Take two businesses, of comparable size, revenues, and profitability. Why would one sell more quickly than the other—and for considerably more money?
Here at The Legal Director, it’s a question that we often ask clients, in order to illustrate the benefits of exit planning.
As we warned in our March 2018 blog, there was always a high probability that the IR35 reforms the government introduced to the public sector in April 2017 would be applied to the private sector. Now that distinct possibility is a reality.
In the Autumn 2018 budget it was announced that IR35 reforms will be introduced to the private sector in April 2020.
It’s the season for Christmas parties. And, as an employer, you may well be holding one for your staff—a Christmas party is, after all, a popular way of thanking employees for their hard work over the past year.
But while your finance director will doubtless have reminded you of HM Revenue and Customs’ rules regarding avoiding any tax or National Insurance liability for such a party, you may not be aware of the equivalent guidance regarding your legal obligations if your Christmas festivities are not to fall foul of the law.
In an earlier blog, we looked at how best to instruct external legal providers—providers such as barristers, solicitors, or legal consultants.
Why? Because all too often, working with such providers can be a dispiriting affair, leaving businesses wondering why they struggle to make sense of what they get back, and why the resulting invoice represents such seemingly poor value for money.
It’s a common enough scenario. You have a contract with one of your key suppliers, and you—or one of your staff—agree over the phone with that supplier to alter the quantity, or to reduce the price.
And in the event of a subsequent dispute, you might imagine that a judge would uphold those changes without question. But that’s not necessarily so.
The Legal Director is proud to be co-sponsor of the latest Informed Funding "Funding Fair - Funding for Deep Technology: from concept to commercial reality" on Thursday, 8 November 2018 from 08:45 to 17:30 (GMT). This event takes place at Plexal, 14 East Bay Lane, Stratford, London, E15 2GW
A huge gulf exists between technology break-throughs and commercialised products or services that will support a profitable business.
The Legal Director is proud to be co-sponsor of the latest Informed Funding workshop on Tuesday 9 October from 11:00-13:30 hrs or 14:30-17:00 hrs. This event takes place at Plexal, 14 East Bay Lane, Stratford, London, E15 2GW.
In this Informed Funding Workshop, you'll be able to discuss with experts and other business owners how to maximise the value of your business.
The Legal Director is proud to be co-sponsor of the latest Informed Funding workshop on Wednesday 3 October from 12:00-13:30 hrs or 17:00-18:30 hrs. This event takes place at Plexal, 14 East Bay Lane, Stratford, London, E15 2GW.
Managing cashflow is the number one challenge for the majority of business owners, particularly in early stage and growing businesses. Finding the right mix of funding is dictated by a host of different factors, tactical and strategic, long term vs short term requirement and whether it is supporting working capital or investment in growth, people, marketing and assets.
The Legal Director is proud to be co-sponsor of the latest Informed Funding 90-minute workshop on Wednesday 12 September from 10:30-1230 hrs or 14:00-15:30 hrs. This event takes place at Plexal, 14 East Bay Lane, Stratford, London, E15 2GW
Raising finance is often the number one challenge for the majority of business owners:
Even when a business has an in-house legal team, there are times when instructing external legal resources—barristers, solicitors, or legal consultants—makes good sense.
And at such times, it makes even more sense to think carefully about the work that you’re asking the external provider to perform, and how you want them to go about it.
What do legal and regulatory issues cost your business each year? And - perhaps more worryingly - what is the cost of those commercial and contractual disputes that could have a legal resolution, but which instead go unresolved?
Nationally, according to a YouGov survey and analysis by the Centre for Economics and Business Research, these costs could total an impressive £13.6 billion a year.
The Legal Director is proud to be co-sponsor of the latest Informed Funding workshop on Wed 4 July, where you'll be able to discuss with experts and other business owners how to maximise the value of your business.
Location and Timing
Is your business facilitating tax evasion? Put like that, most of us would automatically answer ‘no’.
But let’s re-phrase the question. Does your business make cash payments to suppliers or contractors? Has a customer asked for an invoice to be issued in a way that changes or disguises either the nature of the goods or services involved, or the parties involved? Do any suppliers or contractors have overly-complicated supply chains or payment procedures? And are there any self-employed contractors performing jobs indistinguishable from those of full employees?
As the government considers extending to the private sector its public sector reforms of the rules relating to the engagement of contractors through so-called personal service companies, is your business at risk?
Our view—if you engage contractors—is ‘quite possibly’. For in our experience, many businesses do not understand the very complicated rules that govern the engagement and tax status of contractors.
In just a few months—on May 25th—compliance with the General Data Protection Regulation (GDPR) becomes mandatory. The biggest change to data protection law for a generation, it imposes vastly stricter data protection requirements on businesses, and a far tougher penalty regime.
By now, there can be few businesses that don’t know this. Reminders are everywhere, and it is hoped that most are well advanced with their compliance plans. The debate has moved on from “Whatisthe General Data Protection Regulation?” to “How exactly do we comply with it?”
Conversations about employees working from home were once very short. In those rare instances where employees did venture to enquire about the possibility, the answer was usually an automatic ‘no’.
Times have changed. According to figures from the Office for National Statistics, there are now around 4.2 million home-based workers in the UK—roughly a trebling since 1998. Many use their home as a base, but work in different places. But around a third work only at home.
It’s fair to say that many businesses are unprepared for the new .uk Internet domain - which is unfortunate, as from June 2019, they could find that their branding and name has been registered on it by a third party, leaving them with little redress.
Promoted as a shorter and more genuinely local replacement for the .co.uk domain that many businesses use, it’s intended to be the UK equivalent of [say] Germany’s .de domain, and France’s .fr domain. To be eligible to use the new .uk domain, businesses must supply an ‘address for service’ within the UK. Moreover, this must be a physical address, rather than a PO Box.
For businesses wanting to grow or invest, external finance can be an attractive option: access to the funds that they need, without equity dilution or participation.
But external finance has its downsides—namely terms, conditions, and covenants that can prove overly restrictive, potentially tipping the business into default in the event of unforeseen circumstances.
Buying a business is exhilarating. Hard work, to be sure - but undeniably exciting, and with a rich sense of the opportunities that lie ahead.
So perhaps understandably, once the deal has closed, there’s a temptation to get stuck in and focus on actually running the business, rather than thinking about protecting - and adding to - the value that you have acquired.
With effect from 25 May 2018—in other words, less than a year away—your business is exposed to a new regulatory regime backed by hefty fines. And by ‘hefty’, we’re talking fines of the higher of either €20 million, or 4% of annual worldwide sales revenues.
The regulatory regime in question? The new EU-wide General Data Protection Regulation (GDPR)— the biggest change to data protection law for a generation—which imposes even stricter data protection requirements on businesses, and a far tougher penalty regime.
It’s barely a year since the introduction of the PSC regime - and already, the compliance requirement has been tightened.
And at a time when many businesses are still grappling with the issues raised by the original PSC requirement, the result is a significant ratcheting-up of the associated compliance burden.
Every year, several hundred thousand new businesses are created. In 2015, according to the Office for National Statistics, the total was 383,000—the highest recorded since comparable records began in 2000.
Many are sole traders, of course. But a significant proportion comprises two or more individuals coming together in some form of partnership: either as a limited company, or as a formal limited liability partnership, or as a traditional partnership.
Is your business at risk from the Uber decision? Why your self-employed contractors could really be employees
Fuelled by companies such as ride-hailing business Uber and personal courier firm Deliveroo, the so-called ‘gig economy’ is on the rise. So much so, that at the end of November, the government announced an official review into its impact on workers’ rights. But could the impact on businesses—and employers—be even greater?
That’s certainly one of the conclusions to be drawn from the high-profile employment tribunal ruling at the end of October, which found that Uber’s self-employed drivers were in fact employees of the company, and were consequently due holiday pay, sick pay, and the National Minimum Wage.
Law firm The Legal Director (TLD) has been commended in the FT Innovative European Lawyers awards, which were announced at the beginning of this month.
TLD ranked highly on the total innovation score, which was broken down into three elements: originality, rationale and impact. For a fixed monthly fee, the company provides generalist lawyers to small and medium-sized enterprises that cannot afford to hire a full time in-house lawyer.
The need for additional finance is often the price of success for small to medium-sized enterprises (SMEs) that are looking to grow.
The question that faces the directors in such a situation is whether to go for debt financing, which will appear as a liability on the balance sheet – and possibly preclude further borrowing – or for equity funding, which will not. Securing equity finance may, however, entail giving away control of much of the business, leaving owner managers as little more than employees.
At the end of July, Prime Minister Theresa May launched a cabinet-level government taskforce to eradicate modern slavery in the UK.
It was, she said, “one of the great human rights issues of our times,” adding that modern slavery was a “barbaric evil”.
Outside the narrow realms of consumer technology, there’s often an inevitable trade-off between cost and quality. In other words, you can have something at lower cost, or better—but not both at the same time.
But here at The Legal Director, we’d like to highlight a recent development at the firm as an exception to that rule. Because following a waiver from the Solicitors Regulation Authority, we’ve become the first law firm to sign up to the Bar Council’s BARCO escrow account.
As we have written before, the Bribery Act 2010 is a law with undoubted teeth. Fines are potentially unlimited, and custodial sentences can be up to ten years.
And the liability is personal, not just corporate: in other words, the fines are paid by individual directors and company officers, and it is individual directors and company officers who must serve the jail time.
New rules on shareholder identification are now in force - and yet many businesses aren’t aware of them.
Does your business have corporate or nominee shareholders? Perhaps a family trust, or a corporate shareholding through a venture capital firm? Or one or more ‘business angels’, with veto powers over particular developments? Or perhaps a number of minority shareholders from the same family, who tend to vote in the same way?
PRESS RELEASE: The Legal Director has become the first law firm regulated by the Solicitors Regulation Authority (SRA) to sign up to the Bar Council’s escrow account BARCO.
The Legal Director, which provides in-house lawyers to businesses on a contract basis, has become the first SRA-regulated firm to secure a waiver from the regulator to sign up to BARCO. This new service allows the firm’s clients to pay for legal services safely without their money needing to be held in a dedicated client account. Client funds are pooled into a ring-fenced Barclays account and not released to lawyers from the BARCO account until they have completed the work for their client. All interest on the funds is returned to the client.
Wander around a supermarket, or browse the advertisements in newspapers and magazines, and you’ll see trade marks everywhere. And it’s likely, too, that your own business will also possess trade marks, linked to either the business itself, or to the products or services that it provides.
You don’t have to look too far to see that traditional modes of employment are increasingly giving way to more flexible working arrangements.
Returnee mothers, for instance, can be found working school hours during term time. Retired former employees are spending two days a week in the office, working as part-time consultants. And specialists in particular areas of expertise can be found working part-time, or on fixed-term contracts, as contractors.
A recent ruling by an Employment Appeal Tribunal is set to cause many businesses a headache. Quite an expensive headache, at that.
Simply put, it means that certain businesses will find themselves paying their workers additional holiday pay. Moreover, if they’re not already paying that additional holiday pay right now, they’re leaving themselves open to claims for back pay—claims that will almost certainly be valid.
To see the difficulties that businesses can get into through bribery - or even allegations of bribery - look no further than the reputational damage suffered by international football association FIFA, aero-engine manufacturer Rolls-Royce and pharmaceutical giant GlaxoSmithKline in recent times. Not to mention, in Glaxo’s case, eye-watering fines.
Simply put, the world is getting tough on bribery, with country after country enacting legislation to make it a criminal offence. Here in the UK, for instance, the requisite piece of legislation is the Bribery Act 2010, which came into effect nearly four years ago.
Imagine, for a moment, that when faced with a serious illness, significant numbers of people took no action. And of those whodid take action, around two-thirds ‘self-medicated’, either using their own judgement, or seeking help from friends and family.
The remaining third? Around half sought formal medical advice from a medical practitioner. But the other half, while seeking advice, consulted a wide range of other advisors and practitioners—some relevant, others not.
Here at The Legal Director, we’ve recently come across a business where the two co-founders have fallen out -- one is now leaving, in order to set up on his own, in direct competition with his former co-director.
Under the circumstances, the company’s bank account has been frozen—it needed both co-directors as signatories—and the business has more or less stopped trading while the complications are sorted out.
Another week, and yet another critical item in the press on the cost of obtaining corporate legal advice. And to be sure, it’s certainly a fairly open goal at which to aim. For while ‘fat cat’ lawyers may not attract quite as much popular opprobrium as ‘fat cat’ bankers, to many the distinction is largely one of degree.
The trouble is, there’s actually a downside to all this. A downside, what’s more, that affects a vast array of businesses, even those far from the orbit of the City and the upper echelons of British industry.
As the credit crunch and ensuing recession of 2008 began to bite, lending to businesses dried up. To their shock, even long-established, profitable businesses with solid banking relationships and unblemished records suddenly found that they couldn't get finance.
Subsequently, lending conditions have improved somewhat. For one thing, the government has made help for businesses a condition of its own assistance to the country's banks. The Bank of England, meanwhile, has launched a Funding for Lending scheme, whereby it explicitly lends money to banks, for them to subsequently lend to their business customers.
Visit the website of the Information Commissioner’s Office, and there’s an interesting section entitled ‘Enforcement’. In it, the Commissioner details the various criminal prosecutions that the Office has undertaken in the last few months, together with the enforcement notices that it has issued, and the fines that it has levied.
A startling fact about many of these cases is that they involve very ordinary businesses. A leisure centre. A doctor’s surgery. A lettings agency. A ‘payday loan’ company. An estate agent. And so, and so on.
When we start working with a business we assess their existing legal arrangements to determine how these can be improved and aligned with commercial objectives.
We ask some basic questions, such as:
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