Breathing space for struggling businesses

iLaw | corporate law firm in London

The UK Government has announced that measures put in place in March 2020 to help protect businesses from insolvency during the coronavirus pandemic will be extended. This will give businesses much-needed reassurance and respite in the months to come as the impact of coronavirus continues to effect commerce across the United Kingdom.

The temporary changes, originally introduced in the Corporate Insolvency and Governance Act 2020, were due to end on 30 September 2020. However, many have been extended. For example, the restrictions on statutory demands and winding-up petitions, which were introduced to help protect companies from aggressive creditor enforcement action, will continue until 31 December 2020.  Termination clauses continue to be generally prohibited.  This will assist companies going through a rescue process, by preventing suppliers from ceasing their supply or asking for additional payments.

The extension of these temporary measures and certain others will be welcomed by many businesses and should provide some relief to those going through challenging times. Those effected by these changes should keep an eye out for further developments, as it is possible that there will be further extensions beyond December 2020.

If you would like to discuss any legal issues that your business might be facing, then please contact our solicitor, George Duncan on 0203 9622 230 or at george.duncan@ilaw.co.uk.

Funding options for commercial disputes

iLaw, litigation law firm in London

With the current uncertain financial situation due to the global pandemic, many businesses may not have the cashflow to enforce their legal rights. As a litigation law firm in London, our team highlights some of the options available where self-funding legal costs is an issue.

 

Third Party Funding

Third party funding from a specialist litigation funder is now commonplace for disputes. The basic concept is that in consideration to finance all or (more commonly) part of the legal costs of a case,  a funder will charge a fee, payable from the proceeds recovered from the case (but only if successful). Third party funding is widely available in commercial disputes.

 

Important points to note:

  1. It is usually available to claimants only. However, defendants may also obtain funding if certain criteria are met;
  2. It may be used in both litigation and arbitration and it is not confined to English Court proceedings and domestic Arbitration;
  3. It is normally available in cases with good prospects of success (60% or above) and where the enforcement is not likely to be an issue;
  4. Funding is usually obtained with an insurance policy (paid for by the Funder) to cover the liability for the adverse costs.

 

Conditional Fee Agreement (CFA)

Another option is a CFA, where all or some of the solicitor’s fee will be deferred and dependent  on winning the case.  As an incentive to act on this case, the solicitor is entitled to charge a success fee on the deferred and contingent element of his fees.  This fee is referred to as a “success fee” and is calculated based on the solicitor’s hourly charging rates. The success fee payable is a percentage increase on the solicitor’s charging rates, which is calculated based on the risk involved – the higher the risk, the higher the percentage.

 

Important points to note:

  1. CFA must be in writing and must state the percentage of the success fee;
  2. It cannot exceed 100% of the solicitor’s normal charges;
  3. It will not cover the liability for adverse costs;
  4. It is not confined to English Court proceedings and domestic Arbitration.

 

Damages Based Agreement (DBA)

A DBA is where a solicitor agrees to act on a contingent basis in return for a percentage of the damages in a winning case (either by settling a case at any stage or after the trial). Where the case is unsuccessful, the solicitor would not receive any fees.

 

Important points:

  1. DBA must be in writing;
  2. Shall not provide for a payment above 50% of the sums recovered by the client;
  3. The cap is inclusive of VAT and barrister’s fees.

 

After the Event (ATE) Insurance

ATE insurance provides cover for litigation costs incurred by parties in litigation or arbitration. It is taken out after the legal dispute has arisen. It is distinct and wider in scope than the aforementioned options, as it covers almost all areas of litigation and is available to both claimants and defendants.

 

The important points to grasp:

  1. Largely confined to English court litigation and domestic Arbitration;
  2. Available only in multi-track cases, where there is no fixed recovery rate;
  3. ATE normally covers the client’s own disbursements and liability for adverse costs.

 

Why is it important?

Litigation may be expensive and sometimes even damaging for a business. The losing party will have to pay not only its own legal costs, but also those of a winning party. For this reason, a calculation of the overall costs of the litigation is close to impossible. The funding options described above are the effective solutions to minimise the risks associated with legal costs.

 

If you would like more information on the funding options available to you, then please contact Madina Tatraeva at madina.tatraeva@ilaw.co.uk.

Should we be going back into the office?

Returning office after COVID-19

We, like many of our clients, are an office-based business. There are competing pressures on such businesses between keeping staff working from home and getting them back into the office, which I don’t propose to go into here. Boris Johnson has recently started trying to urge people back into their offices, in an attempt to boost businesses that are reliant on people being in their offices, such as public transport and lunch outlets.

But what is the government’s official position on this question? Should we be starting to allow the factors in favour of returning to the office to outweigh the factors against?

The government updated its guidance on “Working safely during Covid-19 in offices and contact centres” most recently on 17 July, a week after Boris Johnson issued his first exhortation. As you’d expect, the guidance contains recommendations on risk assessments, cleaning, PPE, social distancing, meetings etc. But perhaps the most important chapter for many is on how to make the decision whether staff should be in the office at all. It still lists a general objective that “everyone should work from home, unless they cannot work from home.”

The current guidance goes on to say that, in deciding whether staff should continue to work from home or go back to the offices, businesses should:

  • Consider who is needed to be on-site, for example:
    • Workers in roles critical for business and operational continuity, safe facility management, or regulatory requirements, which cannot be performed remotely; or
    • Workers in critical roles which might be performed remotely but who are unable to work remotely due to home circumstances or the unavailability of safe enabling equipment.
  • Plan for the minimum number of people needed on-site to operate safely and effectively.
  • Monitor the wellbeing of people who are working from home, helping them stay connected with the rest of the workforce, especially if the majority of their colleagues are on-site.
  • Keep in touch with off-site workers on their working arrangements, including welfare, mental and physical health and personal security.
  • Provide equipment for people to work at home safely and effectively, for example, remote access to work systems.

So currently we’re being told only to allow individuals back into offices if absolutely necessary for the proper functioning of a site or if they’re unable to work at home. This is very much at odds with the Prime Minister’s wishes, and he’s said that the guidance will be updated on 1 August. We can probably therefore expect that the above guidance will be reversed from 1 August, to a position where it is in favour of returning to the office.

There is no doubt that the guidance will still make any such return subject to numerous conditions, for example requiring risk assessments and social distancing.

Ignoring this guidance may expose employers to claims if they impose a situation that their staff aren’t happy with. It’s going to be a tricky trip back to normality, whatever that may now mean. For assistance with employment issues coming out of Covid-19, please contact Malcolm Mason on 07516 045756 or at malcolm.mason@ilaw.co.uk.

Practical tips on the filing and service of claims during COVID-19

Practical tips on the filing and service of claims during covid-19

Covid-19 has undoubtedly put the adaptability and creative thinking of litigators to the test. Apart from an increased reliance on remote court hearings, the pandemic has also sparked a conversation around the adequacy and practical application of many parts of the Civil Procedure Rules (CPR). As a top litigation law firm in London, we would like to share our practical tips in navigating the rules for filing and service from two very different case management perspectives: the Queen’s Bench Division of the High Court and the County Court Money Claims Centre (CCMCC).

 

  1. Deadlines: This should be an obvious point but can be easily overlooked. If possible, filing should not be left until the last minute whether by CE-file or an application by email to the CCMCC. Just when you have finalised all the papers and are ready to file the perfect e-bundle, Murphy’s law dictates that it may well be scuppered by a sudden internet connection failure, planned maintenance of e-filing (notice boards should be checked regularly prior to any planned filings!) or a frozen computer screen. Telephone customer service support might not be available to help either.

 

  1. And More Deadlines: If the particulars of claim cannot be served together with the claim form, remember the hidden trap for the unwary in rule in CPR 7.4(2) – the particulars will have to be served before the claim form expiry date, four months after the date of issue.

 

  1. Contingencies: If a client is expecting a claim to be served on them and its office is running a skeletal staff or is closed, they should be advised to arrange appropriate monitoring of post delivered to their office. Some claimants serving on a company’s registered address may apply for a judgment in default if court papers have not been seen. An application to set aside a judgment in default might be successful, but it is better to save costs at the outset and think practically. Similarly, both clients and their legal teams should be checking their junk folder regularly for any emails purporting electronic service.

 

  1. Filing requirements: Know your filing limits and read the applicable filing and e-bundle guidelines carefully to avoid any rejected filings or delays in having your papers processed by the court. Be mindful of the megabyte limits on emails, file size, page number and formatting restrictions.

 

  1. Method for service: This depends on multiple legal and practical factors and it should be carefully planned. Although electronic service via email seems like an obvious choice in the current environment, do not take it for granted and make sure you obtain the recipient’s consent in good time (especially if a claim form is about to expire) including that of any legal representatives. If postal service is the preferred option, consider if the defendant has specified any address for service. If not, be mindful of the cascading test on the “last known address” rules.

 

  1. Manage expectations: This is particularly relevant for the CCMCC where response time is slower than usual, and it is important that the client is made aware of the longer processing times.

 

  1. Customer service: Longer waiting times for court customer service are to be expected. You should avoid telephone inquiries unless absolutely necessary as the court staff, who were stretched before, are often overwhelmed now. If you have a specific extension number, that might be a preferable option.

 

  1. Records: Another overlooked, common-sense point is to keep proof of filing and service, whether in the form of e-receipts, autogenerated read, delivery receipts, email trails or proof of postage. This is particularly important in the current climate of delay and uncertainty.

 

With advanced preparation and prompt planning, the difficulties posed by the pandemic are certainly not insurmountable. This is an opportunity for all practitioners to generate and adopt more efficient procedures and risk-responses, which they can then carry over into more normal times.

 

If you would like to discuss any issues on claim management your business might be facing, then please contact our litigation lawyer Allan Murray on 0203 9622 230 or at Allan.murray@ilaw.co.uk.

 

Remote mediation: the new normal?

Online mediation

Mediation has long been a highly useful dispute resolution option in the United Kingdom and beyond.

With a neutral third party (normally a specially trained barrister or solicitor) being appointed to help bring the parties towards a negotiated settlement, typically over the course of just one day, the success rate runs at around the 90% mark.

But with parties unable to meet face-to-face due to the COVID-19 pandemic, one might be forgiven for thinking mediation is not currently a viable option.

There is positive news though; remote mediation has emerged as a serious contender for resolving disputes outside of Court.

The technology exists to allow mediation to take place effectively online, with each participant in separate locations on one video call.  The mediator has the ability to place each party into separate “rooms” so that they can discuss matters confidentially.  Whilst not perhaps as seamless as the in-person environment, it does work.

The general structure of the process, and its governing principles, remain unchanged.  It is still voluntary, without prejudice and confidential.  Participants still retain control of the decision whether to settle and on what terms; no judgment is made by the mediator and no decision is imposed upon a party.   However, with lower costs, and with travel time removed, remote mediation is a viable and cheaper option to resolve commercial disputes.

Why Does This Matter?

Fears that remote mediation will not enjoy the same success rates as “getting everyone around the table” appear to be unfounded.   One of the key providers report that they have experienced little difference in success rates as compared to face-to-face mediations; in both situations around 90% of cases settle.

Businesses with disputes should therefore consider the option of a remote mediation.

At iLaw , our Dispute Resolution solicitors in London have successfully resolved many disputes by way of mediation and our head of practice is a qualified mediator.

To find out how we can resolve your business dispute, please contact George Duncan on 0203 9622 230 or at george.duncan@ilaw.co.uk.