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The Times

Monday, September 26 2016

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

Today

  • Top UK companies amass £31bn legal bills war chest
  • London firms go into bat in Brangelina saga
  • 28% rise in taxman raids on property
  • Huge rise in children challenging wills
  • Minister relents over legal advice for soldiers
  • Comment: Government must boost funding for restorative justice
  • The Churn: Watson Farley & Williams founder retires
  • Blue Bag diary: Peddling for pro bono

Tweet us @TimesLaw with your views

 
Story of the Day

Top UK companies amass £31bn legal bills war chest

Britain’s biggest companies have salted away a £31 billion war chest to pay lawyers in what they expect is going to be a rising tide of litigation and regulatory fines in the next 12 months.

The fighting fund has increased by more than a fifth over the previous year, reflecting not only an increase in expected law suits, but also inexorably rising fees imposed by top flight City of London law firms.

Of the FTSE100 companies 16 have been forced to set aside £250m or more to cater for legal expense.

Lingering effects of large scale legal actions – such as the payment protection insurance mis-selling and the Deepwater Horizon oil spill in the Gulf of Mexico involving BP – are highlighted as the driving force behind the increasing litigation fund.

Data analysed by Thomson Reuters from annual reports of FTSE100 companies shows that they have increased the funding pool for legal bills to £31.3 billion from £25.6 billion the previous year.

The financial services sector has made the biggest contribution, as in-house lawyers and senior executives in that sector anticipate a continuing tide of lawsuits, fines and compensation claims. The figures show that banks are responsible for the largest increase in provision for legal liabilities, up 27 per cent to £17.4 billion from the previous year’s figure of £13.7 billion.

Researchers point out that the increase means that the banking sector now accounts for 56 per cent of total provision for legal liabilities among FTSE100 companies – up from 53.6 per cent in 2014, the previous year for which data is available.

Energy companies and mining businesses account for the next biggest slice of anticipated legal liabilities at slightly more than 25 per cent total, setting aside nearly £8 billion to pay for lawyers’ fees and other legal costs.

There was a fivefold increase in legal provisions within the construction and construction materials sectors with companies increasing their total legal and regulatory provisions from £54.1 million in 2014 to £251 million last year. That rocketing of legal costs in the sector was in large part attributed to the Swiss Competition Commission’s action against CRH, a Dublin-based company that is listed on the London Stock Exchange.

Likewise, investigations into anti-competitive behaviour forced up legal bills for FTSE100 leisure and tourism companies. Costs in that sector rose by nearly 150 per cent to £288.7 million last year, up from £115.7 million in 2014. Other legal issues facing the leisure and tourism sector included group employee holiday pay and age discrimination claims.

 
 
News Round Up
London law firms go into bat in Brangelina saga

Legal wrangling over the Brangelina divorce saga only took a few days to flow across the Atlantic as two London media bulldog firms were wheeled out to act for both of the Hollywood superstars.

Angelina Jolie reached for Harbottle & Lewis, while her now estranged husband, Brad Pitt, plumped for Schillings.

Harbottle & Lewis picked up the high profile instructions as media speculation reached fever pitch stateside over the cause of the split. Jolie is reported to have instructed Laura Wasser, the glamorous partner at Wasser Cooperman & Mandles, the Los Angeles firm, as she filed divorce papers on fellow star Pitt.

This will be Jolie’s third divorce – actors Jonny Lee Miller and Billy Bob Thornton are previous husbands – and the Hanover Square firm will be keen to see that media coverage is kept to a minimum this time round in the UK. It will be Pitt’s second trip down the divorce aisle; his seven-year marriage to another Hollywood star, Jennifer Aniston, went south in 2005.

There are three partners at in the nine-strong media and privacy team at Harbottle & Lewis. The team is led by long standing partner Gerrard Tyrrell, who has a blunt Rottweiler reputation. Tyrell went into bat for the Duke and Duchess of Cambridge and their first child, Prince George, in a 2014 action against a photographer.

Schillings has a five-partner team, led by founding partner Keith Schilling, a doyen of media lawyers, who recently acted for JK Rowling, the Harry Potter author, in a defamation claim.

Huge rise in children challenging wills

Children are increasingly going to court to challenge their parents’ wills as the value of inherited estates is fuelled by rising house prices, figures show.

The number of cases involving grown children who dispute their parents’ estates in the High Court is up from 116 last year – and 104 the year before – although many more will settle out of court.

A driving factor, reports The Times this morning, is thought to be the continuing rise in the value of residential property, giving family members a greater incentive to dispute their inheritance. The advent of increasingly extended families also means that larger numbers of children have an expectation of receiving an inheritance from their parents. Increasingly, too, children challenge donations by parents made in their wills to charities.

The figures, collated by Hugh James, the London law firm, show that a last will and testament is no longer the final word on what will happen to a person’s property and finances. The firm said: “More frequent divorce and remarrying means that more relations, such as step children, are considered immediate family and assume they will be listed as beneficiaries in their step-parents’ wills.”

The firm also says that with rising life-expectancy in the UK it is common for children to inherit from their parents in middle age, when they may own high value assets themselves. Parents may instead choose to disperse their assets more widely to friends or charities for example, believing their adult children do not need financial help.

Roman Kubiak, a partner at Hugh James, said: “Often there is a lot of money at stake and so many people are considering claims, especially if they feel they are in financial need.”

Taxman raids on property up 28%

Tax officials are ramping up the number of property raids carried out as part of criminal investigations with a 28 per cent increase in the past year alone.

In all, reports The Times this morning, they searched 761 premises in the last year compared with 593 raids as part of HM Revenue and Customs' push to boost the numbers of prosecutions over tax evasion. The figures are 53 per cent up on those for five years ago, when in a year just under 500 property searches were carried.

A City law firm specialising in fraud and white collar crime who collated the figures said that they reflected the extra resources granted to HMRC to bring more tax evaders to book – and showed no signs of slowing.

Paul Noble, tax director at Pinsent Masons, said: “Criminal prosecutions for tax evasion can be notoriously difficult to bring to court, so raiding property is a vital way for HMRC to get hold of the crucial evidence it needs. Tax evasion investigations can be complex and time-consuming to uncover what are often well-hidden tracks," he added. “Often the only way to do this is by getting access to personal documents, files or correspondence through searches of a suspect’s homes or business premises.

“HMRC is taking greater advantage of these powers as a shock and awe tactic. By raiding premises, it not only hopes to be able to seize the proof it needs to build its case, it’s also a clear show of strength and intent which should act as a deterrent to others.”

Minister relents over legal advice for soldiers facing misconduct claims

The lawyer acting for British troops facing allegations of serious misconduct in Iraq and Afghanistan has criticised ministers for dragging their feet in authorising legal advice to defend the claims.

Hilary Meredith welcomed a statement on Friday from Michael Fallon, the defence secretary, confirming that the government would provide legal support for military personnel facing what he described as a “bucketful” of “patently false” claims. But, said the lawyer, “it is a shame it has taken so long and the threat of legal action by way of judicial review has been necessary.”

Earlier in the week, Meredith’s firm had threatened to launch a court challenge to what appeared to be Whitehall reluctance to underwrite legal advice for those facing investigations by the controversial Iraq Historic Allegations Team, as well as for personnel alleged to have committed offences in Afghanistan.

Meredith, who runs a law firm in Wilmslow that is devoted to military advice, recently gave evidence at the defence sub-committee’s inquiry into the support offered by the Ministry of Defence to former and serving military personnel who are subject to judicial process. In addition to financing independent legal advice, on Friday, she called on the MoD to guarantee affected personnel the right to a fair trial, continuing cover under the military covenant and remedies under The Human Rights Act 1998.

Meanwhile, the Law Society dived into the debate over allegedly unfounded claims against the military. In a statement, the body that represents solicitors in England and Wales said that it “will never condone the pursuit of vexatious claims and is determined to work with the profession, regulators and government to take meaningful steps to eradicate the small number of claims which are pursued inappropriately”.

But Robert Bourns, the organisation’s president, said: “The rule of law protects and holds every single one of us accountable, from the most powerful to the most vulnerable.

“Military personnel should have the ability to pursue claims for wrongdoing and should also be held to account if their conduct breaches international laws. Lawyers must not be hindered or intimidated in carrying out their professional duties and acting in the best interests of their clients within the law.”

In Brief

Lawyer numbers rise across UK top 50 – Legal Week

New EU laws legitimise fintech challengers – Financial Times

Is Britain fighting another illegal war in the Middle East? – The Guardian

Labour delays justice review until summer 2017 – Law Gazette

Furious judge lashes out at Facebook for letting junior lawyer handle terrorism case – Wall Street Journal

 
Byline
Comment

Government must boost funding for restorative justice Brian Swan

It has long been argued that restorative justice helps to deter young offenders, to reduce reoffending rates and to heal the wounds resulting from criminal behaviour.

The cross-party House of Commons justice select committee recently confirmed that victims of crime in England and Wales should have the legal right to restorative justice, but only when the criminal justice system is sufficiently resourced.

Restorative justice enables victims to meet offenders to explain the impact of their crimes. Meetings happen in a controlled environment, supervised by a facilitator to ensure that the process is entirely safe.

This helps victims to recover and move on – and there is wide support for the process with 80 per cent of people saying they should have a legal right to meet offenders.

The committee’s findings are welcome. Our criminal justice system focuses too much on punishment and too little on rehabilitation. Encouraged by the work of the Restorative Justice Council, lawyers involved in the system have argued, vigorously and rightly, that punishment has little effect in reducing recidivism.

The committee’s report proposes that restorative justice should feature in the proposed victims’ law, but only once it is “demonstrated to parliament that the system has sufficient capacity” to deliver restorative justice services to every victim with exceptions for sexual offences, domestic abuse and hate crime.

Bob Neill, the Conservative committee chair, said: “While capacity issues mean that it is still too soon to introduce a legislative right to restorative justice for victims, we urge the government to work towards this goal. We heard extensive evidence of the tangible benefits to victims and the role of restorative justice in reducing reoffending, so it clearly benefits wider society as well.”

He added that: “The priority must be to ensure that victims of crime are properly informed. The Ministry of Justice should focus its resources on ensuring restorative justice is well understood by bodies within the criminal justice system who can then convey this information to victims.”

The ministry has said that it will consider the report carefully. But experience suggests that reports from parliamentary committees are too often warmly welcomed, only to be forgotten because their proposals involve spending more money. Without targeted funding and political will, good intentions come to nothing. This must not be the case with restorative justice.

As home secretary, Theresa May told the Police Federation conference last May: “Used appropriately, restorative justice can have real benefits for victims.” Now that she is prime minister, criminal lawyers and victims everywhere hope that her sentiments are reinforced by regulatory action – and by appropriate funding.

The government has already committed to provide £29 million for existing restorative justice projects in England and Wales. But for restorative justice to be given to every appropriate victim as a legal right, additional funding will be needed.

To avoid this report being kicked into the long grass, Mrs May and the chancellor, Philip Hammond, must allocate funding in this year’s autumn statement.

Brian Swan is a partner at Stokoe Partnership Solicitors, a law firm in London

 
 
Tweet of the Day

#Brexit https://t.co/ewFxnNkeHT

Legal Cheek @legalcheek

 
 
Blue Bag

Law chiefs prepare livers for party conferences

Leaders of the legal profession will be hoping their livers survive the next fortnight as they gird their loins for the party conference season.

Top figures from the Law Society and the Bar Council will be schmoozing government ministers and key figures from the opposition at both the Conservative and Labour party shindigs.

First up is Labour, which kicks off this weekend in Liverpool. The Bar chairwoman, Chantal-Aimée Doerries, QC, will share panels with Sir Keir Starmer, QC, the former director of public prosecutions, Lord Falconer, QC, a former lord chancellor, and the current shadow justice secretary, Richard Burgon.

The Bar big wig will also be quaffing bubbly with Andrea Coomber of the campaigning organisation Justice, and Shami Chakrabarti, the former director of Liberty, who was recently controversially given a peerage by Labour leader Jeremy Corbyn.

The Law Society, which represents solicitors, will plough a separate furrow in Liverpool. Joe Egan, the organisation’s vice president, will share a platform with Burgon, and Lord Bach, a former shadow attorney general, who is now the Leicestershire police and crime commissioner.

The two organisations will join forces to take on the government a week later in Birmingham, where they will hold a combined reception. Separately, Doerries will speak at two fringe events: one on access to justice with Solicitor General Robert Buckland, QC, and another on alternative dispute resolution with Sir Oliver Heald, QC, the justice minister.

Meanwhile, the Law Society will host a drinks reception for Conservative Home, where its president, Robert Bourns, will speak alongside the Secretary of State for Business, Energy and Industrial Strategy, Greg Clark.

The society will also host a Brexit breakfast roundtable for those Tory delegates sufficiently keen to rise early.

Peddling for pro bono

Lawyers will soon be crashing into each other on their bicycles as they peddle around the UK on various charity events.

Indeed, it is increasingly difficult to keep up with which lawyer is cycling in aid of which cause. Last month, we covered the Tour de Law, which, to be fair, won’t run the risk of any collisions as all the action takes place on stationary exercise bikes in law firm offices.

Then at the end of last week, we focused on the Mackrell International London2Paris event, which pretty much does what it says on the tin.

And now along rolls up Jess Campbell, the chief executive of the Bar Pro Bono Unit, to remind us that she has just completed a 400-mile cycle journey to mark her outfit’s 20th anniversary. Last Tuesday, plucky Jess set off from Trinity Chambers in Newcastle to make for the capital via Zenith Chambers in Leeds, St John’s Buildings in Manchester and St Philips Chambers in Birmingham.

Plucky she may be, but Campbell clearly drew the short straw when it comes to geography as that route is hardly the way the crow would fly.

The celebrations of the unit’s 20th year did not end when an exhausted Campbell dismounted in London. Next month, Andrew Lingard, a case-worker, will run the Birmingham half-marathon, and fellow caseworker Lauren Graham will slog round the Bournemouth 10k.

 
 
The Churn

A run down of the big partner and team moves this week

Watson Farley & Williams founder retires

Significant moves in the City of London and in public law reform at the end of last week as the founder of a Square Mile firm retired and the head of a campaigning organisation returned to private practice.

Martin Watson, a founding partner of Watson Farley & Williams, one of the City’s premier maritime and aviation practices, was the lawyer hanging up his quill pen. He spent 34 of his 44 years of City legal practice at the firm.

Along with fellow founders Alistair Farley and Geoffrey Williams, Watson took the firm from inception in 1982 to a 146 partner practice with 14 international offices and more than 900 staff. “The dynamic and entrepreneurial spirit that enabled WFW to grow into a highly respected top-50 UK headquartered law firm in just over 30 years is truly phenomenal,” said Watson on his departure.

Meanwhile, Angela Patrick announced that she was leaving Justice, the law reform and human rights group, to return to practice at the bar. She was director of the group’s human rights policy for five years, and will join Doughty Street Chambers in London from the end of this month.

Back in the City, Allen & Overy, the magic circle firm, has raided Simmons & Simmons for a couple of partners to add to its intellectual property practice. Mark Heaney and David Stone have made the move.

 
 
Quote of the Day

“Under the first past the post system, there’s only room for one party on the left. If that party is Labour, there can be no other.”