Understand Your Rights. Solve Your Legal Problems
Lourdes Fuentes Slater is the Founder and CEO of Karta Legal. A veteran litigator and a pioneer in digital transformation, she has a long list of achievements in legal process improvement and the adoption of technology solutions to innovate the delivery of legal services. This month, we have the pleasure to speak with her. Despite the accelerating pace of innovation in legal technology, lawyers have been slow to embrace tools that could greatly improve their productivity and add value to their clients. A new approach is needed to help lawyers remain competitive and, importantly, comply with their ethical and professional duties of competent and efficient representation. A trained Lean Six Sigma Black Belt and described by the New York Law Journal as "truly an agent of change”, Lourdes shares her thoughts on innovation and how the sector can be transformed.
Legal technology has made great strides in the past decade. How has the implementation of these new tools benefited legal project management?
You have to separate two things here. Yes, legal technology investment and available tech solutions for legal are at an all-time high. In 2018, tech investment experienced a growth of 713%. 2019 set another record with $1.23 billion invested by the third quarter of 2019. But the adoption of legal technology, generally speaking, has been incredibly slow, and even when new technology is implemented it is used at 50% or less capacity. Innovation in legal has certainly been a lot slower than in other industries, despite being constantly top-of-mind. In fact, I recently came across a PWC survey that highlights the industries that focus on "breakthrough innovation,” but shockingly, legal was not in it.
The obvious question is: why is it so hard to motivate lawyers to do something they have the ability to do? Psychologists will tell you that the answer is simple. Motivation is intertwined with reward value. And reward value, in turn, is deeply influenced by past experience. An important consequence of this biological fact is that new behaviours are rarely as motivating as existing ones that have previously been rewarded. This is a fundamental problem for those wanting to innovate the practice of law.
Meaningful adoption of legal technology solutions has been incredibly slow. Innovation initiatives fail approximately 70% of the time and even when new technology is implemented it is used at 50% or less capacity.
I want to take a minute here to address the question about legal project management and highlight something that I think is very important. Due to economic pressures, the 2008 recession triggered the rise of legal project management as its own separate field in legal. In my opinion, the 2020 pandemic and the transformational changes in the way we practice law - have triggered the rise in legal process improvement as a legal career path in and of itself. Those of us selling process improvement as a separate service are now in more demand than ever, and I do not see that changing because I believe the tippling point for legal innovation is now. As I explain below, the pandemic has us poised for finally making those great strides.
Which areas of legal practice have seen especially strong returns from the adoption of specialised legal tech?
Data security and privacy compliance tools are two must-have that pay off in dividends. Collaboration and project management tools can streamline processes internally and externally and cut down waste significantly. The pandemic saw the rise in video conferencing, remote hearings and depositions, which have proven to be great ways to save money and time. Same goes for e-signing. These tools have been there for years, but it took the pandemic for legal to embrace them fast and furiously, which shows it can be done!
In contrast, what areas have yet to see improvement, and how can they be brought up to speed?
Well, where do I start? With some notable exceptions, very few law firms and legal departments, private and public, are at advanced or mature stages of legal technology acquisition, adoption, and implementation. Most companies regardless of size are in the underdeveloped or foundational stages. Part of my job is to assess the maturity level of a company and prepare a prioritised legal technology roadmap, which can be done only by working hand-in-hand with an internal cross-functional team. The needs and priorities vary greatly by individual organisation, which is crucial not to forget.
[ymal]
Also, as a process expert, I am a big proponent of bite-size innovation. If you want to gather a few takeaways from this interview, let this be the first one: digital innovation is a process. Think of it as a big project full of mini projects that have been properly prioritised and mapped out after a holistic assessment of your current capabilities, technology and needs. The second takeaway is that innovation has a compounding effect and grows exponentially, which is why it is so important to start innovating.
If your question is: “which solutions will promote quick gains and efficiencies right now”, my first recommendation would be to focus on the “efficiency boosters,” including business process management tools and robotic process automation. We can bring these tools to bear in any organisation today and you will see a positive ROI within a few months of implementation. I was pleased to see a recent report from the Corporate Legal Operations Consortium showing that 71% of legal teams have identified the automation of legal processes as a high priority.
A 2019 study found that only slightly more than half (53%) of lawyers in the US and Europe said their organisations intended to increase investment in legal tech. Why do you think firms are reluctant to adopt new technologies?
Change is hard. Elliot T Berkman PhD wrote a good article on the subject of neuroscience and behavioural change last year in the Consulting Psychology Journal. He points out that any human change in behaviour requires “the will” and “the way”. Let’s look at these in the context of legal innovation.
The “will” is the “why” of behaviour change. You can call it the business case. In contrast, the “way” refers to the cognitive and informational aspects of behaviour change. The “way” is the “how” to change. How are you going to innovate your practice? Where do you start? What skills and capabilities are required? Do you have a process map ready? Law schools and training in law firms have not provided lawyers with the skills to find the way.
Moreover, learning new skills and gathering the data needed to transform law practice and the delivery of legal services requires executive function as that term is used in neuroscience. That means that learning something new demands conscious attention. To truly be successful, time, energy, and focus need to be deployed in finding “the way”. Of course, this means there is an opportunity cost of deploying the path to finding “the way”. For attorneys, this is significant because it takes time away from billable work, meeting deadlines, preparing for a pitch, writing briefs, etc. Opportunity cost is possibly the biggest challenge we have as legal professionals in trying to innovate the industry. For lawyers, time is money, and as an industry we have not placed a lot of value in legal process innovation. This is where great leadership makes it or breaks it when it comes down to it.
What can firms and in-house legal teams do to overcome this reticence?
Innovation theory explains that for any successful innovation to take hold you need the perfect confluence of these three factors:
The tech feasibility has been here for years. What we have lacked as an industry are 1 and 3. Outside events, like the pandemic, trigger those two events to happen quicker than we, the evangelists, are able to do ourselves. That is why I view 2020 as the tipping point for legal innovation. But I do want to stress that even before pandemic, I and many others have been pointing out that there are other market factors, such as regulatory reform, the Big Four and alternative legal services providers, that were threatening the traditional law practice models.
The hardest challenge to overcome has been – and still is – the human factor. Nobody likes change, law is deeply rooted in tradition, it is still being managed by Generation X, and the billable hour is still queen, just to mention a few human factors at play here. So, to overcome reticence, I am a big proponent of deliberately working on a culture change and being intentional about a mind shift. This requires time and effort on an extraneous concept: change management. Both are foreign concepts in traditional law. We need training and workshops on how to view law as a business in a way we have not before, and we need leaders to invest in upskilling their teams in change management methodologies and process improvement techniques. And frequently, it requires outside consultants like me to guide the internal team in a digital transformation journey by facilitating the change management piece.
The hardest challenge to overcome has been – and still is – the human factor.
From what you have seen, how far has the COVID-19 pandemic led to renewed interest among legal firms to mend their outdated tools and processes?
As I stated before, we have made some quick basic gains (video conferencing, e-signatures, collaboration tools). I think contract management tools have also made huge gains because of the pandemic. But there is still a long way to go.
An ancillary point, but one that will bring faster innovation to bear, is the renewed interest in hiring heads of legal operations. Right now, between 25 and 55% of all legal departments regardless of size have at least one legal operations person onboard. The point of legal operations is to carry out the business of law, leaving your lawyers to practice law. That is of course much easier said than done, so please keep in mind that legal operations can transform the practice of law only if they have the experience, the background (the perfect combination of lawyer, technologist and business process person is ideal) and the gravitas needed so that everyone else embraces her/his ideas. This takes me back to the importance of leadership in fostering culture change and change management.
Is there an area of legal tech (AI, cloud, etc) with development potential that you feel particularly optimistic about?
I am optimistic that our long-term relationship with e-discovery tools will continue to flourish with the use of AI and analytics to not only cull documents, but to review documents for production. Page-by-page digital review of documents is outdated, error-prone, time-consuming and costly, and it is remarkable how many people still follow that process. I also think AI will make great progress in contract review and life-cycle management, and data mining. And, as I mentioned before, I am of the view that all networks should be cloud-based, and that BPA and RPA are must-have tools.
But I am mostly optimistic not about technology but about approaching innovation the right way. Research indicates that over 70% of all change management initiatives or innovations fail and almost in every single case the main reason for that failure is the lack of leadership and human interaction with the innovation, and the lack of willingness to change. Therefore, it is so important to have or work with change management and process experts.
About Lourdes Fuentes Slater
What can you tell us about your journey into law?
I am a graduate of the University of Pennsylvania Law School and a litigator by training. In addition to being a partner at a litigation firm in New York City, two years ago I founded a legal operations and technology management consulting firm with a focus on design thinking and process improvement.
I have had a long career, litigating in state and federal courts across the USA and in international arbitrations. My detour from courtroom to tech-room happened seamlessly. Unlikely the vast majority of my colleagues, I was drawn to the field that was to become e-discovery. I was at the forefront of that critical path that merged IT, litigation support, technology, and the law. The idea of providing immediate value by creating workflows to improve an obsolete process (manual document review) using technology was genius. E-discovery is an early example of legal innovation. As an aside, I know “innovation” sounds like a buzzword. It is not. Innovation is the act or process of introducing new ideas, devices or methods.
Early on I realised that to deliver legal services to my clients in the most cost effective and efficient manner, I needed skills I did not learn in law school or as a practicing lawyer, and I became a legal project manager and a Lean Six Sigma Black Belt. For those not familiar, Lean Six Sigma is a team-oriented data driven approach to process improvement focused on delivering value to the client. Those skills and my background have been crucial to my work in managing technology projects, logistics, data and discovery in two of the most complex and data intensive matters of the last decade, the Madoff Trustee and the Residential Mortgage-Backed Securities litigations.
I know “innovation” sounds like a buzzword. It is not. Innovation is the act or process of introducing new ideas, devices or methods.
How does your firm reflect your professional outlook?
Karta Legal is a legal operations and management consulting firm. The genesis of Karta Legal was my desire to push forward team, process, and technology innovation and change management. We have a team of lawyers, process experts, and legal technologists working with legal departments and law firms of all sizes to innovate the practice of law, and we have a roster of vetted and tested partners to help us deliver the best for a successful digital transformation – because we understand the theory behind change management itself. We are unique in the method we deliver our services, focusing not on technology but on change management and process improvement. We use curated design thinking, Lean Six Sigma, and Agile project management tools and techniques tailored to the management of the business of law and legal processes. By doing this, the success of any innovation initiative is optimised. This approach also maximises efficiencies, resulting in significant savings in resources.
In 2021, the National Law Journal selected Karta Legal LLC as a Legal Technology Trailblazer. Very few companies get recognized as a Trailblazer and the fact that our young company was selected among a choice of titans is a testament to our innovative approach to legal technology innovation. Not only was the award meaningful for this recognition, but also because Karta Legal LLC was the only woman and minority business enterprise to be given this prestigious award. Moreover, to my knowledge, we are the only 100% minority- and woman-owned consultancy in this field. While I cannot say I am proud of being the only one, I am proud of being a role model for other women and minorities in this space because you cannot be what you cannot see.
What personal goals do you have for yourself and your organisations in the second half of 2021 and beyond?
We will continue to provide individual consulting services to our law firms and legal department clients on change management, process improvement, and legal technology acquisition. After an initial assessment, we create a prioritised legal technology road map that works for the individual client. This is not a one-size-fits-all approach, so the right considerations must be given to the work and processes being delivered by each individual client. Also, as we have done since our inception, we will continue our due diligence to find the best solutions in the market for the needs of the legal buyer. We vet and test these solutions, and we form valuable partnerships with legal vendors in the ecosystem to be able to deliver value.
Moreover, there are two initiatives this year that we are particularly excited about. The first is that our Karta Online Campus is now open and accepting enrolment from all legal professionals, not just lawyers! We provide certifications in change management and Legal Lean Six Sigma. Applied to legal services, LSS can quickly and favourably impact the bottom-line in cost and time savings. The legal industry is entering a new period of people, process, and technology innovation. We believe that by up-skilling your team and giving them tools to tackle legal innovation effectively and efficiently, you will be able to deliver unparalleled services and value to your clients.
Also, our Karta Staffing company is now accepting applications for lawyers, project managers and process experts interested in temporary work assignments. Our staffing company is incorporated in Puerto Rico and serves Mainland USA and LatAm with a workforce that is expertly qualified and trained, fluent in both Spanish and English. We offer unparalleled global services at a lower cost point with an emphasis on security, speediness, and efficiency.
Lourdes Fuentes Slater, Founder and CEO
Karta Legal LLC
Address: 950 Third Avenue, 24th Floor, New York, NY 10022
Tel: 212 897 9500
Email: lslater@kartalegal.com
Website: https://www.kartalegal.com/
Karta Legal is a legal operations and management consulting firm founded in 2019. Through a combination of training and expertise in technology and processes, Karta works with firms and legal departments of all sizes to innovate the practice of law. Despite its relative youth, Karta’s work has been recognised by the National Law Journal as a Legal Technology Trailblazer – the first minority- and woman-owned firm to have received this accolade.
Lourdes Fuentes Slater is the founder and CEO of Karta Legal. A Lean Six Sigma Black Belt and legal project manager, Lourdes is committed to legal process improvement, described by the New York Law Journal as “truly an agent of change”. She is also a sought-after speaker on process improvement, legal technology, privacy, artificial intelligence, diversity & inclusion and e-discovery issues.
Following decades of economic instability due to fiscal mismanagement, corruption and conflict, the government of the DRC implemented economic reforms. What were these reforms?
During the period 2001 to 2014, a series of institutional reforms were undertaken by the government administrations, supported by economic reforms that had the implementation of the country’s global development goals as their foundation.
These reforms were structural and were accompanied by infrastructure programmes, the strengthening of the banking system, and the improvement of governance, which led to the reform of state-owned companies and the liberalisation of the energy and insurance markets.
These liberalisations have led to a change in legislation. In this context, we can cite the mining code in 2001 – which has been amended to date – the investment code with the creation of the National Agency for the Promotion of Investments, the law on energy, the hydrocarbons code, the insurance code, the new business law (OHADA law), the law on telecommunications, the law against money laundering and terrorist financing and the creation of dedicated agencies, the law on subcontracting, and others besides.
Did these laws have an impact on attracting commercial activity?
There has been a definite impact as a result of changes in legislation, especially on business law. The creation of companies has become flexible, which has encouraged the creation of new businesses, and net banking and a competitive market have developed following the strengthening of the banking system.
There has been a definite impact as a result of changes in legislation, especially on business law.
GDRC efforts from 2001 to 2014 yielded some improvement, but a drop in commodity prices in 2015 has resulted in significant economic instability yet again. How have things progressed since?
After the instability of 2015, there was an economic rebound with a double-digit growth rate. However, there was a slowdown following the political instability which calmed down after the elections and the handover of power between the elected president and the outgoing one. Then came the COVID-19 pandemic, which put a damper on things.
Now, the government is making efforts to ensure that the recovery is effective with or without COVID-19.
What current challenges are commercial businesses facing in the DRC?
The pandemic is the new challenge for doing business, and the traditional challenges of corruption, development of news solutions and price stability yet remain.
What should businesses be doing to see these challenges through?
Companies in the DRC must reinvent themselves and propose new solutions to get out of the pandemic, and then they must take advantage of the legal tools that have been set up (including new laws and the liberalisation of economic sectors such as insurances, energy, telecommunications and new technologies) to help them thrive in a market of more than 80 million consumers. With the presence of countries such as the States of the European Union, Asia (China, Japan, AUE and others), the African countries, the USA and Great Britain, we are rethinking the tools to facilitate exchanges by re-launching the chambers of commerce.
[ymal]
Liliane Mubanga, Senior Executive
Thambwe-Mwamba & Associés
Address: 364, Blvd du 30 juin, Im. Kiyo ya Sita, 6th floor, Kinshasa, Democratic Republic of the Congo
Tel: (+243) 817 100 018
Email: cabinet@thambwe.com
Thambwe-Mwamba & Associés is a law firm based in Kinshasa, capital of the Democratic Republic of the Congo. Its lawyers work in a human-sized unit to better serve their clients across a range of sectors including banking, general trade, construction, mining and the hotel industry. The firm covers legal advice in various areas of law, but especially in business; they specialise in creation of companies, drafting of deeds, special contracts and due diligence. Thambwe-Mwamba’s team synergise their skills to master a broad range of areas of law, covering all traditional legal services and continually building upon their knowledge base across multiple disciplines. The firm combines its ever-deepening expertise with an ability to build personal relationships with clients and pursue the best possible outcome for their needs.
Liliane Mubanga
I am a lawyer registered at the Bar of Kinshasa/Gombe in the Democratic Republic of the Congo. I have been a member of the Bar Council of the said Bar for a term of four years. I am a member of the law firm Thambwe-Mwamba & Associés, where I am the Senior Executive. I am also the Mining and Quarrying attorney with the senior partner, Maître Alexis Thambwe-Mwamba.
Electrical and mechanical failures require a good deal of specialist knowledge to fully understand. What skills and experience did you require to specialise as an expert witness in this area?
I am an electrical engineer whose bullseye competence is based in a lifetime of working in potentially explosive atmospheres with experience of equipment ranging from low voltage and current to 138 kV. My career started as an apprentice electrician in the coal mining industry, progressing through being an engineering manager, companywide automation engineer, and research engineer working on European Union projects to being a Health and Safety Executive (HSE) Inspector. For the last eight years I have worked in the private sector as an engineering consultant and expert witness.SEHealth and Safety I now work for Envista Forensics, based in the London office, which covers the Europe/Middle East and Africa (EMEA) region.
Not only do I have many years of industry experience, but I have also been fortunate to have worked for companies who have given me the time, support and sponsorship to gain a BSc, an MBA, an Engineering Doctorate and a deep knowledge and understanding of a plethora of standards and legislative requirements relating to engineering.
I am repeatedly instructed on insurance losses ranging from £20,000 to £100 million both in the UK and overseas and on complex health and safety prosecutions, and my instructions often are at the direct request of Insurers and barristers.
As an expert witness, my fundamental role is to explain complex engineering issues in a manner and language that the Court can easily understand. In my experience, being able to give practical examples of different, but similar, equipment and systems that the Court can more readily relate to can often work best. Prior to me working for the HSE I was a part time Further Education teacher which I did for many years. That experience of teaching adults, some of whom were only students because their employer forced them to attend, greatly assists me in producing my reports for the Court and also in giving oral evidence.
[ymal]
Even though I am obviously biased, and I hope that I do not offend my legal colleagues by saying so, in my opinion an engineer is always best placed to assist the Court on engineering issues.
I have acted as an expert witness:
Engineering issues are often highly complex and sometimes difficult for a lawyer to explain in court. What assistance do you provide?
In criminal trials, I am not only able to assist the Court to explain the complex engineering aspects but also the associated investigation process that led up to the decision to prosecute.
Even though as an expert witness my overriding duty is to the Court to be honest and impartial, I also have a commercial duty to my client who is instructing me. Therefore, it is paramount that I work within the agreed budget and timescales.
Of course, prior to producing a report, I need to carry out a robust investigation and gather as much evidence as I can. One of the best lessons that I have ever been given on taking evidence is to think that you will never visit the scene ever again. That way, you take the time that is necessary, not always the same as the time that you are originally allotted, and take whatever evidence is required. Photographic and video evidence is invaluable as is detailed note taking.
One of the best lessons that I have ever been given on taking evidence is to think that you will never visit the scene ever again.
Sometimes other parties in a case instruct their own experts and I am required to conduct joint inspections. It is here where good interpersonal skills are required so that everyone has fair and equal opportunity to carry out a robust inspection.
What analysis do you need to undertake to conduct an effective investigation?
I reach my conclusions by following the evidence and approach each case with no preconceived thoughts on what the root cause may be or where the case may lead. I examine all credible scenarios, create hypothesises and then either prove or disprove each one. However, I sometimes have to accept that I cannot categorically find the root cause of an event. Sometimes the evidence has been disturbed or even disposed of before I arrive on scene, and sometimes witness evidence is not as reliable as I would like for various reasons. I am aware of one investigation carried out by a colleague where it was eventually proved that a corpse had been moved to give the impression of another chain of events. With this in mind, I tend to be sceptical and only believe what I can prove.
What are common reasons for electrical and mechanical failures in the cases you pursue?
I am often asked about the common reasons for electrical and mechanical failures in the cases that I investigate. Invariably I find that poor design, poor installation and commissioning and poor maintenance (probably in equal measure) are the reasons. Sadly, another increasingly common factor is how the competence of the technicians and engineers involved in these processes has diminished with younger people choosing to follow other careers than engineering. Because of this, I am a STEM ambassador in my spare time and try to encourage as many young people as possible to become engineers and scientists.
What developments have taken place in the past year to impact how cases in your area of expertise are handled?
In the past 15 months during the COVID-19 pandemic, social distancing measures have meant that joint inspections are carried out in a different manner, with some taking place by remote means. Also, of course, the advent of Nightingale Courts and remote attendance has been something that a lot of people, myself included, have had to adjust to.
The changes made due to the pandemic are hopefully short-term, but I feel it is vital for an expert witness to keep abreast of emerging technologies and practices. I am fortunate that the professional bodies that I am a member of encourage continuous professional development (CPD), and I submit my CPD plan and record annually to assist me maintaining my Chartered Engineer, Chartered Scientist and Chartered Environmentalist registrations.
Dr John Ford (BSc, MBA, EngD, DMS, PGCE, CEng, CSci, CEnv, FIMMM, MIET, MCMI), Technical Lead Mechanical/Electrical UK
Envista Forensics
Address: 364, Blvd du 30 juin, Im. Kiyo ya Sita, 6th floor, Kinshasa, Democratic Republic of the Congo
Tel: (+44) 203 696 7996 / (+44) 778 740 8240
Email: john.ford@envistaforensics.com
Website: envistaforensics.com
Envista Forensics is a global, multi-disciplinary and highly skilled forensic engineering and expert services firm. We have 400 full time professionals (as well as over 1200 Associates) located in 35 offices on 4 continents that comprise the Envista team and provide a wide array of services including various disciplines of Forensic Engineering, Fire and Explosion Investigations, Building and Equipment Consulting, Accident Reconstruction and Digital and Cyber Forensics as well as Equipment Restoration Services globally known as AREPA. Our customers are primarily insurance companies, loss adjusters and lawyers.
Dr John Ford is Technical Lead for Mechanical and Electrical Investigations at Envista. He has accrued a library of professional accreditations alongside a wealth of practitioner and regulatory experience, specializing in commercial and industrial settings involving electrical engineering and workplace accident investigation.
Once again, an active shooter destroyed the lives of many family members and took his own life.
Sam Cassidy was a 57-year-old employee of the Valley Transportation Authority (VTA) in San Jose, California, with 20 years of experience under his belt. While fellow VTA employees were starting up the trains for the workday early in the morning on 26 May, Cassidy appeared on the scene toting three handguns with 32 full magazines. By the time law enforcement arrived on the scene, Cassidy had discharged 39 rounds, killing eight coworkers (a ninth died just hours later) and himself and injuring others.
These are the sad facts reported by the news media on that fateful Wednesday. But what makes the situation worse is that it did not have to happen. Cassidy left many red flags. But those close to him failed to heed them. For instance, Cassidy had expressed dissatisfaction with his job at the VTA and that he wanted to kill some of his coworkers and bosses, but his threats went unheeded. As the VTA active shooting revealed, failure to act on red flags shown by a disgruntled employee can be fatal.
By having a Threat Assessment Team (TAT), the VTA could have prevented the active shooting that occurred on its rail yard. The purpose of a TAT is to prevent targeted violence. The TAT is comprised of employees and supervisors and receives reports from staff members and other sources about threatening or violent behaviour by someone at a worksite. The TAT assesses the facts and evidence of reported behaviours. It then responds by providing support and resources to reduce the risk of future targeted violence.
The TAT meets regularly to share information and gather facts. During these meetings, members of the TAT discuss the latest news, laws, and procedures regarding workplace violence to enable their employer to avoid situations like the VTA active shooting. The duties of the TAT are:
[ymal]
All TAT members play distinct roles in helping an employer to avoid workplace violence. TAT members include legal professionals, HR personnel, EAP counselors, facility security, local law enforcement, and first-line supervisors.
Legal professionals help the employer avoid lawsuits by involved parties by providing legal counsel of the rights and responsibilities of the employee and employer. Legal professionals can advise an employer of what information it has legal access to and what its responsibilities are in protecting its employees and organisation.
HR personnel can keep an employer abreast of an employee’s work history, including counselling, discipline, and career progression. HR personnel can also offer advice to an employer about suitable training for employees that will help foster a safe work environment.
EAP counsellors work directly with employees with work-related issues, so they can provide invaluable information to employers on an employee’s mental health. EAP counsellors are specially trained on employee safety, performance management, workplace trauma, coaching, and crisis intervention. Therefore, EAP counselors are the subject-matter experts regarding employees who have or are receiving counselling for work-related issues, or those who should be referred to receive it. As such, EAP counsellors can serve a vital role as liaisons between employers and disgruntled employees with the potential to cause workplace violence.
Legal professionals can advise an employer of what information it has legal access to and what its responsibilities are in protecting its employees and organisation.
Facility security is an integral part of a safe work environment. Thus, all security personnel should be relied on to respond to workplace violence in the most efficient and safe manner. To this end, the facility security supervisor must be up to date on the latest training on workplace violence and active shooter response. The facility security supervisor is also responsible for conducting realistic training on workplace violence response such as access control, evacuations, and applying first aid. In conjunction with facility security, an employer should implement an organisational code system that would be employed in the case of a hostile act at the workplace.
In the case of a hostile event at the workplace, local law enforcement should be called to help neutralise and secure the situation. The facility security supervisor should be in close contact with local law enforcement and incorporate its advice and guidance regarding responding to workplace violence in the organisation’s standard operating procedures.
The first-line supervisor of a potentially violent employee should be called on by the employer to gather timely information. Since the first-line supervisor knows the potentially violent employee’s personality and behaviours, the first-line supervisor is probably most suited to assess a potentially violent situation involving the individual on the job.
Months, and even years, after a violent workplace incident such as an active shooting, the employer is left to pick up the pieces and do damage control. For instance, even though most people knew little to nothing about the Valley Transportation Authority before the active shooting that occurred at its facility, its name, unfortunately, will probably be remembered only as the place where a disgruntled employee fatally flew off the handle. Of course, there are legal issues involving the incident that will appear to have no end in sight for the employer. Local and federal authorities and litigating opposing counsels will be asking the employer at least two obvious questions:
What did you do once your Threat Assessment Team informed you of the perpetrator’s potential violent behavior? How could your organisation have avoided this senseless act of violence? What actions must everyone involved take?
Months, and even years, after a violent workplace incident such as an active shooting, the employer is left to pick up the pieces and do damage control.
California Active Shooter Training Response is here to provide training to assist you with your fiduciary duties of protecting your staff. For more information, contact California Active Shooter Training Response at their website.
Lindon Lilly, President
California Active Shooter Academy LLC
Tel: (833) 922 6742
Email: llilly@californiaactiveshootertraining.com
Website: www.californiaactiveshootertraining.com
California Active Shooter Response Training is here to provide training to assist you with your fiduciary duties of protecting your staff. With decades of experience handling threat assessments and security consultations, their team identifies, locates and interviews witnesses for reporting purposes, and will surveil subjects in support of civil litigation. With their years of experience, they aim to bring the same discipline and knowledge of a large firm but with the compassion and care of a boutique agency.
Lindon Lilly has 30 years of experience in the legal support and security services industries, including years of protecting high-profile individuals, in addition to 20 years of experience in law enforcement. Lilly is a licensed private investigator who has designed and implemented threat assessment methodologies and standard operating procedures. He is also a physical security specialist specialising in perimeter security, internal security and surveillance monitoring. Lilly is a certified Active Shooter Instructor able to instruct on active shooter pre-attack behaviours, US Secret Service threat assessment training, and FBI debriefing training on active shooters and bombing investigations.
The past year has been full of trials and tribulations for work practices across every industry in the UK. The legal profession is no exception. When COVID-19 struck, law firms were forced to close their offices and switch to a remote working model. As a result, both in-house legal teams and external law firms needed to explore virtual ways of delivering their services.
Although remote work was not a totally new phenomenon, the urgency with which the transition took hold, alongside the fact that many legal businesses still relied upon traditional working practices and legacy technologies, left many individuals in the profession feeling underprepared and unable to work effectively.
To make matters worse, against this backdrop of chaos, the UK’s exit from the European Union still needed to go ahead. The ratification of Brexit has had a significant impact on workload for all legal professionals, regardless of specialism or job role. As law firms and corporate law departments get to grips with the myriad of new regulations, and subsequent client requests and activities, the switch to remote working has presented yet another unwelcome hurdle.
With legal workloads at an all-time-high it has never been more important for law firms to ensure that their employees are equipped with the tools to remain productive and collaborative, regardless of where they are working. Whilst set to be challenging, this period of transition could also be one of opportunity for legal professionals, enabling them to maximise on new business opportunities and become an essential asset to their clients.
As the UK finds its feet as a nation officially outside the European Union, professionals in the legal sector have found themselves suddenly juggling a spike in demand for their services. While growth is a priority for all businesses, it must be manageable in order to reap the rewards. Unfortunately, for many legal professionals operating in today’s climate of crisis, this is not the case.
[ymal]
In fact, recent research revealed that despite 58% of in-house legal teams seeing their workload increase as a result of the pandemic, only 6% saw their budget rise to support the extra activity. It is no surprise that 29% of those surveyed said they are having to do more with less. This can have a negative impact across the whole sector and those working within it. For example, research from legal software specialist Access Legal discovered that time constraints were the top challenge for all law firms, regardless of size, with 48% struggling to set time aside for career development processes such as essential learning and training.
To add to this, maintaining a healthy work-life balance while tackling high volumes of work in the midst of a pandemic is not easy, especially within the legal sector. In fact, according to recent reports, 70% of lawyers believe they work in the most stressful profession, with 81% of respondents naming workload as the leading cause.
Whilst challenges related to remote work rage on, in the lead-up to Brexit, many firms - particularly those that carry out cross-border work - have faced pressure to ensure that they themselves are compliant. From understanding where data is stored and how it is transferred to reviewing and updating privacy notices, consents and relevant policies and procedures, firms will have needed to take necessary steps to ensure they comply with both the EU GDPR and the UK Data Protection legislation. Moving forward, clients, suppliers and other third parties will need to be informed around the transfer of data, and, more importantly, staff will need to undergo relevant training.
Needless to say, legal professionals are currently faced with a never-ending to-do list, from client requests to internal processes. In order to support their staff and enable them to transform this pressure into opportunity, legal businesses need to streamline operations.
Moving forward, clients, suppliers and other third parties will need to be informed around the transfer of data, and, more importantly, staff will need to undergo relevant training.
Modern technologies - such as legal speech recognition software – could provide an answer. These solutions empower barristers, solicitors, paralegals, clerks, and other legal professionals to complete documentation simply by using their voice. They can help legal teams to navigate the challenges of Brexit whilst still delivering in terms of client needs and maintaining productivity levels, regardless of where employees are based.
Recent research by Nuance revealed that legal professionals spend an average of three hours a day typing out case notes, briefs, contracts, and correspondence. By leveraging speech technologies, most of that time could be diverted towards other, more valuable activities - such as billable work and client service. These technologies can convert spoken words into editable text up to three times faster than they could be typed, resulting in a significant reduction when it comes to document turnaround time. They are able to recognise specialised legal vocabulary and acronyms and even enable automatic formatting of legal citations. The best on the market are powered by deep learning technology which achieves the highest recognition, even for users with accents or those working in open office environments.
Cloud-based technology ensures that legal professionals have access to all these features, regardless of where they are based. This is something that proved particularly useful over the last year. In fact, the research found that 80% of legal practitioners who were already implementing speech-to-text solutions felt properly equipped to work from home when the pandemic struck, as opposed to just 53% of those not implementing the technologies.
One example of a legal professional already benefitting from this technology is Jonathan Silverman, founder of Silverman Advisory LLP. He deployed speech recognition in his firm for the first time in 1995 and has been leveraging the technology ever since. In addition to speedy and accurate document creation, Jonathan’s firm is able to meet client needs swiftly, and personally benefit from greater job satisfaction through increased control over document production.
For legal professionals – whether in-house or external - discovering the benefits of digital transformation in this new post-Brexit, remote world, legal speech recognition technology could be the secret for meeting client needs, growing practices, taking on new clients and increasing overall profitability.
Ed McGuiggan, Vice President of Global eCommerce
Nuance Communications UK Limited
Address: 33 Soho Square, London W1D 3QU, United Kingdom
Tel: +44 (0) 1628 491600
In Ras Al Khaimah Investment Authority v Azima [2021] EWCA Civ 349 (‘RAKIA’) the civil division of the Court of Appeal confirmed the long-standing rule that relevance of evidence is key to its admissibility, not whether it was obtained lawfully. As a result, evidence of fraud on the part of Mr Azima, which was said to have been obtained by unlawful ‘hacking’ of his computer, could nonetheless be deployed. The court took the view that refusing to admit the evidence or striking out the claim as an abuse of process would have left Mr Azima with the benefit of his fraudulent conduct.
In weighing up the public policy considerations of needing to be seen to provide justice whilst at the same time ensuring that members of the public abide by the law, the court has continued to favour the former, well established by the time of the seminal judgment in Jones v University of Warwick [2003] EWCA Civ 151. But what bearing does this decision have on the admissibility of illegally obtained evidence in criminal proceedings, especially if sought to be deployed by a defendant? And does this case in any way erode the well-established rule that illegally obtained evidence obtained through torture will not, under any circumstances, be admitted in evidence?
In principle, in criminal proceedings the same rule applies: provided that admitting evidence will not have an adverse effect on the fairness of proceedings, and it is relevant to matters in issue, it will be admissible. Indeed, Kurama v R [1995] AC 197, which is the leading authority from (relatively) modern times, was a criminal prosecution from Kenya where the search leading to the evidence was plainly unlawful. As the court reiterated there, quoting from an 1861 judgment (in another criminal case): “It matters not how you get it; if you steal it even, it would be admissible”.
Nonetheless it is hard to imagine that deliberate breaches of the criminal law by the authorities would not lead to exclusion of such evidence, given the fairness requirement embodied in the Police and Criminal Evidence Act 1984 and its extensive subsequent case law or, in the world of surveillance, by the Investigatory Powers Act 2016 (‘IPA’ - for technical surveillance) and the Police Act 1997 and Part II of the Regulation of Investigatory Powers Act 2000 (for physical surveillance and associated actions), which provide state actors with comprehensive processes and codes to ensure they act compatibly with the criminal law and the Human Rights Act 1998. In short, there can be little excuse for a state actor not acting lawfully.
“It matters not how you get it; if you steal it even, it would be admissible”.
These issues were well illustrated in the recent Court of Appeal (Criminal Division) judgment in A,B,D,C v R [2021] EWCA Crim 128 concerning the use of evidence thought by suspects to be protected by the ‘EncroChat’ encryption system, which was hailed as one of the greatest evidential breakthroughs against serious and organised crime. The underlying point was the need to assert that not only was the material outside the prohibition on the use of intercepted material but that, if the prohibition did not apply, the actions were taken with lawful authority where the acquiring agency (here the NCA) had a relevant Targeted Equipment Interference Warrant under the IPA. The need for compliance with the IPA was a given throughout the proceedings, on what was effectively a premise that compliance guaranteed admissibility (if this was not interception, which the Court of Appeal concluded it was not). Significantly, subject to other arguments about admissibility and abuse of process - which the Court of Appeal strongly hinted would not carry any weight but seem to the authors to present substantive challenges (as is the case in proving all hacking activity) – such evidence can be relied upon by the prosecution.
Whilst the historical and ethical bases for restraining state power are obvious, there is an argument that the same bases do not readily apply to an individual. Of course, it is not for the accused to present anything by way of evidence in their defence; instead that task lies squarely with the prosecuting authority. But to what extent, for example, is a defendant, wishing to use illegally obtained evidence in support of their defence, at liberty to use that material?
Self-apparently a defendant exposes themselves to the risk of further investigation and prosecution should they engage in criminal activity such as hacking (or theft) even if the purpose was to secure evidence to support innocence. But to that extent the individual is in no different position to the civil litigant in terms of the consequences of their actions, although with the obvious practical difference that law enforcement bodies will already be party to the case and the defendant’s actions (or the actions of those associated with them) will be much more readily apparent to those who might be minded to initiate a criminal inquiry. It seems clear that the fundamental test of ‘relevance not lawfulness‘ should not change simply because of the identity and position of the party seeking to adduce the evidence.
[ymal]
Although likely to be rare, it is important to remember that a special exception to the general rule of courts admitting relevant evidence, no matter its origin, has been carved out by the House of Lords (A v Secretary of State for the Home Department (No 2) [2005] UKHL 71). Where the evidence may have been obtained by torture (the legal test being that it must be proven on the balance of probabilities that torture took place) that evidence will be inadmissible. This rule recognises the moral and public policy imperatives.
That rule was affirmed by the Supreme Court in 2020 in another civil case, Shagang Shipping Company Ltd v HNA Group Company Ltd [2020] UKSC 34 (‘SHAGANG’). Concentrating on the issue of proof, the Supreme Court held that whilst evidence shown on the balance of probabilities to have been obtained by torture is inadmissible, there is no rule that, if it is not proven to the civil standard, the fact that torture may have taken place must be ignored when deciding the facts in issue. The court confirmed that if there are reasonable grounds for suspecting that a statement was obtained by torture, that is a matter which a judge can and should take into account.
Such a pragmatic approach reflects the fact that proving torture occurred is often inherently difficult and therefore, as a matter of public policy, it is only right that courts in respect of all judicial proceedings be able to take into account the possibility that torture may have rendered the evidence unreliable. The evidence that torture was used will therefore fall to be considered by the judge along with all other relevant matters. This significant clarification also recognises the fact that its use will always be subject to the party who wishes to benefit from its use seeking to show that it cannot be proven, on the balance of probabilities, that it was in fact the product of torture. And this too could arise in the criminal context: not least given it is a crime of universal jurisdiction one can see how evidence arising from torture could feature in criminal proceedings in England alleging crimes relating to torture.
RAKIA and SHAGANG largely confirm what we already knew about admissibility of evidence that is obtained by unlawful means. Torture remains a moral line which the courts will not countenance being crossed. For the rest, the Courts seem open to admitting unlawfully obtained evidence in civil proceedings (or arguably from the defendant in criminal or regulatory proceedings) where the issue of whether a crime has been committed in gathering the evidence is left for other organs of the state to investigate. Public authorities are – and should be – held to higher standards, adopting the existing processes which remove any question that the evidence has been unlawfully gathered.
Michael Drury, Partner
Caroline Mair, Senior Associate
Andrew Watson, Legal Assistant
BCL Solicitors LLP
Address: 51 Lincoln's Inn Fields, London WC2A 3LZ
Tel: +44 020 7430 2277
Philip Turvey, executive director at Anglia Research, explores how the COVID-19 pandemic has accelerated the digitalisation of legal practices.
While there has been a very rapid uptake in digital solutions in the legal world within the last five years, with lots of disruptor start-ups shaking up their field, some legal practices, such as probate genealogy, still follow quite a technical, non-digital process. A lot of this is due to the type of work carried out by probate genealogists.
Probate genealogy – more commonly known as heir hunting – is the practice of investigating family trees, finding heirs and proving their right to an inheritance if someone has not only died intestate, which accounts for roughly 1 in 3 deaths in the UK at the moment, but also where they have no known next-of-kin.
As a result, the genealogical investigation can often involve sifting through and checking masses of historical records, including birth, death, and marriage certificates, drawing up the deceased’s family tree and identifying the next-of-kin. However, the pandemic changed all of this, with the lockdowns forcing the industry to adapt far quicker than it ever could imagine.
Sectors across the economy faced a similar challenge. Take estate agencies, for example, firms across the country, such as Maskells and Strutt & Parker, had to pivot during the first lockdown to offer virtual property tours to prospective buyers who couldn’t physically attend viewings.
Similar adaptability was evident in criminal and civil courts across the UK. Before the pandemic, the UK court system used the Justice Video Service in criminal courts and could offer audio hearings in civil courts. However, after the first lockdown started on 23rd March 2020, the UK greatly expanded this existing technology and incorporated teleconferencing services, such as BTMeetMe, and videoconferencing services, such as Skype for Business, into their capabilities. The result was a court system that didn’t completely collapse under the pressures of COVID-19. And it is this adaptability that is most similar to the changes we saw in the probate genealogy sector.
Like the court system, we have used videoconferencing and other digital services to correspond and engage with our clients. These changes enabled us to avoid any potential backlog of cases caused by the pandemic. Our FOI report, which surveyed all local authorities in England and Wales, found the number of will-less deaths, where councils became responsible for arranging a public health funeral as a result of there being no relatives,rose by 60% between March and May last year. Furthermore, 12% of councils reported handling such matters for the first time. Similarly, our Unclaimed Estates Index found there were 216 and 176 unclaimed estates in Birmingham and Camden, respectively, in December 2020.
However, partly as a result of the digital practices put in place during the pandemic, the number of unclaimed estates has greatly reduced. Our most recent Unclaimed Estates Index in June this year found that the number of unclaimed estates in Birmingham and Camden had dropped to 187 and 131.
The pandemic has irreversibly changed all our lives, and as we begin the long road to normality, businesses face the question of what COVID-19 necessitated changes do we keep or lose. For probate genealogy, the pandemic has shown that some of our processes can be streamlined, simplified, and conducted online.
Streamlining practices is something happening across the legal sector at the moment, with the Ministry of Justice recently turning to the National Archives to set up a new comprehensive and free online repository of court judgements from England and Wales. However, this doesn’t mean that all practices need to change. For Anglia Research, studying physical records is an area of the sector we are experts in, and it would be nullified if we shifted to a total digital-first approach.
It is in this middle ground that the future of the probate genealogy sector lies. We must blend the new practices put in place by the COVID-19 pandemic with the old ways of studying physical records. Although we may not have expected it, the partial shift to digital will help the sector assist lawyers, trustees and local authorities and help us to crack our genealogical investigations.
The use of technology to handle data has significantly increased efficiency in the legal sector over the past decade or so. When it comes to due diligence and security, software does not tire as humans do and it can increase accuracy and efficiency when completing tasks.
In the post-pandemic world, many companies generally will be switching to a hybrid model of working. This means that they will become more reliant on secure programmes to protect data while ensuring employees can share and access it easily.
The needs of companies have changed drastically in the past year, and it is imperative they should find the right programmes for themselves going forwards. Legal professionals can play a pivotal role in advising on minimum security needs and pointing clients towards the right programmes to support their needs.
A key issue is that with more data being stored in a digital world, more opportunities for cyberattacks are created. Cyberattacks can involve hacked devices, network breaches or stolen data, all of which can seriously damage commercial interests and be financially devastating.
The consequences of cyberattacks go far wider than internal disruption. They include reputational damage, fines from regulators, loss of revenue, loss of customers, the need to pay out compensation to customers and the cost of resources needed to combat cyberattacks. Real estate is a sector that is particularly attractive to hackers because of the frequent, high-value transactions between multiple parties taking place digitally.
Despite this, there is a common perception from real estate professionals across Europe that the industry is unprepared to deal with cyberattacks, with many expecting the number of attacks on businesses to increase in the coming years.
There is a common perception from real estate professionals across Europe that the industry is unprepared to deal with cyberattacks.
Controlling external parties’ access to information is of particular concern because it is difficult to monitor and limit. Protecting information flows between devices, protecting against ransomware and controlling employees’ access to information are other vulnerable areas for companies operating in real estate asset management. As the industry looks to get this issue under control and implement changes to enhance protections, legal professionals will be key to supporting companies and ensuring the correct processes are applied.
Key steps to keep in mind when advising clients on developing a strategy to address potential cyberattacks include:
Countering the threat
Early warning systems – Identifying a cyberattack is often much harder than it might seem. Adequate monitoring is essential to highlight breaches as soon as possible. This monitoring system must pinpoint when attacks have taken place, what kind of attacks they are and the impacts they could have.
Containing the attack – Responsibility for this must rest with either the IT department or be tasked to an external cybersecurity specialist.
Effective recovery strategy
Transparency – Stakeholders are unforgiving of product and service providers who breach trust by failing to make them aware of important developments at the earliest opportunity.
Reporting incidents – Issues should be reported in a timely manner to relevant authorities and customers. This is even more imperative under the GDPR reporting rules.
Response plan – This must include a PR and marketing strategy to mitigate negative publicity as well as informing key stakeholders on the type of attack involved.
[ymal]
Key points of consideration for companies
Governance – A core group should be made responsible for monitoring, developing and implementing cybersecurity programs and policies.
Strategy management – Response plans must be updated regularly to ensure they are fit for purpose.
Training – Team members beyond just the IT department must be kept informed of the risks faced by the company and its cybersecurity policies.
While prevention is key, it is just as important to have an effective recovery strategy in place. If the right procedures are in place, cyberattacks can be contained and recovery can begin immediately.
Surviving in a digital world
The potential for cyberattacks is growing as digitisation becomes an ever-increasing part of commercial life. Preventing such attacks by having the right protection in place will always be less costly than recovering from a breach.
This requires companies to secure and manage data in the right way. While real estate companies need to fully consider all their options, cloud-based data storage in the form of virtual data rooms (VDRs) offer a robust solution for many of them.
Drooms’ VDR products provide the security protocols to meet all the best practice principles outlined above. They tick all the boxes in terms of being fully GDPR-compliant and having encryption, multi-factor authentication and back-up solutions in place.
These are all the factors that real estate companies must ensure they have covered in today’s world. Protecting against cyberattacks is not a luxury; it is essential for their survival.
Rosanna Woods, Managing Director UK
Drooms GmbH
Address: 11-12 Tokenhouse Yard, London, EC2R 7AS
Tel: (+44) 207 118 1100
Email: office-uk@drooms.com
Website: www.drooms.com
With the end of COVID-19 restrictions in sight, many businesses have focused on making their workplace compliant with safety guidelines. However, because of this focus on pandemic measures, another new government rule has likely slipped under the radar for many people — a new rule that will massively impact how businesses interact with contractors.
This new rule concerns the tax legislation IR35, which finally came into force in April this year. IR35 is designed to prevent “disguised” employment, where businesses engage workers on a self-employment basis, generally in order to pay less tax or circumvent employee protections. Previously, it was the contractor’s responsibility to assess whether IR35 applied to their situation, but since April it is now the responsibility of private companies to identify the contractor’s IR35 status and whether or not they should be paying the same income taxes and national insurance contributions (NIC) as a regular employee. This will increase business costs as companies must spend time and money on reviewing and formalising work relationships with contractors.
If a contractor falls within the scope of IR35 — for instance, because the business employs them on an ongoing basis rather than for a project or offers them benefits such as paid leave — the company must reclassify them as an employee, deduct income tax and employee NIC from payments to the contractor’s limited company, and pay employer NIC to HMRC.
Furthermore, when the contractor is deemed an employee, they are not automatically entitled to employment rights or social security. This means that the worker gets all the disadvantages of being an employee without the advantages.
Why companies hire contractors
The government had good intentions when drafting IR35: it wanted to address a perceived unfairness in the labour market, protect workers from exploitation and increase tax revenues. However, it has seemingly failed to understand the mechanics behind why companies employ contractors.
[ymal]
Companies use contractors for various reasons, but most often it is to acquire help and expertise needed for a specific time-limited project at a lower cost compared to hiring a full-time employee. The business simply pays a fee to the contractor’s limited company and does not need to worry about paying employment taxes or benefits.
For the contractor, earning income via a limited company is tax-advantageous: they can pay themselves with dividends from their company, which are not subject to NIC, and their company only pays the corporation tax rate on profits, which may be lower than income tax rates. Contractors often prefer the freedom and control that comes from being self-employed.
Using contractors is fine when people are hired on a project-by-project basis. However, IR35 was partly drafted in response to the rise of the gig economy, which allows employers to hire workers on very flexible terms and an on-going basis, without the risks and costs of permanent employees.
That is a prime example of corporations using contractors for the wrong purpose: it is cheap labour, there are complaints about work pressures, and workers may end up in unhealthy situations. IR35 is a new attempt to address this old problem.
International implications
Other countries in Europe have tried similar legislation to address the issue of contractors, but it usually has not worked out as planned. For example, the Netherlands altered its rules regarding the misclassification of contractors in 2018 but ended up putting an enforcement moratorium in place because it created too much legal uncertainty for companies and contractors. The law was replaced last year. IR35 carries the same issue: as the classification of in- or out-of-scope is checked afterwards, parties are exposed to the risk of misclassification.
IR35 could also make the UK unattractive for certain jobs and limit access to talent. For instance, if a country struggles to hire engineers, companies abroad will make it possible to contract there. This could cause an exodus of talent moving to other countries.
IR35 may also negatively impact international business because it also applies to foreign companies trying to hire local contractors. Foreign companies are unable to employ contractors as employees because of their lack of presence in the UK. IR35 creates the risk that any contractor they hire may be deemed an employee, which may disincentivise foreign businesses from working with UK contractors.
What business should do next
It is a priority for businesses of all sizes to assess their contractor relationships to determine which are working on a project basis – and so may remain working as contractors – and which could be deemed as employees.
Most smaller businesses will be unaffected by IR35, as the rules state that the contractor will remain responsible for assessing whether IR35 applies if their client is a small company. The Companies Act 2006 defines a small business as one that meets at least two of the following requirements: turnover of £10.2 million or less; a balance sheet total of £5.1 million or less; and/or no more than 50 employees.
If a business is affected, they have a few options. If they do not wish to hire an employee when extra support is needed only with a specific project, they could hire contractors employed via an umbrella company, rather than ones who operate their own limited company. We are likely to see a rise of umbrella companies, which employ people who are then hired out to work with businesses on a temporary basis. However, it may mean that contractors continue working for an employer without enjoying the benefits of being a full-time employee.
We are likely to see a rise of umbrella companies, which employ people who are then hired out to work with businesses on a temporary basis.
On the lower end of the job range, where IR35 is supposed to have a positive impact, you may expect companies to circumvent the rules via umbrella companies or other structures and keep underpaying their cheap labour workforce.
Another option for UK and foreign businesses is to consider hiring their contractors as employees via Employer of Record (EOR) services, which means a third party takes care of payroll, benefits, taxes and compliance. This circumvents the IR35 issue altogether.
Focus on talent, not employment terms
Prior to IR35, using contractors was an easy way to hire talent for a specific project, but now employers must make more effort to get help with short-term project-based work.
Fundamentally, businesses hire contractors instead of full-time employees because it can be cheaper. If governments do not understand the reason behind this decision-making process, then they are just trying to address a symptom, not fighting the cause. This never works.
IR35 places the burden on companies to assess the status of their contractors; a better solution would be to bring the government check to the front of the process. This could be done by standardising contractor arrangements that are out of scope of IR35. Meanwhile, the causes of unwarranted use of contractors should be addressed by reducing the cost difference between contractor and employee.
Fundamentally, businesses hire contractors instead of full-time employees because it can be cheaper.
Personally, I am more in favour of hiring employees compared to contractors – I think it is better for both parties. Fundamentally, businesses need a talented and stable workforce and employees must receive their full rights and benefits. Hiring can be made much easier by using a specialist company that deals with all employment issues, including law, taxes, HR and compliance. After a year of pandemic, the labour market needs new ideas and flexible solutions, not new tax rules.
By Roderick van Vliet, Head of Legal at Remote
In a broad sense, what policies does the South Korean government use to oversee foreign investment?
In a broad sense, Korea is quite a foreign investment-friendly state. However, we would say the Korean government approaches foreign investments coming into Korea and foreign investments going outside of Korea differently. Generally speaking, foreign investments coming into Korea are freely allowed, as long as they are properly reported. On the other hand, foreign investments bounding outside of Korea are more regulated and often require prior approval from the Korean regulators such as the Bank of Korea.
How has the 2017 Foreign Investment Promotion Act (FIPA) altered the regulation of foreign investment in the country?
The Foreign Investment Promotion Act (“FIPA”) was first enacted in 1998. Since the enactment of the FIPA, the Korean government has implemented policies to provide several incentives to foreign investors in order to attract more foreign investments into Korea. These incentives include tax incentives, subsidies, and foreign investor visas.
In the past, the Korean government’s interest was the amount of investment made by the foreign investors. However, in my view, more recently, the Korean government’s interest has shifted to the quality of the investment by attracting foreign investments in high value-added industries.
Are there other significant laws governing how foreign investment is handled?
FIPA applies only to certain foreign investments. The primary form of foreign investments first coming into Korea is equity investment (e.g. corporate formation). FIPA applies to a foreign investment whereby the foreign investor purchases shares of a Korean company in the amount of at least KRW 100 million (approximately USD 88,370) and the foreign investor will own at least 10% of shares in the Korean company as a result of the investment. In other words, if the foreign investor’s investment is less than KRW 100 million, we will have to look if any other law or regulations apply. For example, in such a case, the Foreign Exchange Transactions Act (as well as regulations promulgated thereunder) could apply.
In my view, more recently, the Korean government’s interest has shifted to the quality of the investment by attracting foreign investments in high value-added industries.
What regulatory issues are commonly encountered by foreign individuals or organisations attempting to invest in South Korea?
As we mentioned above, as long as the foreign investor makes the proper report for the foreign investment into Korea and is substantiated with the supporting documents, then the foreign investor should be in good shape.
Making the proper report is quite important because it could delay and complicate the process when the foreign investor attempts to later repatriate its investment back to its home state.
How would you advise that foreign investors avoid or overcome these hurdles?
We would say the foreign investors consult with a lawyer or an expert beforehand so that any required report is properly prepared and made.
About Rieu Kim and Hyuk Jun Jung
Rieu Kim: I have been with Barun Law since 2010 and before that I worked as an attorney at a boutique corporate law firm in California and at a major Korean electronics company.
Hyuk Jun Jung: I have been with Barun Law since 2014 and before that I worked as a Judge Advocate with the Korean Army.
Rieu Kim: Together, we have extensive experience advising Korean and international companies in relation to both contentious and non-contentious matters in Korea and outside of Korea. More specifically, we frequently advise clients in relation to their corporate activities in and outside of Korea, such as foreign investments, corporate formation, corporate reorganisations, contract reviews, M&A, joint ventures and employment.
Hyuk Jun Jung: We also represent clients in arbitration cases before the arbitral bodies, such as KCAB, the ICC and the HKIAC. I also represent clients in complex civil and commercial domestic litigation cases before the Korean courts. Our balanced experience in both advisory and contentious matters allow us to comprehensively understand the legal issues the clients are currently facing and may face, thereby allowing me to better support them and to create more values to them.
Rieu Kim, Senior Foreign Attorney (Partner)
rieu.kim@barunlaw.com
Hyung Jun Jung, Partner
hyukjun.jung@barunlaw.com
Barun Law LLC
Address: Barun Law Building, 92 Gil 7 Teheran-Ro Gangnam-Gu, Seoul 135-846
Tel: +82 2 3476 5599
Fax: +82 2 3476 5995
Website: barunlaw.com
Barun Law was founded in 1998 and quickly took its place among Korea’s top full-service law firms. It is now comprised of over 220 attorneys who, together with highly qualified support staff, provide a full range of legal services.
