past 18 months to review their arrangements to create specific rooms for specific teams such as auditing, advisory, and planning – areas where teams work together. Spaces have also been tailored for sector-specific teams to create inspiration, such as pharmaceuticals, insurance, and sports law. Even before the pandemic, we saw firms working towards the idea of placing their partners and associates in the same room to collaborate and share ideas. The pandemic has just accelerated that experiment.
Quiet areas also matter, and this could be in the form of furniture pods which are growing in popularity across the sector. Law firms have, quite rightly, started to challenge the effectiveness of the traditional interior design grid. Some have even started to work towards something called an ‘open meeting office’. This is an office without a door or entrance and has an open front with a ceiling that has an acoustic baffle. This means people in that area only hear others if they walk past. Floors remain private because you’ll only overhear the conversations of people in your own zone.
There is no one size-fits-all approach. Law firms will be meddling with their workplace design for some time to find what truly works for them and their workforce. But you can’t please everyone. The changing of the workplace should be done sensitively and with input from each employee to tick as many boxes as possible. A shift in thinking and a new approach to space and talent are required for the legal workplace to remain nimble and respond to an unpredictable future.
The publisher of the Mail On Sunday has lost a Court of Appeal challenge against a ruling in favour of Meghan Markle, represented by Schillings, over the publication of a personal letter to her estranged father, Thomas Markle.
Meghan Markle sued Associated Newspapers Limited (ANL) over five articles that shared parts of a “personal and private” letter to Thomas Markle in August 2018.
Markle won her case earlier in 2021 when a high court judge gave summary judgement in her favour without the need for a trial. However, ANL brought an appeal, arguing the case should go to trial on Markle’s claims including breach of privacy and copyright.
ANL claimed that Markle had penned the letter with the knowledge that it could be leaked. Markle denied she thought it was likely that her father would leak the letter, though “merely recognised that this was a possibility.”
ANL later said it had new evidence in a witness statement in the form of texts and emails from the Duke and Duchess’s former communications chief Jason Knauf, in which she allegedly sent him a draft of the letter, saying, “Obviously everything I have drafted is with the understanding that it could be leaked so I have been meticulous in my word choice.”
However, Markle’s barristers argued that the letter was “deeply personal” and was “intended to be kept private.”
Following the win, Markle said in a statement, “This is a victory not just for me, but for anyone who has ever felt scared to stand up for what's right. While this win is precedent-setting, what matters most is that we are now collectively brave enough to reshape a tabloid industry that conditions people to be cruel, and profits from the lies and pain that they create.”
The court upheld the US Patent Trial and Appeal Board’s findings that Arbutus’ patents are valid as the science involved was previously unknown. Arbutus’ patents may cover technology used in the Covid-19 vaccine.
In court filings, Moderna had previously stated that it believes that, if the patents were upheld, Arbutus could launch a lawsuit asking for royalties from Moderna’s vaccine. Last month, Moderna forecast vaccine sales of $15 billion to $18 billion for 2021, and sales of $17 billion to $22 billion for 2022.
The two patents are licensed to Genevant Sciences Inc, a company that Arbutus launched with Roivant Sciences Ltd in 2018. They involve the “lipid nanoparticles” that enclose the genetic material messenger RNA in the vaccine. It is thought that the technology could also be used to support the development of future vaccines against other illnesses.
Initially, Moderna challenged the patents before the US Patent Trial Appeal Board, with the board agreeing that some elements of one of the patents involved were invalid. However, the board mainly sided with Arbutus, with the findings later upheld by the Federal Circuit.
Derek Rodgers, managing partner of Gardner Leader solicitors, reflects on his experience of growing his firm through mergers and acquisitions.
Founded in Newbury in 1895, the last decade has seen rapid growth for Gardner Leader as it has expanded beyond its West Berkshire roots. The acquisition of Heath Buckeridge in Maidenhead in 2014 kickstarted a period which has seen the firm treble in size. A London office was opened in 2019, and in 2021 a small acquisition in Windsor has been followed by a merger with the 16-strong team at Swindon-based corporate and commercial boutique firm Clark Holt, taking the firm’s headcount to around 175, with a combined turnover of £12 million.
Our aim is to grow carefully and prudently so we can continue to attract the best people and offer high-quality services to clients, acknowledging that this comes with increasing cost in terms of investment in people, technology and other resources as well as the basic expense of running the business, such as insurance. It is not about growth for growth’s sake, but rather ensuring that we have the infrastructure and resources to enable us to be the kind of firm we want to be, staying independent and offering a realistic alternative to larger firms for both clients and staff.
To make a success of that strategy, it has been essential to assess each merger opportunity carefully to make sure that it will help achieve those objectives and not be either a distraction or a dilution. We have explored a large number of potential opportunities and have turned down more than we have pursued.
It is almost a cliché to say that culture is key, but it is true. If the purpose of our growth is to enable us to maintain the independence of the firm that we all enjoy working in, then anything that would be detrimental to our existing culture and values is not the answer. That does not mean finding a clone, but it does mean having confidence that the people coming in, especially at leadership level, are sufficiently aligned to your vision and approach to avoid fundamental changes that you do not want to see. We had an employee net promoter score of +70 in our most recent staff survey – that is not something we want to put at risk.
It is not about growth for growth’s sake, but rather ensuring that we have the infrastructure and resources to enable us to be the kind of firm we want to be
Beyond that, the potential merger needs to be capable of adding to the bottom line and enhancing your service offering. Just adding turnover is unlikely to achieve very much.
Our recent merger with Clark Holt was the culmination of a working relationship stretching back at least 12 years. That meant that both sides had long experience of what made each firm tick, what kind of people they were, what mattered to them and what sort of future we all want to have.
Naturally, we were quite different firms, one being a small, highly specialised team based in one office focusing on corporate, commercial and real estate, the other spread over five offices and offering services from conveyancing to complex international arbitration. But our teams had worked closely together over many years, each assisting clients of the other in areas which one firm did not offer and also working jointly on matters for mutual clients. We already had a shared network of contacts and referrers. We could see very clearly that our way of working, our approach to client service and our approach to people were all quite closely aligned. When the proposed merger was announced, the response from several clients and contacts was “why have you waited so long?”.
In terms of the financial aspect and the service offering, the merger fitted neatly into an approach – which we had been following for a number of years – of building and growing our corporate and commercial offering to balance our private client offering. With the significant expertise available at Clark Holt, the merger represented a step-change in that strategy and greatly enhanced what we could offer to clients and potential clients across the Thames Valley. Joining forces with us also meant that, for Clark Holt, the range of services which they could offer ‘in-house’ was transformed overnight.
It is almost a cliché to say that culture is key, but it is true.
There are many stakeholders who need to be considered when approaching a potential merger. Most obviously, getting all the partners in both firms on board in principle at a very early stage is key. For those leading the project, it is important to be sure that everyone is actually happy with the prospect of reaching the proposed destination rather than just agreeing to the steps along the way and leaving the bigger question until the end.
The support and engagement of your professional indemnity insurers throughout the process is also essential. We were fortunate to have very constructive input throughout from both our brokers, Marsh, and our lead insurer, QBE. You need to make their job easier by having a clear picture of what you are trying to achieve and how you are going to go about it, especially in relation to due diligence. They will want to see that you have identified and considered all relevant risks and have a plan for mitigating any which cannot be eliminated.
Inevitably, much of the early discussion has to take place in confidence and with only a very tight group of people involved, but at some point, the rest of your management team will need to be involved. At that stage, it is not just vital that they are given a clear understanding of the project and what is needed from them to advance the process, but also that you are alive to whatever concerns they may themselves have about what it will mean for them in relation to their own roles, workload and place in the team.
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A clear and consistent message to the wider staff of both firms is key and a process for discussing, consulting and allaying any concerns. The task of creating one team from two needs to begin at the earliest opportunity, as soon as news of the proposed merger is announced. Communication needs to be regular and ongoing, and at all levels across the firms.
At least as important is communication to (and with) the clients of both firms, their contact networks and the wider market. That needs to focus on the benefits to them and why they will get a better service as a result.
Signing and completing the deal, and enjoying the celebratory champagne and cakes, make it all worthwhile. Then you realise that the hard work is just beginning!
Derek Rodgers, Managing Partner
White Hart House, Market Place, Newbury, RG14 5BA
Tel: +44 01635 508080
E: d.rodgers@gardner-leader.co.uk
Derek Rodgers has been the managing partner of Gardner Leader since 2011, having joined as a partner in 2005. Prior to taking on this role, he was an experienced corporate and commercial lawyer with expertise in corporate finance, mergers and acquisitions, general company and commercial law and employment.
Gardner Leader provides a range of services for businesses and services for individuals, including commercial, corporate, dispute resolution, residential property and conveyancing, inheritance protection and family law. During Derek Rodgers’ tenure as managing partner, the firm has doubled in size since 2012. Gardner Leader has also been a member of LawNet, a group of over 60 independent law firms committed to quality and excellence, for over 25 years.
Below, Access Social Care CEO Kari Gerstheimer explores more of the ways in which the UK’s legal aid drought is harming its most vulnerable citizens.
Every day, millions of older and disabled people are denied the social care they need. This injustice falls inequally across society, with poorer and racialised communities experiencing health and social care inequalities. 75% of local authority leaders admit they are not confident or are only partially confident that they will meet their legal duties to provide social care this year.
For people who are denied their right to social care, legal aid is a critical part of access to justice. We all have a right to hold public bodies to account, but many people with social care needs cannot afford lawyers and so rely on publicly funded legal aid to pay for the legal support. Without legal aid to facilitate access to justice, the rights of many disabled and older people might as well not exist.
There is a crisis in the availability of legal aid for community care cases. Since 2010, there has been a 92% reduction in the number of community care legal aid cases. This is not about reduced demand – Access Social Care has led a data project with a group of national helplines measuring advice demand for community care over the last two years, which demonstrates a staggering 150% rise in requests for community care advice since 2019.
75% of local authority leaders admit they are not confident or are only partially confident that they will meet their legal duties to provide social care this year.
Community care cases are legally and factually complex. Most cases require over 30 hours of work but will settle in favour of the client before getting to court. At Access Social Care, we have a 98% casework success rate.
But it is precisely this type of early legal help where there is a shortage of support. Most publicly funded cases are started on “legal help”, which is a fixed fee and will never make it onto a legal aid certificate, never mind making it to court. The rates of pay have barely changed for decades. This all means that many community care cases are loss-making for community care legal aid lawyers. Some cases can be pushed through the court of protection – where it is easier to secure legal aid (rather than fixed fee legal help) – but this is not always appropriate, either because the client has capacity or because the court of protection can be a blunt tool to settle complex community care issues.
As a result, we have seen a dramatic reduction of the number of community care cases taken on and community care specialists are leaving the profession in droves. It is scandalous that community care lawyers are leaving simply because they cannot afford to do the work. Greater investment is urgently needed for early legal support.
Whether provided in our own home, a care home or in the community, social care is the very basic support that we need to wash, eat, maintain relationships with loved ones and live a life of dignity. Without legal help to enforce the right to this support, people can experience trauma, neglect and abuse.
Without legal aid to facilitate access to justice, the rights of many disabled and older people might as well not exist.
From a 94-year-old with dementia denied support to help her remember to wash, dress and feed herself; to the case of a 14-year-old with autism and learning disabilities placed hundreds of miles away from his family, self-harming by swallowing pieces of glass; through to the horrific cases of people with a learning disability being tortured by abusive care workers or criminals in the community; the cases we work on are so distressing that we are seeking additional funding to pay for counselling for our lawyers due to secondary trauma.
At Access Social Care, we are helping citizens understand that they should be fighting for the right to legal representation to enforce their rights, whilst working hard to try to grow our legal team so that we can reach more people.
Our in-house team and network of lawyers give pro-bono advice and casework support when things go wrong. We have recently developed an automated legal information chatbot to increase our reach, and we are harvesting data to take an evidence-based approach to influencing at a local and national level.
The failure of the government to properly invest in legal aid for community care cases means that the rule of law is broken for many people in society who need it the most. Charities like Access Social Care will never be able to meet the tsunami of need. One of the most important things we can do is shine a light on that gap, with a view to changing the system and seeking greater investment in legal aid in the longer term.
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The case that sticks with me is related to a 16-year-old girl with autism.
Years of social services failures led to her behaviour becoming violent. She did not have a mental health condition, but she was sectioned. Placed far away from home, she was overmedicated, unlawfully restrained, treated like an animal – staff would knock on a door on one side of her cell and push food through a hatch on the other. Her distraught parents were not allowed into the room and communicated with her through a tiny window. After two years of inhumane treatment, she started to self-harm, hallucinate and have seizures. The hospital refused access to a specialist clinician, citing safety concerns. Outraged, her father posted what was happening to his daughter on social media. Exposed, the local authority sought a gagging order claiming the father was abusing his daughter’s right to privacy.
The father was refused legal aid but our lawyers and two brilliant barristers working pro-bono were able to support the family. The case was thrown out, a costs order was made against the council and after a long fight the daughter was freed and now lives happily in the community.
The government recognises that mental health settings are not suitable for people with a learning disability and/or autism and challenging behaviour, but there are over 2000 adults and 200 children inappropriately placed in these units across the country. The UN has cited this as being one of the most egregious human rights abuses in the UK - and families still struggle to access legal aid to support them.
Kari Gerstheimer, Founder
Oakwood House, St Patrick's Rd, Coventry CV1 2HL
Tel: +44 024 7697 8903
E: enquiries@accesscharity.org.uk
Kari Gerstheimer
I am the CEO and Founder of Access Social Care, a new charity providing free legal advice and information for people with social care needs, helping these people achieve a better quality of life. We are working towards a future where social care is adequately funded, and we all get the support we need.
Keith Tully, a partner at Real Business Rescue, shares his knowledge on the ripple effect of insolvency on active dispute resolution proceedings.
An arbitration agreement may be entered into under the condition that if, alternative dispute resolution (ADR) methods such as mediation or conciliation fail, this route would be pursued to ease a definitive outcome and conclude the chapter. Arbitration can neutralise parties and command cooperation following the appointment of an impartial arbitrator.
A firm solution can be sought outside of the courts through arbitration, and therefore, every effort is injected into the process to ensure fairness to all parties involved. The process is often faster, cheaper, and held under a veil of privacy, which differs from formal litigation proceedings.
The timeline for arbitration proceedings will be determined by the availability of all parties involved, including third-party arbitrators, or an arbitrator panel. The financial status of the parties involved will also dictate their ability to participate in arbitration proceedings and make a monetary commitment towards the arbitral award.
The coronavirus pandemic triggered unprecedented trading conditions and economic uncertainty, which tipped many healthy businesses in the UK into extreme financial distress. The ultimate fight for survival rolled out as cash flow was obliterated overnight and consumer spending took a downturn.
Arbitration can neutralise parties and command cooperation following the appointment of an impartial arbitrator.
To accelerate business recovery and prevent the demise of the UK’s largest contributors to the labour market, the UK government introduced state-backed loans, COVID-19 grants, and emergency COVID-19 funding.
A moratorium on winding up petitions was also announced through the Corporate Insolvency and Governance Act 2020 to protect businesses crippled by COVID-19 economic disruption. As creditors waited on the sidelines until the moratorium was lifted on 30 September 2021 to seek legal action against debtors, a wave of corporate insolvencies is now underway as predicted by the sector.
Insolvency statistics provided by Real Business Rescue for Q2 2021 shows that there were 3,116 company insolvencies in Q2 overall. This represents a 31% increase vs Q1 figures (2,371 insolvencies) and is also the highest quarterly insolvency figure since before COVID-19.
When a business is under serious financial pressure due to poor cash flow, tax debts and reduced consumer demand, and can no longer afford to continue trading, it is the director’s prerogative to cease trading and seek professional support. All trading must halt, and a licensed insolvency practitioner must be appointed to review the business and decide to either close the company or rescue the company if there is a possibility of business turnaround.
The primary aim of the insolvency practitioner will be to act in the best interests of creditors, raise funds to repay creditors and maximise value. As a result, ongoing dispute resolution proceedings may be temporarily paused or terminated while the licensed insolvency practitioner takes control of the business.
Insolvency statistics provided by Real Business Rescue for Q2 2021 shows that there were 3,116 company insolvencies in Q2 overall.
The interplay between insolvency and arbitration proceedings will ultimately be determined by national or international insolvency law, the jurisdiction in which the insolvent company operates, contract law and the seat of the arbitration. The type of insolvency procedure pursued on a voluntary or compulsory basis will determine if it is feasible for arbitration proceedings to continue.
Company liquidation – If a company is placed into insolvent liquidation, a licensed insolvency practitioner will be appointed as company liquidator. The liquidator will take control of company affairs and raise funds to repay creditors with the view to maximise value. The closure of the company will be forensically controlled to ensure that all distributions are made per the Insolvency Act 1986, which sets out who gets paid first during liquidation.
If the ongoing dispute concerns a creditor, the circumstances will be judged to determine if an agreement can be reached through arbitration, or if a claim should be submitted through the insolvency process.
Company administration – During company administration, a licensed insolvency practitioner will be appointed as the company administrator to oversee intensive recovery and facilitate rescue, such as a business sale. When entering company administration, the business will be protected against legal action from creditors to allow for uninterrupted recovery.
A moratorium on legal proceedings is automatically applied when a business enters a compulsory insolvency procedure and appoints a licensed insolvency practitioner.
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The Insolvency Act 1986 states that, during a moratorium, no legal process (including legal proceedings, execution, distress or diligence) may be instituted, carried out or continued against the company or its property except:
(i) employment tribunal proceedings or any legal process arising out of such proceedings,
(ii) proceedings, not within sub-paragraph (i), involving a claim between an employer and a worker, or
(iii) a legal process instituted, carried out or continued with the permission of the court
This typically applies to arbitration proceedings, for which express permission must be granted by the court or a licensed insolvency practitioner for proceedings to continue. This is to ensure that a solution can be reached through this route without disruption to the insolvency procedure and a potential breach of creditor rights.
If an application submitted by a creditor can demonstrate that the administration or liquidation process will not be obstructed by continuing arbitration proceedings, permission may be obtained. In this event, the insolvent party will likely be replaced by the insolvency practitioner.
If arbitration proceedings are likely to hamper the insolvency procedure and a solution can be better employed through the legal route, the arbitration agreement may be concluded. The claimant must then pursue their claim through the insolvency process and submit a proof of debt to the licensed insolvency practitioner. If the debt amount is in dispute, this can be challenged through the insolvency process.
If arbitration proceedings are likely to hamper the insolvency procedure and a solution can be better employed through the legal route, the arbitration agreement may be concluded.
During an insolvency procedure, all monetary claims are centralised and dealt with in an orderly and transparent manner.
As the moratorium on winding up petitions has now been lifted, businesses on the brink of collapse may be in the firing line of a winding up petition from creditors or voluntarily enter a formal insolvency procedure.
Steps must be taken to analyse the insolvency risk of financially distressed parties to assess if it is commercially possible for the party to commit to a favourable award, and if they can cover their share of the costs incurred to facilitate arbitration proceedings. This information is publicly available on Companies House, the Gazette and business intelligence platforms, such as Red Flag Alert.
It is paramount to understand the relationship between arbitration and insolvency, upon which a licensed insolvency practitioner can advise you further.
Keith Tully, Partner
340 Deansgate, Manchester, Greater Manchester, M3 4LY
Tel: +44 0161 210 5109
Keith Tully is a partner at Real Business Rescue (part of Begbies Traynor Group) and an insolvency professional with 30 years of experience in supporting company directors in financial distress.
Real Business Rescue is part of Begbies Traynor Group, which recently retained its position as the UK’s leading business recovery practice with regard to total corporate insolvency appointments. The company offers comprehensive director support through its nationwide office network, including representation in Scotland, Wales, Northern Ireland and throughout England.
David Tattersall of Handpicked Accountants shines a spotlight on the importance of introducing ADR as a form of damage control in a partnership split.
Business partnerships are often the solution to a fruitful and profitable commercial relationship between partners. However, not all come to a natural end. The majority of partnership splits are attributed to a relationship breakdown between partners due to irreconcilable differences which can lead to both voluntary and involuntary departures. It is essential to resolve disputes pragmatically and without delay, as the future of the partnership will be at risk.
The extremity of the dispute in question and the fragility of the relationship between partners will determine if alternative dispute resolution (ADR), such as mediation or arbitration, is suitable, or if addressing the matter through formal court proceedings is likely to bring finality to the matter. The circumstances under which a partner leaves will also dictate if the partnership can be revived or must be dissolved.
The governing factor in a partnership is the partnership agreement, which is legally binding and can be used as a handbook to guide partners through major transitions. The basis of a partnership agreement is to establish the roles and responsibilities of partners, in addition to the correct way of leaving a partnership agreement to avoid unexpected disputes.
If informal efforts to resolve a long-running dispute have been exhausted, the matter may be escalated and addressed further through mediation or arbitration. Alternative dispute resolution as a means to remedy a dispute can help address the root of a disagreement and subsequently bring outstanding affairs to a close.
It is essential to resolve disputes pragmatically and without delay, as the future of the partnership will be at risk.
Common reasons for a partnership split can often include personal hardships and general disagreements, or termination as a result of criminal activity or a conflict of interest. As partners are often personally related, dispute resolution must be handled with extra care.
There are many forms of dispute resolution that can provide a safe space for parties to shed their concerns in a controlled environment. The flexibility provided by ADR can help re-establish the lines of communication between partners and help reach a favourable outcome when disputes appear unresolvable. In comparison to legal remedies, ADR can often present a cheaper and less time-consuming solution that is conducted in private to protect the reputation of both partners.
The exit procedure will be determined by the partnership agreement, including the distributions of company assets, liabilities, and the percentage of profits due to each partner. A partnership agreement is the cornerstone of policy in a business partnership as it addresses strict terms all partners must abide by when navigating a partnership split. The power to expel a partner and terminate a partnership may also be drafted into the partnership agreement, which is vital as it can help navigate future claims.
If a mutual agreement cannot be reached under self-determined terms outside of the confines of ADR proceedings, ADR can be employed to bring order and introduce a neutral party to the playing field. Partners may agree to partake in dispute resolution proceedings with the view to negotiating the future of the partnership and distributions.
The flexibility provided by ADR can help re-establish the lines of communication between partners and help reach a favourable outcome when disputes appear unresolvable.
During mediation or arbitration proceedings, a partnership settlement agreement may be discussed to set restrictions on the activity and interactions of the exiting partner following their departure.
Typical clauses in a partnership settlement agreement may include:
Implementing such clauses can regulate future business activity to ensure that the exiting party does not enter into an unfair competition or operate to the detriment of former partners. By aligning the trading advantage between all parties, the dispute can be resolved peacefully.
If the partnership continues following the exit of a partner, these clauses can help restrict unsolicited behaviour that could result in existing clients disengaging with the partnership and diverting their custom to the expelled or departed partner.
If a partnership agreement is not in place, the rulings will automatically default to that under the Partnership Act 1890.
A partnership can be dissolved under the following circumstances, as governed by The Partnership Act 1890:
If a partner issues notice to dissolve the partnership, the partnership will be dissolved with immediate effect.
The Act also sets out the rules for distribution of assets on final settlement of accounts. Company liabilities must be paid out of profits, next out of capital and then by partners in proportion to their share profits, if necessary. Payment of advances must be repaid and any capital due to partners. Any remaining funds will be divided among the partners in the proportion in which profits are divisible.
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Upon resolving the dispute, if the partnership continues with the remaining partners or a replacement partner, care must be taken to reassign company liabilities accordingly. If a partnership agreement is not in place, this may be revisited to reduce risk exposure.
Different forms of alternative dispute resolution can be entered into voluntarily by all partners, such as mediation. If mediation is unsuccessful as partners fail to cooperate, arbitration may provide an alternative that can help bring about a legally binding solution. Partnership splits are often the outcome of deteriorated relationships and can therefore blur reason as emotions remain high. ADR can provide a protective platform for negotiations to progress and can ease the separation between commercial partners.
David Tattersall, Head of Client Relations
340 Deansgate, Manchester, Greater Manchester, M3 4LY
Tel: +44 0800 063 9258
David Tattersall is Head of Client Relations at Handpicked Accountants, with over 35 years of experience in professional services working in finance, accountancy and corporate insolvency.
Handpicked Accountants is a UK SME support specialist. An initiative created by Begbies Traynor Group, the company operates more than 100 offices across the UK to deliver corporate recovery and professional services to businesses, financial institutions and professional advisers.
Below, Robert Rutherford and David Clarke of QuoStar outline the threat that ransomware poses to law firms, along with advice on how these firms can best protect themselves from a virtual attack.
Ransomware is the largest and most prominent risk that law firms face today. These types of attacks have increased by 288% in 2021 and are unlikely to slow down any time soon. It is an unpleasant place to be for firms; the global ransomware business is huge. It generates revenues of over $1.5 trillion and grows by the day.
Any business can be a victim of cyber criminals, but it is law firms that are the top targets globally. These are lucrative companies that have rapid access to significant cash reserves, so they are often able to pay a ransom quickly without seeking external assistance.
Cash flow is not the only reason law firms are targeted. They are essentially service businesses, and service businesses live and die on their reputation. This factor, plus regulatory oversight and vast numbers of electronic interactions with third parties, makes them a prime target for ransom groups.
Law firms hold a lot of detailed data, and that certainly fits with the ransomware business model. Ransomware is essentially a revenue generator for cybercriminals. They can monetise the encryption of data and also the disruption that it causes in a number of ways, such as:
Ransomware is the largest and most prominent risk that law firms face today.
Typically, law firms will have some form of insurance to protect them against the impact of a ransomware attack. For example, a paid ransom will be reimbursed by insurance. However, these payments will only be made if the right cybersecurity and risk controls are in place in the first instance.
Insurance will also not guard against some of the major effects of a ransomware attack. Some groups will demand a ransom only after they have posted all of the firm’s sensitive data – including client data – onto the dark web. In that situation, a firm may be able to get operational again, but the real damage has already been done; the lasting impact goes far beyond simply paying a ransom.
Data can be spread globally for anyone to access, meaning firms have to let clients know that their information is ‘in the wild’, that other parties can access it and can, in effect, use that information to do much greater damage. This can seriously hurt the reputation of the firm and those they work for and with.
Regulators, too, will compound that damage and ensure that firms comply with protective measures. Law firms are now looking at huge fines from these industry bodies, such as the Information Commissioner’s Office (ICO) and Solicitors Regulation Authority (SRA), if they do not have the right security controls and governance in place.
Insurance will also not guard against some of the major effects of a ransomware attack.
Too many firms still deal with risk and IT security as separate entities. They often leave the responsibility of being secure from cyber-attacks to their IT team, but this approach will not bear scrutiny from regulators, clients or the media. Risk is a much broader responsibility, and it is not something that should rest entirely with IT.
Of course, the IT team does play its part, but like every important functional operation in a firm, governance is key. The whole firm needs to be aware of its own role in controlling risk, especially as most IT breaches come from employees doing something they should not. The biggest threat to a firm’s security can, more often than not, come from something as simple as someone unsuspectingly clicking a link in an email, or giving information out over a phone.
Other major risks to a firm’s security come from potential vulnerabilities within IT systems that face the internet, including those run internally and through third-party electronic links into a firm, such as partner organisations, cloud providers and website hosts. Every one of these links to a firm poses a risk, and they must be evaluated and tested. As a result, law firms should exercise penetration tests to ensure their own systems are effective. They must also look to their external relationships with third parties to ensure that these partners also have effective security controls and governance in place.
Where ransomware is concerned, there are basic measures that should be in place to ensure firms have controlled the bulk of the areas of risk.
Ransomware attackers are focused on encrypting data, which could take a business down for several days. Organisations should therefore ensure backups are not located on the same network (local or wide area) as their data, as this could leave a firm with no chance of recovery.
While many businesses patch their systems to fix security vulnerabilities on a weekly or monthly basis, this simply is not enough. IT teams need to continually be alerted of new and emerging threats, or rely on specialist IT security partners to deal with these dangers with urgency.
IT teams need to continually be alerted of new and emerging threats.
Again, staff can often be the weakest link, and there are critical measures that firms need to put in place to protect themselves. As a minimum, employees should be given the training they need to spot suspicious behaviour online.
But there is more that firms can do. Many allow their staff to connect at home or other locations such as coffee shops and hotels, often over unprotected networks. Controlling these risks via a VPN solution is critical.
Others may allow staff to plug anything into a work computer, such as USB drives. Do not forget that for decades computer disks were the primary way for viruses to get onto IT systems, and this risk has not gone away. It is important that USB ports are locked down to only known IT-approved devices.
Other ways in which law firms can create barriers to deal with security threats include having an advanced email security protection system in place, to check both links and attachments from emails, and Next Generation AntiVirus, which can spot ransomware attacks before they do any damage. The traditional AntiVirus solutions are no longer enough.
Firms should also use two-factor authentication. This is one of the most effective ways of protecting against ransomware and security breaches. Third parties may be able to steal a password, but they cannot get access to systems without using a known device.
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Finally, firms will need a system that continually looks for suspicious behaviour (a Security Information and Event Management System or SIEM), and a team that can take any alerts and respond to them accordingly ( Security Operations Center or SOC). These are the last steps and can be expensive, so firms should really make sure that they have covered the basics before looking down this road.
With cyber-attacks ever-present, firms must really understand all the risks they face and what the likelihood of those risks being exploited is. The question is, how can this be done?
Law firms need a system or a framework in place. Too many organisations think they have Cyber Essentials and believe that this covers all aspects of cybersecurity. However, the Cyber Essentials and Cyber Essentials Plus certifications only represent the most basic level of protection.
The only way a firm, and particularly the leadership, can get a grip on IT security is to work to a governance level – to implement an Information Security Management System (ISMS). An ISMS, such as ISO 27001, will give law firms a detailed understanding of their risks and how to control them. This should also extend to third parties, as accountability cannot be outsourced when it comes to risk.
Those with an ISMS are already doing the right thing from a leadership perspective by ensuring they know their risks, know the control measures in place and continually review them. They are able to make a call about what they need and want to put in place – based on real knowledge.
Ultimately, the firm’s board will be responsible and accountable for the security of their firm, and so it is crucial that to understand the role they play in order to act more efficiently.
Together, all these measures will form a robust defence and continual improvement operation for any law firm, ensuring they can defend themselves and respond to security incidents as well as the growing threats they face.
Robert Rutherford, CEO
David Clarke, Chief Information Security Officer
Waverley House, 115-119 Holdenhurst Road, Bournemouth, BH8 8DY
Tel: +44 01202 055400
Robert Rutherford is an IT industry leader with over 24 years of experience working with IT and business systems. He leads QuoStar by providing strategy and vision for the business whilst also remaining active with clients, providing insight and solutions for their various business challenges and opportunities.
David Clarke is a veteran cyber-security consultant with over 25 years of experience in the sector. He has worked with clients ranging from SMEs to the FTSE 100 and previously held Global Head of IT Security roles at BT and Radianz, during which he was responsible for managing the security infrastructure and delivery of ISO 27001 for multi-billion-dollar environments.
QuoStar is a full-service IT provider that delivers fully managed IT support, consultancy, co-sourcing and cloud services alongside a range of other offerings for businesses with 30 to 300 staff. QuoStar has a track record of helping mid-sized law firms to grow and gain a competitive advantage by delivering specialist IT support, consultancy and security services in the sector.
Matt Gould, Head of Legal Transformation at ContractPodAi, delves into the latest trends in legal tech below. What are the benefits of transitioning away from traditional contract management processes and adopting AI and automation?
The age of automation has been upon us for a number of years now, but the legal industry in particular has been less inclined to adopt and implement this new technology. Prior to the COVID-19 pandemic, legal teams’ success was possible despite how little they used advanced digital tools.
Nevertheless, companies are evolving quickly during this time of crisis, which has only increased the need for legal automation. If the pandemic has taught us anything, it is that technology is critical to companies’ productivity, business continuity and overall sustainability.
The legal industry has consisted of manual and siloed processes, historically speaking. But the average Fortune 500 company can have as many as 40,000 active contracts at any given time, and the consequences of one little mistake can be rather high. That is why using legal technology and making artificial intelligence (AI) a part of your contract management process is crucial. With such automation, legal teams are able to have unlimited access to — and control over — contracts, as well as mitigating risks, cutting costs, and freeing up their time for higher-value, strategic work. They can also shift the perception of in-house legal teams from a cost centre to a total value centre.
It may surprise you to learn that the majority of medium and large companies still have manual contracting processes — more than 70%, in fact, according to Gartner. Perhaps the most time-consuming responsibility for legal teams is the management and manual review of contracts and related documents. By adopting end-to-end contract lifecycle management (CLM) solutions, though, they can reduce pressure on the legal department. With a controlled negotiation cycle, a common approval workflow, and an industry-standard, integrated electronic signature system, more specifically, they are able to focus on more strategic matters.
Perhaps the most time-consuming responsibility for legal teams is the management and manual review of contracts and related documents.
Given the importance of moving an agreement forward in a timely manner, deploying legal technology to lessen — and even eliminate —the time-consuming work around them not only benefits legal teams, but also the wider organisation.
For some industries, the shift to remote work was a near-seamless transition. Unfortunately, this was not the case for legal. Remote work has presented a challenge for lawyers, as many contracts still consist of physical documents and files or are stored digitally within on-site servers. One of the many benefits of contract automation, though, is that legal teams can have unlimited access to contracts. This enables them to work anytime and anywhere — when access via digital platforms is more important than ever before.
Granted, the use of tools like Excel and cloud storage for contract management is a small step in the digital transformation journey. However, using end-to-end CLM technology will take general counsels (GCs) and legal teams even further along the path.
On average, agreements cost $6,900 but can reach as much as tens of thousands of dollars to generate. Though legal teams are commonly referred to as a “cost centre,” the reality is that automation can help change this perception by making contracts easier to understand and more standardised. End-to-end CLM technology also leads to the quicker creation of contracts and reduces production costs, while serving companies’ overall objectives.
Due to the high volume of contracts within a company, as noted above, mistakes are inevitable. These mistakes include losing contracts, with 12 to 15% of all contracts being reported as lost or unaccounted for, according to the Aberdeen Group. The consequences of such errors can be extremely serious and, oftentimes, leads to lawsuits. In fact, according to Gartner, “contract disputes represent 64% of cases in (US) state courts.” To mitigate the risk associated with contracts, then, companies tend to purchase insurance. But through the use of AI, legal teams can quickly find outliers, spot risky clauses like limitless liability, improve compliance consistency and never have to worry about contract mismanagement.
According to Gartner, “contract disputes represent 64% of cases in (US) state courts.”
Finally, CLM systems offer legal teams total control of their contracting ecosystem. They allow for approvals across the organization while setting up processes to request, produce, negotiate, analyse, sign, and manage companies’ agreements.
As long as this legal technology continues to digitally transform organisations’ systems and processes, it will go on disrupting the legal industry in new and exciting ways. In the end, such legal digital transformation will not only refine, but also redefine the legal profession. But adapting to new technology certainly requires change management and an alignment with forward-thinking partners and customers. This enables all parties to manage contracts and related documents, and overall business operations, with the future fully in mind rather than being held back by traditional contracting processes.
Indeed, innovation is no longer merely a choice. In a World Commerce and Contracting survey, the majority of respondents acknowledged the need for contract management technology. In fact, more than 80% indicated that they have already implemented automation solutions or have plans to do so. Respondents who currently utilise automation in their contract management systems (CMS) said they considered the disruptive technology to be ‘business critical.’
So, it may not seem like a must-have for your business right now. However, the reality is that as companies scale, so will the need for legal technology that supports their individual growth — and inevitable expansion.
Matt Gould, Head of Legal Transformation
5 Merchant Square, 7th Floor, London W2 1AY
Tel: +44 (0) 207 096 1401
Matt Gould is the Head of Legal Transformation at ContractPodAi and leads the firm’s legal teams. He brings over 20 years experience as a general counsel leading global in-house legal teams in the telecommunications and tech sectors. Previously, he was General Counsel for EMEA at Telstra and General Counsel at LycaMobile.
ContractPodAi is a well-established leader in end-to-end contract lifecycle management, harnessing the unrivalled AI power of IBM Watson and Microsoft Azure to lead corporations around the world. From its London headquarters and global offices, ContractPodAi amplifies businesses’ readiness through partnerships with complementary technology providers including IBM, Microsoft, DocuSign, and Salesforce. ContractPodAi is also the recipient of several awards and has been named a Visionary in the 2021 Gartner Magic Quadrant report for Contract Lifecycle Management.
