Category Archives: Latest News

GDPR – the double-edged sword facing the legal profession

Articles, Latest News, Technology Media & Telecoms

On May 25th 2018, the way companies handle data will change forever. On this day next year, the General Data Protection Regulation (GDPR) will come into force, changing how customer data is handled, and outlining the toughest consequences of data breaches ever seen. Considering we create 2.5 quintillion bytes of data a day , and the global volume of electronically stored data is doubling every two years , this presents a problem for businesses and their advisors internationally.

The GDPR will shake up the collection and processing of personal information of EU individuals, colossally. Whether it’s a business in France, Germany, the US or India, there is no room for complacency as the new set of obligations will apply to all companies that target both EU markets and consumers. It also presents an issue for law firms as let’s face it, they will be hit two fold; both in terms of data held about clients, employees and so forth, along with any potential data they have been provided by clients and third parties which they are storing.

Complacency is no longer an excuse for firms, they need to know what they’re doing with consumer data, or face the consequences. For those who infringe the rules, there are significant changes to the penalties they face. One of the biggest developments is that Supervisory Authorities have the power to impose hefty administrative fines for violations – be that in regard to data protection law or operational transgressions. Whilst a tiered approach is being brought in to direct the appropriate punishment, the majority of breaches look to fall into the higher tier. In terms of punishment, it currently stands at:

• Tier one: fines of up to €10,000,000, or 2% of global turnover, whichever is higher
• Tier two: fines of up to €20,000,000, or 4% of global turnover, whichever is higher

As you can see from the above, this is a significant rise from the previous limit of £500,000. To put this in context, Talk Talk was fined £400,000 for the data breach of its 157,000 customers. With the new changes, they could have faced the maximum tier two fine of up to €20,000,000 or 4% of their turnover. Quite a difference indeed and one that could ultimately ruin a smaller firm with less capital.

The problem we all face is, the world we operate in is going through a digital transformation, which relies on scrupulous data recording and being able to verify that the information we hold is truly up-to-date. The NHS, for example, fell foul of this in February when the news hit that 700,000 patients had not received sensitive health information, because records were out of date or incomplete. Imagine waiting for a biopsy result, or news on your treatment dates, only for the information to never turn up. Or, in the most recent case, being able to google yourself and find transcriptions of doctors letters on your medical treatment leaked by a 3rd Parties insecure infrastructure . You might have thought critical information such as this would be available, but this example typifies the challenges facing businesses, including those in the legal sector – you need to know what data you have, and ensure it’s correct.

But what does it mean in terms of implication and operations for UK firms? Below are five recommendations to help legal firms get ahead.

Library vs landfill

A common challenge for any client-servicing business is knowing what data to file and what to delete. Names, addresses, personal health information, legal history or payment details may well be necessities, but all this information can start to mount up, to the point that you have such a detailed picture of an individual that they would be shocked if they knew the true extent of the depth of information you hold on them. In addition to holding all this information, locating it can also present an issue for some businesses, particularly if that data goes back for years.

When you are dealing with serious amounts of data, it’s not uncommon to be using multiple mediums of communication, multiple servers and multiple databases to hold all the information, never mind the ad-hoc extracts people tend to make whenever they need them. Therefore, it’s not impossible for customer data to sit in more than one place on your system, leaving valuable information forgotten about and collecting dust. However, this is not good practice. Information should be held in one place, to make it more secure and to ensure you have an accurate (and accountable) picture of the customer’s information. Dissipated data is a nightmare, and if a business needs to quickly present accurate data information, searching for records in disparate locations is a massive drain on resources. Additionally, with data duplicated across multiple locations, businesses could be wasting space that could be freed up. Time and server space are expensive commodities, so GDPR is a good opportunity to get everything in one, secure place via a data inventory.

Consumer rights

Leading on from the data storage point, GDPR also gives consumers the right to know how their data is stored, and what it’s being used for (data minimisation). Therefore, businesses need to be wary of what data they hold, as if they can’t give a valid, business-critical reason for holding that specific data, they need to get rid of it (and in the right way). Generally, any consumer requests for their own personal data must be fulfilled within one month of receipt.

For law firms, this presents a problem. Background information related to cases is almost always kept on file – be it testimonies, character witness statements or client details. Once cases are over, calls need to be made on how long this information should be held for, and to what extensive degree (can some files be purged quicker than others?). Above all, a decision needs to be taken as to who ‘owns’ the decision over whether data should be deleted or not, the law firm or their client?

Additionally, businesses will be looking to their legal advisors for help with the changing data legislation, so legal firms need to be advising on how best to meet the new regulations. For example, stellar security is vital to protect core assets, and identifying any weak spots should be undertaken to help avoid any breaches. Due to the extensive repercussions, Data Protection Officers could be recommended as a remedy, to oversee data governance, security, analytics and location, being directly responsible to the Board. We fully expect this job function to increase in headcount and importance over the next two to five years, as conservative estimates predict up to 28,000 DPOs will need to be appointed across the EU before GDPR comes in .

Employment

Changes in data holding will also affect employment, and how much information companies can hold (or collect) on their employees – even more so in the case of former employees. Privacy notices and consent will be big, immediate issues for businesses to deal with. Businesses will need to look at the terms and conditions of privacy notices and ensure they follow the guidelines by including information such as how long information will be held for and if said information will be transferred to other countries. Legal practitioners will therefore need to work with clients to ensure they’re meeting these regulations.

In terms of consent, this has traditionally been a murky area, so the GDPR changes may help make this clearer. As it stands, businesses can keep and process data as they have employee ‘consent’. GDPR has more prescriptive requirements around consent, and states that employees must be able to withdraw their consent at any stage and the processing of the data needs to be ‘explicit’ in detail. Employers will therefore be able to rely on the consent argument less, and will need other legal arguments to hold on to employee data.

Legal implications

To adopt GDPR fully, changes to the Data Protection Act will need to be made to ensure there is no duplication or confusion. The government is adopting GDPR in full, as it comes in before the UK exits the EU. Therefore, changes will be made and legal firms will need to be aware of any possible alterations, and how clients will be affected, especially given all the uncertainty around Brexit. There is also the possibility of whether the UK and US governments look to make their own data flow laws, as with the UK leaving the EU, it will no longer be covered by the EU-US Privacy Shield, never mind the future relationship between the UK and the EU.

GDPR is one of many international initiatives aimed at simplifying the legal and regulatory requirements about the management and security of data. Firms, therefore, will often find themselves bound by a wide range of requirements which can differ significantly depending upon the industries and jurisdictions they operate in. Regulations ranging from MiFID II, Basel III, Solvency II and FRCP Rule 37(e) should be fully considered and included in any data compliance strategy.

Breach notification

Any firm which has experienced a data breach will now be expected to report this to their Supervisory Authority within 72 hours. Currently, only those working in Financial Services or telecoms are required to report breaches, so for companies outside these sectors, they will now need to comply fully with this legal requirement. Being able to assist clients develop and integrate internal procedures for discovery, reporting and investigation of breaches will be an essential component of any advice.

Opportunity for trusted advisors

In order to meet the full requirements of GDPR, clients will need to be advised of the full extent of potential changes and the steps they will need to take to manage the alterations required. This is not limited to legal advice, but demands an element of technical knowledge as well as operational change management. To facilitate this for clients, it is vital to partner with experts who can help advise on any changes, to leave no stone unturned. Businesses can no longer leave it to the IT Director to facilitate the changes, and legal advice can help manage costs and warn on the potential damage (financial and reputational) of breaches. Clients need to employ a holistic approach to the GDPR with all their relevant data stakeholders involved in order to ensure that they make the right decisions.

Legal aid changes offer vital lifeline for domestic violence victims

Articles, Family and Matrimonial, Latest News

The decision to lift strict time limits placed on obtaining legal aid for domestic violence court hearings has been a long time coming, and is set to offer a vital lifeline to vulnerable victims who have previously been afraid to take their abusers to court. The ruling, which was announced in February 2017, means that thousands of men and women who have faced abuse – some possibly for years – are more likely to see the the perpetrators brought to justice.

Following a speech by Theresa May promising a new law to increase prosecutions for domestic violence, the decision looks to change widely criticised rules (and rightly so) that meant victims seeking legal representation in family court hearings – where they are often forced to confront their abuser – had to demonstrate they had been targeted in the last five years in order to qualify for legal aid.

Giving more victims the opportunity to take their cases to court, the ruling is, in my opinion, simply common sense. The purpose of legal aid is to ensure that everyone in society has access to justice, and as they stood, the rules were leaving a number of victims vulnerable to further abuse.

The announcement follows a Judicial Review against the government brought by charity Rights of Women in 2016 in an attempt to turn the spotlight on the previous rules. Notably, it means that the Ministry of Justice will now accept new types of evidence in domestic violence proceedings, including statements from organisations working with domestic violence victims, housing associations and solicitors.

Removing the five-year limit, as well as the admission of fresh categories of evidence, is set to provide much-needed help for victims who have previously found themselves deprived of legal advice and representation in family disputes, such as those involving custody and contact with children issues.

Rights of Women provided evidence as part of its legal case that revealed as many as 40% of female survivors of abuse could not meet the existing legal aid requirements. This meant that many vulnerable victims were forced to face their abuser in court.

It spoke of a case involving a woman who had been raped and beaten by her former husband and had been refused legal aid for a hearing in which he had applied for contact with their children. I have dealt with a variety of cases involving domestic violence and believe the removal of this time limit will lead to a brighter future for victims who have previously been unable to fight for justice.

In 2015, the Commons Justice Select Committee produced a report that found more than a third of domestic violence victims could not provide the evidence required to gain legal aid. Last year, the Ministry of Justice extended the time limit for those suffering from domestic violence, or those at risk of domestic violence, from two years to five.

It is vital that those at risk of domestic violence fully understand that they are able to access legal aid for advice on their rights and options, as well as assistance to better understand the negotiations and paperwork involved. Those eligible can seek legal representation in cases where they are at risk of losing their home, as well as on their finances if they have been in an abusive relationship.

In my time as a solicitor I have handled many domestic violence cases and I know all too well the psychological damage that abuse can cause. Domestic violence has no ‘typical victim’; both men and women in either heterosexual or homosexual relationships can be affected, and it’s high time changes were made to give these people a voice.

The treatment of domestic violence victims during legal proceedings can shape their lives and recovery afterwards. This is why I am also in favour of a separate move in which the family courts are expected to announce further developments that will reduce the suffering of victims of serious crimes, spanning further afield than domestic violence.

At present, the law states that victims who provide a prerecorded video testimony of their ordeal in a criminal case cannot present the tape for use as evidence in the family court. Instead, they are asked to deliver a fresh account, which can cause them to relive the trauma they have experienced. The rule changes mean that existing recorded testimonies from the crown course will be accepted.

I am hopeful that the changes are a signal of a renewed commitment from the government to address the entire landscape of domestic violence provision more proactively. Politicians had previously committed to protecting the victims and their families at risk of domestic abuse, however a significant number of victims remain at risk under the existing rules, which can be incredibly restrictive and confusing. The decision to change the rules will enable efficient and targeted legal advice to be given to the individuals who are most in need – resulting in saved costs, time and lives.

The impact of domestic violence is long-lasting, and victims often find they are unable to form close relationships for many years, if ever, afterwards. However, legal aid provides for representation in proceedings, enabling domestic abuse survivors to escape from abusive relationships and to protect their children, as well as to better manage their finances. The judgement will help to ensure they can achieve vital access to justice.

Intelligent Contracts – Is this the Way Forward for Enterprises?

Articles, Latest News, Technology Media & Telecoms

Technology is an ever moving target. It’s one of the most demanding working environments; every few weeks or months you need to understand and account for new technologies changing the nature of IT.

However, the benefits of being in a fast-paced environment are that new opportunities to combine methods or technology occur almost daily. One such combination is Narrow Artificial Intelligence for contract detection and extraction of information held within physical contracts. This is brought together with ‘smart contracts’, the encoding and execution of contractual data and events on a programmable blockchain, a technology solution which provides a public ledger of all the transactions on a network. A block is the ‘current’ part of a blockchain which records some or all of the recent transactions, and once completed goes into the blockchain as a permanent database.

Smart contracts may not fully deliver on all that is promised, as they face several technical limitations and challenges. The usefulness of the data or functions encoded, and how it gets accurately encoded onto the smart contract are often questioned.

Intelligent Contracts

Intelligent Contracts are far more intelligent (as the name suggests) and extensible than smart contracts as they are currently defined. The intelligence comes from the ‘I’ in AI (Artificial Intelligence), where a system is taught to continually and consistently recognise and extract key information from contracts, with active learning based on users’ responses, both positive and negative, to the extractions and predictions made. This is very different to current smart contracts, but it still uses some of the underlying methods of blockchain and the extension to store immutable information or actionable events within a block.

The Value of Intelligent Contracts

To help demonstrate the value of Intelligent Contracts, let’s take a sample customer of a large international IT/software company that has acquired different companies or business units over many years. They have over 16 different contracting solutions on both the buy and sell sides of their business, with no standard reporting on contracts. They continually sign Master Agreements in different locations or departments, and should allow all global entities access to discounts once negotiated levels are reached or exceeded. This is a very common challenge with larger organisations.

You can immediately see where a ‘smart contract’ could be used to encode the master agreement’s key performance indicators (KPIs) onto a blockchain, and then automatically apply the discounts across all departments. However, with all the different systems, and no single or consistent method to track and report on new contracts being created, signed, or agreed to on (potentially) 3rd party paper, extracting the required information can be a challenge

Blockchain: The Single Source of the Truth

If we take this further, past just the encoding of actions, and the combination of parties and events, we can see how this solution provides companies with a ‘single source of the truth’ within contracts. As a contract placed onto the blockchain has been agreed by both parties, why not share the same information between parties – as a single entity with continually updated contract terms?

Companies placing details of actual contracts onto a public blockchain might soon run into issues of security and scalability. Security because every person on the blockchain can see the transactions that occurred, and scalability as block size is limited on public blockchains for many reasons, not least of which is performance. With blockchain, the larger the blocks the longer it takes, and the more processing power is needed to reach consensus (e.g. the process used by a group of peers responsible for maintaining a distributed ledger to reach agreement on the ledger’s contents.) To this end, it should be clear that a public blockchain or smart contracts system are unlikely to meet the requirements of many organisations for contracts.

Intelligent Contracts use private blockchains with algorithms to ensure no single system controls the creation of the blocks, leading to immutable and distributed consensus. As the chains are private, the issue with sizes of blocks is removed, and security can be implemented at many different layers, including HASH-only and PKI key-level security for access to information encoded on the blockchain. The use of the private blockchain also allows for the system to provide Know Your Customer (KYC) functions, as each entity within the system would be required to be known as they are a party to, or have an interest in a contract. They can all participate in the creation of the blocks as each entity is known and trusted.

With the differences outlined above, it’s clear to see why Intelligent Contracts are what enterprise customers need.

Intelligent Contracts: The User Experience

One of the most important aspects of technology is to make users’ daily lives simpler, and the operation and adoption of new technology as seamless as possible. One of the best ways I have found to do this, over years of working with enterprise customers, is to embed new functions into well-known existing applications or processes so users are actually unaware of the new processes and functions taking place behind the scenes.

Who Needs Intelligent Contracts?

In the example above, I described a large software/IT company with many different contract repositories and processes across their business functions and lines of businesses.

But there are many other types of use cases for Intelligent Contracts, where the capabilities of this new technology will provide significant value over what is currently available. These include M&A and business restructuring, Contract Lifecycle Management (CLM), and regulatory compliance.

Intelligent Contracts in M&A

When ownership of an organisation changes, the contracts associated with that business are divested or acquired within those transactions, and can greatly affect the accretive nature or overall outcome of the transaction. In M&A, organisations need to review contracts and analyse their metadata in the due diligence phase, to ensure they know what they are buying, and then integrate contracts into the new organisation post transaction. With divestitures, they need to know which entities to assign the appropriate contracts to.

With Intelligent Contracts, organisations will be able to immediately locate all relevant contracts as they will be located in one repository. All the metadata will be associated as blocks on the relevant chains, and so full reviews will be fast and simple, in due diligence and post transaction. For example, special indemnifications and assignment and termination rules will be identified immediately across the entire portfolio, and will be relevant to valuation. The current deal room, where limited subsets of contract documents are placed for manual reviews across multiple legal professionals will no longer be needed. The deep analytics embedded in Intelligent Contracts will mean that M&A and legal professionals can immediately, and visually, capture all types of metrics and analytics across entire contract portfolios.

Contract Lifecycle Management

A challenge often found with Contract Lifecycle Management is system ROI (return on investment) which has been elusive for most customers. The systems are heavy in workflow and document library services, and are very light in contract data management. They have proven to be overly complex, tough to implement, and suffer from low adoption rates and usage with knowledge workers. They also have poor change management functionality, and the data management is primarily manual input of contract data by users, which is inconsistent and error prone.

Intelligent Contracts will be authored in the familiar Word user interface, and collaboration and negotiation is facilitated via workflow in the blockchain. Contract data is captured and shared automatically on the chain, and there is never any question or confusion as to which versions and edits are being used and approved, and why. Changes can be initiated and processed in the Line of Business (LOB) via Word using approved language, meaning legal operations resources are used more efficiently and cost effectively. The result is a lean, efficient, secure, and scalable contracting system that finally delivers the ROI desired for contract automation.

Regulatory Compliance

The final user case is in regulatory compliance. With Intelligent Contracts, when a regulation changes, all contract data is automatically captured and presented visually, so organisations understand the size and nature of the impact of the new regulation to their business. Compliance owners can determine strategies and project plans to meet compliance deadlines.

When contract repapering or renegotiation is needed to achieve compliance, the business owner can initiate the process in MS Word and using approved language, make the needed changes. Those changes are captured on the blockchain, and then can be routed to legal operations resources for final approval. This is more efficient than using legal operations resources throughout the entire process. The blockchain is available to all relevant parties, so contract changes are permanent, transparent, and auditable.

Avoiding Shoot, Ready, Aim: Cease and Desist Letters and the Streisand Effect

Articles, Intellectual Property, Latest News

The urban legend says, “If you don’t protect your trademark rights, you’ll lose them.” Like most urban legends, there is a kernel of truth lurking at the base, although the proposition is not literally and universally true.

If mark owners do not enforce their rights against third-party uses of the same or similar marks or names for goods or services, the mark owner’s rights to object to such uses and similar ones can be diminished if not extinguished. This is true particularly when the goods or services are the same as or closely related to those of the mark owner, and when the activities of the parties overlap in geographic area or other market segmentation.

But if mark owners seek to enforce their rights when either the marks or the goods and services are so significantly different that no confusion is likely, they face different risks with a similar result. These include publicizing the third-party use, being unsuccessful in attacking the use, encouraging additional uses and potentially having their rights diminished if not extinguished.

Often mark owners send a cease and desist letter to third parties who use the same or similar marks or names for goods or services. When a cease and desist letter is sent, the typical response is a return letter stating that there can be no reasonable probability of confusion (probability here equating to likelihood, rather than a possibility of confusion) because of the nature and extent of third party use of similar marks on the same and related goods and services, thus demonstrating that the relevant public is not likely to be confused by use of the accused party’s mark. The impact of this response depends on the number and nature of the third party uses that the accused party can find.

However, if mark owners seek to enforce their rights for a mark that is subject to challenge based on a registration that is subject to challenge, they likewis risks the diminishment if not the extinction of their rights. Such extinction of rights can occur based on several different arguments: that the asserted mark is generic for the goods (such as “footlong” for 12” sandwiches); that the mark is deceptive or merely descriptive and has not acquired distinctiveness; that the mark is the configuration of the goods and that the configuration is functional; or that the claim of use was defective and the evidence of use insufficient to support the claim to registration.

Given these scenarios, it looks like mark owners could be damned if they do try to enforce their rights and damned if they don’t. So, what are mark owners to do? That decision should be made by assessing the answers to the following questions and considerations, which fall into two general categories: diligence and identification of options.

Diligence

It’s essential to research all the relevant information by answering these questions. Who has priority? What is the nature and extent of use of each mark? Has there been any confusion? Granted the conditions of purchase trade channels and strength of the senior mark, is there a real likelihood of confusion that is commercially meaningful or a hypothetical “if-then” concern? Is the accused company one that might be a business partner or customer? How vulnerable is the senior mark (or registration) to attack? What counterclaims might be brought against the client? Does the accused party have superior rights in another jurisdiction of interest? How important is the matter to the client? Is the business at issue profitable, justifying the expense of potential litigation? Will the mark be in use into the foreseeable future, will it be phased out in a matter of months, or is it otherwise at the end of its lifecycle?

Identification of options

Sending a cease and desist demand letter or filing a complaint are common remedies used to protect a mark. But there are other approaches worthy of consideration that may be more effective. These include the following: taking no action; communicating with the third-party user by having a business person to business person conversation by telephone or otherwise; or having an initial expression of concern made by in-house counsel to in-house counsel with an invitation to discuss how those concerns might be addressed. On the other extreme, if the conduct is egregious and appears to be deliberate, there is no requirement for a cease and desist letter to be sent. The first communication to the adverse party may be the service of the complaint, with or without a demand for interlocutory injunctive relief.

If, after consideration of all the options, the decision is made to send a cease and desist letter, the next step is to determine what the demand is going to be, how much support will be provided for the demand and what the tone of the demand will be.

In making these determinations it is important to remember that how the message is conveyed will impact the response, which may include a resort by the recipient to social media. This is where the Streisand effect (that is, the capacity of an attempt to shut down a communication to generate even wider distribution of the communication) may come into play. Having a demand letter to cease and desist made public on social or other media by an accused entity seeking to generate public sympathy and support against a “bully” may generate more notoriety for the mark owner’s conduct than the accused party’s mark or product ever would have received, if the dispute had not become public. What this suggests is, first, that the demand be written as if it will be read by the client’s customers, as well as the general public, and second, that if the misuse is likely to be short-lived and little noticed, a different kind of letter may be called for. In the latter instance, the letter will have a less formal and less strident tone, as it is intended to educate and persuade. It’s also important to realize that search engine optimization can address any number of issues without recourse to legal demands.

Generally, the objective should be: first, to provide a factual and legal basis for the claim, especially if the recipient is an individual or small enterprise that may not have done a comprehensive search or may not have any real understanding of trademark law; and second, to demand what is feasible and what the client is entitled to. Overblown demands and demands that cannot reasonably be met are more likely to generate resistance than to secure compliance.

Solving the case for a more connected legal workforce

Articles, Latest News, Technology Media & Telecoms

Whilst article 50 may not yet have been triggered, the impact of the Brexit referendum (mainly uncertainty) has been strongly felt by everyone and in particular the legal community. Those in trade, financial and regulatory law are working 80+ hour weeks in an attempt to help clients with the legal confusion brought about by the possible changes. Conversely transaction lawyers have seen their work go on hold, whilst clients step back and see how business settles. In law firms themselves, there are discussions about location. Some firms are asking if it would it be better to be situated in Ireland, for example, possibly leading to offices distributed across various locations. What is the impact of these increased workloads, and multiple locations, and can technology play a role in easing their delivery whilst remaining compliant and secure?

One possible solution may be cloud working. It delivers the ability to share documents across multiple locations, multiple devices and for staff to collaborate, boosting productivity. Like employees in other businesses, solicitors are under extreme pressure to be always-connected and to be able to access relevant and accurate information, wherever they may be. In particular, for solicitors, who bill not by the hour but in segments of six minutes, even the shortest time away from safe access to client information, reduces the ability to log billable hours; directly impacting their revenue.

Furthermore, in the legal profession a lot of work relates to small but crucial updates to legal documents. Therefore, being able to access the most current data is essential. It could mean the difference between losing a case or winning it. Even in less significant instances, updating the wrong version of a contract for example would lead to lost billable time, lost productivity and lost revenue.

The threat from Public Cloud

However, solicitors cannot risk breaking compliance laws by using the public cloud, no matter how convenient. If legal professionals did use public cloud file, sync and share providers like Box and Dropbox, the firms would no longer have control over where confidential data was stored. Not only does this give legal firms a lack of visibility as to where their data is (shadow IT) or who has access to it, but it can leave them facing heavy fines. Because the data is uploaded to the cloud, it’s impossible to know whether or not it’s being protected in the right way to maintain legal professional privilege and protect client data. For lawyers, client data has to be kept in a controlled environment and the last thing any legal professional wants is data to be leaked about its highly confidential cases.

What law firms need is the ease of sharing that a public cloud can offer, but with the security and control that it is unable to deliver. This means an on-premises solution that offers file sync and share capabilities but remains under the control of in-house IT, without storing any data in the public cloud.  This private cloud needs to offer the ability to share data, as well as access it while on the go, and have the attributes of enterprise storage such as high performance, expanded capacity, and solid reliability.

Unified storage for the enterprise

Law firms need a unified solution, which delivers high performance and multi-site collaboration at LAN speed to support business continuity and disaster recovery, as well as mobile access. Today’s storage needs to offer organisations the ability to securely and seamlessly connect its mobile workforce to files stored within the corporate data centre. The enterprise can then combine security requirements with the ability to remotely access any corporate data (even from internal servers) and can handle growing capacity requirements.

It is important for legal firms to move beyond traditional file storage systems that fail to deliver the easy access and file sharing features essential for today’s connected workforce. Public cloud does not provide the security and privacy required. So, in order for legal firms to enjoy the advantages of connected working (ease, productivity, increased revenues) whilst remaining secure, compliant and private, the solution is a unified storage solution with private cloud integration – case closed!

Stacking the Deck -Again! Clinical Negligence Litigation Cost.

Articles, Food/Drugs/Healthcare/Life Sciences, Latest News

Back in the early part of 2016 I looked at how changes to the costs rules since April 2013 had benefitted Defendants at the expense of Claimants. I pointed out that many had commented that successive governments had been increasingly pro-Defendant in their reforms.

The announcement earlier in 2016 by the then Health Minister, Ben Gummer, seemed to be consistent with that view insofar as Mr Gummer had announced that the government intended to bring in fixed costs for all litigation cases worth £250,000 or less, including clinical negligence, and these reforms were to be introduced in October 2016.

Well, the long awaited consultation on fixed costs initially set for the end of 2015, then put back to early 2016, is still nowhere to be seen!

However, recent news reports seem to suggest that the government has reviewed the idea of fixed costs for clinical negligence cases and now intends to set the level for inclusion in the fixed costs regime for clinical negligence cases of £25,000 or less (not £250,000).

What will actually happen?

The consultation paper is still awaited and the government will need to review the outcome of the consultation before proceeding to introduce their reforms.

The national Law Society has welcomed news of some reversal of thinking by the government, but the Law Society has highlighted the difficulties in imposing fixed costs in clinical negligence cases where complex medical issues are involved. Such a regime should only apply to modest value claims of £25,000 or less where liability has been admitted.

Equality before the law is a fundamental principle behind our justice system. Fixed costs will save Defendants money at the expense of Claimants. In cases against the NHS, the State is ultimately responsible for paying successful Claimants and for paying for the defence in claims against NHS Trusts.

The State has deep pockets. Hence, the playing field is not equal now and creating further costs obstacles for Claimants will make the current lack of equality even worse.

Let us not forget that legal aid for clinical negligence cases was removed in April 2013, save for a small minority of cases. No legal aid and the introduction of fixed costs – do you now wonder why I title this commentary, “Stacking the Deck – Again!”

 

The Italian benefit corporation: to profit and …. beyond!

Articles, Corporate/Commercial Law, Latest News

Benefit corporations are for-profit companies that – in addition to maximize shareholder’s value and profits – undertake to expand their purpose to explicitly include the creation of public benefit and the commitment to carry out their activities in a responsible, sustainable and transparent way, in favour of persons, communities and environment. They are being introduced in some legal systems to meet the global trends demanding greater accountability and transparency from business and stimulate a new role that business can and should play in society.

Italy is the first country after US to have introduced in its legal system (Law n. 208 of December 28, 2015, hereinafter “Law”) the so called “società benefit” (hereinafter “SB”). The main characteristics of the SB are taken from the US benefit corporation, which was firstly introduced in the US legal system in 2010 in Maryland and then in other 29 US States.

What is a benefit corporation?

The distinguishing features of the Italian SB are: (i) the legal duty to create general public benefit in addition to financial return; (ii) to carry out its activities in a responsible, sustainable and transparent way in favour of persons, communities, environment, cultural and social activities, associations and other stakeholders (hereinafter collectively “Beneficiaries”); and (iii) the impact of the SB’s activities must be assessed annually by the directors with a written report, and must take into account the requirements set forth in Annex 4 to the Law.

The Italian legislator did not create a new form of corporation but provided for that any company can change its status and become an SB. It is the intentional creation of social and economic benefit that differentiates the SB from traditional for-profit and non-profit entities. In an SB the directors are committed to pursue the general benefit, while the market and the public must be correctly and transparently informed on how the corporation is achieving its goals.

What are the advantages of becoming an SB?

Benefit corporations can help meet the demands of those who are interested in having their business help solve social and environmental challenges. Becoming an SB can also help the company to grow its business and market share, since an increasing number of consumers expect companies to act and align their policies to a sustainable growth, to take into consideration not only profit but also values like the need of social communities and the impact on the environment.

The benefit activities

The activity/ies of public benefit selected by the SB must be specifically indicated in the SB’s bylaws and must be achieved taking into account and balancing both the shareholder’s interest and the interest of the Beneficiaries. The SB must achieve a general public benefit (“beneficio comune”).  This is defined both to induce a positive impact or reduce the negative effects on the Beneficiaries and other stakeholders (“altri portatori di interesse”). Other stakeholders are the persons or groups who benefit from the SB’s activities, such as workers, customers, suppliers, financial backers, creditors, public administration and civil society.

The annual report

The SB must prepare annually a report (to be attached to the yearly financials) where it assesses the impact of its activities on the general public benefit. The report must be published on the SB’s website. The report must include: (i) a description of the ways and actions implemented by the directors to purse general public benefit during the year and any circumstances that have hindered or delayed its creation; (ii) an assessment of the SB’s performance determined taking into account the standards outlined in the EAS; (iii) a section outlining the new goals that the SB wants to achieve in the following year.

Third-party validation

The report must be prepared applying a third-party standard (“standard di valutazione esterno” or “EAS”) that must be: (i) comprehensive because it assesses the effects of the business and its operations upon the general public benefit; (ii) developed by an entity that is not controlled by the SB; (iii) credible because it is developed by an entity that both: (a) has access to necessary expertise to assess overall corporate social and environmental performance; and (b) uses a balanced multi-stakeholder approach to develop the standard, including a reasonable public comment period; (iv) transparent because the following information is publicly available: (a) the criteria considered when measuring the overall social and environmental performance of a business; (b) the relative weightings, if any, of those criteria; (c) the identity of the directors, officers, material owners, and the governing body of the entity that developed and controls revisions to the standard; (d) the process by which revisions to the standard and changes to the membership of the governing body are made; (e) an accounting of the revenue and sources of financial support with sufficient detail to disclose any relationships that could reasonably be considered to present a potential conflict of interest.

The EAS is not to be confused with the B Lab certification that – contrary to the EAS – is not mandatory. An SB can become a B Corp (Benefit certified corporation) by meeting the B Lab standards and obtain the relevant certification. B Lab is a non-profit organization that serves a global movement of people using business as a force for good.

The areas of assessment

The assessment of the effects of the SB’s activities, must include the following areas: (i) SB’s corporate governance:  so that to assess the degree of transparency and commitment of the corporation for the achievement of the benefit indicated; (ii) employees: to determine the relationship with workers and associates in terms of salary, other benefits, training opportunities, quality of the workplace, internal communication, flexibility and health & safety at work; (iii) other stakeholders: to assess the relationship of the corporation with suppliers, the territory and local communities, charity activities, donations, cultural and social activities and any other actions implemented to support the local development and the SB’s supply chain; (iv) environment: to assess the impact of the SB’s products and activities regarding the use of resources, energy, raw materials, the manufacturing, logistic and distribution cycles, the use, consumption and disposal of the products.

Directors’ duties

In addition to the general duties that directors have under Italian corporation laws, the SB legislation set forth specific duties that SB’s directors must comply with. Section 380 of the Law set forth that the SB must be managed in way to balance the interests of shareholders, the pursuing of the general public benefit and the interests of the other Beneficiaries. The corporation must appoint the person/s who shall have the responsibility to achieve the goals indicated, who can be one of the directors but also an officer of the corporation or a third party, taking however into account the general duty that directors have to put place a corporate governance structure that is adequate for the dimensions and nature of the corporation.  If this duty is delegated to a third party, it is appropriate that the delegate has enough experience in the specific sector that the SB has chosen for achieving the general benefit.

Directors responsibilities

SB’s directors (like directors of any other corporation) must act in the best interest of the corporation and in compliance with the obligations set forth by the law and the corporation’s bylaws. Directors have a duty of care, duty to act knowledgeably (for example, with the appropriate skill and professionalism) and to monitor the actions of the other directors.

The extent of these duties and responsibilities and the standard of care required for each director depend on the director’s office and specific expertise. Directors may have civil liability duties towards: (i) the corporation, if they have caused damage to that corporation due to the breach of the law, the corporation bylaws, or the general duties; (ii) the corporation’s creditors, if the directors have breached the specific rules regarding the preservation of the corporate assets, and those assets are insufficient to pay the creditors off; (iii) each shareholder and each third party, if they have suffered direct damage from an act performed with fraud or gross negligence by the directors.

As to the SB, it is questionable and still to be assessed by jurisprudence, whether directors can have any liability towards the other Beneficiaries. In any event, directors are not accountable and responsible for the negative results of the corporation provided that their decisions were taken with adequate diligence and with the goal of achieving the corporate object. SB’s directors are however liable in the event they fail to appoint a person who has the duty to supervise, control and be responsible to implement all actions necessary to achieve the general benefit. The Law does not provide any sanctions for failure to prepare the annual report but, since this is mandatory obligation, directors shall be liable also in this latter case.

Sanctions for non-compliance

The Law set forth that the SB which fails to achieve the general benefit indicated, is subject to the sanctions established by Legislative Decree 145/2007 (governing unfair competition and misleading advertising) and by Legislative Decree 206/2005 (the so called Consumer’s Code, with particular reference to the rules regarding the prohibition of unfair commercial practices). This provision was enforced in order to guarantee that all information disclosed to the public are true and accurate so to avoid that an SB that does not comply with the Law, take any illicit advantage with respect to its competitors as well to avoid any distortion of the information provided and disclosed to consumers. It is the Italian Competition Authority (Autorità garante della concorrenza e del mercato) that shall have the duty to sanction any non-complying SB, with administrative sanctions provided for by the law.

 

References: Assonime, Circolare n. 19, of June 20, 2016; Esela – The first European benefit corporation: blurring the lines between social and business; Le società benefit – La nuova prospettiva di una Corporate Social Responsibility con Commitment (Fondazione nazionale dei Commercialisti); Domenico Siclari – Le società benefit nell’ordinamento italiano; Autorità garante della concorrenza e del mercato http://www.agcm.it/en

Lee v. Tam and the Registrability of Disparaging Marks

Articles, Intellectual Property, Latest News

Can a band register their name, “The Slants,” as a mark? Is that name disparaging to Asian-Americans and so barred from registration under the Lanham Act, 15 USC 1052(a)? Can the football team that plays in Washington maintain its registrations for its “Redskins” marks?

During the oral argument at the U.S. Supreme Court on January 18, 2017, the “Redskins” marks were not directly in issue, but there is no doubt that what the Court decides in Lee v. Tam will decide the validity of the “Redskins” registrations, as well as the registrability of “The Slants”.

The oral argument addressed all the key points that have been debated since the Trademark Office first addressed the merits of the “Redskins” and “Slants” cases.

On the one point of most concern to the trademark bar – the overuse of marks potentially considered to be disparaging, the Justices seemed clear that the denial of registration would not preclude enforcement of rights in registered (and potentially unregistered) disparaging marks.

The central question before the Court is whether denying registration implicates the First Amendment if the denial does not burden, restrict or prohibit the use of the subject marks, although the denial precludes reliance on the benefits of registration, which are substantive as well as procedural, and include incontestability barring certain defenses, recordation with Customs to stop infringing imports, statutory damages against counterfeits.

What is notable are the number and variety of the amicus briefs filed. In support of Tam, amicus briefs were filed by: law professors and lecturers such as Floyd Abrams (Yale and Columbia), Eric Freedman (Hofstra), Nadine Strossen (New York Law), and William Van Alstyne (William and Mary); Pacific Legal Foundation; American Center for Law and Justice; Chamber of Commerce. There were amicus briefs filed on behalf of neither party by the American Bar Association and Public Knowledge, and on behalf of a number of members of Congress. And amicus briefs filed on behalf of the petitioner included: the Hispanic National Bar Association, National Asian Pacific American Bar Association, National LGBT Bar Association, National Native American Bar Association and a number of law professors.

The oral argument provided no clear answer as to what the ruling will be. Numerous analogies to copyright law were drawn by Justices Kennedy, Alito and Ginsburg. Numerous questions were posed about the purpose and function of trademarks by Justices Roberts, Stewart and Breyer. The most torturous component of the argument revolved around the distinction that might be drawn between the commercial and the expressive components of a trademark, with John Connell on behalf of Tam submitting that the trademark serves both functions, with the non-commercial component of his client’s mark communicating Asian pride.  Tam himself has been quoted as saying: “We’re fighting for more than a band name; we’re fighting for the right of self-determination for all minorities.”

It is interesting that in such a submission, neither “The Slants” nor the “Redskins” cases offer competent survey evidence to address whether or not the population alleged to be disparaged by the mark in question finds the mark in fact to be disparaging. Justice Stewart noted that the director of the USPTO was relying on internet commentary to support the finding of disparagement. The question is whether such important determinations should be based on such flimsy evidence. And this same concern applies equally to the prohibition on registration of scandalous and immoral marks, a separate provision of 15 USC 1052(a), which was remarked on more than once by Justice Ginsburg. The USPTO has taken the position that if there is a dictionary that identifies the term as “vulgar” (a word that does not appear in the statute), that term is precluded from registration. If the bar to registration of disparaging marks falls, there can be little doubt that the bar to registration of “immoral” marks also falls.

And then the question must also be raised that if disparagement is not a bar to registration, can it be a basis for precluding the use of a mark, such as when a mark is alleged to cause a likelihood of dilution by tarnishment?  How the Lee v. Tam matter is decided, and the breadth of the language employed, will clearly have an impact on more than the question of registration of “The Slants” and ‘Redskins” marks. It should also resolve the uncertainty over the impact of a finding of incapability of registration on the ability to enforce trademark rights under the provision protecting unregistered marks and names from infringement, 15 USC 1125(a).

Are personal injury lawyers ‘more sinned against than sinning’?

Articles, Employment and HR, Latest News

Jonathan Wheeler looks at the barrage of reforms facing the personal injury sector in England & Wales

Personal injury lawyers in the UK have a bad press. If you believe all you read, you would be forgiven for thinking that the courts are awash with fraudulent claims, and so-called fat cat solicitors are preying on the misery of injured people.  Whilst this is fake news, the sector has awakened the ire of those in charge, and as a result it is facing an unprecedented onslaught of reform.

It is true that some made a good living in the world before the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) 2012, an unlikely title for a statute which did away with recoverable success fees in conditional fee agreements a year later. Success fees since April 2013 are now paid by those bringing successful claims, ensuring that claimants have “skin in the game” as former justice minister Jonathan Djanogly indelicately phrased it when he introduced the measure.

Since then a number of personal injury firms have gone out of business,[1] and the future looks uncertain for many others, including key players in the claimant personal injury market. This is not enough for the Government which appears to have been swayed by partial information from the Association of British Insurers to target personal injury lawyers and their clients with further, and multiple layers of reform. In the Government’s stated wish to reduce insurance premiums, hoping that those savings will reach the public, they risk destabilising the sector further, whilst diminishing the legal rights of its electorate.

Reforming compensation for ‘minor’ whiplash claims and the small claims limit

One major plank of the Government’s reform programme comes from the Ministry of Justice. It proposes to do away with general damages for ‘minor’ whiplash claims (‘minor’ being defined as pain, suffering and loss of amenity of up to 9 months’ duration). This presents an attack on the rights of this country’s citizens and is likely to be unlawful for as long as we stay within the European Union. The alternative limited tariff scheme would equate the pain and suffering for a soft tissue neck injury with the sort of compensation one can claim for a flight delayed by over 3 hours.

Additionally raising the small claims limit for all injury claims from £1,000 to up to £10,000 puts the moderately injured on the same level as someone suing for a lost rental deposit or a dodgy vacuum cleaner. Legal costs are not awarded to the successful party in the small claims court. Whilst it may be the appropriate forum for minor consumer disputes, it will present an unlevel playing field for unrepresented victims of accidents (unrepresented because it would be uneconomic to instruct a lawyer and pay them out of their damages). Litigants in person will be Davids pitched against Goliaths as the defendant will most likely be insured and have professional representation whichever court is handling the dispute. The Government is currently considering its response to its consultation which closed on the 6th January. Now is the time to involve your members of parliament to lobby the Ministry on your behalf, before it’s too late.

The Ministry of Defence and a scheme for service personnel injured in combat

In parallel, the Ministry of Defence is consulting on doing away with lawyers in a no-fault scheme for service men and women injured in combat. This is an attempt to side-step the consequences of the judgment in Smith v Ministry of Defence[2] which involved the supply of inadequate equipment (Land Rover vehicles)  to soldiers in a combat situation in Iraq. There is a serious constitutional issue here: a defendant Government department, which pays out on claims because of the negligence (or worse) of its employees, is planning to legislate to do away with the rights of those wronged to sue them in court in certain situations. Instead, the defendant sets up a scheme where it is judge and jury over its own wrong doing. The courts perform an important function in evaluating the merits of a claim independently and holding power to account; the Government is strangling legitimate opposition. Its consultation closes on the 23rd February so there is still time to have your voice heard.

A ‘fixation’ with fixing fees

In a related move, the Department of Health is consulting on a fixed fee process for clinical negligence claims. Having been trialled as applying to cases up to £250,000, the Government appears to have been persuaded to limit the scheme to cases worth £25,000 and under. Claimant lawyers have breathed a sigh of relief. But again this is an example of the defendant (the Government) legislating to control the process, and the costs that will be paid, to those patients who have been negligently treated at that defendant’s hands. The long-awaited consultation was only published on the 30th January this year and closes on the 1st May

What is it with the “powers that be” and their apparent fixation with fixing costs? We already have a fixed cost regime for the vast majority of personal injury claims worth up to £25,000 and costs budgeting for those above that. We also have a perfectly good system called detailed assessment for losing parties to challenge winning parties’ bills with judicial scrutiny of the process. But the move to fix ‘anything that moves’ is relentless:  the Civil Justice Council’s work on fixing fees in noise induced hearing loss claims must be nearing its conclusion.

In a similar vein, Lord Justice Jackson has been tasked with looking at fixing fees in the multi track for cases worth up to £1/4 million. One cannot fix fees fairly without fixing the process, and personal injury claims (or for that matter any unliquidated claim) of that value do not conform to stereotype. Lord Justice Jackson’s previous reforms recognised this and introduced costs budgeting for such cases – a bespoke solution, to control costs for each case, depending on the work required in that case. If fixed costs are to apply to personal injury claims, and are not fixed fairly, then more costs will fall to be paid by the claimant, flying in the face of one of the fundamental tenets of tort law, to put the claimant back to the position they were in, had the wrong not been done to them, as much as money can achieve that aim.[3]. This was very recently approved in the Supreme Court judgment of Knauer v Ministry of Justice[4] where the two most senior judges in the land, Lord Neuberger and Lady Hale, President and Deputy President of that court said:

“It is the aim of an award of damages in the law of tort, so far as possible, to place the person who has been harmed by the wrongful acts of another in the position in which he or she would have been had the harm not been done:  full compensation, no more but certainly no less”.

Lord Justice Jackson’s report on the issue is set to be published in July 2017. He needs to understand that injury claims valued from £25,000 to £250,000 are not ‘minor’. They will include fatal accidents and those which have resulted in life changing injury. The concern is that fixing costs on a ‘one size fits all’ basis will inevitably mean that the costs will not pay for all the work which needs to be done to prove the case. The only solution (save for not bringing the case at all) is for a claimant to pay an increasing amount of his lawyers’ fees from his compensation, money perhaps earmarked for care or adaptations, or to reimburse lost earnings. The onus is on the claimant to prove their case to the satisfaction of the court, and our current adversarial system cannot be compared with international models where such claims are dealt with in an inquisitorial way, and where the judge has a much greater role in preparing the case and looking for the truth.

Let us end this hiatus, let the reforms we have already endured bed-in, and review using empirical evidence. Those in charge – the Government, the judiciary, the Civil Justice Council – should not pander to the wishes of an insurance industry which first and foremost looks after its shareholders and not injured people.

The silver lining?

On the 7th December, the Lord Chancellor somewhat surprisingly let it be known that she was going to pronounce on her department’s long running (almost 7 years’ long) review of the discount rate. If reform is recommended, then this is likely to have the most spectacular impact on damages for those who have been seriously injured. The discount rate is the expected rate of return for the future investment of damages, and as such it is ‘discounted’ from an award paid by the tortfeasor. Since 2001 it has stood at 2.5% per annum, originally based on safe gilt yields. But no one can achieve a rate of return of 2.5% these days, unless (possibly) a claimant invests in much riskier stocks. But why should claimants take such risks with their compensation, which may be needed to pay for future care, treatment, adaptations and equipment to help them live their lives as comfortably as possible as an injured person? The Association of Personal Injury Lawyers has been calling for a review for years – they suggest that in line with current gilt yields the rate should be –0.5% or -1%. It can be seen that that would have a massive effect on damages awards for the most seriously injured. The reality is that our own court system has been systemically under-compensating claimants for years and this is an opportunity to redress the balance. The Association of British Insurers – whose members clearly stand to lose if the rate is reduced – attempted to stop the Lord Chancellor by way of judicial review last month; that was defeated.  But the Lord Chancellor has since delayed her announcement, whilst promising more news in February. I hope she does the right thing for seriously injured people.

[1] Firms that disappeared last year, citing changes in the personal injury claims sector for their closure, included big players Parabis Law and Prolegal, as well as Carter Law, GT Law, and Mendell Solicitors.

[2] Smith & others v MoD [2013] UKSC 41

[3] Livingstone v Rawyards Coal Company (1880) 5 App Cas 25

[4] Knauer v Ministry of Justice (2016) UK SC 9

UK National minimum wage changes

Articles, Employment and HR, Latest News

Minimum wage changes have traditionally always taken place in October.  However, the introduction of the national living wage in April 2016 gave us a new date in the diary to keep an eye on.

Introduced at £7.20 per hour as essentially another band of minimum wage, the national living wage has now been in force for almost a year and stuck at its introductory rate, despite the other minimum wage bands increasing in October 2016.  April 2017 will see the next set of changes, to all bands of minimum wage.

From 1 April 2017, the rates will be:

25+ (National Living Wage) £7.50 per hour
21 to 24 (Standard adult rate) £7.05 per hour
18-20 (Development rate) £5.60 per hour
16-17 (Young workers) £4.05 per hour
Apprentice £3.50 per hour
Accommodation Offset £6.40 per day

 

2016 also saw the financial penalty for non-payment being doubled, meaning 200% of arrears will be due (although this will be halved if the employer pays within 14 days).  HMRC also continues to name and shame employers who have underpaid, as well as impose penalties of up to £20,000 per worker and refer cases to the CPS for a criminal prosecution.

Since the introduction of HMRC’s ‘name and shame’ list in October 2013, 687 employers have been named and between them, owed over £3.5 million in underpaid wages.  August 2016 also saw the biggest list since its introduction, with 197 companies named, owing just over £465,000.  A company’s name going onto the list itself doesn’t happen lightly.  Before being named, employers will have already received a notice of underpayment, which includes the opportunity to appeal.

HMRC also recently released a ‘top 10 worst excuses’ for not paying the minimum wage which, somewhat comically, included a worker not deserving the minimum wage because she “only makes the teas and sweeps the floors”, an employer and his accountant speaking different language meaning the accountant doesn’t understand the correct wages, an employer thinking it was “okay” to pay foreign workers below the minimum wage rate because they aren’t British and shop workers only being paid when they are “actually serving someone”!

Sue Evans, Partner in Lester Aldridge LLP’s Employment and HR Team, commented “It is still worrying to see just how many businesses fall foul of their minimum wage obligations and with the government increasing the enforcement budget available to HMRC, as well as the penalties for non-payment, it’s something employers need to keep on top of”. Ends

Providing outstanding legal advice, Lester Aldridge has core practice areas in real estate, litigation, private client and commercial services, which it delivers nationally and internationally through its global alliance with MSI, a network of professional service firms.

For advice and assistance with minimum wage obligations, please contact Sue or a member of her team on 01202 786 161.