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The Times

Thursday, March 17 2016

Frances Gibb and Jonathan Ames bring this morning’s must-read of all things legal, including news, comment and gossip.


  • Budget ‘hypocrisy’ over legal expenses insurance
  • Forex fiasco raises temperature around fraud busters  
  • Internet cafés escape copyright infringement liability  
  • Part-time judges lose bid to extend pensions battle
  • Complaints watchdog to move to alternative dispute model
  • Law Society apologises over ‘Harry Potter’ solicitor case
  • Comment: Lawyers are throwing communications to the wind
  • Blue Bag diary: Gove the comedian
  • Law reports: Liability for attack on customer

Tweet us @TimesLaw with your views and feedback.

Story of the Day

Budget ‘hypocrisy’ over legal expenses insurance premium hike

George Osborne’s move to increase insurance premium tax by another 0.5 per cent “smacks of hypocrisy”, personal injury specialist lawyers claimed in the aftermath of the chancellor’s budget yesterday.

They pointed out that premiums had increased by “around two thirds” since last November, maintaining that the latest increase would have a serious effect on the ability of ordinary people to afford before-and-after-the-event legal expenses cover.

“In November’s autumn statement,” said Jonathan Wheeler, the president of the Association of Personal Injury Lawyers, “the chancellor was so determined to reduce car insurance premiums that he announced the right to claim damages for some whiplash injuries would be removed.

“The fact that, on the one hand, the chancellor is prepared to sacrifice the right to claim damages for injuries in the hope that premiums will fall and, on the other, actively to do something which will increase premiums, simply smacks of hypocrisy”.

But insurance premiums were far from the only issue lawyers clambered to pronounce on the moment that Osborne sat down. Here’s The Brief’s electronic cut-out-and-keep guide to the analysis.

Employee share schemes

“The cap on employee shareholder status, where individuals will only be able to realise £100,000 tax-free, will severely restrict its future use,” said Matthew Findley, a partner at Norton Rose Fulbright, the transatlantic law firm. “It is not yet clear, however, whether the cap will apply to the disposal of shares already acquired under that regime.

“It is no surprise that the chancellor has restricted the use of [the share scheme] as it has primarily been used as a senior management incentive tool rather than to promote broader employee ownership. The government was warned at the outset that this would happen and so today’s news has a sense of inevitability about it.”

Stamp duty and capital gains tax

“There was some welcome clarity on the additional 3 per cent stamp duty land tax that will be due on the purchase of additional residential properties,” said Nicola Plant, at Thomson Snell & Passmore. “Purchasers bridging between properties will be able to reclaim the higher rate of tax paid on their new property, provided their former home is sold within 36 months.”

Elizabeth Bradley, a partner at Berwin Leighton Paisner, said: “Much of the British property industry will be very disappointed with today’s budget changes. The property sector is effectively being used to placate the government’s back benchers. The chancellor has acknowledged the need to build more homes but the extension of the extra SDLT rate on buy-to-let to large investors will discourage investment in the private rented sector.

“Overall, increased tax costs will not be offset by the reduction in corporation tax rates to 17 per cent by 2020.”

On capital gains tax, Plant added: “The … decision to cut rates by 8 per cent on all but residential property and carried interest is a clear indication of the government’s wish to discourage future speculation in the buy-to-let market, halting continued growth in prices in that sector and potentially freeing up more properties for first-time buyers.”

Oil and gas

David Blumenthal of Clyde & Co said: "While tax cuts for the oil and gas industry are welcome – given the stagnating oil price and fears that we may yet see it fall further before any recovery – there is a sense that whatever the chancellor does now could be a case of too little, too late, especially in view of the blows he dealt the industry at the beginning of his chancellorship. Far more still needs to be done to give a boost to this hard-hit sector of the UK economy."

Sugar tax

"[This] has finally come to fruition, albeit only on water-based soft drinks, so excluding pure fruit juices and milk-based drinks,” explained Nicky Strong of Bond Dickinson.

“The levy will be calculated on the total sugar content of these drinks, and will be charged direct to producers and importers, rather than being added to the price paid by consumers. It will be interesting to see how much devil there is in the detail when the government publishes its consultation on the levy in the summer.”

News Round Up
Forex fiasco raises temperature around fraud busters

Lawyers were quick to raise question marks over the viability of the UK’s specialist cadre of fraud busters yesterday after officials said that a two-year investigation into alleged rigging of the foreign exchange market had been dropped.

The embarrassing statement from the Serious Fraud Office on Tuesday blamed “insufficient evidence” for the collapse. Yesterday, lawyers were queuing up to stick the knife into David Green, QC, the SFO director, and his oft-maligned organisation.

The announcement “must beg the question as to whether the SFO remains fit for purpose”, intoned Sara Teasdale, a partner at Byrne and Partners, a City of London law firm.

She described the SFO as being “still bruised” from the recent Libor acquittals, and said that its decision to ditch the forex investigation without bringing any charges was “all the more embarrassing” when viewed in contrast to the guilty pleas obtained by US counterparts from Barclays, RBS, Citigroup and JP Morgan.

The Department of Justice in Washington and the Financial Conduct Authority in the UK have also imposed significant fines on six banks, all, according to Teasdale, “in relation to the same factual matrix as recently considered by the SFO”.

Lewis Power, QC, of 7BR chambers in London, described the move as “hugely embarrassing”, considering the SFO had “spent tremendous amounts of money in this investigation and has also been assisted by the US attorney-general”.

But Abdulali Jiwaji, a partner at Signature Litigation, also a City law firm, was more forgiving. He said: "Bringing a prosecution was always going to be challenging, and the recent failed Libor prosecutions underline the difficulty when it comes to persuading a jury.”

Jiwaji pointed out that the SFO’s decision "isn't directly relevant to potential civil claims, although active prosecutions would have given encouragement to those looking to claim damages. Regulatory actions against individuals are no doubt in the pipeline.”

Internet cafés escape copyright infringement liability

Owners of internet cafés across Europe received a boost from the adviser to Europe’s top court yesterday, when the lawyer said that free wi-fi providers should not be held responsible for how individuals use their networks.

Maciej Szpunar, the Polish advocate-general to the European Court of Justice, made his recommendation in a case involving a German shop-owner and Sony Music, the multinational conglomerate.

Sony had sued Tobias McFadden for copyright infringement after an unknown person using his shop's free wi-fi connection uploaded and shared a song on an online file-sharing platform. McFadden was unable to identify the infringing party, so the global music giant sued him.

However – in what lawyers described as a “sensible” ruling that struck a “balance between a number of conflicting fundamental rights” – Szpunar said that liability cannot be transferred to a third party.

“While rights holders may be disappointed to discover that they are unable to transfer liability for third party infringement to the wi-fi provider,” Amy Lambert, a lawyer at Fieldfisher in London, said, “the advocate-general has taken a very pragmatic position and has identified that extending liability would have a disproportionate impact on freedom of expression and freedom to conduct business”.

But Lambert gave some hope to rights holders – they can obtain injunctions against free wi-fi providers if the court is satisfied that implementation will be specific and easy. Nonetheless, internet café owners will not be obliged to monitor their wi-fi services, and neither can they be compelled to password-protect their internet access or terminate their internet connection.

"In addition to not being liable for damages for third party-infringement,” said Lambert, “free wi-fi providers will also not be liable for the rights holders' pre-litigation costs, or the costs of obtaining an injunction.

“The result of this, that many rights holders may not consider the benefit of the injunction worth the cost, particularly when they take into account the usual viral impact of copyright infringements – once the material is out there, it will typically spread quickly and will be replicated on a number of different websites.”

Part-time judges lose bid to extend pensions battle

Two government departments have seen off a bid for enhanced pensions rights for part-time judges after a court ruled that the claimants were timed out.

In a ruling on Tuesday, Mrs Justice Laing, sitting in the employment appeal tribunal, backed an early ruling in favour of the Ministry of Justice and the Department for Communities and Local Government.

She dismissed the part-time judges’ claim that they needed to wait for a ruling in the Supreme Court case involving Dermod O’Brien, in which the part-time recorder won his bid to claim a full pension.

Mrs Justice Laing also rejected submissions from some of the claimants that they had received negligent advice regarding the timing of bringing their case. She also found that one claimant “understood that he was taking a risk by not making a claim in May 2012”.

Complaints watchdog to move to alternative dispute model

Alternative dispute resolution methods should be used more widely to resolve arguments between clients and their lawyers, the legal profession complaints watchdog has said.

The Legal Ombudsman’s office announced that it “will be reviewing our options later this year” in relation to ADR”. In a strategy paper released in the past few days, it said that this year it would consider dusting off its application to become an official approved entity under the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations. The ombudsman’s office postponed its application in 2015.

The watchdog made a veiled reference to internal feuding that has “limited” its recent ability to develop services. The office has been embroiled in a long-running row with its former chief legal ombudsman, Adam Sampson, over allegations around his expenses claims.

Last October, Ministry of Justice officials had to make an embarrassing climbdown before MPs on the justice select committee, admitting that they had been wrong to say that Sampson had been dismissed. In fact, Sampson resigned and served his notice period.

Law Society apologises over ‘Harry Potter’ solicitor case

The bizarre tale of the solicitor-advocate castigated by a crown court judge for wearing “Harry Potter-style” robes has taken another turn, with the professional body being wrapped over the knuckles by its own freedom of information supremo.

Adam Sowerbutts told the Law Society that he found it “troubling” that its officials could not provide all relevant information in relation to a request by a third party. In an adjudication unearthed by the website Legal Futures, Sowerbutts relates that the governing organisation apologised for the error, but that “whilst always making allowances for the occasional administrative oversight, I do not consider it unreasonable to expect the society to fully review the disputed information it is providing to me to ensure that it is complete, before giving an explicit assurance to that effect”.

His adjudication is one of many side-shows in the travails of Alan Blacker, who occasionally travels under the name of Lord Harley of Counsel. The solicitor-advocate was initially ticked off by Judge David Wynn Morgan in August 2014. Sitting in a hearing involving a charge of causing death by dangerous driving, the judge raged at Blacker, who was wearing a barrister’s wig and gown, with the latter festooned with an array of ribbons and badges.

Most recently, the website Legal Cheek reported last month that the Solicitors Regulation Authority planned to call 16 witnesses in a case disputing the legitimacy of Blacker’s lengthy LinkedIn CV. The hearing is scheduled for five days this summer.

In Brief

In this week’s Times Law

Elsewhere … 

  • BLP and Greenberg Traurig call off merger talks – The Lawyer, Legal Week and Legal Business
  • Freshfields begins talks on plans for Fleet Street HQ – The Lawyer
  • City firm launches groundbreaking six-year apprenticeship solicitor qualification route – Legal Futures
  • Clifford Chance reveals lowest trainee retention rate of the magic circle – Legal Cheek
  • MoJ to relocate staff outside London – Law Gazette

Lawyers are failing in the court of public opinion David Sugden

First it was globalisation, then digitisation – the textbooks on reputation management have been re-written almost monthly over recent years.

In the protection of corporate and personal reputations, legal requirements are generally well understood: you need a good law firm to fight your corner. But still not fully understood is how communications can support a case. Ignore that side of the coin, and you may end up counting the financial cost later.

The world is becoming more litigious. Everywhere you turn someone is arguing with someone else. “Hire more lawyers,” has been the historic response. And indeed, that may once have been the best solution, when legal issues were won by the black letter of the law alone.

This is no longer the case. The resolution of legal issues has never been more influenced by factors outside the courtroom, while reputations have never been determined less by the underlying legal position. A position is not complete unless a litigant has both legal and communications practitioners building strategy, arguments and responses side by side, complementing each other with the shared mission of protecting reputations.

Why are communications so important? In today’s globalised and digitalised world disputes are fought across many battlefields. There are multiple stakeholders and audiences, each with their own agendas. Privacy is a thing of the past.

While lawyers decipher legal precedents, interpreting the contractual, communications practitioners buttress that work by influencing the other battlefields. They amplify the key messages, build relationships, create persuasive content; turn antagonists into advocates, and rebut inaccuracies. Any party not employing this two-pronged approach can be sure the other side will be.

There is, of course, a deep-set dichotomy to overcome in that lawyers are generally risk and publicity-averse, while communications practitioners are risk and publicity-abetting. There is no one-size-fits-all approach that sets the right balance.

However, if the contrasting legal and communications responses of two recent events – the independent review findings published last November relating to the deaths of two children at a Thomas Cook-organised holiday in Corfu in 2006 (a legally-driven response), and the Alton Towers rollercoaster accident last June (initially a PR-driven response) – tell us anything, it is that legal and communications practitioners should work together from an early stage to protect reputations and, in many cases, bottom lines.

Don’t just take the word of PR professionals in this discussion; ask Vijaya Gadde and John Davidson – general counsels of Twitter and SABMiller, respectively – who have recently assumed additional responsibility for the other side of the reputational coin, namely communications.

But the vast majority of lawyers still haven’t caught on. In a world where the toss of the coin could reveal tails on any given day, clients’ pockets are still full of double-headed coins.

David Sugden is head of litigation and legal affairs at Edelman, a public relations firm based in London and New York. He is a former lawyer at Freshfields Bruckhaus Deringer, the London magic circle firm

Tweet of the Day

"He earned overwhelming bipartisan praise from senators and legal experts alike." —@POTUS on Chief Judge Merrick Garland #SCOTUSnominee

The White House @WhiteHouse

Blue Bag

Gove the stand-up act

If the “outers” win the Brexit referendum in June, odds are that Michael Gove, current lord chancellor and justice secretary, will challenge Boris Johnson, London mayor, for the leadership of the Conservative party, David Cameron having doubtless fallen on his sword.

If the Leave side loses, Gove stands a decent chance of being sacked for treachery by a victorious Cameron, but he needn’t go hungry if the vista of backbench wilderness looks a bit boring – the London comedy club circuit is sure to beckon.

Gove continued his charm attack on the legal profession by turning in a polished and highly entertaining turn before a packed house at the Great Hall at Lincoln’s Inn for the annual student essay awards sponsored by The Times.

He wasn’t afraid to tease gently the audience of senior lawyers. “Current legal practitioners, both solicitors and those at the Bar, are living through times of unparalleled austerity,” Gove intoned, referring obliquely to recent fee rows with the publicly funded profession. “A mere subsistence income keeps them away from starvation. For example, the Roche de Bellene Marsanne Viognier is only a 2014 vintage. Also, the port and cognac has been distributed in remarkably small glasses and in single measures.”

And, unlike his predecessor, the fellow Brexiter Chris Grayling, the lord chancellor was not afraid of poking fun at himself. “I am not a member of Lincoln’s Inn. But I am – much to my surprise and not least to theirs – an honorary bencher of the Inner Temple. It is perhaps the only respect in which I could be said to be a confirmed and lifelong Inner.”

John Witherow, editor of The Times, reminded the audience that while Gove might not be a lawyer, he comes from that other great adversarial profession, journalism, having spent a decade on the books of this newspaper.

One story from that period, “so they tell it at El Vino’s, anyway,” related Witherow, “involves the young Mr Gove being summoned for a chat with the managing editor. ‘I’ve been looking at your expenses and I see that you claimed for lunch with Ken Clarke,’ he said. ‘That can't be true, for I had lunch with Ken Clarke on that very same day.’

“Quick as a flash, Gove replied: ‘You mean Ken Clarke had two lunches that day? The greedy bastard.’

“You can see,” said Witherow, “that Michael would have made a great lawyer with such a nimble mind.”

The Law Reports

Liability for attack on customer

Supreme Court -- Published: March 14, 2016 — Mohamud v Wm. Morrison Supermarkets plc

Before Lord Neuberger of Abbotsbury, Baroness Hale of Richmond, Lord Dyson, Master of the Rolls, Lord Reed and Lord Toulson
Judgment March 2, 2016

An employer could be vicariously liable for an unprovoked assault by one of its employees on a customer if there was a sufficiently close connection between the employee’s job, considered broadly, and the wrongful conduct so as to make it just for the employer to be held liable.

Quote of the Day

“Law schools … generally perform badly in the national student survey and if anything are more distanced than ever before from understanding the revolution that has been going on in the legal services market.”