Briefly Legal - summer 2012

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An economic outlook

CBI analyses the UK’s financial performance

“

...a superb level of service The Legal 500

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watsonburton.com

CARING CREATIVELY AT SPRINGFIELD

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HISCOX – INSURING A STRONG FUTURE

Graeme Lee of Springfield Healthcare Group Stuart Clarke of Hiscox outlines the company’s assesses the impact of innovative approach to the recession on insurers social care

BUSINESS ENGAGED AT NORTHUMBRIA Interview with Northumbria University on the challenges higher education institutions face in obtaining funding for continuous growth

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Investing in business stars of the future

Corporate The programme is run alongside traditional subjects in the national curriculum and aims to enhance the business and economic understanding of students by helping them set up and run their own real companies for a year.

A time of transition

In an environment of continuing uncertainty, UK business must adjust to the fluctuations of the global economy and develop strategies for taking advantage of the chaos.

In this edition of Briefly Legal, we feature articles highlighting some of the most dynamic companies in the UK. These companies are thriving despite the challenging trading conditions.

They are businesses that do not rest on their laurels – they are proactive in seeking out new opportunities, and are innovative in the way they manage their That is why our firm has adopted businesses and the opportunities which come their way. Hence a commercial, business driven orientation. We deliver pragmatic their continued success. solutions and advice – not We also feature an article by the interesting essays! Whilst we CBI which is a critique on the can’t impact the situation UK’s financial performance for globally, we can ensure that our the first half of this year, which I lawyers are properly equipped think will be of particular interest to help clients see their strategies to you. This is followed by through to fruition, and to features from lawyers across our manage risk. firm, providing expert analysis Times such as these demonstrate the need for strategies for both growth and innovation, and for contingency planning. This means that businesses need advisers who not only have the legal expertise any client has the right to expect of their lawyers, but also sound commercial awareness and business acumen.

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and commentary on recent developments across a number of sectors, including construction, healthcare and insurance.

As we look ahead to the second half of the year, our aim is to work with you to ensure that your organisation transitions smoothly through these challenging times, and to help you to identify and follow through on the opportunities which will undoubtedly arise.

We wish you well.

Gillian Hall Senior Partner Watson Burton

Throughout the programme, students aged 15-19 years old are tasked with the ultimate enterprise experience as they develop their product or service, undertake market research, create a business plan, manage finances via the company bank account, market the product or service and trade with the public.

Kevin has advised the team at Benfield High School on the launch of their business, Photolaughs, which involves the team attending school events to take photographs of students for processing and sale to the public.

To date, the team have attended sports events, dance recitals and prize giving ceremonies with the aim of capturing images of students for parents and family members.

Kevin Anderson said: “A lot of vocational skills necessary to succeed in the workplace are learnt through personal experience of setting up and growing a business, so the Young Enterprise programme makes a great contribution to the development of the students’ understanding of business management.

“I have noticed that since the launch of Photolaughs, the students have really developed confidence in their approach to the business. They have gained practical experience of key business functions like financial management, marketing, customer care and HR and have a greater understanding of economic

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and insolvency specialist, Kevin Anderson, has volunteered to represent the firm in funding and mentoring the charity’s Company Programme for students at Benfield High School in Newcastle.

... we have been able to assist the students in utilising talents that they never knew they had, which will really help them as they progress with their career later in life...

concepts such as market supply and demand, competition and profit.”

Through the programme, the team, supported by Kevin, is able to view, communicate and trade with over 2,500 companies through The Company Programme’s online facilities and will compete with other schools and colleges in the North East, across the UK and internationally to become Young Enterprise company of the year.

Kevin said: “The great thing about this programme is that it enables teachers and mentors to see a different side of the students outside of a classroom environment.

Through the various tasks they undertake in developing and implementing business plans and promoting their product, we have been able to assist the students in utilising talents that they never knew they had, which will really help them as they progress with their career later in life.

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“We feel that by investing in the delivery of the Young Enterprise Company Programme at Benfield High School not only are we encouraging economic growth by nurturing the Lord Sugar’s of the future, but we are also fostering students who could well come to work for our company once they have completed their education.”

A recent independent evaluation of Young Enterprise’s Company Programme investigated its impact on previous participants, concluding that students involved in the programme are twice as likely to start their own business as their peers and demonstrate an increased awareness of social responsibility.

Government’s Big Society, it has never been more important that we continue to form partnerships with businesses in the private sector to help drive leaders of tomorrow, so we are extremely pleased to have the support of Watson Burton.

“The work of Kevin and other mentors across the UK ensures that students leave school equipped with leadership and strong business skills and are more work-ready for the country’s employers.”

Young Enterprise is the UK’s leading enterprise education charity and aims to inspire the next generation of entrepreneurs and prepare young people for the world of work.

Every year the charity helps more than 250,000 young people learn about business in schools, colleges and universities. The charity is supported by a network of 5,000 volunteers from 3,500 companies.

This year 25,000 15-19 year-olds have taken part in the charity’s flagship Company Programme and set up their own businesses in schools with support from local business mentors.

Catherine Marchant, Director of Corporate Relationships at Young Enterprise, said: “As part of the

For further information on the business initiatives run by Young Enterprise please visit their website young-enterprise.org.uk

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An economic outlook Ian McCafferty, Chief Economic Advisor at CBI provides an insight into the UK’s financial performance to date this year Buying-in to Quick Hydraulics Managing Director Andrew Esson of Quick Hydraulics Limited talks about the challenges of completing a management buy-in of a company in the current climate

10 An asset for business

18 Changing the landscape 30 Working at the coal of healthcare Lawyers from Watson Burton’s healthcare group answer questions on healthcare reforms and their impact on the sector

22 Business engaged at Northumbria

Interview with Jonny Hall of Northumbria University Law School on the challenges higher education institutions face in obtaining funding for continuous growth

Watson Burton’s Mark Lazenby provides an insight into how lawyers add value to businesses in an ever changing landscape

34 Negotiating the maze of employment law

Watson Burton’s Gearalt Fahy provides an overview of employment law reforms and the effect they will have on business

36 Building momentum or

Lawyers from Watson Burton offer their specialist perspective on the construction sector

24 Opening the right doors 40 A commercially driven

Julius Gottlieb, Managing Director of Dorchester Ground Rent Management reveals the company’s key to success in real estate investment

for a quality team

workforce

Watson Burton’s Katie Smith sets out the firm’s approach to the development of its personnel

Patrick Harwood, Watson Burton’s Chief Executive, authors the first in a series of articles looking at the firm’s five strategic priorities

for building a better Britain

a strong future

stars of the future

Stuart Clarke of Hiscox assesses the impact of the recession on insurers

An interview with Kevin Anderson of Watson Burton on his role in mentoring students as part of a year-long education programme run by Young Enterprise

14 Laying the foundations 26 Hiscox – insuring Watson Burton’s real estate partner George Parker-Fuller discusses the Government’s plans to kick start the UK’s housing market

16 Caring creatively at Springfield This is a Carbon Balanced Publication.

The full carbon impact of this document has been offset by the conservation of endangered tropical rainforest in association with the World Land Trust.

Fiona Megaw of CCCS explains how the organisation is helping the UK cope with its spiralling debt problems

stalled and shrinking?

Construction in the UK

growth

12 Going to ground

face of the economic downturn

Graeme Lee of Springfield Healthcare Group outlines the company’s innovative approach to social care

28 Running for cover!

Richard Palmer, Head of Professional Indemnity Insurance at Watson Burton considers the issues surrounding insurance policies

42 Investing in business

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An economic outlook

AN ECONOMIC OUTLOOK Ian McCafferty, Chief Economic Advisor at CBI provides an insight into the UK’s financial performance to date this year.

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An economic outlook

UK

economic performance over the first half of the year has been somewhat of a puzzle.

On the one hand, business surveys have been pointing to some improvement in sentiment about business conditions. On the other hand, official GDP data for the first quarter showed the UK firmly in recession, with output contracting at the same rate as in the final quarter of 2011 (-0.3%). The consistency of the picture painted by the survey data does suggest that, at the very least, there is some underlying momentum in the economy. In addition, recent labour market data showed a rise in employment in the first quarter, which suggests some business optimism.

However, there are some seasonal factors during 2012 which may delay the point at which underlying growth becomes apparent in the headline data. The additional bank holiday over the Jubilee weekend is expected to push some activity from the second to the third quarter, despite some additional expenditure associated with the Diamond Jubilee.

The Olympics are not expected to substantially affect GDP as lower productivity will counterbalance any additional boost from tourism. So GDP growth is unlikely to turn decisively positive until the third quarter.

The ongoing turmoil in the Eurozone is, unsurprisingly, the main risk facing the UK. The uncertainty around when a solution to the current problems will be found and what it might look like continues to put pressure on business confidence.

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An economic outlook

HOUSEHOLD BUDGETS UNDER PRESSURE A tick up in GDP later in the year will rest upon some improvement in household consumption. Although the economy is expected to become less dependent upon consumer spending over time, consumer expenditure still accounts for around two thirds of UK economic output. However, the consumer outlook remains relatively subdued.

The labour market has shown some signs of improvement recently, which should provide some support to consumption.

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The labour market has shown some signs of improvement recently, which should provide some support to consumption

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Employment rose by 105 thousand in the first quarter of 2012 – again entirely driven by growth in part-time employment. Despite recent signs of improvement, however, unemployment is expected to remain elevated through to 2013.

Consumer incomes have been under pressure from the prolonged period of elevated inflation. Inflation has come down from its peak at 5.2% in September 2011. However, it has proved stickier than expected – in its May Inflation Report, the Bank of England expected inflation to take a year longer to fall to target than it had predicted only three months earlier – due, in part, to some pressure on oil prices from supply pressures.

The substantial margin of spare capacity in the economy, combined with weak cost pressures should, however, lead to inflation coming down throughout 2012, and approaching target level (2%) in early 2013.

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An economic outlook

Falling inflation should take the pressure off consumer incomes going forward, which have seen particularly weak earnings growth in recent years – private sector pay remains very flat, with growth in total pay continuing to fall back. Support from public sector pay growth is also gradually being withdrawn with the downward shift in public sector spending, which has brought public sector pay growth down from 4% in 2010 to just 1% now.

for 42% of UK exports – will hold overall export growth back to a modest 1.5% this year. On the back of a more pronounced pickup in the global economy, we expect this to rise to 6% next year.

While prospects for business investment are relatively subdued, our latest surveys point to some improvement in investment intentions, with uncertainty about demand easing as a constraint within the manufacturing sector.

Meanwhile, replacement has become a more commonly cited motive for expenditure, Taking all this into account, consumer spending growth is expected to be just 0.2% suggesting that the weak recovery in corporate spending has created some pentthis year before rising to 1.6% next year. up demand. But with uncertainty around the outlook particularly high, we expect BUSINESS ENVIRONMENT It is hoped that stronger business investment business investment expenditure to be relatively modest. We forecast growth of and export growth will counterbalance 4% in 2012, rising to around 5% nextt year. some of the weakness in consumer spending going forward. A recovery in business IN SUMMARY investment, however, rests on some The central outlook for the UK is fo fforr improvement in demand either at home or growth of 0.6% this year, rising to 2% next. abroad. Although domestic demand in the The Eurozone crisis is the main risk sk to this UK is likely to remain subdued during 2012, there is some uplift in export markets fairly modest appraisal in the near term.

Further out, the fiscal consolidation n in the outside the EU. In particular, our year will continue to take some growth owth out manufacturing survey suggests that export hers pace. optimism for the year ahead has picked up, of the economy as the recovery gathers and export orders are expected to rise next quarter. Nonetheless, the fiscal consolidation underway in the Eurozone – which accounts

Ian McCafferty, Chief Economic Advisor at CBI BI

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Buying-in to Quick Hydraulics

Buying-in to Quick Hydraulics

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The general feedback we got from legal and financial experts was that buy-ins were very challenging and we’d have to work very hard to have a chance

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Buying-in to Quick Hydraulics

Andrew Esson, Managing Director of Quick Hydraulics Limited, last year defied the negative effects of a lengthy recession to become the first North East businessman in three years to successfully complete a management buy-in. Six months after the deal, we speak to Andrew to discuss the challenges he faced in undertaking the MBI and how the business is transitioning under new management. than a year after being awarded the title of North East Business Executive of the Year for Tyneside and Northumberland, Andrew Esson embarked upon one of the biggest challenges of his 27 year career – to complete the purchase of his own company.

as private equity houses won’t touch MBIs given the current economic climate.”

Andrew’s success with ContiTech Beattie inspired him to pursue ownership of his own business in the North East, but with the current economic downturn and tough trading conditions for up and coming businesses, progressing with his plans was not going to be easy.

when banks were more or less throwing money at everyone, it was relatively easy to do a management buy-in. But when I started making enquiries, people told me it would be hard to do a deal because everyone was much more risk-averse.

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It was then that Andrew began his search for profitable business opportunities by engaging a team of advisors from Watson Burton and Tait Walker.

Andrew said: “I discussed my plans with Gillian Hall of Watson At that time, Andrew was Burton, who recommended managing director of ContiTech Mike Smith of Tait Walker. I Beattie, an organisation which asked him about the probability manufactures specialist hoses of getting a deal completed, and for the oil & gas industry. As a I was shocked when he told me subsidiary of Continental AG, it was only about 50%. He more the world’s largest manufacturer or less told me that if I wasn’t of non-tyre rubber based plastics, such an experienced candidate he would have advised me not the company grew under Andrew’s leadership, more than to continue with a management buy-in. doubling its exports of £23 million in three years.

“If you go back to about 2007/8,

“The general feedback we got from legal and financial experts Andrew said: “In the first instance, was that buy-ins were very I set my sights on pursuing a challenging and we’d have to business with £10 million work very hard to have a chance.” turnover, but it soon became clear to me that I would struggle With the assistance of friends to raise funds for the transaction and business contacts across

the region, a few options were unearthed that were suitable prospects for the MBI. One was North Shields-based Quick Hydraulics Limited, the UK’s leading fluid power centre and hydraulics components distributor.

Quick Hydraulics Limited, formed in 1977, supplies hydraulic components to a range of sectors including nuclear, oil, gas, paper and process, and renewable energy and is an established provider of bespoke packages, products and services, with a growing consultancy and training division. The organisation supplies its products to businesses across the world, providing services to customers as far afield as South America, West Africa and the Far East.

Andrew said: “I was attracted to Quick because it was a specialist engineering business, and a profitable company which could greatly benefit from the knowledge I have gained throughout my career. Although I had never worked with the company before, I had worked with some of Quick’s competitors and I believed that it was a strong performer within its field and had the potential for major growth.”

The management buy-in of Quick Hydraulics Limited successfully completed in September 2011, with Andrew and his team securing funding from four private investors and national bank Santander.

Since taking over, Andrew has embraced his role as major shareholder and managing director, initiating an aggressive growth programme for the organisation. This has included a substantial investment into the company’s IT facilities, the implementation of state of the art lean manufacturing concepts, 2D and 3D design equipment and the implementation of a training programme for all of the company’s employees.

Andrew has also increased the company’s workforce from 14 to 19 employees and has appointed two significant appointments to its board, who bring with them extensive experience of the sector.

Andrew said: “The next two or three years will be about growing the business, and if I’m successful in doing that I expect there will be opportunities to acquire other firms and create a specialist engineering group.”

Andrew Esson, Managing Director, Quick Hydraulics Limited

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An asset for business growth

An asset for business growth During a recent review of the UK’s financial status, The International Monetary Fund (IMF) forecasted a 3% growth in the country’s economy by 2013.

In order to achieve this, IMF Managing Director Christine Lagarde emphasised the need for the Government and the Bank of England to be proactive in boosting productivity and business prosperity, however, in the midst of global economic uncertainty this will not be an easy task.

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tough trading conditions, all businesses, whether large corporate or SME, are now subject to ever increasing regulatory, legal and contractual demands which carry with them potential costs for non compliance. This has resulted in an even higher demand for astute, commercially driven business advisors to assist companies on business strategy and general management issues with a view to easing the process of compliance to such contractual and regulatory “red tape”.

With

There can often be a perception that lawyers are only instructed as a “necessary evil” for businesses, with their services sought only to

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An asset for business growth

resolve commercial problems and disputes or deal with a transaction which requires legal representation, such as a property matter or an acquisition. In all cases there is a fear that instructing lawyers will be a very expensive and unrewarding experience and advice is based upon technical legal arguments rather than commercial ones that actually matter.

We disagree, but as we are lawyers we know that you would expect us to say that!

As business advisors, we go to great lengths to establish and maintain a solid long-term working relationship with each of our clients, based on a mutual trust that benefits both your business and ours. Our aim is to develop a deep understanding of your strategic objectives and provide you with legal advice that will achieve the best possible outcome for your business. With a sector based approach, we are positioned well to assist you in both stimulating business prosperity and help drive forward the UK as a competitive industry of enterprise.

The benefits for a business of regularly liaising with its lawyers are brought into sharp focus where the strategic aims and goals include any form of transaction involving a business or share disposal or acquisition.

Where the business strategy involves a disposal, an integral part of the process is to ensure that value is preserved and maximised.

In doing so, it is important to have in place an appropriate business structure which protects its assets, to resolve or mitigate any known issues and to identify any unknown factors before embarking on a formal disposal process.

With regular involvement in the business, we can assist you in ensuring that all required systems and processes are up to date from a compliance perspective and undertake a legal audit which helps to identify any potential issues early on. Our role is to work in partnership with you to ensure any issues identified by a potential purchaser during its due diligence process are known in advance and are correctly dealt with or presented prior to any sales process, thereby minimising any negative effects on value that result.

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Having your lawyers involved as an integral part of your team, especially when contemplating a transaction, enhances your ability to make the whole process more efficient and increases your chances of having a successful transaction

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will need to be structured in order to protect or ring fence the existing business from any issues or liabilities that may be connected to the target business. The knowledge we gain of our clients’ business strategy assists us in ensuring that any current or anticipated future funding requirements are not compromised by the potential acquisition.

when there is an equity gap between the required consideration and the level of debt facilities available. We have strong partnerships with equity and mezzanine funding providers which can make the difference in obtaining the funding required for a transaction, especially in the current economic climate, where obtaining debt finance for transactions is difficult.

With in-depth knowledge of sectors, our experience means we are able to ensure that a proposed acquisition is appropriately structured to deal with any likely industry issues that may arise in a matter which is acceptable to potential funders or investors.

Dealing with such issues at the outset means a costly restructure is not required mid way through the process which would otherwise risk delays in anticipated timescales and relations between the respective parties.

Having your lawyers involved as an integral part of your team, especially when contemplating a transaction, enhances your ability to make the whole process more efficient and increases your chances of having a successful transaction. As such, we should not be regarded as a “necessary evil” but rather a “necessary part of your team” which can and will add value to the overall management and day-to-day running of your business.

Where the acquisition requires external funding, we play an integral role in assisting businesses in obtaining funding for transactions, especially

In addition to the value of the provision of regular legal reviews and audits, industry knowledge means that we have extensive expertise of dealing with likely purchasers in a given sector and are aware of their preferred purchasing structures. This knowledge will provide potential sellers with up to date options for potential purchasers and the structures generally required.

Where the strategy involves an acquisition, it is important to understand how the transaction

Find out how our corporate finance group can help you by getting in touch with Mark Lazenby. Call 0845 901 0964 or email mark.lazenby@watsonburton.com

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Going to ground

GOING TO GROUND

Ground rent funds have grown in popularity recently as many private investors have opted for the stable returns of ground rents at a time of stock-market volatility. Dorchester Ground Rent Management was established two years ago to focus on institutional investors searching for a much safer form of real estate investment with a greater return than index-linked gilts. Founder Julius Gottlieb explains how the company has grown to become one of the UK’s top ten ground rent investors by focusing on the requirements of its key market – institutional investors.

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Going to ground

rents – the payment made by a leaseholder to the freeholder of a property - are growing in popularity as a pension scheme product. They offer secure investments, they are normally at least 75 years in length and are backed by the underlying collateral of land and buildings.

Ground

All the more surprising that when Julius Gottlieb established his asset management company in 2010 he could find no organisations who could reliably manage the process of sourcing ground rent investments on behalf of institutions.

That’s when he had a ‘light bulb moment’, and Dorchester Ground Rent Management was born. Post-2008 in the property sector, institutional investors had become very risk-averse. They were looking for investments that offered greater security, low risk, no debt and a reasonable income stream.

Owners of ground rents include housebuilders, developers and specialist investment companies. A ground rent is created when a residential unit is sold on a long leasehold, rather than freehold, basis. The owner of the freehold is entitled to receive a ground rent from the long leaseholder, and may also be entitled to recover the cost of insurance and management.

There is different legislation which applies to the sale of ground rents for apartments and ground rents for houses. When the ground rents of apartments are bought and sold, they are subject to legislation which requires notices to be served giving leaseholders the right, as a collective, to purchase the freehold.

Julius Gottlieb has many years of experience in the property industry as head of property of a private equity house and as a Finance Director of various blue chip organisations, both of which had involved buying and selling ground rent portfolios. He recognised that their qualities ticked all the boxes for post-recession institutional investors.

Strong Partner

Ambitious Aims

Julius lost no time in establishing a business which had the necessary scale to attract the business investors he had identified as Dorchester’s key market and which would give them the confidence required to invest.

He found an ideal partner, EC Harris, the international built asset consultancy, which agreed to back and invest in Dorchester Ground Rent Management.

Dorchester is one of the top ten UK ground rent investors, and its aim is to grow the business to have invested at least £250 million in four to five years time.

Julius said: “EC Harris has the access to stock and vendors and the in-depth knowledge of the property market that make it a perfect partner for Dorchester Ground Rent Management.”

Julius then hired a team of experienced specialists for Dorchester, all of whom know the ground rent sector well. As a result the company has recorded a strong first year.

AVIVA Fund Within months of its launch, the new company had signed its first institutional fund mandate with Aviva Investors worth an initial £50m, and targeting a minimum of £250m over five years. Under the arrangement Dorchester sources residential ground rent investments for the Aviva Investors Ground Rent Fund.

Following the launch of the Aviva fund, Dorchester has bought portfolios from Barratt, Bellway, Persimmon, Redrow and other well-established national housebuilders.

Julius Gottlieb said: “Institutional investors are increasingly interested in ground rent portfolios, which offer them predictable, long-term cash flows. For developers, this represents an innovative and low-risk opportunity to unlock financial capacity from their housing stock.”

Dorchester’s acquisitions cover all corners of England and Wales, and the team is keen to identify more across the UK. Dorchester is looking at newly created ground rent by pinpointing housebuilders. Modern ground rents include 5-10 year reviews linked to the retail price index, making them more attractive to institutions than old ground rents which do not have the same review pattern.

Although the average ground rent acquisition is around £750,000 to £1m there are economies of scale which tip the balance towards larger acquisitions for Dorchester.

Julius Gottlieb is optimistic about the future. He said: “We have established strong credentials in our first two years and have a highly experienced team in place to enable us to grow well. These are exciting times.”

Julius said: “We take out a whole line of legal work and are in effect an efficient acquisition process, which institutions appreciate. In one year we have completed or are in the process of completing over £70 million of deals.”

Julius Gottlieb, Managing Director, irector, Dorchester Ground Rent Management Ltd

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Laying the foundations for building a better Britain

Laying the foundations for building a better Britain The Minister for The Housing and Local Government recently provided an update on its plans to inject some vitality and momentum into the UK’s housing market.

Housing Strategy, first published in November 2011, aims to promote choice, flexibility and affordability, with David Cameron and Nick Clegg stating that it will “unlock the housing market, get Britain building again, and give many more people the satisfaction and security that comes from stepping over their own threshold.”

Under the updated measures announced in February of this year by Grant Shapps, the Government emphasised the need for power and incentives of the housing sector to be placed back into the hands of local communities.

Largely welcomed by developers, prospective house buyers and local authorities alike, the raft of measures announced within the lengthy strategy include initiatives to deal with kick starting stalled development projects and increasing the supply of new private market and affordable homes. The Government also used the strategy to respond to concerns within the industry over the low level of new build sales by establishing a new build indemnity scheme.

The NewBuild Guarantee The new build mortgage indemnity scheme will be branded as NewBuild Guarantee and will be open for all new build houses and flats up to £500,000. The scheme will be available to UK citizens buying their main home and will support up to 100,000 prospective borrowers access a 95 per cent loan to value mortgage.

The scheme applies to new builds (residential properties being sold for the first time or for the first time in the current form); UK citizens and those with a right to remain indefinitely only. The houses are only available for ownership (the scheme is not available for shared ownership or shared equity purchases); and primary homes only (the scheme is not available for second homes, investors and buy-to-let).

Whilst there is a proposed cap on the value of homes to which the NewBuild Guarantee will apply there are no qualification restrictions in relation to individuals’ earnings

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Laying the foundations for building a better Britain

Housing finance reform

Regenerating surplus public land

Streamlining building regulations

Under the new system, councils will keep all their rent income and use it locally to fund their homes.

This will give local authorities the stability required to develop long term business plans with the most efficient local mix of maintenance, repairs and replacement works. Instead of all funding being allocated annually from central government councils will take responsibility for their homes. The government’s aim is to encourage active local asset management to meet the future housing needs of communities.

The Government is looking to free up redundant, formerly used public sector land and buildings to support new homes and are working with smaller landholding Departments and agencies, such as the Ministry of Justice and Home Office, to maximize the release of their surplus land for housing. As well as consulting within government departments and agencies the consultation is also being extended to quasigovernmental statutory bodies such as the BBC, Network Rail and the Royal Mail.

There is a new consultation on streamlining Building Regulations aimed at cutting excessive redtape whilst delivering safer and more sustainable buildings. The consultation includes proposals for the next steps to improve the energy efficiency of new homes, to pave the way for the introduction of zero-carbon homes from 2016.

Extending the Right to Buy

The consultation includes practical measures to assist departments and organizations to help unlock the release of their land, including through the Homes and Communities Agency, and a small advisory group of experts which are to start meeting shortly to provide advice on the disposal of key sites.

The strategy outlines ways in which reinvigorate the Right To Buy, proposing a ÂŁ50,000 cap on discounts across England alongside plans to deliver one-for-one replacement so that for every home sold under the Right to Buy, a new Affordable Rent home is built.

The clear rationale behind these measures is to inject some much needed capital investment into the residential sector on the basis that a recovery in the housing market will assist in providing a platform for a greater economic recovery all round.

Find out how the real estate group can help you by getting in touch with George Parker-Fuller. Call 0845 901 2079 or email george.parker-fuller@watsonburton.com

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Caring creatively at Springfield

Caring creatively at Springfield Long-term care for older people involves not only health care, but also social care. With a rapidly growing population of ageing people and the increasing squeeze on public finances in the UK, long-term care for older people is a crucial issue.

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draft Bill to modernise the legal framework for care homes and home-help services in England will be drawn up in the next year. It aims to reform the law and introduce measures “to modernise adult care and support in England”.

The Law Commission reported in 2011 on the scope and scale of change required to “create a clear, modern and effective legal framework for the provision of adult social care both now and for the future”. The new framework is likely to include issues around care delivery such as closer integration of health and care, a national approach to eligibility for care across local authorities and greater choice and control for people using the services.

Seacroft Care Village

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Care Villages Springfield Health Group, the largest provider of domiciliary care in Yorkshire and Humberside, is already helping to address the need for a more personalised, holistic approach to health and social care for older people with its pioneering care village concept.

The Springfield model of a care village caters for a range of care levels. The village model has around 96 beds across selfcontained care floors. The care offered ranges from independent close care apartments on one floor, to separate, totally self-contained floors for residential care, dementia care, nursing dementia care and nursing care, each with its own day space, access and kitchen facilities.

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Caring creatively at Springfield

“

Springfield makes it a priority that they are in the heart of the community

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As a result each area feels smaller, homely and welcoming. The care village has an attractive central core, and a special therapy spa, restaurant, internal court yard and easy access gardens.

The location of the care village is pivotal.

Springfield makes it a priority that they are in the heart of the community. Seacroft Care Village is next to a church, shops, pub and close to a bus stop. Residents can enjoy all the advantages of a town centre while having a peaceful, well-run place in which to live.

Graeme Lee said: “The care village concept is at the forefront of current thinking on healthcare provision, and it is one that Springfield has pioneered. We have plans for two new purpose built facilities, offering 200 beds to residents who want to combine independence and freedom of choice with tailored and individualised care.”

Group Growth

Springfield Healthcare has also developed a training company and assessment centre, Definitive Training. Disillusioned with the Graeme Lee, chairman of Springfield Group, fragmented availability of suitable training intends to open more care villages in Yorkshire which could meet the needs of Springfield’s and Humberside, building on the success of staff and service users, the group decided Seacroft Care Village in East Leeds. It has to create its own in house training schemes. already secured a second site in Harrogate, It has put in place training for all staff that which it hopes to begin building once is accessible to everyone, takes place in a planning approval is completed this summer. positive learning environment, meets the

company objectives and learning requirements and where possible leads to accreditation.

Springfield’s Definitive Training is now a City and Guilds NVQ Approved Centre and a Chartered Institute of Environmental Health Training Centre. It can offer nationally recognised qualifications in First Aid, Moving and Handling, Food Hygiene and Health and Safety.

Graeme Lee said: “In today’s competitive care sector, it necessary for staff to have the knowledge and skills to deliver high quality care. The specialist training we offer is designed to ensure that staff have the information, training and skills to provide care to people with specific medical conditions and needs to ensure they are competent to do their jobs.”

Graeme Lee, Chairman, airman, Springfield Group p

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Changing the landscape of healthcare

Changing the

Panel: Michael Ord, employment partner, James Nightingale, corporate associate, Michael Shuker, real estate associate, James Harrison, construction partner.

Panel: Michael Ord, employment partner, James Nightingale, corporate associate, Michael Shuker, real estate associate, James Harrison, construction partner.

After a 50 day debate in the House of Commons and nearly 2,000 amendments, the Health and Social Care Act has received Royal Assent.

As the NHS braces itself for what is arguably the largest reorganisation in its history, members of our healthcare group answer some questions on the Act and its influence on the country’s healthcare system.

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Changing the landscape of healthcare

landscape of

healthcare h Q A

In your opinion, which elements of the Act will have the largest impact on the healthcare sector?

Michael Ord: All of the reforms within the Act are hugely significant not only for the NHS, but also those seeking to contract with the service. I am of the opinion that one of the most influential aspects of the Act is the change in power and responsibility for commissioning local health services.

By transferring the existing primary care trusts (PCTs) into Clinical Commissioning Groups (CCGs), which consist of local consortia of healthcare professionals, the Government is attempting to follow through with its aim of shifting the decision-making to those on the frontline. Whether this is a good move or not is yet to be determined.

Michael Shuker: One of the most controversial, but important aspects of the Health and Social Care Act, is the ability for Foundation Trust Hospitals to earn up to 49% of their income from the provision of private medical care. Currently, 2% of hospital income derives from this, which has led to industry professionals voicing concerns over the effect of this pressure on non-paying NHS patient care. The Government has reacted to those concerns by allocating responsibility of the income to the council of governors of each Foundation Trust, who will closely monitor any increase above 5%.

James Harrison: The introduction of increased competition within the healthcare sector will have a huge impact on both the healthcare sector and the wider economy. With both private sector companies and health and social care charities being encouraged to tender for opportunities to work in regional healthcare, CCGs will have the power to appoint qualified providers to assist them in the ongoing management and maintenance of services.

James Nightingale: The requirement for hospitals to become Foundation Trusts is a change which will have a significant impact on the sector. As independent legal entities run by local managers, staff and members of the public, foundation trusts will have the financial and operational freedom to cater to the healthcare needs on a regional level whilst remaining under the supervision of the NHS.

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Changing the landscape of healthcare

Q A

The NHS is expected to find £20 billion worth savings by 2014; do you think implementation of the Health and Social Care Act 2012 will aid them in achieving this target?

James Nightingale: At this point in time, it is very hard to say. Whilst the healthcare budget now remains ring fenced, the NHS still faces it’s tightest ever funding in the face of an increasing demand of patient and service care.

I think the next 12 months will be a testing time for the healthcare system as the sector transitions under the new legislation.

Q A

Under the plans, GPs will be responsible for commissioning healthcare services from 2013, what legal issues can you see arising from this?

Michael Shuker: The expectation is that GPs will control approximately 80% of the NHS budget which will obviously place an enormous amount of pressure on practices. Whilst many GPs are forming consortia to enable bulk purchasing / commission, our firm has seen an increase in us acting for clients on transactions where a number of GPs from separate surgeries have amalgamated to form one “super surgery” to operate under one roof. This has inevitably resulted in an increase of the incorporation of on-site pharmacies on their own Lease arrangements. This joining of forces still enables the GP’s to deliver a service to the community but in a more efficient manner and at a significant cost saving. There are a number of models for the ownership / lease / use of such premises amongst partners. No one size fits all and we work with our clients to ensure the right model is applied to the circumstances of each practice.

The push for cost savings mean that the terms of any agreement between the practice and the provider will need to be carefully examined. Minimum performance requirements and a process of ensuring quality of patient care will have to be part of carefully drafted contracts. GPs will, without doubt, come under pressure to sign up to “standard form” agreements but legal advice will be essential to ensure that the practice or consortium is getting what it bargained for.

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James Harrison: Health Minister Andrew Lansley has stated that the main driver of the Act is to make the NHS more responsive to patients and more efficient in terms of its productivity. His mission to tap into the entrepreneurial skills of employees on the frontline has been severely criticised by some but is key to his strategy of reducing costs. This means that there will be an increased pressure on GPs and Foundation Trusts to “shop around” and deliver cost savings without compromising the quality of care provided to patients. In that respect, if the healthcare establishments are provided with the correct support from regulators to action this to their best ability then the Act should contribute to saving money.

Michael Ord: The interface between the consortium agreement and the existing partnership agreements is an area where care is needed. There needs to be a mechanism to deal with disputes not only between consortium members but also in case a dispute between partners in one member practice impacts on the wider consortium. The amount of money which GPs and consortia will be handling will also put them under real strain, with patient service being paramount, pressure to deliver savings and a new management structure to get used to. Conflict is bound to occur and a dispute resolution process will help prevent those strains causing a breakdown in the service.

One of the legal issues of interest to GPs is the reorganisation of corporate structures. Most of the publicity appears to focus on GP practices, but under the plans, other healthcare providers are also impacted by the commissioning of healthcare services. Both GP and dental practices are being encouraged to implement new corporate structures such as limited liability partnerships and move away from the existing traditional unincorporated partnership structure. In particular, dental practices eligible to enter into general dental services (GDS) contracts and personal dental services (PDS) contacts have been widened to allow GDS contracts to be held by a limited liability partnership, provided that at least one member is a dental practitioner. PDS contracts will, subject to certain criteria, may also be entered into by limited liability partnerships and the rules have been widened in relation to those entitled to hold shares in a company limited by shares in a company.

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Changing the landscape of healthcare

Q A

What are the commercial implications of the reforms for the firm’s clients who operate within the healthcare sector?

Michael Ord As one of the world’s largest employers, the commercial, implications of the reforms are huge and of course, in some areas, highly controversial. With every hospital intended to become a Foundation Trust, and the limit for such a trust on non-NHS income to be set at 49%, there are claims of privatisation in all but name. There are, of course, well known elements of James Nightingale: Ahead of the new consortia opposition amongst staff bodies (from the whole range of NHS becoming fully operational, disputes arising which employees) against the changes so that industrial action and staff jeopardise medical partnerships remain all too familiar unrest may be a continuing theme over the next months and years. and are entirely avoidable. As we move into a new phase This may be particularly true when the impact of commissioning of primary healthcare it presents a suitable opportunity (and the prospect of commissioning from non-NHS providers) to focus partners’ minds on managing any unnecessary exposure is clear. With local bargaining of terms and conditions also being impinging on the long term security of individual GP practices and proposed across the whole of the public sector, NHS Human the assets of the partnership. Simple steps such as ensuring a valid Resources professionals may face challenges that have previously mediation clause in your agreement can make a significant been largely contained to the private sector. Similarly, the difference to the control and resolution of disputes within a outsourcing / transfer and possible fragmentation or amalgamation partnership and ensure as far as possible that issues which may of services will mean that an understanding not only of the law and arise during the operation of the partnership can be ring fenced its’ application but also the commercial drivers that operate within so that they do not impact on patient care and service delivery. contracting parties is essential. Organisations will be entering the market who are highly experienced in the management of the Michael Shuker: The commercial and legal implications of the TUPE regulations and how to work things to their commercial reforms in relation to property could be substantial. GP practices advantage. The moral of the PFI schemes which are proving longmay face Care Quality Commission (CQC) inspections. In many term burdensome for NHS organisations needs to be learned and cases they operate from older properties which may not be fully not repeated. Our work with commercial organisations operating compliant with disability access rules. The split of responsibility in this area gives us an insight into these issues which are for meeting those requirements between landlord (often some of invaluable when our clients are managing a TUPE related process the partners as property owners) and the tenant (the practice as to ensure that they do not inherit or retain unnecessary liabilities, a whole) can be a real source of dispute. A review of all leases / costs or risks. tenancy agreements should be carried out (assuming they have been formalised, in many cases they have not, and must be).

James Harrison: In relation to construction, there are numerous issues that require consideration. For example, as hospitals transition into Foundation Trusts, they must consider all of their assets, including the buildings in which they are situated.

Currently, all hospitals are owned by the state, so to progress with any building works requires approval from outside of the hospital.

This is why the Government scrapped talk of making hospitals become employee-led bodies such as the retailer John Lewis, as this would mean that all hospitals would need to be purchased from the state. This would prove to be too expensive for the NHS if they were valued at market prices.

Find out how our healthcare group can help you by getting in touch with Michael Ord. Call 0845 901 2036 or email michael.ord@watsonburton.com

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Business engaged at Northumbria

Business engaged at Northumbria

The Government’s Spending Review and its subsequent announcement of reforms to higher education funding have led to huge changes within the HE sector. From September 2012, universities will see their direct teaching grants decline with graduates making up the balance sheet in the form of tuition fees costing up to £9,000 per year.

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Business engaged at Northumbria

have been spurred into action to find new income streams to subsidise the effect of falling income coupled with rising costs. To survive, universities must adapt and they must change their old ways of thinking and working. Jonny Hall, associate Dean for Region, Engagement and Partnerships at Northumbria University, outlines the challenges faced by the university in building and maintaining lasting relationships with the business community.

Universities Writing for the University Alliance’s Growing the Future report, Vince Cable, Secretary of State for Business, Innovation and Skills, said: “The best universities are seeking stronger links to business and making sure their graduates have the skills employers need.

There is a greater understanding of the capacity of universities to provide regional economic leadership than ever before [and] much regeneration, economic development and regional employment is directly attributable to the presence of a university… I hope that businesses will become more directly engaged in higher education – sponsoring students and where appropriate helping in course design as well as supporting research.”

Northumbria University is fortunate to be ahead of the game in this area. A member of the University Alliance, a group of major, businessengaged universities which have innovation and enterprise running through their veins, Northumbria is one of a small number of universities who can truly claim to be fully engaged with businesses, the professions and the community to play a leading role in building regional economies.

Northumbria University has long enjoyed positive relationships with the business sector, with broad partnerships stretching across the region and beyond. The creation of a Region, Engagement and Partnerships strategy in 2009 has led to a step-change in this area of activity, with the formation of partnerships with key organisations including Newcastle, Northumberland and Gateshead Councils and the BALTIC Centre for Contemporary Art. The first fruits of these activities are now blossoming, with the opening of the BALTIC

“

They have embraced the opportunity to experience challenging work, under supervision

”

39 gallery on High Bridge and the development of accommodation for almost 1,000 students in the heart of Gateshead town centre’s regeneration.

While these are clearly important activities in the region’s social, cultural and economic life, there are many more partnerships which have a direct impact on the University’s curriculum.

The University provides corporate and executive development for many of the largest businesses in the region. More than 600 employers sponsor the University’s academic programmes, ensuring that programmes are relevant and structured to meet the future needs of the economy. These links enable many students to graduate with recognised chartered or professional accreditation.

One example of an innovative partnership in this area is the creation of a Master of Law (Solicitor) degree by Northumbria’s School of Law, which has been designed to enable students to graduate from a five-year programme as a fully-qualified solicitor.

This pilot programme, which has been approved by the Solicitors Regulation Authority, combines

traditional study with clinical legal education and placement within practice to develop the skills, knowledge and ability required to work as a solicitor. Professional skills developed through the course of the programme include research, advocacy, legal writing, drafting court documents, file and case management, negotiating, interviewing and advising and professional conduct. Where appropriate, they can also appear in court or tribunal to represent the client.

Watson Burton LLP has acted as a partner firm in support of the programme and has been impressed with the results to date.

Human Resources Advisor, Katie Smith, said: “We have found that the students from this programme are enthusiastic and have settled into our teams very well, quickly becoming valued members of the teams they are working in.

“They have demonstrated high degrees of initiative and positivity and have embraced the opportunity to experience challenging work, under the supervision of a supervisor. They are excellent ambassadors of the course.”

Jonny Hall, Associate Dean for Region, Engagement and Partnerships in Northumbria University’s School of Law University of Northumbria Law School

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Opening the right doors for a quality team

Opening the right doors for a quality team As a national law firm, Watson Burton aims to provide the highest quality service to our clients and recognises that our employees are critical to our success in doing this. That is why we recruit individuals with the longevity to build not only meaningful client relations, but to also establish a long-term career with our firm. have always recognised the value of nurturing talented individuals and providing an environment which allow our employees to flourish. This has resulted in us investing heavily in the development of our people to enable them to achieve their full potential and deliver the outstanding results which our clients have come to expect from our firm.

We

The common thread at the core of our business strategy is quality – this is a concept which is integrated into the values, culture and leadership of the firm and is a great contributor to our success in being one of the UK’s leading commercial law firms.

We appreciate that whilst academic knowledge and excellence are important; they are not the only qualities in a successful employee.

In doing so, we attract and retain talented, enthusiastic individuals with a positive, client focused approach, who feel that they can bring something special to our developing firm.

Katie Smith, Human Resources Advisor

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Opening the right doors for a quality team

“

They are extremely approachable and willing to give their time in order to assist with my development at the firm

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Nurturing talent

The firm’s continual investment into the career progression of our gifted employees has resulted in significant advances for many.

Here we speak to individuals from across the firm who have benefitted from our training.

Jacqueline Turner, partner, employment

Deborah Lazenby, associate solicitor, real estate

“Watson Burton’s focus on training and development means that my career with the firm has come a long way in a very short space of time. I began as a trainee in September 2001 and was given a great deal of responsibility throughout my training and direct support from high level fee earners. As a result of this, I have progressed from a solicitor to the role of associate and have recently been promoted to the position of partner, dealing with a broad spread of employment matters for the firm’s key clients within a growing team.”

“I joined Watson Burton as a trainee solicitor in September 2003 and, following the completion of my training contract I qualified with the firm in 2005. I have worked with a wide variety of the firm’s key clients and have been actively encouraged to take on responsibility for establishing and maintaining my own client relationships and matters. During my transition from trainee to associate, I have been involved with both department and firm marketing, having had direct contact with clients from day one.

I have worked in both the Newcastle and the Leeds offices, which has helped me strengthen my expertise and knowledge in more than one marketplace. In terms of career progression, which is obviously a huge factor in assessing a chosen firm, Watson Burton has always been very supportive of me”

Darren Smiley, assistant management accountant

Lyndsay McFarland, legal secretary, employment

“I have worked for the firm for over 11 years and in that time I have received an enormous amount of support and encouragement in developing my skills. Not long after I joined Watson Burton as a Trainee Accounts Clerk I was promoted to the role of team leader, with increased responsibilities within the firm’s finance group. I then completed my qualification to become a legal cashier. More recently I have become the firm’s Assistant Management Accountant and am currently in the final stages of completing the ACCA course to become a qualified accountant.”

“I began working for Watson Burton as an administration clerk in 2002 after leaving school and now work for senior partners within the firm’s employment group. Not long after joining Watson Burton, I completed an NVQ level 2 in business administration and was then offered the opportunity to attend Newcastle College one night a week to complete an ILEX Legal Secretary course. Whilst attending college, I also completed an NVQ level 3 in business administration. Since joining the firm, I have been given the opportunity to develop many new skills and achieve further qualifications.”

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Hiscox - Insuring a strong future

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Hiscox - Insuring a strong future

INSURING A

STRONG FUTURE The recession has been a tough period for insurers, as it has for firms from all business sectors. Such a challenging economic climate forces every company to look at its operation and, where necessary, make changes to ensure it survives current turbulent times. further ahead, it can also be said that the recession provides an opportunity to reshape a business to strengthen its longterm future.

LOOKING

The opportunity provided by the economic downturn has been one that Hiscox has most definitely grasped. As well as the added risks and challenges involved the recession has made us focus on the claims process and generated a review of the covers available.

All insurers including Hiscox have had to reflect on the consequences of recessionary driven fraud. There are significant legislative changes on the horizon, which mean that we must act to ensure that changes are made.

transactions at a professional level, there can also be the complicating factor of economic pressure causing difficulties in the claims process.

In a multi-party dispute, one of the parties involved could go into administration, the difficulties of which feed through the process.

There are many additional risks to take into account during more unstable economic periods.

INFORMATION MANAGEMENT

REVIEW AND REVISIT

The definite advantage with this recession over previous similar periods is that firms, mine included, have better access to the management information. There are much better systems in place now, meaning that insurance firms are more able to analyse and break down recessionary losses. In previous recessions, access to management information was fairly primitive.

Here at Hiscox, a review of policy wording in first party cases has been carried out, and we have revisited what the firm is prepared to cover. The climate has offered the opportunity for underwriters to take stock of appropriate levels of exposure .

As well as the changes made as the business moves forward, towards what we hope will be a more favourable economic period, impending legislative changes have underlined the requirement and potential for further changes to be made.

As well as the issue of fraud, whether it be first party fraud, from employees looking to increase their take-home pay, or fraud within

The civil litigation reforms which will come into effect next year, following the report from Lord Justice Jackson which received Royal Assent

It is vital that the level of risk and exposure is assessed continuously for the benefit of both the business and the client.

in May, will have far-reaching implications.

They will have a huge impact on the way claimants are funded, and, as a result, will have a major impact on insurers and how they deal with claims.

LONG-TERM PLANNING But through change comes opportunity.

Hiscox has reviewed its wordings for nontraditional professional indemnity to improve the cover offered to clients, including upgrading from a “full civil liability” to a “duty to defend” wording, and adding in crisis containment assistance. These will be available on existing products for miscellaneous, management consulting, estate agent and recruitment risks, as well as health and safety consultants, green consultants, facilities managers, interior/garden designers and training, coaching and education wordings, launched at BIBA in May. This latest recessionary period has underlined the importance of continually reassessing a business and how it operates, to ensure it is strong and efficient enough to come through challenging periods and to adapt to change.

Insurance businesses have had to make changes to their whole operations, and more are on the horizon for the near future. But by taking advantage of these opportunities to change - whether they are obligatory through legislation, or as a result of an individual company review – the longer-term impact and prospects for the business will be improved.

Here at Hiscox, the changes that have been made equip the firm in the best possible way for the future, to ensure we remain at the top of our game.

Stuart Clarke, Head of Professional Claims at Hiscox Insurance Company

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Running For Cover!

Running For Cover!

In the current economic climate, we are being asked to advise on more and more disputes in relation to the meaning, effect and application of insurance policies. Many policy disputes are simply a result of policyholders not taking enough care over their insurance requirements or where they have carried out work they are simply not qualified to do.

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Running For Cover!

that can arise, and we regularly see examples of all of these, include mistakes on the proposal form, failures to promptly inform insurers of claims as well as policyholders refusing to co-operate with their insurers. With a little care and attention, these issues can be prevented from arising in the first place.

Issues

When completing any proposal form (for any type of insurance) policyholders must remember they have a duty of disclosure to their insurers as well as a duty to act in good faith. Of course, any fraudulent statements in a proposal form will certainly void the policy, but even accidental mistakes in the proposal form may mean that insurers are entitled to avoid the policy. However, where there is a good relationship and loyalty between the policyholder and insurers, this can help to minimise the impact of minor mistakes – in some circumstances, even where the insurer is entitled to decline cover, they may choose not to.

In the professional indemnity sphere particularly, we are also seeing cases where professionals are carrying out work which they are not qualified to do. Where businesses are struggling, there is a temptation to accept any work that comes along and to ‘dabble’ in other areas. This can be a potential minefield; most professional indemnity insurance policies will only cover policyholders when they carry out work they are qualified to do.

We also regularly advise on cases where the policyholder has not

notified their insurer promptly of a potential claim. This may be due to a belief that the “claim” has no merit, or them simply not having the right complaints handling processes. This can be extremely damaging, potentially entitling insurers to reject the claim or avoid the policy entirely. Policyholders should notify potential claims to their insurers as soon as possible, so that insurers can assist with defending the claim.

result in financial hardship or even insolvency and a policy that allows no latitude to a policyholder in terms of compliance with the small print can end in an unexpected and unwelcome outcome for a policyholder.

Insurers also vary in their approach to claims, their ethos and the claims management service.

When we are instructed, we see

ourselves as an extension of the insurer’s claims team and we always look to deal with policy issues quickly and openly and to provide solutions. This then enables the insurers and the policyholder to focus their energy on the underlying claim. This is, after all, what policyholders are ultimately paying for.

Many policy issues arise simply because the policyholder has not taken care in taking out the right type of insurance for their requirements. Whilst many may be tempted in the current economic climate to choose a particular insurance policy on the basis of price alone, one needs to do so with “eyes wide open”.

It is important to look at which insurer is providing the policy and the terms of any policy, including the limit of indemnity, the exclusions and obligations under the policy, as well as the size and type of the excess (if the excess includes payment of legal costs, for example, a policyholder could end up paying the excess even on a spurious claim). An insufficient level of cover could

Find out how the firm’s professions and insurance can help you by getting in touch with Richard Palmer. Call 0845 901 0944 or email richard.palmer@watsonburton.com

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Working at the coal face of the economic downturn

Working at face of the

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Working at the coal face of the economic downturn

the coal economic downturn In the UK alone, there are more than 13 million people currently in debt. The news in April that the country has slipped back into recession affected both businesses and individuals, many having to cope with much less money and rapidly rising costs. The work of CCCS, in helping individuals to cope with spiralling debt problems, often has a direct impact on British businesses because it helps to restore financial stability to worried, distracted employees and employers.

Fiona Megaw of CCCS talks about the effect of the recession on the operation of her organisation, and on the breadth of support CCCS now offers.

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Working at the coal face of the economic downturn

The

economic downturn has had a significant impact on the operations of the Consumer Credit Counselling Service (CCCS). Not only has CCCS grown as the need for debt advice has risen, but we have also had to introduce new services as the needs of those who are struggling with debt have changed, from an individual voluntary arrangement service to offering debt relief orders.

CCCS is a charity that helps those who are struggling with their debt repayments by providing free, impartial and realistic debt advice. Through our free national telephone service, online debt counselling and ten regional centres, we are able to help people with debt problems wherever they live.

As well as debt counselling, we provide support with bankruptcy, welfare benefits checks, mortgage counselling, specialist advice for the selfemployed, debt management plans and money management guidance - all of which are free.

CCCS is also continually looking for new and innovative

ways to help those struggling with unmanageable debt.

Building on the pioneering online debt counselling that it launched in 2007, it has recently created an online diagnostic tool to identify those who may be struggling with stress and anxiety as well as debt.

“

Incomes are stagnating and jobs are still being lost across the country, and these are the main drivers of financial distress

�

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Working at the coal face of the economic downturn

Economic downturn

Impact on organisation

Due to the nature of our work, the charity is very much at the coal-face of the economic downturn. Over 350,000 people sought our help in 2011.

We offer a wide range of services across the UK, which involves recruiting and managing a wide range of staff. Current careers within CCCS range from helpline advisor to systems analysts. We have committed, enthusiastic and skilled employees who feel as passionately as I do about the value and importance of CCCS work to people across the country.

While the debt levels of our clients are dropping in line with the efforts of the general population to reduce their borrowings, demand for our help remains high. Incomes are stagnating and jobs are still being lost across the country, and these are the main drivers of financial distress. Last year, our clients both owed less and spent less on everyday living – but falling incomes meant that they had no more money to repay their debts.

We are particularly concerned about a growing minority whose situation is particularly difficult - the quarter of our clients who owe 20 times more than they take home each month.

Going forward Looking ahead, the need for CCCS’s help remains high.

Our research has identified over 6.2 million households classed as financially vulnerable, and pressures such as high unemployment and inflation will continue to leave many struggling to repay their debts.

people taking out payday loans, and having to cope with the impact of their interest rates.

We have also found that demand for debt advice is growing rapidly among older age groups. Since 2009 there has been a 15 percent increase in the number of people aged over 60 we have counselled at our charity.

During the last year, CCCS has developed a strategic plan aimed at doing more to help those in society who need debt advice and solutions. This includes working more closely with the banks, credit card companies and other, non-financial creditors; developing our partnerships with others working in this field; rebranding ourselves to become a more public facing debt charity; and publishing more about what is happening to the families and individuals who need help with unmanageable debt.

We are also seeing new trends such as growing numbers of

Fiona Megaw, Chief Operating Officer, CCCS

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Negotiating the maze of employment law

the

Negotiating

maze of employment law The first half of this year has seen the Coalition Government’s plans to reform England’s employment law regulations gain momentum with the introduction of its ‘Red Tape Challenge’. Here employment law expert, Gearalt Fahy, provides an insight into the proposed changes and the Government’s rationale behind them.

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“

Negotiating the maze of employment law

The Government’s focus has been on reforming employment law to assist business and boost economic recovery

The

”

Coalition Government’s time in power has been notable for its focus on reviewing existing employment law legislation rather than bringing new legislation into force.

In April 2011, the Government introduced its ‘Red Tape Challenge’, a wide-ranging project reviewing a multitude of legislation in order to identify which existing regulations could be ‘scrapped, merged, simplified or improved’.

In October 2011, the spotlight was turned on employment legislation.

The Government’s focus has been on reforming employment law to assist business and boost economic recovery. In April, some key changes were introduced which included increasing the qualifying period for bringing claims of unfair dismissal from one to two years, as well as further changes to Employment Tribunal procedure. The Government has also committed to looking at ‘making it easier for employers and employees to have frank discussions and resolve disputes’.

More recently, 23 May 2012 saw the publication of the Enterprise and Regulatory Reform Bill aimed at further reducing the burden of legislation. The Bill introduces many of the changes proposed in the Government’s Response to the Resolving Workplace Dispute consultation.

The most important change for employers involves the introduction of financial penalties for employers. These will give Tribunals the power to impose a financial penalty on employers who lose at Tribunal of 50% of any financial award. So much for assisting business and reducing the burden of legislation.

coupled with proposals to introduce fees for bringing Tribunal claims and the extension of the Tribunal’s discretion to award costs from the current maximum of £10,000 to £20,000, offers some welcome encouragement for employers.

At Watson Burton, we run an employment practice exclusively for employers. As a commercially managed organisation, we appreciate that problems in the workplace can significantly impact upon the success of a business. Driven largely by a series of EU Directives, the last 10 years have seen an increased demand for advice and representation in employment related disputes. Employment issues have become part and parcel of business. Owing to the increasing complexity and volume of legislation together with arising awareness of individual rights, it is rare to meet an employer who does not have one or more issues with their workforce. We have a track record across a range of industry sectors as well as specific expertise and experience and can deal with the problems which our clients have.

The proposed reforms aim to address all employment issues with the Government stating that the implementation of legislation, such as the Enterprise and Regulatory Reform Bill, will reduce pressure on the employment tribunal system and save costs for both employers and the tax payer. It remains to be seen whether this will be the case.

More positively, the Bill places renewed emphasis on early conciliation before the presentation of complaints to the Tribunal effectively stopping the clock on the limitation period to present claims to the Tribunal where parties agree to pre-claim conciliation. This,

Find out how our employment group can help you by getting in touch with Gearalt Fahy. Call 0845 901 2034 or email gearalt.fahy@watsonburton.com

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Building momentum or stalled and shrinking? Construction in the UK

Building momentum or stalled & shrinking?

Construction in the UK The need for growth in the UK’s construction sector through major infrastructure projects has never been more pressing. Output fell in this sector by an estimated 4.8% in the first three months of the year. It was the biggest fall in three years. Even the International Monetary Fund advised the government that there was scope for higher spending on these projects to boost employment and demand within the economy.

How will the UK construction sector fare if the economic downturn elongates?

Six Robin Adams and Anne-Marie Knight

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Watson Burton partners and associates who are all involved with construction-related clients give their views from the perspectives of their specialisms.

Roddy Gordon, head of construction and engineering, Warren Kemp, construction partner, Tracy Hall, head of real estate, Christopher Graham, head of employment law, Anne-Marie Knight, professions and insurance associate and Robin Adams, corporate law partner discussed the current outlook for the construction sector.

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Building momentum or stalled and shrinking? Construction in the UK

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The government should also drive through real strategic infrastructure decisions about, for example, nuclear, other renewables, clean coal, rail and water

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Roddy Gordon: While it’s true that some sectors are faring better than others in successfully getting developments underway and in the pipeline, developers I speak to are still having trouble getting funding from banks, and without new schemes, contractors will struggle.

Warren Kemp: Yes, it’s the Plc clients we have with diverse profile portfolios that are doing better.

Listed and international clients are busy because of the range of work they carry out across sectors, some in niche areas they have made their own.

Roddy Gordon: For smaller companies, government must take real steps to cut out red tape and drive work to SMEs. The huge framework contracts give too much power to the few really large players. The government should also drive through real strategic infrastructure decisions about, for example, nuclear, other renewables, clean coal, rail and water.

Warren Kemp: Yes, we can see how the government support for infrastructure projects would make a difference. We are involved in a number of large projects at the moment and with clients in the rail, nuclear and renewables sectors all busy getting involved with engineering projects.

Anne-Marie Knight: I agree, government has to prioritise infrastructure work as the construction industry is struggling

to find enough privately funded projects. Many builders are braced for the worst this year. In the Professions and Insurance team, we act for insurers of a wide range of construction sector professionals.

Many of the smaller firms of architects, engineers and design and build contractors have really seen potential projects dry up recently. It is those businesses with a wide spread of expertise across the public and private sectors that have been better placed to work through the recession.

Roddy Gordon: In education, the government has just announced that 261 schools will receive some of the £2 billion funds from a new Priority School building programme.

It’s good news, and will bring new construction projects to the regions over the next five years. However, construction projects in the health sector are generally smaller. There are no major new hospitals being built although it’s good to see some smaller projects underway.

Tracy Hall: Local authorities and the Housing and Communities Association (HCA) have a big role to play in the recovery, but I agree there’s a lot less money for them to do it with. I believe the HCA will be a very valuable contributor to drive things forward. Now that the RDAs have gone and ERDF funds are drying up, major regeneration requires public funding from local authorities working with organisations like the HCA to kick start a recovery.

Warren Kemp

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Building momentum or stalled and shrinking? Construction in the UK

Left to right: Warren Kemp, Anne-Marie Knight, Robin Adams and Tracy Hall

Robin Adams: I’ve found with owner managed companies that it’s also affecting their future plans. Owners of subcontracting businesses looking to sell or retire are sometimes finding it difficult to get a strong valuation for their business when prices for jobs are low and longer-term contracts are few and far between. It’s more important than ever to plan early if you would like to sell the company or retire from it. I’m advising owner managed clients to take time to get their businesses in the best possible shape well before identifying a potential purchaser, because a strongly structured business will help with valuations and deal terms.

Tracy Hall: The signs are that the government will carry on supporting infrastructure packages such as the Growing Places Fund by putting aside many millions of pounds to ensure stalled major projects can restart.

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Anne-Marie Knight: Subcontractors and suppliers are also affected by new regulations which significantly reduce the time limit in which they can bring a claim for a breach of procurement rules when tendering for public sector contracts. The time allowed has been slashed from three months to 30 days.

It means that it’s really important that suppliers know their rights so they are aware if there’s been a breach of procurement rules, and that they act quickly to get legal advice and preserve their rights.

However, we also receive instructions from Local Authorities and their insurers in respect of challenges to the procurement of public projects and this reduction in the time available to contractors for challenging procurement processes is obviously good news for them.

Christopher Graham: Although some regulations can be seen as

helpful, it’s important that the government doesn’t over regulate, which could slow down the recovery process even more.

The Courts and Tribunal system has already recognised the need for change. If anything the government should deregulate business to cut back on the red tape that threatens to choke smaller businesses. If banks are over-regulated it will also slow their ability to lend to companies which need it most. Providing lending and making funding available would make the most difference.

Robin Adams: Yet some sources show Britain’s construction sector grew at the fastest pace in nearly a year this February, although that seems to have tailed off more recently. However, 2011 was a very low starting point: new construction orders were at their lowest level last year since 1980.

Recent figures show a downturn in construction output.

Tracy Hall: What we’re also seeing now is the stronger national housebuilders still standing and pushing forward with some new schemes. The weaker companies have fallen, usually around lack of funding which they could not sustain. Five years ago if you weren’t cash rich you could still be OK, but not now. On the residential side there are contractors and housebuilders that have now taken the decision to get back into the property market. What I’m hearing is that they are now ready to invest again - they’ve stopped holding their breath.

Land is being bought by companies that have used up their land banks over the last four years. It all provides an opportunity for growing momentum to gain traction.

Warren Kemp: Regions are crying out for more houses and land can be bought at very good prices at the moment. We’re involved with some major projects but the last few years have proved

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Building momentum or stalled and shrinking? Construction in the UK

you have to be out and about to get work and make deals. In the legal sector, the rewards will come to those people who work that bit harder. The focus is on the bottom line and added value – especially working with the construction sector.

Robin Adams: What smaller or medium companies face coming out of recession is that contracts won at recession prices have to be carried out when supplier prices have gone up significantly, meaning any profit is wiped out.

People are also pushing more for payment which can be hard to deal with: robust terms and conditions and litigation insurance can help.

Christopher Graham: Litigation of any kind is extra expense when many companies can least afford it.

There are “hidden risks”.

Companies have to watch out for the ‘self-employed’ contractors who only work with that company.

The HMRC is strengthening the

IR35 which prosecutes those who are not genuinely self-employed but are to all intents, employees.

Rigorous new rules will boost specialist compliance teams to tackle avoidance of the employment income rules and simplify the way IR35 is administered.

Roddy Gordon: It comes back to the need for major projects and big decisions from government.

If moves like the BBC’s to Manchester are matched with similar decisions to relocate civil service departments such as the Ministry of Defence to Newcastle it would be a major boost for the region. The impact of the DHSS’s move to the north east was not only great news for the construction sector but is now a big, stable employer.

Anne-Marie Knight: Yes, if there was more certainty about the pipeline of public sector programmes, and if there was active help from the government

to make sure shovel ready projects could get underway there would be a noticeable change in mood and momentum.

Christopher Graham: We all seem to be agreed that targeted investment would give the industry

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a shot in the arm that could begin to promote growth. Let’s hope that this year will see the announcement of focused investment in construction – not only for the swift recovery of the sector but for the wider growth of the economy.

Government has to prioritise infrastructure work as the construction industry is struggling to find enough privately funded projects

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Left to right: Christopher Graham and Roddy Gordon

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A commercially driven workforce

A commercially driven workforce In the first in a series of articles on the firm’s five strategic priorities, Chief Executive Officer, Patrick Harwood, highlights the important contribution of the firm’s personnel in servicing Watson Burton’s future as a national firm of quality.

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A commercially driven workforce

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Our talented lawyers and dedicated support staff are the firm’s greatest asset and we value the hard work and expertise of each of them

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the heart of every successful professional services business is a dynamic workforce dedicated to the provision of a high quality service at outstanding value to its clients. As a leading national law firm, Watson Burton is proud to boast both qualities as the very essence of our service-led approach, which has defined the longevity of our firm for over two centuries.

At

During the process of re-evaluating the firm’s business model, our leadership team were acutely aware that our commercial ambitions would not be achieved without the commitment and skill of our valued personnel. As the face of our firm, they are intrinsic to the formation of lasting productive partnerships with clients and work under a common framework in portraying and living the values and culture of our business on a daily basis. That is why our people are an integral element of our five strategic priorities, identified to work alongside our clients, our market position, our common purpose and our new start in providing foundations for future growth of our firm.

the firm further secures an opportunity to grow our business and provide an increased range of quality services to our regional and national clients.

Commercial approach Our position in the UK is unique in that we aim to provide much more than just legal advice – we strive to demonstrate in-depth understanding of individual clients, their business and the sector in which they operate, to provide commercially sound, pragmatic business solutions.

A heightened knowledge of the commercial implications of running a business is the focal point of the training and development of our lawyers. From the beginning of their career with the firm, they participate in an intensive 3-day training programme where they gain an understanding of the inner workings of Watson Burton; our policies and procedures and our approach to the development of client relationships.

Once integrated into their respective teams, our lawyers enter into a development plan that sees them being mentored by senior Thriving environment members of their department, who play As a self-motivated, commercially astute business, Watson Burton recognises that our a pivotal role in enhancing their business talented lawyers and dedicated support staff acumen. This process is complimented by weekly departmental meetings with the are the firm’s greatest asset and we value the hard work and expertise of each of them. firm’s management team to discuss the business strategy, client relationships, As you will see from our feature on resources and finances. professional development on pages 24 By embracing the commercial entity of and 25, the firm is committed to providing Watson Burton, our lawyers gain a deep a thriving, enjoyable working environment that encourages the continuous professional knowledge of the intricacies of business development of our personnel. In doing so, management, which they utilise when servicing the firm’s clients. In doing so, our workforce is equipped to build upon their existing skills, further strengthening our team ensure that every client we serve Watson Burton’s position as a commercial benefits from receiving commercially practice of national significance. focused, personal attention from a team who understand their objectives and work Over the past year, investment in our as a valuable extension of their core team. workforce has supported the internal promotions of 7 of our people across the firm and the formation of two multidisciplinary groups dedicated to servicing two of the firm’s key clients. We have also further enhanced our team with the appointment of 24 new people, all of whom add new dimensions to the service capabilities of the business function in which they specialise.

With each addition to and investment in the professional development of our workforce,

Watson Burton is a firm which strives to achieve excellence in everything that we do. Run as a commercial organisation by commercially minded individuals, the firm has an inspiring workforce which is united in providing our clients with the highest quality service. This is testament to the firm’s best characteristics; pride in the work we do and a commitment to building strong relationships with our clients, our people and our friends.

Find out how Watson Burton can help your business by getting in touch with Patrick Harwood. Call 0845 901 2091 or send an email to patrick.harwood@watsonburton.com

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Investing in business stars of the future

Investing in business stars of the future As part of the firm’s commitment to the development of entrepreneurial skills in youngsters, Watson Burton has joined forces with national charity Young Enterprise to run an inspiring year-long education programme mentoring North East students on the intricacies of business management.

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Investing in business stars of the future

Corporate The programme is run alongside traditional subjects in the national curriculum and aims to enhance the business and economic understanding of students by helping them set up and run their own real companies for a year.

A time of transition

In an environment of continuing uncertainty, UK business must adjust to the fluctuations of the global economy and develop strategies for taking advantage of the chaos.

In this edition of Briefly Legal, we feature articles highlighting some of the most dynamic companies in the UK. These companies are thriving despite the challenging trading conditions.

They are businesses that do not rest on their laurels – they are proactive in seeking out new opportunities, and are innovative in the way they manage their That is why our firm has adopted businesses and the opportunities which come their way. Hence a commercial, business driven orientation. We deliver pragmatic their continued success. solutions and advice – not We also feature an article by the interesting essays! Whilst we CBI which is a critique on the can’t impact the situation UK’s financial performance for globally, we can ensure that our the first half of this year, which I lawyers are properly equipped think will be of particular interest to help clients see their strategies to you. This is followed by through to fruition, and to features from lawyers across our manage risk. firm, providing expert analysis Times such as these demonstrate the need for strategies for both growth and innovation, and for contingency planning. This means that businesses need advisers who not only have the legal expertise any client has the right to expect of their lawyers, but also sound commercial awareness and business acumen.

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and commentary on recent developments across a number of sectors, including construction, healthcare and insurance.

As we look ahead to the second half of the year, our aim is to work with you to ensure that your organisation transitions smoothly through these challenging times, and to help you to identify and follow through on the opportunities which will undoubtedly arise.

We wish you well.

Gillian Hall Senior Partner Watson Burton

Throughout the programme, students aged 15-19 years old are tasked with the ultimate enterprise experience as they develop their product or service, undertake market research, create a business plan, manage finances via the company bank account, market the product or service and trade with the public.

Kevin has advised the team at Benfield High School on the launch of their business, Photolaughs, which involves the team attending school events to take photographs of students for processing and sale to the public.

To date, the team have attended sports events, dance recitals and prize giving ceremonies with the aim of capturing images of students for parents and family members.

Kevin Anderson said: “A lot of vocational skills necessary to succeed in the workplace are learnt through personal experience of setting up and growing a business, so the Young Enterprise programme makes a great contribution to the development of the students’ understanding of business management.

“I have noticed that since the launch of Photolaughs, the students have really developed confidence in their approach to the business. They have gained practical experience of key business functions like financial management, marketing, customer care and HR and have a greater understanding of economic

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and insolvency specialist, Kevin Anderson, has volunteered to represent the firm in funding and mentoring the charity’s Company Programme for students at Benfield High School in Newcastle.

... we have been able to assist the students in utilising talents that they never knew they had, which will really help them as they progress with their career later in life...

concepts such as market supply and demand, competition and profit.”

Through the programme, the team, supported by Kevin, is able to view, communicate and trade with over 2,500 companies through The Company Programme’s online facilities and will compete with other schools and colleges in the North East, across the UK and internationally to become Young Enterprise company of the year.

Kevin said: “The great thing about this programme is that it enables teachers and mentors to see a different side of the students outside of a classroom environment.

Through the various tasks they undertake in developing and implementing business plans and promoting their product, we have been able to assist the students in utilising talents that they never knew they had, which will really help them as they progress with their career later in life.

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“We feel that by investing in the delivery of the Young Enterprise Company Programme at Benfield High School not only are we encouraging economic growth by nurturing the Lord Sugar’s of the future, but we are also fostering students who could well come to work for our company once they have completed their education.”

A recent independent evaluation of Young Enterprise’s Company Programme investigated its impact on previous participants, concluding that students involved in the programme are twice as likely to start their own business as their peers and demonstrate an increased awareness of social responsibility.

Government’s Big Society, it has never been more important that we continue to form partnerships with businesses in the private sector to help drive leaders of tomorrow, so we are extremely pleased to have the support of Watson Burton.

“The work of Kevin and other mentors across the UK ensures that students leave school equipped with leadership and strong business skills and are more work-ready for the country’s employers.”

Young Enterprise is the UK’s leading enterprise education charity and aims to inspire the next generation of entrepreneurs and prepare young people for the world of work.

Every year the charity helps more than 250,000 young people learn about business in schools, colleges and universities. The charity is supported by a network of 5,000 volunteers from 3,500 companies.

This year 25,000 15-19 year-olds have taken part in the charity’s flagship Company Programme and set up their own businesses in schools with support from local business mentors.

Catherine Marchant, Director of Corporate Relationships at Young Enterprise, said: “As part of the

For further information on the business initiatives run by Young Enterprise please visit their website young-enterprise.org.uk

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An economic outlook

CBI analyses the UK’s financial performance

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...a superb level of service The Legal 500

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watsonburton.com

CARING CREATIVELY AT SPRINGFIELD

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HISCOX – INSURING A STRONG FUTURE

Graeme Lee of Springfield Healthcare Group Stuart Clarke of Hiscox outlines the company’s assesses the impact of innovative approach to the recession on insurers social care

BUSINESS ENGAGED AT NORTHUMBRIA Interview with Northumbria University on the challenges higher education institutions face in obtaining funding for continuous growth