Understand Your Rights. Solve Your Legal Problems
“Problems with IP protection are usually a subject of choice for IP professionals”, says Marek Bury, an IP specialist in Poland. With technology quickly advancing, Marek speaks on how Poland is adapting to such change.
“That is what we find interesting. Our reports often look pessimistic. It should be stressed that obtaining and enforcement of patents in Poland is possible, even if not easy, and that wealth and market generated by a population of 38 million citizens have a potential for providing generous compensation for IP inconveniences.”
With automation and robotics quickly advancing, how would you advise those involved to change their game regarding patenting their invention?
Our world is getting more and more digital. At the time patent systems were designed, technical problems used to be solved with “iron, coal and heavy machinery”. Nowadays, solutions to technical problems tend to mainly consist in finding a way of controlling hardware and programming it. Therefore, inventions migrate away from mechanical machinery and analogue electronics towards digital electronics and computer implemented inventions. This phenomenon complicates prosecution and enforcement of patents because legal regulations and practices are not harmonized between various countries. Even in Europe some jurisdictions apply very different approaches towards computer implemented inventions than European Patent Office. Effect of European patents can be invalidated in contracting states and respective authorities are not compelled to interpret the regulations of European Patent Convention according to EPO case law and guidelines. The Polish Patent Office is one of such authorities. It is responsible for all patent invalidation actions in Poland and its examiners quite openly declare that computer implemented inventions are, in their opinion, not technical and hence not patentable.
Have there been any recent regulatory developments in Poland to affect your work with patents? Are there plans in this respect?
A main legal act covering patents in Poland, the Industrial Property Law, has recently been subjected to rather frequent amendments, thrice in 2015. One of the amendments addressed directly issues related to computer implemented inventions and modern electronics. A requirement has been laid down (art. 33.3) to draft method claims using features concerning technical processing of matter. This requirement intentionally excludes all compressing and encoding methods. On the other hand, implementing rules laid down in Regulation of the Prime Minister on filing and processing of patent and utility model applications, were amended in a manner making the process of rejecting computer implemented inventions more laborious for patent examiners. Nevertheless, all these changes have had rather limited impact on the practice of the Polish Patent Office according to which software exclusion is interpreted much more broadly than in the European Patent Office (EPO).
What filing scheme can be recommended to obtain a valuable protection on (radio) electronic, or computer implemented inventions in Poland?
The most reliable path to patent protection on computer implemented inventions, encoding/decoding methods, signal and image processing methods, digital modulation schemes in Poland, still leads through the EPO - exactly as designed in the European Patent Convention (EPC) having patent granted by the EPO and then validated. However, Poland adopted the provision of the EPC which contributes to the significant effort required to have the effect of granted European Patent valid. Whole patent specification needs to be translated and in case it defines narrower scope of protection, it is the Polish text which is supposed to be applied. Otherwise, quality of translation does not seem to matter much – theoretically. In practice, the claims must be well translated as the scope of protection defined by poorly translated claims can be argued to be null. On the other hand, description can be used to interpret claims in infringement procedures. Although translations can be corrected, changes are effective only after the Polish Patent Office publishes corrected text and this can take a while. Moreover, the infringement cases are still handled by common courts. Judges are not yet very well versed in intellectual property, and hence, they are pretty susceptible to argumentation based on good/bad faith and general honesty. Amendments to the documents defining scope of protection during prosecution are not working to the advantage of the party which makes them. In a view of the above implementation of specialised Intellectual Property Courts in Poland is a change very much longed for. But for the time being it is crucial to have translation texts verified by someone working with patents professionally.
Another risk factor is the possibility of invalidating the effect of the European Patent in Poland in nullity proceedings before the Polish Patent Office (PPO). The PPO does not consider itself bound by the EPO case law or guidelines and is willing to use own interpretation of EPC articles. Therefore, a risk that subject matter of granted European Patent may be found non-technical and hence not patentable by the PPO in the nullity proceedings is not negligible. The risk can be reduced if there are given hints or embodiments showing that the invention as defined in claims can not only be implemented digitally, but also in analogue electronics.
Marek Bury
Managing Partner
Marek Bury deals mainly with the cases concerning patents, particularly in the field of electrotechnics, mechanics, telecommunication and information technology. He is an author and co-author of approximately 30 scientific publications concerning radio electronics and 5 works concerning industrial property. He provides advice regarding optimal IP protection and assistance in patent and UM drafting, prosecution and litigation as well as invalidation of inaccurately granted patents and rights under utility designs.
Bury & Bury have been patent attorneys for generations. In our work, we put strong emphasis on sound technical knowledge and engineering education. We take care to be well-versed not only in the procedural nuances of the industrial property law, but also in how entrepreneurs can use the industrial property and how it can be translated into their profit. As a result, we can understand the needs of our clients and advise them well.
If you are interested in opening a franchise, or have wondered how it all works, this next article will be a must-read. We speak to the writer of ‘Franchising for Dummies’, an expert in everything to do with the franchising industry; Michael Seid offers insights into the legal process behind opening a franchise, how lawyers need to address these situations and what you need to be aware of before considering becoming a franchisee.
Can you list three important things business people should consider or be aware about before they venture onto buying into a franchise?
Let me push back a bit first on your question. One of the major issues in franchising today is the relationship between the franchiser and the franchisee. Much of that has to do with expectations and the use of the term “buying into a franchise” which I believe is at the root of the problem. Franchisees buy the necessary assets for their business, but they do not buy a franchise. Franchisees license for a limited period of time and under precise terms the right to use the franchiser’s intellectual property. This misperception is at the root of much of the litigation today between franchisers and franchisees. The term “buying” connotes ownership and the franchisee, while benefiting from the franchisers good will does not acquire any ownership in that good will. What the franchisee acquires is the right to transactional use that good will during the term of its relationship its franchiser. Saying that:
• The first thing a person should consider in looking at franchising in general is whether or not they will be happy as franchisees. Franchisees often view themselves as entrepreneurs but in reality, a franchisee is a “formula entrepreneur” or sometimes referred to as an “entrepreneur lite”. An entrepreneur, by definition, charts their own destiny and makes their own decisions about their businesses. A franchisee, while still a risk taker, must understand that the franchiser will ultimately determine what their business will offer in the way of products and services and the franchisee, even in progressive franchisers, truly has little to say about those offerings. If a person can’t fit into the necessary culture of being a franchisee – the ability to execute someone else’s strategy, they will not be happy as a franchisee. If that is the case, they should instead start their own independent businesses – and possibly down the road become a franchiser.
• The second thing that is essential is to select an industry in which you will not only do well financially, but will be happy in. There are over 120 industries using franchising today and people often do not explore the opportunities fully and instead often look at restaurants as their gateway in understanding their investment options, or allow a franchise broker to steer them toward an opportunity the broker is hawking. Prospective franchisees before actually looking at any particular franchise opportunity need to spend the necessary time exploring directories and other sources of information to understand the breadth what is available to them. Equally important is then taking time to look at each industry and to determine where it is at on its growth curve. Many factors can impact whether any industry still has legs, including today where technology and consumer buying habits are changing as those will have a dramatic impact – even on legacy brands.
• The third and likely the most important thing to understand is that becoming a franchisee is a very complex decision. Franchisers are skilled at positioning their brands to potential franchisees as sound business opportunities and franchise salespeople are gifted at their craft in recruiting franchisees. A prospective franchisee - even an experienced franchisee with investments in other franchise systems - must engage qualified professionals experienced in franchising, including lawyers and accountants.
To assist in this, MSA has published a due diligence workbook for prospective franchisees. The latest version of MSA’s Making the Franchise Decision is available on the companion web site to my latest book Franchise Management and can be found at www.dummies.com/go/franchisemanagementfd.
How do these points differ for those wanting to expand their business into a franchise?
Many companies entering franchising are not candidates to become franchisers. Under the law in most countries, including the United States, there are no hurdles any business must overcome before offering franchises. While this may allow interesting and exciting ideas to come to market, many new franchisers may be untested before they become franchise offerings. A new franchiser does not need to have a working concept – a profitable business, or any working business at all – before they begin to offer a franchise. All that is needed to become a franchiser are offering document and a willing prospective franchisee.
The lack of any hurdles in becoming a franchiser is the reason that many companies that begin offering franchises are no longer doing so three or four years down the road. The percentage of failed franchisers is higher than most in franchising are willing to acknowledge. However, when structured properly, companies ready to franchise, have significant upside for themselves and their future franchisees.
Prospective franchisers need to understand that the lack of hurdles in franchising for new franchisers has allowed companies we call “franchise packagers” to prey on the new franchiser market. These companies offer packaged programmes to which the modifications enable any business to begin offering franchises. The issue is that many of these companies in reality should never franchise or are just not ready yet to begin offering franchise opportunities.
Developing franchise systems is not a legal track but a business track. Having a lawyer draft documents without first spending the time and resources necessary to create a solid franchise strategy is a classic mistake many new franchisers make. Important to understand is that “selling” a franchise is relatively easy. We teach our clients how to generate excitement for their brands and their offerings and many new prospective franchisees do not do their homework in evaluating franchise offerings. However, sustaining a franchise system is quite hard.
The first thing an emerging franchiser should do is to become educated on franchising. My latest book as was the focus of my prior work – Franchising for Dummies – was written for that purpose. There are any number of very good books and an abundance of information on the web that can provide information on franchising. Responsible trade associations, like the IFA, are also an excellent source where people should go before deciding to become a franchiser.
Once armed with some basic knowledge, a prospective franchiser can self-evaluate their business and make some easy determinations of whether or not they are ready to begin the process of becoming a franchiser. My book provides the basic outline of a Threshold Analysis that can give a company some internal understanding if they are ready to franchise. Once that has been done, engaging a qualified professional firm to conduct an independent Threshold Analysis is essential.
Finally, in creating the strategy necessary to determine what is included in the franchise offering, understanding that you are in reality trying to achieve a consistent, sustainable replication of the brand’s offering and its culture, is essential. It is also important to know in advance who the franchise offering is being targeted to. A nuanced approach to understanding franchising by class of potential franchisees and not simply looking at franchising as single unit or multi-unit offerings, needs to be done to be successful in modern franchising. Once understood, the franchise offering should vary between the classes, including the fees and the rights and obligations of each of the parties.
What legal obstacles do businesses often face when expanding into a franchise? What area of law poses the most challenge?
In reality there are few, if any legal obstacles. The laws that govern franchising deal primarily with the offering of franchises and do not deal with the management or structure of franchise systems. While there are some relationship laws, these primarily focus on in term and post term covenants. Franchise law is merely contract law applied to a licensing approach. Because it seems familiar many lawyers experienced in franchising at the level required of knowledge, offer franchise legal services.
While the law is not complex, proper business and legal structure of agreements can be. Many companies may simply copy other franchise’s agreements which is a tragic and avoidable mistake. Franchise structures and agreements need to be based on practices right in for the context of the offering.
Franchise agreements are not meant to be management tools. While legal documents are essential in becoming a franchiser, they are not sufficient. Agreements are long term arrangements and the underlying business will evolve over time. Having a system adept in the capability to evolve, and management understanding franchise dynamics, is essential.
If there are any areas of the law, other than contract law and related relationship laws and case law, these would fall into the buckets of Intellectual Property licensing and those involving laws that impact the nature of the relationship. These would include, but not be limited to: joint employment, independent contracting, vicarious liability, taxes, etc.
Moreover, as an expert in this field, what are common cases you witness being taken to litigation? From your perspective, what could be done to reduce the risk of going to court?
Much of the litigation we see stems from legal documents that are written in an unclear manner. In attempting to make the offering documents as appealing as possible to market franchises, lawyers frequently are not precise in the meaning of the words they use. This is the most significant issue I face when working with clients as a litigation expert.
Also, management style and understanding the difference between managing a company owned system and a franchisee driven system creates significant issues. Likely the most common cases today relate to vicarious liability claims made by consumers or others that embroil the franchiser. The same issues that drive these cases also drive many of the claims by franchisees staff, management and government agencies against the franchiser. Government agencies today are seeking to show that the franchise is responsible for the human resources practices of its franchisees and this creates tax, wage and hour and other complicated issues.
Franchising is not a control strategy. Having brand standards is essential but controlling how franchisees manages their business on a day-to-day basis creates unintended and unnecessary liability. In addition to the terms of the franchise agreements, the broader scope of rights and responsibilities are found in the system’s manuals, training programs and day to day communications. Also misunderstanding the proper role and responsibility of field and headquarters support can be a major trigger. Attempts at unnecessary controls creates opportunities for litigation.
Besides a variety of vicarious and control claims from consumers, employees and government agencies, we also see issues related to ownership and use of the franchisers’ intellectual property during and after the term, claims of improper disclosures, issues related to territorial rights, verbal promises, etc.
We live in a litigious world and litigators are some of the most creative creatures. The best strategy for avoiding litigation is have a proper set of franchise offering documents, manuals, training programmes, support programmes, communications, etc. Understanding the proper way to manage a franchise system is essential and ultimately having a franchise programme that meets a franchisee’s return on investment requirements or desires lessens the risk of litigation from that quarter.
And while others look favorably on arbitration instead of litigation, I don't. I prefer the structure and requirements of litigation and do not find arbitration any faster or inexpensive today, than litigation. Also, while mediation may be an option, it has some risks that I believe can be avoided simply by adopting a proper communications platform within the system.
In general, how do international franchising legislations differ from local regulations and what struggles do businesses often face when deciding to make a step into becoming a global franchise?
While there is a commonality in franchise practice, the laws vary considerably from country to country. When entering any market, how the offering is structured must be based on an understanding of the laws, including taxing, repatriation of funds, supply chain, labeling and of course both franchise law and the customs and practices in that country.
A mistake many franchisers new to international franchising make, is to allow the opportunity to direct the strategy. The phone call from a particular company has the franchiser focused on the sale in that country rather than looking at the opportunity on a regional basis. This often leads to a decision to use master franchising for that country when direct multi-unit franchising would be a better choice had a regional approach been explored.
We structure an international approach for our clients, resulting in identifying global regions to target for expansion. This allows us to consider establishing regional support operations that may allow for direct franchising, and also gives us the opportunity to prioritise the regions to be targeted. A successful direct approach to franchising, assuming franchise recruitment growth is equivalent to other methods and that brand position and retail sales can be equally achieved, will result in a higher enterprise valuation for our clients. Master franchising can be appropriate but in our opinion, is overused. This likely is caused by international franchise brokers’ preference to target this segment, even if not most appropriate for the company, because the commissions can be higher and the resulting payment to the broker quicker.
Understanding that international franchising includes significantly more negotiations than domestic franchising, we create a negotiating box that defines the elements of the offering that are not negotiable. We then can craft parameters for those areas of the offering that may be modified based on the country and the arrangement required by the potential franchisee.
As a frequent speaker at universities, what do you think are important aspects for those in law to consider, in regard to franchising?
There is a difference in understanding the law and being a good lawyer. Legal documents are meant to facilitate a business relationship and finding the balance between risk and opportunity often is outside of many young lawyers’ expertise because of how their professors instructed them on the law. I have spoken at several law schools where the professor is an experienced business lawyer and their approach to the law is rooted in ensuring that their students understand the nature of the business and the transaction they will be advising on, and then focusing on the legal requirements. Often the reverse is true, and we find a multitude of lawyers having formed structures they want to use and requiring the underlying business approach to be modified to fit their legal agreements. To be productive, lawyers need to first focus on the business transaction and then language the agreement in a way to support the deal.
As it specifically relates to franchising, there is a need to recognise that agreements need to be tailored to the underlying requirements of the industry and the company. While there is a commonality in many aspects of franchising, thinking that franchisers are fungible with one another, even in the same industry, is something lawyers need to understand. Also while legal agreements are required, it is the terms in those agreements that are important. Unless a lawyer is willing and able to deliver advisory services at a comparable level of professional rigor as another professional, they should not attempt to provide those advisory services from both an ethical and business obligation to their clients. Mature and experienced lawyers understand the need to work with their client’s management and business advisers and tend to be more productive working as a member of that team, rather than trying to direct the deal be structured.
What other changes are you expecting to witness in the next few years?
We are transitioning from a manufacturing and service economy into a technology based economy. The nature and need for labour is changing rapidly and this is causing major disruption.
Our transition from an agrarian economy to a manufacturing economy took decades and this transition is happening within a much more truncated period. How companies deal with labour issues may create problems. As we are seeing in the UK with the recent announcement by London’s Mayor of his attempt to ban Uber, the gig economy where full-time jobs are replaced by part time or independent labour, creates disruptions to labour unions and what were considered standards of human resource relations. Using touch screens, apps and bio metrics to place orders and robots to cook the food creates complex labour disruptions. Changes to the retail base, as Amazon deliver 90% of what we need, will change the way we go to market as businesses.
The question will be how the government and businesses deal with this change. Protective actions like those taken in London are short sighted and counterproductive as Londoners moved to Uber because it met their needs better than traditional taxis or the underground. We can all look back on jobs that no longer exist and those that likely will be eliminated in the next few years because of technology or cultural changes.
As an experienced social franchiser, I see the use of social franchising as a replacement to traditional NGO approaches to delivering product and services to the poor at the bottom of the Pyramid in Africa, Asia and elsewhere a trend that will accelerate in the next few years. Social franchising where it is being used properly outperforms traditional NGO approaches both from a cost perspective but also from a performance measure. Social franchising also lays down the foundation for further commercial and job growth in markets because of its business approach. I see social franchising having a major transformational impact on creating new economies in a very positive and possibly unexpected way.
Still there will be resistance to this change as it challenges traditional methods but over time, donors, investors and government agencies that fund NGOs will move in this direction simply because it works so well.
Michael Seid
Managing Director
MSA Worldwide
94 Mohegan Drive
West Hartford,CT. 06117
(860) 523-4257
www.msaworldwide.com
mseid@msaworldwide.com
Michael H. Seid is the founder and Managing Director of Michael H. Seid & Associates, LLC, (“MSA” or “MSA Worldwide”) a provider of domestic and international franchise advisory services.
During my professional career I have been a senior operations officer, financial executive, consultant or accountant for companies within the franchise, retail, restaurant, hospitality, healthcare, education and service industries.I have consulted both domestically and internationally for companies on the appropriateness of franchising, licensing and other methods of down-stream distribution of products and services; the design, development and implementation of franchise and licensing systems; and, for established franchisers, non-franchisers and other multi-unit operators.
Since 1987 through the present, I have primarily been a consultant to the franchise industry. I graduated from Long Island University with a BS in Accounting in 1975 and obtained my CPA in New York State in 1978. During the period 1970 through 1976, I was a member of the US Army Reserve and was honorably discharged in 1976 with the rank of Staff Sergeant.
I have published numerous articles on franchising. I am the author of Franchising for Dummies, published by Wiley Publishing, Inc. My co-author for Franchising for Dummies was the late Dave Thomas, Founder of Wendy’s International.
According to the International Franchise Association, MSA is “the leading strategic and tactical advisory firm in franchising.” Our practice is diverse and while primarily focused on franchising, we support our non-franchised clients in a host of alternative downstream expansion strategies. Our reputation has been built on being innovative with many of franchising’s best practices originating within our firm. MSA’s clients include small emerging brands to some of the leading franchisers and non-franchisers in the United States and internationally. MSA Worldwide also provides other professional services including but not limited to manuals; training programs; franchisee recruitment strategies; franchiser expansion strategies; real estate site selection and site development; franchisee advisory councils; franchise relations; joint-employment; crisis management; change strategies; litigation support and the strategic restructuring of established companies.
My primary practice focus is as a strategist for our clients in their domestic and international systems. Approximately 10 to 15 % of my practice time is in litigation support.
In this next interview, we speak with one of the leading experts in mental capacity; Tim Farmer is devoted to ensuring that the individual is at the heart of everything he does, resulting in the main principle for assessing mental capacity at his firm TSF Consultants. Tim says: “We believe that people should be treated with Compassion, Knowledge and Empathy.
“I love the phrase from ‘Horton Hears a Who’ (Dr Seuss): “A person is a person no matter how small”. Lose sight of that and you lose sight of the purpose of the assessment.”
In this insightful interview, he shares how perceptions towards mental health has changed, aspects the Mental Capacity Act does not address and how the Court of Protection has changed to enhance the legal system.
How have you seen perceptions towards mental health change over the years? How has this affected the changes legal cases have undergone over the years?
When I started out, over 20 years ago, mental health was still seen very much as something to be hidden away by those outside of the profession.
I remember back in 2001, when helping a patient apply for a job, I noticed on his application he had written he had been in prison for robbery rather than saying he had been in the mental health hospital. I asked him why he had done this, and he replied: “I am more likely to get the job if I say I have been in prison for robbery than I am if I admit to having depression”. Since then I am pleased to say that perceptions are changing but I feel there is still a long way to go.
It is important that we separate out mental ill-health and mental incapacity as the two are not synonymous. The advent of the Mental Capacity Act (2005) has provided a more formalised framework from which to assess capacity. The resulting establishment of the Court of Protection has had a huge impact on legal cases and created a whole new area of legal expertise. It is still a relatively new and exciting area of law and everyday sees a new judgement that affects how we should interpret and work with the Act and other relevant case law.
What stages do you undergo when assessing the mental capacity of a client? What challenges arise during this time?
Following the Court of Protection rulings and drawing on our vast experience we have created new practice standards. My company, TSF Consultants (TSF) prides itself on performing assessments in a standardised format and as part of this, we have developed a four-stage process to a support a key component of any assessment – the threshold of understanding. It is known as the CMSL principle (Concept, Mechanics, Short Term, Long Term).
But before we get to that, the first step of any assessment is to identify the specific decision to be assessed in order to define the best test to use. This is essential, as the test used to assess capacity is dependent on the specific decision being assessed. The more specific you can be about the question the better. You can then go about setting the threshold of understanding, i.e., what a person needs to understand, retain, weigh up and use to be able to make the decision in question.
For many decisions (such as litigation or making a Will) the threshold of understanding is set out in the relevant case law. The real difficulty for assessors seems to arise when decisions come under the Mental Capacity Act. The Act doesn't cover all areas of decision making, but it’s mainly a framework stating a person must be able to:
What the Act doesn’t do is tell us what the ‘relevant’ information is. Subsequent caselaw instructs us that we mustn’t set the bar too high or low, but it rarely tells us what that bar is. This is where CMSL has proven very useful.
We’ve been able to create a framework that allows us to set the threshold for each area, based on what you would expect the average person to understand for each. Our system allows us then to identify which questions to ask and how we expect the information to be presented back.
The last step, often missed by many assessors, is validation (of the information provided); a person can say anything in an assessment and what a good assessor should do is always verify and validate the information they provided, before making a final decision.
I will always remember as a student nurse I went on a home visit to see a lady with schizophrenia who lived in a run-down bedsit. She was incredibly upset that she hadn’t received an invite to a certain royal wedding. My mentor at the time, brushed over this as part of her illness. It turned out that she was supposed to attend but the invite had somehow got lost. From that moment on I have always insisted on verifying information where possible before making a judgement.
What could those facing litigation have done to avoid such situations?
Many people try to short cut or reduce costs by using their GP or a person that is not specialist in the area of mental capacity. In my experience this usually results in poor assessments and wrong outcomes that then result in challenges and increased costs as they attempt to put them right.
What challenges did you face as the first mental health nurse to have evidence accepted by the Court of Protection? How did you overcome them?
When I first started as an expert witness specialising in Mental Capacity, a colleague of mine said to me: “Tim, I’m a Consultant Psychiatrist and therefore the Gold standard, you are only a nurse and therefore, at best, will only ever be bronze.” That very much summed up the attitude at the time!
A key moment was finding someone who was willing to put my evidence before the Court (thank you Ron Hiller). Overtime, it has become more acceptable for non-medical professionals to have evidence accepted by the Court, although there are still some people who believe Mental Capacity should be the sole domain of the doctor.
I believe the quality of the work we produce and the education we provide to those we meet and work with will help overcome this kind of attitude. I also think that having an award-winning book, number one on Amazon in the UK and US helps: http://amzn.eu/4PEI6la .
Over the years have there been any significant changes to the Court of Protection which have enhanced the legal system?
For me the acceptance of evidence from different professions, along with the greater inclusion of those with reduced capacity, have been key. I believe that this has resulted in better, more accurate evidence being presented before the courts which ultimately results in better outcomes for the individual’s concerned.
As a member of Baroness Finlay’s leadership team for the National Mental Capacity Forum, we are seeing a lot of good practice and a real drive across all areas to embed the principles of the mental capacity act in day to day practice. I think that this will necessarily see a knock-on effect for the cases that are presented to the Court in terms of processes followed and the quality of evidence that they receive.
We also find ourselves in the middle of a Law Commission review of Wills and within that, whether Banks v Goodfellow remains the best test for testamentary capacity. I get the feeling there is a real drive to make the Mental Capacity Act (2005) the new framework for assessing testamentary capacity. My personal opinion is that it should change but I am wary of ‘throwing the baby out with the bath water’. One of the things I love about Banks v Goodfellow (1870) - and indeed all common law tests for capacity - is that they clearly set the threshold of understanding for the specific decision in question. I honestly believe that if I were to set out the threshold of understanding for testamentary capacity under the MCA it would pretty much mirror that, as currently set out in the ruling of Banks v Goodfellow.
Having said that, I do believe it is time for a change. To my mind there exists a dichotomy between assessing testamentary capacity using Banks v Goodfellow and then, having to present evidence to the Court of Protection for a Statutory Will in terms of the Mental Capacity Act. I also believe that some of the language used in the ruling of Banks v Goodfellow is out dated and it needs to reflect the many changes that have occurred since 1870!
You have been described as “The Guru of Mental Capacity” – what key characteristics do you think account towards this?
I think one of the key characteristics is always keeping the individual at the centre of what we do.
I believe there should be a recognised standard in place for mental capacity assessment and I’ve been asked to participate in various developments for the protection of the individual.
I also believe in knowledge and the willingness to share insights and understandings. Mental Capacity is a relatively new area of expertise and we are all learning all the time.
TSF focuses solely on Capacity Assessment, we believe in focus and understanding and instead of offering multiple services we chose to specialise for the benefit of the individual.
This has allowed us to develop a greater level of insight than most in the Mental Capacity field.
The “guru” reputation comes from being proactive and at the forefront of innovation. To keep this reputation, with TSF, I am developing a training academy for professionals interested in making a difference in the world and learning all the intricacies of assessing mental capacity… always with the individual in mind.
Tim Farmer
TSF Consultants
1st Floor, R & R House,
West View, Paganhill Lane,
Stroud, Glos,
GL5 4JP
0333 577 7020
info@tsfconsultants.co.uk
www.tsfconsultants.co.uk
Established in 2011 TSF Consultants are recognised as the leaders in the provision of mental capacity assessments and were awarded the coveted title of Mental Capacity Assessor - firm of the year 2017 by Lawyer monthly.
We believe that every individual is a person and that every person has the right to be the best that they can be and should be treated with respect and dignity at all times. Through our core values of empathy, compassion and knowledge we ensure that everyone is treated with respect and dignity and supported to achieve their optimum.
Our founder Tim Farmer is acknowledged as one of the UK's leading experts in the assessment of mental capacity. He is a registered mental health nurse with over 20 years’ experience of working with individual's with reduced capacity and was named as Expert witness (Mental Capacity) 2016. He is a best-selling author on the assessment of capacity and is also a member of Baroness Finlay's leadership team for the National Mental Capacity Forum, a national committee member for CoPPA (Court of Protection Practitioners Association).
To expand our knowledge into the personal injury sector, we decided to get in touch with Bernd Höke who is the Director of Kanzlei Voigt Rechtsanwalts GmbH. Last time we caught up with Bernd, he spoke on how he made a name for himself in the insurance industry and developments in the insurance sector. This time round, Bernd goes into more depth, touching on changes he would like to see in traffic law and the insurance sector, that would make his client’s lives a lot simpler in the long run.
What helps you to achieve optimum results for your clients, even when all other options have been exhausted?
When the usual options have been exhausted, it is essential to be very familiar with the subject of insurance law in general and personal injury law in particular. Our experience and our knowledge allow us to discuss at eye level with insurance companies to achieve an optimal result for the client.
How difficult is it to work your way through cases whereby injury is due to vehicle damages unbeknown to the owner?
The German law provides a solution to this situation. According to section 12 of the Obligatory Insurance Law (Pflichtversicherungsgesetz) the Compensation Fund (Verkehrsopferhilfe e.V.), an association for assisting accident victims, helps injured parties in its function of a Guarantee Funds in the case of accidents occurring in Germany which are caused by unidentified or even uninsured motor vehicles and even in cases in which the car was used intentionally and unlawfully as a "weapon" or where the motor vehicle insurer becomes insolvent.
However, a compensation by the Compensation Fund is subordinated. If the damage is covered by an insurance from another insurer, the claim has to be asserted with the later one. Damages regarding the vehicle are to be asserted with the hull insurance. Treatment costs are covered by health insurance and health is not compensated by the Compensation Fund.
Besides this, the Compensation Fund also serves as the compensation body in accordance with Fourth Motor Insurance Directive.
Are there any regulation changes you would support, that would make your role, and your client's case, a lot easier?
Actually two regulations were recently discussed, which would make the client’s situation easier. One of them is a proposed reversal of the burden of proof to the detriment of insurance companies in case of a non-regulation over a certain period of time.
Especially in personal injury cases a shift in the burden of proof away from the injured party would make sense, since many injuries heal over time. A medical examination is of little use, if there is nothing or nearly nothing left to examine - simply because it healed while the insurance company waited with the regulation.
Another aspect discussed was the establishment of an ombudsman for liability insurers. The German Consumer Dispute Resolution Law (Verbraucherstreitbeilegungsgesetz) provides a complaints procedure for the insured party against insurance companies regarding claims arising from the insurance contract.
The Rules of Procedure of the Insurance Ombudsman (Verfahrensordnung des Versicherungsombudsmanns) provide a conciliation procedure. But no current regulation provides comparable possibilities for injured parties. If the insurance company does not cover the claims arising from liability, the only option left for a traffic accident victim is to go to court.
What current changes have you eagerly anticipated in regard to traffic law?
As the First Chairman of the Pan European Organisation of Personal Injury Lawyers (PEOPIL) regional group Central Europe I never get tired of standing up for surviving dependents' benefits. It has been on top of my agenda for a long time, so I guess you can imagine how eagerly I anticipated a change regarding this issue. As you can read in my article "The Discussion on Smart Money in Germany: Inventory in Comparison" ("Die Schmerzensgelddiskussion in Deutschland: Bestandsaufnahme und Vergleich", published in Neue Zeitschrift für Verkehrsrecht [NZV] 2014, volume 27, issue 1, pp. 1-4), Germany was one of the last European countries that did not provide any regulation regarding survivors' benefits.
Last time we met, we were discussing a draft bill by the Federal Ministry of Justice and Consumer Protection with the title "Draft Law on Introducing an Entitlement to Survivors' Benefits". The bill was successful and promulgated in the Federal Law Gazette on 17 July 2017. Nowadays section 844 (3) of the German Civil Code (Bürgerliches Gesetzbuch) entitles bereaved of a person killed in a car accident to a compensation for that loss. They no longer have to you counter a heavy burden of proof regarding their ability to cope with the pain inflicted by the loss experienced and the damages to the health beyond those caused by common grief.
Are there any changes you would support regarding the insurance industry?
I have worked for a renowned insurance company for many years and left a successful and prospering career behind due to the increasing competition between insurance companies and its side effects of harder regulation and cost saving measures like stuff reduction.
Since then the market got even tougher. The competitive pressure forces the insurance companies to calculate the insurance fees lower and lower. But without sufficient insurance fees and - still being a company - with the aim to generate profit, at the end of the day there is not enough left for a proper regulation of asserted justified claims. The only way to leave this vicious circle would be sufficient insurance fees. So I would support taking away some of the competitive pressure between insurance companies for the greater good of a change towards a proper regulation process.
Is there anything else you would like to change regarding traffic law?
As the aspect of surviving dependents' benefits showed, some issues regarding the regulation of claims arising from traffic accidents vary widely among the European countries. Due to this, the outcome of the regulation and the compensation a victim of a traffic accident receives, highly depends on the place of the accident and the law applied. I would welcome a first step towards an equal compensation of equal damages and claims.
Besides this, in the case of an accident with parties from different countries, the law provides the injured party to file their claims with a local representative of an insurance company from abroad. The injured party also has the right to sue the foreign insurance company at a local court. But once they obtain a title, there is a lack of an adequate enforcement regarding the foreign insurance company. It is up to the legislation to take this next step in cross-border liability regulation.
Contact Details:
Bernd Matthias Höke
Director
Kanzlei Voigt Rechtsanwalts GmbH
Ruhrallee 9
44139 Dortmund
Germany
Tel.: +49 231 6000 82-20
E-Mail: zentrale@kanzlei-voigt.de
Web: www.kanzlei-voigt.de
Bernd Matthias Höke is Director of Kanzlei Voigt Rechtsanwalts GmbH, a law firm specialised on all areas of traffic law and insurance law.
Bernd Höke is First Chairman of the Pan European Organisation of Personal Injury Lawyers (PEOPIL) regional group Central Europe and Member of the Board of the Institute of European Traffic Law (IETL) – as such he and the lawyers of Kanzlei Voigt serve as representative or communicating lawyers as well as authors of experts’ reports.
And with more than 25 years as an Attorney at Law in the field of claims management, Bernd Höke provides the expertise required to deal with most complex personal injury cases against insurance companies – especially since he used to be Head of the Claims Department of a renowned insurance company as well as manager of the General association of the German insurance industry’s (GDV) Motor Claims Commission.With 28 subsidiaries and more than 80 attorneys throughout Germany, Kanzlei Voigt Rechtsanwalts GmbH has a decentralised area-wide structure with a central management. This allows professional advice on site combined with networked knowledge.
But some cases require special attention and concentrated expertise due to their complexity. Severe personal injury cases are handled in the headquarters in Dortmund. The firm’s expertise is also much appreciated abroad.
With over 30 years of experience in banking and real estate, Jay Hilbert's market knowledge and transactional experience has allowed him to work in a consulting and expert witness capacity for many clients over the years. Still an ACTIVE lender in the industry, Jay has transacted hundreds of real estate and non-real estate loan negotiations in times of economic growth as well as downturns in the economy. His extensive credit background arms him with the understanding of how banks and other lenders operate internally, and he speaks with us this month about commercial real estate. Jay touches on how good investment deals can easily turn bad, how to ensure lending from a bank runs smoothly, and how being an active lender in the industry helps him in his role as an expert witness.
Market Street Financial Solutions provides services to banks, non-banks, and individuals in need of creative financing solutions; which of these three types of clients poses the most challenges for you?
The services that we provide vary based on the type of client that we are working with. Many times our biggest challenge comes when working with individuals. Most individuals we work with have not experienced a commercial real estate transaction before, and they are surprised by the complexity of the process. It is our job to educate our individual clients while we put together the best financing alternative available for them. Part of the process involves helping them understand that commercial loan products are completely different than a consumer mortgage, which is often times their only basis for comparison.
What different aspects must banks consider, in comparison to non-banks and individuals, when dealing with creative financial solutions? In relation to this, how many aspects overlap for all clients, which non-banking institutions often forget to address?
The reason we are successful providing the financing solutions that we do is because of our knowledge of the different lending sources. Most borrowers do not realise that there are multiple sources of funds that may be available. There are often times when someone is declined for a loan at a commercial bank and they believe that there is no alternative available. That is where we come in.
We specialise in funding loans for individuals and companies when their primary bank has told them ‘no’. It is here that we provide the relationship to a loan transaction that most non-bank providers do not. In other words, obtaining a loan from a non-bank institution can be an impersonal transaction because it is just that - a transaction. Non-bank lenders are not looking for the entire banking relationship therefore the interaction is not what people are used to. We bridge that gap and take care of the “heavy lifting” for our clients. We act as the intermediary with the non-bank finance company. We believe that if the numbers work there is a solution and it is our job to find it.
With the unstable nature of the financial sector, how have you seen the real estate industry change?
The nature of the real estate lending industry has not changed dramatically over the 30 years that the team at Market Street has been involved in lending. The fundamentals of a good loan request, presentation, underwriting, and ultimate loan decision have not changed. What has changed is the return to a consistent practice of sound underwriting. What that means is that basic credit guidelines have not changed, but the industry departed from them in varying ways for many years and now has returned after the experience of the worst economic depression we have seen in our lifetime. One of our biggest challenges is helping borrowers understand what it takes to obtain a loan when their only experience may have been obtaining a consumer mortgage in a time when requirements were minimal.
What is a key piece of advice for those investing in real estate to ponder over, given the fluctuation of the economy?
The best advice that I offer to my clients is to make sure that they do not over leverage themselves, that they study current market trends, and that they base investment decisions on present market conditions and not future speculation. In other words, a real estate investment needs to make sense now and not be based on the hope that a property’s value is going to increase tomorrow.
As an Expert Witness, what are common cases you are instructed on?
If I had to name one common theme it would be ‘Standard of Care’: a borrower’s expectation of what a bank or lender should be or should have provided. In most cases that I provide expert witness services there has been a clear misunderstanding of the bank’s role and responsibility as a lender. Sometimes the bank or lender does fall short on fulfilling its duties and sometimes a borrower has not performed at the level expected. My job is to educate my client, whether it is the lender or the borrower on what is expected in the industry; in other words, what the customary practice is supported by the lender’s policies and procedures, and the written regulations of the various authorities such as the FDIC, the OCC, and the various state authorities.
How could these cases be avoided?
The vast majority of the cases that I have been involved with could have been avoided had the expectations been properly managed. In some cases that means clearer communication on the part of the lender - making sure to not “over promise and under deliver”. Other times it could be for the borrower to clearly define the purpose of their loan request. Obviously there is a lot more to share on this topic but miscommunication is the number one reason for the lawsuits I am involved with. Unfortunately, we do not have “20/20 hindsight” when making or requesting loans.
Your experience allows you to be aware of how banks and lenders operate internally; can you explain some key things those who are unaware of their processes are often dismiss? How can being aware of such things enable your clients to avoid litigation?
One of the biggest issues that lenders have is how they document and process loans. Lenders operate based on internal policies and procedures that are published and followed. In addition, lenders are regulated by various authorities based on the type of entity they are. The first thing I do when I am assigned to a case is review how well the lender has adhered to the policies it has put in place, and the policies established by the regulators overseeing its activities. Many times litigation can be avoided if a lender is diligent in monitoring its systems and management of its lending department and employees.
Can you explain the approach you believe to be ideal when clients may be involved in litigation regarding real estate?
The best protection that a borrower has is to work with a lender that truly has the expertise necessary given the loan request. Borrowers may not necessarily be a match for the first bank employee they see when they enter the branch, or even for their long-time personal banker. When dealing with a real estate transaction, seek out an expert based on the person’s transactional experience and track record helping similar clients.
What other changes are you expecting to witness in the next few years?
I do not believe that we will see any substantial change over the next several years when it comes to the issues that cause litigation between lenders and borrowers. There are many reasons for this, but primarily it is because people are involved on both sides. Mistakes are made and no matter how well institutions try to establish systems and policies and procedures, the human element exists. Lending is not a science, it is an art that includes systematic analysis and implementation, but it also involves exceptions to rules based on a myriad of variables that change from transaction to transaction.
Why is being an active lender in the industry helpful to your expert witness work? And conversely, how does your expert work help you as a lender?
As an active commercial real estate lender I am able to stay current on industry customs and practices as well changes in federal and state policies, and regulations that affect lending. Conversely, I am exposed regularly to the issues that result in litigation between lenders, borrowers, and title companies. Many times I think that I have experienced most of the pitfalls that can occur, and then I am a part of another case where I am able to learn even more which allows me to continue to sharpen my skills as a lender. In addition, my active participation as a lender is the most important differentiator for me versus other expert witnesses that I oppose. The vast majority of experts that I oppose do not have current lending experience and in most cases have not been a part of a loan transaction for many years.
You are experienced in trial testimony. What is it like to be on the “hot seat” during a trial?
I enjoy the experience of trial testimony every time I am called as a witness. It is the time where I am finally able to take the many hours of preparation for a case and present my opinions to the court. When a jury is involved it is an even better experience because one of my strengths is the ability to present information that most find to be boring (at best) in a way that keeps their attention and helps them see why my opinions are a valuable part of the evidence. Some attorneys can be challenging during questioning, but my background and training allows me to think ahead and plan for their approach. I welcome the opportunity to testify when it comes!
Do you see your business being affected if the economy takes a turn the way it did in 2008?
Unfortunately, there is always going to be disagreements and sometimes outright breaches in relationships that occur on both sides. I believe certain cases may increase due to an economic downturn, but even in better economic times, people tend to take part in activities that cause litigation in this and all aspects of business.
Is there anything else you would like to add?
Owning and investing in real estate is still the goal of many people. Many have won, many have lost. I speak from personal experience when I say that hindsight is 20/20 and I have been on the wrong side of a few deals myself. It doesn’t mean that I will ever stop believing in the industry. It’s what I know and it is what I have a passion for. Let me backtrack and tell you a little known story about how Market Street got its name. Most people assume that we have on office on Market Street. This is not the case. Our name, Market Street Financial Solutions, was created because of a bad personal investment that was made in 2006 on what was thought to be a great property located on Market Street. We lost a lot of money on that deal and it was not a great situation. When we founded our company a few years later we decided to use the name Market Street as a way of turning a bad investment into a good investment. Now, years later here we are. I like having the reminder that even the best deals can take a turn, and that even those with extensive experience in real estate can get into a bad situation.
Contact info:
James B Hibert
Market Street Consulting Group
6965 El Camino Real Ste 105-599
Carlsbad, CA 92009
Phone: 760-518-2310
jhibert@marketstreetfs.com
www.marketstreetfs.com
James (Jay) Hibert is an active lender with over 30 years of experience in Banking, Finance, and Real Estate Lending. Jay was in the commercial banking industry for 25 years. In 2009 he left the turbulent industry of banking to form his own company, Market Street Financial Solutions, a Commercial Real Estate lending company. Market Street Financial Solutions is a licensed California Finance Lender and Bureau of Real Estate Broker. The company provides services to banks, non-banks, and individuals in need of creative financing solutions.
Jay Hibert is a licensed Real Estate Broker through the California Bureau of Real Estate. CA BRE #01523075 and his company is a California Finance Lender and Broker licensed with the California Department of Business Oversight DBO# 603I920.
His Expert Witness Company, Market Street Consulting Group represents both defendants and plaintiffs in cases that pertain to commercial real estate, banking, and lending practices.
Key areas of expertise include:
Lending Policies, Custom and Practice/Lender Liability
Broker Standards of Care and Fiduciary Responsibility
Loan Underwriting and Credit Administration
Loan Process and Bank Loan Restructure/Workout Process
Note Valuations/Collateral Review
Litigation and Discovery Consulting
Banking Operations/Administration
Specialty Niche in SBA Real Estate Lending
Construction RE Lending & Administration
Expert reports adherent to Federal Rule 26
Loan Syndication/Secondary Market Loan Sales
Title Insurance Cases
Experienced in trial and deposition testimony
At Market Street Financial Solutions we are dedicated to providing the best service possible in our industry. Our hands-on approach to every transaction has gained us the loyalty of our clients, providing repeat business and a reputation for getting deals done.
Michele Fuller, Founder and Managing Partner of the Michigan Law Center, PLLC, speaks on elder law planning; thinking about life after death is not on the topic of everyone’s list, but Michele touches on the importance of it. Her firm is focused on planning for persons with disabilities of all ages, preserving assets and helping to access resources to foster independence and vitality of life, and so she touches on the best interests for those with disabilities and changes she would like to see in elder law.
Many people would assume that it is best not to leave a loved one with disabilities anything in their will or trust so as not to disrupt their qualification for public benefits. Is this true?
Often people elect to disinherit a person with disabilities because they do not understand their options, or find it easier to leave an “extra” share to another family member who will care for their loved one with disabilities. However, this type of planning leaves the person who needs the most support without any resources. The person receiving the “extra” share has no legal obligation to care for their family member with special needs. The extra share can be pilfered away, used for their own purposes, subject to being disbursed to the future ex-spouse, or lost under a variety of circumstances such as a lawsuit or bankruptcy. The best way to protect a family member with special needs is a special needs trust. It provides a legal framework for a person who requires public benefits to meet their basic needs, like SSI and Medicaid, or someone who needs protection from predators or just needs some help managing finances. There are a variety of options for families of all levels of estates.
From your experience, what would you say are the most common challenges to face clients in the US as they look to plan their estates?
Some of the biggest mistakes I see business owners make is not planning for their own disability. They are typically highly driven successful people, so sitting down and strategising their succession plan is not something they are excited to do. There are different levels of planning that should be considered for business interests and personal affairs in the event of a short-term absence, long term or permanent disability, and upon their death. There needs to be processes in place and training on the business and personal side in each of these circumstances, as well as making sure legal authority and accountability systems are in place so that in the event of a short or long-term event, they have a business to come back to and an effective advocate for their personal care and needs. Then, upon passing, ensuring the next generation receives their assets in an efficient way without unnecessary costs.
Can you give me some examples of advanced elder law planning strategies you have implemented?
In the case of an elderly couple of modest means where one spouse needed immediate 24-hour care and the other spouse remained in the marital home, through the use of court orders and other techniques, able to preserve the marital assets for the spouse who remained in the marital home and obtain benefits for the spouse in the nursing home. We revised the estate plan of the well-spouse so that in the event they were survived by the spouse in the nursing home it would not result in rendering them ineligible for government benefits. About six months after the planning was complete, the well-spouse unexpectedly passed away, and was survived by the spouse in the nursing home. The estate was funded into a special needs trust to pay for any needs of the surviving spouse, and upon her death would be distributed to the children. As much as possible, we encourage people to pre-plan for long-term care needs through creating and funding irrevocable trusts.
Do you see the need for any legislative changes? What would you change and how if you had the power?
Several years ago I, along with several colleagues, drafted the Michigan Pooled Trust Act, which would allow individuals with disabilities of any age to place assets into a special needs trust. This is key to allow people to age in their homes rather than an institutional nursing home setting while accessing publicly funded in-home support services. This way, some public dollars are utilised to offset the cost of long-term care, and funds set aside are used to supplement care needs and maintain their homes, but at a substantial savings compared to a nursing facility. The best part is that people can remain in their homes. If I could have this passed tomorrow, I would.
How do you ensure that your estate planning services stand out from the competition?
As the outgoing Chair of the Elder Law and Disability Rights Section of the State Bar of Michigan, we are aware of pending legislation, which allows me to anticipate the needs of my clients. I also write and teach frequently, especially on new statutes or policies, which helps keep the firm on the cutting edge. We are also constantly looking for ways to innovate and improve client services, experience, and planning methods to meet their goals.
You have published many articles – which do you think covers the most important topic people need to be aware of?
That choosing an experienced special needs or elder law attorney is critical to prevent unintended consequences. Ask questions and be a good consumer.
Is there anything else that you would like to add?
For larger or complex settlements of litigation issues, a qualified settlement fund is an underutilised tool that can help control tax liability and buy time for plaintiffs to create an appropriate legal and financial plan that best suits their needs. This is typically a tool used in mass tort litigation, but has applications beyond that usage into a much larger variety of claims. This area of my practice was a natural extension of my background in special needs settlement planning, and has been an exciting area ripe for innovation.
Michele P. Fuller
Michigan Law Center, PLLC
12900 Hall Road, Suite 470
Sterling Heights, MI 48313
ph: 586-803-8500
fx: 586-803-8508
www.michiganlawcenter.com
Michele Fuller is Founder of the Michigan Law Center located in Sterling Heights, Michigan. The practice focuses on elder law, special needs planning, Veteran’s Administration planning, and settlement planning, including a national practice establishing Qualified Settlement Funds (QSF).
Michele is a member of the National Academy of Elder Law Attorneys (NAELA) and is serving her second term on the Board of Directors of the Michigan Chapter, and presented at the 2014 national conference. She is an Advisory Board Member of the Academy of Special Needs Planners (ASNP), and served as Chair of the 6th Annual conference, in addition to being a frequent presenter at the annual conferences and webinars. She has also presented for the American Bar Association and American Association for Justice regarding various aspects of special needs trusts and planning.
The Michigan Law Center is dedicated to helping their valued clients meet all of their estate planning objectives.
Enrico Di Fiorino is an Italian criminal defence counsel, specialised in white collar crimes (serious fraud, tax evasion, bankruptcy, corporate crimes, market abuse). He also has a particular expertise in environmental offences, anti-money laundering and medical malpractice.
As partner of the Law Firm Fornari e Associati, Enrico speaks to us on the developments in his jurisdiction and how it affects his business clients.
Firstly, can you please update us regarding the latest Italian legislative developments in this legal segment?
In July 2017, the Orlando reform, named after the Minister of Justice, was approved by the Italian Parliament. Its most important and controversial effect is the modification of the statute of limitations. This will result in a lengthening of criminal proceedings and will satisfy the conventional request by ECtHR and ECJ for the offences to be sentenced, but will not meet the needs of the reasonable length of proceedings, and therefore safeguarding of individual.
More recently, in October there has finally been the approval, by a Chamber of the Parliament, of the law concerning whistleblowing. The most important safeguards for those who report any kind of information or activity that is deemed illegal or not correct within an organisation (that could be either private or public) are protection of identity, no reprisal in the work environment and no discriminatory acts.
What do these changes mean for businesses and legal professionals?
Our clients, mostly companies and entrepreneurs, ask for reassurance. The length of Italian criminal proceedings currently makes it difficult to adequately predict future timelines. However, correcting the problem requires serious systematic reforms and sizeable investments which begin from improving human resources in the justice system, to enhancing organisational structures while accelerating the digitalisation process.
The introduction of whistleblowing is certainly much appreciated by international investors, who for some time now have been in favour of greater transparency and compliance within organisations.
Criminal law is generally seen as a jurisdiction-specific discipline. Is this still an accurate portrayal in today’s world?
While that portrayal is still clearly relevant, the criminal lawyer in today’s world certainly has a much greater international dimension to his role than in days gone by. For example, this can be seen in the explanation of one’s own legal system to foreign clients or colleagues. Moreover, representing international clients often requires the preparation and subsequent implementation of a global strategy to address a client’s cross-border issue.
In fact, the importance of this has been entrenched in my law firm from the beginning by its founder, Giuseppe Fornari, whose relationship with global international clients makes him stand out in the professional legal sector.
How has the European Union affected white-collar crime discipline?
While the EU cannot have a general criminal code, EU criminal legislation can add, within the restrictions of EU competence, important value to the existing national criminal law systems. For example, the EU has the possibility to adopt directives that set minimum rules on criminal offences, setting out what constitutes a criminal act and what type and level of sanctions apply for such acts.
The very latest update is the regulation establishing the European Public Prosecutor's Office (EPPO), which was adopted by those Member States which are part of the EPPO enhanced cooperation. The EPPO will be in charge of investigating, prosecuting and bringing to justice the perpetrators of offences against the Union's financial interests.
LM knows that you recently earned the LL.M. in Corporate and Insolvency Law at Nottingham Trent University. As a civil law lawyer, can you expand on the advantages of undergoing a common law educational experience?
Firstly, due to my law firm extensive relationship with international clients and corporations, it was helpful to gain a foundation on common law systems. Secondly, I firmly believe that the civil and common law systems, although primarily different, can learn from each other in various situations. Thirdly, a LL.M. is a fantastic experience to widen one’s network of colleagues abroad, which is imperative for the modern criminal lawyer.
Enrico Di Fiorino
Partner of Fornari e Associati
Milano – Via Chiossetto 18 – 20122
Roma – Viale Liegi 28 – 00198
Tel: +39 0254107954
Email: edifiorino@fornarieassociati.com
Enrico graduated cum laude in law from the Università di Pisa in 2008 with a dissertation on Criminal Procedure, and graduated cum laude in law from the Università di Pisa in 2010 with a dissertation on European Criminal Procedure. In 2012, he graduated cum laude a master in Commercial Criminal Law from LUISS Guido Carli di Roma with a dissertation on Bankruptcy Criminal Law. In 2013, he attended the postgraduate course in Financial Market Law at the Università degli Studi di Milano.
His areas of activity are:
Studio Legale Orlando e Fornari was founded in Milan by lawyers Maurizio Orlando and Giuseppe Fornari.
By appraising the experience gained over two decades of activity, the Firm has developed an articulate and dynamic structure, characterised by great competence and the high level of skills of its members.
The clientele of the Firm is composed by companies (including publicly listed companies), national and multinational corporations, public and private entities and individuals. Law Firm Fornari e Associati has extensive and recognised experience in the field of commercial criminal law and assists its clients, individuals and legal entities, in every aspect of business that can involve criminal profiles.
Construction does not always run smoothly, but when it does, it is down to effective planning and detailed contracts. Frank Giunta has been in the construction consulting industry for more than 30 years and this month, he discusses how technology is changing the disputes he sees, and key principles he believes businesses should meet.
What are the particular challenges involved in disputes surrounding construction surveying and the construction process?
The biggest challenge is documentation. Without good documentation and a sound contract, it is difficult to support or dispute a construction claim.
Why is arbitration often the best resolution method for this type of case?
When designed properly, arbitration can be a cost effective and efficient forum for the resolution of disputes and may provide parties a means to have their dispute heard by a trier of fact without the time and cost burden of a formal court trial.
You have aided counsel in numerous large construction projects; what are the biggest concerns you convey to clients in the planning and implementation of such construction projects, in particular regards to avoiding potential disputes?
It all starts with the contract. The detail and thoughtfulness of the contract sets the tone of how the construction process will unfold. From there, strong project controls, protocols, and thorough documentation are key to avoiding or minimising disputes.
In your work in the construction industry, what has been the biggest dispute challenge you have faced? How did you overcome this?
Dealing with diverse international parties and their professional and jurisdictional norms can present a challenge. What is customary in one country or jurisdiction may not be consistent with the other party or parties. You need to make sure your client understands the law and customs of the contract and views his or her expectations of the merits of the case on that basis.
You also lecture in the US and South America; what key principles do you believe businesses must be aware of?
Prior to undertaking any capital programme, it is absolutely essential that the parties understand the risks of the venture, how to manage or control those risks and which party in the venture is best suited to handle those risks. Once these risks are identified in the beginning they must be managed throughout the project. Your best chance to avoid construction problems is before construction begins. Anyone who embarks on a construction project needs to remember the basic principle that the earlier you detect a problem in the lifecycle of a project, the easier it is to fix. The cost of delays and change orders increase exponentially as a project lifecycle progresses.
Over the past decade, have there been any legal developments that have significantly affected your work in the construction industry?
As consultants we focus on the technical and factual aspects of a project or dispute and leave the legal considerations to the attorneys. However laws pertaining to document discovery, admissibility, and privilege change from jurisdiction to jurisdiction and affect how you do your work. Further, technology has had a tremendous impact over the last decade. New technology has improved project controls with real-time information from the job site. Drones have made job sites safer and information quicker and easier to obtain. BIM has helped with design to construction implementation. As this technology gets incorporated it requires new laws to govern their use.
Is there anything else you would like to add?
HKA recently separated from its parent company Hill International as an independent entity. Hill had a global project management division and as a result the claims consulting practice was in conflict many times. Operating independently is a major advantage for HKA and for our clients. With a singular focus on claims consulting we are free to support a much wider array of clientele. Multi-national stakeholders are now commonplace on major construction projects. Our Panama Canal Expansion project had stakeholders form 42 different countries and some of those stakeholders caused conflict with Hill’s project management group. It is a new error for HKA as the largest claims consultancy in the world with nearly 1,000 consultants worldwide. Without other lines of business within our company, there are far less restriction to support clients of any type, anywhere in the world.
FRANK GIUNTA
PARTNER, AMERICAS
T 215-309-7934
M 856-296-0190
E frankgiunta@hka.com
HKA
2005 Market Street, 17th Floor
Philadelphia, PA 19103
Frank J. Giunta is a Partner and President of the Americas for HKA, www.hka.com, a global advisory, claims consulting and expert consultancy that employs the largest construction claims team in the world.
Mr. Giunta has more than 30 years of experience in engineering and construction consulting. He has managed complex consulting assignments on behalf of public and private owners, engineers, contractors, insurance and financial institutions. These assignments have involved a wide range of projects which include highways and bridges, dams, power related facilities, water and wastewater treatment, landfills and building construction. He has provided expert testimony in various legal forums on issues including differing site conditions, defective contract documents, adequacy of design, construction defects, schedule delays, productivity evaluations, and cost analysis. He lectures extensively throughout North and South America on matters pertaining to project delivery systems, risk management and dispute avoidance/ resolution.
HKA is the new global brand that unites the former Construction Claims & Consulting Group of Hill International and associated subsidiaries – Binnington Copeland & Associates, Cadogans, Hill-PCI Group, Knowles and McLachlan Lister – following its sale and de-merger from Hill International, Inc.
HKA is now one of the world’s leading providers of advisory, consulting and expert services for the construction, manufacturing, process and technology industries.
We anticipate, investigate and resolve project challenges. HKA understands the pressures associated with delivering successful projects, whatever their size and complexity, wherever in the world. As trusted independent advisers, consultants and experts, HKA finds solutions amid uncertainty, dispute and overrun, and provides the insight that make the best possible outcomes a reality for public and private sector clients worldwide.
Now a privately-owned organisation with management equity, HKA is supported by Bridgepoint Development Capital, part of Bridgepoint, a major international private equity group headquartered in London, UK.
HKA has over 960 professionals operating from more than 40 offices in 21 countries worldwide.
Throughout his professional career Henrik has focused on the defence of liabilities. In 1989, he started his professional career as head of section with the Danish Insurance Complaints Board and for the past 22 years he has been with Kammeradvokaten/Poul Schmith to which he is Partner. He heads the firm's team of specialists in the field of insurance, tort and compensation and below he explains the cases he is often involved in, and changes occurring in Denmark.
What does your team do?
We have a very strong team of specialists in the field of insurance, tort and compensation. Our focus is both litigation and counselling. We represent the public authorities in litigation, primarily reviews of government orders and other claims for damages. We also assist insurance companies and insurance brokers and other corporate clients. Furthermore, we have created a corporate network for the insurance sector including insurance companies and insurance brokers for the exchange of experience and current subjects which we call “Forum for forsikringsbranchen” (Forum for the Insurance Sector).
In the cases that we are involved in, we assist the clients formulating a strategy for the actual trial if our recommendation is that we should go to trial. After the trial, we also act proactively by assisting the clients prevent similar claims. We may advise the client to accept the claim that has been raised and to avoid the trial or to solve the matter in another way, perhaps by mediation. Our team also have an extensive network that we collaborate with both inside our firm in other practice areas and outside the firm.
Please mention some of the cases of public importance that you have recently conducted in the area.
As co-counsel, Henrik and his team of insurance lawyers represent a team of international insurance companies in two major court cases regarding an oilrig in the North Sea. The total claim is approx. NOK 6.5bn. One being an appeal case before the Eastern High Court of Denmark regarding coverage according to an all-risk insurance policy. The other is a first instance City Court case regarding the defence of liability due to business conduct and being of general public interest, the City Court has been asked to consider referring the case to the Eastern High Court. They co-operate with Henrik’s former colleague Michael S. Wiisbye and his team of insurance lawyers from Nielsen Nørager as well as leading law firms in the UK and in Norway.
The firm represents Banedanmark, the Danish Railway Agency in different cases, including cases regarding damage to the railway infrastructure and to the railway bridges caused by collision with the structure. Recently, Henrik and his team of tort and compensation lawyers have conducted in arbitration proceedings, as well as before the Danish Maritime and Commercial Court in two cases brought by a Danish insurance company, and a Danish railway company regarding damage to a Danish railway bridge and delays of and disruption to the railway traffic. They have also appeared before the Supreme Court in two cases brought by a Danish insurance company and a Danish railway company and one of the engine drivers regarding the collision of two trains causing damage to both the trains and the railway infrastructure, as well as personal injury to the passengers. These cases are highly complex and involves difficult questions regarding state liability and they are of a significance due the nature of the damage and the matter value, and sets a precedent for other cases.
Which types of advice do you provide?
Being in a competitive legal market we aim to both influence the development and be at the forefront. By having this approach to the market, it is important for us to be on top of all aspect within the field of litigation, arbitration and mediation so that we are able to provide advice on the possibilities and challenges on the cases within our field of industry.
Dispute resolution and the supervision and counselling of cases takes up a lot of our time, both nationally and internationally. When acting in the field insurance, tort and compensation it is important for us to be able to understand both the industry and the political context in which the clients and the counterparts are acting. In some cases, the best advice is to try to avoid legal actions either by settlement or by accepting the claim. The next step is to understand why it went wrong and how to avoid the next claim: could the policy be written differently? Should the safety policy be rewritten? What about risk management? It is preventive advice that is often the result of a decision or the solution to a case.
Litigation funding is becoming more popular in other countries around the world. In Denmark it is still something new, maybe due to the fact that the Danish State in certain cases and subject to certain conditions, offers free legal assistance and that Danish insurance companies offer legal expenses insurance. However, we expect that this type of solution will catch on, also in Denmark. Due to the approach of the market, we are able to provide advice on the possibilities and challenges when acting for or against clients having their case financed by litigation funders.
Another part of our assistance to the insurance sector is tender processes where we bring on board specialists from our tender teams. More and more often, we help insurance brokers put insurance schemes up for tender. We also assist clients on InsureTech and matters related to the insurance sector, including personal data, marketing and consumer law.
The fact that we have such extensive litigation experience acquired from many cases that are often very heavy on facts means that we are trained to manage investigative processes and uncover whether there is any basis for raising a claim.
What is your view on the digital developments in the legal area?
There is no doubt that technology and artificial intelligence will play a major role for lawyers in future and indeed for everyone facing the law. Not only us as attorneys but also legislators, authorities, private enterprises and citizens. The new technology opens for completely new options for attorneys and their clients. In a near future, robots or computers, may take over some of the legal work, hopefully leaving the lawyers to spend more time on handling the most complex legal issues.
It is our goal to support and improve legal processes by using digitalisation. Therefore, we are developing digital tools for our clients in the public and private sectors so that they can reach their targets in respect of their legal challenges and needs faster, cheaper and easier. Recently, we have launched digital solutions in the areas of personal data and bankruptcy and right now, we are working on making legal actions even more digital.
Henrik Nedergaard Thomsen
Partner, Attorney
Direct +45 72 30 73 30
Mobile +45 20 45 10 65
hnt@kammeradvokaten.dk
www.kammeradvokaten.com
About Henrik Nedergaard Thomsen
Copenhagen-based lawyer Henrik Nedergaard Thomsen, partner of Kammeradvokaten/Poul Schmith and certified arbitrator, is focused on litigation, arbitration and mediation. For more than two decades he has acted for private companies and public authorities. His practice is focused upon insurance, tort and compensation in relation to the defence of liabilities, be it coverage, subrogation, professional liability, product liability and public insurance schemes, as well as planning and implementation of insurance programmes national and international. Consumer law, patents and trademarks are also topics on his desk. He has conducted a considerable number of cases before the Danish Courts including more than 100 cases before the Supreme Court and he has a number of Danish leading cases to his credit. He handles some of the firm’s biggest and most complex cases. “Yet it may never become a routine to appear in court,” he says and he continues, “Always having regard to the specific case and never lose track on its impact and importance to other cases. One should aim not only for the right outcome of the specific case. One should also feel that the outcome is the right one.”
The firm profile
In recent years Kammeradvokaten/Poul Schmith has grown to become one of the biggest and leading law firms in Denmark with more than 500 employees. They are a full-service law firm and hire only the most talented lawyers in Denmark.
The firm is the main legal advisor to the Danish Government which gives a deep understanding of the of the industry and the political environment in which all of the firm’s clients operate. The firm has been counsel to the Danish Government since 1936, representing the Danish State and other public bodies in numerous high-profile cases, regularly appearing before the Supreme Court. The firm is consistently involved in about two-thirds of all the cases before the Danish courts.
In addition, the firm is also advising private Danish and international clients. The number of the firm’s corporate clients is increasing. In recent years the firm has made a strategic move to increase its market share on the market for corporate clients and is already experiencing an increased demand for services from corporate clients nationally as well as internationally.
Yuan Chao has broad commercial practice, focusing mainly on contentious work and non-contentious work in the area of company law, commercial disputes and insolvency, trusts, etc., and leads a team which dealt with hundreds of dispute cases a year, with a full spectrum of issues between and within companies. He speaks with us this month on provisions which have occurred in the People’s Republic of China, the difficulties he faces during insolvency and why he thinks dispute resolution is a waste of time.
On 1 September 2017, Provisions of the Supreme People’s Court on Several Issues Relating to Application of the Company Law of the People’s Republic of China (IV) took effect; can you explain the changes which have had big impact on your clients?
The Provisions of the Supreme People’s Court on Several Issues Relating to Application of the Company Law of the People’s Republic of China (IV) (‘the Company Law Interpretation IV’), from my point of view, is the confirmation of the common practice from the Supreme People’s Court, which gives clear indication and guidance to the decision-making process of a company. I used to deal with the disputes in relation to the preemptive right of the shareholders during equity transfer, and major shareholders’ expropriation; after the Company Law Interpretation IV took effect, the remedies available are clearer.
What changes are you looking forward to with the new judicial interpretation on corporate law being released by PRC Supreme Court? Which do you think is the biggest change?
PRC Company Law has a sound system but lacks details, which gives arise of uncertainty and disunity in application and adjudication. Until this year, four judicial interpretations have been issued, which makes the details clearer and has enabled practicality.
What regulations do you think could be amended in order to ease international trade into and from China?
A number of uniform rules and conventions are adopted in international trade, such as UN Convention on Contracts for International Sales of Goods (CISG), Incoterms, UCP, etc., and the Chinese Contract Law referring to CISG to a large extent, for instance. To ease the international trade into and from China, I think it is important to establish a sound system of service of court documents, recognition and enforcement of Court judgements.
What is the biggest difficultly you face when undergoing corporate insolvency projects?
From its appearance, the biggest difficulty lies in the process of reaching the agreement by creditors of various priorities and adopting the restructuring scheme accepted by all the interested parties: the creditors, purchasers, and the insolvent itself.
However, in practice, it occurs to me that the biggest challenge is that when the insolvent is trapped by the irregularities or even crime, such as: financial fraud, illegal fund-raising, etc, what should be dealt with by the administrator. The administrator, a new insider and supervisor of the insolvent, should have the guts to decide whether any of the irregularities should be reported to the criminal judicial bodies, or be dealt with through civil and commercial procedures because no crime is constituted.
What could clients do to ensure this process runs as smooth as possible?
It is critical to have good communication with the governing court and the local government.
How are you hoping to see the Chinese legal sector progress in the future?
It is not the wind, not the trail, the benevolence. The advance of legal system lies in the mind of people, the key is that the moral bottom line of people, otherwise, legislation becomes a futile attempt. From my point of view, the laws in China are too loose rather than too harsh. The Criminal Law tends to punish lightly and though the chief sentence cases are lower, the number of crimes does not reduce, thus severe punishment should be used as a warning to others. In Civil Law, the liability of the breach of contract is limited by the reparation of the loss, up to 130% of the loss proved by the aggrieved party. However, in practice, it is quite difficult to prove the loss, which results in unfair compensation for the aggrieved party, but unjust enrichment on the part of the defaulted party. Persist in so doing, spirit of contract is demoralised, due to the cost for the breach is low.
You deal with hundreds of dispute cases a year, with a full spectrum of issues between and within companies; which are your favourite and why?
Disputes resolution wastes manpower and money; the war is disruptive, which is the last resort, the same as litigation, no choice is left but to file a lawsuit. Therefore, my favourite approach is to find a way for the parties to continue their cooperation through via effect of the lawyers. Just the same as a story written in Chinese history, the manoeuvre by Gongshu Ban and Mo Di: when all the facts and the laws can be illustrated, the advantage and the disadvantage can be forecasted, the parties may understand their position better before the lawsuits, and settle their disputes.
What would you claim is key to being successful in your role?
I have never felt that I am successful, I always do as what I think whilst being discreet.
YUAN Chao
Partner
Commerce & Finance Law Offices
6F NCI Tower, A12 jianguomenwai Avenue Beijing 100022, People's Republic of China
Tel: 8610-6569 3399
Mobile: 86-138 1053 0528
Yuan Chao graduated from the University of International Business and Economics (UIBE) with a Bachelor of Laws in 2007 and a Master of Laws on International law in 2009. Mr Yuan joined our firm in April of 2008, specializing in legal advisory services such as the review of contract for domestic and international sales of goods and dispute resolution, including dispute resolution for the guarantee, letter of credit cases in international financial settlement; international sales of goods cases in international trade. Mr Yuan also provides non-litigation legal services such as IPO and M&A, etc. Mr Yuan’s working language is Mandarin and English.
He also advises on corporate finance, debt distress and corporate insolvency projects. His practice covers all the stages of the life of a company, from establishment to insolvency. Yuan Chao also specializes in the international trade and trade finance, he deals with numbers of milestone cases in application of UCP, URDG and other ICC rules.
Commerce & Finance Law Offices is one of the leading private law firms in China. Founded in Beijing in 1992, Commerce & Finance has steadily built up its practice and reputation. Today, the firm's fifty-seven partners and one hundred and thirty-two associates represent a wide range of foreign and domestic clients. We have established branch offices in Shanghai and Shenzhen and, commensurate with the ever-increasing success of our clients, we continue to develop close working relationships with major law firms in many other jurisdictions.
Our clients turn to us not only because we are a full-service law firm, but also because we have accumulated the professional knowledge and skills necessary for working successfully in Chinese and foreign business environments. Our multi-national list of clients attests to this. Commerce & Finance is able to bridge business cultures because we have a diligent team of attorneys who have acquired training and exposure in diversified areas of legal practice.
