Quite simply, Robotic Process Automation (RPA) is software which mimics and replaces computer-facing work which is or can be done by humans. Think of it as a ‘digital workforce’. Continue reading “Robotic process automation: understanding the legal issues”

The Department for Digital, Culture, Media and Sport has just published a ‘Statement of Intent’ on the Data Protection Bill. For those hoping to see the draft bill itself, sadly we will have to wait. It is not the draft bill, but simply a statement of what it plans to do to keep in line with EU laws. So we are still left waiting to see the detailed wording of implementation. Once you read through the document you quickly realise that it is largely restating provisions that are already known to be found within the General Data Protection Regulation, which will come into force on 25 May 2018, and the Data Protection Law Enforcement Directive.

Continue reading “Edging closer to a UK draft Data Protection bill for GDPR implementation”

Intellectual property rights (IPRs) help companies maintain their competitive edge in the marketplace. To prevent this edge from being eroded, it sometimes becomes necessary to enforce these rights against infringers.

Continue reading “Emergency enforcement of intellectual property rights”

The introduction of the internet as a delivery platform and the digitisation of audio visual (AV) content have triggered major changes in the media sector. The shift from a relatively closed media system, controlled and broadcast linearly, to an open media ecosystem where the audience chooses its favourite content on-demand not only represents a challenge to the traditional media companies, but has also stirred consumer expectations towards being now able to access content ‘anytime, anywhere, on any device’.

Continue reading “Access to content anytime, anywhere, any device: how changes in consumption habits shape EU policies”

With less than one year left before the General Data Protection Regulation (GDPR) comes into force in May 2018, the Information Commissioner’s Office (ICO) has embarked on an initiative to correct some public misconceptions about its impact. Elizabeth Denham, the Information Commissioner, recently expressed concern in the ICO blog that ‘not everything you read or hear about the GDPR is true’, and that ‘misinformation is in danger of being considered truth’. This article will discuss how the legal and business press have been reporting GDPR stories, and outline the 12 steps that the ICO recommends organisations should be taking now. Continue reading “The General Data Protection Directive: correcting the myths”

The Digital Single Market (DSM) proposals emanating from Brussels are designed to create a level digital playing field between Europe and the USA. The European Union has long acknowledged the online dominance of the American tech giants and is keen to create a legal framework that may benefit the European digital economy. But in classic Brussels style the mood music is more one of ‘if it moves and is American, regulate it’.

Continue reading “Should you be worried about the Digital Single Market?”

The UAE recently issued laws on Excise Tax (Federal Law No 7 of 2017) and VAT (Federal Law No 8 of 2017). Excise tax will be applicable in the UAE from 1 October 2017 and VAT will be applicable from 1 January 2018. Excise tax will be applicable on a limited number of commodities like tobacco, energy drinks and sugary fizzy drinks. VAT will be applicable on a number of goods and services as set out in the VAT law. Under the VAT regime, businesses will be collecting taxes on behalf of the government and will file tax returns accordingly. Although the tax is collected at each stage of value addition, the burden of tax falls only on the end consumer. For all the other stages, one can claim a refund. For this reason VAT is called ‘consumption tax’.

Continue reading “Tax procedures law in the UAE – a significant step forward”

In recent times, we have seen the introduction of the concept of ‘cashless’ ways to pay for goods and services, offering more convenience and security benefits than traditional payment methods. There are e-wallets, retail-based digital reward exchanges, there is direct carrier billing, and there is even the ability to pre-load cash onto mobiles, wristbands and other gadgets to spend later. Getting on board with evolving consumer demands might well be key to giving your business the competitive edge, but if you are using or planning to introduce any of these types of digital or e-payment methods into your business, you would be wise to consider the associated legal and regulatory issues. The nature of the precise activities to be undertaken by your business may mean that you will need Central Bank or other approvals to keep you compliant in the UAE. Continue reading “Regulation of e-payments in the UAE as businesses cash-in on cash-less solutions”

Picture the scene. Your trusted external law firm advised that you have a strong claim, likely to yield a significant financial upside for your business. The budget to run the claim is £2m, including adverse costs risk, but subject to possible change. The firm cannot agree to a fixed fee. They also advise that your business might be in breach of its fiduciary obligations to its customers if it does not pursue the claim. You take the proposal to the chief financial officer (CFO) and you know their two key questions will be: ‘Can you guarantee we will win?’ and ‘Can you guarantee we won’t exceed that budget?’ And you know the answers are ‘No’ and ‘No’.

Continue reading “How to make your CFO happy – transforming litigation from liability to asset”

If you are a chief executive, finance director or general counsel, you might have some set ideas about how lawyers charge for their work. You might also think your business has a good claim, but are reluctant to pursue it. Whether it is a lack of resource – both human and financial – or a reluctance to risk betting on your ability to win that is putting you off, you do not want to waste your time and money, or foot your opponent’s bill.

But, the legal world is evolving. Now, hiring a lawyer does not have to be about them billing you as they go along, implementing the strategy they developed, without any risk to them if it does not work out.

Andrew Brown, a lawyer specialising in resolving disputes, explains this transition – how good claims can be an asset to your business, pursued at no cost or risk – and looks at the questions you might want to ask, next time you hire a lawyer.

How do lawyers traditionally charge clients?

Like accountants, lawyers have traditionally charged clients in units of time – with reference to their hourly rates. This can be problematic: rate setting has become a bit of a black art. Lawyers often reference levels of experience and technical skills, areas of specialism, location (City lawyers will charge more than regional firms) and good old-fashioned supply and demand when quoting rates to clients.

What is the problem with that?

Well, some lawyers will ‘low-ball’ their rates when tendering for work, and the more experienced lawyers often disappear after the pitch stage. Some businesses are also left to test the value of City rates, which are usually significantly higher than those charged by regional firms.

This ‘pay as you go’ model does not give you much certainty, and makes it hard to plan and budget accurately. Without an overall agreed budget, costs can quickly spiral – leaving you with a difficult choice: to pay more than you had hoped (or can afford) for the work to be completed, or to stop paying the fees and leave it unfinished.

Using this fee arrangement, lawyers do not share any risk in ultimately testing their advice. When a lawyer charges you on an hourly rate basis throughout a court claim, the risk lies with you. If you lose the case, you will still have to pay your lawyer’s hourly fees, lose your outlay, and pay your opponent’s legal costs.

What about ‘no win, no fee’?

‘No win, no fee’ arrangements – or variations of them, where you pay your lawyer depending on the successful outcome of the claim – have become more popular over the last ten years.

This model is particularly prevalent in personal injury cases, and is often bandied around in advertising campaigns. It was developed to try to move away from the traditional ‘pay as you go’ structure. In theory, ‘no win, no fee’ creates better access to justice for people that have good claims, but are unable to pay for them to be pursued.

‘No win, no fee’ makes it sound like you are only paying fees if the claim is successful, but that is not quite right. You will still have to pay for disbursements – like court fees (up to £10,000 to issue a claim), barristers’ fees (unless they are also ‘no win, no fee’), experts’ fees, and an ‘ATE’ insurance premium to cover the risk of losing and paying your opponent’s legal costs.

The law also changed in 2013 to significantly water down the ‘loser pays’ rule. Even if you win your claim, you can no longer recover the success fee (which lawyers often charge for bearing the risk of running the claim on a contingent basis) and the ATE insurance premium from your opponent.

Are there better variations of a ‘no win, no fee’?

There is an American model called ‘damage based agreements’ (DBAs). In this structure, if your case is successful, you pay your lawyer a percentage of any money (damages) recovered from your opponent. In commercial disputes, this percentage cannot exceed 50% of the winnings.

But, DBAs are not as popular in the UK as they are in the US. There is some uncertainty around the regulations that introduced them, and you will still have to pick up the tab for the disbursements.

What about third-party funding – is that a good option?

The need for a better system – coupled with the relaxing of an outdated law called ‘champerty’ – has led to a surge of third-party funding. This means that a financier (usually a large hedge fund), who has no investment in the proceedings, funds the cost of pursuing the claim, in return for a share of the winnings.

This method is an attractive option for both those who are unable to pay for their own claims, and businesses who want to pursue good claims while saving their capital.

But, the whole process of obtaining third-party funding and sourcing ATE insurance can be expensive and time-consuming. The financiers and ATE insurers involve their own lawyers and underwriters – ‘the middle men’ – to ‘second guess’ the advice already given to the client. Financiers also require a favourable opinion from a barrister (usually paid for by the client) before even considering an application, and then getting their own lawyers to review the claim.

This duplicated effort often comes at a price. Many litigation financiers fund claims based on either a percentage of the sum recovered up to 50%, or a multiplier of the funds they have used to pursue the claim up to x5. This prohibitive cost means that many litigation financiers ignore most claims under £5m.

Is there another way of improving access to justice?

An important part of solving a client’s problem is taking care of the cost and the risk – and that is difficult for lawyers to do if they are restricted by third-party lending terms.

In 2016, Capital Law became the first law firm in the UK to launch its own fund, Capital Dispute Finance. Our selection criteria takes the ‘middle men’ out of the equation and gives us far greater flexibility over the fee arrangements we can offer. We can pursue claims without cost and risk, and can fund claims between £100,000 and £5m, which other financiers usually ignore.

Claims are assets. You normally have up to six years to pursue them. There is no need to leave cash to your business ‘on the shelf’, when it is possible to pursue claims without cost and risk.

Can other changes be made to fee arrangements?

The hourly rate model will become extinct. Some lawyers obsess about time and hourly rates, but fail to listen to what the client wants. Agreeing budgets from the outset is becoming the norm; this is a relatively small step away from a total fixed-fee agreement, which is worth exploring.

But the courts need to support this step, too. At present, the main yardstick for testing the reasonableness of costs is with reference to the hourly rate and amount of time incurred.

The rest of the business world is used to requesting or having to adhere to fixed fees and careful project management. The legal profession should not be the exception – there are opportunities for lawyers and clients who embrace it.

Corporate clients are of course no strangers to litigation. Listening to in-house counsel talk about how they approach litigation, they will often regard it as an inevitable, if undesirable, by-product of doing business. When it arises out of their core business activity, and particularly for large organisations – banks and insurance companies, for instance – they will frequently regard themselves as sophisticated users of the litigation or arbitration process. In run-of-the-mill cases for which they budget and, where necessary, appropriately reserve, they will typically consider that they and their advisers are well placed to understand and manage the risks. Not all litigation claims of course fall within this category and from time to time businesses will be drawn into one-off disputes, often as defendant, but on those they are likely to have no (or little) choice but to engage.

There is, however, a third category of claims, which are neither run-of-the-mill nor so significant as to be unavoidable, where in-house counsel have a choice whether or not to get involved. Competition damages claims are a good example. A company may have suffered as a result of anti-competitive activity, and may have a good claim, but pursuit of the claim is not a business priority and certainly not one which would justify diverting scarce resources away from core activities. This will be exacerbated where the costs involved may compare unfavourably against the losses suffered by that individual claimant. The natural tendency on the part of in-house counsel in such cases will often be to conserve resources to support business-critical activities and to leave the value of such claims on the table.

This reluctance to invest in realising the value of claims is unsurprising given the way that the cost and value of litigation claims are accounted for. Broadly speaking, companies will treat the costs of litigation as an expense in the year in which it is incurred. This will drive up expenses as the costs are incurred and correspondingly drive down profitability.

At the same time, the company will be unable to reflect the value of unrealised claims in their balance sheet. So, while the company’s cash decreases, the litigation asset in which the company is investing has no corresponding value on the balance sheet. This gives a worst-of-all-worlds outcome while the case is ongoing.

The company takes an ongoing hit to its profitability which will be reflected (possibly many times over) in the company’s share price (if that reflects a methodology referencing profit), while the company’s net assets are reduced by the expenditure without reflecting any value for the asset being realised. Even should the claim conclude successfully (and there is of course no guarantee of that), the revenue is likely to be regarded as a one-off item not included in gross profit and therefore may be stripped out by analysts in their assessment of the company’s underlying profitability for valuation purposes. Any in-house counsel considering allocating resources to pursuing a claim will therefore have to consider whether the future benefit from the claim outweighs the negative impact of tying up cash, the drain on management time and also the drag on the company’s perceived financial performance for the life of the case.

In recent years, however, in the UK, we have seen offerings to corporates which ameliorate these effects through the use of litigation funding and adopting a group approach to litigation. By utilising litigation funding, companies are relieved of the ongoing burden of funding the claim, as well as the risk if the case is unsuccessful. The effect is to tip the balance away from a likelihood of not pursuing the claim towards pursing it providing that the risks are properly addressed. By joining forces with other claimants, companies are able to share the legal costs and funding cost, making the proposition attractive for funding, making the case more robust commercially and therefore protecting the company’s economics.

In the competition space, recent examples include the claims being pursued with funding from Therium by Humphries Kerstetter on behalf of a group of companies, including the Co-op, against Visa and Mastercard for damages relating to the practice of overcharging of merchant interchange fees to merchants. Similarly, Therium is funding the Road Haulage Association in bringing collective proceedings in the Competition Appeal Tribunal on behalf of hauliers and other buyers of trucks against manufacturers who have been fined by the European Commission for fixing prices of certain kinds of trucks over a 14-year period. Such claims are not restricted to the competition space; the recent shareholder claims against The Royal Bank of Scotland, Lloyds Bank and Tesco are also examples of group litigation involving litigation funding and the clients included large institutional investors.

Funded group litigation offerings like these provide corporate clients with alternatives to shouldering the entire burden of litigation alone. As issues emerge in the public domain which are likely to give rise to a claim in which a company is a potential claimant, in-house counsel should now be considering what options are likely to be available to prosecute the claim, whether their interest in the issue is sufficient that they would wish to issue proceedings individually as against the benefits of joining a broader group, and whether to use third-party funding rather than self-funding. It may even be possible to answer the issues of individual versus group claim and funding independently – for instance pursuing the case individually on a funded basis or joining a group but with the company self-funding, bearing its own share of the costs. Whatever the answer in an individual case, it is clear that the emergence of these litigation options is changing the perspective of in-house counsel on accessing the value locked up in the company’s claims and that trend looks set to continue.

The government enacted the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLR 2017) on 26 June 2017. These are based on the same principles as the pre-existing rules, but contain significant changes which affect how regulated organisations must structure their anti-money laundering (AML) functions and carry out checks.

Continue reading “New money laundering standards – what you need to know”