Understand Your Rights. Solve Your Legal Problems
One of the main recent developments in the UAE business regulatory environment is the promulgation of the long-waited Commercial Companies Law No. 2 of 2015 (CCL), which is in line with the current trend in GCC region towards updating corporate laws in the region in accordance with the international best practices. Dr. Mohammed Haitham Salman, Partner at Middle East Alliance Law Firm expands on this recent development and its impact on UAE and its corporations.
Let us focus on UAE’s legislative developments regarding CLL and where you see it progressing in 2017, and the changes implemented that will help/hinder that progression.
Despite the fact that CCL came into force on June 2015, the impacts of its application cannot be recognised until June 2017 onwards as the period of the reconciliation of Statuses for the existing companies has been extended until the end of June 2017. In general, I think the application of CCL shall bring significant advancement to the business environment, as it is expected to enhance clarity and transparency (as it details the procedures and requirements of setting up companies with specific timelines) to improve the ranking of UAE in international doing business reports, and promote the competitiveness of UAE to attract targeted FDI inflows to achieve the desired economic diversification.
In addition, a number of legislative changes are in the pipeline and expected to be issued during 2017, such as: federal foreign investment law, federal arbitration law, and federal maritime law.
From a practical point of view, what changes can CCL bring to corporations in the UAE?
Well, CCL brings a number of changes as it provides, for the first time: provisions for incorporating a limited liability company owned by one party (natural or corporate); the requirements for the operation of holding companies; the requirements and procedures of mergers and acquisition, as well as the contribution of strategic partners. Furthermore, in addition to the governance measures applicable to shareholding companies to enhance the protection of the interests of the shareholders, CCL provides provisions to apply certain corporate governance in all types of companies; this requires significant changes in the duties and liabilities of the managers and partners, such as: the provision to avoid any conflict of interests for the managers; the liability of the company for the actions of its employees; each company shall have an authorised auditor; each company must have annual accounts with commitment to prepare annual financial accounts, including the balance sheet and profits and loss accounts, applying international accounting principles and standards. Each shareholder or partner in any company may obtain a copy, free of charge, of the last audited accounts and the last report made by the company's auditor. These changes may help those seeking to conduct due diligence in relation to a UAE LLC as from now they can rely on the targeted company’s accounts.
Each manager at a limited liability company shall be liable towards the company, partners and third party for any fraudulent actions he carried out. Further, he shall be committed to compensate the company for any losses or expenses incurred thereby due to abuse of power, or violation of the provisions of any law in force or the company's memorandum of association or his contract of appointment, or due to gross error by the manager. In this context, the most important provision for LLCs is provided under Article 84 which stipulates that the provisions related to the members of the Board of Directors at shareholding companies stipulated by CCL shall apply to managers of the limited liability companies.
What are the main challenges posed from the application of CCL?
One of the main challenges is that CCL maintains the provision related to foreign equity ownership restrictions (51% for the UAE citizens) and foreign investors who are willing to setup their own business without a UAE partner, need to operate in free zones or wait for the proposed federal foreign direct investment law to be issued.
Due to the essential changes required by CCL in the AoA or MoA and the internal regulations or bylaws of the existing companies, most of the companies do not have enough time to take the necessary steps to be aligned with the provisions of CCL and an extension for another year seems imperative.
Finally, the knowledge of the majority of business people in UAE about the requirements or the advantages of CCL is still limited which may affect the overall objectives of the law. Therefore, public seminars and workshops, articles in the newspapers, TV programs to explain the aims, advantages, changes required and the benefits to business people are really important to maximise the positive impacts of CCL.
The world of intellectual property (IP) has grown to become an ever-important component for businesses to invest in, to ensure their innovations are fully protected. This month we speak with Richard Hoffmann on the IP sector and how the Court could improve when dealing with IP related disputes.
Does your initial degree in chemical engineering help you when practising law? In what way does it place an advantage for you?
In practicing intellectual property law, an engineering degree is very helpful. By having the appropriate background education, I am better able to communicate with inventors to fully understand the scope of their inventions. The requisite educational background also allows me to better advocate for patentability with the patent office. In the case of litigation where infringement and validity of the patent are at issue, my degree provides a technical foundation which helps me fully understand the invention so I can distil relatively complex technology into more easily understandable arguments to present to a judge or jury who often do not have a technical background.
What are important aspects to consider for patent applications in the mechanical and chemical arts?
It is critical to properly identify what features of a new “invention” are truly inventive. Once the inventive aspects are identified, it is important to craft patent claims to fully cover the invention without including extraneous limitations that are not necessary to fully define the invention. For mechanical inventions, the patent application requirements are relatively straightforward; however, in chemical cases, there are some unique requirements in preparing an application to deal with issues, such as structurally similar compounds and other unpredictability in the art.
Regarding the above, where do clients tend to be misinformed on the importance of patenting and trademarking their work?
Clients, particularly individuals or small companies, often do not initially have a good understanding of the different types of IP protection; they often confuse what a patent protects and what a trademark protects. For patents in particular, clients often have unrealistic expectations of the what their patent will cover. My job during the application process and afterwards, is to help them understand the scope of their patent – what it protects and what it does not.
What challenges do you face when acting as Lead Counsel in Federal Courts in IP related matters? How do you overcome this?
Educating a judge and jury as to the patented technology is one primary challenge. Judges will often allow a technology tutorial which gives them a session with the lawyers to get acquainted with the patented technology. This is not the case with a jury. During a trial, I have a limited amount of time to teach the jury the technology that is patented and how an accused device would infringe (or avoid infringement) of the patent claim at issue. I accomplish this by combining simple explanations with metaphors and examples that are relatable to someone without a good understanding of the subject matter. Often technology, such as videos or power point presentations, can be used to help convey an understanding of the technology to the jury.
What are common issues you see arise in IP litigation and what would be the best way to solve such issues?
A particularly common problem that arises in IP litigation is dealing with extensive discovery. Lawyers tend to abuse discovery. In addition to what they actually need to support their case, lawyers will often seek marginally relevant or even irrelevant information. Whether this is done intentionally or out of fear of overlooking some potential issue, such tactics unnecessarily increase the expense of the litigation and do not help resolve any truly contested issue. Because the Federal Rules of Civil Procedure do not limit the number of document requests, litigators often employ this "scorched earth" approach to discovery. There is not an easy solution to this problem. Courts that enforce the Rules might need to take a hard look at such abuses and limit the scope of discovery in any given matter to that which is truly necessary to the party to properly present its case.
As Thought Leader, can you share with us the key to becoming a ‘super lawyer’?
A major key is preparedness. When arguing case there is no substitute for knowing both the law and the evidentiary record. Understanding the technology and issues and being able to convey my thoughts and arguments in a coherent manner results from being fully prepared.
What developments in Michigan are you hoping to see in the future, relating to IP law?
I would like to see the Federal Courts in Michigan adopt a uniform set of Patent Rules so that the procedure for a patent case is the same, regardless of the Judge that is hearing the case.
The Israeli minister of transportation has recently signed a Memorandum of Understanding with its US counterpart to invest $20 million dollars in developing a new R&D centre for autonomous vehicles near the city of Netanya. In his brief to the press, Minister Katz presented a target of autonomous vehicles driving down Israeli streets by 2020, thus turning Israel into one of the first countries to allow for the operation of autonomous vehicles. Devising new regulation for emerging technologies is an art. First and foremost, it requires certain expertise in the current legal regime. Knowing the law and its reasoning is essential, but it is not enough. Regulators need to be able to devise and depict a detailed vision of the future to construct a legal regime that provides adequate solutions to a reality that has not yet matured. This is where we currently stand when it comes to the regulatory framework for autonomous vehicles. In this insightful article written by Roy Keidar of Israeli law firm Yigal Arnon and Co, we begin to surface the exciting advancements for the legal sector.
Recently I was reminded of the story about "the great horse manure crisis of 1894". At the turn of the 20th century, there were about 50,000 horses serving as the main form of transportation in the great metropolises of London and New York. Needless to say, the neighing transit-line was producing an exorbitant amount of manure daily. The problem reached headlines when the Times newspaper estimated that in 50 years every street of London would be buried under 9 feet of manure. This projection was the catalyst for the first international urban planning conference held in 1898 in New York. Unfortunately, the delegates were unable to agree on a solution. Perhaps more importantly, they were unable to break out of the mindset of a city without horses, and imagine any other alternative. Then, by 1912 the manure problem was long gone. What solved the crisis was not a change of policy but technological innovation: electrification and the internal-combustion engine provided new, manure-less ways to transport people and goods. And the regulator was only all too happy to embrace these sudden blessings to usher in a new era in transportation.
It was this story that I had in mind when considering some of the challenges regulators face today when trying to predict the future legal regime of autonomous vehicles (AV). In just the last few months, we have been witness to many signs of technological advancement in this field: Tesla declaring its ability to produce a fully autonomous vehicle by 2017; Uber utilizing a broad definition of Pittsburgh's existing regulatory framework and close cooperation with local authorities in order to turn the city into an experimental ground for autonomous taxis; Otto testing the operation of autonomous trucks, which have the potential to disrupt the entire commercial delivery industry; Google, Baidu, Volvo, and many others, already stepping in and working hard to establish themselves in the industry, too.
Unlike other technological advancements, for example artificial intelligence, Internet of Things, or nanotechnology, the AV industry is locked up in regulation from head to toe. A car, even semi-automated, will not be allowed to drive even one single yard without prior approval of the regulator—not to mention an en-masse authorization of fully autonomous vehicles to take the streets. Public safety is the foremost concern and rightfully so. This means that major players' financial investments and remarkable technological achievements are not enough. To drive the AV industry forward it is essential to accompany such progress with the creation of the appropriate legal structure that aligns with the new emerging reality.
Looking a decade or two into the future, we are likely to live in a world in which most of the traffic in western countries will be autonomous. Human beings will no longer be drivers. They would eventually lose this battle to computers, which will use machine-learning based algorithms to drive vehicles in the most secure and efficient way possible. This also means that the issue of liability for car accidents will have to be reviewed, paving the way for a new legal regime that holds the manufacturer and other service providers chiefly liable for any damage caused to human wellbeing or property.
Furthermore, the growing trend of the 'sharing economy' and the increase in use of autonomous vehicles could lead to the conceivable end of private ownership of automobiles. The industry could gradually shift away from an individual consumer customer-base to corporations running large fleets of vehicles. Essentially, there would be no economic justification for owning a vehicle that is not in use 95% of the time (and requires an expensive parking space).
The design of the vehicle itself would also evolve. The notion that there is no human driver in the front seat would likely inspire new innovative designs that would elevate the safety and comfort of the travelers, allowing them to utilize time spent in transportation for business and pleasure in ways similar to what we see in the shipping and aviation industries.
The issue of infrastructure is equally as important. Vehicles would be able to communicate directly between themselves, with traffic signs, and with the authorities, with no human involvement, calculating the most safe and resourceful method of transportation. Rapid, ongoing and secure communication infrastructure would be essential for the operation of the AV industry. Obviously, cyber security concerns would be central.
Judging by the current direction, it is fair to say that the United States (US) is leading the race, both in terms of technological advancements and amendments to existing legislation. For example, the recent US Department of Transportation's new AV policy provides a significant acceleration forward for state legislators and the AV industry. There are already signs that, with a green light from the Feds, states such as California could speed ahead to regulate driverless cars.
Other countries are also attempting to establish their own leadership in this area. The Israeli Minister of Transportation recently signed an MoU with his US counterpart to invest in developing a new center for research and development of autonomous vehicles in Israel. In a brief to the press, he presented the vision of autonomous vehicles driving on Israeli streets by 2020, thus turning Israel into one of the first countries to allow for the full operation of autonomous vehicles. A special inter-agency team was compiled to discuss the need for a new regulatory framework to be established in time for the arrival of the first autonomous car to be cruising down the Israeli freeway. Singapore has also launched the first operational taxi service run by NuTonomy, an autonomous vehicle software startup. Singaporean good weather, great infrastructure, obedient drivers and the geographical characteristic of being a land-locked island, have turned it into ideal laboratory for the introduction of AV.
Devising new regulation for emerging technologies is an art form. Knowing the law and its reasoning is vital, but not enough. As the great horse manure crisis of 1894 has shown us, it isn't enough just to get policy-makers together in a room, but for them to have the crucial capacity to envision an entirely new set of rules once they get there. Regulators need to be able to imagine a detailed vision of the future in order to construct a legal regime which provides adequate solutions to a reality that has yet to mature. The uncharted future often leads to short-sightedness, which in turns creates a tendency to deal with immediate and minute problems, instead of focusing on the bigger picture. There is no doubt today that the autonomous vehicles industry is facing gigantic challenges that demand creative and robust legal thinking—not meaningless muddling in manure.
Handling more than 300 civil cases, including accumulated abundant experience in litigation and arbitration and non-contentious cases, Zhengyang Wang has been the legal counsel for more than 30 companies and has provided contentious and non-contentious legal services to domestic financial organisations and large state-owned corporations. In this interview, he offers some great insights for businesses and their legal matters, as well as China’s market development.
What was the biggest challenge of acting as legal counsel to companies?
I believe the biggest challenge is in what ways we can prevent the legal risk and how to maximize the profits of the companies. Being a legal counsel for companies means that I am responsible for compliance issues of the companies’ business development and business models so as to prevent any potential legal risks. Furthermore, analysing the value of the new business and their models is also a part of my work. Sometimes, the riskier a business is, the higher the potential profit the company might gain.
What different considerations must you make when providing contentious legal services to domestic financial organisations, in comparison to non-contentious?
When I provide contentious legal services to domestic financial organisations, my primary consideration is the outcome of the litigation, which is to find a way to win, recover as many payments as possible, and realise the creditor’s rights. On the contrary, it is more common for me to think of the compliance review and the prevention of potential legal risks in cases of non-contentious legal services.
In what way do different corporations demand different legal advice? Can you give an example to how you ensure advice is tailored to each unique corporation?
After years of practice, we are aware that some corporations are willing to take certain risks to maximize their profits; other corporations, however, prefer to keep the risks under acceptable levels while making business plans.
For instance, the demand for architecture-related products increased rapidly during the period of fast development of China’s real estate market. In order to seize more market shares, certain companies sold a huge number of products on credit without obtaining any guarantee from the buyers. The problem is that when the market cools down, the buyers barely have the ability to reimburse the payment for products. Since no guarantee is provided, these companies fail to recover the creditor’s rights. This kind of situation is quite common among domestic corporations. In contrast, foreign-funded corporations in China are more conservative and tend to accept lawyers’ advice on obtaining guarantee whilst selling products on credit. The sales volume of these companies is not as high as other companies, but the possibility of having a distressed debt is much lower.
It is important for a legal counsel to analyse the potential legal risks carefully while providing legal opinions to corporations. Generally, I provide more than one plan for the companies, and explain the merits and demerits so that the companies can decide which plan suits them best.
How has the financial scope for corporations changed in China? How has the legal advice you provide adopted to this change?
Under China’s current economic situation, financing is not only a rare opportunity but also a grave challenge for most of the corporations in China. On the one hand, there is a wide range of investment, such as industrial investment and security investment. On the other hand, the financing cost and the risk are comparatively high.
Based on this situation, we advise the companies to operate their business moderately. They should, under the premise of effective control of risks, reasonably conduct the investing and financing activities in accordance with their operating status, and avoid scaling up blindly without counting the cost.
What common challenges do you face when acting as a Judge?
When I worked as a Judge, the major challenge was collection of the evidence. China’s market economy was underdeveloped back then, and there were not many commercial dispute cases. But the litigation system was not very complete, there was no clear provision in the law on the burden of proof for an action. The Judge was responsible to hold the court hearing as well as investigating and collecting evidence. Now, the Judges rarely collect evidence by themselves. According to the existing laws, the plaintiffs should bear the burden of proof otherwise they will have to bear any unfavorable consequences due to the failure to adduce sufficient proofs.
How can you navigate these challenges to ensure that arbitration grows in popularity in commercial settings?
Compared with litigation, arbitration has its advantages in commercial settings. Firstly, arbitration can maximally reflect the real intent of the parties; they have the right to choose the arbitrators as well as the applicable law. Secondly, it takes less time for the parties to settle the dispute through arbitration, since the arbitration award is final while there are two instances in the litigation process. Finally, the recognition and enforcement of foreign judgement has always been a task for international litigation cases. Arbitration award, however, is more likely to be recognised and enforced by foreign courts. Therefore, we usually recommend arbitration as the dispute resolution to our clients. In contrast, litigation also has some merits. In order to ensure the enforcement of the judgement, the court can, upon the request of the plaintiff, make an order to preserve the defendant’s properties. In some cases, the two parties decide to settle the dispute soon after the property preservation measures are adopted.
This article has been written by Andrea Wallack, CEO and Founder of NightOwl Discovery.
General Data Protection Regulation (GDPR) is scheduled to come into force on 25 May 2018. It will apply to all companies worldwide that process the personal data of European Union (EU) citizens –tightening the rules for obtaining valid consent for using personal information. GDPR compliance is a critical task for every professional services firm and will have an impact on other issues such as Brexit and international trade.
GDPR introduces new legal obligations in only just over a year’s time – and preparing to meet these obligations in time will be a challenge for many. The penalties are severe – failure is not an option. A two-tiered sanctions regime will apply. Breaches of some provisions, which lawmakers have deemed to be most important for data protection, could result in fines of up to €20 million or 4% of global annual turnover for the preceding financial year, whichever is greater. For other breaches, the authorities could impose fines of up to €10 million or 2% of global annual turnover.
The impact on legal businesses will be wide ranging. Data collection for legal discovery, for example, will be perilous due to the potential of enormous fines under GDPR. It looks likely that the UK and US will need some type of privacy shield framework to work under, similar to the Swiss-US privacy shield. Discovery work will need to be compliant with a vast array of regulations encompassing GDPR and any privacy shield that is set up.
GDPR opportunities
At the same time, the introduction of GDPR will provide a real opportunity for many businesses. Although the initial focus may be on preparing to comply with the regulations, the purpose of GDPR is to harmonise data protection law across Europe, ultimately making it far easier to share data across borders. At present, an organisation operating throughout Europe may have as many as 28 different legal data protection regimes to address; from May 2018, there will be a single consistent legal regime.
There are a number of best practices that can be put in place ahead of GDPR – and key stakeholders such as legal, IT, compliance and senior management teams should take ownership of these right now:
International ramifications
The implementation of GDPR will have international ramifications. EU data protection law will still apply to post-Brexit UK, which very well may have to adopt some form of GDPR law to remain compliant with EU standards so that businesses can continue to streamline trade with the EU.
When the regulations come into force, any European data protection authorities can take action against organisations irrespective of where they are based in the world. Globally, two thirds of firms are reviewing their business strategy ahead of GDPR. Law firms in particular should be well advanced in their preparations for the impact of GDPR on their own and client data processing activities –failure to assess every aspect of GDPR could be far reaching.
Andrea Wallack
CEO and Founder of NightOwl Discovery
The Peruvian economy is growing stronger alongside its legal sector and government, however, speaking with Oscar Mago, Partner at OMC Abogados & Consultores, he states if certain threats imposed are ignored, it can cause serious economic damage and damage to the reputation of a company. He states: “Peru needs to develop greater mechanisms and elements in the legal, institutional or governmental framework for fighting against these crimes and greater concern on the issue; if controls are not implemented the crimes are not detected.”
We speak with Oscar who reveals ways in which Peru is working towards this change for the country’s economic development.
When dealing with disputes involving international parties, what do you think is the main misconceptions outside jurisdictions have on Peruvian law?
In China, trademarks must be registered so that the holder can enjoy the exclusive rights thereof. China is a jurisdiction that applies the first-to-file system for the protection of trademark rights; the first registrant has the right in China. In that sense, the “foreign priority right” is not applicable, a legal concept allowed and regulated by our Andean legislation, whereby the owner of a trademark registered / applied for abroad has a priority right against third parties to register its trademark in Peru.
Another common concern regards the classification of goods or services. In China, trademark protection does not cover complete classes, but it is necessary to submit a detailed description of the goods or services sought to be protected. However, the Chinese Trademark Office accepts the goods detailed in the different classes, but still manages its own classification criteria. This situation is contrary to what happens in Peru (and in most countries) since we are governed by the International Classification of Nice to determine the class to which the goods or services, sought to be protected, belong to.
How has economic crime changed over the years in Peru; how has the legal sphere adapted to this and what more do you think can be done to ensure it is dealt with in the best way?
Surveys show that, over the years in Peru, companies have been victims of economic crimes, such as: accounting fraud, false documents, illicit appropriation, embezzlement, bribery, corruption, purchases and acquisition frauds.
Economic crimes are more common than they seem, but in Peru, there is a lack of information and a lack of courage to react against these crimes.
With the opening of markets for international trade and new technologies, the space for criminal modalities has expanded. Our country definitely has the great challenge of taking measures to promote complaints for these types of crimes.
It is very important and extremely necessary for companies and/or interested parties in economic activities to take preventive measures also on their own account. Some alternatives would be as follows:
In legal terms, it is necessary to know the regulatory framework in the Peruvian legislation of these crimes. In addition, implement complaint channels on suspicious activities and the respective investigation. Faced with these latent risks, these actions must be taken to detect these crimes. These must be early so as to minimise the impact of damage on companies.
As technology advances, cases of economic crime have increased, for example, internet fraud which is prevalent, as it does not only cause economic loss, but also affects the image and reputation of a company. The impact of all these crimes is reflected in large losses in both internal and external damages. Among the crimes, accounting fraud is the most common.
Regarding competition law, where do you think Peru stands in comparison to its neighbouring jurisdictions?
We can indicate that Peru is improving compared to the jurisdictions of the member countries of the Andean Community, not only by amending Legislative Decree No. 1033, which modernised the free competition regime of the National Institute for the Defense of Competition and Protection of Intellectual Property (INDECOPI) and Legislative Decree No. 1034, which approves the Law of Repression of Anti-competitive Behaviors; the improvements can be seen in the Logistics Performance Index (LPI), which was published by the World Bank in The year 2010 which helps to compare the challenges and opportunities faced by countries in their performance at the commercial level. It is necessary to point out that member countries enjoy exceptions, which are stipulated in the General Agreement on Customs Tariffs and Trade and in the General Agreement on Trade in Services. The purpose of the exceptions mentioned above is to allow for greater trade in goods and services and to accelerate the economic growth of member countries.
On the other hand, Peru ranked 67th in the Logistics Performance Index (LPI) because five important sectors were verified:
a) Customs efficiency;
Work at the confluence of international affairs, economics, politics and business drew Martin Harrison towards investment but without connections in the City it was not an obvious career path in 1980, during the deepest recession since the Second World War.
Consequently, from business school in the US, Martin went into strategic planning with an oil major. However, he only became more curious to see the bigger picture and understand investment. So, he contacted several stockbrokers and joined a progressive firm led by Nils Taube, a revered investor. His very first job was to have tea with the board of his former employer.
The Stock Exchange rule-book was before the Monopolies Commission, 2% commissions were on the way out and old hands, to whom 1974 was a fresher memory than the recent financial crisis is today, felt that “the jig was up”, but Martin relished the pulse, the ticker and the impact of news. He recalls: “at last, it felt like being ‘in the cockpit’”.
Lawyer Monthly has the pleasure of discussing with Martin his journey in institutional investment management and his role as an expert witness in the $1.2 billion Libyan Investment Authority (LIA) v Goldman Sachs case.
How do you compare the buy and sell sides?
Exhorting clients to buy or sell never held much appeal. At first, I don’t think I understood what it was to be a salesman: how seasoned brokers got orders was a mystery, until I moved to BP Pension Trust.
BP’s research head told me: “we like to do things slowly here, take our time, get our facts straight”. After the hustle of broking, I thought I had died and gone to heaven.
The fact was that we were few and managed the largest private pension fund in the country, “the world beat a path to our door”. It was like broking without the hassle. If we wanted to buy a million Glaxo shares the rejoinder was: “OK, who shall we deal through?” This, of course, is where that timely research note, call or company lunch, that vague feeling of indebtedness to an attentive broker for his morning briefing, paid off. The “scales fell from my eyes”.
I have principally been a buy side denizen. That said, solving client problems drives innovation; new order arises close to the market, from the complexity at the margins of chaos. For me, an asset management firm embodies the perfect compromise; the buy side but with product innovation.
What has changed in investment management from when you began working?
An era that predates the mobile phone and the internet, let alone the personal computer, seems antediluvian now. Technology skills and continuing professional development are two themes that dominate investment careers for good reason. What was largely theory when I started work defines investment today. Technology was the enabler for pillars of modern finance like the capital asset pricing model, Modigliani-Miller theorems and Black-Scholes option theory. If there was a computer at Oxford when I was an undergraduate, I never saw it, but took to computing at business school and have led its use for investment advantage at every opportunity since.
Pre-Big Bang, the City retained a “gentlemen and players” feel; the “back-office” almost used a different door. UK pension fund management grew from the cosy corporate finance relationships of a dozen merchant banks but, like the dwindling ranks of independent domestic broking partnerships before them, these thinned too as the London market opened to competition, embracing stricter regulation and governance.
In a connected world, price, size and timely data prevail. “Back office” logistics are decisive. Investment has come increasingly to resemble its frictionless, efficient-market theory apotheosis. Taking advantage of inside information is illegal; not sought after. Corporate news is quickly disseminated; and, fair benchmarks are hard to beat.
Where do you stand on indexation versus active management?
I have always been and remain an advocate of both. It is absurd to see them in Manichean terms; they are points on a continuum. Without demonstrable skill, the fair gain from doing anything, let alone managing assets, is zero (before costs). One thing any investor should know is their risk appetite and one thing they can control is their costs.
Theory holds that the optimally priced asset-basket for any investor in terms of risk and return is a mix of the market-basket and cash. It follows that, if you have no skill in picking stocks or managers, you should market-weight allocation and selection, do so as cheaply as possible, and balance risk to taste.
It took a long time for “the penny to drop” with investors. Now that it has, I almost think it’s time for a new paradigm. Failing that, a sound plan is to start with indexation and assume active risk only if you can justify it. For likely levels of skill, it takes a long time to distinguish it from luck with any confidence.
Stock returns are skewed: there is sometimes the proverbial “£50 note lying on the pavement”, but unless you habitually set off for lunch empty-handed, expecting to find the means to pay on the way, it’s prudent to index a lot of your pension.
Are you against derivatives?
On the contrary, I became enchanted with them early and have introduced and used them widely. Even prior to the 1987 Crash, I sold large stocks like BP across my clients’ portfolios at Schroders and bought traded call options. I later learned that these were the largest stock substitution trades ever in the UK market. For a small loss of premium, my funds were spared a big market fall, earning trustee plaudits.
Derivatives are immensely useful tools but, like any sharp instrument, demand skill and care. Options can articulate exquisitely precise investment views, but this comes at a cost. In contrast to stocks, bonds and other derivatives, like futures and forwards, which are volatile, options alone price volatility; they almost conjure value out of the air. The issuing house’s cost is the need to hedge them; unless it or some other party wants to take the other side, in which case the premium(s) may represent almost pure profit.
You don’t pay for volatility or time-value when you buy a stock, ownership and dividend rights are open-ended, but a call option is like rent; it’s a wasting asset. It doesn’t make sense to rent for longer, or go for a bigger or more elaborate contract, than you need. You must also think about liquidity, exercise rights, counterparty risk, price transparency, administration, and leverage – a particular “red-line” for most funds.
What is a Sovereign Wealth Fund (SWF) and are SWFs receptive to change?
The International Monetary Fund (IMF) defines five categories of SWF: reserve, pension reserve, stabilisation, development and fiscal savings. Of these, intergenerational fiscal savings SWFs are paramount.
Once domestic fiscal resources exceed foreseeable budget needs there is a twofold rationale to create a long-term savings fund: the first is to better accumulate and manage assets and the second is to invest overseas to avert “Dutch Disease”- inflationary and currency pressures that might stifle economic activity.
Several first-generation funds grew on the back of the 1970s energy shocks, when there was an additional imperative to recycle OPEC surpluses. However, SWFs are not confined to energy resources; Asian funds reinvest general trade surpluses and, believe it or not, one of the earliest funds, in Kiribati, derives its wealth from phosphate-rich deposits of bird guano.
Creating and preserving a national “cookie-jar” demands providence and power. Savings SWFs manage assets for generations yet unborn, but it is hard to accumulate and manage assets for the longest term in the full glare of public scrutiny, and harder still to keep “hands out of the jar”. Perhaps this explains why the UK has no SWF.
I have never witnessed change like that in the Middle East and Asia. Some may sneer but SWFs assist in avoiding “African” problems. They are integral to nation-building and progenitors of change. The question is whether they always have sufficient competence and governance for their ambitions.
What got you into working with SWFs and how is managing SWF money different?
Having restructured a multibillion dollar business and led it from Bankers Trust to Invesco, completed back-to-back, part-time Master’s degrees and started a family, I was at a crossroads. UK Pension funds of the day talked a lot but cleaved to their peer averages; I craved a bigger canvas. When a joint move came up in 1996 it was “now or never”. My wife and I each became senior investment advisers at different UAE SWFs. Abu Dhabi Investment Authority’s MD’s office afforded incomparable perspective and the region still fascinates me. We enjoyed quality time and I researched a part-time PhD, supervised by a Cambridge don.
I have worked for three more SWFs since, in Singapore, Qatar and back in the UAE. Each was different and evolving. They had a common imperative to raise their game, either because they were nascent funds or because external events demanded change.
Scale is one big difference: these are the proverbial investment “supertankers”. Horizon is another: the longest of any investment endeavour. Allocation moves take time: you must hope to look “wrong” and carry on; for instance, selling into a rising market. It’s the hardest thing in asset management. SWFs are often also in young, devout, multicultural societies: managing money is not their only end; SWFs perform crucial roles in nurturing a commercial “hinterland” and educating and training nationals.
How did you come to be an Expert Witness in the LIA vs. Goldman Sachs case?
Senior experience at four SWFs was key but, as well as consulting and board advisory roles, I had managed conventional and quantitative portfolios for over fifty global pension funds, including AT&T, Cargill, DEC, DuPont, Ford, Burmah-Castrol, IBM, John Lewis Partnership, De Beers, Mercedes-Benz, Price Waterhouse, Leyland, Kimberley-Clark, Honeywell, Hackney Council, Rolls-Royce, San Diego County and Hong Kong Hospital Authority.
Leading City solicitors, Enyo Law, instructed me early in 2015, but had to resign due to the Libyan civil war. It looked over. I saw enough, though, to conclude that SWF investment management best practices were not sufficiently well-elaborated. So, I set aside a book project on the subject and applied to research a part-time DPhil at the University of Oxford.
By November 2015, the LIA’s contending factions had appointed BDO as joint receiver. The case resumed and I was reappointed. It was the sort of dispute that I had seen before from both sides. I was familiar with Goldman Sachs as a counterparty and knew of the LIA, though we never had a dialogue.
As a member since 1981 of what is now the Chartered Financial Analysts Institute, which represents 130,000 global asset management professionals, the case was especially thought-provoking in terms of the active debate over professional standards, fiduciary responsibilities, investment suitability and financial regulation.
Can you explain your involvement in the case?
My testimony centred on the investment suitability for a nascent intergenerational savings SWF like the LIA of their nine call option trades made with Goldman Sachs between January and May 2008.
The question of the disputed trades’ investment suitability arose in respect of both the LIA’s allegation of undue influence and unconscionable bargain, the two principal causes of action.
These elements were intertwined: the trades might be so unsuitable that it would be unconscionable for Goldman to sell them, demonstrating actual undue influence; equally, a presumption of undue influence might arise because the LIA bought them despite them being unsuitable.
In contrast to the LIA action against Société Générale, settled on 4 May for £815 million, no corrupt collusion was alleged. I was not instructed as a witness of fact and was asked to assume that the LIA was a nascent fund whose objectives were purely those set out in its founding decree.
I described a model set up for an SWF with this mandate, adduced criteria for investment suitability and analysed the LIA’s transactions. To corroborate my own opinion, I employed the contemporaneous promulgation of the 2008 “Santiago” SWF principles in tandem with a rigorous evaluation of LIA competence and a recently published technique for appraising instrument sophistication.
The LIA was a very large state fund; couldn’t it look out for itself? What should similar state funds look out for?
The original impetus behind the Generally Accepted Principles and Practices (GAPP) agreed at Santiago was certainly not disquiet about SWF’s vulnerability so much as their ungoverned power.
Nevertheless, SWFs do not spring up fully-fledged. There are degrees of development associated with increasing competence over time, embracing progressively riskier and more complex instruments, which facilitate more efficient portfolios.
It’s feasible to categorise investor competence and instrument sophistication along definitive, functional lines, like those I developed for this case. I believe that it would be constructive to do so more generally.
Regulatory regimes exhort financial vendors to know their clients. Others encourage customers to enter contracts “with their eyes open”. Under its Code of Ethics and Standards of Professional Conduct the CFA Institute imposes individual observance of fiduciary and investment suitability obligations on members. Such principles are now broadly accepted but common, coherent, objective criteria are often lacking.
Importantly, no such regulations applied in this case. English law is loath to detract from certainty of contract. An LIA win on undue influence would have been the first in a commercial setting for over 40 years.
It’s hard to draw conclusions because the circumstances were so unusual. However, SWF stakeholders should combat agency and intermediation problems by employing independent board advisers and consultants. They should also require proper investment committee oversight and use qualified, independent, fiduciary “gatekeepers” for all direct transactions.
What led the LIA to plead breach of trust and unconscionable bargain?
Numerous fiduciaries might have managed cheap, segregated portfolios for the LIA. Instead, between 2007 and 2008 it made costly deals in alternatives and structured notes, followed by direct equity trades, without independent asset allocation advice.
Amidst this, the disputed trades were the LIA’s sole direct option transactions and, reportedly, the largest single-stock volatility trades made by Goldman Sachs. They comprised nine over-the-counter, cash-settled call options covering $5.2 billion worth of six stocks, at a premium of $1.2 billion over a three-year term. Similar in principle to my 1987 substitution trades, they differed in almost every material respect and were far from “option money”.
No ISDA Master Agreement was signed and subsequently almost everybody at the LIA swore blind they had bought stock. Available records show this is what the LIA’s board members were told, too.
Even the CEO seemed shocked to learn that total LIA premiums might be lost. At a “stormy meeting” in July 2008, Goldman staff were so severely “chastised” that they requested emergency evacuation.
Until then, the relationship seemed almost too close for market counterparties. For example, entertainment offered to the LIA CEO’s brother and other forays to Morocco for junior staff during their derivatives training in London breached Goldman’s policy.
Consequently, the LIA contended that the disputed trades cried out for explanation.
How did the case affect your own perceptions?
I believe both sides were shocked at how one-sided the judgement in favour of Goldman Sachs was. It seemed to me to conflict with the norms of the investment industry as I understand them. Scant justice was done to the valour of Catherine McDougall, the Australian lawyer and “whistle-blower” in this case, whose career had suffered unwarrantedly and to whom it added insult to injury.
Having worked at senior level in both banks and SWFs, where I’ve seen a lot of transactions and authored guidelines, ethics, conflicts and risk codes, I was conversant with the potential pitfalls.
My career has straddled the advent of investor protection regimes. Over thirty years ago, I had helped draft derivative sections of the forerunner to the BMBA and later IMRO customer agreements. One inevitable consequence of progress was that firms, which might once have felt obliged to stand behind their clients, now on best advice and for the avoidance of doubt, disclaimed responsibilities.
Among SWFs, though, regulatory regimes have little to say, deal sizes can be large, some financial products carry high margins and best practices cannot always prevail over societal norms.
As a former banker, I also understand the urge to return with the “still-bleeding carcass slung over one’s shoulder”. At a well-governed SWF, frustrated would-be “hunter-gatherers” often asked: “What’s our problem with you guys, Martin?” and I’d respond: “Please understand, my national colleagues don’t wish just to sign your bits of paper; they want to look you in the eye and know that, if things go wrong, you’ll be there for them”.
It was a hurdle in terms of trust and commitment that few banks met.
The Santiago Principles were published in 2008, how have things improved?
It’s hard to tell: GAPP adherence is voluntary and, whilst transparency is the touchstone for outsiders of a Whiggish persuasion, many SWFs are not in pluralistic liberal democracies and prefer discretion; even if they agree the investment principles. This presents a conundrum.
Though the pattern of GAPP compliance is all too predictable, even based on largely self-reported data, opacity is not the same as non-compliance. The converse of best practice has few advocates, but there is little call to advertise: funds struggle to be more transparent than their owners.
As a former SWF insider, I am less concerned about transparency and can attest that this is an instance where absence of evidence is not necessarily evidence of absence.
What could be transformational is a rigorous technical framework linking investment best practice to objective badges of compliance. This would facilitate independent accreditation of an SWF quality “kitemark”, provide assurance to stakeholders and assist SWF planning, implementation and business process improvement.
As discussed, the LIA case prompted me to combine my consulting with part-time DPhil work in this field.
I hope to collaborate with funds and service providers during my doctoral research into these aspects of SWF investment management cybernetics at the University of Oxford, recently ranked the world’s foremost research university by Times Higher Education.
How did you set about defining investment suitability and what for you are the main elements of suitability?
My definition of suitability comprised four criteria present across asset management generally and within SWFs at every level of delegation: from asset allocation, through individual security selection, to investment committee decision-making. They are: a fund’s financial predicament, the provenance of its decision-making, its technical competence and the sophistication of its proposed investments.
Provenance is the least familiar but most important of these concepts. In the context of a strategic asset template derived from a fund’s financial predicament, provenance demonstrates ownership of a continuous, comprehensive chain of diligent investigation, confirming the rationale for and attesting to the fitness of all subsequent transactions.
To convey to a lay audience just how incongruous the LIA’s disputed trades were, even by the standards of its other costly but unlevered security purchases, I analysed fund competence across 25 investment functions in terms of expertise and organisation. Then I mapped these onto a congruent proprietary model of security sophistication in terms of risk and complexity using a common five-point scale.
This reinforced my conclusion that the trades were unsuitable for a nascent fund by demonstrating graphically just how far outside the competence of the LIA their risk and complexity fell.
Civil Engineer Gary Vaughan first became an Expert Witness without being aware of the fact that he was being relied upon as such in a civil dispute; two good clients of his had a falling out over the boundary between their respective properties and asked if he would help to map out the features and calculate some lines. Having helped resolved that dispute Gary decided to find out more about the role of an expert; he attended a number of training events and seminars on expert related topics and discovered he enjoyed the investigative nature of being an expert witness.
He discusses with us now where the legal sector can improve in the world of surveying, and the problems he overcomes as an Expert Witness.
What are common cases that you are involved in as an Expert Witness?
The areas in which I frequently provide expert opinion broadly speaking fall into two distinct areas: cadastral matters, i.e. those matters which are concerned with boundary demarcation, rights of way and extent of Highway etc.; the second area are matters regarding drainage and flooding. These two areas may seem to be quite different, but they both involve the expert interpretation of plans, technical drawings, diagrams and photographs. Typically, a very precise measured survey is required to establish the factual position of features which currently exist.
When dealing with such cases, have you ever noted common mistakes made by the parties, which if avoided, would avoid such disputes? If yes, what common mistakes are made?
There are a number of basic misconceptions which exist with respect to legal boundaries, the largest of these is probably a misunderstanding of the role of Land Registry and the significance of Ordnance Survey Mapping. It is extremely common for somebody to have taken the depiction of their property on Ordnance Survey mapping and to have concluded that the boundary is in the wrong place. The same can be said of Land Registry Title Plans (which for the most part are based on Ordnance Survey mapping). What the lay person fails to appreciate is that Ordnance Survey do not map legal boundaries, they map physical features; these physical features may or may not have relevance to the position of the legal boundary. Land Registry Title Plans rely on Ordnance Survey mapped features, thus it follows that the extent of a particular title on a Land Registry Title Plan can only ever be a general indication of the position of the legal boundary and not a precise line that could be mapped out on the ground and used as a legal boundary.
What are the common misconceptions lawyers have regarding boundary services?
The largest misconception that I have encountered in my particular sector of expertise is that legal practitioners do not always appreciate that the field of Surveying is a very wide field and that not all surveyors have the required skills to be able to address all matters. For example, if you have a boundary dispute concerning the position of a legal boundary within a building then the required skill set would need to include an understanding of building construction; a building surveyor would be ideally suited. If, however, the dispute involved farm land and the position of features such as hedges and ditches and watercourses, a building surveyor may not necessarily have the required skill set. All too often I have been involved in disputes over matters where the opposing expert has been selected with small regard for the particular nature of the dispute. Thus, in my experience the expert discussion and the production of a Joint Expert Statement can become protracted. This in turn has a direct bearing on costs.
To paraphrase, if you have a land dispute, make sure that you appoint a surveyor skilled in the measurement of land.
Using your expertise, in what ways do you like the legal sector needs to change in order to adopt to the requirements of your sector?
One of the trends I have noted in my particular sector of expertise is for ‘Questions to Expert’ to be more akin to a written form of ‘Cross Examination of Expert’. My understanding is that this is currently not allowed for under CPR35 without the written permission of the Court or the agreement of the opposing party. CPR 35.6 sets out that written Questions to Expert ‘must’ be for the purpose ‘only’ of clarification of the report. It is sometimes the case that a court may restrict the evidence of the expert to that of his or her written report.
‘Questions to Expert’ do not necessarily offer an opportunity to cross examine an expert and if the expert is not to give oral evidence there is no formal procedure set down in CPR to cross examine an expert witness in writing. The concept of cross examination by written questions seems to be evolving at this point in time (in my sector at least). My view on this immerging trend is that it makes the job of an expert more complicated and un-necessarily expensive. I have recently answered 32 ‘Questions to Expert’, thus producing a 22-page expert report in a contentious matter. Of the 32 questions put to me only four concerned matters of clarification of my report. The time taken to answer the questions was disproportionate to the length of the original report purely because the answers dealt with matters of cross examination rather than what is intended under CPR35.6. I believe there is growing issue here that needs addressing.
Is there anything else you would like to add?
I would like to thank the Academy of Experts for their support and training over the years. In my view the Academy provides excellent support to practicing experts and I have very much valued the informative publications and well organised training events that they have provided.
This month, we speak to Julia Brockman, Partner at DSL Lawyers in Macau where she leads the areas of Telecommunications, IT & Media and Construction, as well as the Litigation and Arbitration practices. After graduating in Law in Portugal, Julia moved to Macau in 1995, where she first worked as a legal adviser to the Macau Government in preparation for the handover from Portuguese to Chinese administration until 1999. Between 1999 and 2006 she was Legal Counsel and Company Secretary at the incumbent telecoms provider in Macau Companhia de Telecomunicações de Macau (CTM), having moved into private practice thereafter. She is a member of the Chartered Institute of Arbitration – East Asia Pacific Branch. She discusses her unique role and reveals how Macau is a small region with huge potential.
Macau has a mix of cultural influences from Portugal and Hong Kong – how has this shaped the legal sphere?
Due to the presence of the Portuguese for nearly 500 years, the cultural influence from Portugal is undeniable and very visible, not only by the architecture and beautifully kept colonial buildings and churches, but also by the fact that Macau has maintained a Chinese-Portuguese bilingual system in the Government and in its legal system. However, outside the Government and the Courts, Portuguese is not widely spoken in Macau.
Macau’s legal system has Portuguese law as its main reference, belonging to the civil law tradition of continental Europe, which originates from Roman law and is based on written legislation - statutes and codes - as its main source of law. The main characteristic of the civil law systems is not only the codification of laws, but also the methodological approach to the laws and statutes. The civil law system is systematised and structured relying on declarations of broad, general principles. Thus, the Courts base their judgments on the provisions of codes and statutes, from which solutions in particular cases are to be derived, having to reason on the basis of general rules and principles of the code. By contrast, in a common law system, such as Hong Kong, cases are the primary source of law, while statutes are seen as incursions into the common law and thus interpreted narrowly.
Culturally and commercially, Hong Kong has had a strong influence on Macau. English is the main common language used in the business community. In particular, since the liberalisation of the gaming sector in 2001, which turned Macau into the largest gaming hub in Asia, a large number of Hong Kong based businesses – e.g. construction companies, property developers, hotel operators and high end luxury retailers – have set up in Macau, which has resulted in “imports” of common law based concepts. This originates mainly from the fact that these companies use their tried and tested contract templates from Hong Kong, often referring disputes to arbitration proceedings there.
However, these “imported” common law concepts have not infiltrated the laws and regulations in Macau, which are still largely based on Portuguese law, with its major codes (mainly the Civil Code, Code of Civil Procedure, Commercial Code, Criminal Code and Code of Criminal Procedure) derived from its Portuguese models still in place.
The use of common law based contracts, which most of the times are governed by Macau law by choice of the parties, leads to some challenges when they are enforced in the Macau Courts, mainly in their interpretation and application under the general rules and principles of the codes.
How does this mixed culture enable Macau to stand out for international investment?
The mixed culture has certainly contributed to a soaring international investment, and due to its Portuguese heritage, Macau offers an important language and cultural bridge between China and the Portuguese speaking countries, such as Brazil, Angola, Moçambique and East Timor, among others.
What are common legal disputes you are faced with? Why do you think these types of disputes are common in Macau?
As a tiny enclave of just over 30 km2 located in the Pearl River Delta, Macau is a small market, which does not allow lawyers to be restricted only to their usual practice areas. Therefore, I am often faced with general commercial disputes outside my areas of expertise.
Currently, the majority of cases I am handling are property disputes. Some are related to the expiry of 25-year old land concessions that the Macau Government declared as expired due to the lack of development of the land granted to the developers.
In other cases, the disputes involve sale contracts over building units that were assigned several times to third party buyers before construction was completed, a common practice when the real estate market was soaring and the law allowed pre-sales without restrictions. In the meantime, the Government put in place several laws that have curbed speculation (mainly on stamp duty) and put restrictions on pre-sales, but a few of these disputes are still on-going.
Construction disputes are also very common, given the enormous building activity of the last 10 years, mostly related to the construction of the large casino resorts.
In these cases, I often act as Macau Counsel to arbitrations that are held in Hong Kong.
Does Macau have potential to become an international arbitration centre?
Macau is not comparable to the international arbitration centres of Hong Kong or Singapore, but in the last few years the Macau Lawyers Association has organised training sessions and workshops on international arbitration with the Chartered Institute of Arbitrators – East Asia Branch to develop and internationalise its own Arbitration Centre. I hope that this will create more confidence in the international entities doing business here to refer their disputes to arbitration in Macau. It has a particularly important niche to fill for ADR between parties from Portuguese speaking countries and the PRC.
As Thought Leader, can you share with us what you think is the key to ensuring the dispute concludes in the best circumstance for your clients?
I believe it is crucial to define strategies and to think ahead by determining the best and worst case scenarios for the outcome of a dispute. Once these aspects are clear, it is easier to help the client to decide whether it is worth trying to settle before any litigation, mid-way through litigation or not to settle at all. There is no mandatory mediation in Macau, but in practice we, as counsels, often end up acting as mediators.
Understanding the commercial side of a dispute is also essential to conduct cases in a manner that is satisfactory to the client. This requires a good understanding of the costs involved and clear communication with the client in order to avoid unexpected expenses.
Promoting communication and cooperation between the opposing parties’ counsels is also very important to avoid unnecessary contention and conflict.
How do disputes differ for telecommunications and media, in comparison to property and construction? What different considerations do you make when acting on a case?
The first main difference is that litigation in the telecoms sector is quite rare.
The only major dispute in this industry was between the Government and Macau Cable TV; this related to the Government’s lack of action to clamp down on antenna operators illegally retransmitting TV signals, who have been active in the market since the 1990’s.
The second difference is that most disputes in telecommunications and media will still be between operators and Government, rather than between competitors. Under the current telecoms regulations, it is the Government, through the Regulator, that is granted powers to resolve disputes between operators. Also, given the Government’s control on pricing, there is less potential for disputes to arise between operators.
Do you find that commercial awareness often gets in the way of legal practice? If so, what more do you think can be done to ensure they complement one another?
I believe the perception of commercial considerations getting in the way of our practice is becoming rarer with time, as nowadays we had to learn to understand the clients’ business perspective. Of course, in some instances, when we feel strongly about a certain case and are confident that we can win, it can be quite frustrating if cost considerations prevent us from conducting litigation in the manner that we think would get the best results.
I was an in-house lawyer for seven years; this experience gave me insights into business management, so I can relate to commercial awareness.
In my view, the best way to ensure commercial awareness and legal practice complement each other is to keep good communication with the clients.
As Thought Leader, can you share what the main motivation behind your role is?
Given my 10-year gap in private practice, when I worked first as a legal adviser to the Macau Government and later as in-house counsel and secretary at the main telecommunications services provider of Macau (CTM), I was particularly motivated, so I decided to work again as a lawyer, to broaden my knowledge and to interact directly with clients, which I enjoy (most of the times). I was excited to face the intellectual challenge and I look forward to reinventing myself and building up DSL Lawyers with my other Partners.
No two days are the same in the sector of criminal law, with each case posing new challenges to the attorney handling the case; criminal law covers everything, from small misdemeanors, to big heinous crimes, fraud and white-collar crime. It is therefore vital that the legal help you seek is the right help for you, as the every-evolving and changing nature of the law can make it difficult to keep up.
This month we speak with Benjamin Gray, an attorney specializing in criminal law, who updates us on the legislative changes in Texas.
What criminal law segments would you say you are most involved in? What motivated you to embark upon a career focused on this practice area?
I focus on state criminal law in Texas as opposed to federal criminal law; I handle misdemeanor and felony cases. During my second year of law school I interned for a criminal defense attorney during the summer. It was a great experience and opened my eyes to the realm of criminal law.
What is a recent regulatory development surrounding crimes and related to criminal law in Texas?
In 2013, Texas enacted the Michael Morton Act as codified under Article 39.14 of the Texas Code of Criminal Procedure. This requires prosecutors to give defense attorneys any evidence that is relevant to the defendant’s guilt or innocence. In essence, there is now a more open discovery policy in Texas for criminal matters.
What are currently the biggest obstacles pertaining to criminal conviction and litigation therein in Texas / globally, and as Thought Leader, what solutions do you envision?
You have indigent people who can’t afford to post a bond or can’t afford to hire an attorney. A lot of them accept plea agreements to get out of jail because they didn’t have the resources to fight their case. We do have provisions which allow an individual to be released on a personal bond, however for a misdemeanor that could take up to 30 days and for a felony that could take up to 90 days. If the State files a complaint or indictment before the 30 or 90 days then the individual still has to post a bond. I think we need to make bonds more reasonable so the average person can afford to post a bond and continue with their life until their legal matter is resolved.
Have you noticed any trends in crime overtime? Were particular crimes commonly witnessed throughout different time periods?
Drugs and driving while intoxicated seem to be what I see as prevalent as far as crimes committed in Texas. When I look at the court dockets there tends to be a lot of arrests for possession of marijuana and DWI.
International thoughts on weapons in American states have conflicting opinions; do you think anything could be done to reduce gun/weapon crime? If so, what would you advise?
I am not sure if anything can be done to reduce gun crimes. Most criminal aren’t buying guns at the gun store through a licensed dealer. Most criminals are getting guns illegally on the street. The United States is a large country and it is difficult to keep people from smuggling guns into the country.
