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The Times

Thursday, November 24 2016

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

Today

  • Chancellor targets lawyers over tax avoidance
  • Irwin Mitchell tops legal aid league table with £28m in fees
  • Pensions watchdog ‘unlikely’ to seize Green’s superyacht
  • Gay cake case headed to Supreme Court
  • Courts ‘need complete overhaul’ to stay worldbeaters
  • Comment: Law needs to catch up with cryogenics
  • Blue Bag diary: Partnership committee grinches
  • More Blue Bag: Royal seal for trade mark attorneys

Plus the new Brief Premium ...

  • Ministers must act on gender pay gap reporting, says Cherie Blair, QC
  • Finance focus: Banking on change –Trump rips up reforms; UK in-house lawyers braced for regulation

Tweet us @TimesLaw with your views.

 
Story of the Day

Chancellor targets lawyers over tax avoidance

Abolishing the autumn statement was the most legally notable element of what was the chancellor’s first and last autumn statement, lawyers claimed yesterday.

Legal experts also forecast that moves by Philip Hammond (pictured) to simplify the tax system by providing his successors with fewer opportunities “to fiddle” were destined to fail.

“Future chancellors will not be able to resist making tweaks and changes to make themselves look in control,” Stuart Thomson, of the Westminster law firm Bircham Dyson Bell, said. “There are very big set piece political occasions for chancellors to show what they are made of. Future chancellors will feel less constrained than Mr Hammond.”

Taxing times

Advice on tax avoidance was the headline issue for lawyers – and Hammond offered them little comfort. “The chancellor continued in the same vein as his predecessors in targeting tax evasion, tax avoidance and aggressive tax planning,” said Emma Loveday, a partner at fellow Westminster law firm Wedlake Bell.

Hammond confirmed that the government will introduce a penalty for those that enable a tax avoidance scheme which is later challenged by HMRC and defeated in the courts.

“Tax advisers will be concerned at the apparent equation of tax planning with tax evasion,” she said, “and will want there to be a clear line within the proposed legislation so that advisers can be sure that standard and legitimate planning is not affected, and neither are individuals deterred from fairly organising their tax affairs to preserve wealth for their families.”

Solicitor leaders also leapt to warn the government off going too far. “While we completely support measures to make our tax system just and effective,” Catherine Dixon, chief executive of the Law Society of England and Wales, said, “we continue to urge the government to ensure they do not punish advisers providing genuine tax advice or prevent taxpayers from getting advice on how to understand and comply with their tax obligations.”

Haydn Rogan, a tax partner at the national law firm Weightmans, described the chancellor’s efforts to raise tax income by restricting salary sacrifice schemes as “more of a cosmetic exercise than a real, substantive revenue-raising measure”.

The schemes involve employees giving up part of their salary in exchange for certain tax-free benefits and perks. Rogan said: “Given that it has already been announced that the changes will not affect salary sacrifice arrangements involving pension contributions, childcare and cycle to work schemes – three of the most common types of salary sacrifice scheme – it is hard to view any such changes as anything other than tinkering at the edges and the additional tax raised in the overall scheme of things will be a mere drop in the ocean compared to the increased borrowing requirements.”

Good news; bad news

City lawyers agreed that there were no surprises in the statement. Dominic Stuttaford, a tax partner at the transatlantic law firm Norton Rose Fulbright, welcomed Hammond’s confirmation that the government will reduce corporation tax to 17 per cent.

However, he said, “the less good news for many will be the confirmation that the restrictions on relief for interest and the changes to the loss rules are going ahead; these have been the subject of much comment over the last few months and it will be interesting to see the extent to which HMRC has taken account of the representation made. Many had asked for the changes to be delayed.”

Stuttaford went on to describe as outright “bad news” for the insurance sector the chancellor’s announcement that there will be another increase in the rate of premium tax, meaning that the level will have doubled in the past two years.

Letting agents

A ban on letting agents charging tenants fees in England and Wales after Scotland banned them in 2012 will be “met with despair by many agents and their landlord clients”, predicted Ian Peach, head of residential property at Coffin Mew solicitors.

“Many agents operate both a sale and rental business and the past year or so has seen significant downward pressure on sale commission fees,” he said. “Therefore, additional pressure on their fees for rental aspects of their business will prove a real challenge for a lot of them unless they pass responsibility for fees to the landlord. They certainly won’t be able to absorb the costs into their own.”

Pension fraud

Moves to crackdown on pension fraud by banning cold-calling are “unlikely” to deter criminals, claimed Dominique Dolman of the law firm Irwin Mitchell. “People will continue to receive unsolicited calls and will be contacted via other means such as text messages, emails and advertisements including website advertisements as scammers seek new ways to exploit the rules,” she predicted.

However, the lawyer said that the proposals could give the public confidence “to put the phone down if contacted in the future by aggressive sales representatives in the knowledge that such calls are now banned”.

Land Registry

The chancellor also confirmed a story broken in The Times more than two months ago -- that ministers are to scrap plans to privatise the Land Registry. Hammond told MPs that "modernisation will maximise the value" of the registry, but it would stay in public hands.

 
 
 
 
News Round Up
Irwin Mitchell tops legal aid league table with £28m in fees

Lawyers at Irwin Mitchell, a firm specialising in medical negligence claims, were paid nearly £28 million pounds last year by the legal aid fund, making them easily the highest earners of state funds for civil law cases.

The 30 highest paid law firms picked up nearly £155 million last year, figures released by the Ministry of Justice in response to a freedom of information request revealed yesterday.

Irwin Mitchell, which is based in Sheffield and has 16 offices across the UK, was paid about 18 per cent of the amount that went to the top firms. It was followed by Duncan Lewis Solicitors, a civil litigation law firm with 30 offices across the country, which last year earned £19.5 million from the legal aid purse.

The biggest earner from the legal aid fund in criminal cases was Tuckers Solicitors, a firm based in London and Manchester. It billed nearly £7.5 million over the past year, ahead of Cartwright King, another national firm, which picked up nearly £6.5 million, and The Johnson Partnership, which billed about £6.4 million.

The highest earning 30 law firms picked up slightly more than £90 million in total last year from the criminal legal aid fund.

Despite leading the table of state-funded fees, Irwin Mitchell was reported to have been forced to take an additional £29 million bank loan to cover reduced profits. The Lawyer magazine reported that the firm’s recent limited liability partnership accounts revealed the borrowing, which must be repaid within the next two years.

A second FoI request showed that total legal aid costs in criminal trials costing more than £1 million had fallen by nearly 40 per cent in two years.
In 2013-14 the total bill came to more than £109 million, including so-called very high cost cases; but in 2015-16 the total bill was nearly £59 million.

The government said in a footnote to the figures that it had taken action to reduce legal aid expenditure, which had fallen by more than 20 per cent since 2010. It adds: “The government has cut the fees paid to lawyers in criminal legal aid cases such as these, to ensure legal aid represents better value for the taxpayer.”

Pensions watchdog ‘unlikely’ to allow regulator to seize Green’s superyacht

Regulators have no chance of winning a court order to seize the £100 million superyacht of the former owner of the BHS department store chain, an expert lawyer said yesterday.

MPs on the work and pensions committee had pressed Lesley Titcomb, chief executive of the pensions regulator, this week to pursue Sir Philip Green for assets held offshore, not least his yacht Lionheart.

But Paul Dean, a partner at Holman Fenwick Willan, said they had little chance of convincing a High Court judge that doing so would be just. "The courts over the years have demonstrated a considerable reluctance to pierce the corporate veil,” Dean said. “Over the past 130 years there have been many attempts but it had only been done 17 times.”

The corporate veil is a legal concept that separates the personality of a corporation from the personalities of its directors, shareholders and employees, and protects them from being personally liable for the company’s debts and other obligations.

Dean was involved in one of those successful attempts in the 2012 case of Caterpillar v Saenz. Since that ruling, there have been several court decisions on piercing the corporate veil, with the leading judgment given by Lord Sumption in Prest v Petrodel Resources – a matrimonial dispute.

“Tellingly,” Dean told The Brief, “Lord Sumption stated that ‘the recognition of a limited power to pierce the corporate veil in carefully defined circumstances is necessary if the law is not to be disarmed in the face of abuse’.”

But Dean continued: “In criminal confiscation cases the courts have also recently emphasised how difficult it is to pierce the corporate veil.”

Gay cake case headed to Supreme Court

The dispute over the decision of a family of bakers from Northern Ireland not to make a cake with a message in support of single-sex marriage because it offended their Christian beliefs could be headed for the UK’s top court.

Northern Ireland's attorney-general, John Larkin, told the Court of Appeal last week that he intended to invoke his power to refer the case to the Supreme Court.

In October, the Court of Appeal in Belfast upheld an original ruling that Ashers bakery had discriminated against a gay activist by declining his order for a cake bearing the message “Support Gay Marriage”.

Under the 1998 Northern Ireland Act, Stormont’s chief law officer can ask the Supreme Court to rule on issues related to devolution. Larkin has decided that elements of the Ashers case meet those criteria.

A spokeswoman for the attorney-general told the Press Association: “I can confirm that the attorney-general has, pursuant to paragraph 33 of Schedule 10 to the Northern Ireland Act 1998, served notice identifying a number of devolution issues.” In the original court case, the district judge Isobel Brownlie ruled that religious beliefs could not dictate the law and ordered the firm to pay damages of £500.

Mounting an appeal, Ashers contended that it never had an issue with the individual customer’s sexuality, rather the message he was seeking to put on the cake.The business said the slogan was inconsistent with their deeply held religious beliefs.

Larkin does not need judicial authority to make a direction to the Supreme Court. However judges can assess whether a specific case meets the relevant conditions for referral.

English civil courts ‘need complete overhaul’ to stay worldbeaters

Civil court infrastructure in England and Wales needs to be completely overhauled if the jurisdiction is to retain its “world-leading” status, a litigation specialist said yesterday.

Ed Crosse, president of the London Solicitors Litigation Association and a partner at City law firm Simmons & Simmons, praised the modernisation efforts of Lord Justice Briggs.

The Court of Appeal judge is conducting a landmark review of technology in the courts and Crosse maintained that he had the support of City lawyers. “The reform ideas are essential if we are to ensure that our courts maintain their position as the internationally preferred forum for resolving complex, high-value business disputes,” he said. “There is increasing competition from overseas and other tribunals, particularly in light of the Brexit vote, and we cannot afford to stand still.”

Nonetheless, while City solicitors involved in heavyweight litigation back modernisation, lawyers working on lower-level claims are far less impressed with Briggs’s proposals to create online courts. Barristers especially fear the move will lead to the ultimate “de-lawyering” of litigation.

In Brief

In today’s Times Law …

Elsewhere …

  • Barclays boss ‘fired after Fraud Office interview’ – The Times
  • Online age checks ‘are censorship’ – The Times
  • Ericsson under investigation in US over ‘bribery millions’ – The Times
  • TfL to sue MasterCard over interchange fees – The Lawyer
  • Solicitor on hook for £4.65m losses caused by fraudulent partner – Legal Futures
 
Byline
Comment

Law needs to catch up with cryogenics Paul Hewitt

Ministers need to put the brakes on freezing the dead until people plan to finance their new lives.

Cryogenics is no longer completely confined to the realms of science fiction, as Mr Justice Peter Jackson last week allowed a 14-year-old suffering from terminal cancer to be frozen after death, despite her father’s objections.

The ruling raises a range of ethical and scientific issues – and so far little attention has been paid to the wealth-planning implications for individuals hoping to be reanimated.

It can be hard enough for a grieving loved one to deal with a testator’s wishes – but those heading for the freezer will have to give clear directions to executors as to how their bodies should be maintained, and when they want to try to return.

How will those who have been thawed provide for themselves? Does current legislation in England and Wales permit for reanimation planning? Once revived, are you the same person you were before you were frozen? How do you access bank accounts, investments or trusts to fund your new lease of life?

Most of us dispose of our assets through a will – or intestacy if there is no will – but the frozen testator could well face a fight to claim assets back from succeeding generations. And while your warm-blooded self may trust the guardian of your frozen body, can you trust and legally enforce against potentially cold-hearted offspring?

Those contemplating cryogenics could consider establishing a trust to hold assets until a future self comes back to claim them. But there are difficulties, as the return of the frozen dead was not a consideration when English trust law developed.

Trusts for specific non-charitable purposes are permitted in limited circumstances. A trust for maintaining a frozen body is not, currently, valid under domestic law. Non-charitable trusts must have “objects” – namely, beneficiaries.

But making your future self your beneficiary won’t work if medical science takes the view that a frozen body cannot, in fact, be brought back to life; there’d be no “person” to benefit from the trust, and it would thus fail.

Another issue is that the rule against perpetuities provides that trusts, unless charitable, may exist for no more than 125 years. So anyone tucked up in the deep freeze now will have to go in with fingers crossed for a successful defrost before then, so as not to be left out in the economic cold. What if life insurance policies paid out? Would that have to be repaid? On the other hand, is there an insurance policy that will pay out on reanimation?

Offshore trusts are much more flexible, both on timing and objects, and can solve many of these financial issues. But unless cryogenics advances and those on ice are successfully reanimated, these may remain academic difficulties.

What is clear is that planning for a new life after death isn’t straightforward and there remain some chilling problems.

Paul Hewitt is a contentious trust and probate partner at Withers, an international law firm based in London

 
 
Tweet of the Day

Latest episode of 'Casualty': "We're losing him! Check status!" "Stand clear!" *rustle* *tense silence* "Still no sign of a passport!"

Colm Nugent @Wigapedia

 
 
 
 
Blue Bag

The partnership committee grinches

The partnership management committee at Dorsey & Whitney, an international law firm based in Minneapolis with a London office, will have their beady little eyes on the timesheets of J Michael Keyes.

Keyes is a partner in the firm’s Seattle office, who seems to have become obsessed with a dispute that has just opened in the California federal court involving ComicMix, a branch of IDW Publishing, and Dr Seuss Enterprises.

Theodor Seuss Geisel was an American cartoonist who created a series of popular children’s stories, not least How the Grinch Stole Christmas and Green Eggs and Ham.

Dorsey & Whitney is not involved in the action – lawyers at DLA Piper, the transatlantic law firm, are acting for the claimant, Dr Seuss Enterprises. But that hasn’t stopped Keyes from penning “Dr Seuss Sues in Sue-ville This Holiday Season”, a nine-stanza poem in tribute to the lawsuit, which has been distributed to the media.

Here is a taste of the lawyer’s verse:

“So the lawyers lined up and formed quite a roster,
All hands on deck to take down this imposter.
They filed their suit for the Green Eggs writer,
And sought an injunction to make things a bit brighter.”

Back to the partnership committee, which might be taking the view that Keyes has too much time on his hands.

Morrison & Foerster associate is an “inspiration”

A senior associate specialising in regulatory and compliance issues at the London office of a US law firm has been named as this year’s overall winner in the “inspirational women in law awards”.

Keily Blair from the City office of Morrison & Foerster picked up the prize from the “First 100 Years” project, an organisation celebrating women in the legal profession.

The judging panel included Baroness Cohen of Pimlico, a lawyer turned crime fiction writer, Sean Jones, QC, of 11KBW chambers in the Temple, Monica Burch, the former senior partner at the City law firm Addleshaw Goddard, and Susan Belgrave, a barrister at 7BR chambers in London.

Royal seal for trade mark attorneys

Trade mark attorneys can now do their grocery shopping at Fortnum & Mason after their professional body was granted a royal charter, it was announced today.

The Institute of Trade Mark Attorneys has become the Chartered Institute of Trade Mark Attorneys and immediately triggered hyperbole alarms by describing the change as a “landmark achievement”. It said that the Queen – in between sorties to Piccadilly for her weekly deal on F&M marmalade – doled out the charter at a recent meeting of the Privy Council.

According to the institute, the charter was granted “for its important role in representing the specialist work of trade mark attorneys in the United Kingdom”. Kate O’Rourke, the president of the 82-year-old body, said: “This new status provides a seal of quality for the work of our members and the value their work provides to businesses in the UK and across the globe.”

Fully qualified institute members will now be able to use the official title chartered trade mark attorney.

 
 
Quote of the Day

“It’s widely accepted that the inquiry has failed on all levels, but … [h]ad it not been for victims’ and survivors’ vigilance, inappropriate chairs and unethical behaviour at the inquiry would have gone unchallenged, leaving survivors and the public with yet another empty government investigation, which would never have offered up the truth. Sometimes, good things take time.”