Herts Law Society Gazette issue 36 online version by EPC Studio

issue 36 Autumn 2017

The 2018 General Data Protection Regulations

Hertfordshire Law Society Gazette

Jeremy Chandler-Smith investigates on pages 8-9.

Also this issue: • Lasting Powers of Attorney – unnecessarily risky or essential? • Protecting your practice from modern day business risks • and much more...

▲

Contents

Hertfordshire Law Society Gazette

Contents issue 36 Autumnr 2017

Council Members for 2017

MOJ Penalised

Outsourced Cashiering

From the President

That Sinking Feeling...

Merchant Taylor's School

Lasting Powers of Attorney

Expert Witness Section

Defining Benefit

Careless Talk...

Construction Contract Variations

Indemnity Insurance and Brexit

The Open Spaces Society

Fraudulent Bank Calls to Law

The Evolution of Legal Indemnity

Modern Day Business Risks

Firms and what to do

Insurance

Published by: EAST PARK COMMUNICATIONS Ltd. Maritime House, Balls Road, Birkenhead, Wirral CH43 5RE Tel: 0151 651 2776 simon@epc.gb.com www.epc.gb.com

Advertising Simon Castell

Design David Coffey East Park Studio

Peter McEleavey Managing Editor Jeremy Chandler-Smith

Accounts Tony Kay

Published: Autumn 2017 Legal Notice ÂŠ East Park Communications Ltd. None of the editorial or photographs may be reproduced without prior written

permission from the publishers. East Park Communications Ltd would like to point out that all editorial comment and articles are the responsibility of the originators and may or may not reflect the opinions of East Park Communications Ltd. Correct at time of going to press.

DISCLAIMER: the views expressed by the writers in this magazine are not necessarily those of the Hertfordshire Law Society

http://www.hertslawsoc.org.uk/

3â&#x2013;˛

Council Listings

Council Members 2017 President Stephen Halloran Lawtons Solicitors (Hatfield) Crime Vice President Attia Hussain Crane & Staples (Welwyn Garden City) Family Hon Secretary and Treasurer Laura Colville Debenhams Ottaway (St Albans) Private Client Immediate Past President Claire Sharp Debenhams Ottaway (St Albans) Private Client

▲4

Members Robert Bedford Machins Solicitors LLP (Luton) Employment Nicholas Belcher Nockolds Solicitors Limited (Bishop's Stortford) Agricultural and Liquor & Gaming Licensing Marilyn Bell SA Law (St Albans) Family David Bird Crane & Staples (Welwyn Garden City) Private Client & Trusts

(From January 2017 until 31 December 2017)

Penny Carey University of Hertfordshire (Hatfield) Academic Jeremy Chandler-Smith JCS Solicitors (Codicote) Sole Practitioner Judith Gower Hertfordshire County Council (Hertford) Local Government Steven Hamilton Taylor Walton LLP (Harpenden) Private Client

The Law Society Relationship Manager – East

Neil Johnson HRJ Foreman Laws (Hitchin) Civil Litigation

Jack Dunkley

Gary Smith Nockolds Solicitors Limited (Bishop's Stortford) Employment

Parliamentary Liaison Officer Judith Gower

Amanda Thurston Curwens (Hoddesdon) Family Samantha Worth Tees Law (Bishop’s Stortford) Commercial National Council Member Paul Davies Hamilton Davies (Stevenage) Employment, Family and Litigation

Hertfordshire Law Society Gazette

Editorial

From the President... As President of the Hertfordshire Law Society, I wish every success to our new national President Joe Egan, who commenced his term in July. We have been privileged to have welcomed Joe to a previous AGM and Annual Dinner. I know from meeting Joe that he will work hard for the profession and deal with the challenges that we face.

General Meeting on Tuesday 21st November 2017 at the university of Hertfordshire and all members are welcome to attend. A level of commitment and enthusiasm is essential. Stephen Halloran President, Hertfordshire Law Society StephenHalloran@LawtonsLaw.co.uk

I would also wish to thank Robert Bourns on a hugely successfully year in office. We were fortunate to have Robert attend our recent dinner and his passion and commitment were evident in his address. We wish him every success in the future and thank him for hard work during his year in office. I am sure you will have all heard the terribly sad news about His Honour Judge Plumstead, who passed away on the 13th September. Judge Plumstead sat at St Albans Crown Court and was universally liked and respected by all Court users. The valedictory that was held in his honour on Friday 15th September at St Albans Crown Court was a deeply moving and affectionate tribute to him. The depth of affection that was felt for him resulted in the tribute being video linked to another Court room in St Albans and also to the Old Bailey, Aylesbury & Woodgreen Crown Courts. The Judges from Luton Crown Court also attended. A Memorial Service is to be held later in the year for him, but I extend my condolences to his family, friends and colleagues on behalf of the Hertfordshire Law Society. Though the circumstances were somber, what was striking about the valedictory was the way in which the legal community can & do come together to provide support in such times. We all play our part in ensuring that the Court system functions effectively and it would be a sad day if the spreadsheet were to dominate how we all interacted with each other. I recently attended the Annual Dinner of the Chartered Insurance Institute (CII) of Luton & St Albans at the Needham House Hotel, Little Wymondley. The current national President of CII, Dame Inga Beale was the guest speaker. She is also the first female Chief Executive Officer of Lloyds and it was striking that her speech chimed with many of the same themes facing our profession. The way in which we all consume professional services is changing and the key to moving with change is ensuring that we involve younger members of the profession. With that in mind, I would encourage all members of the Hertfordshire Law Society to consider whether they could serve in some capacity during 2018. We have our Annual

http://www.hertslawsoc.org.uk/

5â&#x2013;˛

Editorial Featured Article

Lasting Powers of Attorney – unnecessarily risky or essential forward planning? prepare the document. It is also necessary for an LPA to be registered with the Office of the Public Guardian (the administrative arm of the Court of Protection) before it can ever be used. In contrast, under the old EPA regime an EPA could be used unregistered in certain circumstances. So is Deputyship a more preferable option?

n 15 August 2017, the BBC published a news report on Lasting Powers of Attorney (LPAs) following comments made by Denzil Lush, a retired senior judge at the Court of Protection, who warned people of the risks of setting up LPAs (article available at http://www. bbc.co.uk/news/uk-40887323). Mr Lush has vowed to never sign one himself and criticised the “lack of transparency” in how appointed Attorneys manage other people’s finances and has also criticised the Ministry of Justice as being “disingenuous” in its promotion of the legal instrument. Mr Lush has pointed to the alternative as a more preferable option – the appointment of a Deputy by the Court of Protection, to make financial decisions for someone who has already lost capacity. What is a Lasting Power of Attorney? The BBC, in its report states that ‘the enduring or lasting power of attorney is a legal document, which allows someone to make your financial decisions when you can no longer do so’. In fact, an LPA for financial affairs can be used whether or not the Donor lacks mental capacity to make his or her own decisions. For example, they can also be used in circumstances of physical incapacity, if the Donor is planning a trip abroad and needs things dealt with whilst they are

▲6

away, or if it is simply more convenient for the Donor to allow the Attorney to deal with certain things for them. The report is also misleading in that it does not differentiate between LPAs and their predecessors under the old regime, Enduring Powers of Attorney (EPAs). It does not explain that since the Mental Capacity Act 2005 came into force on 1 October 2007 it is no longer possible to create EPAs nor does it explain that their replacement offers consumers with the option of two separate but equally important alternatives: an LPA that gives authority to make decisions about finances (whether or not the donor has capacity), and an LPA that gives authority to make health and welfare decisions (which apply only when the donor loses capacity). The BBC article refers to the high profile case of Frank Willett, a Dunkirk and Normandy war veteran who lost his life savings to his next door neighbour when the neighbour was appointed by Mr Willett as his Attorney. Whilst this is an appalling case and may, on first glance, add weight to Mr Lush’s comments, it should be noted that it dates back to 2003, prior to the introduction of LPAs and when the old EPA regime was in force. LPAs have more safeguards than EPAs, in particular the requirement for a “certificate provider”, an independent third party, who confirms that the Donor is fully aware of the effect of the LPA, and that they are not being inappropriately pressured to

As touched on earlier, if an individual has not made an LPA and then loses capacity, it is likely that their affairs will need to be managed, so an application has to be made to the Court of Protection for someone to be appointed to fulfil that role. The Court therefore decides who is appointed as the Deputy after the event and not the individual his or herself, in advance. The Deputy must report a full list of assets and annual accounts to the Office of the Public Guardian from the outset and the OPG will look at this report carefully and can make further enquiries or carry out investigation. If they think the Deputy is incompetent or abusing their position they will apply to have them removed. The Deputy is also required to take out a security bond upon their appointment which is a form of insurance designed to pay out in the event of the Deputy’s actions, in order to protect the individual’s assets. But what of the cost? The BBC article quotes an annual cost of £320 but that doesn’t complete the picture. The Court fee to make an application to the Court of Protection is currently £400 and medical evidence from a medical practitioner as to lack of capacity is also required (which will also incur separate professional fees for the preparation of the appropriate report). There is then the annual supervision fee of £320 per year on top of this and also the cost of the security bond - the cost of which varies depending upon the size of the estate but for a modest estate an annual premium of approximately £200 can be expected. There are also potential legal fees for preparing the application and assisting the Deputy with their ongoing reporting obligations. In contrast, the cost of

Hertfordshire Law Society Gazette

Featured Article

Protecting your practice from modern day business risks

eports state that there are an increasing number of criminals specifically targeting law firms. In addition to these threats, there are new regulatory obligations that bring with them new risks which need to be protected. Threats such as cyber-attacks and data breaches are all part and parcel of modern day business risks law firms now face. As recently highlighted in the media, cyberattacks are increasingly becoming the norm. Sadly, it is more likely to be a case of ‘when’ not ‘if’ your practice will be attacked. Out of necessity, businesses have started to think more proactively, raising staff awareness through training, whilst also implementing new processes and procedures in place to effectively deal with an attack, or minimise the damage an attack may cause. This is particularly prevalent for law firms, due to the amount of personal and sensitive data that they hold, especially with the impending GDPR legislation which is effective from May 2018. What is described as a “cyber-attack” can

http://www.hertslawsoc.org.uk/

come in variety of forms, including but not limited to a malware attack, malicious hack, a disgruntled employee, or simply caused by human error. Upon discovery that you have been affected, the damage to your practice could be anything from a breach of privacy (loss or theft of personal data, as well as third party or corporate data), or it could simply interrupt your business preventing you to trade, alternatively it could result in the discovery that a theft has occurred, all of which could cause you significant reputational harm. During or in the immediate aftermath of an attack, a firm need to make very important decisions and quickly. These decisions can come from all angles, with the need to consider protecting yours and your clients’ reputation and getting your business back on track as quickly as possible. Extensive expertise is often required, which could include forensic and security specialists to identify the cause, lock down and collect evidence as well as involving crisis management and PR support along with the need for legal counsel. Furthermore Regulatory obligations include, protection of client moneys and assets; along

with having the responsibility to keep the affairs of clients confidential along with having to comply with legislation applicable to your business, including anti-money laundering and data protection legislation. Which means that all practices need to address ways to protect their overall risk profile, as cited in principle 1 and outcomes O(4.1) and O(7.5). Due to the concerns expressed by our clients of the modern day risks that they are faced with, we have developed a unique, seamless and interlocking insurance product specifically for the UK legal sector of England and Wales. The product incorporates Cyber, Crime, and Regulatory defence cost coverages alongside SRA compulsory PII insurance. For more information on how we can help protect you from modern day business risks, please contact myself or one of Lockton solicitors team on 0330 123 3870, or alternatively please visit our website: www.locktonsolicitors.co.uk Brian Boehmer, Lockton Companies LLP +44(0) 207 933 2083 brian.boehmer@uk.lockton.com

11 ▲

Advertorial

Ministry of Justice penalised for refusing to mediate A

prison officer who won a personal injury (PI) claim against the Ministry of Justice (MoJ) has been awarded part of his costs on the indemnity basis after beating a part 36 offer by a significant amount and the Ministry of Justice refused to engage in mediation. The MoJ made an ADR pledge in 2001, and updated it in 2011 with a ‘Dispute Resolution Commitment’, requiring departments to use mediation, arbitration and conciliation. According to a Lawtel report of Marsh v Ministry of Justice, the claimant's letter of claim was sent in March 2012; in 2014, the claimant made a part 36 offer of £223,500 which was not taken up. He also offered mediation, but the MoJ said

mediation was not open at that stage. In June 2016, the court ordered that the parties attempt to settle by ADR. Four months later, the claimant made a part 36 offer of £180,000, and invited the defendant to engage in mediation, but the MoJ did not reply to either offer. The claimant was eventually awarded judgment of £286,000 earlier this year. Lawtel said Lady Justice Thirwall observed that PI claims by an employee against an employer were “often amenable to ADR” and that this was a case where mediation was appropriate. The MoJ had argued there was a public policy element to the case that meant it was not, but the court failed to see how that was relevant in a PI case brought by an employee.

“The greater public context, if it existed, did not mean that the defendant was exempt from court orders. If a defendant did not want to engage in mediation for public policy reasons it had to be prepared to take the costs consequences.” In relation to the 2014 part 36 offer, the MoJ maintained that, but for a change in the discount rate, the claimant would not have exceeded the judgment at trial. The report said: “Although it was known that the Lord Chancellor had been reviewing the discount rate since 2012, it was not just for the part 36 costs consequences to follow the 2014 offer. However, the 2016 offer had been a genuine offer to settle. There was no injustice if the costs consequences of rule 36.17(4) were applied.”

DONOGHUES LEGAL COSTS

Donoghues Legal Costs is a new and vibrant practice based in Hertfordshire that provides a wide range of costs services to the legal profession. The many years of expertise gained in all aspects of costs are dedicated to providing a high quality service which can be tailored to meet a client’s specific needs. We provide a wide range of services which includes the preparation of: • Costs budgets (Precedent H) • Statements of Costs (N260) • Schedules of Costs • Part 8 only costs claims • Bills of Costs • Points of Dispute • Replies to Points of Dispute

In addition, Donoghues Legal Costs can: • Attend CCMCs • Conduct costs negotiations • Attend detailed assessment hearings • Advise on all costs issues • Provide in-house costs advice

DONOGHUES LEGAL COSTS • 202 London Road, St Albans, Herts AL1 1PL

http://www.hertslawsoc.org.uk/

DX: 122739 St Albans 10 T: 01727 568126 M: 07519 621030 E: dominicd@donoghueslegalcosts.co.uk

www.donoghueslegalcosts.co.uk

13 ▲

Editorial Advertorial

That Sinking Feeling

or homeowners, the word ‘subsidence’ brings a cold shiver to most. The thought of such an occurrence happening near to your home is an uninvited prospect and one that conjures up images of hefty bills, insurance issues and massive repair works. Having seen various headlines and images of houses displaying large cracks, or even sinkholes appearing in and around residential areas, you would like to think that consumers are mindful of the potential hazards when purchasing a new home, however it isn’t always front of mind for those on the hunt for their ideal property. For solicitors, undertaking appropriate checks into a property’s risk of ground stability, as part of the conveyancing process, will offer insight or assurances before any purchase is completed. Unless there are known examples of ground stability hazards in an area, it isn’t always something that clients have considered when buying a property, so being able to deliver intelligence related to any risk is paramount. But, what causes ground stability or subsidence, and how prevalent is it really? There are many reasons why a property could be at risk from subsidence. This includes naturally-occurring hazards based on land’s underlying geology, through to a range of man-made, historical factors based on activities that may have occurred on the land in the past. Former mining activity is one contributor. Old mine shafts and tunnels that were created as part of mining activities have the potential to collapse and damage properties above them. Disturbed ground and spoil tips can also be prone to settlement, which could cause structural damage to buildings.

within 250m of land that might have previously been used for coalmining and activities such as quarrying of sand, clay and gravel pits. The data research also suggested that in 95 Local Authority areas, the proportion of housing stock at risk is 50% or higher and in 34 areas 100% of the housing stock is at risk from former coalmining activity. This includes authority areas such as Bolton Metropolitan Borough Council, Barnsley Metropolitan Borough Council, City of Newcastle upon Tyne Council and Rotherham Metropolitan Borough Council to name a few. Other forms of ground stability hazards come from former Brine Extraction and Salt Mining. This type of mining leaves large cavities in the ground which could collapse and cause problems for properties built in the area. Landfill sites and infilled ground, which is indicated from historical mapping such as ponds, drains and small pits, have the potential to create cause for concern. Infilled land can be susceptible to settling so any houses that have been built on these areas could experience stability problems and subsidence resulting in damage to the property. As for natural ground stability hazards, some areas of land could be prone to ground instability and subsidence as a result of the natural underlying geology. Examples include areas of the UK at a higher risk of landslides or where sink holes could occur due to the make-up of the underlying soils.

In fact, according to data* compiled by Landmark Information for Property Week, it found that almost one-third of residential properties in England, Scotland and Wales are considered to be at some form of risk as a result of historic mining activities.

For conveyancers, help is at hand in being able to confidently research all known risks. The new Homecheck Mining and Subsidence report is one example that not only provides details on any potential mining, subsidence or ground stability hazards, but uniquely has the added advantage of including details of insurance claims from Crawford & Company, which are a result of damage caused by subsidence to nearby properties.

It estimated that 33% of homes are located

Reassuringly, Crawford and Company is

▲ 14

the world’s largest independent provider of claims management solutions to insurance companies and self-insured entities. These claims could be evidence of hazards that have been identified elsewhere in the report. It includes the details of successful Coal Mining Subsidence Damage Claims that have been handled by the Coal Authority, rather than going through an insurer. All of this provides a very clear picture on potential hazards and ‘real life’ evidence of those near to a given address, enabling further investigations to take place if they are concerned by the findings. To make interpretation of the report easier for both solicitors and homebuyers, it also includes a plain English professional opinion for each type of hazard or insurance claims identified, along with clear next steps. All of this is written in a way that makes it straightforward for solicitors to extract and report back to the client in their own reporting style. Ultimately, when it comes down to home-buying, subsidence, mining risk or sinkholes isn’t at the top of everyone’s consideration list. It is therefore down to solicitors to be able to research and advise on any potential hazards before the sale completes to ensure clients are fully briefed, and full and proper due diligence has taken place. When you talk to people about such risks, they often don’t realise the prevalence and regional variances in ground hazards across the country. And, with a report like Homecheck Mining and Subsidence costing just £20 + VAT, it’s a small fee to pay in the grand scale of home buying, yet provides the analysis and interpretation that offers wider peace of mind. Tony Rollason, Regional Manager, Landmark Information www.landmark.co.uk

Hertfordshire Law Society Gazette

Editorial Expert Witness

Experts in 21st Century By Phillip Taylor MBE, Reviews Editor of “The Barrister” and Head of Richmond Green Chambers

he Expert Witness Institute (EWI) has a new chairman- Martin Spencer QC. In one of his first comments, he says that “it has never been more important to highlight the critical role expert witnesses play in supporting the proper administration of justice and to establish the highest standards of best practice”. And he is absolutely correct!

training, education, skill, or experience, is known to have specialised expertise or knowledge so that other people may rely on their opinion. “In providing independent assistance to the court by way of objective, unbiased opinion in relation to matters within their expertise, they make complex issues understandable to lawyers, judges and juries” declares Spencer.

Use of expert evidence in legal proceedings has been a long-standing tradition, with the first recorded use of an expert witness in the UK courts being recorded in 1782 and now subject to stringent procedural rules which all experts should have a working knowledge of.

The Procedure Rules for court work are quite clear – the expert performs his or her duty to the court. That duty overrides any obligation to a party from whom the expert is receiving instructions. The ‘knock-on’ effect with modern litigation is that the number and types of experts are increasing. “They have become an integral part of the court process” declares Spencer.

In the litigation cycle expert witnesses play a vital role across civil, criminal and family proceedings in the administration of justice. An expert witness is someone who, by his/her

Many lawyers use experts in criminal proceedings in areas as diverse as accident investigations, forensic linguistics and the increased use of DNA evidence. In civil and

family courts, experts cover areas such as forensic accounting, civil engineering, medical, and many more. It is recognized that, with litigation entering increasingly complex areas, the effective use of a good expert witness is increasingly important. “There is no doubt that high quality expert evidence will continue to play an important role in all court proceedings” says Spencer. He adds that “there will always be a need for expert opinion about questions that are outside the knowledge, skill and experience of the court”. To meet this challenge, instructing lawyers need to ensure they work only with experts who understand their duties within the latest procedure rules, and experts need to take responsibility for their development and training to ensure they meet the highest standards which the EWI oversees so effectively as the importance of experts grows with the changing face of litigation in 21st century.

Mr Colin John Read MBChB

Consultant Orthopaedic & Trauma Surgeon

Areas of Expertise: • General orthopaedic trauma. • Injuries to the spine and chronic spinal pain. • Disorders and injuries to the foot and ankle. • Personal injury and negligence.

• Fraud, including evasion of VAT and Excise Duty

• Directors misfeasance & disqualifications • Wrongful and fraudulent trading

• MTIC, advance fee and boiler room • Partnership and directors disputes • False accounting and money laundering • Business valuations • Charity, PAYE fraud and tax cheat • Mortgage fraud • Drug offences

Colin Read Medical Services Ltd 7 Hemel Hempstead Road Redbourn ST ALBANS Hertfordshire AL3 7NL

• Proceeds of Crime Act (POCA)

• Preparation of detailed reports which clearly set out the issues and conclusions • Assistance at Court including Expert to Expert consultation and giving evidence • Appointment as joint expert

01582 793903 info.read@gmail.com

▲ 16

Hertfordshire Law Society Gazette

Expert Witness

Consultant Cardiac & Thoracic Surgeon Expert Profile: R.G. Wagstaff BSc, DipPhys, Cert Comp Math (Open), LCGI, MITAI and Hertfordshire Police before finally serving prior to retirement on the triforce collaborated unit for Bedfordshire, Cambridgeshire and Hertfordshire.

ob Wagstaff is the managing director of this company. He was a time served Engineering Technician prior to joining the Police Service, he has served for 30 years in Bedfordshire Police with the last 23 years as an expert in the field of collision investigation. During his service within the Police he has investigated many fatal, serious injury and life changing events, including a number of murder investigations and ‘Cash for Crash’ jobs the most notable being “Operation Exhort” a £3.24 million fraud case. Since 2015, following retirement from the Police Service, he has remained active in the field of collision investigation working as a consultant Bob Wagstaff was the Senior Collision Investigator for Bedfordshire Police and for the Collaborated unit of Bedfordshire

Bob has been commended by the Chief Constable on a number of occasions for his work in the field and most recently commended in open court by the Deputy Coroner, Mr Oldham for his services to the Coroner’s and to the county of Bedfordshire in the role of Collision Investigator. He has continued to develop his skills maintaining a portfolio for Continued Professional Development (CPD) and was registered with Council for Registered Forensic Practitioners (CRFP) in the specialist discipline of Road Transport (Collision Investigation and Vehicle Examination). Bob Wagstaff is currently the External Examiner for De Montfort University overseeing the UCPD, Cert HE and the FdSc courses in Collision Investigation. Bob Wagstaff has written and verified approximately 850 reports in his career and has given evidence on a number of occasions at Magistrates / Crown Court, and has presented evidence on numerous occasions at a number of different Coroners courts.

Tel: 01525 864 852 or 07917 208 308 Email: bob@wagstaffforeniscs.co.uk 9 Sharp Close, Maulden, Bedforshire, MK45 2BZ, United Kingdom

Professor Andrew John Ritchie MD. PhD. FRCS E. FRCS Ire. Expert Witness/Assessor with the NHS Litigation Authority since 1999.

Specialist areas include: Adult Cardiac Surgery General Thoracic Surgery Development of Off Pump CABG & total arterial revascularization Development of ablation techniques for atrial fibrillation Thoracic oncology, especially mesothelioma Upper GI malignancy & oesophageal resection Arterial and tumour biology research Clinical investigation Innovation & development in cardiothoracic surgery Member of the following professional associations: Royal College of Surgeons of Edinburgh Royal College of Surgeons in Ireland Soc of Cardiothoracic Surgeons in Gt Britain and Ireland Br Thoracic Soc. British Thoracic Oncology Group 25 Glenside, Billericay, Essex, CM11 2LY 07889 812346 - lorraine.vesey@btuh.nhs.uk

Editorial Advertorial

Method of Valuing Variations Under Construction Contracts W

hether it’s during the contract period or at the final account stage, it is not uncommon that construction disagreements and disputes often relate to contract variations and in particular, the method by which the variation is valued. Indeed, whilst recent research1 shows historically adjudications relating to value of work and variations amount to 20% of all adjudications, the recent decrease is masked by the significant increase in withholding and payless disputes, which may well include unagreed amounts relating to variations. Disagreement as to the value of variations occur for several reasons not least, the actual cost of the variation is greater than the perceived value returned, the works are undertaken in different circumstances than the planned scope of works, the timing and conditions of the varied work is undertaken is inconsistent with the contract scope of works by which the works were priced and or the conditions of contract have been misinterpreted or misunderstood. Indeed, this final point was highlighted by HH Judge Humphrey Lloyd2:

“That the type of question raised by this appeal is a matter of the construction of the contract (here clause 52(1)) and not a question of valuation or fact”. Where there is no agreement to the value of variations, standard form contracts, including JCT, ICE and CECA3 have their own specific mechanisms for valuing additional, omissions or substituted work. Notwithstanding this, where a contract provides specific valuation rules for valuing variations, disputes can still arise relating to which valuation rule applies and how the rule is interpreted. Essentially, the methods of valuation consider whether: 1. Contract bills of quantities or schedule of rates are applicable to the varied works. 2. Whether the varied work was of similar character and nature to those in the contract bills, 3. Are the works undertaken in similar conditions as those proposed in the contract bills; and 4. Are there significant variances in the quantity of work, as set out in the contract bills. During the tender process, the production of

▲ 18

rates and the pricing often lack the foresight that in the event of variations occurring they will be used as a basis for valuation. Contract bills will be used either for the method by which variations are to be valued or the basis for the valuation, making allowances for the change in conditions or character. The use of contract bill rates as the basis of valuing variation is often a contentious issue as the dissenting party may argue that the component parts of the rate are only applicable to the rate for the specific applicable item in the contract bills.

Where errors in the contract bills have subsequently been established, this cannot be used as a defence from using the rate to value variations. In Henry Boot v Alshom Combined Cycles4, the contract was ICE Condition of Contract5, the contractor included a contract bill item for temporary sheet piling, the rate was subsequently proved to be erroneous. Further sheet piling was subsequently instructed in a different location of the site, which when assessed using the contract bill rate resulted in a ‘windfall gain’ in the Contractor's favour. In a decision upheld in the Court of Appeal6, the judge decided that the use of contract rates is absolute and are not to be adjusted even if it is subsequently established they are erroneous: “Clause 55(2) does no more than restate (in a place where it may be particularly apposite) the fundamental proposition that the contract rates and prices are sacrosanct and not subject to correction. In the ICE Conditions the contractual foundation for the rule that the rates and prices are immutable even though they prove to be too profitable or uneconomic...” Notwithstanding the facts, contract rates are to be used as the basis of the valuation of the variation where the character or conditions may be different to those in the contract bills. This was further confirmed by the judge in Henry Boot7: “If the varied work is work of a dissimilar character or to be executed under dissimilar conditions, then the contract clearly maintains the principle that a valuation ought to be made if there is a contract rate or price applicable or which could be used as a basis for valuing the variation”. It has been suggested, that this approach may be questionable8: “Whilst the inflated rate for the work contracted for cannot be adjusted, it seems less clear why it should be reasonable to apply such a miscalculation to varied work which is not of a similar character. This is on the simple ground that it is not reasonable to apply a rate which

obviously overcompensates the Contractor for the work done and would lend encouragement to the sort of rate manipulation where the Contractor is encouraged effectively to gamble on the necessity for additional work where the applicable rates have been deliberately inflated.” However, whether the rate is reasonable to use was addressed by Lord Justice Ward in the Henry Boot appeal9, where he stated:

“reasonableness is determined by, and is solely dependent upon, whether the varied work is reasonably sufficiently similar to the contract work to justify the use of contract rates.” Similar Conditions may vary from one work element to another and the circumstances will be dependent on the demonstration of the facts surrounding the variation in question. However, Keating on Construction Contracts10 suggests: “Dissimilar conditions might, it is suggested, include physical site conditions such as wet compared with dry, high compared with low, confined space compared with ample working space and winter working compared with summer working, where the Contract Documents show that the Bill prices were based on such conditions.” Further consideration should also be given as to the programming and timing of when the work was undertaken, as if delays occur and the contractor is deemed culpable for the delays then it may be considered that had the contractor delays not occurred the variations may have been instructed earlier and the change in conditions may not have happened. A significant change in the quantities may also give rise to a change to the contract rates as a significant reduction in quantities may result in a loss through inefficiencies and equally, a significant increase may result in improved economies of scale. Both the JCT SBC under clause 5.6 and the ICC under clause 56 (2) address the issue of where the actual quantities are greater or lesser than the contract bills, rendering the contract bill rate inappropriate. In the absence of being able to use the contract rates and prices either as a rate or the basis of a suitable rate, fair rates and prices are a valid mechanism to value variations. The judge in Henry Boot, was clear to set out the alternative to contract rates or as amended: “A fair valuation when used as an alternative to a valuation by or by reference to contract rates and prices generally means a valuation which will not give the contractor more than

Hertfordshire Law Society Gazette

Advertorial

his actual costs reasonably and necessarily incurred plus similar allowances for overheads and profit for anything more would confer on him an additional margin for profit and would not be fair to the employer.”11 In Weldon Plant v The Commission for New Towns12, HH Judge Humphrey Lloyd, again addressed the issue of a fair valuation which would be based on actual costs reasonably and properly incurred: “the contractor would be entitled to a fair valuation which would ordinarily be based upon the reasonable costs of carrying out the work, if reasonably and properly incurred... Clearly if, in the execution of the work, cost or expenditure is incurred which would not have been incurred by a reasonably competent contractor in the same or similar circumstances, then such costs would not form part of a fair valuation.” Furthermore, in this instance specifically whether profit forms part of a fair valuation, he said: “Indeed in my judgment a fair valuation must, in the absence of special circumstances (none of which have been identified by the arbitrator), include an element on account of profit. …. a contractor is in business to make a profit on the costs of deploying its resources,” Often parties’ opinions on the principles of

http://www.hertslawsoc.org.uk/

how variations are valued differ however, as it has been identified above, it is essential when valuing variations to firstly analyse and understand the contractual mechanism by which variations are valued, under the specific contract conditions. On assessing the contract valuation rules, it is then that one should look at the facts in question to establish the method of valuation set against the factual background and the resulting outcome of the valuation. By undertaking an analytical approach to understanding and interpreting the construction of the contract, set against the facts in hand, this will go some way to improve the agreement the valuation of the variations, settlement final accounts and ultimately avoid timely and costly disputes. Lindford Consulting Brewmaster House, The Maltings, St Albans, Herts, AL1 3HT Tel: +44(0)1727 861510 Web: www.lindfordconsulting.co.uk Edward Carolan BSc (Hons) MSc (Const Law) FRICS FCIArb Email: edward.carolan@lindfordconsulting.co.uk Edward is a Chartered Quantity Surveyor, with more than 30 years’ construction industry experience, delivering Expert services relating

principally to dispute avoidance, dispute resolution and contractual and commercial advice. Edward's experience includes the provision of Quantum Expert opinion and advice, dispute resolution services and contract review and advice, with a core focus on identifying issues and avoiding disputes before they become protracted.

Report No.14, Adjudication Reporting Centre in conjunction with The Adjudication Society April 2016 2 Henry Boot Construction Ltd v. Alstom Combined Cycles [1999] EWHC Technology 263 3 Joint Contracts Tribunal Standard Building Contract, Infrastructure Conditions of Contract and Civil Engineering Contractors Association Form of Sub Contract 4 Henry Boot Construction Ltd v. Alstom Combined Cycles [1999] EWHC Technology 263 5 ICE Conditions of Contract 6th Ed 6 Henry Boot Construction Ltd v. Alstom Combined Cycles [2000] EWCS Civ 99 7 Ibid 8 Hudson’s Building and Engineering Contracts 12th edition 5-014. 9 Henry Boot Construction Ltd v. Alstom Combined Cycles [2000] EWCS Civ 99 10 9th Edition (2012) paragraph 20-305 11 Henry Boot Construction Ltd v. Alstom Combined Cycles [1999] EWHC Technology 263 12 Weldon Plant Limited v The Commission for New Towns [2000] EWHC 76 (TCC) 1

19 ▲

Editorial Advertorial

Fraudulent bank calls to law firms – how to protect yourself T

his pernicious form of fraud is on the increase. It’s not a new phenomenon but it is one of a variety of methods criminals are using successfully. So how does the scam operate? Firstly, you need to understand the criminal slang - phishing, vishing, smishing and spoofing. Phishing. This is when you receive a fraudulent email alerting you to a problem. The email looks genuine and may lead you to a website that looks exactly like your bank’s website. If in any doubt, just don’t click on the link. Vishing. Vishing or voice-phishing, occurs when you receive a telephone call from someone purporting to be from your bank. The aim is to obtain confidential details, passwords or to convince you to make a monetary transfer.

• Use known contact details other than email to make these checks and apply the same rigour to both internal and external emails. • Consider how you communicate with individual clients who are sending funds, so they can be sure they are sending their money to the correct account. • Consider encrypting emails and providing clear, initial instructions about how payment details will be provided or amended. • Payment methods and bank account details should be agreed at the outset of transactions. And finally, protect all PCs with quality anti-virus software and ensure it is updated regularly. Upgrade all operating systems and software to the latest versions the minute they become available. Mike O’Donnell, LawWare Limited.

The criminals may claim to be from your bank’s Fraud department. They may tell you there is a problem with your account and ask you to confirm some payments. Smishing. Smishing, or SMS-phishing is the mobile phone equivalent of vishing. The criminals use it less against law firms, but it does happen. The method encourages you to ring a number or follow a link. This will then request password and account information. Spoofing. This is where it gets really tricky. In essence, the criminals imitate genuine telephone numbers or email addresses to gain your confidence. You will see a telephone number that you recognise as being your bank in your caller display. Protect your firm against phone scams • Never give out banking passwords or security codes to anyone over the phone. • Do not trust your phone’s caller display to identify a caller accurately. • Check callers by phoning the bank yourself using the known number. • Remember that the bank will never call you to ask you to transfer money to a so-called safe account. • Remember that the bank will never ask you for banking passwords or user numbers. Protect your firm against email scams • Provide a documented process for all employees to follow. • This should ensure email requests to set up or amend payment details are verified as genuine.

▲ 20

Hertfordshire Law Society Gazette

Editorial Advertorial

Outsourced cashiering and your bottom line Success in business

he ultimate marker of a successful business is the strength of its bottom line. Profitability is everything if you want to survive and thrive. The route to healthy profits is maximising income and minimising costs.

You don’t necessarily need us to tell you about the former of these – maximising income. Revenue generation is

your forte, achieved by good marketing to create new

business opportunities in the first place, and even better legal service provision and client care thereafter to secure a stream of repeat and referral business.

Your legal software provider can assist in this area by offering solutions containing features such as automation to reduce your workload, application availability for greater uptime, intuitive time recording

to capture more chargeable activity and advanced

analytics to monitor performance, to name a few. But that’s not the main focus here. We’re concentrating on the latter – minimising costs.

Note: These averages were calculated from jobs advertised on

spends will be, with no hidden extras on top, which can

In comparison, outsourcing’s charged at a set affordable,

The other cost-related factor to take into account is

down according to your own level of busy-ness. Clearly,

into variable costs, as mentioned earlier. Scalability

various recruitment platforms throughout June 2017.

monthly, transaction-based fee all-in which scales up or

then, outsourced cashiering is by far the most economical way to manage this highly skilled, time intensive and heavily regulated business process. In real terms, outsourcing means doing the same job (better, we would

argue, as your supplier is a specialist in its field), namely all the normal cashier duties, for substantially less cost.

Finding the right people, training them on an ongoing

basis, paying a regular salary and benefits, providing

a physical workspace fitted out with all the requisite technology and telecommunications is an extremely costly affair.

you how outsourcing services, specifically outsourced legal cashiering, can help you to drastically decrease your overheads.

you must enrol your staff into a pension scheme and contribute towards it. The minimum employer contribution is currently 1%, rising to 2% in the 2018/19

fiscal year and 3% from April 2019 onwards. More if

To begin, consider the standard costs associated with

If you’re lucky enough to recruit the perfect candidate

annual bonus; overtime; temporary cover for long-term

sickness, maternity and paternity; 10 metres of office space necessitating rent, rates and service charges; IT

hardware equipment and office furniture; 1 user licence

for legal accounts software; telecommunications; tea, coffee, sugar, milk, water and fresh fruit provision;

social events including Christmas parties; other financial rewards such as referral, length of service and staff introduction awards; and miscellaneous

schemes including car parking, healthcare and gym membership.

of pounds. And it’s by no means the biggest expense which is, of course, salary. To give you an impression of average cashier earnings, this table compares salaries by region:-

Region Cashier’s salary London £32,500 Manchester £21,500 Birmingham £19,000 Leeds £20,500 Cardiff

£20,500

Bristol £22,500

changing demands upon you as a result.

Hopefully by now we’ve demonstrated that the delivered cost savings are decisive when evaluating your outsourcing options. It’s glaringly obvious that your bottom line will be much healthier by moving from a

traditional in-house set up to outsourcing agreement, but this isn’t the only financial aspect to take into account.

associated with outsourced cashiering services

steady flow of monies in and out are essential to keep your business running. This is about establishing

good billing and payment practices, distinguishing

between your client and office accounts, reviewing your key financial indicators regularly, and staying

compliant with the SRA Accounts Rules and CLC Accounts Code.

Cashiering expertise Your outsourced cashiering provider should be

challenge. One of the ways you can retain your talent

Fully conversant in the latest accounting rules,

don’t want to lose them. Employee churn is a major is to offer a competitive remuneration package. People aren’t driven by money alone but that’s not to say it’s

not important. It’s something that can entice your staff

to stay with you for the long term. Ultimately, you

could end up paying more than anticipated for your cashier’s salary, with incremental adjustments higher than national inflation rates.

And what about ambition? If your cashier wishes to climb the proverbial career ladder, they’ll be looking

retaining your star performer, it may be by providing a pathway to progression elsewhere in your business.

competent in managing these tasks on your behalf.

trained to industry-recognised standards – typically

holding an Institute of Legal Finance & Management qualification

–

and

following

professional

development programme, your cashier will manage your books in their entirety from your bank accounts and ledgers to reports and VAT returns.

They’re up-to-date in cashiering best practice, so you don’t have to be. With their input, you’ll identify any red flags immediately in order to keep your finances

in the black and have actionable financial intelligence from which to grow your business.

That means an empty pair of shoes in your cashiering

Security precautions

excessive spending on recruitment.

There’s also the matter of security. As a law firm, you

Other cost factors

are an obvious target and scams relating to rogue house

department and back to square one with yet more

It’s also nigh-on impossible to plan for unexpected, sudden costs not originally factored into your annual

allocation of monies. The possibilities are depressingly

endless and could be anything from a staff member deciding to retire early to market-driven hike in office rent. Conversely, with a pay-as-you-go pricing plan, you

know from the outset what your monthly outbound

▲ 22

business, you become more agile and responsive to the

with an ideal skill-set and strong work ethic, you

for promotion opportunities. Even if you do succeed in

This extensive list can easily run into tens of thousands

When you contract, you scale down and pay less. As a

without covering cash flow management generally. A

Staff retention

induction, mentoring, training and development;

budget. When you expand, you scale up and pay more.

relatively newly introduced, if you employ just one

In-house vs outsourced costs

Outgoings encompass recruitment and selection;

affords you much more flexibility and control of your

It’d be an oversight to write regarding the costs

special mention. It’s yet another mandatory overhead,

you’re a generous employer.

employing an in-house cashiering staff member.

how outsourcing immediately converts fixed costs

Not forgetting workplace pensions which warrant

person. To fulfil your Pensions Regulator obligations,

Where cost cutting’s concerned, we’re going to show

easily be absorbed into your overheads.

handle enormous sums of client monies. Conveyancers owners and buyer deposit redirection have made

headline news over the past few months. But it’s not only conveyancers who hold and pay monies from client account. Every law firm does. With fraudsters and cybercriminals trying their hardest to purloin your

financial assets, you have to tighten your defences in

order to keep them at bay and your finances intact. You’re reliant upon your cashier and accounts software to do so.

Hertfordshire Law Society Gazette

Advertorial

It thus follows that you’re placing an inordinate amount

data security in the form of ISO-accredited data centres,

Breaking with tradition is never easy. Even the

fulfil an important role in the management of your

testing, system monitoring, replication, physical

change. However, with outsourcing services and legal

of trust in your in-house cashier who’s required to finances. Amongst their many responsibilities are bank reconciliations, online banking, inter-account transfers and paying invoices. Your internal controls must be watertight in order to monitor your cashier’s actions and

password access, SSL encryption, firewalls, penetration

security measures and more industrial-strength security protocols. The significance of your software is not to be overlooked.

transactions so that if anything’s amiss, it’ll be noticed

With outsourcing, stringent measures are in place to

unheard of. While we don’t want to engender suspicion

and senior leadership controls. Regular reports showing

straightaway. In-house cashier fraud isn’t completely

of your employees, it’d be naïve to assume it’ll never happen to you. It’s rare, admittedly, but not outside the realms of all possibility.

For cybercriminals, your client information’s valuable

supervise each cashier who’ll be subject to team, section potential or actual breaches, anomalies and late arrival of

monies keep your finances in check. There’s simply no room for error or deliberate deception in an outsourced set-up.

too. This can be used for all manner of illegal purposes

And there’s more

stolen. In fact, you’re duty bound to protect your clients’

Although costs are the major benefit, there are

Regulation Authority and other industry regulators but

from outsourcing. We’ve written on this subject

and you can be held to ransom for its safe return if

confidential and sensitive data, not only by the Solicitors also by the Information Commissioner’s Office. Under EU General Data Protection Legislation, coming into force next year, penalties are enforced of up to 4% of

global annual turnover or €20 million – whichever is higher – for failure to comply. Protecting your data is equally as important as protecting your finances.

With your accounts software, you can reduce the risk of fraud with anti-money laundering checks, credit screens, conflict of interest searches, proof of identity

document capture and breach warnings to preserve

your matters and their associated finances. There’s also

http://www.hertslawsoc.org.uk/

a whole multitude of other advantages derived extensively before. Read our earlier article titled ‘Ten

reasons to outsource your cashiering’ at www.quill.

co.uk/10-reasons. You’ll find information relating to concentration on higher priority tasks, assured

regulatory compliance, built-in emergency planning,

most forward-thinking amongst us can be averse to accounting software advancements, traditional isn’t always best when it comes to managing your finances.

While we appreciate outsourced cashiering may not be right for every law firm, if it does fit your business’s

needs, just imagine the cost savings and other benefit gains to be made. You may even prefer a hybrid approach comprising an outsourced cashier and inhouse accounts clerk. Every business is different and

the one-size-fits-all solution doesn’t always apply.

Your outsourcing vendor should openly discuss your options and devise a strategy unique to you.

Remember too that not all outsourcing companies are reputable and reliable with a proven track record

in your sector. Careful screening is recommended. Read our ‘Essential questions to ask your outsourced

cashiering provider’ article to assist you here. Go to www.quill.co.uk/essential-questions.

To contact the Quill team, call 0161 236 2910, email info@ quill.co.uk or visit www.quill.co.uk/nobrainer.

availability of value-added support, simplified annual

Julian Bryan joined Quill as Managing Director in 2012 and

accreditation and more. Not least of these is access to

Quill is the UK’s largest outsourced legal cashiering provider

accounting, straightforward auditing, assisted external back up from the wider cashiering team as opposed to working in isolation. This is one of the reasons an

outsourcing bureau can keep your finances under closer command.

is also the Chair of the Legal Software Suppliers Association. with 40 years’ experience supplying outsourced services and software to the legal profession.

Julian Bryan, Managing Director, Quill.

23 ▲

Editorial Advertorial

Merchant Taylors' School: A Different Kind of Sixth Form

cross the country, time spent in the Sixth Form is increasingly seen as a waiting room for university. When I joined Merchant Taylors' in 2016 I was delighted to find that it is a school where this is very far from the case. Yes, we ensure that boys are well prepared for the process of university application (we send large numbers to Oxbridge and Imperial each year, as well as to Russell Group universities and to the US) â&#x20AC;&#x201C; but we also create an environment where boys can fully flourish. This might be in small classes (often just 8-10 boys) which facilitate more receptive learning, or in sports teams which achieve boardingschool levels of achievement (our

â&#x2013;˛ 24

U17 cricket team are the new national champions) or in a memorable concert or play. Beyond that we also encourage boys to give back through charities like Phab, where Merchant Taylors' boys and St Helen's girls work together to look after severely disabled children for a week, or in outreach to local primary schools.

Of course, in what is a fiercely competitive job market, we also endeavour to guide boys in their early career planning. We do this by giving every boy an individual career plan, through our Careers Department. They can also tap into our network of alumni and parents to gain vital work experience and advice; for example, this year we placed boys in work at range of different places, from consulting firm Deloitte, to Oncopole, a world-leading cancer research facility in Toulouse. Our Scholars gain the additional benefit of specialist mentors, Oxbridge-style tutorials and a workshop with a leading academic - last year's cohort benefiting from a session with Lord Mervyn King

and a talk on monetary policy. Parents are rightly concerned that their sons are ready for the real world but intense study complemented by little else is no such preparation. We look to help boys realise their varied talents and build their characters as well as learn the importance of academic rigour. To illustrate the point, our newly refurbished Sixth Form centre has a large area for social interaction, as well as space for collaborative study and the latest IT facilities. The ideas for Young Enterprise companies, plans for House drama and allocation of Prefect responsibilities are all forged in this productive space. We are convinced that the Sixth Form should be the best two years of their school careers. The 250 recent leavers who returned for drinks in the Head Master's garden at the start of term hopefully shows we are striking the right balance. Jon Rippier Director of Communications & Teacher of Modern Languages

Hertfordshire Law Society Gazette

Advertorial

Defining Benefit W

hen dealing with the pension assets of a divorcing couple received wisdom has always been that where Final Salary (Defined Benefit) pensions were up for grabs, these were the most sought after by both sides since - as the title infers - the benefits were pre-defined and therefore guaranteed to be paid at the level calculated at the time of divorce with inflation proofing thrown in! On the other hand, lowly Money Purchase (Defined Contribution) pension benefits carried no such guarantees and income was dependent on the performance of the underlying funds and/or the annuity rates prevailing at the time the recipient retires. The last ten years of Credit Crunches and unprecedented Central Bank economic meddling in the form of QE and suppressed interest rates have done nothing to counter this logic - a "no brainer" then! Well, yes, maybe! The “Pension Freedom” changes introduced by George Osborne in April 2015 have added a few options into the mix that make the decision a little less straightforward than it might have been before.... To re-cap, the changes were widespread but the ones that are perhaps most pertinent for the purposes of this discussion were as follows: • Income of any level could be withdrawn from the pension fund from age 55 with tax payable at the recipient’s marginal rate of income tax. • Lump sum death benefits in the form of 100% of the value of the fund could be paid to ANY chosen beneficiary free of all taxes if death occurred prior to age 75. If death occurred after age 75 the benefits would still be free of Inheritance Tax but the recipient would be liable to tax at their marginal rate. • Provided the funds remained within a pension contract in the hands of the beneficiary then the remaining value could be passed on to their chosen beneficiaries under the same terms as set out above.

http://www.hertslawsoc.org.uk/

So, armed with this knowledge we should perhaps look more closely at the merits of Final Salary over Money Purchase. Let's assume the following scenario • Wife 58, Husband 60 and children 30 & 32 who are no longer financially dependent • Wife has no pension benefits, Husband has pension benefits as follows 1. £45,000 per annum Final Salary pension payable from age 65 (Cash Equivalent Transfer Value (CETV) £900,000) Tax free cash is available through commutation leading to a reduced initial pension. 2. Money Purchase benefit in a Self Invested Personal Pension (SIPP) value £900,000. Benefits are available from age 55 and Tax free cash of 25% of the fund value can be withdrawn (£225,000) Whilst on the face of it the £900,000 SIPP fund could not initially purchase an equivalent income to the Final Salary scheme via an annuity purchase the Pension Freedom changes throw up some interesting alternatives to the traditional analysis. Death Benefits Final Salary death benefits in the form of 50% spouses benefits would only be payable to a financially dependent spouse. If the wife takes a pension share but does not remarry or lives with/ marries someone independently wealthy then the pension will likely cease on her death. As her children are not financially dependent they would receive nothing (NB. If death occurs within five years of retirement there may be a lump sum in the form of the balance outstanding of 5 year’s worth of pension payments) Money Purchase death benefits of the full value of the SIPP fund can be left to any beneficiary regardless of financial dependency. In this case then, assuming wife dies after one year and no income taken or growth on the fund, her two children could each receive £450,000 totally tax free.

Income Flexibility Final Salary pension payments are subject to income tax at the recipient's marginal rate. Once in payment they cannot be stopped or varied. Tax free cash must be drawn at retirement and in one lump sum. Money purchase pension payments are also taxable however it is possible to withdraw the tax free cash entitlement in stages which could provide a tax efficient income stream. If we assume inflation at 2% per annum and net investment returns of 5% per annum then, using this strategy, the SIPP could match the Final Salary income net of tax until the wife reached age 99. Of course should she not reach age 99 then any remaining funds would be available - free of IHT - to her chosen beneficiaries. Access to Capital Instead of providing an income, the Money Purchase funds could be used to provide the wife with capital. Obviously a tax-free lump sum of £225,000 could be withdrawn at outset. However, pension freedom rules allow further taxable lump sums to be withdrawn up to the full value of the fund. Whilst this will impact the level of ongoing income available, it introduces an element of flexibility unavailable through Defined Benefit schemes. Indeed, if other capital is tied up in illiquid assets then the SIPP could provide a non-taxpaying wife with capital of over £610,000 after the deduction of all tax. In summary then, where flexibility, access to capital and death benefits are a priority, Money Purchase benefits might just have the edge. Andrew Whiteley DipPFS Director Tel: (01223) 356262 E: awhiteley@provisio.co.uk

27 ▲

Editorial Law Society News

Solicitors’ indemnity insurance spared Brexit effect

or third year in succession, the majority of solicitors’ firms experienced a smooth professional indemnity insurance (PII) renewal process, the Law Society of England and Wales’ 2016-17 PII survey has revealed.

Reflecting on the survey results, Law Society president Joe Egan said: “Brexit-borne uncertainty does not appear to have affected solicitors’ PII and the average premium has actually dropped slightly. “This continued market stability is good news for both clients and the profession, so it’s well worth shopping around for a good deal; surprisingly few firms do at the moment.” The Law Society is keeping a close eye on a number of issues highlighted by this survey. Only a third of firms are aware of the closure in 2020 of the Solicitors’ Indemnity Fund (SIF), which provided post six-year run-off cover. Firms that are considering shutting down will need to factor in the additional costs of extending run-off cover beyond the prescribed minimum, so increasing

▲ 28

awareness of the implications of the SIF’s closure is an urgent priority.”

Just over a quarter of firms reported being targeted by scammers in the last year, with spam emails and phishing attempts by far the most common approaches. Joe Egan commented: “It is vital firms keep their risk management up to date - particularly in relation to scams - if they wish to continue to benefit from lower PII premiums. “Some insurers now ask about the measures firms have taken to protect against scams, including their security and IT systems. The Law Society provides training and resources to help solicitors prevent scams and keep up to date on this important issue.” The survey found: • The average premium was 1.3% lower this year, but mean premium costs rose for firms with one to four partners. • As was the case last year, more than threequarters of firms did not find the PII renewal process difficult.

• 58% of firms submitted only one proposal form, up slightly from 52% last year, while 24% submitted two or three forms. The number of firms submitting no proposal forms halved to 4%. • Nearly three-quarters of firms renewed with their previous insurer, up from almost twothirds last year. • The strongest drivers for choice of insurer were cost and the insurer’s financial stability. An existing relationship with an insurer was more likely to factor into the consideration of larger firms.70% of practices chose traditional 12-month policies. • It is a matter of ongoing concern that the median cost of run-off cover remains at a historically high 300%. • A little over two-fifths of firms agreed it should be mandatory to purchase post six-year run-off cover after the closure of the SIF. • Just over a quarter of firms reported being targeted by scammers in the last year, with spam emails and phishing attempts by far the most common approaches. • 90% of firms were aware of the Law Society’s practice note Protecting your firm if you fall victim to a scam, and almost half had reviewed it.

Hertfordshire Law Society Gazette

Editorial Advertorial

Legal Indemnity insurance continues to evolve I

f you’re involved in conveyancing, you’ll be only too familiar with having to arrange legal indemnity insurance. Insurance is often used to satisfy lender requirements, where speed is of the essence to complete a transaction. The availability and delivery of legal indemnity services has changed over recent years and continues to evolve. So what’s changed - are all legal indemnity services the same? Whatever your views on insurance, it is now applied to a greater percentage of transactions than ever before. The days of waiting for an insurer to reply to a letter or even an email for the most commonly requested indemnity policies has mostly gone. We’ve been through the period of the call centre to arrange insurance, followed by the paper based ‘self-issue’ pack – itself a significant change in its time! Inevitably, the next advancement was to take the self-issue pack to online, this led to online services offering even more insurance products and flexibility, joining the technological trend to ordering searches, titles and other related services online. The move to online has, of course, not only improved the speed within which solicitors can obtain legal indemnity quotes and policies, but has also brought about reduced premium charges for clients, particularly as more insurance providers have moved business online. Client demands and expectations have also changed. We live in a world where there is demand not only for great service and advice, but also choice and value for money. The Financial Conduct Authority’s (FCA) Treating Customer Fairly (TCF) initiative aims to raise standards in the way firms carry on their business, bringing about changes to benefit consumers, and increase their confidence in the financial services industry. TCF is recognised by The Solicitors Regulatory Authority as a core outcome of Client Care including, amongst other desired outcomes, treating your client fairly and ensuring they are in a position to make informed decisions about the services they need, how their matters will be handled, and the options available to them. Most clients, when buying insurance or indeed other services, look for and compare a choice of quotes to make an informed decision about what they are buying. Comparison sites have been around for general insurance, as an example, for many years now. Even if a client chooses not to arrange insurance themselves and goes to an insurance professional such as a broker, the broker will usually obtain a choice of quotes or insurance options to present to the client for consideration or recommend from a choice as to which best suits the clients needs. For solicitors acting on a client’s behalf in arranging legal indemnity insurance, it has always been more difficult to obtain several quotes

▲ 30

for comparison to determine what might be best for the client’s demands and needs. To get a choice of quotes, a solicitor had to visit each providers website and complete each insurer’s online application, write to the providers or wade through a selection of self-issue packs (assuming they have yet to adopt the move to online services). However, legal indemnity insurance solutions such as DUAL’s ‘My Legal Indemnity Shop’ online service now takes things forward to the next stage by offering solicitors (and clients) a choice of up to 3 quotes from different insurers, all from a single website and simple quote application. Whilst many legal indemnity insurance products are tried and tested and vary little between insurers beyond price, provision and delivery of legal indemnity insurance continues to evolve. New services such as ‘My Legal Indemnity Shop’ are another step forwards towards providing greater choice when placing legal indemnity insurance and, perhaps, go some way in helping solicitors achieve core outcomes such as Client Care and Treating Customers Fairly when giving advice to clients on these insurances. Mark Dennis, Head of Residential Risks, DUAL Asset Underwriting

FINDING YOUR VOICE IN TODAY’S DIGITAL AND PRINT MEDIA

East Park Communications Maritime House, Balls Road, Birkenhead, Wirral CH43 5RE 0151 651 2776 www.epc.gb.com

Hertfordshire Law Society Gazette

Advertorial

specialise in family law and have done so for many years. When I

Most of the time my work, and the work of my

http://www.hertslawsoc.org.uk/

31 â&#x2013;˛