AUTUMN/WINTER 2014/2015
IN MY EXPERIENCE
CONSTRUCTION 2025
Entrepreneur Roy Stanley on thirteen years of IPOs
More than a year later, how has the strategy been implemented?
ENERGY UPDATE Is the North of England on track to be the energy capital of the UK?
CLOUD TECHNOLOGY...
driving innovation
Welcome
WELCOME: By Duncan Reid
As 2014 draws towards a close we can reflect on a year when Scotland decided to remain part of the United Kingdom and when many were brave enough to declare that the recession is finally behind us.
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Welcome to the latest issue of Briefly Legal ur clients in the construction industry have shown particular optimism this year. Fuelled by Help to Buy, house builders and their associated supply chains saw a significant upturn in new projects getting off the ground. I welcome the contribution from my Construction and Engineering partner, Sarah Wilson and her article on how the Construction 2025 strategy will see government and industry working together to drive growth and continue the positive momentum in the sector.
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We’re delighted that two of our key regions, the North East and Yorkshire, have seen strong economic recovery. Not only has available finance spurred entrepreneurship in the region, but the North of England has been marked out as a prime strategic hub for the offshore renewable energy market. Adam Lovell, Editor of Yorkshire Business Insider looks at how Government and the private sector can collaborate to realise the region’s energy potential.
Construction isn’t the only industry that has turned a corner; business confidence is returning across the board. Not only are we seeing more inward investment coming into our regions, but crucially, businesses are finding it easier to access finance. Venture capital experts Ian Richards of Northstar Ventures and Paul Wigham, Associate in Corporate from Watson Burton, explore the current funding opportunities in more depth in their Q&A.
Our specialists from Watson Burton have shared their experience on some of the issues facing our clients, from the data protection minefield surrounding big data, to the impact of whistleblowing on employers.
For those companies further down the line, the M&A market is gathering momentum and 2014 has so far seen a record number of IPOs on the London Stock Exchange. For those considering the option of a flotation, Roy Stanley, Non-Executive Director of the Tanfield Group shares his experience of taking companies through the IPO process.
Briefly Legal autumn/winter 2014/15
And as the firm celebrates another strong financial year, our CEO Patrick Harwood gives us his perspective on essential leadership qualities. It is hugely rewarding to see our clients emerging from some challenging times and making great strides forward. We hope you find our views and thoughts in this issue useful, wherever you are in your business journey. Duncan Reid Partner & Head of Corporate, Watson Burton LLP
CONTENTS
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Cloud technology driving innovation in the education sector
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16 Focus on
30 Exporting for
house building
growth
Codification, 18 Whistleblowing and 32 clarification, employment law what both sides need to know
Big Data: Big Questions
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14 Construction 2025: Building momentum?
England on track to be the energy capital of the UK?
24 Energy and politics don’t mix
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.
innovation: the new procurement Directives
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10 Roy Stanley: In my 20 Is the North of experience
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34 Be sure and avoid insurance risk
36 Energy drives great leadership
38 60 seconds with...
26 Investing in a
Chris Graham
bright future
Briefly Legal autumn/winter 2014/15
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BRIEFLY LEGAL: Cloud technology driving innovation in the education sector
Cloud technology driving innovation in the education sector
Gareth Davies, MD at Frog Education
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Briefly Legal autumn/winter 2014/15
BRIEFLY LEGAL: Cloud technology driving innovation in the education sector
The classroom is a constantly evolving environment and technology is transforming the way teachers communicate with students. The ICT budget of any school is now typically second only to staffing costs with iPads, Kindles and other handheld devices playing an integral role in meeting the demands of a tech-driven generation.
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BRIEFLY LEGAL: Cloud technology driving innovation in the education sector
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hildren as young as five are set to learn how to code from September 2014, with a recent study from Ofcom revealing that six-year-olds have the same understanding of using tablets as that of a 45-year-old. Going hand in hand with this digital revolution is cloud computing. With teaching now taking place in areas beyond the classroom, the future of education is geared towards anywhere, anytime learning. As such, educational institutes are catching on to the cloud as a means to create a more targeted learning experience, facilitating greater collaboration amongst teachers, students and parents. At Frog, we work with over 800 schools in the UK and 12 million users worldwide to deliver technology to the education sector; from implementing cloud services and technical support to ongoing training with teachers. Many of our staff have a wealth of experience in education – from ex-teachers to Ofsted inspectors – meaning that we’re perfectly positioned to discuss some of the issues that today’s educators face.
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Teachers can now set homework, collect it and grade it online...
Giving teachers a helping hand Teaching remains a dedicated profession and many either stay in the classroom long beyond the school bell or take home a large bag of student homework. However using cloud computing through virtualised desktops, teachers are able to access applications anywhere – rather than relying solely on their school computer. The cloud allows individuals to access data securely from remote locations. This in turn means that teachers can now set homework, collect it and grade it online – all from the comfort of their home if they so desire. This provides an increased element of flexibility as well as the ability to become more responsive and share instant feedback. Instant, on-the-go sharing is largely the norm for today’s younger generations and it’s hugely important that they’re provided with the capacity to do the same in an educational environment. Feedback on work, including any comments or grades, is instantly available via a computer, smartphone or tablet. Students are able to log on and view group projects, including any edits that have been made to the project for example. This element of collaboration creates a much improved dialogue amongst peers – and their teachers – as a result.
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Briefly Legal autumn/winter 2014/15
BRIEFLY LEGAL: Cloud technology driving innovation in the education sector
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One of the biggest challenges that schools will need to address as the use of cloud technology grows in importance is that of connectivity
Improved collaboration – teachers, pupils and parents There are typically three parties concerned in a pupil’s education – the teachers, the parents and of course the students themselves. One of the biggest benefits that cloud technology offers is an increase in communication between all three. Parents can log on to a dedicated portal from any device and access their child’s schoolwork, including recent grades and comments from their teacher or areas for improvement. Teachers can also share pictures from school trips or assemblies that parents may have missed, uploading them to a secure portal that parents can then access. Heads of year and other managerial staff are also provided with a more holistic understanding of work that staff are setting, including lesson plans, classroom worksheets and schedules around upcoming school trips. This is a great opportunity for senior staff – whose role may lie outside of the classroom – to gain a clearer understanding of creative ideas and see if they have the potential to be implemented across different departments. Lastly, headteachers and decision makers are able to keep an eye on what applications teachers are using most frequently and which can be deemed as business critical, which in turn helps when managing budgets.
What next for cloud? The bring your own device (BYOD) trend is one that is accelerating at a rapid pace as cloud technologies and mobile learning begin to work more closely together to drive innovation in education. Primarily, the scheme allows students to bring their own devices in to school, with secondary schools the main target. A survey carried out by the British Educational Suppliers Association entitled Tablets and Apps in Schools found that more than two thirds of schools (67%) are now considering BYOD, compared to just over half (52%) in 2012. Consensus from the industry remains largely positive at present with BYOD expected to enhance learning, reduce procurement costs across the ICT department and increase the amount of available resources. Northumbria University is just one example of an educational institution that has jumped on this trend with the university handing out iPads preloaded with key texts to new students, making it possible for pupils to access work at home or on the go as well as in class. Similarly, the Essa Academy in Bolton hit the headlines back in 2012 when it announced that every student would be provided with an iPod Touch, while each teacher would be provided with their own iPad. One of the biggest challenges that schools will need to address as the use of cloud technology grows in importance is that of connectivity. School broadband was in many cases installed with a small number of devices in mind and slows down to a snail’s pace when handling large numbers of pupils uploading homework at the same time. Increasingly, schools are taking technology more seriously and the advantages that a cloud infrastructure can bring far outweigh the inconvenience of upgrading outdated internet services. Used well, the cloud makes it possible to build a genuinely productive community that includes staff, parents, and most importantly, students.
Gareth Davies, Managing Director at Frog Education @FrogEducation
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BRIEFLY LEGAL: Big Data: Big Questions
Big
Data: Big Questions By Sam Jardine & William McCullough
With the ongoing hype and media attention surrounding Big Data, commercial law specialist, Sam Jardine, considers some of the key questions coming out of the Big Data debate. What is Big Data?
What are the concerns?
Big Data is defined by leading analysts, Gartner, as “high-volume, high-velocity and high-variety information assets that demand cost-effective, innovative forms of information processing for enhanced insight and decision making.”
The Information Commissioner’s Office (the “ICO”) has highlighted the key area of concern as being where Big Data uses personal data within the meaning of the Data Protection Act 1998 (the “DPA”). Personal data is, broadly speaking, data which alone or in conjunction with other data can be used to identify the individual to which it relates. Where such personal data is being processed, the eight data protection principles from the DPA will apply.
It describes the increasing application of analytics to massive (and often disparate and unstructured) datasets to provide a broad range of outcomes, such as targeted advertising, trend analysis and even credit scores. These datasets are derived from a variety of sources including social media, browser history, online purchases, etc. In the retail sector, Big Data is increasingly being used to create “sector of one” profiling - a bespoke profile created for each individual shopper enabling retailers to target them with specific products and offerings.
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The eight Data Protection Principles state that personal data must be: • Processed fairly and lawfully • Retained for a specified and lawful purpose • Adequate, relevant and not excessive • Accurate and up to date • Not kept any longer than necessary • Processed in accordance with the relevant data subject’s rights • Securely kept • Not transferred to any other country without adequate protection in place
BRIEFLY LEGAL: Big Data: Big Questions
There are a number of tensions between Big Data and the eight data protection principles. For example, the requirement that personal data held is not excessive can be at odds with the enormous amount of data being processed. Similarly, the requirement that the personal data is obtained for a specific purpose can clash with Big Data analytics that determines a range of outcomes, depending on the subject matter. Issues also arise when data is “repurposed”; or used for something other than that which was communicated to the individual at the point of collection. This can cause controversy, particularly where sensitive personal data is in question, for example with the NHS’ Care Data initiative.
What is the main challenge? The ICO has stated that Big Data can be effectively regulated within the existing data protection framework and is not “a game that is played by different rules”. This means organisations themselves need to become more flexible to accommodate the use of Big Data and will need to find increasingly adaptive ways of ensuring the transparent and fair processing of personal data.
What can be done?
An ethical solution?
There are a number of steps which organisations using Big Data can take towards compliance with the DPA:
The ICO has made positive noises about organisations that seek to go over-and-above compliance with the DPA. These organisations are endeavouring to develop the trust of data subjects by implementing “ethical policies” that set out their ethos in relation to Big Data and data processing. This development of trust could increase user-traffic, leading to more accurate analytics, data reliability and ultimately targeted sales.
1. The complete anonymisation of personal data can take it out of the reach of the DPA as the ICO is primarily interested in Big Data when it includes personal data. If the data held cannot be linked back to the individual from which it was derived then the proposed use of such data is likely to be acceptable. However, such anonymous data will be of limited use in the context of targeted advertising etc. 2. Organisations should consider undertaking a privacy impact risk assessment to determine the benefits/risks of a particular Big Data project. This is particularly important where proposed Big Data analytics involve novel, complex or unexpected uses of personal data and can help to demonstrate that the eight data protection principles have been considered. 3. Another way to increase compliance is to enact ‘privacy by design’ in new Big Data projects. This is where an organisation uses privacy enhancing technology to ensure ongoing privacy. This can include anonymisation techniques, technical and organisational measures, access controls, audit logs, data minimisation, data segregation and purpose limitation and separation.
4. Organisations should reconsider their privacy policies/notices in light of Big Data. The overriding objective with privacy notices is that the processing is explained in a fair and transparent way allowing people to understand how their personal data is going to be used. The ICO acknowledges that many users do not fully read privacy notices prior to clicking “accept” however, it confirms that this is merely an additional challenge that organisations must adapt to. Businesses need to find new ways to ensure that data subjects are fully aware of the proposed processing of their personal data.
Find out how our technology team can help you by getting in touch with Sam Jardine
0845 901 0966 sam.jardine@watsonburton.com
If you use or provide services on Big Data and would like to discuss any of these issues, please do not hesitate to get in touch with our Commercial team.
Find out how our technology team can help you by getting in touch with William McCullough
0845 901 0968 william.mccullough@watsonburton.com
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BRIEFLY LEGAL: In my experience
In my experience Roy Stanley, Non-Executive Director at Tanfield Group on his experience of Initial Public Offerings (IPO) 2014 has so far seen a record number of IPOs listed on the London Stock Exchange. In fact there were more flotations in the first half of this year than in the boom time of 2007. According to data from Thomson Reuters, 40 companies raised a combined ÂŁ5.7 billion between January-June 2014. But with the media reporting that IPO activity is slowing down, should companies hold tight or forge ahead to float and get that much needed injection of cash for their business? 10 Briefly Legal autumn/winter 2014/15
BRIEFLY LEGAL: In my experience
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oy Stanley, an entrepreneur based in the North East of England, has been involved in taking four companies to the AIM Market and four others to the ISDX market. He has been chairman of two AIM listed companies, including Tanfield Group PLC, which he helped to develop into the world's largest manufacturer of commercial electric vehicles; and Optare PLC, a bus manufacturer. Here Roy talks about his own experiences of embarking on an IPO, offers invaluable advice to any business owner considering this route of finance and gives his views on the current marketplace.
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There are definitely ups and downs involved in going from a private company to a PLC
“My first IPO was back in 2001, in the midst of the dot.com bubble. I was looking to raise at least £4million to take the business to the next stage. I was introduced by a friend at Deloitte to a local Nomad/Broker and really progressed it from there. If you are looking for some initial information and advice, pick up the phone and reach out to your contacts whose opinion you trust. Do your homework on who the experts are - as a first port of call you may want to get in touch with specialised accountancy and law firms such as Deloitte, Baker Tilly, Grant Thornton or Watson Burton. My advice to anyone considering an IPO is to persevere and don’t be daunted by the prospect of an IPO. If you are a small or medium sized business do look at listing on the ISDX (formerly OFEX) market. ISDX is designed for companies looking to raise up to £10million, but typically up to £2million. It has less onerous admission requirements than AIM and the main markets. Remember there is a clear process. That said, do make sure that you lead this process and
don’t over delegate to your advisors. While it’s crucial that you are surrounded by a good group of advisers; a NOMAD broker, lawyer and accountant, you are in charge! If I could turn the clock back to any of the IPOs I led, I wouldn’t have changed any of my advisers but I would have spent more time looking at different broker categories and understanding how they operate. Also don’t underestimate the costs of taking your company to market. If you are looking to raise money on the AIM market, you should factor in a figure between £500,000 – £1million and between £75,000 – £100,000 on the ISDX market. Whilst most of the money is taken out after the money is raised, lawyers and accountants may ask for a proportion of the money upfront. When my first IPO completed, the business had raised £7million and was valued at £28 million. It’s fair to say the float exceeded my expectations – there’s no doubt that the process developed me as a person and raised my sights as to what the business could go on to achieve.
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BRIEFLY LEGAL: In my experience
There are definitely ups and downs involved in going from a private company to a PLC. But I’d say the plusses far outweigh the minuses. The profile of your business is raised instantly and you suddenly have funds to develop the business and take it to the next exciting level. You get more credibility as a PLC and as a result you can expect a significant increase in new business contracts. You also get the opportunity to create more jobs and share your success with your management team by giving them share options. This definitely helps to make them feel part of the business and its growth.
If I could turn the clock back to any of the IPOs I led, I wouldn’t have changed any of my advisers but I would have spent more time looking at different broker categories and understanding how they operate
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BRIEFLY LEGAL: In my experience
If I could push for any change in the marketplace, I would call for regional stock exchanges to be set up. In the North East of England alone, there are so many businesses in need of finance. There are opportunities for businesses to get funding from the Regional Growth Fund and other publicly funded bodies but it can be a laborious and long process. Many businesses can’t afford to wait up to nine months and the scale of the finance is often not enough. Until that time comes, do look at getting a full, AIM or ISDX listing on the London Stock Exchange. Don’t be put off by everything you might have read or heard about in recent months that the flotation frenzy is waning. While a few companies have pulled their IPO plans in the last few months - this is largely because these companies are controlled by the decisions of their private equity investors. Likewise don’t believe the hype that the 2015 General Election could slow down investor sentiment. We are coming out of a recession and businesses are in a prime position to grow and get a listing. As I see it if you have a good business and can find a good nomad/broker to take you on, then you should find there is a healthy investor appetite.
If you are considering flotation then please get in touch with Duncan Reid
0845 901 0954 duncan.reid@watsonburton.com
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BRIEFLY LEGAL: Construction 2025: Building momentum?
Construction 2025: Building momentum? With initiatives such as Help to Buy and Funding for Lending gathering pace, the pressure has increased on the Government over the past couple of years to formalise plans for growth in the construction sector – and more importantly, to deliver. In July 2013, it did just that as the Government Construction Summit played host to the unveiling of an industrial strategy document entitled Construction 2025. More than a year on from the announcement, Construction and Engineering specialist Sarah Wilson looks at how the strategy has been implemented and its impact on the wider industry.
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esigned to provide a vision for “longterm strategic action by government and industry to continue to work together to promote the success of the UK construction sector”, the Construction 2025 strategy set out far-reaching ambitions on sustainability, efficiency and international growth. The 76-page document promises to radically transform the sector over the next decade, outlining ten joint commitments between industry and Government as the two strengthen their relationship and begin working together to create long-term and prosperous opportunities.
Headline targets for 2025 The strategy document focuses on five clear Four key targets were identified to be achieved by the UK construction industry areas: people, being and Government, listed as follows: smart, sustainability, • 33% reduction in the initial cost of construction growth and leadership and the whole life costs of built assets (based on 2009/2010 figures) • 50% reduction in the overall time, from inception to completion, for new build and refurbished assets (based on 2013 figures) • 50% reduction in greenhouse gas emissions in the built environment (based on 1990 figures) • 50% reduction in the trade gap between total exports and total imports for construction products and materials (based on February 2013 figures) So what progress has been made in the mission to achieve these targets over the past year? Probably one of the most promising aspects of the 2025 strategy is the formation of the Construction Leadership Council (CLC). With an impressive line-up of industry leaders and government representatives, the CLC has the opportunity to capitalise on existing opportunities for the sector whilst ensuring that the strategy’s aims and objectives are achieved within the timeframe.
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One area that the CLC has been particularly vocal about is that of payment practices in the industry. This resulted in the creation of the Construction Supply Chain Payment Charter which was launched in April 2014. The aim of the initiative is to reduce standard payment terms in construction to 30 days by 2018. Whilst concerns have been raised that the charter will reduce cash flow for contractors and force them to increase prices, the initiative has been largely welcomed by the CLC with nine of its representative firms opting to support it. Whether or not the charter will be adopted by the wider industry remains to be seen with businesses being asked to follow the process internally rather than physically sign up to it.
BRIEFLY LEGAL: Construction 2025: Building momentum?
Drive for efficiency
What’s next?
Payment practices form part of wider discussions in the CLC’s mission to increase efficiency and lower costs across the industry. The use of technology is going to be a key factor in helping achieve this, with some of the strategy highlighting BIM as a means of driving efficiency throughout the project life cycle. Reducing gas emissions will also help drive efficiency. Sustainability and low carbon design has improved immensely in recent years but it needs to spread further into practices and processes undertaken across the wider industry. The Government’s renewed commitment to investing in the energy sector will help with this over the coming years as the UK’s energy strategy develops further.
The next two years will play an integral role in defining the success or failure of Construction 2025, with the general election looming and the industry keeping an ever watchful eye on developments and actions that arise out of discussions.
Improving the image of construction One of the main challenges set by Construction 2025 is to improve the image of industry with the aim of plugging the existing skills gap. The central recurring themes focus on investment in skills and training and the need for a more diverse work force. There are a number of initiatives underway to help with this. The industry’s training and skills body, CITB has pledged to dip into its reserves over the next two years to pay more training grants and the Council is engaging with business leaders to look at key drivers for identifying opportunities to increase capability in the work place.
Much of this vision relies upon a huge amount of people power and willingness if the industry is to truly get on board and back the strategy. Monitoring ongoing efforts and measuring success will be something of a slow burner. With the industry welcoming plans for growth and sustainability with open arms, if enthusiasm continues, the UK construction sector will be well placed to take advantage of opportunities moving forward.
Find out how our construction group can help you by getting in touch with Sarah Wilson 0845 901 0930 sarah.wilson@watsonburton.com
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BRIEFLY LEGAL: Focus on house building
Focus on house building
Ross Smith, NECC Director of Policy
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BRIEFLY LEGAL: Focus on house building
In the various analyses surrounding the onset of recession six years ago and the nature of recovery now, the role of the housing market has been a central feature.
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he byzantine evils of sub-prime mortgages and the levels of debt linked to property were two major themes in explaining the downturn and the pain it caused. Six years later, it is hard to find a description of the recovery that doesn’t make heavy reference to the impact of the Help to Buy scheme, and in particular the disputed housing market bubble in London. This, many people postulate, is the “wrong kind” of recovery.
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In the meantime, a variety of associated issues loom large in political debate – whether it’s the ‘bedroom tax’, green belt development disputes or what have been dubbed separate ‘poor doors’ for affordable housing. So while in one respect it is surprising that there is relatively little mention of housing in discussions around economic strategy in the North East, it is also easy to understand why it has become something of a hot potato. Nevertheless, the North East Chamber of Commerce has reached the view that economic policy must be complemented by an effective housing policy in the region. We are therefore delighted to be working with Watson Burton LLP to consider what that might be, and how it would help achieve the goals the region is working towards. There are several reasons why we consider this so important. The first is about ensuring skilled workers have good reason to stay in the North East. This could start right from the point they leave university. With the market for student accommodation changing so much over recent years, it’s not clear that sufficient thought is going into ensuring people have the kind of choice they might want locally once they become graduates. Later in life, they will require family homes with a very different set of characteristics, and the market must support this transition. If we are successful in creating the kind of better paid jobs the region is aiming for through its economic strategies, many people will want to use their extra income to move up the housing ladder. So the right kind of property needs to be available – or they will look elsewhere.
With a third of UK carbon emissions coming from housing, failure to improve energy efficiency here will mean even tougher requirements on businesses in order to hit the country’s overall targets
A second issue is attracting people here from outside the region. The National Biologics Centre now being built in Darlington is an example of a big opportunity to do this, as highly skilled people will require use of this unique facility. If we want them to stay and establish businesses here, that means also convincing them there are houses here in which they will want to raise their families.
A large part of this has to be addressed through making the most of our existing housing stock. But it is clear that new development will also be needed, and at a faster rate than is presently being delivered.
Given relative house prices in the North East to many other parts of the country, that should be a strong selling point – but only if the right type of housing is available in the right location. A third is maintaining and improving local services, and regenerating communities. A flow of young families is needed to keep schools viable, while local shops need customers with disposable incomes. Therefore it can be detrimental to local residents if the population of an area stays entirely static.
Our project will identify the barriers to achieving this, which largely fall into two categories of planning and finance, and suggest approaches the region should consider to overcome them. Already, NECC has successfully argued for a more supportive national planning regime and for greater housing numbers to be included in several local plans. Some of the issues are for government bodies – central, regional or local – to address. Some are without doubt for the housing industry. Others require a much broader coalition and therefore hearts and minds need to be won over around the North East.
Fourthly, as people live longer, and are healthy and active for longer, our housing stock needs to keep up. If older people stay in large family homes for decades after their children have moved on, this will cause bottlenecks in the housing market. But the right alternatives need to be available to make ‘downsizing’ more attractive. Finally, housing is an important element in addressing environmental goals. With a third of UK carbon emissions coming from housing, failure to improve energy efficiency here will mean even tougher requirements on businesses in order to hit the country’s overall targets.
An Englishman’s home is his castle, or so the old saying goes. But we need to realise that everyone else’s home could have a bearing on our economic fortunes too. It’s time to give housing the focus it needs.
Ross Smith, NECC Director of Policy @NECCRoss
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BRIEFLY LEGAL: Whistleblowing and employment law – what both sides need to know
Whistleblowing and employment law - what both sides need to know
On paper, reporting a concern about a risk, wrongdoing or illegality at work, in the public interest should be a relatively easy matter. Yet, when it comes down to whistleblowing, employees are still hesitant to speak up - for fear of bad blood between their employer and the possibility of being fired.
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he tide is slowly changing and there is more acceptance around blowing the whistle in the workplace. The 1998 Public Interest Disclosure Act has played a major role; encouraging disclosures to be made internally to the whistleblower’s own employer or a person designated to them. Intended to reassure staff and forewarn employers, The Act affords organisations the opportunity to deal with the problem internally and, crucially, avoid reputational damage or even public scandal.
BRIEFLY LEGAL: Whistleblowing and employment law – what both sides need to know
When and how does someone acquire the status of whistleblower? More recently, the Enterprise & Regulatory Reform Act 2013 means that there is now a greater emphasis on making disclosures in the public interest – workers must believe that their admissions are made to public advantage before any protection from dismissal or detriment can be reached. Nevertheless, blowing the whistle is a somewhat risky pursuit and despite revised legislation, there remains a complex balance between the personal interests of the individual employee versus the commercial or organisational interests of the employer. It’s important for both organisations and staff to take steps to protect themselves, be clear what steps are required to make a disclosure and how to manage the legal risks.
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It’s important that employers do not shirk away from whistleblowing and face the facts in order to mitigate the risks
Not everyone will automatically qualify for protection. Organisations such as MI5 and MI6 for instance are exempt and it is not possible to make disclosures on matters concerning national security. There are also a number of stipulations when making the claim itself. In order to achieve protected disclosure, a number of conditions must be satisfied in accordance with the statutory framework. - It is a common misconception that information needs to be something that was previously secret or unknown, when a protected disclosure simply involves bringing information to the attention of the employer or some other prescribed person. - If the employee makes a disclosure they now need to provide as much information as possible and convey all the relevant facts – complaining, expressing opinions or even making a claim may not be enough. - The potential whistleblower must now be able to back up the facts upon which the allegation is based and confident that the claim is being made in the public interest and be able to highlight that one or more of the following failures has occurred; a criminal offence; failure to comply with any legal obligation to which a person is subjected; a miscarriage of justice; endangering the health or safety of any individual; damage to the environment, or the deliberate concealment of any of the above categories. It has undoubtedly become more difficult for an employee to acquire protected status. Employers are now able to argue that the disclosure was not made in the public interest as well as alleging that the worker did not have a reasonable belief. So taking steps to make a genuine disclosure that serves public advantage cannot be stressed enough.
What next?
Managing the legal risks
If an employee qualifies for protection as a whistleblower, it is open to them to pursue an employment tribunal claim following detriment or dismissal – the former includes suspension, disciplinary action or failing to investigate the complaint, whilst the latter can comprise redundancy as well as straight-forward termination of employment. Importantly, there is no cap on the compensation which an employment tribunal can award and an order for re-employment is a realistic prospect.
Where someone has made a protected disclosure, the risk of compensation can be considerable. Whistleblowers typically argue that they find it difficult to mitigate their losses by securing employment elsewhere because of how they were treated at the hands of their employer. Equally, the risks should not be overstated.
The worker will of course have to establish a link between the fact that they made a protected disclosure and the way they were treated at work. In practice however, much weighs on the employer’s explanation and whether they can demonstrate a reason for their actions unrelated to any protected disclosure.
It’s important that employers do not shirk away from whistleblowing and face the facts in order to mitigate the risks. Implementing a whistleblowing policy is a good place to start. Not only does it provide an early warning system but also allows the organisation to deal with serious failures in-house, removing any unwanted publicity. From a commercial perspective, this can even help to increase market confidence. With a policy in place, there is no guarantee that workers will not present employment tribunal claims, but it does manage the risks. Where an employer can show that they are concerned to deal effectively with any malpractice, it is difficult for a worker to demonstrate that they behaved reasonably where they have failed to follow internal procedures.
Whistleblowing law is still relatively new and has only been part of our legislation for 16 years. It is also a complex area of law. Depending upon the facts of any particular case, different considerations may well apply. Gaining an understanding of how the legislation works is key to enable both employers and the employee to understand and effectively manage the risks.
Find out how our employment group can help you by getting in touch with Christopher Graham 0845 901 2033 christopher.graham@watsonburton.com
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BRIEFLY LEGAL: Is the North of England on track to be the energy capital of the UK?
Is the North of England on track to be the energy capital of the UK? Adam Lovell, Editor of Yorkshire Business Insider takes a look at how the region is shaping up
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BRIEFLY LEGAL: Is the North of England on track to be the energy capital of the UK?
It’s easy to see why the North of England was marked out as a prime strategic hub for the offshore renewables energy market - for its geography, experience, infrastructure and technical capabilities, and the potential to deliver comprehensive, allencompassing supply chain solutions. Yet having all the credentials for large scale energy projects and realising the ambition can be another matter. Just how far would Government and the private sector embrace the region with investment?
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he latest pledge by Government to back plans for a £450million energy park in the Humber will see Yorkshire compete with internationally renowned areas both in the UK and further afield. Aberdeen in particular has historically been recognised as the Energy Capital of Europe, housing over one thousand businesses in the energy sector. However recent investments mean that the North of England is catching up fast. Based at North Killingholme, the Able Marine Energy Park (AMEP) will deliver state of the art port facilities specifically designed to support the North Sea's offshore wind industry. With more private sector funds for energy projects since 2012 than in the past decade, it’s clear that the North of England means business.
Inward investment surge Sizing up the business opportunity International companies, notably Siemens and Vivergo Fuels, are making substantial investments in equipment and process improvements in the region, helping to make the area a real contender against international competition. In the past 18 months, the region has received more than £500million of inward investment, as international industry giants now view the region as an appealing location to develop their global energy strategy. Concrete plans are now underway to build a £160million wind turbine factory in Hull as well as a £350million biorefinery – which will be the largest in the UK.
The North of England’s manufacturing heritage, coupled with its passion for innovation, is the perfect formula for businesses to seize opportunities
The North of England’s manufacturing heritage, coupled with its passion for innovation, is the perfect formula for businesses to seize opportunities, particularly those available in the supply chain. The Vivergo plant which opened in Hull during July of this year employs approximately 80 full time staff and is expected to provide over a thousand additional jobs via its supply chain, with businesses supplying everything from valves and loose parts to critical engineering equipment. Britain’s manufacturing industry is booming and will only continue to grow with the emergence of Siemens’ site and the AMEP. Businesses of all sizes are set to capitalise on opportunities across manufacturing and assembly, with greater access to the supply chain also set to expand, as the region explores opportunities within foreign markets and international export trade, all of which can only serve to benefit Yorkshire’s GDP. Added to this are the opportunities for young people. Speaking recently about Siemen’s decision to build in the area, David Cameron stressed the importance of local apprentices in delivering a workforce that is trained and available to take on jobs. Engineering and construction are prime areas as well as roles on the shop floor and across project management. An expected 1,000 roles will be up for grabs between now and 2017 when Siemens’ plant will open for production.
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BRIEFLY LEGAL: Is the North of England on track to be the energy capital of the UK?
With more private sector funds for energy projects since 2012 than in the past decade, it’s clear that the North of England means business
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BRIEFLY LEGAL: Is the North of England on track to be the energy capital of the UK?
Future opportunities – the importance of a compelling argument Businesses are now looking ahead to what’s next for clean energy, with fracking high on the agenda. Much of the debate around techniques used to extract shale gas has been blown out of proportion; partially due to an element of misinformation, but with many businesses also blinded by pure emotion. A recent survey carried out on behalf of UK Onshore Oil and Gas found 57% of people in the UK would be happy to see shale gas production go ahead on the proviso that it makes up a mix that includes renewable energy sources. This would suggest that, despite initial controversy, opinion now seems more balanced with businesses open to discussion. If the North is to build on its recent growth in the sector, then it has to be part of an honest and open on-going conversation between local businesses and energy suppliers. A crucial element to this lies with local buy-in. Companies set to carry out hydraulic fracturing are largely removed from local communities, making it easy to see why certain areas and populations are still sitting on the fence – there is currently very little dialogue or communication that would convince them otherwise. As plans for fracking inch forward, it is essential that the industry works together to implement a long-term strategy that outlines proposed developments for the next forty or fifty years. The current fragmented system, which sees five year plans latched on to two year plans, is simply not sufficient. If businesses begin to get an understanding of the potential benefits, then current attitudes may change. Thousands of jobs, the opportunity to become less dependent on imported energy supplies and the continuing support of manufacturing are all huge benefits that the region would do well to tap into. For the moment, the North is steaming ahead and on target to become both a domestic and global hub for the offshore renewables industry.
Adam Lovell, Editor of Yorkshire Business Insider @AdamInsider
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BRIEFLY LEGAL: Energy and politics don’t mix
These are challenging times for governments when it comes to energy strategy. The difficulties are all the harder because political posturing can sometimes get in the way and overcomplicate matters. The issue of crossborder politics playing a role in the security of energy supply (or more accurately, the lack of security of supply) is an example of this.
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he UK government’s strategy is built on three broad priorities: security of supply; reduction in emissions; and affordability for the consumer. The need to reduce emissions and the desire to have affordable energy are inevitably interlinked. Energy from fossil fuels has been historically cheap to produce and we can all understand the need to develop carbon capture and storage technologies to ensure compliance with European Union emissions regulations. Anticipating the need to develop these technologies to stay ahead of the curve is not always a political priority, however. There is arguably a lack of a political will to provide a short to medium-term place for coal and other fossil fuels in our energy strategy, which means that we are losing the ability to use these fuels as bridging sources of energy as we move towards greener and more reliable technologies. This leads to uncertainty over medium to long-term supply, short-term pricing for the consumer and fairly substantial price increases, which is already placing some domestic consumers in fuel poverty.
BRIEFLY LEGAL: Energy and politics don’t mix
Energy and politics don’t mix The need to reduce emissions and the desire to have affordable energy are inevitably interlinked Europe and nuclear power Nuclear energy is highly emotive, particularly since the 2011 tsunami-sparked catastrophe at the Fukushima nuclear plant in Japan. The negative public perception of the industry has inevitably been exacerbated by the disaster. This sapping of confidence has played a significant role in energy markets in Spain and Germany, where there has been a shift to green energy away from nuclear power and fossil fuels. In Germany for example, the government has sought to move the cost subsidies for green energy across to the consumer, resulting in a rise in energy prices – and much consternation. Given the contribution to our energy supply made by nuclear power stations, we in the UK are forced to acknowledge that they are coming to the end of their natural lives and a plan must be put in place to either replace them with updated nuclear technology or find a reliable alternative. This situation was brought to the media’s attention during the third quarter of 2014
following the temporary closure of two nuclear power stations; Heysham 1 and Hartlepool. Offline due to a series of discovered faults, EDF Energy revealed that these power stations were likely to be out of action until the end of the year, with a potential electricity shortage on the horizon as a result. To combat this possibility, the National Grid promptly began to explore options around sourcing from other suppliers. Perhaps this will be one of the triggers for further action as we look to alternative solutions, with a rising number of old plants due to retire. Thrown into the mix is the government’s agreement with EDF and its back-up consortium made earlier this year regarding the construction of a new power plant at Hinkley Point in Somerset. While it has now been agreed that construction will begin, this was not before the guaranteed minimum price was closely examined by the European Courts to ascertain whether such support would fall short of European state aid rules. This all adds to the ongoing debate as to whether this is too politicised and perhaps, not completely geared to the national interest.
The arguments presented here focus on one or two big political hot topics and ignore some of the wider issues currently under discussion – but in many respects a consideration of the broader national and international politics at play would serve only to reinforce the view that energy security should be a matter of national interest not subject to short-term political influence. It is unsettling and not a little bemusing that in these sophisticated times and against a backdrop of the history of the twentieth century, we and other nations should find ourselves in this position on something as critical to the national good as energy.
Find out how our energy team can help you by getting in touch with Tracy Hall 0845 901 2067 tracy.hall@watsonburton.com
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BRIEFLY LEGAL: Investing in a bright future
Investing in a bright future Figures released by the Office of National Statistics (ONS) earlier in 2014 provided a positive outlook for funding into UK companies. Not only did the first quarter of the year see funding rise to the highest level since 2008, investors ploughed an estimated ÂŁ32.8 billion into businesses across the country. As the economic recovery gains pace, venture capital experts Ian Richards of Northstar Ventures and Paul Wigham, Associate in Corporate at Watson Burton answer questions on the North East investment market post-recession.
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BRIEFLY LEGAL: Investing in a bright future
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In your experience, does the venture capital market in the North East reflect the positive national picture portrayed by the ONS statistics? Ian Richards: Yes, we have seen an increase in deal flow, together with an improvement in the financial performance of the underlying businesses within our portfolio. We spend a lot of time with businesses, and CEOs are saying that things are getting better. Trading is looking more positive and a lot of people around our region seem to be busy working on deals. Paul Wigham: I agree. We have seen an increasing number of active business angel investors in the market as well as the emergence of new angels who have exited their businesses and are re-investing some of their exit proceeds and their experience into start-ups. There has also been an increase in M&A activity as previous recipients of Finance for Business North East Funds look to exit; and an increase in the number of mergers and corporate re-organisations, as people start to put in place the plans that they have been formulating over the past four or five years.
We have always believed that if you have a good team you can get through most business issues
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Do you think the investment market has changed post-recession? If so, in what way? Paul Wigham: The availability of seed capital for technology businesses has changed. Although I’m not sure that this is necessarily an effect of recession, it’s now easier to fund tech businesses and they don’t need much capital to get their products through a proof of concept phase. We are seeing a much higher number of seed capital deals which is partially being driven by the increased willingness of business angels to invest. The Finance for Business North East funds have certainly played an important role in helping to unlock that private investment. Ian Richards: It would be fair to say that investors and venture capitalists became far more selective as we concentrated much more on the quality of the team – we have always believed that if you have a good team you can get through most business issues. Co-investment is also something that we encourage, because by increasing the amount of cash into a business we give it a greater chance of success. Business angels are particularly of interest to us here, especially those angels that can add something to the board of a business. When the recession hit, a lot of the angels stopped investing in early stage businesses, but we have been encouraged by a solid, steady improvement in the market over the last couple of years.
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BRIEFLY LEGAL: Investing in a bright future
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What is the main piece of advice you can offer start-up organisations in the region trying to secure equity investment? Ian Richards: Talk to a venture capitalist early on in the process. We are more than happy to talk to businesses before they prepare a business plan and we are quite willing to provide input into the process so that we help the entrepreneurs in any way we can. Paul Wigham: I would agree with Ian in that speaking to the venture capitalists from the outset is important. Start-ups should also be realistic on the valuation of the business and take on board the advice available from the region’s professional community. There is a whole host of services available to start-ups and my advice would be to capitalise on these.
do you think Q What initiatives like the Ignite 100 business accelerator programme bring to the region? Paul Wigham: The main thing is profile. Ignite has really raised awareness of the tech scene in the North East and brings investment into the region. The current Ignite programme is backed by a number of business angels who don’t necessarily have a primary connection to the region, but are buying into what is being done here. It shows that you don’t have to be in London to make connections, raise money or to be successful. Ian Richards: The North East has always had a strong network of advisors and providers of assistance for businesses, but programmes like Ignite help to provide a more coordinated approach and we are delighted to be an Investor and Partner on Ignite 100.
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It shows that you don’t have to be in London to make connections, raise money or to be successful
BRIEFLY LEGAL: Investing in a bright future
Q
What one thing would make the biggest difference to the investment market in the North East? Ian Richards: The region has benefitted greatly from the ÂŁ125million Finance for Business North East suite of funds which has supported many businesses. In order for this momentum to be maintained, additional funds need to be made available for investment after 2015. It is encouraging that the two Local Enterprise Partnerships are working together to provide successor funds be invested from 2016. Paul Wigham: Wider engagement of business angels. The culture of angel investing is probably taking longer to take hold in the North East than elsewhere, but it is changing quickly. I think if the pace of that could be continued then there will be an even more thriving investment community in the region. Access to funds in the ÂŁ1m to ÂŁ5m range is also difficult so having a fund dedicated to providing this would make a big difference and allow companies to realise their strategies quicker.
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In your opinion, what will the future hold for the North East investment market? Ian Richards: The market is strong. We have been investing for 10 years and there are many other venture capitalists now and increasing numbers of providers of other finance. We have the funds to invest and a strong pipeline of deals and access to what we think are good people to help these businesses, so the outlook for investment in the North East is looking very positive. Paul Wigham: We are going to see an increased number of investment deals in the technology sector. Over the next two or three years the number of exits will grow as the market picks up and the businesses that have been built up over the last five years are acquired by other companies. The Finance for Business North East funds and the Local Enterprise Partnerships are going to play a very important role in securing the next phase of the programme. If we can build on the success of the current programme then I would say the future of the investment market in the North East is looking very good.
Find out how our corporate group can help you by getting in touch with Paul Wigham 0845 901 0960 paul.wigham@watsonburton.com
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BRIEFLY LEGAL: Exporting for growth
Exporting for growth Exporting is key to success in today’s global economy, with the potential for SMEs to operate overseas becoming an increasingly attractive option.
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or many, trade barriers such as international laws, industry regulations and restrictive practices can create significant challenges for those entering the international business arena. Here we speak to corporate finance expert Andrew Francey to find out what you need to know when taking the first steps towards international trade. When the government recently announced plans to increase the number of exporters by 100,000 within the next six years, the topic of international expansion was brought to the forefront of the business agenda. The prospect of exporting has never been as popular with more and more businesses eyeing the scope of opportunity and potential gain. Despite this, there remains a level of hesitation amongst businesses, many of which are often apprehensive of the best strategy to adopt. Knowing where to start can be a daunting process with failure a constant and potentially damaging threat. For businesses looking to adopt a successful export strategy whilst minimising risk, there are a number of issues to take into consideration before treading into international waters.
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BRIEFLY LEGAL: Exporting for growth
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The prospect of exporting has never been as popular with more and more businesses eyeing the scope of opportunity and potential gain
1. Ask some questions: Be very clear in identifying the ‘whats’, ‘wheres’ and ‘whys’ that are driving your business towards international expansion. Put together a list of questions to consider when approaching new markets, including what your business will do to differentiate itself from the competition. 2. Have a clear plan: After asking yourself some initial questions, it’s essential to consider and ultimately become clear on your own strategy and approach, researching all the options in order to gain an accurate picture of the different routes available to your business when approaching new markets. 3. Consider potential pitfalls: It’s key that businesses weigh up international expansion as a viable option versus the potential pitfalls and hurdles. For example, differing employment laws, varying regulatory frameworks and taxation laws are all key areas for consideration. Research is, again, invaluable. 4. Make sure that the business is aware of available support: Funding may form a large part of your business plan. Make sure that you look around when considering the available support. The UK Export Finance (previously ECGD); Export Working Capital Scheme and the Bond Support Scheme are all popular options.
5. The value of local partnerships: For any business approaching a new landscape, it is key to have a partner on the ground that can give you the full picture before you commit. There is real value in partnering with a scheme that provides a contact on the ground, who is able to develop relationships and negotiate deals in real-time. 6. Placing your product in the right region: Don’t automatically approach certain regions just because they’ve housed success stories in the past. For example, companies approaching the Chinese market are increasingly looking away from the more well-known areas such as Beijing and Shanghai to lesserknown cities that are growing sectorspecific industries. Understand your target audience and recognise what area will work for you and your business. 7. Different countries do business differently: Understanding the cultural spheres is extremely important and compromise is a big part of developing business relationships outside of your own territory – make sure that you’re prepared to meet in the middle. Learning the language will also help! 8. Accreditation: Many products in territories outside the UK require specific accreditation and certification, the process for which can be time-consuming and carry a cost. Businesses should take the effects of this into careful consideration, as delays may impact on time frames and business plans.
9. Finding the right match: Partner with suppliers that are passionate about your business and protecting the brand. They needn’t be the biggest or most respected – they may even be a small, relatively unheard of family-run company. What’s important is finding out why they want to become an extension of your brand as well as understanding what they can do for you on the ground. 10. Understand the market and adapt the brand accordingly: Whilst there are a number of technical aspects that are hugely important, one over-arching element for consideration should be the importance of adapting the brand to different cultures. Not all products translate and it’s essential to understand the demand for a certain product or service, what’s already being done in the space, as well as what your competitors are doing. This list of considerations is not exhaustive by any means, but is highly beneficial if implemented as part of an export strategy.
Find out how our corporate group can help you with international trade by getting in touch with Andrew Francey 0845 901 0958 andrew.francey@watsonburton.com
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BRIEFLY LEGAL: Codification, clarification, innovation: the new procurement Directives
Codification, clarification, innovation: the new procurement Directives Early next year, if the Cabinet Office sticks to its timetable, we will see three new EU procurement Directives implemented in UK law: on public procurement, utilities procurement, and on concession contracts. This article takes a high-level look at some of the more significant features of the public procurement directive and briefly outlines the concessions directive.
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BRIEFLY LEGAL: Codification, clarification, innovation: the new procurement Directives
Codification Article 12 codifies the Teckal, or “in-house”, exclusion. Contracting authorities can directly award contracts to entities which they (alone or together with other contracting authorities) both own and control, provided that no less than 80% of the controlled entity’s turnover comes from the services it provides to the controlling authorities. Article 12 also sets out the law on public/public cooperation, confirming that under defined circumstances public authorities can work together under contract without going through a public procurement. But be careful: the “defined circumstances” are restrictive, apparently limiting the exemption to public services the authorities have to perform, and hence excluding tasks which are necessarily incidental – so running a school is in scope but cleaning it is probably out; maintaining a fire and rescue service is in but maintaining its vehicles is probably out. Article 72 puts the pressetext rules on material change into legislative form. The Article is too long and detailed to analyse in detail here; it should prove helpful in clarifying exactly when a change to a contract must be treated as so significant as to be treated as a new contract which must be advertised.
The Directives merit a thorough read by all contracting authorities
Clarification There is some clarification of the vexed question of abnormally low tenders. Article 69 specifies that a contracting authority does have an obligation to investigate an ALT, even if it does not intend to reject it – but doesn’t say whether, if the tenderer cannot justify the abnormally low elements, the authority is required to reject it. The answer is probably “no” (because the Article does mandate that a tender must be rejected if a low price is due to the tenderer’s failure to meet legal obligations concerning employment or the environment) but it’s not spelled out.
Innovation
The concessions directive
The division of services into part A and part B has gone. Instead, services listed in Annex XIV to the Directive (which include tyre-remoulding, blacksmithing and graphology) must be advertised if the contract value is €750k or above but not otherwise, and all other services are in scope. The big question is whether this supersedes the requirement to give some publicity to contracts which are not caught, rendering the Commission’s 2006 Interpretative Communication redundant; the Cabinet Office seems to think it does, I think it doesn’t.
Ever since Telaustria ((2000) Case C-324/98), authorities have worried about whether they had to advertise services concession contracts. They can relax: yes you do, but it is up to each national government to pass legislation saying exactly what you have to do to satisfy requirements of equal treatment, transparency and non-discrimination.
Article 57 creates some completely new powers for a contracting authority to exclude an economic operator from tendering. If the economic operator has performed really badly on a previous public contract; if they have committed grave misconduct so as to “render their integrity questionable” or if there are “plausible indications” that the economic operator has entered into anti-competitive agreements in the past, the authority can kick them out. However the legislation offers no help as to what sort of misconduct renders your integrity questionable nor as to what a plausible indication looks like. The authority must allow the economic operator to show that they shouldn’t be excluded, and in any event may not take into account matters happening more than either three or five years earlier, depending on the grounds for exclusion. As well as codifying case law the Directive takes the opportunity to overrule it, reversing the more annoying effects of Lianakis ((2008) - Case C-532/06) by expressly permitting the authority to take into account as an award criterion the quality of the team proposed by a tenderer to carry out a contract.
Conclusion The Directives (2014/23/24 and 25/EU) merit a thorough read by all contracting authorities who want to be ready for the new UK legislation, and by any economic operators who expect to win contracts from the public sector.
Other innovations include the abolition of the “lowest price” criterion (although it sneaks back in); the reform of dynamic purchasing systems to make them a serious alternative to framework agreements; the (very limited) possibility for an authority to reserve some contracts to “mutuals”; an obligation for authorities to explain why they have not divided a contract into lots; and a number of other tidying-up modifications. There are two new procedures for letting contracts; this is not the place to go into detail but authorities will be interested in the considerably greater scope to include negotiation in your award process.
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BRIEFLY LEGAL: Be sure and avoid insurance risk
Be sure
and avoid insurance risk Failing to understand obligations when it comes to commercial insurance can have catastrophic effects for business owners, but by understanding the common pitfalls and knowing what to look for in an insurer at the outset, the risks can be greatly reduced.
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hether seeking Contractors’ All Risk insurance in the construction industry, Directors and Officers insurance in the corporate world or specially tailored cover in the technology arena, there are a number of considerations to make, both before any insurance cover is taken out and once the insurance is in place. In order to mitigate against risk, directors and managers should not only look to understand the policies, but ensure that employees dealing directly with customers also understand what they should be doing to comply with the terms.
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BRIEFLY LEGAL: Be sure and avoid insurance risk
Choosing your insurer wisely
Avoiding the worst case scenario One of the most common reasons for insurance not covering a claim is that insurers have not been told quickly enough about a claim. If it is a significant claim, this can have serious or even fatal consequences for your business. One grey area is where a claim has not actually been made but where there are circumstances that could or are likely to lead to a claim. Your insurers want to know about these too and you may have similarly onerous obligations regarding notification which you should be aware of, so check your policy. Expressions of dissatisfaction without the express threat of a claim can often be enough to trigger the need for a notification. Even if there is a designated person within the business who knows the terms of the policy, it’s important to be confident that those ‘out in the field’ dealing with customers, or managing projects, know what they need to do. In the construction sector, where adjudication is prevalent, and timetables are extremely tight, professional indemnity insurers will usually require notification within just 48 hours, of either a notice of adjudication against your business or of your intention to bring an adjudication against another party which could then lead to a retaliatory adjudication against you. People always worry that a notification will increase premiums but as a general rule, a notification in itself will not have this effect – it’s the outcome of a claim that will affect the premium and if insurers/their advisers have had the chance to influence that outcome positively, that should benefit, rather than penalise you. Whilst late notification is by far the most common reason we are asked by insurers to advise on whether a policy responds to a claim, others include: • Admissions of liability made by a policyholder • Lack of co-operation when dealing with a claim • Whether a claim is covered under the scope of the policy • Whether a number of related claims can be treated as one single claim.
One of the most common reasons for insurance not covering a claim is that insurers have not been told quickly enough about a claim
Insurance is an important purchase and while the factors you need to consider will differ from business to business, the following should all feature in your decision-making process:Claims Handling - some insurers invest heavily in a bespoke claims handling function so that, in the event of a claim you have the best possible experience. You may also save money from the way a claim is dealt with. Developing a Relationship – loyalty can pay dividends, both in terms of premiums and in terms of queries over whether you have complied with policy terms. Over time, your insurer will come to understand your business better and you may benefit from a ‘smoothing’ of premiums so that you don’t suffer a large spike in premiums in years with greater claims activity (although you should still ‘market-test’ what your insurers offer, to ensure that they remain competitive). Security - although relatively rare, there have been insolvencies in the insurance world in recent times so always check with your broker as to your proposed insurer's rating. Bulk Buying Power - are you part of a professional organisation or trade body that has an insurance scheme for its members? They often can negotiate better terms for their members, whether in terms of price or the scope of cover. Price - you tend to get what you pay for. More expensive premiums often reflect the quality of claims handling or a wider scope of cover. If a premium looks out of kilter with the market there may be issues with that insurer’s business model and might they more likely to quibble in the event of a claim? You can influence the premium by taking more of the risk yourself in the form of an increased excess and be careful not to falsely economise by under-estimating the level of cover you need. Your broker can advise you on the best insurance cover to fit the needs of your business but give some thought as to what suits you and make sure that you know what your obligations are under the policy, so that you can benefit from what you are paying for, when you really need it.
Find out how our PII group can help you by getting in touch with Richard Palmer
0845 901 0944 richard.palmer@watsonburton.com
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BRIEFLY LEGAL: Energy drives great leadership
Energy drives great leadership I’ve been very fortunate to work with a number of inspirational people during my career, many of whom have demonstrated tremendous depth in their leadership abilities. For the purposes of this article I’ve been trying to characterise what it is that has made them stand out.
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ver the years I’ve read many articles about how ‘thinking differently’ makes for great leaders but for me, it’s doing things differently that has the greater impact. And, put simply, this ability to do things differently requires huge amounts of energy.
many different styles of energy, he believes that all great leaders somehow bring a “...physical, emotional or spiritual energy to their environment.” He goes on to acknowledge that “…being able to tap into that energy, even when things aren’t going your way, often separates those who lead at the highest level versus those who fall short.”
Energy is an often under-rated concept in the corporate world but it is absolutely vital if you are to run a progressive business. In fact, ‘Do I have the energy for this?’ should be the first question any entrepreneur or business leader asks themselves at the beginning and regularly throughout their career. The best leaders I have ever met have all demonstrated endless reserves of personal energy.
People
In his Seven Core Qualities of Leadership, renowned US business coach Anthony Robbins puts energy at Number One, stating that “It takes tremendous energy to grow and realise a vision.” While he acknowledges that there are
“It’s all about the people” is a common adage – but this over-simplifies the complexities of management. The people within your organisation are crucial, of course, but it’s how you deal with the situations that arise
Most business leaders have three key responsibilities where energy levels can be tested. These can loosely be divided into people, substance and risk.
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between people that make a difference. Leaders can deploy endless employee engagement strategies to encourage loyalty and motivation but managing challenges that will inevitably crop up along the way requires a degree of decisiveness that too many leaders simply do not have. While understanding a situation is generally intuitive for a good leader, knowing how to deal with it can be learned - and can separate the good from the great. Not going for the easy option of just being liked or disliked requires greater reserves of energy – following the path that is best for the business, not just for your internal perception. Making an energetic investment in the people who you lead will often generate a long term legacy of alignment and cohesion that in turn creates strength in depth within a business.
BRIEFLY LEGAL: Energy drives great leadership
Substance Effective leadership requires an ability to maintain a clear focus on the essence of the business. The more a business grows and diversifies, the more challenging this becomes. Good management teams obviously play a part in keeping you informed, but the best leaders still retain some degree of involvement in the day to day operations. Only by understanding how people within the business think and feel can you lead them effectively. Maintaining a level of involvement while relinquishing some control to your management team require levels of both energy and trust that leaders often find to be one of their most difficult challenges.
Risk Great leaders have the energy and courage to make decisions. You can be the smartest person in the world, but you will always be outdone by someone who is braver than you courage is an essential element of leadership. I have always admired genuine entrepreneurs who can put all their chips on black and spin the roulette wheel. There are those who are prepared to lose it all on the basis of instinct and others who take risks in a more measured way - I consider myself more of a calculated taker of risks. There is no right or wrong when it comes to the level of risk you are prepared to take in business as long as you appreciate that, at some point, you must take some. Younger companies generally have more freedom when it comes to risk as they are just starting out on their journey. Larger and mature companies have more to consider their legacy, their shareholders and their employees - so risk-taking becomes more daunting. I have great admiration for larger companies that have stood the test of time by reinventing themselves when circumstances have dictated the need to do so. It may mean stripping the company back in order to move forward, but it demonstrates a subtle gutsiness and a strong belief that they can become great again.
The people within your organisation are crucial, of course, but it’s how you deal with the situations that arise between people that make a difference
Energy might not be a typical corporate buzzword, but if I had to pick one word to sum up the common characteristic that has defined some of the greatest leaders I’ve worked with, then that’s the word I’d choose. It’s the ability to manage and replenish your own energy levels, even when the going gets tough, while motivating and inspiring those around you that makes people do things differently. Leading a business is not for the faint-hearted, but for those who have the energy for it, it’s immeasurably rewarding.
Find out how Watson Burton can help your business by getting in touch with Patrick Harwood 0845 901 2091 patrick.harwood@watsonburton.com
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BRIEFLY LEGAL: 60 Seconds with… Chris Graham
60 Seconds with…
Chris Graham Chris Graham is a Partner and head of Watson Burton’s employment team. He joined Watson Burton 12 years ago and has built his team into one of the best regarded in the North of England. Here we delve beyond the lawyer to find out more about Chris and what makes him different.
What was the first job you ever had? My career is slightly unusual. Prior to joining the legal industry I worked in very different businesses ranging from sales to an overseas posting with a holiday company. This influences the way I work today and gave me a good grounding in the ‘people’ aspects of what I do today at Watson Burton, as well as a more commercial outlook.
Who or what has most inspired you in your professional life? As the adviser to innovative and entrepreneurial clients, I’m constantly impressed and inspired by the people that I work with. They make difficult and challenging decisions routinely and on a daily basis. If I had to pick one person in the legal industry though, I’d say Antony White QC of Matrix Chambers. Anthony is effective in court, but patient and polite with clients and opponents. The Chambers Legal Directory summed him up in 2013 commenting that he is “a genius at whatever he touches”. Anthony always reminded me that we need to live up to the trust others place in us.
38 Briefly Legal autumn/winter 2014/15
BRIEFLY LEGAL: 60 Seconds with… Chris Graham
What is the skill or superpower you would most like to have? It would be great to have the powers of Professor Charles Xavier, leader of the X-Men who can read people’s minds. There is a great deal of psychology involved in the tactics of litigation, so I could use this to look into the minds of the opposition and really understand what is most important to them. I’m not sure however whether that would permissible in Court…
Which word or phrase do you most overuse? I’m forever asking people to “put a number on it” because this is one of the first things that clients want to know. I’m also keen that everyone in our team continues to develop and learn, so within the office the most overused is probably “what would you do if you were me?” It encourages people to think for themselves rather than just giving them the answer. It’s this approach that has contributed to building a team of specialists in their own right and provides our clients with maximum value.
What do you like most about being a lawyer? Recognising my competitive nature, I’d have to say that winning on behalf of our clients is high up the list, but interestingly becoming a partner and then investor, my career has also afforded me the opportunity to become a principal owner with responsibility for a business that was established more than 200 years ago – not many people get to say that.
If you weren’t a lawyer what would you choose to do?
What is the best decision you have ever made?
It would have to be something in complete contrast to what I do now. I enjoy the outdoors and if I could set up a sport-fishing business in the Caribbean that would do it forr me.
In the previous issue of Briefly Legal, my fellow partner Richard Palmer answered this question by saying that his best decision had been to invest as a principal partner in Watson Burton and I’d have to agree. I get to do a job that I love - and being responsible for helping to run a commercially-focussed business means that I better understand the needs of clients.
What would be your perfect day away from work? Sustainable fishing in Costa Rica is right at the top of the list, though I could also be tempted back to Australia. When you catch a marlin or a sailfish the idea is that you get to re-tag it before releasing it and when the next person catches the same fish they can see who caught it before, the weight and length at the time etc. Well, I once caught and released a Marlin in Australia and months later received an email out of the blue from an American guy called Arty Bingerheimner saying “Hello, I caught the Marlin you caught and she is asking after you”, he signed off his email “Yours in game fishing, Arty.” The Marlin had apparently grown quite a bit too - by about 130lbs.
If you were marooned on a desert island and were allowed to take three essential items, what would they be? I would take my springer-spaniel Tess for companionship and she would be useful for finding things to eat. I’d also take a bottle of single malt to wash down dinner and watch the sun go down in the evenings. The third thing would have to be my iPhone with a solar-powered charger, so I could connect to the real world via satellites - and let’s face it there is probably an app for surviving on a desert island with nothing but a dog, a bottle of whisky and an iPhone…
Briefly Legal autumn/winter 2014/15 39
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