Birmingham Law Society Bulletin Jan / Feb 2021

BULLETIN

THE MAGAZINE OF THE BIRMINGHAM LAW SOCIETY

PLANNING POINTS FOR BUSINESS OWNERS: On Death And During Lifetime

WHAT IS ESG & WHAT DOES IT MEAN FOR LAW FIRMS?

Empowerment Through Technology For Law Firms

THE IMPORTANCE OF NOTICE CLAUSES IN SHARE PURCHASE AGREEMENTS

REGULATION REPORT:

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INSIDE THIS ISSUE 4.

Presidents Address

6.

Member’s News

THE BIRMINGHAM LAW SOCIETY BULLETIN IS PUBLISHED BY FRASER URQUHART MEDIA.

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Planning Points For Business Owners – On Death And During Lifetime

11.

The Importance Of Notice Clauses In Share Purchase Agreements

To advertise your business to Birmingham Law Society members call Fraser Urquhart Media on 0116 2533445 or email jon@fu-media.co.uk or kevin@fu-media.co.uk

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Editorial enquiries to info@fu-media.co.uk Disclaimer: Copyright Fraser Urquhart Media. No part of this publication may be copied or reproduced, stored in a retrieval system or transmitted in any form or by any means - electronic, mechanical, photocopy, recording or otherwise without the prior permission of the publishers. Whilst every attempt has been made to ensure accuracy in compiling this publication, the Publisher cannot accept responsibility for any inaccuracies, omissions, breach of copyright or otherwise since compilation. The Publisher cannot be held responsible for any material submitted to the publication, not excluding advertisements. The views expressed within this title are not necessarily the views of the Publisher. Acceptance of advertisements does not imply recommendation by the Publisher. © Fraser Urquhart Media 2021.

Requirements For Standard Contractual Clauses:

16.

What Is Esg & What Does It Mean For Law Firms?

18.

REGULATION REPORT: Compliance Top Ten For 2021

20.

Three Things To Think About When You’re Re-Mortgaging Your Home

22.

Empowerment Through Technology For Law Firms

24.

Top 10 Compliance Mistakes And How To Avoid Them

CONTACT US MEMBER EVENTS Birmingham Law Society Suite 101, Cheltenham House 14-16 Temple Street Birmingham B2 5BG

BIRMINGHAM LAW SOCIETY MEMBER’S EVENTS AND WEBINARS

Tel 0121 227 8700

25th January Commercial Property Update Pt. 1 1:00pm-2:30pm Virtual Event

info@birminghamlawsociety.co.uk www.birminghamlawsociety.co.uk @birminghamlawsociety Officers April 2020 - July 2021 President - Inez Brown - Harrison Clark Rickerbys Vice President - Stephanie Perraton Squire Patton Boggs (UK) LLP Deputy Vice President - Tony McDaid - No5 Chambers Hon. Secretaries - Stephanie Brownlees - Eden Legal Services LTD and Mariyam Harunah -- Squire Patton Boggs The Board 2020/2021 Chair: Dee Kundi Director: Karen Bailey Director: Caroline Coates Director: Laura Daly Finance Director: Ben Henry Director: Professor Luke Mason Director: Tony McDaid Ex Officio: Inez Brown Ex Officio: Linden Thomas Contact c/o Birmingham Law Society

20th January An Evening with Cherie Blair 7.00pm - 8.30pm Virtual Event

28th January The Future Delivery of Legal Services Conference 10:00am - 4:00pm Online 1st February Commercial Property Update Part Two 1:00pm-2:30pm Virtual Event 23rd February How to Burn Bright, not out!

The Fundamental Principles’ workshop 12:00pm - 1:00pm Virtual Event 12th March Lunch Club with Preet Kaur Gill MP 12:00pm-2:00pm Chung Ying Gardens 15th April Legal Awards 6.00pm - 1.00am The ICC

Booking is essential. To find out more and to reserve your space visit www. birminghamlawsociety.co.uk www.birminghamlawsociety.co.uk 3

PRESIDENT’S LETTER

including Geoffrey Cox, QC, MP; Nick Green of Spire Patton Boggs; Lisa Jordon of Irwin Mitchell; Tony McDaid of No5 Chambers and Greg Lowson of Pinsent Masons and Joe Wilson of St Phillips Chambers. BLS will continue to defend the Rule of Law on behalf of its members.

BREXIT In 2020, the UK was not only faced with COVID19 but we were also preparing to leave the EU. The new Brexit deal will shape our relationship with the UK’s biggest trading partner for many decades.

If you have not been following every twist and dramatic turn of the Brexit negotiations and there have been many, I would recommend reading the article in the Financial Times dated 24th December entitled, ‘The Brexit trade deal explained: the key parts of the landmark agreement’. The article covers the following areas:

PRESIDENT’S LETTER Happy New Year. It’s amazing how time flies as I am now entering the sixth month of my virtual presidency. What a first six months it’s been! 2020 was a year filled with both difficulties and opportunities but it is a year that will never be forgotten due to COVID19.

To date, there have been so many sad and untimely deaths in the UK totalling in excess of 77,000. In addition, there is a new variant to the virus causing infection rates to increase. The situation remains serious, uncertain and fast moving.

COVID19 continues to affect the health care services and continues to have a devastating effect on the economy. Once again the country is in full lockdown which will no doubt cause considerable difficulty and hardship to all sectors and is affecting mental health and wellbeing.

The legal sector needs to consider the role it will play in the country’s recovery both on an economic and social level. We need to continue to provide essential legal advice to clients who will be facing unprecedented business challenges. More than ever, we need to listen to our clients and their needs, and maintain justice for all.

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The good news is that the UK was the first country to approve and roll-out the COVID19 vaccine to people most at risk from coronavirus. These vaccines have been developed by Pfizer/ BioNTech and Oxford/AstraZeneca.

The order in which people will be offered the vaccine is based on advice from the Joint Committee on Vaccination and Immunisation (JCVI). The vaccines will help to put the UK and economy back on track and it is hoped that by spring/ early summer things will begin to improve.

THE RULE OF LAW Following a recent BLS survey, over 40% of people say it can at times be acceptable to break the law. Perhaps even more surprisingly, more than 1 in 5 people think it’s acceptable for a member of the UK government to break the law and 18% of people think that it is not very important that society’s leaders obey the law.

We can all agree that no one is above the law! In fact, for the rule of law to be effective, there must be equality under the law, transparency of law, together with an independent judiciary and access to legal remedy. It is therefore very important that as lawyers we continue to uphold the rule of law. In December I was privileged to chair ‘The Big Debate’ on the Rule of Law with a panel

• Level playing field: standards • Level playing field: state aid • Fishing rights • Data flows • Logistics and road haulage • Aviation and travel • Food and drink • Retail • Chemicals • Pharmaceuticals • Car industry • Manufacturing • Professional services • Financial services • Defence and security PROFESSIONAL SERVICES To summarise, it is noteworthy that professional services providers (including lawyers), will lose their ability to automatically work in the EU. This means that professions must have their qualifications recognised in each EU member state where they want to work.

However, agreement has been reached for short-term business trips and temporary secondments of highly skilled employees. You can also obtain more information on how Brexit legal services from The Law Society of England and Wales’ website. Finally, BLS will circulate updates in relation to Brexit in the coming months but please do not hesitate to contact us if you need any advice on the Brexit deal.

Inez M. Brown

www.birminghamlawsociety.co.uk 5

NEWS

UNCLEAR REGULATIONS COULD BE BEHIND PUBLIC LAWBREAKING, LAWYERS SAY

A number of the West Midlands’ leading lawyers have admitted that the decline in the UK public’s respect towards the law has been caused by a ‘lack of logic’ behind restrictions implemented by the Government in connection with COVID-19.

At a panel debate hosted by Birmingham Law Society, which included Geoffrey Cox QC MP, Lisa Jordan, Tony McDaid, Joe Wilson, Nick Green, Greg Lowson and Inez Brown, the respect for the law came into question following the results from a recent survey of 1,000 members of the public.

The survey found that almost one third (32.5%) expressed feelings that it is okay to break the law. Lisa Jordan, Regional Managing Director at Irwin Mitchell, commented that while the UK is largely a law-abiding nation, many have struggled to understand the logic behind some of the Government’s recent decisions.

She said: “By and large we have followed the rules. But when you take forcing pubs to close an hour early, as an example, people ask ‘what is the logic?’ The Government has a responsibility to ensure there is clarity behind the laws. If they do, then people will follow them.”

ASSET MANAGEMENT DIVISION OFFERING ADVICE TO CHARITY MEMBERS Law firm Irwin Mitchell is building on its relationship with the Spinal Injuries Association after being appointed the charity’s first trusted financial partner.

For the last five years, the legal experts have supported the charity’s peer support project by sponsoring a peer support officer for the Yorkshire and Humber area. This allowed Irwin Mitchell to help those affected by a spinal cord injury.

Geoffrey Cox QC MP, agreed, saying the Government has a responsibility to accurately communicate the law, otherwise it could be brought into disrepute. He said: “With the ever-extending legal control over our lives, it is very important that it is accurately reflected in the messaging. The law [can be brought] into disrepute when there is confusion and lack of clarity as to what it is.”

Now, the Spinal Injuries Association has widened its support network by partnering with Irwin Mitchell’s Asset Management division which can offer financial advice and expertise to charity members.

Birmingham Law Society’s survey results also showed how 87.6% agreed that lawbreaking by those in high profile positions has a negative impact on respect for the rule of law.

This new relationship will combine the existing peer support service with a nurse specialist team, an advocacy team and a newly-established counselling service. It will provide a greater depth and breadth of support to an increased number of people affected by a spinal cord injury up and down the UK.

Tony McDaid, CEO of No5 Chambers, added: “I think the survey would’ve produced different results if those in government, parliament and other high-profile positions weren’t seen to break the law. It is easy to see why young people, for example, see ‘one rule for them and another for me’, which has been problematic.”

Among the findings of the survey, a further two-thirds (68.7%) believe that respect for the law has decreased in the last five years, while 96.5% said it is important that society’s leaders obey the law.

Inez Brown, President for the Birmingham Law Society, concluded: “Our survey has opened up a much-needed debate about the role our leaders and the country’s lawyers have to play in respecting the law. Ensuring that regulations are clear and transparent is fundamental to earning public respect for new legislation and as lawyers, we must come together to ensure our message is heard.”

Birmingham Law Society’s panel debate is available to watch ondemand. For more information, visit: www.birminghamlawsociety. co.uk/debate-2020/.

We would like to thank our sponsors for supporting this event: Harrison Clark Rickerbys and Wesleyan.

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Edward Tomlinson, Head of the Financial Planning Team at Irwin Mitchell, said: “I’m delighted that the Spinal Injuries Association has chosen Irwin Mitchell as its first trusted financial partner.

“This new national partnership allows us to provide our full service offering to the SIA’s 11,000 members via its support network. It means members will be given the best financial planning and legal advice, and it will also help the SIA achieve its vision of ensuring everyone affected by a spinal cord injury can live a fulfilled life.”

PLANNING POINTS FOR BUSINESS OWNERS – ON DEATH AND DURING LIFETIME be checked that the will provisions can take place. Are there any pre-emption rights so co-shareholders can opt to buy the deceased’s shares and avoid family members suddenly running the business with them? Who is it best to leave company shares to in the will in any event?

Business owners may well have sufficient wealth to mean inheritance tax will be of real concern. Detailed advice should be taken so the particular circumstances and priorities of each individual can be considered and tailored advice received.

Should the home go into a trust for the surviving spouse to preserve the asset for children from a first marriage in the case of blended families, or to limit the amount spent on the survivor’s care and preserve an inheritance for the children?

Trusts should be considered, either of business assets or other assets, as they can protect those assets if future generations suffer financial or matrimonial difficulties, or if the beneficiaries are not mature and responsible enough to receive large sums of money.

Everyone should consider what their wishes are for their assets on their death and seek advice on a will, but for business owners, there are particular issues to consider writes Laura Banks, partner, Harrison Clark Rickerbys.

If a business owner fails to make a will, and so dies intestate, they won’t be able to ensure that the value of the business interest (whether sole trader, partner or shareholder) passes to the intended recipient. In a will, steps can be taken to ensure that the ownership and control passes to the business co-owners. Is it appropriate for a co-owner’s spouse or children to have a seat at the table and make decisions about the business? Or should the co-owners buy the interest out so the family, either directly or through a trust, receives the value but not the responsibility?

The choice of executors is crucial as, if there is a cross option agreement in place for shareholders or equivalent in the partnership agreement, they will be

the ones negotiating for the family. They have an even more important role if there is no agreement with the co-owners, as they will be negotiating all aspects with them, rather than ‘just’ navigating the agreed purchase process. If there is to be no sale of the business interest to coowners, the executors should have the relevant business skills to be able to run the business on a short, medium or long term basis.

In the case of a partnership, unless there is agreement to the contrary in a partnership agreement, a partnership will be dissolved fully by the death of a partner, so the partnership would come to an end. This aspect should be considered ahead of the death of a partner.

Although a partner may dispose of their partnership share by their will, a partnership agreement provision will prevail if it differs from the will’s provisions. It is always therefore best for a partnership agreement and the will provision to be considered in tandem.

With a shareholding, the death provisions in any shareholders’ agreement (or in the memorandum and articles of association) need to be considered so that it can

Trusts can also be used to benefit future generations by potentially by-passing children to benefit grandchildren or further generations. Trusts can run for a maximum of 125 years so can look after several generations.

Business owners should think about not just what they would like happen if they die, but very importantly, what should happen if they lose capacity before death. Powers of attorney are a valuable way of ensuring that, in such a sad case, the business can still be run and personal finances managed, if an individual loses capacity. Without a power of attorney, an application would need to be made to the Court of Protection for a deputy to be appointed which can take many months and cost far more than a power of attorney. Meanwhile, what happens to the business?

Business owners may wish to appoint family members for managing their personal finances and health decisions, but different people under a business power of attorney to run their business, who have the necessary business skills and knowledge to do this.

Everyone, and especially business owners, should obtain detailed advice from a knowledgeable qualified adviser on their particular circumstances so they plan for the future in a coherent comprehensive way. www.birminghamlawsociety.co.uk 7

NEWS

LAW SOCIETY RECOGNISES LODDERS LAWYER’S FIFTY-YEAR LANDMARK securing changes to the law on compensation for compulsory purchase in respect of advance payments to ensure that disposed landowners have the finances to reduce or pay off mortgage debt on the land, and avoid being out of pocket or bankrupted while lengthy negotiations and arguments drag on to finalise the amount of compensation payable.

Michael says that other top career highlights over the past 50 years, have been representing clients at public inquiries: “Whilst not always of legal significance, cases were of course always of great importance to the individuals involved. In two cases,”

In recognition of 50-years in the legal profession, Birmingham Law Society has presented Michael Orlik of regional law firm Lodders, with a special award.

Michael was admitted as a solicitor in October 1970, and has been a member of the Commercial Property team at Lodders since 2002.

Marking Michael’s fifty years in legal practice, the Birmingham Law Society has awarded him a commemorative plaque in recognition of his achievement.

The Society planned to present the award at a special event, but this had to be postponed due to the COVID-19 restrictions, and Lodders’ managing partner Paul Mourton presented Michael with the award on the Society’s behalf.

A specialist in local government, planning, highways, public and private rights of way, compulsory purchase, compensation law, common land and village greens, Michael is known as one of the country’s leading experts on highway law. His book, ‘An Introduction to Highway Law’, is now in its fourth edition.

He spent the first half of his career in local government working for four different councils, the last being the Surrey Heath Borough Council in Camberley, where he was Chief Executive and Town Clerk. In 1990, he entered private practice as a partner at Needham and James in Birmingham, which merged with Dibb Lupton Alsop in 1993. He joined Lodders in Stratford upon Avon in 2002.

An Oxford University graduate, Michael was instrumental in 8 www.birminghamlawsociety.co.uk

Michael was also in court for what he describes as “the very unfair trial of the Rolling Stones” in the West Sussex Quarter Sessions in 1967, while serving articles with Geoffrey Godber, the Clerk of the West Sussex County Council.: “As a young, idealistic trainee lawyer, I was appalled at the injustice,” he says.

He adds: “Whilst slightly mystified that it is now fifty years since I was admitted to the legal profession, I can honestly say that I have enjoyed the whole of my career very much, both in the public and private sector.”

Presenting the award on behalf of Birmingham Law Society, Paul Mourton said: “Michael stands out as one of the UK’s leading authorities, and a nationally acclaimed expert, on UK Highway Law. He has played a key role in establishing Lodders as the experts in matters concerning Highways and Rights of Way amongst developers, landowners, and local authorities, providing them with specialist advice in this highly technical area of the law.

“We congratulate Michael on his fifty years in the legal profession, and thank him for his continuing contribution to the firm and support of the commercial property team.”

Becky Lynch, Head of Operations at Birmingham Law Society, adds: “Birmingham Law Society is very proud to present the award to Michael for recognition of fifty years in legal practice. We look forward to welcoming Michael to a presentation in the new year when the restrictions are lifted.”

Michael today works with Lodders as a Consultant. He lives in Edgbaston with his wife Susan.

NEW PARTNER BOOSTS TEAM AT VWV BIRMINGHAM Partner Sarah Webb has joined VWV’s successful Birmingham team to advise businesses on all areas of intellectual property and commercial law, working in the education and charity sectors, amongst others.

After decades of experience across leading Birmingham City law practices, Sarah joins VWV from Higgs and Sons, having headed the commercial team and worked closely with its entrepreneurial owner managed business clients and IP centric enterprises including university spinouts and start-up companies.

She has a vast amount of experience supporting clients across all of their commercial and IP needs and trading activities. Sarah combines an understanding of her technical legal discipline with a practical approach, built up over the years in advising across a number of client sectors such as professional and financial services and manufacturing and engineering.

Sarah’s immersion into all facets of her clients’ business is exemplified by her work in the last 11 years for the Professional Golfers Association, working together with their senior leadership team and other professional advisors to help them deliver their IP and corporate strategies.

Independent legal directory Chambers & Partners commented on Sarah that she “impresses clients with her mastery of IP issues”.

Sarah commented on her appointment: “I am delighted to be joining VWV, a law firm with strong core values that resonate with mine.

This is a great opportunity to work as part of a fantastic team of specialists.”

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NEWS NEW PARTNERS & FIRST LEGAL DIRECTORS AT ANTHONY COLLINS SOLICITORS Birmingham-based Anthony Collins Solicitors has appointed its first legal directors as part of a series of promotions which includes three new partners.

legal director position which has been created as an alternative to partnership - with solicitors able to embark on a new flexible career path within the firm.

The new partners are Doug Mullen who will lead the growing social purpose law firm’s pensions practice and Phil Scully who steps up to lead its property litigation practice.

Ramjeet Kandola has also been promoted to partner within the firm’s corporate litigation team.

Evans, who joined the firm three years ago, is playing a key role in building its planning practice, widening the regeneration and development services on offer.

Stuart Evans and Edwina Turner have been promoted to the new

Turner’s promotion to legal director follows successfully establishing Anthony Collins Solicitors as a leading charities law firm, working with clients such as The Charity

Commission, Methodist Council and MIND. The firm has also conducted a round of wider promotions, with Alex Lawrence, working in its governance and commercial team, becoming a senior associate. Cara McNeely (property), Narinder Singh and Samantha Woolley (private client) have all been promoted to associate, with Lauren Murphy also becoming an executive within the firm’s private client team.

For more information, please visit www.anthonycollins.com

THE TRADE IN SERVICES UNDER THE UK-EU TRADE & COOPERATION AGREEMENT (TCA)

The service sector accounts for around 80 percent of the UK economy and makes up more than 40 percent of the UK’s exports to the EU. It is unfortunate then that although the TCA makes some loud commitments to liberalising services the devil in the detail of the Annexes is far more defensive and that is where many EU Member State restrictions are to be found.

As the UK has left the EU Single Market, UK service suppliers have lost the automatic right to offer services across the EU. Instead they will have to comply with a patchwork of rules in each Member State.

To counter-act this service suppliers, as many already have, may need to establish themselves in the EU to continue operating.

Having said that the TCA does have substantive things to say on particular sectors such as professional, telecoms, computer, digital, financial architectural, transport and environmental services. Unlike other “third countries” UK suppliers will be treated no less favourably than EU suppliers and vice-versa.

The actual level of market access will depend on the way the service is supplied. For example: supplied cross-border from the home country of the supplier, e.g. over the internet (“mode 1”); supplied to the consumer in the country of the supplier, e.g. buying services whilst travelling abroad (“mode 2”); supplied through a locally-established enterprise owned by the foreign service supplier (“mode 3”); or supplied through the temporary presence in the territory of another country by a service supplier who is a natural person (“mode 4”).

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Financial Services As was largely anticipated “passporting rights” will no longer apply for financial services firms. There is relatively little substantive detail on financial services to replace this which will cause inevitable friction.

Specific examples of easing friction are: market access on a nondiscriminatory basis if firms are appropriately established in their home jurisdiction; implementing agreed international standards; and a commitment to put in place a Memorandum of Understanding by March 2021 for establishing a framework of regulatory cooperation on financial services.

Of more concern are the following: financial services are excluded from the most-favoured nation clause in terms of a future trade deal with a third country; financial services are excluded from the requirement to review trade in services and investment relations in the future; equivalency decisions are not covered.

Instead it is a unilateral decision of the European Commission and of HM Treasury in terms of making such decisions to grant third country access to their markets.

Professional Qualifications There is no mutual recognition of qualifications. Instead, broadly, UK nationals, irrespective of where they acquired their qualifications and EU citizens with qualifications acquired in the UK, will need to have their qualifications recognised in the relevant EU Member State on the basis of that State’s domestic rules.

There is however the prospect that the UK and EU will agree mutual recognition of specific qualifications on a case by case basis.

For help or advice on this or UK EU legal technical issues, please speak to Baljit Chohan b.chohan@sydneymitchell.co.uk 0808 166 8827 www.sydneymitchell.co.uk/news/trade-services-under-uk-eutrade-and-cooperation-agreement-tca

THE IMPORTANCE OF NOTICE CLAUSES IN SHARE PURCHASE AGREEMENTS The United argued that the Dodika was aware of the investigation prior to the notice of claim, as various pieces of correspondence had been exchanged by the parties. United further argued that the notice of claim should be considered in light of that knowledge.

The judge rejected that argument, stating that the SPA required United to provide reasonable detail of the claim and it could not rely upon Dodika’s existing knowledge. The judge stated that as a minimum “a compliant notice would identify the particular warranty that was alleged to have been breached;… at least in general terms the notice would explain why it has been breached, with at least some sort of particularisation of the facts upon which such an allegation was based, and would give at least some sort of indication of what loss had been suffered as a result of the breach of warranty”.

PRACTICAL POINTS

As a matter of course share purchase agreements contain clauses about the notifying of claims. The norm is to see provision for the person(s) to be notified and the method by which notice should be given. It is also not unusual for the clause to set out the level of detail required for there to be a valid claim writes Kirsty White, Barrister, St Philips Chambers.

In the recent case of Dodika Ltd & Ors v United Luck Group Holdings Ltd [2020] EWHC 2101 the High Court determined that the buyer’s notice of claim did not fulfil the notice provisions and was therefore inadequate.

The SPA provided that “the rights of the buyer in respect of: any… claim under

the tax covenant shall be enforceable if the buyer gives written notice to the warrantors stating in reasonable detail the matter which give rise to such claim, the nature of such claim and (so far as reasonably practicable) the amount claimed in respect thereof on or before [a specified date]”.

The tax warranties in the SPA provided that in certain circumstances the Dodika Ltd (“Dodika”) would pay the costs of any tax liability. In its letter of claim the United Luck Group Holdings Ltd (“United”) gave notice of a tax investigation by the Slovenian authorities. The letter before claim was general in nature, informing Dodika of the existence of the enquiry but gave none of the substantive details.

United stated the value of the claim as an amount equal to that it considered likely the Slovenian authorities might impose. Dodika brought Part 8 proceedings and applied for summary judgment that United had not complied with the notice provision.

It seems obvious to say that a notice of claim should be drafted having first reviewed the notice clause and understanding the requirements of the same. Notice clauses are contractual requirements and the failure to observe the same can rarely be dismissed as a technicality that can be brushed aside. The law in relation to contractual interpretation and the well-known line of authorities including Arnold v Britton [2015] UKSC 36 will be applied when determining the meaning of the term. If the notice of claim does not comply with the clause then a claim stands liable to be struck out.

A clause requiring reasonable detail of the claim, as above, should give the recipient enough information to consider the merits of the claim and to take any necessary steps so as to properly respond to the claim, and notify any other relevant parties.

If there has been previous correspondence between the parties then that should be properly referenced, and possibly appended to the notice rather than a simple reference made.

Equally if you are responding to a notice of claim check the notice clause before delving further into the correspondence.

Kirsty is a barrister at St Philips Chambers specialising in Commercial, Company and Insolvency law. She can be contacted via her clerks at commercial@st-philips.com www.birminghamlawsociety.co.uk 11

OPINION DRIVING THE WEST MIDS’ TECH REVOLUTION IN PROFESSIONAL SERVICES A collaboration between the West Midlands’ largest and most well-established businesses and emerging tech firms aims to accelerate a technology revolution in professional services.

Generating £27.8 billion gross value added annually, and employing more than 360,000 people, the West Midlands is the UK’s largest centre for business, professional and financial services (BPFS) outside London.

Now, business leaders from Shoosmiths, Wesleyan, Bruntwood, CBRE and Birmingham Law Society, amongst others, are working with the region’s just under 12,500 leading tech and digital companies to see how they can integrate AI and advanced technology into their everyday activities.

SuperTech – the first ProfTech supercluster in the UK - aims to increase the level of digital-led disruption between technology businesses and professional and business service organisations. Harnessing the cross-over potential across sectors including LawTech, FinTech, PropTech and InsureTech, the Partnership also focuses on spurring new ideas and products through tech innovation. The collaboration is unique in taking this integrated approach and reflects the group’s 12 www.birminghamlawsociety.co.uk

fundamental beliefs that there is much to be gained in sharing intelligence and practice between professional communities when it comes to technology-led disruption, and also that significant opportunities exist in the interfaces.

Inez Brown, president of Birmingham Law Society and one of two legal leads on the SuperTech programme alongside Tony Randle of Shoosmiths, said: ““As one of the leading and most well-established professional services sectors in the region it is incredibly important to me that we lead from the front. Not just considering how technology can benefit us but also our clients.

SuperTech provides that opportunity for all professional services firms throughout the West Midlands.

“Birmingham has a deep-rooted heritage in legal and professional services, which if leveraged successfully through tech, gives the UK a major competitive advantage in emerging industries of tomorrow.

“Being part of SuperTech allows us to ensure that it is not just the largest legal businesses that are able to integrate tech into their operation but all firms.”

Tony Randle, partner at Shoosmiths, added: “If you look at where the investment is going in law, it is centred towards those new firms that are able to leverage

technology to improve and automate processes.

Massive change is coming, and tech is going to play a crucial role in determining whether law firms thrive or fail. At Shoosmiths we are very firmly standing behind SuperTech in supporting its goal of allowing greater integration of technology in law and the wider professional services community.”

David Stewart, Group Chief Operating Officer at Wesleyan and co-lead for the finance cluster within SuperTech, said: “ProfTech, like FinTech, is an emerging sector with enormous potential to scale.

Having undertaken a number of studies into FinTech, which in just a few short years is now worth £411.7 million per annum to the West Midlands economy, we’ve identified three ways in which we can facilitate growth - access to businesses, access to technology and access to talented people.

“SuperTech combines all three, by connecting technology firms with the major professional services businesses we have across the region.”

David continued: “For established organisations like ourselves, involvement in SuperTech gives us access to the region’s emerging tech talent and latest developments. While tech firms, whether focused on finance, property, law or insurance, can find new ways to solve business issues and gain direct access to a sector that is worth almost £28bn – 26.5% of the total regional economy.”

In a further move to support the growth of professional services technology in the region, a partnership between the Investment Association and Wesleyan has established Europe’s largest asset management FinTech hub, The Engine Room, in Birmingham.

FOUR LAWTECH INNOVATIONS AND APPLICATIONS WITH LINKS TO THE WEST MIDLANDS: SOLOMONIC - WARWICK Solomonic offers a statistical analysis platform to equip litigation lawyers, their clients, funders and counsel with vital information to inform and enhance decision-making and advice throughout a legal case. Developed in partnership with Warwick Business School at the University of Warwick and qualified solicitors and barristers, the platform uses machine learning to analyse judgements order and other court documents to provide valuable data points for analysis. This information can then be used by legal firms to predict case outcomes, or by clients to research experts with the most experience in a field.

CLARILIS - WARWICK

Specialising in complex document automation, Clarilis offers the legal sector a simple, straightforward and efficient way to prepare contracts and other documents through its online platform solution. Launched in Birmingham in 2015 by brothers James and Kevin Quinn, the company has grown from strength to strength, with a client roster including 30 of the UK’s top 100 law firms. 2020 saw Clarilis open a new office in Singapore, marking the start of ambitious plans for further global reach targeting the South-East Asian, Australian and Canadian markets.

ENGINE B – WEST MIDLANDS REGION Engine B is a co-created professional services enterprise that aims to create industry standards for data access and open up the marketplace for a more diverse range of clients to enter the sector. The University of Birmingham is among the consortium’s first academic partners helping to develop the standardised methodology. Currently working with accounting firms, the organisation is seeking to create an artificial intelligence-led platform that will help the industry analyse client data for audits to produce a more accurate process, help identify fraud and financial misstatements.

GOWLING WLG - BIRMINGHAM

Global leading law firm Gowling WLG is taking major steps to introduce technology within its legal services for the real estate sector. Working in partnership with AI technology partners Avail, the firm has enhanced its client services through a number of technology solutions. Its Title Register Review App allows instant reporting on Official Copies to allow lawyers rapidly to identify issues within a property portfolio and advise a client, while the firm’s Property Searches App extracts key information from multiple documents about a property to quickly create a summary report and increase the efficiency of its legal services for clients.

FIVE KEY PROFTECH STATS: The region is home to more than 53,000 Business, Professional and Financial Services (BPFS) companies employing 358,200 people, making it the most significant business hub outside of London. (ONS) Generating £27.8 billion GVA annually, BPFS represents the region’s largest sector, responsible for almost a third of its total GVA, with a value that is forecast to double to £50bn over the next 10 years. (Productivity and skills commission, CityRedi, 2018).

The West Midlands is home to the largest regional tech and digital cluster outside of London with 72,700 people employed across 12,550 tech and digital companies. (ONS) The region’s newly established FinTech sector boasts 122 companies, 46% of whom are classified as scaleups.

The West Midlands’ 12 universities contain 50 tech-related centres of excellence and deliver over 66,000 graduates every year. (HESA).

To find out more and get involved in SuperTech visit: www.supertechwm.com or follow SuperTech on LinkedIn and Twitter www.birminghamlawsociety.co.uk 13

OPINION

THE END OF PRIVACY SHIELD & NEW REQUIREMEN CONTRACTUAL CLAUSES: WHAT ‘SCHREMS II’ MEANS FOR YOUR IN In July 2020, the European Court of Justice dealt a major blow to organisations that transfer personal data to the US and other jurisdictions, primarily with the striking down of the EU-US Privacy Shield. The judgment also raised wider concerns for organisations relying on Standard Contractual Clauses (SCCs).

In this article, Penny Bygraves of Veale Wasbrough Vizards LLP considers what this actually means for organisations within the Pharmaceuticals and Life Sciences sector who export personal data to the US and beyond and what the implications are for data transfers into the UK, if the transition period with the EU ends without a decision that the UK's data protection laws are adequate.

Implications for the Pharmaceuticals and Life Sciences Sector in the UK Improving data transfers (eg by improving efficiency with which clinical trial results are shared or increasing the size of biobank populations) has been identified as key to ensuring the continuation of rapid developments we are seeing in the fields of predictive diagnostics, medicines and therapeutics. For 14 www.birminghamlawsociety.co.uk

example, the new NHS England Genomic Medicine Service (offering future opportunities for cell and gene therapies) will benefit from access to the latest cutting edge technologies, which empower scientists (through better integration of data) to discover more efficient medicines faster. We have seen this already in the clearer targeting strategies and reduction in clinical trial lengths demonstrated in the context of the coronavirus (COVID-19) vaccine. These demands are to be considered amongst a developing regulatory landscape.

Organisations operating within the Pharmaceuticals and Life Sciences sector will need to review any specific arrangements where they rely on the Privacy Shield, or the SCCs, to permit transfers of personal data outside the UK. This includes within group structures, as well as third party IT outsourcing and cloud storage arrangements.

They should consider whether an adequacy assessment needs to be carried out and/or whether supplemental measures need to be implemented.

In particular, organisations need to look out for arrangements with large corporations who provide cloud services, or otherwise store or transfer data (such as Google or Microsoft), to see if they have

updated their data protection terms. Often, these will require organisations to take some form of action to ensure that they are valid and apply to their agreement, so be aware that you may have to click a link, or request a specific agreement/ set of terms in order to comply.

The Legal Background to the Schrems II Decision Under data protection law in the UK, organisations cannot transfer personal data outside of the UK or the EEA, without ensuring that the personal data is safeguarded in the same way that it would be if it remained in the EEA or UK. There are some exceptions to this (such as where the individual has provided explicit consent to the transfer, after being made aware of the risks), but most large scale transfers rely on one of the following methods of securing equivalent protections.

The first of these is where the EU has issued an "adequacy decision".

This means that the EU has assessed the laws of the relevant country and declared that they provide sufficient protections to allow a transfer.

Other options include SCCs, or Binding Corporate Rules (BCRs), both of which seek to place contractual safeguards on data being transferred which offer

and guidance on European data protection law - has recently published guidance on what this assessment might look like and what sorts of safeguards could be put in place following the assessment (if the third country is deemed inadequate). It stresses that any assessment, or additional necessary safeguards identified, should be considered on a case-by-case basis as there is no 'one-size-fits-all' solution.

How to Carry Out an Assessment Whilst not being definitive, the guidance does set out some key requirements which should be met and also identifies some key steps in the process. For example: The exporter (ideally with the help of the local importer) must identify any laws or practices in the third country that undermine the effectiveness of the specific safeguard relied upon (ie SCCs).

NTS FOR STANDARD

NTERNATIONAL DATA TRANSFERS equivalent protections.

The US does not have an adequacy decision as such, but it did have the Privacy Shield. This was a voluntary code that US organisations could sign up to, which purported to ensure information protection met EU standards.

The Decision The Court found that the law in the US around surveillance and general privacy of citizens meant that, effectively, US organisations could not guarantee equivalent protections to personal data, even when complying with the Shield.

This means that organisations in the EEA (and the UK) can no longer rely on the Shield to transfer personal data to the US. Organisations can still rely on SCCs and BCRs in principle. However, organisations are required to carry out an assessment to ensure that safeguards are in place and put in place supplemental measures where appropriate.

What Are the Options?

All international transfers that rely on SCCs or BCRs will need an assessment of the protections offered by the law of the recipient country, with a conclusion that the level of protection offered by the SCCs or BCRs is equivalent to that provided by the GDPR, or details of additional safeguards that have been put in place.

The European Data Protection Board (EDPB) - a body which provides advice

The EDPB has provided a non-exhaustive list of information sources which could be relied on when carrying out the assessment, including resolutions and reports from intergovernmental organisations and UN bodies.

The assessment should focus on the particular transfer in question and the specific transfer tool relied on, ie it need not become an assessment of the entire data protection landscape in the third country.

The assessment must be thoroughly documented to ensure that you can demonstrate the basis for the decision that was taken, when required.

What If the Assessment Deems the Third Country 'Inadequate'?

If the assessment determines that local laws undermine appropriate safeguards, then unless 'supplementary measures' can be put in place, the transfer must not go ahead, or if already being carried out, then the transfer must be suspended or terminated.

Supplementary Measures These are measures which may be adopted to raise the protection level to the EU standard and otherwise permit the transfer (despite the third country being deemed inadequate).

The EDPB has provided a non-exhaustive list of what these measures may include, such as encrypting the data and ensuring 'encryption keys' are managed and retained solely outside of that third country by the exporter and/or adopting additional contractual safeguards, requiring the recipient to resist requests from law enforcement agencies.

However, such options may not be practical in many cases. For example, encryption may work if the data is simply being stored in the US but not if it needs to be accessed or viewed there.

Whilst a helpful starting point and guide, the guidance and examples are worded

cautiously to avoid amounting to definitive solutions and the EDPB reiterates that each data sharing scenario must be considered on a detailed case-bycase basis to determine what (if any) supplementary measures are appropriate in the circumstances.

Not a 'One-Off' Requirement The guidance states that the protection afforded to data in the third country should be continuously monitored on an ongoing basis to ensure there have been no developments that may reduce the protection. What this specifically requires is not specified - for example, does this require repeat assessments, or how frequently should this be re-examined?

This is Likely to be Hugely Costly and Impractical for Organisations, So What Else Can Be Done?

The UK's data protection regulator, the Information Commissioner's Office (ICO), has confirmed that it will continue to regulate using a risk-based and proportionate approach and is still considering the effect of the decision.

Organisations should consider taking stock of their international transfers and reviewing any that might be high risk.

Where personal data is clearly at risk, action should be taken to mitigate this where possible, such as encrypting the data and otherwise looking at where supplementary measures may be needed and what these could be.

What Will Be the Impact of Brexit?

In the event of a 'no-deal-Brexit', and there being no 'adequacy decision' forthcoming from the European Commission in respect of the UK, then there will be imminent action required - which organisations should start thinking about now. If SCCs are relied on, you should prepare to be involved in an adequacy assessment, for example, if requested by your EEA partner. Now is the time to consider how these requirements will be met, such as the practicalities of carrying out and documenting the adequacy assessment, whether to put in place SCCs for transfers into the UK, as well as identifying and adopting any necessary supplementary measures required.

We have focused on recent developments around international data transfer requirements. However, regardless of whether the UK gets an adequacy decision, there will likely be additional steps that you will need to take for data protection compliance following the end of the Brexit transition period. For example, some organisations may need to appoint a representative in the EU and make changes to their data protection documentation.

For specialist legal advice regarding data protection and international transfers please contact Sam Curtis on 0117 992 9716 or Penny Bygrave on 07909 681 572 at the VWV Information Law team. www.birminghamlawsociety.co.uk 15

OPINION

THE R WORD: DEVELOPING RESILIENCE IN TESTING TIMES Since I launched my Bounce Forward programme, one of the greatest discussion points we have is about the perception of a resilient person. Leaders especially tell me they feel the need to have all the answers and ‘be strong’- almost cape wearing individuals. However, when I ask them to pick a leader they really admire and to consider their resilience we always discover that these highly valued people DO ask for help, DO involve others and DO speak out when they don’t have the answer. When I ask the delegates how they have felt when their direct reports have sought their opinion or advice, they say they feel empowered and valued with greater responsibility. So why not do it ourselves when we need to?

“If I hear that bloody word again…” Words from one of my clients last year on the board of directors for a FTSE company I work with. She was talking about the ‘R’ word! Resilience is a remarkable attribute that many of us work hard to build but for some it can be a word banded about to permit organisations to throw more work at people writes Rebecca Mander at guruyoucoach.com “You need to work on your resilience” is a phrase too often uttered by demanding direct reports. So we know WHAT we need to be but HOW is rarely discussed! When we’re going through setback, such as times like this, facing it with resilience may seem like an impossible goal, but it IS something we can work on and develop.

But really what is resilience and how can we get more of it?

Resilience is our ability to bounce forward through challenging situations. Often described to children as ‘bounce back’. As I see it in my personal and professional life we move forward always and learn from adversity. Author of “Option B”- Sheryl Sandberg talks about post traumatic growth. “The insight and confidence people gain when recovering from trauma is 16 www.birminghamlawsociety.co.uk

critical not only to recovery but to making people stronger than they were before.”

Our law firms can help foster this growth by reaching out, offering support and programmes that will equip employees with tools and techniques to be “more resilient” …it is not enough to simply ask someone to “be more resilient”.

Resilience to you and I will mean different things based on our frame of reference. You may look at a colleague, low and puffy eyed on a conference call telling everyone how home schooling is driving them bonkers and question their resilience. After all you know they have a partner that doesn’t work who can help out and isn’t everyone going through this?

What they may not be sharing are their financial struggles which are leading to arguments at home and the stress of increased hours meaning they are spending little time with their children and are unable to visit a poorly parent. We cannot measure resilience. …but we can develop it!

In 2007-2008 we lost our son Charlie. I went back to work, I became a new Mum again and I lost my Mum…I guess you could say I know a fair bit about resilience and for sure I can promise you as I do my clients, that looking after yourself and asking for help are the keys to true resilience.

There is true power in vulnerability and one of the most listened to Ted Talks by Brene Brown is popular for that very reason. It resonates with everyone. We may think vulnerability is the opposite to resilience, but I believe it is the key to it. We are individuals and can only do so much but by seeking assistance from other minds and resources we not only empower others but we release ourselves from the pressure that coping alone can bring.

As a newly appointed MD at the beginning of the global crisis in 2008, I would gather Directors every morning to check in, seek counsel and plan our way forward. I would speak to my neighbour who had a successful business in the same sector and I would regularly speak to my boss in Holland. To pretend I had all the answers would have been foolish, arrogant and possibly lead to more loss. As it was when the company grew it was thanks to a team of people…not one person wearing their pants on the outside of their trousers!

So don’t think you need all the answers, empower others and collaborate to help you bounce forward in business or in your personal life. It is a privilege to help others and reaching out not only helps you but builds confidence in those who are supporting you too.

Rebecca Mander is an Executive Coach who specialises in supporting senior leaders in the legal sector. A Fellow of the Institute of Leadership and Management, and 20 years of coaching experience, Rebecca works with CEOs and Managing Partners to support their teams when they need it most. For further details of Rebecca’s work, please go to her Linkedin page or website www. guruyoucoach.com.

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OPINION

procedures • Clear anti-bribery and corruption policies • Ensuring boards are composed of independent members How to simplify and structure your ESG process Given the wide spectrum of areas that fall under ESG, putting a process into action can seem daunting.

However, because Landmark recognise the importance that ESG reporting will have in the future, we are offering a platform and reports that allows anyone - regardless of ESG knowledge, experience or qualifications - to kick off their ESG due diligence.

The RiskHorizon ESG Screen report has been designed to simplify ESG risk management for law firms. By providing a framework for ESG due diligence it allows you to quickly focus on main ESG risks of a particular sector.

WHAT IS ESG & WHAT DOES IT MEAN FOR LAW FIRMS? ESG stands for Environmental, Social and Governance and is a set of factors that assess how an organisation impacts on the environment and society. These three criteria are considered key factors for assessing the sustainability and ethical impact of an investment, as reported by both McKinsey and Deloitte writes Allie Parsons, Customer Success Consultant, Landmark Information • “83 percent of C-suite leaders and investment professionals say they expect that ESG programs will contribute more shareholder value in five years than today.” - McKinsey’s Global Survey • “89 percent of investment managers…indicate their firms will devote more resources to this area in the next two years.” Deloitte It’s no surprise many mutual funds, brokerage firms and other financial service advisors are now looking for products that inform investments through ESG criteria.

But what does each area of ESG encompass? It’s a complex subject, so this article just covers the main areas 18 www.birminghamlawsociety.co.uk

and looks at some ways you can address them within your firm.

Environmental As you would imagine, this first pillar of ESG focusses on the effects on the physical, natural environment. Across the globe, how we produce, consume and discard has a significant adverse impact on the natural world.

Considerations include: • Potential climate risk • The extraction and use of raw materials • The effects of human activity on biodiversity Social It’s not only nature we need to consider. How employees and local communities are affected also must be taken into account.

Considerations include: • Are human rights respected?

• Is the end consumer protected from unsafe products or practices?

• How is the personal data of

individuals protected?

Governance Governance is to do with making sure there are systems in place to ensure accountability within a corporation.

Considerations include: • Transparency of processes and

Simply answer a number of questions, which become more specific as you drill down into the sector or location of the target firm, and get instant access to a clear, concise overview of ESG risk and recommended next steps for that company.

This report uses data from: • 90 industries • Over 45 global risks, with coverage for 175 countries • Up to 30 data sources including The World Bank, Unicef and the Global Child Forum, Freedom House, and United Nations Development Programme • All of these are benchmarked against the Sustainability Accounting Standards Board (SASB) You will be provided with a list of due diligence questions which frame the whole ESG due diligence process and can inform any further legal advice including next steps around the potential investment.

• Pre-screen target companies for risk • Easy question-and-answer format focuses due diligence from the outset • Conduct deeper investigations by a sector/geography specific list of questions • A clear, numerical ESG score is easy to digest and explain • Internal benchmarking means you can not only review potential investments, but improve existing ones In addition, you will have access to an experienced consultant for to answer any questions on the report results.

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REGULATION REPORT COMPLIANCE TOP TEN FOR 2021 WRITTEN BY JAYNE WILLETTS, SOLICITOR ADVOCATE, JAYNE WILLETTS & CO SOLICITORS. What does 2021 have in store for us?

With so much to choose from, here are ten of the significant compliance issues for the New Year.

1. SUPERVISION Effective supervision prevents unhappy staff and prevents negligence claims. During the pandemic, supervision has become more important than ever and more difficult to implement. Working on a kitchen table in a small flat for months on end is not conducive to a sense of well-being. It is also not conducive to high service standards – see later. Supervisors cannot solve every problem but keeping in very regular contact provides a fighting chance of averting either a personal or professional problem.

One of my senior partners used to “manage by walking about”. You cannot beat walking the floors and chatting to members of the firm but that option is not open to us at present. Smaller teams for supervision purposes during the pandemic provide more time for 20 www.birminghamlawsociety.co.uk

personal contact as well as working in teams on particular transactions or cases if that can be achieved.

Until we are back in the office and returning to some semblance of normality, supervision both personal and technical is the most important objective for the first six months of 2021.

2. ANTI-MONEY LAUNDERING PROCEDURES A recurrent headache for the profession is the implementation of anti-money laundering procedures.

The SRA as an AML supervisor is monitored by the Office for Professional Body AML Supervision and has during the last 12 months been redoubling its efforts to ensure compliance by those it regulates.

Vendor fraud is seen as a real threat by the SRA with the risk of infiltration of firms by collaborators making use of forged or stolen documents. Rigorous checks on new staff and on client identities in all cases is essential. 2021 may be just the time for a review of internal procedures and refresher training.

Increasing staff awareness by the sharing of practical examples and experiences is always worthwhile.

Fee earners and staff need to put aside their usual trusting nature and switch on their suspicious antennae.

And do not forget the wider definition of “tax adviser” which may affect specialist family law and employment firms in particular.

Those affected need to reregister with the SRA by 10 January 2021.

3. CYBER SECURITY As criminals develop ever more ingenious cyber scams, it can be difficult to keep up especially if you are of different generation technologically speaking. The SRA reports that £2.5m was stolen from law firms by cyber criminals in the first half of 2020. The patience and pockets of the profession’s insurers will not be inexhaustible so more self-help is required. The latest SRA guidance published in November 2019 and guidance on the National Cyber Security Centre website both provide a very useful aide-memoire for a New Year spring clean on this important area of concern. But nothing trumps a sense of alertness on the part of your staff. As with AML, (and road safety), if in doubt stop and think before advancing.

4. REPORTING CONCERNS TO THE SRA Juliet Oliver SRA General Counsel at the SRA Compliance conference in November 2020 cautioned firms not to report every concern unless

they genuinely believed it to be a breach of the rules. She said that the SRA did not want to encourage “defensive reporting”.

I am afraid that ship has already sailed.

The current duties to report, especially the new Rules 7.8 (Code for Individuals) and Rule 3.10 (Code for Firms) which provide for “bringing matters to the attention of the SRA in order that it may investigate”, achieve the very objective that Ms Oliver is seeking to prevent. The rules lead inevitably to over-reporting by firms for fear of sanction for failing to report. In addition, the rules are being used extensively as a tactic in litigation and/or partnership and employment disputes. Threats to report to the SRA are being relied upon in a way that was not intended. Reports to the SRA are also becoming more complex and therefore more time consuming to investigate. The SRA needs to issue detailed guidance on what it does and does not require of firms and to deal robustly with firms who use the reporting regime as a litigation tactic.

Until then the SRA will continue to be overloaded with reports and the problem continues.

5. OPPRESSIVE BEHAVIOUR CIVIL PROCEDURE RULES Litigators will be aware of the new costs sanction rule introduced on 1 October 2020 and contained within CPR Practice Direction 3E Section G which provides that “Any party may apply to the court if it considers that another party is behaving oppressively in seeking to cause the applicant to spend money disproportionately on costs and the court will grant such relief as may be appropriate”. Whilst any costs sanction will be directed against the client in the first instance, the steps taken in the litigation which preceded the claim of oppressive behaviour will no doubt have been taken upon the advice of the solicitors on the record. Whilst there has not, as yet, have been any guidance or authorities on this recent rule, it is anticipated that the use of this provision will go hand in hand with a report to the SRA of misconduct. It may also be linked to allegations under the current Codes of Conduct such as “only making assertions or submissions which are properly arguable” (Rule 2.4) and “wasting court time” (Rule 2.6). Litigators need to add this to their long list of professional obligations to consider when advising their clients.

6. SERVICE STANDARDS With so much attention focused on headline grabbing issues such as cyberattacks and sexual misconduct it can be easy to overlook the perennial issues which continue to trip up many firms – basic service standards. Standard 4 of the Code of Conduct for Firms sets out what the SRA expects which is

“that the service you provide to clients is competent and delivered in a timely manner…” The SRA now extracts from the annual report provided to it by firms, details of first tier complaints and how firms resolve them. These are published on the SRA’s website on its risk page. The same issues recur – delay, failure to advise, failure to keep clients informed and excessive costs. The Legal Ombudsman repeatedly reports these failings. A good New Year’s resolution may be to set time aside to start looking in more depth at complaints you have received and to use the information to improve client care – and reduce the time and cost of investigating complaints.

7. CLIENT CONFIDENTIALITY As everyone knows, this is a fundamental duty owed to clients. When the SRA receives an application from a new firm wishing to be authorised, one of its key concerns is what consideration has been given to protecting confidential information where there is to be remote working, shared office space, or shared staff or data with, for example a connected business. Covid and enforced home working in the last year has been difficult for many firms, particularly because of the concerns around enormous amounts of confidential information which has had to be held outside the office environment. Two things flow from this. Was your firms contingency plan robust enough and did it cover sufficiently this tricky issue of confidentiality? How was information held on laptops and mobiles protected and was it adequate? As the dust settles, it might be a good time to review this.

8. FREELANCE SOLICITORS There has been a gradual take up of this new form of practice and this is likely to increase as those who face redundancy following the covid lockdown look for opportunities to continue their career as solicitors. For those considering this option, there are a number of issues to take on board. The main issue is that of whether reserved legal activities are to be provided. If they are, there is a much tougher regulatory regime which will apply. Amongst other requirements, you must have adequate indemnity insurance, have practised as a solicitor for at least 3 years, must not employ any staff and cannot provide your services through a company. For those only providing non-reserved activities, it is much more of a “no holds barred” regime.

You can employ staff, do not have to have practised for 3 years and there is no requirement to have indemnity insurance – though it would be extremely foolish not to have adequate cover. Both forms of practice cannot be undertaken until the SRA has been notified on the correct form and both require compliance with

the Code of Conduct for individuals. Will this form of practice appeal in 2021?

9. THIRD PARTY MANAGED ACCOUNTS (TPMAS) These are governed by rule 11 of the Accounts Rules. They operate as escrow accounts and money from clients to be disbursed on their behalf is held by the TPMA provider, which must be an authorised payment institution and FCA regulated. Money held for clients by a TPMA is not client money and, for firms that use them exclusively rather than a client account, one cost saving is that no contribution to the Compensation Fund is required. Also, there are obvious financial benefits in not needing to keep client account records and obtain an accountant’s report. As not holding client money reduces the risk of default, it is also something which insurers are beginning to take account of. There may, therefore, be beneficial savings to be gained by using a TPMA. Set against that, however, is the cost of using the TPMA. Most make a monthly charge plus a transaction fee. There is undoubtedly an element of “horses for courses” in deciding whether to use a TPMA for client money but it might be worth further investigation for some firms.

10. REGISTERED EUROPEAN LAWYERS (RELS) POST BREXIT And last, but not least, the status of all RELs changed when the UK’s EU transitional period ended at the end of 2020. Guidance issued by the SRA in December 2020 makes clear that on 1 January 2021 the classification of REL ceases (with the exception of Swiss lawyers) and all those who are RELs will be re-classified as Registered Foreign Lawyers (RFLs). This will have an effect on the reserved legal activities that RELs can undertake, other than under the supervision of a solicitor or authorised person. RELs, but not RFLs, were able to be authorised as sole practitioners and how the position of those who already work as such will be affected is not yet clear. It is understood that the SRA’s rules and regulations are in the process of being re-drafted to reflect that and other changes. Affected firms and individuals will need to keep an eye on SRA announcements and rule revisions.

Jayne is also a director of Infolegal Ltd www.infolegal.co.uk which provides compliance services to law firms www.birminghamlawsociety.co.uk 21

OPINION

THREE THINGS TO THINK ABOUT WHEN YOU’RE RE-MORTGAGING YOUR HOME Sarah Deacon, Area Manager for Wesleyan Financial Services (WFS) who

specialises in providing financial advice to lawyers, explains the top three things to consider when you’re planning to re-mortgage your home.

Remortgaging can feel like a chore, but with a little bit of work you can unlock some big benefits.

Here’s the top three pieces of advice I give my customers when they’re looking to remortgage.

1. Understand the comparison rates When shopping around for a mortgage deal, it’s easy to be seduced by headline-grabbing interest rates. But with so many factors to consider it can be hard to compare like for like. Some deals may include application, legal and product fees. Others don’t.

The one thing I always advise my customers to look out for is the Annual Percentage Rate of Charge (APRC). This is an overall cost for comparison. It’s quoted as a percentage of interest payable on the total amount of credit. It takes account of all fees that you might face.

When looking at the APRC, keep in mind that the calculation assumes you will stay with the same product and provider for the duration of your mortgage. In reality, most people look to switch once every few years.

2. Factor in the fees and costs If you’re remortgaging before your current deal comes to an end, you may have to pay early repayment charges.

22 www.birminghamlawsociety.co.uk

These fees are often tapered as a percentage of the remaining balance, for example, five per cent of the remaining balance if you have three years left on your remaining deal, but only one per cent if you only have one year left.

If you leave your existing deal before the agreed period, the lender may also ask you to repay any incentives originally provided to you, such as free valuation fees, legal fees, or cashback offers. Remember to check the T&Cs when considering your options.

It may still be beneficial to move to a new mortgage deal despite having fees to pay. For example, the savings you could make over the term of a fixed deal may be more than the fee due if you exit your existing deal early.

The solution that’s right for you will depend on your individual circumstances.

3. Your personal circumstances matter It’s important to think about how your future goals might impact your finances. For example, if you

want to become selfemployed or take a career break, you might want to consider a mortgage that gives you freedoms to take payment holidays.

As a lawyer you can also take advantage of your professional status and consider ‘professional mortgages’.

Lenders offering these mortgages will take your professional status into account and offer preferential rates. Qualification criteria typically include factors such as age and qualifications. WFS has access to a range of lenders who provide specialist mortgages for professionals and has arranged more than half a billion pounds of mortgages for professionals in the last two years alone.

For more information visit www.wesleyan.co.uk/ mortgages/personalmortgages This article does not constitute financial advice. Your mortgage is secured on your home, which may be repossessed if you do not keep up repayments on your mortgage.

CHALLENGE US TO SAVE YOU MONEY ON YOUR MORTGAGE Wesleyan Financial Services are dedicated to your profession and has arranged over £780 million in professional mortgage loans in the last 2 years. In addition to remortgages, we provide solutions across a broad range of mortgage needs, covering first-time buyers, movers and buy-to-let.

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Email us at financialreview@wesleyan.co.uk quoting 1002159 Your mortgage is secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

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Most buy-to-let Mortgages are not regulated by the Financial Conduct Authority.

Advice is provided by Wesleyan Financial Services Ltd. ‘WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority and is wholly owned by Wesleyan Assurance Society. Wesleyan Assurance Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Incorporated in England and Wales by Private Act of Parliament (No. ZC145). Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Fax: 0121 200 2971.

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LAW-AD-22 12/20

OPINION

OPPORTUNITY MEETS PREPARATION: EMPOWERMENT THROUGH TECHNOLOGY FOR LAW FIRMS things will return to the way they once were. However, with new announcements across Europe and right in our own backyard across England and Wales about imminent changes to social interaction and ‘soft’ lockdown measures throughout autumn and winter, firms are gearing up for further changes.

OPPORTUNITY MEETS PREPARATION Preparation is the best way forward and firms are looking at how they can engage additional measures to protect their businesses. Technology is a key player in this situation, facilitating improved processes that will support firms through this property boom and beyond. Law firms can come out the other side stronger, by managing their workloads with increased visibility, taking opportunity of automation to free up time for additional tasks, and employing technology that aids connectivity with their clients, other firms and key suppliers.

The UK housing market is flourishing at present, a predication few would have made during the murky depths of lockdown in April. When announcements came in May that the market could restart, many were hopeful we would see a recovery, albeit measured. The announcement of the SDLT holiday in July set a fire beneath the industry and what was expected to be a U-shaped revival become a sharp V, with property sales increasing to their highest figures in a decade writes Bronwyn Townsend, Marketing Manager at InfoTrack.

Despite the sector collectively exhaling a breath of relief as the number of transactions grew exponentially, it was short lived. We are now in the midst of firms teetering precariously on the precipice of breaking point. Why? The acceleration of people moving home has created a backlog which now threatens many being able to seize the opportunity the SDLT holiday presents. Transaction numbers are mounting and firms are trying to manage staffing levels. The rapid return to the market has caught many off-guard and there’s now a push for the UK government to extend the SDLT holiday beyond 31 March 2021.

SILVER LININGS We have long been hearing law firms should be embracing technology and embedding digital solutions into their practise.

While the message has been clear and consistent for several years now, there is a sense of apprehension that lingers.

Whether it be caution around instilling new processes, concerns regarding compliance or simply resistance to change, the uptake has been slow.

If there has been a silver lining to stem from the commotion a global pandemic has brought, it is the increase in adoption of technology among law firms. A state of change that might have otherwise taken six years has been expedited to six months. What it has meant for firms is they are now better equipped to work from anywhere. Remote working has forced cloud systems to become standard operation. Firms are finding ways to obtain the information they need online, whether that’s when onboarding clients, gathering signatures electronically or keeping home movers updated via apps and automation. It’s all creating a shift in the dynamics of how the conveyancing sector is operating.

Not everyone is on board yet though. Between messages from governments urging people to return to the workplace, the lifting of restrictions and the velocity with which the property market bounced back, some might be hopeful 24 www.birminghamlawsociety.co.uk

In March, the shift to home working and months of lockdown restrictions were unforeseen and implemented with little notice. With a third national lockdown upon us, firms now have the opportunity to get their houses, literally and figuratively, in order. Identifying the obstacles faced in 2020, firms are now in a more informed position to avoid them again.

Whether furlough of staff meant a reduction in visibility of your firms’ caseload, a lack of access to printers and scanners delayed progress on transactions, or you’re now faced with a shortage of time to get through the mountain of new transactions piling up, technology can help. Preparation and implementation of improved methods, technology and processes within your firm now will be of benefit beyond the present situation. They will also provide long lasting opportunities in a post-pandemic climate.

CHALLENGE THE STATUS QUO While the cause of the current situation differs from that which led to the 2008 financial crisis, a similar approach will prove a worthwhile investment. Take the time to prepare your firm so it is in the best position possible to overcome potential hardships like being overloaded with transactions now.

What we saw in 2008 was that businesses who responded differently to the circumstances were seizing an opportune moment to lay down the foundations for their future.

Airbnb, Whatsapp and Groupon were all born out of the last major recession. It’s not only new businesses though, existing firms also made their mark. Netflix, Lego and Mailchimp all adapted and thrived. By challenging the status quo, they were able to carve themselves a unique position and achieved what few could at the time. They breathed new life into their business.

Now is the time to act. Law firms have the advantage of preparing for what are now foreseeable challenges. They’ve survived the trials of 2020 once already, they’re in the middle of another vastly different challenge and there may be more yet to come. Review your current processes. Ask your staff where they think improvements can be made and delve into whether you already have access to systems that can help. Are you taking advantage of the full offering from your technology providers? If not, book in training to ready yourself and get the most out of the technology you have. See where there are gaps and fill them, whether with existing or new solutions.

Readying yourself, your staff and your firm is one of the best investments you could make. Embracing technology will not only give you the time to stop and breathe during the biggest property boom in a decade, but it will also aid in future-proofing your firm. If you are prepared, you a ready for opportunity when it arises.

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LAST WORD

TOP 10 COMPLIANCE MISTAKES AND HOW T Compliance should be neither an afterthought nor a burden – it should be a natural consequence of running your law firm and managing your accounts well.

The SRA will tell you that anti-money laundering and mishandling client money are the two most common mistakes law firms make. So how do you avoid the SRA’s intervention? writes Julian Bryan, Managing Director, Quill HERE ARE 10 COMPLIANCE MISTAKES LAW FIRMS MOST OFTEN FALL FOUL OF: 1. NOT PAYING ATTENTION TO THE LATEST SRA ACCOUNTS RULES: The SRA regularly updates its rules, and it’s up to you to be aware of these changes and understand how it impacts your accounts function. The best thing to do is follow the SRA news and adopt a compliance-centric 26 www.birminghamlawsociety.co.uk

approach to your business in order to avoid serious SRA Accounts Rules breaches.

2. INCORRECTLY OPERATING A CLIENT ACCOUNT: Ensure your client account includes the required level of information and that you don’t provide banking facilities to clients or third parties.

It’s essential that your staff are aware of the relevant money laundering regulations and what constitutes provision of banking facilities.

On the same point, don’t suffer lack of understanding about how to operate without a separate client account, should you choose this route. SRA’s Rule 2.2 is all-ornothing. It gives you the choice of exemption from having a client account (across the whole practice, not on a client-by-client basis).

Whilst this may sound like an easier option (and cheaper as you don’t need accountants’ reports), it could create more work by asking clients to pay third parties directly and subsequently making sure these payments have been made.

Alternatively, another option permitted by the SRA is Third Party Managed Accounts which can provide client onboarding checks, card processing and outsourced client account services within one solution. You must decide what makes the most sense for your business.

3. NOT MAINTAINING A CLEAR BREACH REGISTER: You and your employees must be suitably trained to spot suspected breaches, and you must document how discovered breaches will be rectified and keep a register of this information.

4. NOT HAVING A PAYMENT OF INTEREST POLICY: Your policy of interest should clearly state how money held in your client account will be handled, including when it becomes due and the rates you’ll use.

5. NOT THOROUGHLY CHECKING YOUR RESIDUAL AND SUSPENSE BALANCES: Analyse which of these monies you currently hold, determine if

cashbook and client ledger balances. By checking and signing a report of this nature, your COFA can meet his / her SRA obligations and you’ll have the visibility you need to make sure compliance measures are being met.

9. PURCHASING THE WRONG LEGAL ACCOUNTS SOFTWARE: Ask for recommendations from trusted peers of what works best for them. Be sure to probe any potential software provider about how they handle system enhancements to address everchanging rules. Your supplier should be rolling out new and enhanced functionalities which allow you to streamline compliance procedures and ensure you’re constantly protected.

TO AVOID THEM you should be holding them, return to the proper recipients where possible, and log what you’ve done if these people can’t be located.

6. NOT DEFINING ‘PROMPTLY’: This word is dotted throughout the revised SRA Accounts Rules. What ‘promptly’ means to one person is different to another. Choose suitable timeframes for your firm and clarify in your office policies.

7. NOT SETTING REALISTIC SERVICE LEVEL AGREEMENTS (SLAS): There’s no point in setting impossible-to-meet timescales. For example, if you’re a rural practice with no easy access to a local bank or building society, don’t set tight timings regarding paying in cheques. Instead, be honest and upfront about what’s feasible for your unique circumstances and incorporate that into your contracts and policies.

8. NOT SUPPORTING YOUR COFA: Your accounting system should allow you to produce a tri-balance comparison of your client bank,

10. NOT COLLABORATING AND COMMUNICATING EFFECTIVELY: Compliance is not a one-person task. It’s the duty of everyone in your organisation from your cashiers and compliance officers to senior leaders and solicitors.

Seek input from all stakeholders when reviewing compliancerelated policy documents and roll out updated documentation with appropriate training company-wide.

Keep your accountant informed always so audits can be done quickly and efficiently.

SUMMARY: Hopefully our tips will help you fulfil your regulatory compliance responsibilities with ease. This excerpt is taken from our ’15-Step Guide to Starting Your Own Law Firm’.

To download our guide in its entirety, and learn how to keep client money safe and avoid money laundering scams, please visit www.quill.co.uk/ legalpracticemanagementforstartups Julian Bryan is the Managing Director of Quill, which helps law firms streamline, and run their practice better and compliantly by providing simple and easy-touse legal accounting and case management software, as well as outsourced legal cashiering services. Julian is an advocate for quality software standards and served as the Chair of the Legal Software Suppliers Association from 2016 to 2019. He can be reached at j.bryan@quill.co.uk.