Understand Your Rights. Solve Your Legal Problems
‘After the Renewable Energy Act passed in 2008, under the law and related regulations, only projects that have been certified by the Department of Energy (DOE) qualified for the feed-in tariff (FIT) shall receive the corresponding permits that will entitle the project to the corresponding tariffs’, explains Najha Estrella, Partner at PJS Law.
‘As a result, RE developers raced to build their projects for inclusion in the programme, resulting in some solar and wind projects that have been “stranded”.’
Partners Najha and Monalisa Dimalanta speak more on the energy sector in the Philippines, below.
What are important aspects to consider when negotiating power purchase agreements?
Monalisa: In the Philippine context, the type of contract or target customer would matter: end-users belonging to the contestable market (i.e. consuming a monthly average peak demand of 750kW) are free to negotiate PPAs directly from registered Retail Electricity Suppliers (RES) and these contracts are not subject to any price regulation or review by the Energy Regulatory Commission (ERC). These retail PPAs, however, under the current regulations cannot have a term longer than two years. On the other hand, wholesale PPAs between generation companies and distribution utilities generally provide for longer term of 10 to 25 years, but are subject to various regulatory conditions including compliance by the utility involved with competitive selection process for the awarding of PPAs and ERC-approval for the PPA, particularly the tariff, as condition for implementation. Tariffs are generally benchmarked against similar plants in the system with PPAs that were previously approved by the ERC.
Najha: Apart from what Monalisa discussed, factors that generally affect regulated or wholesale PPAs in other jurisdictions likewise, should be considered. For instance, given the benchmarking approach of the regulator, the type of fuel for the plant matters as well as whether the supply is contracted to provide baseload, mid-merit or peaking requirements of the utility. Most utilities also require suppliers to be responsible for replacement power in the event that the plant or facility experiences any outage. There is a fully functioning wholesale electricity spot market or WESM in the Philippine power industry that can provide such replacement power supply, but price volatility could be an issue.
How do you advise your clients on the best approach on this matter?
Monalisa: We always ask our clients to identify their commercial drivers at the outset and then we structure a PPA on that basis. For instance, are they looking to finance a greenfield project? In which case, we would normally suggest a long-term PPA with an established utility and then prepare a selection of prospective utilities as well as contracting and regulatory approval timeline for them. On the other hand, if they are looking at supplemental or substitute PPAs only to expiring ones, we would suggest looking at the retail market for better commercial options and minimal regulatory oversight.
You work on difficult questions of law in litigation and appellate practice; can you share your biggest challenge so far and how you overcame it?
Najha: For the Energy Practice, the biggest issues so far have been on the regulatory side. For instance, we are still waiting for Supreme Court to decide on the legal issues arising from a spike in electricity prices in Luzon that happened back in 2013. Because of the significant hike in generation rates, the contracting and dispatch arrangements by certain utilities with their suppliers were challenged first with the ERC and then the decision of the ERC was brought to the Supreme Court. While the factual circumstances may no longer prevail and indeed because of other safety nets put in place since then it is unlikely to be repeated, there were other legal and regulatory issues in the case that await final resolution.
There is also another case pending with the Supreme Court on certain actions by the ERC regarding validity of certain bilateral power contracts executed by utilities immediately before the requirement of competitive process took effect.
Monalisa C. Dimalanta
Najha Katrina J. Estrella
We are the lead Partners for PJSLaw’s Energy Practice. PJSLaw is a Philippine-based law firm that assists clients from various parts of the world. We are a full-service legal practice established in 1997 by three young lawyers and have since grown in size to 47 fee-earners to date. We are ranked Tier 1 by various legal publications in the area of Energy, and among the Philippine firms cited as outstanding/recommended in the fields of M&A, Banking/Project Finance, and Dispute Resolution.
The devil is in the detail… Don’t get caught out by the traditional equity partnership model
David Beech, CEO of Knights 1759, the UK’s fastest-growing regional professional services business, discusses the controversial topic of how and why so many traditional law firms are concealing debts and risking the livelihood of optimistic lawyers.
It’s no secret that these are challenging times for some of the UK law sector as it tries to keep up with emerging digital trends and increasing demand from clients. But there is buoyancy in the market and opportunities for those businesses that are agile and brave enough to challenge the status quo - the traditional equity partnership model.
At Knights 1759, we’ve seen it all too often where partners have been duped into putting their assets against a failing business that is riddled with debt. We’ve even received calls from partners to discuss bankruptcy and that the possibility of moving house is no longer possible, due to the Limited Liability Partnership (LLP) they joined going into liquidation.
Why are traditional law firms riddled with debt and failing?
Last year it was reported that profits decreased at half of UK law firms[1] and the collective debt held by the top 100 firms reached £4.3bn – a 14% increase in 12 months[2].
This ultimately comes down to an archaic way of working and outdated business structure. An LLP is no longer an efficient and effective business model for law firms. Decision-making is painfully slow amongst partners, overheads are spiralling out of control with businesses employing an unnecessary number of support staff which leads to rising debts and a troubled cash flow.
How are traditional law firms able to conceal debts and convince new and existing partners to put in equity?
When tax returns are filed in January, it is unfortunately a time when even more partners get lured in to putting equity into a dying business and the devil really is in the detail.
As cash is running out the managing partner convinces existing partners, potential new partners and the banks financing LLPs, that the Work in Progress (WIP) stated within the accounts of the firm as ‘current assets’ is a real and tangible asset when a large proportion of it is irrecoverable.
The WIP figure actually provides a comfort blanket for existing partners and helps to convince prospective partners that equity partnership, the Holy Grail, is valuable and should be aspired to. However, the unfortunate reality for many LLP members is that it is a high risk career move that can easily end in financial disaster.
Those managing LLPs retain old, non-billable and non-collectable WIP on their balance sheets and pay tax upon it in preference to the unpalatable alternative, which is to admit that their business is distressed. If the truth comes out, there is a significant likelihood that the banks will demand that the partners “put more skin in the game” and will facilitate this by making Professional Practice Loans (PPLs) available.
Deceit and deception
Essentially, new partners that pay into the failing LLP are being deceived. Busy partners that are focused on generating new work and service delivery day-to-day are not privy to the conversations being had with the banks. A cash call could be sent out to partners on the basis of a desire to increase growth yet the actual reason is being concealed as the organisation finds itself in distress. Complete trust is put in the management board as the LLP’s overheads spiral out of control and cash flow failures are unknowingly putting their personal assets at risk.
The monies raised from the partners will be used to reduce the LLP’s debt to the bank. In the bank’s eyes, this then improves the firm’s position swapping its poor security - the LLP’s WIP and debt book – for the personal assets of the LLP’s partners, which are left wide open for attack. Partners who meet a cash call from a failing LLP are literally putting their family’s homes ‘on the line’, but few think about the risks.
Truth sacrificed
Usually those on the management board have the most to lose because of significant capital tied up in the LLP.
The truth is sacrificed in favour of the misguided view that a greater good will be served if the facts are suppressed and the cash call progresses. Of course, the bank will not disclose its concerns about the LLP. It is not in the bank’s interests to reveal the inconvenient truth behind the cash call; its willingness to lend more money by way of PPLs also conveniently reduces its exposure to a distressed LLP.
A whole paper could be written about why lawyers do things which they would never advise their clients to do. But having acted for hundreds of former partners of various failed LLPs, we believe that the misstatement of the WIP is the very tip of a highly unprincipled ice-berg.
The alternative solution
So, what is the alternative and is it really all doom and gloom for the legal sector? Thankfully not. There are opportunities in the sector for those organisations that are bold enough to change their business model.
Law firms should introduce a corporate structure which requires no capital contribution, allowing partners within the business to flourish and do what they do best.
Alternative Business Structure (ABS) licences have opened up the legal sector to an entirely new way of working. However, they are yet to make the instant impact many would have predicted in 2012.
Since being established, more than 700 ABS licences have been granted. Yet only around 25 of these law firms have truly embraced the opportunities it brings for business growth and very few have secured external investment and made significant changes to their business model.
The next move for a managing partner?
Judging by the signs of distress in the legal market and the approaching gloom in the economy, it’s likely that many more law firms will fail than ever before.
As a partner, if you are tempted to meet a cash call, do your due diligence or better still, avoid putting your personal assets at risk and move to a well-funded and properly managed corporate structure which does not require you to make any capital contribution at all.
Knights is a UK top 100 legal business. Find out more at www.knights1759.co.uk or join the conversation at @Knights1759
About Knights 1759:
Knights 1759 was founded in 1759. It operates from six regional offices in Derby, Chester, Cheltenham, Oxford, Newcastle-under-Lyme and Wilmslow.
Knights 1759 is a full service professional services business with a team of circa 500 staff.
In January 2013, Knights 1759 became the first UK commercial law firm to be granted an ABS licence and attract private equity investment and is now one of the fastest growing legal firms in the UK with a team of 500.
Knights 1759 provides specialist legal and professional support to businesses in all areas of corporate, commercial and real estate. As well as support with legal issues, Knights’ ABS status enables it to provide ‘non-law’ services such as town planning, corporate finance, management consultancy and specialist tax advice. Knights 1759 is also highly regarded for its specialist private client work in the areas of family finance, agricultural and rural affairs, landed estates, property sales and purchases and complex wills, probate, tax and trusts.
[1] Source: PwC Law Firms’ Survey
[2] Source: Edward Drummond
Application for a Post-Judgment Freezing Order: The Risk of Dissipation, written by Adam Knee
Freezing orders are sometimes described as the English Court’s “nuclear weapons”. They are often very effective in preserving assets that can then be used to satisfy a judgment debt. However, they are also onerous, invasive, can cause damage to reputation and massive disruption to a business or individual. The Court does not therefore grant them lightly.
In relation to post-judgment freezing orders, just because a defendant has not paid a judgment does not mean a claimant has an automatic right to get a freezing order against that defendant’s assets. This article will consider the circumstances in which a Court will grant a post-judgment freezing order with particular reference to the recent case of Great Station Properties S.A and others v UMS Holding Ltd and Others [2017] EWHC 3330 (Comm)
Criteria for a Freezing Order
To obtain a freezing order, a Claimant needs to establish three things:
In the case of a post-judgment freezing order, there is no need to prove you have a “good, arguable case”; you already have a judgment! The Court will instead focus on the latter two issues, particularly the risk of dissipation.
Risk of Dissipation
A risk of dissipation basically means that, if left unrestrained, a defendant is likely to either hide or transfer away his assets so that the applicant cannot enforce a judgment against those assets.
In the Great Station Properties case, the Court accepted there was such a risk and granted a freezing order. The factors the Court took into account in making this determination are summarised below but first it is useful to briefly recite the facts of that case.
Case Summary
The Claimants were two companies beneficially owned and controlled by Vladimir Lukyanenko (a Russian and Ukrainian citizen). The Defendants were three companies beneficially owned by billionaire Konstantin Grigorishin. A dispute arose over a joint venture in which Mr Lukyanenko’s companies held 49% of a Cypriot company called Stremvol Holdings Limited. The Defendants held the other 51%. The Claimants claimed that there had been “an illicit scheme” whereby the Defendants had covertly diverted profits and opportunities away from the joint venture to companies connected to the Defendants. Following an arbitration, the Claimants had been awarded over $300 million in damages.
The Freezing Order Application
The Claimants’ application for a freezing order relied heavily on the facts and issues arising out of the arbitration. In particular:
The arbitration tribunal had accepted that the Grigorishin Defendants had engaged in an “illicit scheme” to ensure that profits that ought to have been shared with the Claimants were instead paid to companies in Mr Grigorishin’s control. The Court accepted that, if Mr Grigorishin was prepared to manipulate his companies to deprive the Claimants of their money, there was a real risk he would also manipulate his companies to prevent the Claimants from recovering damages caused by his actions.
The Court added that Mr Grigorishin’s conduct in the “illicit scheme” had been dishonest, which further supported the conclusion that he might dissipate assets.
Furthermore, Mr Grigorishin’s evidence in the arbitration had been that he did not know who owned the companies that had received the profits and opportunities under the “illicit scheme”. The tribunal did not accept this and the Court inferred that Mr Grigorishin had in fact lied in his evidence.
Mr Grigorishin had transferred shares in several companies for free to an old school friend to make it look to the Ukrainian authorities that he did not control them, when in fact he did. He had done this to circumvent a Ukrainian law (enacted following hostilities between Ukraine and Russia) that required companies to disclose their ultimate beneficial owner. Any companies with Russian ownership had their business licences revoked. The court held that this was relevant to risk of dissipation because it showed that Mr Grigorishin was prepared to give misleading information about his assets.
For all of these reasons, the Court held that there was “solid evidence” of a real risk of dissipation and granted the freezing order.
It is quite unusual to get a post-judgment freezing order. The purpose of a freezing order is normally to preserve assets in the jurisdiction pending determination of the claim. However, it is interesting to note that, in this case, the Claimants were able to use the information that came to light during the course of the arbitration proceedings about the Grigorishin Defendants’ conduct to get a freezing order. None of the evidence they used demonstrated that the Grigorishin Defendants were in fact dissipating assets. However, the findings made in the arbitration (as highlighted above) strongly suggested that they would do if not restrained. For example, it is evident that Mr Grigorishin’s intention in transferring shares to his old school friend was not to dissipate assets so as to avoid judgment. However, the Court held that this conduct was still relevant to the issue of risk of dissipation by effectively reasoning that if Mr Grigorishin could transfer away assets for one reason, he could do it for other reasons, including to avoid paying the judgment.
Adam Russell-Knee
Adam Russell-Knee is a solicitor at law firm Byrne & Partners. He works in the firm’s commercial litigation department handling a range of High Court litigation and international arbitration cases. He has a particular specialism in jurisdictional issues and conflict of laws.
There would be numerous points to raise in order to help innovators to be successful with patents, but one point seems striking to Rainer Kuhnen.
There would be numerous points to raise in order to help innovators to be successful with patents, but one point seems striking to Rainer Kuhnen:
‘For innovative companies, it seems that the most difficult part is to keep secrecy of their innovations. This is because once the idea of the invention has gone public - which is if only one other person who is not obliged to confidentiality has become knowledge of it - obtaining a respective patent is no longer possible.’
‘Hence, in order to take business advantage by patenting, one should follow the golden “First to file” rule: “First file an application for your invention with the patent office and then start with marketing your invention!”’.
How have you seen the electrical engineering sector change over the years and how has this affected your line of work?
Over the years, there have been many changes in connection with progressing digitalisation and increasing network connectivity often summarized with the buzzword “Internet of Things” (IoT). Though IoT clearly fuelled the patent activity in the recent years, in particular in the field of smart sensors, it also provides for new challenges in patent prosecution and enforcement.
Besides legal questions of who is owing the collected data, how to ensure privacy and cybersecurity, one of the biggest challenges for established innovative companies lies in the licensing regime under the prevailing standardisation in the telecommunication field. Though holder of standard essential patents (SEPs) are obliged to provide licenses under FRAND (fair, reasonable and non-discriminatory) conditions, negotiations with hundreds of SEP holders are simply neither practical nor affordable.
On the other hand, it is often overlooked that the fact that a patent is regarded standard essential does not per se guarantee its validity. Hence, we experienced a growing number of patent disputes with newcomers in the market who were able to successfully invalidate SEPs. Another growing field in our work was helping SMEs in countering infringement assertions of non-practicing entities or patent assertion entities - pejoratively considered as “patent trolls” - based on outdated SEPs that have been cheaply purchased from telecommunication firms.
What do you think is the most difficult aspect of ensuring a patent is unique?
A valuable patent is one that provides a broad scope of protection. However, this goal is inherently in contradiction with the validity of the patent. In other words, a valuable patent is worth enforcing, but resistant to invalidation.
Hence, to obtain a valuable patent, the art is to find the balanced wording for a claim that legally provides a market advantageous and technically meets the requirement of novelty and inventive step in view of the existing prior art.
As European and German patent attorneys, we are legally and technically qualified and trained for this art and, at Kuhnen & Wacker, you benefit from over 40 years of experience in IP.
How has technology affected your field and how do you think it will evolve in 2018?
With the growing implementation of an “Internet of Things”, several technology fields that had its own markets in the past are coming together. This trend will continue in 2018. Therefore, IoT is requiring the companies and patent attorneys alike to work more interdisciplinary and to understand risk and challenges of entering the standardised telecommunication field. As one of the long-standing and larger patent law firms in Germany, our patent attorneys are covering all main technical areas allowing interdisciplinary working as needed.
Do you have a new year’s resolution that will enable you to develop yourself for the betterment of your clients?
Today’s fast communication has led to a fragmented working day and does often not leave enough room for deep thinking. However, to provide not only a quick work-around but a well-founded IP strategy tailored to the need of the client, sufficient time is essential.
Hence, my new year’s resolution is to delegate more of my managing tasks as partner, to free up more of my working time for providing legal and technical expertise and establishing successful IP strategies.
Rainer K Kuhnen
Partner
KUHNEN & WACKER Intellectual Property Law Firm
Prinz-Ludwig-Str 40A
Freising/Munich 85354
Germany
Tel +49 8161 608 0
Fax +49 8161 608 100
www.kuhnen-wacker.com
Rainer Kuhnen is partner with the renowned IP law firm KUHNEN & WACKER. As a German and European patent attorney, he specialises since over 20 years in patent prosecution and litigation proceedings, especially in the fields of electrical engineering, electronics and physics. Mr Kuhnen holds a master’s in electrical engineering and information technology from the Technical University of Munich and an LLM in European IP law.
So you’re going to the Appellate Court: What does this mean and what should you expect?
Peter Pierce speaks to us about how he prepares his clients for the Court of Appeal and how he demystifies the often confusing process.
What are the top three things you must take into account when attempting to demystify the appeals process for clients?
First, clients who have lost (or won) their cases often believe that an appeal is a “do over” of the proceedings in the trial court. This is usually not the case. Unlike the trial court, the Court of Appeal is not weighing evidence in a search for the truth; the Court of Appeal is searching for error. The Court of Appeal will find reversible error, only if the trial court made a mistake serious enough that there is a reasonable probability the outcome would have been different absent the mistake. Otherwise, the error will be harmless and the judgment will be affirmed. I explain this to the client and then advise on the chances of the Court of Appeal finding reversible error.
Second, I manage the client’s expectations as to what winning the appeal means in practical terms. Often, winning on appeal does not mean winning the case on the merits. It might mean reinstatement of a dismissed case, a chance to amend a complaint, a new administrative hearing, or a new trial. I explain the possible outcomes on appeal to avoid unpleasant surprises when the appeal is decided.
Third, clients who have lost in the trial court often want me to include in the opening brief every possible ground for reversible error. With few exceptions, I urge clients to authorise me to select the best two or three issues for convincing the Court of Appeal that reversible error has occurred. An opening brief is as good as its weakest argument, and weak arguments distract from stronger ones. Better to pick only the ones with a reasonable chance of success and leave the Hail Mary for church.
What would you say are common reasons to why cases are taken to appellate courts in California?
A significant number of clients choose to appeal because they feel jurors or the trial judge did not understand their position or listen carefully enough to their case. There are many reasons why they may feel this way. I have had clients complain that they lost because the trial judge did not specifically address all of their legal arguments and factual points in the decision. Then, when they lose on appeal in a more thorough opinion, they are satisfied that, at a minimum, their position was understood and carefully considered.
Institutional clients often appeal to establish a particular legal principle that will benefit them in future litigation. Of course, there is always the risk that the opposite of the desired principle will be established on appeal, so I work with clients to carefully evaluate the pros and cons of attempting to move the law in a particular direction.
What would you say is the key behind having a positive decision made after taking a case to the appellate court?
Favourable law and facts create the most obvious path to a successful outcome on appeal. But in many cases, the law and facts do not dictate a clear outcome. There can be close calls. In those cases, several factors are key in maximising your client’s chances of success. First, be scrupulously honest with the facts and the law. Do not oversell your case; you will lose credibility. Second, do not be afraid to concede points that are unnecessary to win the appeal. This will help build credibility. Third, do not be an idiot in your brief(s). Personal attacks designed to cast aspersions on the opposing party or opposing counsel invariably boomerang to reflect poorly on the attacker. They pave a fast track to losing all credibility. They distract the court as well, so avoid them.
What should corporations take into account prior to taking their case to appellate courts?
Corporations should always be mindful that litigation is a way of business in the United States, and that their practices will be frequently examined in the appellate courts. They should carefully evaluate the potential impact that legal arguments asserted today will have on their future interests. Tone is particularly important in briefs filed on behalf of corporations. Avoid appearing like the big bad defendant picking on the plaintiff with less resources.
Certified Appellate Specialist
State Bar of California Board of Legal Specialization
Richards, Watson & Gershon
44 Montgomery Street, Suite 3800
San Francisco, California 94104
Tel: (415) 421-8484
RWG delivers practical advice and solutions tailored to the unique needs of public entities. Working seamlessly across offices in Los Angeles, San Francisco, Orange County, Temecula, and the Central Coast, our dedicated team of experts provides the full scope of public law services.
ADR is still a work in progress; some legal experts prefer the traditional method of litigation. The benefits of mediation are well known. Education remains the key to promotion of arbitration in Australia. We speak with John Wakefield on the matter.
You have a wide area of expertise, can you share which is the most challenging in terms of commercial litigation? Which area do you believe benefits the most from ADR?
Litigation is ultimately about people, whether in their private capacities, or as officers of corporations or trustees. It is usually concerned with monetary compensation which might be inadequate to resolve the emotional issues of the individuals involved. This is likely the case in areas like estate administration but can apply equally to other commercial disputes. ADR, at least in the form of mediation, gives the individuals some opportunity to resolve emotional issues either by the process itself or the terms of the settlement agreement. It is flexible and can be more creative about the way in which a dispute might be settled other than by the payment of money or the type of relief available in the courts. All litigation is challenging given the dynamics introduced to the process by the motivations and/or interests of the parties, the complexity of the legal issues involved, the lawyers and even court procedure. ADR generally offers the opportunity to parties to take more control over the process and appropriately handled to achieve savings in time and costs. It also offers privacy.
Some professionals do not promote the idea of mediation and arbitration, as they stand true to believing litigation is the best method for specific disputes; what is your opinion on this?
Mediation has been well known as a form of ADR since the 1980s. The market for mediation in Australia is mature. I would be very surprised if any legal professional was not aware of the availability of mediation and its benefits. In some areas of the law it is compulsory and clients expect it.
The same cannot be said for arbitration. Until quite recently it was not taught at undergraduate level in law schools and I do not think it is well understood more generally in the profession. Like the court process, arbitration results in a decision which is imposed and which is enforceable. However, in arbitration the parties have more control over the process. It is private and the opportunity to review an award is more restricted than rights of appeal in litigation. In international arbitration enforcement of awards is facilitated by the New York Convention in more jurisdictions and more easily than enforcement of court judgments internationally. One criticism of arbitration is that the perceived benefits of the saving of time and cost are illusory. This is likely to be the case if arbitration is conducted in the same way as commercial litigation. Significant expenses occur in areas like discovery, preparation of witness statements and cross examination at hearing. Properly managed arbitration allows the parties to adopt procedure more suited to the resolution of their dispute. This can include limiting or dispensing with some aspects of procedure at a saving of costs when compared with the litigation process. Local lawyers should be encouraged to understand, become experienced in, and encourage their clients to adopt such procedures in arbitration to reap real benefits in costs, and time saving.
Unlike the position in most civil law and many other common law jurisdictions, the arbitration culture in Australia is far from mature. With amendments to the International Arbitration Act 1974 (Cth) and the introduction of the uniform Commercial Arbitration Acts domestically there is an up to date and effective structure promoting best practice for the conduct of international and domestic commercial arbitration in Australia. Arbitration has the strong support of the judiciary. Ultimately however the key to building up an arbitration culture internationally and domestically lies in education of users both legal professionals and their clients as to the points of difference between litigation and arbitration and the benefits of arbitration and how realistically to achieve them. The law schools and professional bodies have an important role to play in this process.
John Wakefield
Chairman of Partners | Sydney Office
+61 2 9390 8302
john.wakefield@holmanwebb.com.au
John Wakefield is the Chair of Holman Webb Lawyers a mid-tier firm with offices in Sydney, Brisbane, Melbourne and Adelaide. He practises in dispute resolution including international and domestic arbitration. John is the Australasian Trustee of the Chartered Institute of Arbitrators and a past President of the Australian branch. He is Chair of the Australian Disputes Centre which provides mediation training to the National Mediation Accreditation Standard and accommodation for private dispute resolution including arbitration and mediation in Sydney. John regularly speaks on issues involving alternative dispute resolution.
Holman Webb is a commercial and insurance law firm with over 60 years experience and the scale to provide a top-tier level of legal services.
Cybercrime is a growing concern. Hackers and criminals have taken opportunity to use technological advances to gather sensitive information on you, me and anybody. And over time we have seen big companies fall victim to such attacks; Uber, T-Mobile, Equifax and even Pizza Hut, have been victims of vicious cyberattacks, causing an uproar and individuals feeling greatly at risk, because let’s face it, we never really know who has our data and information.
With GDPR coming into effect in May 2018, we are long anticipating whether the new regulations will help tackle cybercrime, or at least the after effects of such an event. This month we speak with Andre Pienaar, who is the founder of C5 Capital and a lawyer, as well as an expert on cyber law and cybercrime. He explains how when a prominent company such as Uber have been breached, the legal counsel will be at hand to deal with such an issue. Nonetheless, bounty programmes are fraught with compliance and fraud risks
Therefore, Andre speaks on the first course of action any company should take when faced with a cyber risk and if GDPR addresses all issues cybersecurity presents.
What would you say is the first course of action any company should take when under a cyber-attack?
Don’t panic. Understand what is at risk, consult the incident/crisis response plans that every company should have on file (and should be tested regularly) and determine what the appropriate action is. Engage experts for specialist incident response and forensic skills, or when an independent investigation is required.
What is the most complex form of a cyberattack and how would you say a company should work around it?
A regular complex form of cyber-attack is the insider threat. It is often said that employees are a company’s most valuable asset. This is of course true. They have access to the most sensitive information and we rely on some of them to maintain the security and functionality of our systems.
From file hijacking, keylogging and taking screenshots, which poses the most complexity when trying to overcome the damages?
Ransomware regularly makes headlines when it cripples a business by denying them access to their own information and systems. But the most complex and dangerous attack to overcome is a sophisticated targeted cyber-attack aimed specifically at your company. Defending against such targeted attacks is a challenge most businesses cannot muster and even more cannot even detect that they have been breached; thus, allowing an unknown unauthorised attacker to access sensitive company secrets, without the knowledge of the business. We have seen this result in valuable intellectual property and research being stolen, or competitors getting inside information about deals or strategy.
Do you believe the GDPR Act addresses all cybersecurity issues? If not, what else do you think should be addressed?
The European Union General Data Protection Regulation focuses on protecting European citizens and, more specifically, their personal identifiable information. Many of the principles GDPR introduces (such as Privacy by Design, which ensures that security is properly considered from the outset of any project that will handle personal data) are founded on cyber security best practices. But there are other areas of cyber security, such as the availability of systems or security controls on areas that do not pertain to personal information, that go beyond GDPR.
Data controllers will be required to report data breaches to their data protection authority unless it is unlikely to represent a risk; what classes as a risk?
Under GDPR it will become mandatory to report a breach involving personal data, unless the data breach is unlikely to result in a risk to the individual’s “rights and freedoms”. These rights and freedoms are detailed in Recital 75 of the GDPR and include any personal attributes or personal data being revealed. Regardless of the type of data, there is also a provision that breaches involving a large amount of data or affecting a large number of individuals, must be reported.
Moreover, do you think paying ransom is the best option? What other options are there?
Paying any ransom does not guarantee the return of one’s data or service and it incentivises financial crime in the future. Additionally, it does not absolve the company of any regulatory disclosure responsibilities either.
As you have worked in a variety of jurisdictions, do you think cybersecurity needs to be better addressed in some countries more than others?
The cyber security threat is global and in our interconnected world, attacks from anywhere could reach you wherever you are in the world. We need to do more to share information within sectors and between governments to establish collective security defences.
Managing Partner and Founder, C5
www.c5capital.com
Andre is a Managing Partner and the Founder of C5, a specialist technology investment group focused on cybersecurity, cloud computing and big data analytics with offices in Washington, London, Luxembourg and Bahrain. Andre serves on the boards of several cybersecurity companies including the Haven Group in Luxembourg, ITC Security in London and Omada in Copenhagen.
Mr Pienaar started his career in Kroll Inc where he became the youngest managing director until the successful sale of the company to Marsh Mclennan. In 2004 Andre founded G3, an international consulting firm that advises global companies and international law firms on cybersecurity. He sold G3 in 2011 to Europe’s leading technology investment holding company.
Andre advised the 6th Duke of Westminster on the establishment of the new Defence and National Rehabilitation Centre (DNRC) in the United Kingdom as a state of the art centre for the rehabilitation of British military veterans.
Mr Pienaar is a member of the U.S. Government’s Institute of Peace (USIP) International Advisory Council and a Director of the PeaceTech Lab in Washington DC. He is a member of the National Council on White House History, an US not for profit that is the custodian of the White House, its art and history, as well as being a Director of the International Centre for Missing and Exploited Children (ICMEC) and a trustee of the David Shepherd Wildlife Foundation, a British charity focused on wildlife conservation.
A family capital-backed investment firm, C5 Capital build long-term relationships with committed investors, innovative founder teams and global companies keen to maintain their edge. Operating out of London, Luxembourg, Cape Town, Washington D.C. and Manama, they identify, nurture and support partners, whether they’re just starting out, or embarking on the next phase of their growth.
Given their specialist industry knowledge and execution capability throughout EMEA, they are able to offer a powerful combination of expertise, funding and growth opportunities, all the while ensuring that we are contributing to the public good.
Robert Kry is one of the founding partners of MoloLamken LLP, a litigation boutique formed in 2009. Over the past nine years, their firm has grown from four lawyers to more than 30, and they now have offices in New York, Washington, D.C., and Chicago. Handling a broad range of business disputes, both at trial and on appeal, in the courts and in arbitration, Robert speaks to us about complex litigation.
How do you go about developing a successful strategy in a complex business litigation matter?
The first step is developing a clear understanding of our client’s needs and expectations and combining that understanding with a thorough review of both the facts and the law. We litigate cases on the assumption that they will go to trial and develop our case strategy accordingly. For example, if damages are going to be a key issue, we would retain a damages expert early on in the case, so we can start building our damages model at the outset and shape our discovery strategy around what our expert will need to show.
Then how do you go about executing on that strategy?
We put together a detailed project management plan and update it as the case progresses and new facts or legal rulings develop. Regular communication with our clients, team members, and other stakeholders in the litigation is key. Our focus is on achieving the outcome our client wants and doing so efficiently. We don’t waste resources on strategies that have little prospect of adding any real value to the case at the end of the day.
Does your firm have a particular approach for preparing for court hearings?
For arguments of any consequence in the trial or appellate courts, we do moot courts and mock examinations to prepare. In fact, we built our own courtroom in our offices to make those simulations as realistic as possible for the attorneys and witnesses involved.
Your firm is known for sharing risk with clients; in what ways do you do that in a complex business case?
Our firm regularly agrees to alternative fee arrangements that allow us to share risks and rewards with the client. In many cases, our fee agreements are hybrid arrangements that combine a substantially reduced hourly rate with a contingent payment tied to the outcome in the case. Those arrangements are good for both the client and our firm, because they help the client manage its legal expenses while ensuring that everyone’s interests are aligned.
Are there types of complex business cases we are likely to see more of in the next year or two? One of the major trends in complex business litigation is the increasingly international nature of disputes. Cross-border litigation presents unique challenges, including not only conflicting substantive laws, but also foreign legal systems with very different procedural regimes. Compelling testimony from non-party witnesses in foreign countries raises a whole host of issues not present in United States subpoena practice. And document discovery abroad is often complicated by foreign privacy laws that may be significantly more restrictive than those in the United States.
Robert Kry
600 New Hampshire Ave., NW
Washington, DC 20037
Tel: (202) 556-2011
Email: rkry@mololamken.com
Web: www.mololamken.com
Robert Kry’s practice focuses on trial and appellate litigation. He represents clients before the United States Supreme Court, the federal courts of appeals, and other federal and state courts. He has authored approximately 20 Supreme Court briefs and has argued numerous matters in trial and appellate courts. His practice covers a broad array of subject matters, including constitutional law, sovereign immunity, arbitration, enforcement of arbitral awards, business litigation, securities fraud, criminal law, and intellectual property.
MoloLamken is a law firm focused exclusively on representing clients in complex litigation. We handle civil, criminal, and regulatory matters, as well as appeals, across the United States. Our clients span the globe. Our strength lies in the intellect, creativity, and tenacity of our lawyers and our experience in applying those traits to achieve great results for clients in serious matters.
(Article written by Alexander Pelopidas)
Greetings from (mostly) sunny Cannes where Rosling King are attending MIPIM 2018, the global property exhibition and conference event. With over 24,000 people from the property world due to attend, we are already braced for the tidal wave of prediction, analysis and crystal ball gazing which are characteristic of such gatherings.
If all this appears daunting then do not worry – for the team at Rosling King will be providing analysis and commentary on the key themes and events of the conference, beginning with the giant elephant in the room that is Brexit.
As a London (or UK) based law firm, the potential impact of Brexit is all too apparent. With politicians on both sides of the Channel moving (slightly) on from empty rhetoric and beginning negotiations in earnest, there remains several key issues which both investors and lenders need to consider.
The first relates to passporting. Prior to Brexit, EU passporting rules allowed finance companies to sell their services across the 28-member block with a local licence. This meant that they did not have to secure individual operating licences in each member country where it seeks to do business.
In her speech just under a fortnight ago, Theresa May ruled out securing passporting rights: “We are not looking for passporting because we understand that it is intrinsic to the single market of which we would no longer be a member.”
Such clarity, after months of confusion is welcome but it does raise the question of what sort of access the PM is looking for. If a deal on passporting between the UK and the EU can’t be secured, then the former would have to reapply as a third country for access to the single market. This will almost certainly be under more limited terms than is currently enjoyed by UK firms and could hinder London’s ability to attract inward investment from (or via) Europe. Such a result would also make it more difficult for British firms to sell a variety of financial services to Europe – one of their largest markets.
Brexit also raises questions over legal enforcement in EU jurisdictions. Leaving the Single Market will/ could limit the ability of UK firms to enforce judgements against their European counterparties – forcing them to rely on the rules of the relevant local jurisdiction. Needless to say, such a course would be harder and costlier for UK firms.
All of this begs the question whether London, and English Law, will retain its primary position as the preferred governing law for financial documents? Much of the debate around London and Brexit has focused on whether ‘the City’ will suffer as a result of banks moving to the likes of Frankfurt or Paris. We have recently moved on from this slightly – recognising that the more likely destination for any such move would be New York or Singapore. New York law is seen by many as a sturdy alternative and does pose a significant threat to London’s current pre-eminence.
Overall, however, the body of English Law and the approach of London’s commercial courts should continue to ensure London remains an attractive jurisdiction to operate in. Brexit will put to the test the institutions and sectors on which London’s financial success is built upon and will reveal which of those are fit to compete globally.
Cracking the legal sphere can be tough and with last week being National Apprenticeship Week, we hear from Sue Husband, Director of the National Apprenticeship Service, who speaks on how the legal sector can benefit from an apprenticeship scheme.
Apprenticeships are at the heart of the Government's drive to equip people of all ages with the skills that employers need. They provide the opportunity, and the means, to help address the skills shortages reported by many industries. Across our legal services sector in particular, apprenticeships play a vital role in helping firms grow and prosper. With the sector growing rapidly, it’s important that employers take steps to ensure a pipeline of skills for future success. Apprenticeships can help make firms across the legal sector future fit by upskilling existing workers and attracting new, diverse talent.
Opportunities for employers
There has never been a better time to take on an apprentice. Firms can grow their own talent and develop a motivated, skilled and qualified staff in a cost-effective way in line with their workforce needs. Now, employer-led apprenticeship reforms are making apprenticeships even more valuable to employers by putting those employers in control of the development of apprenticeships. Employers can choose the skills, training organisation, apprenticeships – and how those apprenticeships are delivered – to ensure they meet their organisational needs.
Apprentices bring enthusiasm, energy and fresh ideas to any organisation, contributing to its development and success. As well as encouraging a more diverse range of people into legal careers, apprenticeships also encourage skilled workers to progress their careers in the industry too. Degree and Higher Apprenticeships in particular mean firms can train more of their employees in the high-level skills that are critical for business growth, while offering ambitious school leavers or experienced professionals looking to upskill the opportunity to learn at university, to degree level.
Meeting business needs
Many businesses have already made apprenticeships a vital part of their strategic plans to recruit the skills they need in the future. Firms including Womble Bond Dickinson and Addleshaw Goddard have recently introduced the first intake of solicitor apprentices, while Weightmans paralegal Jordan Coulton last year became the first in the country to complete the Higher Apprenticeship in legal services – an important milestone.
But there is, of course, lots more work to do to ensure that apprenticeships work for the sector as a whole. We are in constant conversation with employers across legal services to ensure that their needs are met while helping them attract the right talent and boost the quality of candidates applying for apprenticeships. We’ve already launched a programme, “Amazing Apprenticeships” to help inform teachers and schools about the benefits of young people becoming apprentices and we will be working with key employers in legal services to drive further awareness of the great vacancies on offer through waves of marketing under the “Get In Go Far” campaign.
High quality
Since the Apprenticeship Levy and other reforms were introduced last year there has been a period of significant change for employers and there will understandably be challenges for them as they adjust and respond. Throughout this time we must not lose sight of why we introduced our reforms in the first place – to put quality at the heart of this programme for apprentices, and putting control in the hands of employers. The feedback we have had shows employers are positive about the reforms and taking their time to plan high quality, well thought through apprenticeship provision that meets their specific needs.
Since May 2015 there have been more than 1.2 million individuals starting an apprenticeship, which will provide each of them with the opportunity to gain the skills they need to get on in life. This is a fantastic achievement but only the start as we want to make sure all legal employers have the skilled workforce they need.
National Apprenticeship Week 2018 took place from 5 to 9 March. The theme is ‘Apprenticeships Work’ to showcase how apprenticeships work for individuals, employers, local communities and the wider economy.
Employers looking to find out more about taking on an apprentice should visit: hireanapprentice.campaign.gov.uk. People looking for more information and support on applying for an apprenticeship can visit: getingofar.gov.uk
