International law firms will no longer be able to pump new lawyers into booming practice areas and expanding international offices, even after the recession ends, according to the head of one of the world’s biggest firms. ‘You will see less of the crazy, untamed growth in many market areas,’ Wim Dejonghe, managing partner at Allen & Overy, told the Gazette in an interview. ‘The growth will be slower. Staff numbers may be lower, and the rush to recruit will not come back.’ Allen & Overy recently completed a restructuring that resulted in a 9% cut in staff worldwide, including partners, associates and support staff. Dejonghe said that from 2011 the firm will recruit 9% fewer graduates – about 12 fewer graduates per year. The era of rapid international expansion is over, he suggested. ‘Emerging markets have been much more volatile than established markets,’ he said. ‘The question is, how much investment do you keep there? Our view is that once we go into a new market, we stay there. But that does not mean we will not modify our staffing there.’ Dejonghe suggested that intellectual property litigation was ‘recession proof’ and an important growth area. The introduction of alternative business structures in 2011 will have little effect on the future of A&O, he predicted.
Jonathan Goldsmith is the Secretary General of the Council of Bars and Law Societies of Europe (CCBE), which represents over 700,000 European lawyers through its member bars and law societies. The business of finding a lawyer in another EU country, and hopefully a competent one with experience in the field you want, has recently come to the top of the agenda.First, this is a problem for criminal defence lawyers. There are more criminal cases with a cross-border element, as people move around Europe in greater numbers. And the European Arrest Warrant has kicked in, abolishing extradition and reducing considerably the amount of time that it takes to send suspects to another country. This has put pressure on criminal defence lawyers to have contacts with lawyers in other EU Member States. The Council of Bars and Law Societies of Europe (CCBE) is currently engaged in a European Commission-funded project to suggest a pilot scheme whereby criminal defence lawyers can become involved in cross-border networks, in a climate which has seen more resources over recent years going to the prosecution. The hope is that, if you urgently need to find a criminal defence lawyer in Bulgaria or Portugal who speaks English, you could do that more easily than at present. And then along comes European e-Justice. The commission will be launching an e-Justice portal in mid-December this year. It will contain a great deal of information for citizens on their rights. The commission has also decided that it will contain a ‘search a lawyer’ function. This sounds great news. It is great news. Nearly all countries have national bars with electronic directories of lawyers, and these databases will be linked up through a central portal, which already exists on the CCBE website. But the easy part stops at this point. Many of the databases are only in their national language. Some list by name, others by geographical location. Some list practice areas and languages spoken by lawyers, others do not. And in any case, what is a practice area? Something for which you have ticked a box because you are interested in expanding into that kind of work, or something for which the bar has certified that you are an expert? In other words, a European citizen using a search function which links the various national directories will meet challenges along the way. The solutions are not easy. Each bar has invested a large sum of money in its database. Changing the fields or the navigation, or even translating the search instructions into other languages, may not be what they would choose to do, particularly in these hard-pressed times. Creating a new Europe-wide database is out of the question, since the national bars are the obvious repositories of lawyer information: it is they that admit to the profession, have information about changes of address, and so on. The maintenance of a database of its lawyers is one of the core functions of a bar. It is possible to see legal education, discipline, ethics and the other functions of a bar as routes for getting onto the database in the first place, and then staying on it or coming off. Yet it is never talked about publicly. It is one of those desperately unsexy topics that is taken for granted, while we get very excited about money laundering or legal aid. I am reminded of the structure of the cosmetics industry, where 80% (or whatever) of the profits come from a common-or-garden powder puff that no one ever promotes, while all eyes are on exciting new perfumes that generate little profit. The lawyers’ database maintained by the Law Society and other European bars is our powder puff, without which none of the rest would be possible. We have to face the fact that the commission wants European citizens to find lawyers in another jurisdiction in an easy manner. That is obviously good for citizens, but also good for lawyers, since we need to find out about our colleagues elsewhere. Reaching that goal is going to be one of the challenges of the coming years.
Only Ireland has suffered more job losses within its legal profession than the UK, the director general of the Law Society of Ireland said last week. Ken Murphy told delegates at a Council of Bars and Law Societies of Europe (CCBE) meeting in Brussels that lawyers in both the UK and Ireland had been hit hardest by problems in the property market. Murphy said that Ireland’s legal profession has been ‘decimated’. He added: ‘Ten per cent of our 8,200 solicitors are out of work. And that doesn’t include the 2009 intake of law graduates, some of whom are never going to find work as lawyers.’ After Ireland, practising solicitors in England and Wales have been worst hit by job losses, he acknowledged, with several thousand understood to have been made redundant. Murphy said both jurisdictions had been exposed to the ‘biggest bubble in history’, the property market, which has now burst. ‘Bars and law societies in continental Europe, less reliant on property, have been largely untouched by the recession,’ he added. Murphy said lawyers’ representative bodies in continental Europe do not see their role as helping members survive any downturn. ‘It is seen as a commercial problem for the individual firms affected,’ Murphy said. The Law Society of Ireland has now appointed a full-time careers adviser to help lawyers find new jobs, including directing solicitors towards opportunities in Australia and Canada where law firms are still recruiting. The Law Society of England and Wales has published a redundancy note on its website advising lawyers on employment rights and job-seeking strategies. Meanwhile, the late Stanislav Markelov, a Russian lawyer assassinated in January, has been posthumously given the CCBE Human Rights Award 2009. At the time of his death, he was seeking justice for Elza Koungayeva, an 18-year-old Chechen woman kidnapped, raped and strangled by Russian army colonel Yuri Budanov. Budanov obtained early release from prison on 15 January 2009. Four days later, upon leaving a press conference denouncing the release, Markelov was shot in the head and later died.
The civil litigation system is at risk of being ‘buried under a mass of paperwork’ because of the way lawyers are compiling their arguments, lord chief justice Lord Judge has warned. Delivering the Judicial Studies Board lecture last week, Judge said modern technology meant lawyers were including far too many cases of ‘spurious’ importance in their arguments. He said: ‘Too many decisions from Strasbourg, and too many domestic decisions, are cited in argument… All the cases on the point are assembled, and put into the skeleton argument. That skeleton argument is saved. When another case emerges, from whatever source, and unreported cases… [it achieves] spurious importance by being linked with an earlier reported case. The process is just too simple.’ Judge said that when one case was added another should be taken out. He added that court bundles would be ‘radically cut’ if the only documents submitted to court were those that had been ‘copied by hand’. Judge continued: ‘If we do not get a grip we shall bury our system under a mass of paperwork’.
M Topolski QC, A Scott (instructed by William Bache & Co) for the appellant Henderson; S Wass QC, K Thorne (instructed by Mark Williams Associates) for the appellant Butler; N P Valios QC, K Arden (instructed by Mackesys) for the appellant Oyediran; J Glynn QC, S Campbell (instructed by the CPS) for the Crown in Henderson; E Brown QC (instructed by the CPS) for the Crown in Butler; S M Howes QC, B P J Keleher (instructed by the CPS) for the Crown in Oyediran. The appellants (H, B and O) in joined cases, appealed respectively against their convictions for manslaughter, causing grievous bodily harm and cruelty and for murder. All three appellants had been convicted in cases involving shaken baby syndrome. On appeal, the appellants sought to adduce fresh expert medical evidence. Held: (1) In H’s case, the new evidence did not undermine the safety of the conviction and her appeal was dismissed. In B’s case the appeal was allowed and both convictions quashed. There was no need to address the fresh pathological evidence that he sought to adduce. In O’s case the quality of the expert evidence was not capable of undermining the safety of the verdict and the application to call fresh evidence was rejected. O’s appeal was dismissed. (2) (Per curiam) Justice in such cases depended on proper advanced preparation and control of the evidence from the outset at the stage of investigation and thereafter. The problem for the court was how to manage expert evidence so that a jury could be directed in a way which would, so far as possible, ensure that any verdict they reached was justified on a logical basis, R v Kai-Whitewind (Chaha’oh Niyol)  EWCA Crim 1092, (2005) 2 Cr App R 31 considered. It was for the jury to evaluate expert evidence even where the experts disagreed. The jury could only approach conflicting expert evidence if that evidence was marshalled and controlled before it was presented to the jury. Unless the evidence was properly prepared before the jury was sworn in, it was unlikely that proper direction could be given as to how that evidence should be approached. A judge who was to hear a particular case had to deal with all pre-trial hearings, save for those in which no issue of substance was to be considered. It was also desirable that any judge hearing a case which depended entirely on expert evidence should have experience of the complex issues and understanding of the medical hearing. The process of narrowing the real medical issues was also vital as the judge should be in a position to identify whether the expert evidence from either side was admissible. Courts should be familiar with the Kennedy Report on sudden infant death in infancy. It recommended a checklist of matters to be established by the trial judge before expert evidence was admitted, including in particular, whether an expert was in clinical practice when he made his report. Part 33 of the Criminal Procedure Rules 2010 needed to be deployed to ensure that the overriding objective to deal with criminal cases justly was achieved. Generally, it would be necessary for the court to direct a meeting of experts so that statements could be prepared in areas of agreement and disagreement. (3) A logically justifiable conclusion depended also on the structure and quality of the direction in the summing up. Two features of the content of a summing up were important. First, a realistic possibility of an unknown cause should not be overlooked and the jury should be instructed that it could not convict unless the evidence led to the exclusion of any realistic possibility of an unknown cause. In cases where developing medical science was relevant, the jury should be reminded that special caution was needed where expert opinion evidence was fundamental to prosecution. Second, the jury needed directions on how to approach conflicting expert evidence. A jury was not required to produce reasons for its conclusion; nevertheless, the judge should guide them by identifying those reasons which would justify either accepting or rejecting any conflicting expert opinion on which either side relied. Judgment accordingly. R v Keran Louise Henderson : R v Ben Butler : R v Oladapo Oyediran: CA (Crim Div) (Lord Justice Moses, Mrs Justice Rafferty, Mr Justice Hedley, Mrs Justice Sharp): 17 June 2010 Expert evidence – Grievous bodily harm – Shaken baby syndrome
The European Commission has scuppered plans by the Financial Services Authority to vastly improve protection for client money held in solicitors’ bank accounts. The commission has announced that it wants to increase to €100,000 (£83,200) the maximum level of compensation available for deposits that are lost in the event of a bank collapse. The FSA had suggested that compensation be increased to £500,000 , but confirmed today that it would have to follow the commission’s proposal. The European Parliament and council must approve the commission’s plans. The commission said that it wants to adopt a number of EU-wide measures ‘to create a sound financial system’. Concern about the safety of solicitors’ client accounts arose after the near-collapse of HBOS and RBS at the end of 2008 (see  Gazette, 25 September, 1). Accountants BDO Stoy Hayward estimated at the time that solicitors held a total of up to £1bn of client money in pooled accounts; the Law Society has estimated up to £3bn. In the UK, the existing level of compensation available under the Financial Services Compensation Scheme (FSCS) is £50,000. EC internal markets and services commissioner Michel Barnier said: ‘European consumers deserve better. They need reassurance that their savings, investments, or insurance policies are protected no matter where in Europe they are based.’ The FSA had suggested that court awards and settlements for personal injury should be compensated in full, even if more than £500,000. The European Parliament and council amended a directive on deposit guarantee schemes in spring 2009, proposing the €100,000 cap. The European Commission was due to report on the proposals at the end of 2009. FSCS protection will still not apply to client funds if that client is deemed to be a ‘large business’, as only individuals and small business are protected by the scheme.
A former cashier at a Midlands law firm has admitted stealing £1.6m from her employer. Louise Martini from Solihull pleaded guilty to charges of money laundering and theft of £1.6m from the accounts of Solihull and Shirley firm Williamson & Soden, in a hearing at Gloucester Crown Court. Martini, who had worked at the firm for 17 years, committed the offences over a six-year period which began in 2003 and ceased when her actions were discovered in 2009. The court heard how she used the money to help her husband’s business, as well as to buy designer clothes, jewellery, cars and a share in a racehorse. The Crown Prosecution Service discontinued money laundering charges against her husband. Ian Williamson, partner at Williamson & Soden, said: ‘The operations of the firm have continued unaffected since the partners discovered the theft in February 2009. We were and are of course fully insured, and have worked closely with our insurers and the police from the beginning. No client has been affected and no client has had or will have cause to complain.’ Williamson said the funds were completely restored to the firm within a short time of the theft being discovered, and the firm had conducted a thorough investigation to ensure there would be no further problems. Martini’s solicitor Stephen Daly, a consultant at Birmingham firm Dass, declined to comment in advance of her sentencing, expected in October.
National firm Ralli is seeking to pursue a group action for harassment against London firm ACS Law in relation to the handling of file-sharing cases. Ralli has called for individuals to contact the firm if they have received what it claims are ‘bullying’ letters from ACS Law. The legal action concerns letters sent by intellectual property lawyer Andrew Crossley, principal at ACS Law, in relation to alleged illegal sharing of films, games and songs over the internet. Ralli claims the letters sent by ACS demanded that recipients pay compensation, typically a sum of £500, or otherwise face being taken to court. Michael Forrester, a solicitor in Ralli’s intellectual property and harassment team, said: ‘The legal basis for the claims being made against these alleged file sharers involves complex legal and technical principles. These are extremely difficult for a lay person to understand and can often mean an innocent person is being pursued. ‘It can be incredibly upsetting for people to receive such letters and they may well have a claim of harassment against ACS Law, so I am urging them to come forward.’ The Solicitors Regulation Authority has referred Crossley to the Solicitors Disciplinary Tribunal, following an investigation which was triggered by complaints made to the SRA by consumer group Which? and others. Crossley said the letters sent by his firm were measured, and did not amount to bullying or harassment. He added: ‘We are operating in full compliance with the SRA Code of Conduct. We are acting on instructions from clients who have a legitimately held belief that an infringement of their copyright has occurred.’
Stricter controls on financial advisers and stricter controls on banks – all designed to protect the public. At the same time the government is ready to throw legal services open to the wider market. Could it be that it is missing something rather obvious – namely that relaxation inevitably leads to risk and it will be the general public who suffer, yet again. Peter Jewitt, Nicholson Portnell, Northumberland
Sound financial management has become a key issue for law firms as for the first time banks are closely scrutinising lending to these legal companies and implementing new credit policies. It is worth looking at how law firms can effectively demonstrate their financial acumen in a bid to secure bank funding. In order to demonstrate to a bank that your firm can meet its credit policy criteria there are a few basic principles to consider. First, it is vital that the partners of the legal practice understand how the business stands financially. At least one of the partners (with or without the assistance of a practice or financial manager) has to know and understand how the business is performing financially on a day-to-day basis so the business can respond effectively and quickly. That individual should also have the knowledge and be given the time and support to undertake what is effectively one of the most important roles within the firm. Secondly, there are a number of questions and considerations of which partners should take note in order to prepare adequate information for their lenders. For example, do the partners know if the firm is profitable? What is the current position before and after drawings – and do they recognise the difference between profit and cash in the bank? How does this compare to the previous three years’ trading? If there has been a decline or an upturn, what is the reason? Is each department and fee-earner profitable and has a profitability analysis been undertaken for each department and fee-earner within the firm? We have reached a significant crossroads and law firms have to decide strategically what type of firm they will be in the future. If the decision is to offer regulated legal services clients will pay a premium for the attention and knowledge your firm will demonstrate. However, if you choose to deliver commoditised services then your choice is either to adapt a software/web-based solution or employ less qualified (and more affordable) staff to deliver these fixed price services. Can the firm’s existing practice management system produce the information which the bank may require? Does it have the facility to undertake a year-on-year comparison without having to refer to year end printouts? Who within the firm actually knows what information can be extracted from the system – and how? It is essential that you give yourself sufficient time to undertake a realistic review of your budgets and targets and identify if you have the ‘right people in the right seats’. To obtain buy-in from your staff it is essential to deliver your budgets and costs-delivered targets to all personnel in time for the new financial year. Once you have ascertained that your WIP (work in progress) is billable then it is essential that you turn those bills into cash. For many firms, the credit control function has not been considered a priority in the past. Here are some key questions to answer when establishing a credit control policy: Viv Williams is Chief Executive of 360 Legal Group Who is responsible for and undertakes day-to-day management of the firm’s credit control process? Do you have a written credit control policy that has been given to every member of your staff? Is your credit control process automated and linked to your accounts software? What is the split between 30, 60, 90 and 120+ day debtors/disbursements? How much has been written off so far this year and have any further potential bad debts been identified? Who has authority to write off bills and have the reasons been recorded for HMRC purposes? It is equally important to manage your fellow partners’ expectations as well as that of the bank and this can be done by producing regular management accounts in-house on a monthly basis. Understand the information in the reports and if your accountants prepare them, ensure they are discussed openly with all partners. Do your management accounts include a work in progress valuation? If not, this will distort the profit/loss figure. It is recommended that you review actual versus budget figures at least quarterly and record any required amendments. Looking to the future Despite the stringent lending criteria currently being applied, law firms will long be an attractive sector for some of the banks. For example, LloydsTSB is going to great lengths to improve its service with specialist units being established to cater specifically for the legal profession which have an understanding of the problems being encountered. In addition, many bank managers now have a Lexcel qualification and a better understanding of the regulatory and compliance issues facing solicitors. Layering the practice’s finances is an option which has largely been ignored by a legal profession used to the luxury of increasing overdrafts on demand. This situation is rapidly changing and specialist lenders such as Key Business Finance, now part of Wesleyan, can assist in the layering of these finance options. Although some key disbursement funding players have disappeared there will be new entrants into the sector and it is likely that more law firms will consider employing alternative funding rather than their overdraft. Whichever the chosen lending route, having excellent management information available will not only help to manage partners’ expectations but also those of your bank/lender and help towards a long and successful relationship going forward.